The Centers for Medicare & Medicaid Services, which administers the federal Medicare insurance program, will begin covering FDA-approved diagnostic tests that scan tumors for a range of genetic mutations. The news is a boost for companies like Foundation Medicine and Thermo Fisher Scientific, who are among the few firms with such tests on the market.
Late Friday, the CMS said that, going forward, it will start to reimburse for tests that use DNA sequencing technology to map the tumors of patients with advanced cancers once approved by the FDA. Two of the already-approved tests fitting this description are FoundationOne CDx, from Cambridge, MA-based Foundation, and Oncomine Dx Target Test, from Waltham, MA-based Thermo Fisher Scientific (NYSE: TMO). FoundationOne CDx looks for 324 cancer-related alterations in patients’ DNA. Foundation amasses a report based on the results and sends it to doctors, who use the data to suggest possible treatments. Oncomine detects 23 genetic alterations associated with non-small cell lung cancer.
From now on, CMS will also immediately cover tests cleared by the FDA as companion diagnostics, as long as there are approved drugs on the market that clinicians can direct their patients to as a result. Doctors use companion diagnostics to select which drug to use to treat a patient. These tests look for mutations in a patient’s tumor that are specifically targeted by certain drugs.
Medicare patients with either stage 3 or stage 4 metastatic, recurrent, relapsed, or refractory cancers are now eligible to have an FDA-approved tumor sequencing test covered. Repeat tests will be covered only when a clinician makes a “new primary diagnosis of cancer” according to CMS’ statement.
Foundation’s test is cleared by CMS for patients with all solid tumor types. Oncomine is currently restricted to late stage lung cancer patients, but Thermo is trying to expand its use in other solid tumor types, such as the rare bile duct cancer cholangiocarcinoma, as well, according to Thermo director of public relations Mauricio Minotta. Foundation’s test can only be administered at its lab, while Thermo’s can be given at certified labs across the country, he says.
“We want cancer patients to have enhanced access and expanded coverage when it comes to innovative diagnostics that can help them in new and better ways,” said CMS Administrator Seema Verma, in the statement. “That is why we are establishing clear pathways to coverage, while at the same time supporting laboratories that currently furnish tests to the people we serve.”
The FDA in November approved FoundationOne CDx as a companion diagnostic for 15 targeted cancer therapies, among them the lung cancer drugs osimertinib (Tagrisso) and crizotinib (Xalkori), the ovarian cancer treatment rucaparib (Rubraca), and the breast cancer medicines trastuzumab (Herceptin) and pertuzumab (Perjeta). Foundation will begin selling the test commercially by the end of March. The company hasn’t announced a list price for the test, but another one of its tests, FoundationOne, costs $5,800.
Susan Hager, Foundation’s senior vice president of corporate communications, says the company anticipates FoundationOne CDx being reimbursed “at or above $3,000” in 2018. Minotta says CMS has yet to officially disclose how much it will reimburse for Oncomine. The price oncologists pay for Oncomine test depends on which lab—like LabCorp., for instance—they buy it from, but Minotta declined to offer more specifics.
Foundation has struggled for years to win reimbursement for its molecular profiling tests—particularly from Medicare and Medicare Advantage, which accounts for roughly 40 percent of its total tests in the U.S. Foundation began submitting claims to Medicare in 2013, but a payment backlog has grown as it still has yet to be paid for any of them. As of late 2016, Foundation hadn’t been paid for over 26,000 tests for Medicare patients, SEC filings show. The backlog has contributed to growing yearly losses for Foundation, even as its test totals have climbed.
In 2017, physicians ordered 67,375 clinical tests from Foundation in 2017, up 54 percent from 43,686 in 2016, and revenue climbed to $152.9 million in 2017 from $116.9 million a year earlier. Foundation still posted a $165.1 million net loss, compared to $113.5 million a year earlier.
Still, important progress has been made over the past year by the developers of targeted cancer medicines, which in turn is helping secure important regulatory decisions for the makers of cancer DNA tests. The FDA approved Merck’s (NYSE: MRK) immunotherapy pembrolizumab (Keytruda) in May 2017 to treat patients with a particular mutation, regardless of where their tumor originated. Agios Pharmaceuticals (NASDAQ: AGIO)) won FDA approval of enasidenib (Idhifa), a drug for people with acute myeloid leukemia and a specific genetic mutation. Loxo Oncology (NASDAQ: LOXO) is close to completing an approval application for a drug, larotrectinib, that targets a genetic alteration present in a number of different cancers. The more targeted therapies that enter the market, the more there might be a need to test simultaneously for a range of genetic alterations with a diagnostic like FoundationOne CDx, rather than looking for one mutation at a time.
These steps, in turn, are starting to boost the developers of the tests that use DNA sequencing techniques to scan for many tumor alterations at once. In 2017, the FDA approved Oncomine, FoundationOne CDx, and Memorial Sloan Kettering Cancer Center’s MSK Impact, which detects mutations in 468 genes. The agency also took steps to speed the path to market for these tests. It unveiled a new, quicker approval path for test developers, in which products approved by a third-party reviewer—the New York State Department of Health—don’t have to undergo a separate FDA review. And Foundation’s application went through the “parallel review” process, which led to both an FDA approval and a simultaneous CMS coverage determination.
How all of this will impact payers remains to be seen. Broad tumor profiling tests are most commonly used in clinical studies and major cancer centers, but have faced pushback from commercial payers for a variety of reasons. Foundation chief medical officer Vince Miller told Xconomy last year that the hope was parallel approval would be “another catalyst,” because Medicare acceptance is “often a lever with the third party payers.”
“As more health plans recognize their value, further adoption of these companion diagnostics will follow—enabling patients to benefit from improved health outcomes and better efficiencies in the cost of their treatments,” said Joydeep Goswami, Thermo’s president of clinical next-generation sequencing and oncology, in a statement.
Here’s more on Foundation, Oncomine, and the troubles cancer DNA tests have had gaining broader acceptance.