Shift in diagnostics landscape laden with far-reaching consequences

Print 22 October 2015
Mari Serebrov / BioWorld

"Proceed with caution" is the advice the U.S. Patent and Trademark Office (PTO) handed Congress in a report on the availability of confirmatory gene-based testing.

Despite the clamoring for access to second-opinion testing that led to the Supreme Court striking down the patentability of the genetic discoveries underlying key diagnostics, the PTO told Congress it found little demand for the confirmatory testing and predicted long-reaching consequences from the court's recent decisions, given the linchpin role genetic testing plays in precision medicine.

To date, tests have been developed for more than 5,800 genetic diseases, with hundreds of laboratories in the U.S. providing the tests, the PTO said. But only about 1 percent to 5 percent of patients who have undergone a primary genetic test have needed a second test to confirm the results. That low number may be due to lack of insurance coverage for a second opinion more so than restrictive patents, which the PTO said incentivize innovation and require beneficial public disclosure of scientific and technological advances.

As a result of the the Supreme Court decisions in Mayo and Myriad, the future success of genetic diagnostics – whether for first-time testing or confirmation – likely will depend on market demand rather than patents, the PTO said.

While the court's rulings may open the door to multiple test providers, including university-based molecular pathology laboratories, the PTO pointed out that more isn't necessarily better. For instance, the inability to patent significant discoveries could discourage diagnostics companies from developing and marketing new, innovative tests because of the risk that they wouldn't recoup their investments.

Other consequences include a high variability in the quality of "home-grown" tests and a fragmented market that would limit access to testing since smaller labs wouldn't have the resources to serve a broad population, according to the report.

Multiple tests also raise questions about data and reliability. "Aggregated data residing with a single provider offers the most reliable results, whereas data fragmented and unshared among multiple providers is less reliable," the PTO said.

On the other hand, the report noted, data exclusivity could lessen a single provider's incentives to improve the quality of its testing and impede follow-on innovation, especially academic research.

One option that's been suggested is to authorize providers for confirmatory testing only. The problem with that, the PTO said, is there would be little to stop them from unlawfully marketing their diagnostics for primary testing to cover their investment. Subsequently, primary testing providers would have the added cost and burden of monitoring confirmatory testing practices.

Mindful of unintended consequences, the PTO urged Congress to proceed cautiously with legislative reforms, reminding lawmakers of the need to maintain an ongoing balance between supporting incentives for innovation and achieving access for consumers. The report also offered Congress a few other recommendations:

• monitor changes in the actual availability of gene-based diagnostic tests from multiple providers;

• consider creating mechanisms to facilitate sharing data on diagnostic correlations to build robust databases of the relationships between genetic mutations and specific medical conditions;

• consider the role of cost and insurance in confirmatory testing.

In addition, the report stressed the need for policy decisions based on fact rather than the vacuum of emotion and opinion. "Much of the debate surrounding the role and impact of patents and exclusivity in genetic diagnostic testing has taken place in the absence of hard data and rigorous analysis, with little empirical support for the often far-reaching changes proposed in legal, economic or regulatory policy," the PTO said.

LET BIOSIMILAR MARKET DEVELOP

The Centers for Medicare & Medicaid Services (CMS) should hold off on finalizing biosimilar reimbursement policies until the FDA has completed regulations for the follow-ons and the biosimilar pipeline and market are safe and stable.

That's the sentiment 20 senators from both sides of the aisle expressed in a letter Wednesday to Andrew Slavitt, CMS' acting administrator. The senators also stressed the importance of the CMS and the FDA working together with patients, doctors and other stakeholders to ensure that the biosimilar pipeline and market are safe and robust. The letter – signed by Sens. Pat Roberts (R-Kan.), Thomas Carper (D-Del.), Michael Enzi (R-Wyo.), Dianne Feinstein (D-Calif.) and others – noted the potential biosimilars have to revolutionize treatment by offering more options at a lower cost.

As part of its proposed 2016 Medicare Physician Fee Schedule, the CMS wanted to lump all related Part B biosimilars into one reimbursement code while placing the reference product in another. Sponsors feared that by distinguishing between biosimilars and the reference biologic, the proposal would send the wrong message about the follow-ons, damaging the new market before it has a chance to develop. (See BioWorld Today, July 21, 2015.)

In other biosimilar news, California passed legislation this week that will allow for the automatic substitution of interchangeable biologics. However, the law includes language that would require physician communication. So far this year, 11 states and Puerto Rico have passed similar laws, even though the FDA has yet to issue guidance on how interchangeables are to be developed and approved.

FTC ASKED TO INVESTIGATE

First there was the public roasting and the calls for a congressional investigation into Turing Pharmaceuticals LLC's nearly 5,500 percent price hike for its newly acquired infectious disease drug Daraprim. (See BioWorld Today, Sept. 23, 2015.)

Fanned by presidential campaign rhetoric and social media rants, the flames spread to other biopharma companies accused of following the same acquire-and-hike business model. Now, a senator is turning up the heat with a request for a Federal Trade Commission (FTC) antitrust investigation into such practices. (SeeBioWorld Today, Sept. 24, 2015, and Sept. 30, 2015.)

While the price hikes alone aren't anticompetitive, preventing competitors from developing generic versions would be, Sen. Amy Klobuchar (D-Minn.) said Wednesday in a letter to the FTC.

She raised concerns that in addition to the price hike on Daraprim (pyrimethamine), Turing is restricting distribution of the 62-year-old drug. "If a company were to employ this strategy to deny competitors supply for use in a generic application, it would be doing more than simply raising prices. It could be excluding competition from the market to the detriment of consumers and violating the Federal Trade Commission Act," Klobuchar said.

The senator added that there is sufficient concern for the FTC "to thoroughly investigate whether Turing or any other pharmaceutical company has used restricted distribution practices to insulate a price increase from competition."

SETTLEMENT REACHED

Pharmerica Corp., the second-largest nursing home pharmacy in the U.S., agreed to pay $9.25 million to resolve allegations that it solicited and received kickbacks from Abbott Laboratories in exchange for promoting its anti-epileptic drug Depakote (divalproex sodium) for nursing home patients.

The kickbacks were disguised as rebates, educational grants and other financial support, according to the Department of Justice. About $6.75 million of the settlement will go to the federal government, while $2.5 million will be allocated to cover Medicaid program claims by states participating in the agreement.

Wednesday's settlement stems from a $1.5 billion agreement Abbott, of Abbott Park, Ill., reached in 2012 to resolve global civil and criminal investigations into False Claims Act violations involving kickbacks to Pharmerica and other nursing home pharmacies.

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