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XDx, After a Long Slog in Molecular Diagnostics, Predicts First Profit in 2011

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a 600-patient study known as Image, which was described in April in the New England Journal of Medicine. The study found that the XDx test wasn’t inferior to the standard biopsy method, and enabled patients to undergo fewer biopsies, allowing for higher patient satisfaction. Four months later, the International Society for Heart and Lung Transplantation included the XDx product in its first set of professional guidelines for best practices.

Those were the two big validating events for XDx in the medical community this year, but that’s not enough for the company to declare victory. Reimbursement from insurers is the next step, and it’s a big one.

Because heart transplants are very expensive, patients are often in a pretty dire financial situation, Cassigneul says. Feedback from the field, especially from nurses, was strong that XDx shouldn’t place any extra financial burden on patients, through establishing a typical insurance-based billing procedure with co-payments. So when a doctor prescribes the XDx test, he or she doesn’t submit the bill for services to an insurer and then haggle over how much to get paid. Instead, XDx has agreed to carry that burden of insurance hassles as a company. So when a doctor prescribes the diagnostic test, XDx provides it, and then submits the bill to insurers and haggles to get paid.

This is where I’m sure the business schools would recoil in horror. It takes XDx about seven months to get paid by insurers, and between 30 to 40 percent of the time, insurers won’t pay, Cassigneul says. The company has to fight this battle, because its test is unique in medicine, and therefore gets filed under a “Miscellaneous” insurance reimbursement code—which is almost always a red flag for shenanigans in the claims department at health insurers. The company often asks doctors and nurses to get on the phone to help make sure insurers understand the test was performed, and it was considered medically necessary, Cassigneul says.

When I spoke with Cassigneul, he was in a pretty bullish mood, feeling confident that the New England Journal paper and the new clinical guidelines would help the company reach its sales goals and, eventually, turn a profit. He even got animated at the end of the conversation, talking about potential future diagnostics for those mass-market opportunities in autoimmune disease—lupus, for example. That would be the kind of test that could be taken by a lot more patients. But this year was mainly about winning over the skeptics, and building up a solid enough foundation to see if this model can turn a profit in its initial market, paving the way for tapping into even more fertile ground.

“We believe this will be the tipping point,” Cassigneul says.

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