From the dawn of the Precision Medicine Age, pathologists have relied upon in vitro diagnostics (IVDs) to inform treating physicians of possible therapy options for cancer patients. From tests for HER2, EGFR, KRAS, and other biomarkers, IVDs have been more than sufficient to generate the necessary information to enable physicians to make educated treatment decisions. However, in the last few years, two pharmaceutical companies have successfully launched a drug with a sole-source lab commercializing a laboratory developed test (LDT). The first was AstraZeneca launching Lynparza™ requiring the use of Myriad Genetics’ BRACAnalysis CDx™ in December 2014, and the second was Clovis Oncology launching Rubraca™ requiring the use of Foundation Medicine’s FoundationFocus™ CDxBRCA in December 2016. It is still too early to know whether or not launching a CDx as a LDT is a new and sustainable trend, but it begs the question: Why would a pharma company select a lab as a CDx partner over an IVD manufacturer?
When choosing a companion diagnostic strategy, pharma wrestles with the all-important question: Which strategy enables the greatest number of patients to receive our drug? To achieve this, a CDx must be broadly accessible, must have payer coverage, and must have a pathway to routine and optimal reimbursement. Both IVDs and LDTs can fit these criteria.
IVD manufacturers are able to provide broad access through placements of platform technology and distribution of IVD kits into hospital and reference laboratories. Should the labs have the required expertise in-house and the laboratory economics justify the purchase of expensive capital equipment, an IVD CDx strategy may be perfectly justifiable, just as it has in the vast majority of examples in precision medicine.
However, as evidenced by the number of testing methodologies being studied in clinical trials as potential companion diagnostics, it may become a reality that the expertise and resources required to execute the next wave of tests may be prohibitive for many labs. For example, the investment for next-generation sequencing machines (and consumables), the associated analytics to make sense of the data, and the experts to run the test and the analysis is not realistic for many labs. One very recent solution to this problem is the mid-June 2017 FDA approval of the Thermo-Fisher OncoMine Dx Target Test for a number of NSCLC treatments. Prior to this, a common solution was, and still is, to send patient samples to a provider who has these capabilities, and perhaps a lab where the only offering of the lab is NGS (e.g., Foundation Medicine). Physicians can be comfortable in knowing that this complicated test is routine for these experts, and that the results will be accurate, reproducible, and have a reasonable turnaround time. This will only become more true as tests become more complicated and rely upon more expensive equipment to run.
LDT CDx are available immediately following approval whereas IVDs must be distributed and then validated within each lab, thereby delaying access to the test. Of concern for LDT CDx is that the sample logistics (e.g., pick-up and shipping of sample, distribution of the report) must be finalized prior to launch of the drug or risk delays in providing patients access to life-saving treatments.
Both IVDs and LDTs can achieve payer coverage after successfully completing clinical trials showing significant benefit for patients. Ultimately, payers require that a test is analytically and clinically validated, has demonstrated clinical utility, and makes reasonable health economic sense. As companion diagnostics, these tests prove their validity and utility in clinical trials.
Also of concern for payers is the inter- and intra- operator/facility reproducibility. To demonstrate this, IVD manufacturers are required to conduct ring trials, which take time, require investment, and are not always logistically simple to execute. Conversely, LDT CDx are not required to execute a ring study, as only one lab is able to provide the test.
Finally, approved companion diagnostics are at risk of competition by “home brews”, or non-approved diagnostics. These tests run the risk of having performance metrics that differ from their regulatory-approved counterparts. However, as tests become more complex (and perhaps rely on proprietary algorithms), it will be more difficult for “home brews” to claim to be as good as the approved test. While IVD CDx are more prone to “home brew” competition, LDT CDx are not immune to this (e.g., BRCA testing available outside of Myriad Genetics).
Pathway to routine and optimal reimbursement
Traditional IVD CDx and the newly-available LDT CDx have had access to routine reimbursement through the availability of CPT codes in the United States. In other markets, pharma companies must pay for the use of the diagnostics either on a temporary or permanent basis. However, the reimbursement that is achieved for a CDx is often calculated based on cost rather than value added. In the future, there will likely be many more tests that use proprietary algorithms or other informatics capabilities that diagnostic service providers or laboratories feel should receive value-based reimbursement. When this becomes reality, test providers will need to go through the years-long process of obtaining and valuing new codes which may deter pharma companies from selecting that test provider as a CDx partner.
Furthermore, just because a code is in place does not guarantee that the code will be valued, nor does it guarantee that the code will be paid. If a CDx provider decides to use established CPT codes in the US, it is possible to obtain immediate reimbursement. However, if the code stack becomes expensive enough or the volumes become high enough to get on the radar of payers, a test provider may need to enter negotiations with a payer. Conversely, if a lab provider opts to use a miscellaneous code to enable value-based reimbursement, payers will likely flag the claims for a review. Given the trend towards value-based reimbursement, many firms will opt to go the route of obtaining new codes to maximize revenues, but it will be a years-long process to achieve a new code, value that code, and obtain routine payment. The pros and cons must be weighed as to which approach best aligns with the goal of the test provider.
Precision medicine enabled by companion diagnostics holds great promise for the improved treatment of cancer patients. Early companion diagnostics were often IVDs that most, if not all, pathologists are able to accurately execute after acquiring the required testing platforms and kits. Next-wave companion diagnostics will likely use proprietary algorithms and/or expensive technology that pathologists may not be comfortable using, making them solid candidates for an LDT. Regardless of the approach, an IVD or a LDT can be an effective CDx strategy so long as the strategy is well-planned and well-executed. Ultimately, pharma will use the CDx approach that best allows access of their life-saving therapies to patients who need them.
Market Development and Commercialization Strategy Manager