How Companion Testing Is Expected to Improve Healthcare and Refine Medicare Auditing

The application of precision medicine, along with diagnostic testing, is expected to save billions of dollars.

The patient has cancer. Difficult to treat. An available drug might work, but with only 18 percent efficacy. It works only on patients with a specific exon mutation. The exome is that part of one’s DNA that can mutate and cause sickness.

The patient needs a diagnostic test to know if they have the mutation that guarantees the drug will work. Where is the test? The pharmaceutical company that invented the drug may hoarding the clinical trial data and continue to prevent development of the precision diagnostic testing technology needed to isolate those patients who can benefit.

Having no available test, doctors are left to prescribe the drug to all patients with this particular cancer including the other 82 percent for whom the drug has no efficacy because they lack the critical exon mutation, e.g., the doctors must prescribe according to disease rather than according to type of patient. A guessing game: will the patient be healed, or merely suffer terrible side-effects with no benefit?

The doctor has no way of knowing that except for the 18 percent of patients, all of the other prescriptions are medically unnecessary treatments. But there is no way to know which patients are in the 18 percent. Some cancer treatments cost $160,000 each. It adds up.

According to industry expert Bradford Power, “Whenever there is a companion diagnostic to a drug that predicts when it will be effective, it should be used, and often isn’t.”

Doctors are being cut off from the most effective diagnostic testing technology. Without these tests, disagreements between the healthcare provider and the auditor as to medical necessity devolve into clashes of opinion and a shouting match with reliance on outdated care delivery standards, often codified by poorly trained auditors. Accurate companion diagnostic testing would replace this fracas with a reliable and scientific standard for medical necessity, saving billions.

Precision Medicine

It is common for DNA Group when replicating to have small errors, but the body contains an astonishing ability to repair most of these errors. If it is not possible to repair, the person is more likely to get cancer.

One of the earliest breakthroughs leading to precision medicine was detection of a genetic marker. It was found that women who carry a mutation of the Breast Cancer Type 1 susceptibility protein encoded by the BRCA1 tumor suppressor gene, lose their ability to repair DNA as it replicates, and this raises the chances of contracting breast cancer. 

Over time, it was found that certain medications are more effective for women with the BRCA1 mutation. To learn if one has this mutation, sophisticated testing is required. Prior to prescribing such medication, testing must analyze the genome of the patient. The first such test was developed by Myriad Genetics in the early 1990s. Today there are seventeen BRCA tests ranging in cost from $185.12 to $3,030.00.

Testing is Essential to Precision Medicine

Since that time, precision medicine has grown as researchers have turned more towards genetics and molecular biology to understand pathogenesis. This has led to one breakthrough after another in creating medicine highly tailored to specific diseases, or to persons with a particular genetic make-up.

Precision medicine also known as “personalized medicine,” “stratified medicine,” or “P4 medicine,” is based on matching treatment to the characteristics of the patient (not merely to the disease). This matching raises the efficacy of a drug. But although the general concept of matching treatment to the characteristics of the patient is not new, these new precision approaches rely on understanding the molecular basis of a disease.

Over time, the number of approved gene-related diagnostic tests has grown. The Testing Fee Schedule published by the U.S. Department of Health and Human Services lists 1,874 tests, each with a separate American Medical Association CPT® code. The most expensive test is $12,000 for exome sequence analysis. The exome is 1.5 percent (40-million base pairs) of the total genome (3-billion base pairs) for a person. Genetic disorders are the result of mutated exons. The least expensive test is a urinalysis, going for $2.17 dollars.

This testing makes it possible to confirm or predict with great confidence that a particular medication will be useful for a particular patient with a particular disease.  In an ideal world, the use of all medications, particularly expensive drugs such as those for cancer, that can cost $160,000 per treatment, should be approved only after a reasonably conclusive test is completed. But that often is not possible. Why?

The Suppression of Diagnostic Testing

Alva 10 is a company that helps bring testing to the forefront of precision medicine. According to its founder Hannah Mamuszka, development of much testing is inhibited by leading pharmaceutical companies. This happens for two reasons: First, the nature of venture capital (VC) in innovation; Second, the economics of blockbuster drugs.

Venture capitalists, who provide the angel funding, and start-up monies for promising diagnostic companies, always are under pressure to get a rapid return on the capital they invest. This makes the start-up vulnerable to an inflow of funding from leading pharmaceutical companies who are relatively cash rich. Frequently, this “big pharm” capital investment is injected into the diagnostic start-up company without taking the customary shares. This highly sought-after money is much preferred over VC money which always demands ownership in the start-up, and sometimes seizes control.

Nevertheless, this money is not without strings. According to Alva 10, the pharmaceutical company often places restrictions on how the testing (diagnostic technology) is developed. These restrictions include (a) limitations on development of follow-up diagnostic technologies; (b) refusal to provide access to drug trial patient data; (c) other restrictions. In essence, leading pharmaceutical companies may exercise a veto over development of diagnostic testing technology.

Pharmaceutical companies also can stifle development of diagnostic technology when it fits its business case. Here is an example: Assume a company has developed a drug with 30 percent efficacy against all patients with a specific type of cancer. This is hardly a “blockbuster” drug. Is it worth it for the company to go through the approval process? After all, 30 percent efficacy is far from optimum. Business case analysis will lead the company to abandon further investment in the drug. It will continue its search for the next “blockbuster” drug, that would work against a much higher percentage of patients.

What happens, thought, if accurate companion diagnostic testing, could identify specific molecular and genetic characteristics of those 30 percent of patients for whom the drug would work?  This would mean that the drug could be produced, and then put on the market for those specific patients, and with a much higher efficacy. It would be prescribed only after an appropriate diagnostic test was completed. But since the drug is not effective for the entire population having that particular cancer, the pharmaceutical company will stop development of the drug, and also stop development of diagnostic and testing technology. 

Keeping Doctors in the Dark

Without the diagnostic testing that can be developed for precision medicine, doctors are left in the dark. They are told that a medication may be 60 percent effective against a particular disease and so they prescribe it to everyone with the disease. They know that 40 percent of the patients will see no health benefits, and also sometimes suffer from serious side-effects.

When the drug has no effect, it is easier to argue that the drug was not medically necessary.

What the doctor needs is the diagnostic testing to screen out the 60 percent of patients who can be helped. But this would be in direct economic conflict with the pharmaceutical company. Accurate testing would mean that only 60 of 100 patients would receive the medication; no testing means that there are 40 percent more sales.

Audits and Medical Necessity

For some very expensive oncology treatments, the United Kingdom and Korea have put in place requirements that precision diagnostic tests must be done prior to administering the drug, otherwise there is no reimbursement. This obviously leads to significant savings for those national health plans.

Should the United States do the same? There are many advantages to mandatory testing for these expensive medicines: (a) there is a higher probability that the drug will match the patient and have positive benefits; (b) patients for which the drug is unlikely to work, even though they have the same affliction, would not be given the drug, and would not suffer any side-effects; (c) the overall expenditure on these drugs would decrease, leading to giant savings.

For medical necessity, the picture would become clearer. If auditors required this testing, then it would in essence define medical necessity in concrete rather than more subjective terms. This would lessen the uncertainty for the health care provider.

A National Program for Precision Diagnostics

In its most recent budget, the U.S. Congress allocated $52 billion in subsidies for the semiconductor industry. For cancer alone, the care in the United States is more than $160 billion per year, with more than $21 billion In out-of-pocket expenses paid for by patients.

But cancer is only the second leading killer, and only one target of precision medicine. If we add together all the costs of our most deadly diseases, it totals hundreds of billions per year. These leading killers (heart disease; cancer, Alzheimer’s, diabetes, influenza and pneumonia, nephritis) are precisely the areas where precision medicine shows the greatest promise.

It is time for the United States to provide massive subsidies to the diagnostic and testing industry for precision medicine. This would help cut the cord with dependence on investment monies from leading pharmaceutical companies. In addition, the rules regarding ownership of patient data might be modified to provide exemptions for development of advanced precision diagnostic testing. Like what happened in the financial services industry when banking was separated from equities; regulations could separate the pharmaceutical companies from development of diagnostic testing; and prohibit hoarding of trial data.

Everyone would benefit: patients, providers, and especially the payers. The auditors would love it because they would be able to establish more unambiguous standards for medical necessity. Lawyers might hate it because there would be less argumentation. Insurance companies would be able to avoid paying for dispensing of costly drugs that will have no effect on those 88 percent.

In sum, the astonishing breakthroughs in precision medicine will not be available to patients without the benefit of companion diagnostic testing.