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Palmetto Finalizes Coverage Determination for Veracyte Classifier

NEW YORK (GenomeWeb) – Veracyte said today that Medicare contractor Palmetto GBA has confirmed its local coverage determination for the Percepta Bronchial Genomic Classifier, a molecular test that identifies and screens patients with lung nodules who are at low risk of cancer following an inconclusive bronchoscopy.

With this local coverage determination, Percepta became the first genomic test to be covered by Medicare for improved lung cancer screening and diagnosis, Veracyte said. Palmetto issued a draft local coverage determination for Percepta in September. The coverage, developed through the Medicare Molecular Diagnostic Services (MolDx) program, will become effective on March 13, and will provide a framework that other participating Medicare contractors may follow.

CGS Administrators, another participant in the Medicare MolDx program, has also issued a final LCD for the Percepta genomic test, and Noridian is also expected to finalize its draft LCD to cover Percepta, Veracyte said. Including those providers, Medicare will cover use of Percepta for around 35 million beneficiaries, or nearly two thirds of the 57 million Medicare beneficiaries in the US.

Percepta is a 23-gene classifier that uses genomic technology to detect molecular changes that occur in the epithelial cells lining the respiratory tracts of current or former smokers with lung cancer. The classifier makes it possible to monitor patients with CT scans and avoid diagnostic surgeries.

"Significant clinical evidence supporting Percepta … [will] be key to gaining private insurance coverage and driving the test's adoption as we begin to ramp up commercialization," Veracyte Chairman and CEO Bonnie Anderson said in a statement.

By Veracyte's estimates, the US market opportunity for Percepta is between $425 million and $525 million, and the firm said it expects the market to increase as lung cancer screening programs expand. Around 50 percent of the current market consists of patients covered by Medicare.

Leerink analyst Puneet Souda wrote in a research note today that the investment bank is modeling a 2 percent penetration of the market for Percepta by year-end, with an average selling price for the test reaching $2,000. He added that the price could increase to $3,000 in the longer term as the firm establishes contracts with private payors.

Veracyte shares were up 1 percent to $7.64 in Monday morning trading on the Nasdaq.

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