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Medco Acquires DNA Direct to Expand PGx Offerings with Genetic Education, Testing Decision Support

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Originally published on Feb. 2.

By Turna Ray

Medco Health Solutions' acquisition of DNA Direct this week will bring genetic testing guidance and utilization expertise to the pharmacy benefit manager's personalized medicine efforts.

Already a pioneer in incorporating pharmacogenetic testing into its PBM programs, Medco's decision to buy DNA Direct signals its intent to be a "one-stop shop" for payors and employers interested in using genetically guided medicine to make healthcare more efficient and lower costs. By integrating DNA Direct's healthcare support services with its pharmacogenetic test offerings, "Medco intends to deliver a broader suite of precision health services, ranging from consumer education to clinical decision support," the PBM said this week.

Medco, one of the largest PBMs in the US serving more than 60 million people, is already offering PGx testing services for widely prescribed drugs, such as warfarin and tamoxifen, to 200 customers serving 7 million lives. Last year, Medco launched the Genetics for Generics program, which aims to use genetic testing to increase healthcare savings in the administration of certain generic drugs [see PGx Reporter 10-07-2009].

"We had a choice — that we could build or we could acquire a company that already had customers and experience," Medco's Chief Scientific Officer Robert Epstein told Pharmacogenomics Reporter this week. "We figured [DNA Direct] could accelerate our speed-to-market [and] they could provide us with more depth and breadth, allowing us to go beyond pharmacogenomics to the rest of genomics. They had a lot of scientific and clinical expertise with full-time genetic counselors on staff."

According to Epstein, in the two years since Medco has launched its personalized medicine program, the interest from customers has grown rapidly. "In the 15 years I've worked here, I've never seen a service take off like this," Epstein said. Medco acquired DNA Direct with an eye toward expanding its personalized medicine service offerings to its existing customers and garnering new enrollees to the program.

San Francisco-based DNA Direct provides genetic utilization management and web-based decision support services to healthcare providers and payors. DNA Direct is the first genomics-focused company to garner accreditation from URAC, a Washington DC-based health care accrediting organization.

DNA Direct's Genetic Call Center also provides genetic counseling services through the phone. Counselors are located in DNA Direct's San Francisco office and in locations throughout the US. These genetic counselors will work with Medco's specialist pharmacists to recognize genetic testing opportunities in a patient's medical record.

In January, the PBM introduced a new information system at its Therapeutic Resource Center headquartered in Whitestown, Ind., that would alert specialist pharmacists of pharmacogenomic opportunities within a customer's medical record, allowing the pharmacist to become an intermediary between doctors, labs, and the patient to facilitate genetic testing [see PGx Reporter 01-27-2010].

"We envision hooking up our Therapeutic Resource Centers with DNA Direct's genetic counselors," Epstein said. According to Epstein, Medco and DNA Direct are in the process of ironing out specific areas of collaboration between genetic counselors and pharmacists.

Another area of expertise for DNA Direct is in the area of physician education. Last year, DNA Direct began providing genetic information services to patients and doctors at El Camino Hospital's Genomic Medicine Institute in Silicon Valley [see PGx Reporter 03-27-2009].

DNA Direct and Medco plan to work together to educate healthcare providers, DNA Direct CEO Ryan Phelan told Pharmacogenomics Reporter this week. Medco has been actively engaged in increasing doctors' understanding and awareness of pharmacogenetic tests, after identifying a great need for physician education in this discipline.

A Medco/American Medical Association survey reported last year that while 98 percent of physicians understand the value of PGx, they don't feel they have sufficient knowledge to comfortably order such tests.

Additionally, in July 2009 the national insurer Humana launched a genetic guidance program through which DNA Direct provides education and preauthorization support for genetic tests "to make sure members get the tests they need and don't get the tests they don't need."

Within Humana's system the utilization and cost of genetic testing is increasing up to 25 percent annually, and according to the insurer's estimates, between 14 percent and 20 percent of all genetic tests are ordered inappropriately.

As a result, through the genetic guidance program with DNA Direct, Humana requires prior authorization for most genetic tests. Doctors requesting prior authorization for genetic tests will discuss with DNA Direct their patients' and their family's medical and genetic history, the reason for the test, and how the test results will be used to guide patient care. If through this process a genetic test meets Humana's prior authorization requirements, then it will be covered. If not, then physicians and patients can speak to a DNA Direct genetic counselor to discuss other options.

Humana isn't the only insurer concerned about erroneous or unnecessary genetic testing. Aetna and United Healthcare have instated prior authorization policies for Myriad Genetics' BRACAnalysis test. Data from insurers suggests that around 20 percent of requests for the test do not meet requirements for BRCA testing under their policy. Furthermore, United Healthcare has also noted that the wrong people were getting tested with Genomic Health's breast cancer recurrence test Oncotype DX for a time and has detected errors in test interpretation with HER2 testing prior to treatment with the breast cancer drug Herceptin [see PGx Reporter 08-12-2009].

It is likely that many of Medco's customers in the payor sector will be interested in similar genetic testing utilization management services through DNA Direct. However, Epstein added that the payors Medco works with "really span the spectrum of interest, from decision support to consumer information about what the right tests [for patients] are … all the way to utilization management."

DNA Direct's Phelan said that as a Medco subsidiary, DNA Direct will continue its current work with Humana, El Camino Hospital, and others.

Financial details of the acquisition were not disclosed.

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