NEW YORK (GenomeWeb) – As an expert in the life sciences and healthcare field, Harry Glorikian has dispensed advice to various companies looking to develop and commercialize in vitro diagnostics. But with the scientific and regulatory landscapes shifting so rapidly, it's easy for a company to make a mistake that could set it back years and waste millions of dollars.
In order to help as many companies as possible, Glorikian has written a new book, Commercializing Novel IVDs: A Comprehensive Manual for Success. In it, he provides guidance on everything from how to put together a development team, to learning how to read healthcare data and life science trends, to developing a comprehensive strategy for navigating regulatory hurdles and gaining reimbursement.
As patients and doctors become more savvy about testing, and the science of personalized medicine continues to evolve, Glorikian hopes his manual will serve as a launching pad for companies that have valuable tests to contribute but that may need some help getting started.
Below is an edited transcript of the interview.
Why is now the right time for a manual like this?
I think there are several reasons. You've got tremendous financial pressure to lower overall healthcare costs balanced by incredible opportunities in the field. New markets overseas are opening up. There's a lot of public interest in things like the Cancer Moonshot and precision medicine. Patients are better informed and are starting to demand testing in some cases. The way we think about patients is changing so that we also need to think about them like consumers. There's a lot of potential in the IVD industry.
At the same time, there are substantial regulatory changes underway and reimbursement is shifting from a fee-for-service model based on volume to one based on value. Those are both incredibly complex topics with a lot of nuance. It's easy to get lost in the weeds when you look at them. And the IVD industry is directly impacted by both.
So, you have these forces, these challenges occurring at the same time. The industry is moving so rapidly, it's almost impossible to keep up. Therefore, the time is right for a manual like this. I'm asked repeatedly about strategy for the regulatory process, for the commercialization part, how to think about reimbursement. I kept hearing the same questions over and over, and realized that what the field needed was book like this: a manual where you could get an overview of the entire process and learn enough details to know what job functions you need to hire for or the right kind of questions to ask. It's not a how-to manual, with a step-by-step process to follow. It gives you not only the basics, but also tells you what pitfalls to look out for and suggestions to make the entire process as smooth as possible.
What's the biggest mistake companies are making in developing and commercializing IVDs?
The biggest mistake I see is not having the right people on their team. There's no way one person, or even a few, can be experts in every aspect of the IVD development process. It's essential to get someone who understands regulatory, someone who knows how to plan for reimbursement, a great project manager who can keep the development moving along and keep everyone on task. I'm not saying you should directly hire someone who can fill each job role. When you're a small startup, it might make more sense to hire consultants or even find someone who will work on a contract or part-time basis.
[The ideal mix of team members] depends on the product. Is it a pregnancy test? It is going to be in a consumer's hand? Is it going to be CLIA waived? Is it going to be in the central lab? Is it going to be in the field? But the must-haves, regardless of the product, are someone who understands the regulatory landscape, someone who understands reimbursements, and someone who can help you build the revenue model.
The second biggest mistake I see is failing to identify what the unmet need is. It doesn't matter if you have the latest and greatest IVD if there's no need for it. Is it easier for a doctor to just treat the patient based on the symptoms rather than have a test to definitively say whether or not a patient has a condition? If that's the case, why should they first use your test? What's the demonstrable value of your IVD?
I also see companies that are behind in understanding how data is driving the industry today. You should understand the big picture — from the gene or protein behind the phenotype, to knowing which is the best treatment or clinical trial for the patient and how it fits into actual patient care. Is it one test, one treatment, or is it a combination? Is it something that's never been used for a particular condition before, but makes sense once you know the underlying molecular defect? It's all made possible by data analytics. We have hospitals and healthcare systems coming on board to use Watson, other artificial intelligence platforms, to help them treat patients more efficiently and improve their outcomes. If your company doesn't know how it fits into the new paradigm, it's going to be tough to survive among the competition.
What do you mean when you say IVDs must have demonstrable value?
If you have a new drug that prolongs someone's life by one or two years, or cures a disease, it's easier to assign a value to it. When the IVD is a companion diagnostic and must be used before the drug can be prescribed, the value is there and it's tied to the treatment. You can calculate a quality adjusted life year or incremental cost-effectiveness ratio for drugs or procedures.
But IVDs are more complicated. So, you must show why your IVD has value. Is your assay less expensive to run than what's currently on the market? Does it have higher sensitivity, specificity, or positive predictive value? You need to make the case for why a physician should use your test instead of someone else's. It's not enough to just know that your IVD has value — you must demonstrate it. For some IVDs, this might mean showing how paying for a $1,000 test upfront can save $25,000 or more in overall costs. Look at whole-exome sequencing. At first, you have insurers and hospitals balking at paying the costs. Now, we have places like Geisinger that will cover it for some of their pediatric patients because they could eliminate other pricey tests, like brain MRIs.
IVDs can change the way the patient is managed or might give doctors insight into how you would manage the patient's family members. Especially when you are considering hereditary disorders and cancers, a test can give you a tremendous amount of information. IVD companies need to be better at communicating this.
The two buzzwords are clinical utility and cost effectiveness. There's no set definition of clinical utility, but it means determining how useful a test is, or if it changes a medical decision, or how it fits into a workflow. And it has to be meaningful. Cost effectiveness is a loaded question — I think of it as getting value for a product as long as you can show that a product materially changes the costs of managing a patient.
Are there any specific population trends you think are most important for companies to keep in mind as they work to develop diagnostics?
Two trends that are going to continue to shape not just the diagnostics industry, but healthcare in general, are digital health and the shift toward a payment-for-performance reimbursement system. We're already seeing how big data and data analytics, AI, and blockchain are changing how we manage patients and healthcare systems. How are IVD companies going to work within the new model, where Watson or other AIs are helping doctors find the best treatment, determine a diagnosis, etc.?
Shifting payment models are also transforming the industry. If you can't demonstrate that your product has value, you're dead in the water. It may not be as dire in the next year or two, but it's coming and you must be prepared.
The FDA recently said it is holding off on finalizing its LDT guidance. Does that change how companies should approach the development of LDTs, or how they should pursue regulatory approval?
With a delay in LDT guidance, companies should be thinking ahead. Would their device meet higher standards for clearance or approval? Would they have the right data to back up their claims? I think if you approach IVD development today, keeping in mind what FDA has indicated they might want to see in their draft guidance documents, you'll be better prepared for the future. If you don't have the data already, get it. What existing data can you leverage for your product? Can you work with the doctors and institutions that are regularly using your IVD to set up a retrospective trial? That said, I am interested to see what happens at FDA with the new administration. We might see fewer regulatory hurdles, which could stimulate innovation, or we might see things stay largely as they are now. And it's not just FDA that companies need to be thinking about. If you hope to get reimbursement for your LDT, it's becoming more important that you have the clinical data to back up why [you should get reimbursement]. In any case, if you're considering entering the market soon, you should move swiftly.
How should companies approach reimbursement? Should that be a priority?
Reimbursement must be a top priority for IVD companies, unless you're going after the direct-to-consumer market. And even then, why should the consumer choose your IVD over another one? This ties into the value being provided. You can't just set a price on what you think the device is worth — you need to show it has demonstrable value and price the device accordingly.
As healthcare moves away from the fee-for-service model, it's more important than ever to understand how your IVD fits into patient care and why it's valuable to clinicians and patients. We're seeing patients take on a greater burden of their healthcare costs, so you should reach them, too. Private insurers base their coverage policies on health technology assessments, which are largely based on peer-reviewed, published studies. Payers want to see clinical utility. Going into development, you should plan the appropriate studies, in the right patient populations, to collect the right data — and then publish those studies.
The payor expectation is that you're going to come to them and tell them why they should pay for a test and why anyone would use it. That's the responsibility of a diagnostics company to do all that homework. It's part of the cost of developing an IVD.
I tell companies, when you're doing your initial studies, think about what you're studying and what you want to prove. You have to think all the way to the end — how to get the data for my cost effectiveness and my clinical utility? How will that data affect my regulatory and reimbursement strategy? All of that data is meaningful.
Simultaneously, you need to think about marketing to physicians. I'm trying to convince both [payor and physician] to take on my test. For the payor, I need more numbers and that sort of justification. But questions on why a test will be ordered, how it will affect a medical decision, how it will be interpreted, all of that works for both sides.
When and how should IVD developers pursue partnerships with pharma or biotech companies?
Partnerships with pharma and biotech are great opportunities to expand into new markets and build greater market share into an existing one. But it can't be haphazard. If you're looking to pursue a relationship, you can do it early on, when you're at the product concept phase, or late in development, when you may already have preliminary data and want the partnership to take it to the next level. Both have their drawbacks and their benefits.
Either way, I think it's crucial to have transparency between the companies for what their goals in the partnership are. You've got to have open communication between them for a partnership to work. Both companies need to be realistic about what their needs are and there should be an up-front understanding about the duration of the partnership.
Is it better to pursue big markets like cancer where there may be more room for innovation, or is it better to pursue more niche markets where there may be fewer players to compete against?
This really depends on the IVD company and their goals, scientific expertise, and financial opportunities. There's a lot of room for innovation in the cancer market, but it's incredibly competitive. It's not enough to just have the "next big thing," and hope that investors agree. You have to be very calculated and be prepared for a potentially long timeframe between product launch and profitability/reimbursement.
Companies should also consider FDA regulations. If it's a really small patient population, the IVD could be developed under the Humanitarian Device Exemption, for example. So there could be fewer competitors for a niche market device, but that also means fewer consumer opportunities.
The book is available through www.insightpharmareports.com, a division of Cambridge Healthtech Institute. Individual print copies are $795 and PDF copies are $695. Single and global site licenses are also available, as are bulk or classroom copies.
Glorikian is currently finishing another book called Moneyball Medicine that discusses how big data and analytics are changing the way we practice medicine and deliver healthcare.