Myriad CEO Discusses Reimbursement Hurdles in Molecular Testing

Oncology Live®November 2015
Volume 16
Issue 11

Mark C. Capone discusses the challenges and opportunities in molecular diagnostics, and what's ahead at Myriad Genetics.

Mark C. Capone

When the words “precision medicine” make it into a State of the Union address, one could argue it’s the best of times for anyone in the genetic testing business.1 And in some ways, it is.

But more than two years have passed since the US Supreme Court found that a naturally occurring DNA segment is not patent eligible.2 That ruling changed the landscape for Myriad Genetics, which since its founding in 1991 has cemented its place as the provider of tests for BRCA1 and BRCA2 mutations, alerting women to their risk of breast or ovarian cancer.

Today, Myriad competes in its core business with other test makers; these include both conventional laboratories and companies that sell genetic tests directly to the public. These “direct to consumer” tests are sold without insurance coverage at very low prices—for example, Color Genomics’ test costs $249,3 compared with Myriad’s reported pricing of $2700 to $4000, depending on whether the test screens for BRCA mutations only or for multiple hereditary cancers (prices reported by the company).

It’s not clear whether the FDA will allow direct- to-consumer sales to continue. While the prospect of regulation looms for molecular diagnostic testing, it’s not there yet. The industry lacks the level of certainty seen in drug development, where a regulator’s seal of approval can be hard won but typically means payment will follow.

In genetic testing, challenges abound with reimbursement, with different payers seeking different levels of evidence. Myriad has been able to consolidate its reimbursement processes with a single Medicare administrative contractor, the Molecular Diagnostics Services (MolDX) Program of Palmetto GBA.

But change in the industry is coming, too, thanks to legislation passed in 2014 that will eventually call for the Centers for Medicare & Medicaid Services (CMS) to move to a market- driven reimbursement system.4

The past year has been both challenging and eventful for Myriad Genetics. It received a local coverage determination from Palmetto GBA for its Prolaris prostate cancer test, although Medicare reimbursement took longer than anticipated.5 The company is transitioning its business from its historic reliance on BRCA testing to broader hereditary cancer screening, as well as new areas that include mental health and rheumatoid arthritis via its 2014 acquisition of Crescendo Bioscience.6

Companion diagnostics is another growth area, and in December 2014 the company reached a high water mark when FDA approved BRACAnalysis CDx as the companion diagnostic for Lynparza (olaparib) in patients with ovarian cancer.7 And as of June, Myriad Genetics has its first new president and CEO since its founding.

Q: What are your thoughts on the Obama administration’s Precision Medicine Initiative?

Q: Much has been written about the challenges with reimbursement, particularly with CMS. How is the process going these days?

Mark C. Capone joined the company in 2002 and had served as president of Myriad Genetic Laboratories since March 2010. Evidence-Based Oncology spoke with Capone about the challenges and opportunities in molecular diagnostics, and what’s ahead at Myriad Genetics. Below are edited excerpts from the interview.We were delighted to hear President Obama talk about the promise of personalized medicine. We have shared that perspective for over two decades, and we believe that these technologies not only have the opportunity to transform the lives of our patients, but also to fundamentally change the trajectory of healthcare costs in this country. Access to personalized medicine can come down to whether insurers will pay for testing.It’s fair to say that reimbursement in personalized medicine is still in its infancy, and there are still some shifting sands around the criteria required for reimbursement. We have seen progress from the CMS perspective with all of the decisions around coverage being consolidated with [Palmetto GBA’s] MolDX program. Having a single contractor with a consistent process by which medical diagnostic products are evaluated is useful for those of us that develop these products. We need some forward visibility as to how they will be evaluated so that we can put together our clinical development programs.

Q: Is there an emerging set of best practices to obtain approval for reimbursement? Are we getting closer to a defined process, similar to what exists at FDA?

The MolDX program has been open to feedback from industry about different ways to approach reimbursement. We have been quite active in providing feedback, and in working with MolDX to identify appropriate ways to provide clinical data for their technical assessment programs. MolDX has also put in place consultation services for companies that are developing products prior to those clinical development programs being initiated, to provide further insight into what types of programs would be useful.It’s emerging slowly. There are some guidelines that have been published by MolDX on levels of evidence that would be required to obtain reimbursement.

You also have some other technical assessment committees that are beginning to establish evidence- sharing levels as well. I think we’re slowly beginning to see those emerge, but I would say that at this point the process is not nearly as defined as you might have at an agency like the FDA.

Q: What about commercial payers? Is there consistency from payer to payer?

Q: Are these disparities between payers getting wider or narrower?

There are still some uncertainties, and the best way to deal with that uncertainty is to have very early conversations with payers about what level of evidence they will require for a specific test.I would still characterize it as significant inconsistency between payers. In Medicare, with all of that decision making now consolidated within the MolDX program, at least you don’t have an inconsistency between Medicare contractors; so I think that’s a positive step forward. Among the private payers, there is still quite a wide disparity as to levels of evidence that may be required.Because the education levels are increasing among payers in general, I do see some progress toward consistency, but I think that pace is relatively slow at this point.

How are providers doing with molecular diagnostic testing? Are tests being used correctly? It’s imperative for a laboratory to [provide] extensive education to healthcare providers about the appropriate patients to test, how to interpret tests, and how to modify medical management after the patient receives the results.

We have seen examples where that type of education by Myriad, which invests very heavily in education, makes a big difference with providers. By way of example, we had a poster published that showed for hereditary cancer testing over 93% of the tests we received were for patients who met [National Comprehensive Cancer Network or NCCN] criteria, and another 6% of the patients had an underlying cancer consistent with the general criteria for that particular hereditary cancer.8

That leaves only 1% of the patients [receiving the test] that didn’t seem to have any ties to the NCCN guidelines.8 By comparison, another lab that published similar data found that 30% of the tests were being ordered inappropriately. That’s a lab that has little educational efforts with providers. I think it’s a very clear distinction between laboratories that invest in education and those that don’t.

Q: What about direct-to-consumer tests that are sold without involvement of insurance coverage? How does Myriad respond to these tests?

When physicians are properly educated, when you have quality control procedures in your lab like we do at Myriad, you can be sure the tests that are being run are consistent with guidelines.I think it’s a critical part of the education process that physicians understand the difference between the various tests that are available. There are a number of companies that are characterized as [offering] “recreational genomics,” and there are companies like Myriad that are very focused on the highest quality clinical tests in order to ensure the appropriate decision making by both the patient and the physician. We try to ensure that our education efforts allow the patient and the physician to understand those differences.

For example, we invest very heavily in the quality of sequencing we provide. We employ a number of different technologies to ensure that the sequence is accurate.

Second, we also invest an enormous amount to ensure the interpretation of that sequence is accurate as well. There’s evidence that public databases that were designed for research purposes are fraught with errors, and if you were to use those databases to interpret test results, you run the risk of getting a false result to patients. Third, we provide an appropriate level of service, so that a patient and a physician know when testing is appropriate and know how to use that test for medical management. When you look at what it takes to ensure that quality of end-to-end service…it really requires a pretty significant cost structure to ensure that kind of accuracy.

What’s important to a payer is that the implications of a false test result are very significant. A false positive means that a patient is potentially going to pursue prophylactic surgery and unnecessarily remove healthy organs. A false negative means the patient is not going to undergo the surveillance required to ultimately prevent cancer.

Either one of those false test results can cost a payer hundreds of thousands of dollars, so it’s worth it to make sure the most accurate test is being used up front to avoid that patient impact and cost implication downstream.

Have payers refused to cover a surgical procedure based on a result from a direct-to-consumer test? I would not know if there are specific examples because we don’t see that information. However, providers are beginning to appreciate that these tests are not regulated by the FDA. So, claims that are being made by these tests have not undergone rigorous review by an agency such as the FDA.

You are aware of the extensive conversations surrounding regulation of laboratory-developed tests, but at this point they remain outside FDA regulation. Both payers and providers are aware some of these claims may not be substantiated by significant additional data. Will the rise of direct-to-consumer tests make regulation happen more quickly?

I do know the FDA has stated before that when it comes to BRCA or hereditary cancer tests, in which the patient is making very significant medical management decisions—those are the examples of the tests they are most concerned about. Those are the ones they would classify as high risk. To the extent that high-risk tests proliferate in the marketplace without having those claims reviewed by the agency, I think it does increase the urgency with which the FDA will pursue regulation.


  1. President Obama’s precision medicine initiative: fact sheet. White House website. 2015/01/30/fact-sheet-president-obama-s-precision-medicine- initiative. Published January 30, 2015. Accessed July 14, 2015.
  2. Association for Molecular Pathology v. Myriad Genetics, Inc. SCOTUSblog website. for-molecular-pathology-v-myriad-genetics-inc/. Published June 13, 2013. Accessed July 13, 2015.
  3. Chen C. Color Genomics sells $249 breast cancer gene test to the masses. Bloomberg website. articles/2015-04-21/color-genomics-brings-245-breast-cancer-risktest- kit-to-masses. Published April 21, 2015. Accessed July 10, 2015.
  4. CLFS Reform. American Clinical Laboratory Association website. Accessed July 14, 2015.
  5. Myriad Genetics posts in-line Q3 earnings, guides lower. Zacks website. posts-inline-q3-earnings-guides-lower. Published May 6, 2015. Accessed July 10, 2015.
  6. Myriad Genetics to acquire Crescendo Bioscience [press release]. Salt Lake City, UT: Globe Newswire; releasedetail.cfm?releaseid=823235. Published February 4, 2014. Accessed July 9, 2015.
  7. Myriad receives FDA approval of BRACAnalysis CDx as companion diagnostic for Lynparza (olaparib) in ovarian cancer patients [press release]. Salt Lake City, UT: Globe Newswire; http://investor.myriad. com/releasedetail.cfm?releaseid=888523. December 19, 2014. Accessed July 9, 2015.
  8. Smith S. Assessment of laboratory-based quality control processes to ensure appropriate utilization of genetic testing for hereditary cancer risk. Presented at: American College of Medical Genetics Annual Meeting, Nashville, Tennessee; March 27, 2014. Poster 165.

Mary K. Caffrey is a writer and editor for the American Journal of Managed Care. Read more at AJMC.

Related Videos
Peter Schmid, MD, PhD
Seema A. Khan, MD
Roisin E. O'Cearbhaill, MD
Stephen J. Freedland, MD
Tapan M. Kadia, MD,
Sara M. Tolaney, MD, MPH
Javier Cortés, MD, PhD,
Stephanie L. Graff, MD
Senthil Damodaran, MD, PhD