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Top PGx Reporter Stories of 2013 Focus on Reimbursement, Regulation, Gene Patenting

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Originally published Dec. 20.

In 2013, PGx Reporter readers were most interested in stories that covered the ongoing reimbursement challenges for molecular diagnostics developers, the evolving regulatory landscape for personalized medicine products, and a landmark case in which the Supreme Court deemed isolated gene sequences patents ineligible.

The piece that topped the most-read list in 2013 was about the closing of Pathwork Diagnostics, a firm that marketed a multi-gene expression Tissue-of-Origin test. The popularity of the story speaks to the ongoing volatility experienced by industry players in the personalized medicine and molecular diagnostic markets. Pathwork seemingly did everything right – the firm had twice garnered FDA clearance for its test, had conducted large validation studies and published them, had conducted cost effectiveness analysis, and had even garnered Medicare coverage.

However, what did the company in may have been the low or inconsistent payment levels the firm was receiving for its Tissue of Origin test from payors, a thorn in the side of many molecular diagnostics labs throughout the year. In its bid to garner greater clarity on the types of tests it is paying for, the Centers for Medicare & Medicaid Services officially did away with CPT code stacking or bundling for molecular tests and adopted around 100 analyte-specific CPT codes issued by the American Medical Association.

However, when Medicare contractors issued pricing for these new codes, the reimbursement levels in many cases were lower than the cost of performing the tests, diagnostics developers complained. The Coalition to Strengthen the Future of Molecular Diagnostics, an interest group representing labs and test developers, estimated that initial pricing issued by Medicare contractors represented cuts in payment rates of around 20 percent for many tests and as much as an 80 percent reduction for some diagnostics, compared with 2012 levels. CMS's national payment limit for 2013 and 2014 for molecular diagnostic codes was a slight improvement over initial rates – a median uptick of 6 percent and an average increase of 26 percent compared to earlier proposals, according to one assessment – but still not high enough for many industry players.

Besides reimbursement, regulatory action – or mere talk of regulatory action – by the US Food and Drug Administration continued to pique readers' interest. In 2013, the FDA's major achievements included finalizing the controversial guidance on research-use and investigational-use in vitro diagnostics; clearing the first next-generation sequencing platform, Illumina's MiSeqDx; and issuing a caustic warning letter to 23andMe, calling the direct-to-consumer testing firm out for failing to submit the necessary validation data to garner regulatory approval for its tests.

But well before making these moves, FDA leaders raised eyebrows this year by strongly asserting the agency's position on lab-developed tests, RUO/IUO-labeled products, and DTC testing, just in case anyone thought the FDA had given up on these divisive issues. Before thousands of cancer researchers and industry representatives, FDA Commissioner Margaret Hamburg spoke about the agency's continued intent to develop risk-based regulations for LDTs.

"The agency is working to make sure that the accuracy and clinical validity of high-risk tests are established before they come to the market," Hamburg said at the American Society of Clinical Oncology's annual meeting over the summer. "The risk-based framework that we have under development will ensure that diagnostics used in cancer treatment will provide medical professionals with a critical baseline for confidence in the tests they order for their patients. Our intent in considering what to do about LDTs is to provide for safe and effective diagnostics while promoting innovation and patient access."

Also at ASCO, research on genomically guided cancer prognosis, diagnosis, and treatment featured prominently. Given the march toward molecular strategies in oncology, it comes as no surprise that one of the top stories of the year was a feature investigating the growing importance of genetic testing in lung cancer.

Lastly, the US Supreme Court's ruling in Association for Molecular Pathology et al. v. Myriad Genetics was the news of the summer, and its aftermath continues to preoccupy the life sciences sector. In this case, the Supreme Court found that several of Myriad's claims on isolated BRCA sequences underlying its BRACAnalysis test comprised a law of nature and therefore was patent ineligible. However, the court upheld certain claims on cDNA, which the judges said do not exist in nature but are created in a lab.

Following this decision, several firms launched competing BRCA tests for hereditary breast and ovarian cancer believing that the Supreme Court's ruling opened up the market – long dominated by Myriad – for competition. However, Myriad promptly sued these labs, arguing that the court in its decision also supported novel applications of isolated gene sequences and that these firms were infringing its IP that protected just such applications.

To date, Myriad has sued six competing labs alleging infringement of its BRCA patents. Many of them have countersued Myriad. The outcome of these ongoing suits stands to significantly impact the future of the molecular diagnostic industry, particularly as the market moves toward next-generation sequencing hereditary cancer panels.


1. Pathwork Dx Defunct; Future of Tissue of Origin Test Unclear

2. Amid 'Chaos,' FDA's Gutierrez Offers Insights on Agency's Regulatory Stance on Molecular Tests

3. After Long Silence on LDT Regulation, FDA Commish Revives Thorny Topic at ASCO

4. GenomeWeb Feature: The Rise of Lung Cancer Genetic Testing

5. Personalized Medicine in 2012: Industry Takes a Wait-and-See Approach Due to Market Unknowns

6. In Gene Patent Ruling, SCOTUS Draws Line Between Product of Nature and Invention

7. Pfizer and Collaborators Developing Next-Gen Sequencing Test for Crizotinib Resistance Mutations

8. Facing FDA Warning Letter and Lawsuit, Can 23andMe Stay True to its DTC Credo in 15 Days?

9. Palmetto's Initial MDx Pricing Disappoints Industry; Raises Concerns about Business Impact

10. In Warning to Would-be Competitors, Myriad and BRCA Test Patent Holders Sue Ambry, Gene by Gene

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