Articles on Pharmacy Benefit Management

Featured Health Business Daily Story April 6, 2009

Personalized Medicine Is Growing, but Health Plans Need Policies for Coverage

Reprinted from DRUG BENEFIT NEWS, biweekly news, data and business strategies for health plans, PBMs and pharmaceutical companies.

The pace of personalized medicine is accelerating, with roughly a dozen new therapies expected to hit the market between now and mid-2010 that will be paired with a genetic test, according to some experts. Pharmacy executives at health plans and PBMs say new data also are expected soon that will help Rx payers sort out which of these and many other pharmacogenomic screenings provide true clinical value and should be covered.

The use of personalized medicine will become increasingly popular in the coming years as both providers and payers recognize the ability of tailored therapies to enhance the practice of medicine and reduce costs over time, including by avoiding adverse events, say proponents.

"Making such tests the standard of care can significantly reduce waste, improve patient care and raise the safety profile for powerful new medications," according to Felix Frueh, vice president of personalized medicine research and development at Medco Health Solutions, Inc.

But Frueh also noted the need for more comparative data of genomic testing versus standard of care without the use of personalized medicine.

"Pharmacogenomic outcome studies are key and critically important, and they are also growing in number," he told a Feb. 26 AIS audioconference on personalized medicine. "In the next few years, we will see the results of many of these studies [that] really help us make decisions on whether or not the clinical impact is sufficient and the economic considerations are affordable."

Determining a Return on Investment

Such data will help health plans, PBMs and other Rx payers determine whether the tests demonstrate a positive return on investment (ROI).

Frueh noted that potential savings from the testing include a reduction in the number of hospitalizations and physician visits because patients are put on the right medication at the right dose earlier, he said. Savings also include the potential for increased productivity as a result of patients being less ill and missing fewer days from work, he added.

For example, a $500 test for the HER-2 gene could determine whether spending $50,000 for the breast cancer therapy Herceptin (trastuzumab) makes sense, since the drug fails to work in two-thirds of patients who are HER-2 negative. "If you calculate the return on investment as the savings ratio to the cost, it ends up being about 17 to 1," Frueh said. "The very significant ROI ratio points to the simple fact that this is probably not a problem test for clinical use as well as for reimbursement."

On the other hand, it is more difficult to determine an ROI for genetic testing used with the blood thinner warfarin. The test costs roughly $150, and the cost of hospitalization due to hemorrhage is roughly $13,500, Frueh said. It would require testing 50 individuals to prevent one hospitalization, for a total cost of $7,500. This works out to a roughly 1.8 to 1 ROI, he said, pointing out that other factors may also come into play. "The point is, the ROI here is less clear," he added.

Meanwhile, some genomic testing should not be viewed from the perspective of a financial ROI, he said. A genetic screening can help prevent potentially fatal hypersensitivity reactions from the use of the HIV drug abacavir and epilepsy drug carbamazepine in patients with a genetic predisposition, he explained. "Even if the cost calculation would return an unfavorable return on investment, these ethical considerations may trump the ROI assessment."

Payers making coverage decisions for genetic tests must, among other things, weigh the tests' effect on reducing absolute risks versus relative risks, he explained.

"If we reduce the risk by 20%, that may sound very intriguing," he says. "However, if that improvement is over a 1% absolute risk, that may not be all that relevant." Still, he acknowledges that even a 20% improvement over a 1% absolute risk in the area of cancer might be viewed as a move in the right direction.

The Regence Group takes a three-pronged approach to reviewing evidence around genomic testing, said Diane Priebe, supervisor of medical policy at the insurer that operates Blue Cross and Blue Shield plans in the Northwest and another speaker in the audioconference. These are:

• Analytic validity: Does the test accurately identify the gene marker of interest?
• Clinical validity: Does the test accurately identify/predict the clinical response to a drug?
• Clinical utility: Compared to establish treatments, does the test provide information that will improve decisions concerning drug selection or dosing?

"When determining the clinical utility, we feel the best evidence comes from prospective randomized trials that compare treatment decisions with genotyping with treatment decisions made on the best current standard of care," Priebe told the audioconference. "That's not always possible, and there are some issues where we need to look at evidence that doesn't come from randomized trials," she said.

The value of many marketed genetic tests is unknown, said Lynn Nishida, director of pharmacy services at Regence. "Even if it is FDA approved, the question of its clinical utility is not always answered," Nishida told the audioconference, noting that the tests may range in price from $50 to $2,000 and higher.

Nishida also pointed out that genomics is a growing industry, which includes direct-to-consumer advertising and marketing.

In 2007, Regence received 55,100 medical claims for genetic tests, representing more than $5 million in billed claims. "That is the genetic tests we could identify using CPT codes," Nishida said. "That doesn't even address some of these other tests that are bundled and billed when they receive them in the hospital."

In designing policies, health plans should first identify the tests that can be automatically approved, she said. "What you're trying to do is narrow down your focus to those genetic tests that you are going to have a more thorough review for medical records," she said of the tests that may be considered investigational or have not yet been shown to have value.

To purchase a recording of the Feb. 26 AIS audioconference on personalized medicine, please call (800) 521-4323 or click here.

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