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How Will Labs Use Expanded Molecular Testing Capacities Post-COVID-19?


NEW YORK – With COVID-19 vaccinations beginning this week in the US, the country is entering a new stage of the pandemic that could ultimately end in widespread suppression of the virus.

The implications of this development for the lab industry are not entirely clear, but after almost a year spent building out molecular capacities to meet SARS-CoV-2 test demand, the question of what to do with that capacity in a post-COVID-19 environment looms on the horizon.

According to data from revenue cycle management and lab informatics firm Xifin, across the lab industry as a whole, as of Dec. 12, 2020, total testing volumes were 245 percent of baseline testing volumes, with around 55 percent of that volume SARS-CoV-2 molecular testing. While molecular testing labs have led the way, with volumes at 538 percent of baseline (and 79 percent of that volume due to COVID-19 molecular testing), all other segments of the business are also well above baseline, with pathology, clinical, hospital, and toxicology lab volumes at, respectively, 143 percent, 226 percent, 218 percent, and 267 percent of average baselines.

Most industry players suggested that the introduction of vaccines is unlikely to impact SARS-CoV-2 testing volumes in the near term and that demand would continue to be high for at least the next six months and potentially into 2022. Longer term, though, laboratories and platform manufacturers will likely be looking for ways to either shed molecular testing capacity or find new tests to put it towards.

"If people have taken on new platforms to do large volumes of molecular testing and those volumes are much bigger than any testing they ever did before, that equipment is probably not going to have a lot of use in that setting [post-COVID-19], and you'll have to make some hard decisions about whether you want to get rid of it or how you might try to repurpose it," said Robert Boorstein, medical director at Brooklyn-based Lenco Diagnostic Laboratory.

Having excess equipment on hand isn't necessarily a bad thing, Boorstein said, but it does come with costs in terms of service contracts and lab space. He added that if labs have purchased new equipment with potential menus beyond COVID, they may transition to those new platforms and retire older ones.

"However, if someone has bought equipment to do hundreds of thousands of molecular tests per month and their normal volume is 200 genetic tests per month, their infrastructure just isn't going to support that," in the absence of SARS-CoV-2 testing demand, he said.

Donna Hochberg, partner with Newtown, Massachusetts-based healthcare consulting firm Health Advances, said that one likely outcome of the recent molecular test capacity buildout would be to accelerate the uptake within the clinical microbiology lab of molecular methods, a trend that was ongoing even before the pandemic.

"What [labs] really see happening is this accelerating the switch from culture-based methods to molecular-based methods to the extent that that is possible with the technologies that they have," she said.

She noted, though, that while this transition would make use of some of the molecular capacity out there, "it's certainly not anywhere near being a blockbuster application for a lot of labs that is going to fill a lot of capacity."

"It will help, but it isn't going to be the solution," she said. "You're going to need some new content for that."

Boorstein suggested that many of the smaller hospital labs that once sent out much of their molecular testing to either a larger hospital or reference lab may now decide to keep that work in house.

"A lot of small and mid-sized hospitals might have had very limited molecular menus — maybe a point-of-care flu test and a MRSA test," he said. "But if they now have [a new molecular instrument] that they fought hard to get and are paying for, they may put [tests they previously sent out] on that instrument."

Jane Hermansen, manager of outreach and network development at Mayo Clinic Laboratories, agreed that many labs that added molecular capabilities to address SARS-Cov-2 would keep it post-pandemic.

"Hospital labs, pathology labs that have never even thought of being molecular laboratories in the past now have the equipment, and the equipment is easier enough to run that you don't have to have all the special capabilities you needed in the old days to actually have a molecular test menu," she said.

Hermansen added that her peers in the hospital reference lab world reported that instrument vendors were discussing with them how to use the molecular platforms they had taken on during the pandemic.

"Vendors are already working very closely with their clients to say, 'OK, today your capacity is tied up with COVID, but what are you sending out, and what can we actually slot in, in terms of reagents, so that you can now do those send-out tests in house?,'" she said.

Hochberg said that while it wasn't yet clear what molecular applications might help fill the capacity that will be left once the pandemic recedes, the lab industry's investments in building its molecular testing capacity had given IVD manufacturers an influx of cash that she expected they would put in part towards new test development.

"A whole lot of companies have money they did not expect, and it is big dollar values," she said, citing the example of a small IVD maker she follows that saw annual revenues jump this year from around $5 million to more than $100 million.

"Big and small companies that have gotten this COVID boost, our read is that they are starting to think about what they are going to do next," she said. "And I think pushing towards innovation and new content is really what they are going for, and I think that is what is going to end up using that capacity."

Hochberg said she didn't expect such innovation would be sufficient to make full use of current molecular testing capacity, but she said that she expected the influx of funds would help the industry "push through some innovation in some different types of tests and some novel content that it might not otherwise have been able to invest in or which could have taken much longer to push forward."

She said she anticipated these efforts would be put both towards further filling out infectious disease testing menus and in expanding into areas like oncology and neurological and autoimmune conditions.

Boorstein suggested that the molecular capacity overhang might not be as big as current test volumes suggest given that many labs are running at a pace far exceeding what they would in normal times.

"Most of our increase [in volume] has come by just going from five shifts a week to close to 20 shifts a week," he said. "We've significantly increased capacity by increasing the productivity of our existing instruments."

Hermansen similarly noted that at Mayo much of the capacity increase has been driven by running instruments around the clock as opposed to the typical one-and-a-half or two shifts per day.

"Although we have made some investments in equipment, I don't see it laying fallow," she said. 

Boorstein added that given SARS-CoV-2 testing volumes labs have in many cases already recouped the costs of the new molecular instrumentation they purchased for the pandemic.

Somewhat trickier, he noted, are current decisions around purchasing new instrumentation.

"I think the problem will be, if people are now looking at systems… and [vendors] aren't able to ship components for eight weeks, so it would be hard to imagine being live with it within three months," he said. "So what happens if you enter into this contract and three months from now your volumes fall off a cliff? I think a lot of people are afraid of this being a game of musical chairs, and they will be the ones left standing, having made commitments to buy equipment."

Hochberg said one way she is seeing labs address this concern is by opting for reagent rental agreements as opposed to purchasing instrumentation outright.

"Quite honestly … I don't have the answer," said Jon Cohen, executive chairman of Opko Health's BioReference Laboratories, regarding what his lab planned to do with the molecular capacity it had built up to address the COVID-19 pandemic. He noted that while the lab offers a variety of molecular infectious disease tests, it already had sufficient capacity for this testing prior to the pandemic.

"There's a chance that we may want to maintain [the capacity] and be prepared if there is anything else that comes down the line," he said. "I think probably that discussion will happen at some point, but I'm certainly not prepared to have that discussion yet. There's too much else going on."

LabCorp declined a request for an interview but noted in a statement that it anticipated continued demand for SARS-CoV-2 testing during and following rollout of the vaccine.

Quest Diagnostics spokesperson Kimberly Gorode said in a statement that even with vaccinations starting the company expected SARS-CoV-2 testing "will continue to be essential to clinical care and public health response for some time to come," and that Quest was continuing to expand testing capacity to deal with the ongoing surge in COVID-19 cases.

She added that at the beginning of the pandemic the company ramped up SARS-CoV-2 testing capacity in part by repurposing molecular testing equipment already in use for other types of testing such as viral load testing for HIV and HCV.

"We are looking at opportunities to further leverage the scope of these platforms in the future," she said.