Print BCTV: Saving Diagnostics - Breaking the 'vicious circle' impending diagnostics for precision medicine


Saving Diagnostics

Transcript of BioCentury This Week TV Episode 155




Sheila Taube, S-T Consulting

Robert McCormack, Head of Technology Innovation at Janssen Diagnostics

Kate Claessens, Director of Federal Health Policy and Reimbursement at Roche Diagnostics

Jeff Allen, Executive Director, FOCR




Oncotype DX




National Cancer Institute

Cobas BRAF





STEVE USDIN: The future of precision medicine requires innovative diagnostics, so why are high costs, inconsistent regulation, and insufficient reimbursement still holding it back? I'm Steve Usdin, saving diagnostics on this edition of BioCentury This Week.


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From cancer to mental illness, the best hopes for cures are precision medicines, treatments tailored to the characteristics of each patient. Precision medicine uses two kinds of targeting. First, drugs are narrowly targeted at the specific causes of disease. Second, drugs are targeted to only the patients who are likely to benefit. Precision medicines can work in many different ways, but almost all share a common characteristic.


An accurate diagnostic test is essential for drug development and deployment. Because they can prevent expensive and futile treatment and reduce toxic side effects, diagnostics are also powerful cost cutting tools. Despite their importance for modern medicine, it's becoming increasingly difficult to develop diagnostics.


Researchers from universities, diagnostics, and insurance companies, and patient groups say a vicious cycle of inconsistent regulation, poor reimbursement, and under investment in R&D is thwarting the development of cancer diagnostics.


For the perspective of companies that create diagnostics, we'll be joined later by Kate Claessens from Roche Diagnostics, and by Robert McCormack of Jannsen Diagnostics. We'll start our discussion today with Sheila Taube, former Associate Director of the Cancer Diagnosis Program at the National Cancer Institute, and Jeff Allen, Executive Director of Friends of Cancer Research, a think tank and advocacy organization.


Jeff, I want to start by kind of setting the stage here. What are we talking about what kind of diagnostics? Why are these are important for medicine for patients?


JEFF ALLEN: Sure. Well, I think we're at a really pivotal time in terms of cancer drug discovery. Historically, anticancer medicine was given to a more general population. These were chemotherapy agents that treated all types of cancer. But what we're really seeing now is due to increased research and understanding of the underlying biology of the disease is the ability to target medicine to certain cancer types based on their molecular characteristics.


STEVE USDIN: So really, if you're going to have a targeted medicine, you've got to have a way to target it. Otherwise you don't have a targeted medicine. That's the general idea, and these diagnostics are the target.


JEFF ALLEN: That's right. These diagnostics are responsible for identifying the populations that it is most likely to be effective in.


STEVE USDIN: So kind of what's the problem here? Both of you are co-authors of a paper that laid out what you call the vicious cycle. And you said that all of the issues, all of the elements in this vicious cycle have to be correct in order to make progress. Sheila, can you kind of give us a rundown?


SHEILA TAUBE: Well, one of the first examples of a targeted medicine was Herceptin, which was targeting a mutation in a gene in a proportion of breast cancer, early breast cancer patients. And only those patients who had the mutation in the gene responded. When the company came to the FDA with their drug, the FDA said, well, you need a test in order to identify the patients who will respond.


This is symbolic of many of the new targeted agents, and the problem is developing that test, and getting the appropriate patients, or patient specimens that will allow you to develop a test that says this patient will respond, and this patient will not.


STEVE USDIN: So in the paper that you both are co-authors of, you talk about some of the scientific issues, what you're just mentioning now. But you also talk about regulatory issues, you talk about R&D issues, and you talk about reimbursement issues. I want to start with the reimbursement part, because I think that's the toughest one. First, what's the problem, Jeff? And what are some of the things that might be done about it?


JEFF ALLEN: Well, I think it's challenging, because the field moves very quickly. So it's very difficult for large organizations to respond to these changes in care that are happening almost overnight. From the reimbursement standpoint, it's really a value judgment. And as health care costs continue to rise, adding more services on top of that is sometimes seen as a potential negative.


But what we're able to do with molecular diagnostics is better select the patients that are able to respond to the drugs. So the value judgment is if they are responding more, they're having better health outcomes. So the diagnostic is allowing that to happen, as well as having a positive impact therapeutic. They're equally as important in many situations.


STEVE USDIN: And Sheila - keep going.


SHEILA TAUBE: But traditionally, there has been a sort of invisible cap on what will be covered in a diagnostic, as opposed to a therapeutic. So a huge amount of money is put into development of a therapeutic, and the companies are allowed to charge in accord with that. What we identified was that that does not apply to diagnostics.


So the companies still have to put a lot of money into the development of the test, and proving that it has clinical utility, and does what it's supposed to do, but they are limited in what they can charge.


STEVE USDIN: So you used a key phrase there, clinical utility. And one of the more controversial recommendations, I think in your commentary is the idea that tests shouldn't be approved unless their manufacturers can demonstrate clinical utility. What is clinically utility and why is it an important issue?


SHEILA TAUBE: Clinical utility is a measure of improvement in patient outcomes. So, a test has to guide a clinical decision, and that clinical decision has to lead to improved outcomes for patients. And our perspective was that, why do a test if it doesn't lead to a decision that will lead to an improved outcome? So we said that you need to show clinical utility.


STEVE USDIN: And we'll talk about clinical utility more and some of the other regulatory issues in a moment. Friends of Cancer Research is working on an idea that could make development of companion diagnostics faster and cheaper. Here are the key points. We'll discuss the details in a moment.


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STEVE USDIN: What can be done to advance breakthrough diagnostics? We're talking with Jeff Allen and Sheila Taube about the challenges for precision medicine. Jeff, before we took the break there, we were talking about companion diagnostics and the idea that the Friends of Cancer Research has to create a pathway for breakthrough diagnostics. Can you tell me first, what's companion diagnostic, and what's the idea for a breakthrough pathway?


JEFF ALLEN: Right. So a companion diagnostic is essentially a test that determines the use or the non use of a specific therapeutic intervention. And due to the evolution of technology, these are oftentimes the molecular diagnostics based on complex scientific methods. And what we've been working on with a group of expert advisers is really when a companion diagnostic is needed to determine the use of a breakthrough therapy.


STEVE USDIN: And let's take a step back there. The whole idea of breakthrough therapy is actually something that your organization came up with in the first place. Briefly, what is it? There's been a lot of excitement about it.


JEFF ALLEN: Sure. So I'm working with a lot of partners. The breakthrough therapy designation was established in order to expedite the development of a particularly promising drug, one that has shown a high degree of activity very early in development. So the goal was never to reduce the amount of evidence, just look at ways to expedite its development program.


And oftentimes what we're seeing, what we think we'll see in the future is that these high magnitude of activity drugs will require a companion diagnostic to determine who should be receiving the drug. So what our group has been working on is looking at particular strategies for keeping the development time of the diagnostic in line with the compressed development time of an associated breakthrough therapy.


STEVE USDIN: So Sheila, from someone who has been working on diagnostics for a very long time, what's your feeling? Is there really a scope for compressing the amount of data that is required to get diagnostics approved so they can get onto the market more rapidly?


SHEILA TAUBE: I'm not sure that compressing the data itself is the issue. It's getting the data rapidly. And one of the issues relates to having specimens available in order to test the diagnostic, working with the FDA to ensure that there's a clear understanding of what needs to be shown, how you would define clinical utility in this particular case.


And for targeted diagnostics, that's more clear cut, because you have a target.


STEVE USDIN: You get the target . . .


SHEILA TAUBE: And you can test for it. However, there have been examples where it wasn't so easy to find a target. So in those cases, there's a lot more research that has to be done.


STEVE USDIN: And Jeff, one of things that's interesting, that Sheila mentioned was about specimens, about keeping specimens. That's another one of your recommendations, it's kind of a radical idea that you recommend bio-specimens be kept from all clinical trials, and then that there can be some kind of common access for researchers to get access to that. Can you explain that, and how could that work?


JEFF ALLEN: Right. So I think that the hope is that if we streamline as a research enterprise, the collection of bio-specimens, research along the continuum of drug development will be improved. So not only looking at potential biomarkers pre-market, but even trying to refine the understanding of the associated therapies throughout the life cycle of the drug. And this can only be done with high quality samples.




SHEILA TAUBE: And a quick example was the development of the Oncotype DX, which was able to be developed because specimens were available from randomized controlled trials.


STEVE USDIN: And you could go back and look at them.


SHEILA TAUBE: And you could go back and look at them.


STEVE USDIN: Well, thanks. As we've heard, diagnostic companies are caught between demands for more evidence and payment rates from an era when tests were much simpler. In a moment, we'll hear from executives at two companies that create cutting edge diagnostics.


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STEVE USDIN: Diagnostics companies walk a tightrope when creating cutting edge diagnostics. Regulations require ever more evidence, but payment rates haven't kept up. So how does a company turn science into diagnostics in today's world? Joining us now is Kate Claessens, Director of Federal Health Policy and Reimbursement at Roche Diagnostics, and Bob McCormack, Head of Technology Innovation at Janssen Diagnostics.


Kate, I want to start with you. In today's world, how can you make the argument that the healthcare system should actually pay more for something? That's pretty tough.


KATE CLAESSENS: It's very tough, and I think the system has a lot of room for improvement. I think the time is ripe for that improvement. I think we have to explain, particularly to payers, particularly to Medicare, that leads the way, why investing in a diagnostic test that is going to direct a very expensive therapy, in most cases, is where our scarce healthcare dollars need to be invested. And I think it needs to happen now. I think the time is ripe on the reimbursement side.


STEVE USDIN: So how do you make that argument? In brief, what's the argument for saying that tests, payments now, that they're being underpaid for them, and that Medicare should pay more for them?


KATE CLAESSENS: I think it's paying appropriately, and not paying more. I think that the tests have been traditionally undervalued. We are seeing Medicare lead the way in looking at robust clinical evidence that shows a change in patient outcomes, better health care for the population, and better using the dollars to reach that goal.


STEVE USDIN: So Bob, a critical component of that, if you're going to be expecting payers to pay more for a diagnostic test, it's this idea of clinical utility. They've got to know that they're paying for something that actually makes a difference. What does that mean from the standpoint of companies that are manufacturing tests?


ROBERT MCCORMACK: So from a manufacturer's point of view, I think all of us see the value in clinical utility, and I believe it's necessary to help the providers, to help patients. The problem comes in in that, as people know, the FDA does not require clinical utility. Payers are now asking for clinical utility.


So if you put it all together, by the time a manufacturer develops a test, demonstrates analytical validity, clinical validity, and then goes on to do a prospective trial for clinical utility, the time to commercialization is substantial, the cost is even more substantial.


STEVE USDIN: So to break down a little bit some of those pieces, the idea of analytical and clinical validity, it's basically does the test measure what you say it's going to measure accurately?




STEVE USDIN: And then you've got this other hurdle of clinical utility, which is does that really make a difference in anybody's clinical decisions?


ROBERT MCCORMACK: Absolutely. And that's why earlier, when you spoke about sample banks, it becomes very, very important if in fact we need to demonstrate clinical utility, that we have well pedigreed sample banks to use to help us shorten that timeline.


STEVE USDIN: So Kate, you said that Medicare's leading the way. That's interesting. Most people don't think of Medicare leading the way around on anything. What do you mean by that?


KATE CLAESSENS: Well, I think Medicare, in particular one program looking at molecular diagnostics has looked at evidence-based medicine, and tests that are accurately predicting which patients should get the therapy, and which patients should not get the therapy. And from the largest payer in the world, I think they're setting the stage for the fact that that is very important.


And from Roche's perspective, where personalized healthcare is our cornerstone and our mission, and we're unique in that we have both diagnostics and pharmaceuticals under one umbrella, we're the leader here, and we have made inroads. For example, with our cobas BRAF test, with the companion therapies Elbaraf. That test has been recognized under this unique Medicare program.


STEVE USDIN: Let me just stop you. That's for melanoma, right?


KATE CLAESSENS: Yes. For metastatic melanoma.


STEVE USDIN: A breakthrough therapy for melanoma.


KATE CLAESSENS: It's a breakthrough therapy, sometimes called the Lazarus drug. It has such an enormous effect immediately on patients, and that test has been recognized as being accurate, reliable, providing the right patient population for the drug. And we have been given a unique coverage policy, and also a unique reimbursement policy that takes into account the large investment Roche has made in R&D.


STEVE USDIN: And a unique reimbursement policy also means actually you're getting paid more for it than companies that haven't produced that kind of evidence. And Bob, do you think that's an appropriate way to -- maybe the market could just sort this out. You get paid more for a test if you've demonstrated clinical utility?


ROBERT MCCORMACK: Absolutely. I think the price a test receives should be incumbent upon the evidence behind it. And I think we're moving in that direction, and that's the right direction to go.


STEVE USDIN: So Bob, one of the arguments in favor of molecular diagnostics and advanced diagnostics is that they actually save the healthcare system money. Can you give us some examples of how that works, and how it might work?


ROBERT MCCORMACK: Absolutely. So for example, the use of a drug. If you have a test that's targeting a drug, if you can identify a priori the individuals that will or will not respond to that therapy, first off, your trials are smaller because you're only testing, essentially, those that are going to respond.


But moreover, for the patients who are not having their cancers driven by that mutation, they're spared the drug, they're spared the expense of the drug and potential side effects, and they could be moved to perhaps a more appropriate therapy.


STEVE USDIN: So Kate, is that part of what diagnostics developers have to do now, is to develop the economic argument for their products, as well as the clinical, the medical arguments for them?


KATE CLAESSENS: I think that that's where we're moving toward. I don't think that has been the case in the past. I think the reimbursement has been based on resource use, as opposed to the clinical value the test is bringing. And I think that is changing. I absolutely agree, and I think we have to look at value, as Friends of Cancer Research is doing, in terms of patient outcomes and overall savings to the health care system.


STEVE USDIN: You know, value means different things to different people, depending on where you're sitting. But one of the ways to look at this is to say, well, maybe diagnostics have been undervalued. A corollary to that might be to say, well, maybe the drugs have been overvalued, instead of saying because there isn't going to be more money for health care. That's just not going to happen.


Is part of the answer here that there needs to be a shift? That maybe some of the money that's being spent on cancer drugs that cost more than $100,000 needs to go to some of the diagnostics, and kind of redistribute it that way?


KATE CLAESSENS: Different payment system. I think there is more flexibility in the drug payment system than in the system set up for diagnostics. There could be an argument for reallocating some of the siloed diagnostic payment systems, hospital payment systems, outpatient systems to reallocate resources more appropriately, which I do think is happening in Medicare.


STEVE USDIN: And another thing when we're talking about resource allocation is basic research. Does more research need to be done on the kind of the mechanisms underlying diagnostics?


ROBERT MCCORMACK: Absolutely. Technology's moving quickly. Our understanding of it is trying to catch up. I think many things have been put in place, like for example, trials that help us educate by pooling our resources to understand what the findings are. But I think we need to have a better understanding of the biology, and how it all interrelates before we really master personalized medicine.


STEVE USDIN: Coming up, some final thoughts about improving innovation ecosystem for diagnostics.


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STEVE USDIN: Now let's get some final thoughts from Bob McCormack of Janssen Diagnostics, and Kate Claessens of Roche Diagnostics about turning science into diagnostics. Kate, what's at stake here, really? What is it that we have to gain if we get these policies right? What are the kind of things that we're going to achieve?


KATE CLAESSENS: We're going to achieve better health for patients. We're going to achieve better population health, and we are going to give clinicians the tools they need to make the appropriate therapy decisions for patients. And I have to say, at Roche, the patient is the center of what we're trying to focus on here, and diagnostics is critical. It's key.


STEVE USDIN: Bob, what are some of the kind of low hanging fruits that we think of? There are all these things that we've talked about, that are problems. What are some of the things that would be easiest to do that would make a big difference?


ROBERT MCCORMACK: So, what would be easiest to do, I think, is to not make it look like it's LDTs versus IVDs.


STEVE USDIN: Let's back up and explain to people briefly what that is.




STEVE USDIN: LDT means Lab Developed Test. Those are tests that are performed in laboratories, and they're not necessarily approved by the FDA. And IVDs, that's tests that are approved by the FDA as kits, and used by multiple laboratories.


ROBERT MCCORMACK: Absolutely. Absolutely. And my point is I don't think it comes down to one or the other. I think everyone believes there's room for both. I think what is really needed is clear oversight for all diagnostic tests that everyone can predict and understand, and follow. The second thing is I think we need to have a clear understanding about clinical utility, when it's required, and how to obtain it.


And thirdly, as we've been talking about, I think it's imperative that diagnostic companies that make an investment in their technology to enable personalized medicine should be reimbursed accordingly.


STEVE USDIN: Well, it's interesting. So, Bob started with this idea of the so-called LDTs, the lab tests versus the tests that are sold as kits and that are approved by the FDA. That's a very controversial issue. There's a lot of members of Congress who believe the FDA should keep their hands off of lab tests. What do you think? What does Roche think?


KATE CLAESSENS: Roche believes there is a place for lab developed tests, however, when there is an FDA approved kit available that has the robust evidence and the precision, we do believe that that is the test that payers should choose to reimburse, and reimburse appropriately.


STEVE USDIN: So you're saying, basically, the market can make the decision. Do you think that FDA should expand and exercise what it says its regulatory authority is over the labs?


KATE CLAESSENS: Yes, I do. I think for patient safety, however, we believe strongly there should be a risk based approach to that oversight. And when we're looking at class three devices, for example, our cobas BRAF test, we want to be sure that all of those tests out there, LDTs and FDA approved kits that have gone through the scrutiny are appropriately regulated.


STEVE USDIN: And Bob, you talk about clinical utility, we've been talking about it for this whole show, is that something that the regulations should be changed, so that a test can't be approved unless there's clinical utility, or is it something that the marketplace can take care of, and just payers can say, well, we're just not going to pay for it?


ROBERT MCCORMACK: No, I don't think it should happen the latter way. I agree with Kate. I think it should be risk based. I think clinical utility should be required in certain instances, and there should be a clear understanding of when it's required, and how to obtain it.


STEVE USDIN: And that's easy to say. Are the standards in place so that we can actually know in advance, prospectively, what needs to be demonstrated to show clinical utility?


KATE CLAESSENS: Well, I think that's how Roche is looking at designing our pipeline products. We're looking at that now as our endpoint to ensure that the diagnostic test that will drive the therapy is going to make a difference in how that doctor decides to treat the patient.


STEVE USDIN: Thanks very much. That's this week's show. I'd like to thank my guests, Jeff Allen, Sheila Taube, Robert McCormack, and Kate Claessens. Remember to share your thoughts about today's show on Twitter. Join the conversation by using the hashtag #biocenturytv. I'm Steve Usdin. Thanks for watching.