Precision Medicine Part II – Reimbursement and Cost

         April 14, 2015

Reimbursement and Cost – Precision Medicine Part II

The promise of Precision Medicine is to leverage highly targeted therapies for the benefit of the patient. By understanding better what makes us unique and leveraging our genetic make up, we hope to improve the outcome for the individual. Now, this blog is focusing on one issue that we collectively have to overcome to make precision medicine a reality. And this issue is simply: Cost.

For some time, lung cancer has turned into the poster child for precision medicine. At this point it is considered standard care for stage IV patients to identify targetable oncogenic drivers. As an example, the anaplastic lymphoma kinase (ALK) gene has emerged as an important oncogenic driver in a small population of patients with adenocarcinoma. The prescription drug crizotinib has received accelerated US Food and Drug Administration approval when used in conjunction with its companion diagnostic test to identify patients with the EML4-ALK gene rearrangement.

From a medical perspective there is no question that this treatment “moves the needle”.

A recent phase III study compared crizotinib with standard chemotherapy in patients with locally advanced or metastatic ALK-positive lung cancer. Everything favored crizotinib:
1. median progression-free survival (PFS) was higher 7.7 versus 3.0 months
2. response rate of the tumor was 65% versus 20%
3. symptoms and quality of life were also substantially better during treatment

Overall survival was not improved. We haven’t found a cure yet. However 64% of the group receiving chemotherapy crossed over to crizotinib, which is a powerful vote of confidence.

Two main questions remain unanswered: Can we afford to screen everyone with lung cancer, given that only 3% to 5% of the population will be ALK positive? And, can we afford to pay for crizotinib? These are the types of questions that our field has to face in scenarios that require specialized drugs.

Leveraging companion diagnostic kits as a standard method to screen for rare mutated genes is likely unsustainable. In the crizotinib example we would test 100 people to find those 3 – 5 patients that are qualified based on their genetics to receive a highly specialized drug. This process takes too long, is too expensive and also creates workflow issues for the treating oncologist. I covered this in a recent webcast, Cancer Gene Panels.

But even if we accept that gene panels or a similar paradigm is better suited than companion diagnostic kits, our industry is facing this issue as a litmus test. Many of Golden Helix’s competitors are providing clinical testing solutions either as a software package or as a cloud based solution as an alternative to VarSeq. These companies create a dilemma for testing labs as they decided to adopt a business model that is based on per sample charges. Very often this is combined with a baseline fee. Now, as these types of therapies become part of standard care, this approach will create an unnecessary barrier for adoption, in addition it creates grey zones. For example, what happens if a lab technician decides to rerun a sample as a quality control measure? Is the testing lab charged again for this rerun?

At Golden Helix, we have decided to charge for our testing software a very reasonable, flat fee that allows the testing labs to drive down overall cost as their testing volume increases. We firmly believe that this is necessary to allow precision medicine therapies to further develop into mainstream treatment options.

The second issue of course has to do with the drug cost themselves. In our example, the treatment of a patient with crizotinib can increase the incremental cost-effectiveness ratio (ICER) to $148,000 per additional life year (see Kelly, Hillner and Smith, “Cost Effectiveness of Crizotinib for Anaplastic Lymphoma Kinase-Postive, Non-Small-Cell Lung Cancer: Who is Going to Blink at the Costs?” Journal of Clinical Oncology, 2014)

These are staggering numbers. Our collective goal is to find ways to reduce the monthly costs for targeted therapies to more reasonable levels. For the United States, the cost issue can only be solved by bringing representatives from the US Food and Drug Administration and other government organizations, researchers, clinicians, Medicare, pharmaceutical companies, patient groups and the insurance industry together. Obama’s Precision Medicine initiative might be the right start for this dialog to occur.


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