The OBR Blog

March 28, 2011 - 09:03 am Posted in Featured comments0 Comments

By Don Sharpe

As usual, the NCCN annual meeting held on March 9 – 13 in Hollywood, Florida, featured a timely and topical expert roundtable, this one titled “Molecular Testing – Implications for Practice and Policy”. The panel discussion featured Scott Gottlieb, MD, American Enterprise Institute; Louis Jacques, MD, Centers for Medicare and Medicaid Services; Michael Kolodziej, MD, Innovent Oncology; Mark Kris, MD, Memorial Sloan Kettering Cancer Center; Lee Newcomer, MD, MHA, UnitedHealth Group; Andrew C. von Eschenbach, MD, formerly of the NCI and FDA, currently with Samaritan Health Initiatives; and Elizabeth Thompson, Susan G. Komen for the Cure.

Moderated by Clifford Goodman, PhD, Senior Vice President, The Lewin Group, the expert panel assembled to discuss the regulation of molecular testing, and it would appear that there is strong consensus and agreement that there needs to be more order (and less chaos) around molecular tests.

NCCN Molecular Diagnostics Panel – Policy Roundtable

Currently, it is not required to attain FDA approval to market and sell laboratory developed tests (LDTs) or what the panel referred to during the discussion as “molecular or genetic tests.” The expert panel was charged with debating whether the data gleaned from these tests is clinically relevant; and in light of the cost of the tests, to discuss if there is value in the tests, should the healthcare system pay for the tests, and should the tests be regulated by the government in the same way as drugs and biologics.

To begin the discussion, Dr. Goodman asked for clarification on the existing regulation regarding these tests. Dr. Gottlieb pointed out that current regulation is determined by three criteria:

  1. Who performs the test
  2. The complexity of the test
  3. And, if the FDA has their way, a third criteria based on the claims being made about the test

To clarify further, if it is a high complexity test it must be performed in a high complexity lab such as a CLIA lab, whereas if the test is marketed as a test kit, it can be performed in a less complex lab such as those at a community hospital. Additionally, if it is a CLIA waived test, it can be performed more easily at the point of care such as a physician’s office.

What concerns the FDA, according to Dr. Gottlieb, is that molecular tests are regulated based on how they are marketed, not based on complexity or the claims being made about the test. If the test is marketed as a kit, it must be FDA approved, but if the test is being performed as a service inside a CLIA lab, it is regulated by CLIA and does not require FDA approval.

Dr. von Eschenbach, formerly of the FDA, clarified that the problem with the lack of governmental regulation today is that it leads to too much heterogeneity and variability of the tests. The variability that occurs in the tests makes it difficult to interpret any of the data from them. He said that standards and platforms need to be put in place “to reduce variability and make the information valuable. We’re laying a foundation here and it is important that we get it right because we have to build on it.”

Dr. Jacques, with his CMS perspective, first noted that CMS spends more money on healthcare than any other country. When asked to clarify what a “homebrew” is, Dr. Jacques said that a homebrew is a laboratory developed test which is essentially performed out of a single lab as opposed to being distributed in a kit. An example of a homebrew is the OncoTypeDX test from Genomic Health in California. Regarding payment for OncoTypeDx, the local Medicare carrier at the time, NHIC, was able to make a coverage determination within their jurisdiction (in California) and it ended up having a nationwide impact on policy coverage even though it wasn’t a national coverage determination.

Next up was Dr. Kolodziej, the practicing oncologist in the group, who framed the issue of accuracy/variability of molecular tests by stating that 10%-15% of NSCLC of a certain ilk are EGFR mutated. At the same time, he says he can’t remember the last time he saw a patient positive for EGFR mutation, and that makes him wonder if the test is any good. That seedling of doubt from the provider obviously puts doubt in the mind of the payers – federal and private – as to whether they should be paying for the test.

Dr. Newcomer informed the group that UnitedHealth spends $1.3 billion on chemotherapy and $4 billion on cancer care annually for the commercial population that they serve. Dr. Goodman asked, “If you’re spending that much money on cancer care, and you know these tests may not be accurate, how confident are you that you are spending those dollars efficiently?” Dr. Newcomer responded that he is not at all confident that molecular tests are improving the efficiency of United’s spending, and that he does not know how much United is spending on molecular tests or what they are getting for that spend.

When the panel was asked how to improve the certainty of the tests, Dr. von Eschenbach said that “it is obvious we need to bring order out of chaos.” He believes that the FDA is best prepared and best positioned to do that, at least from a scientific and analytical infrastructure. First, a decision needs to be made as to who’s in charge and then it will be necessary to bring the FDA up to a level of capacity and capability to create platforms and standards. CLIA can play a role in the transition to greater regulation, and then it will be necessary to put the issue in the hands of the agency best prepared to handle the science and regulation.

Dr. Kris of Memorial Sloan Kettering told the audience that when a new NSCLC patient comes in, the patient is given DNA-based tests which have been shown to predict whether a patient will respond to therapy. The two best examples of this are the tests for K-ras and EFGR mutations. At MSKCC, they do 8 genetic tests on incoming cancer patients. Tests are done in a multiplex system meaning individual tests can’t be ordered as the tests are all done automatically. Dr. Kris said that there are only about a half a dozen cancer centers that routinely do these tests.

The problem with this, Dr. Jacques said, is that CMS is then asked to pre-pay irrevocably for all of these tests, when in fact, it is still too early to determine clinical utility. “Although, the tests results, generally, have proven that they have meaningful clinical benefit.”

Dr. Newcomer was asked by Dr. Goodman whether United evaluates the clinical data or the health outcomes associated with these tests? What comprises real evidence? Dr. Newcomer said they look for three things:

  1. Analytic validity – is the test accurate 99 times out of 100? He added that the HER2 test is a good example. When the HER2 test was performed by community hospitals and then sent to a reference laboratory it was found that the test results were wrong 30% of the time – half overstated and half understated.
  2. Clinical validity – is what you’re measuring really going to result in a change that is valid? The example he used in this case was tamoxifen. A number of women were tested for CYP2D6 and taken off of the drug because of the test results, and yet at SABCS last December, we found out that the gene does not predict how well patients metabolize tamoxifen. So you want to be sure that the gene you’re measuring is truly correlated with clinical outcome.
  3. Clinical utility – Is there something you can do with the information? Is it really useful?

Elizabeth Thompson, representing the patients in the debate, pointed out that this is a very challenging topic for patients. “In the US, we are leading the world with these tests, but we still don’t have enough information to make informed decisions. Even at leading cancer centers.” She feels as though educated patients are pretty informed about the problems with the tests, but there are many, many patients that place their trust in what their doctor tells them, and she is afraid that the doctor may not have the right information.

Adding a dose of reality to the discussion, Dr. Gottlieb pointed out that he thinks there will be a new regulatory scheme attached to molecular tests in the next 12 to 24 months. “The FDA is working on regulations, and if they don’t act unilaterally, then The Hill is working on legislation that will be attached to authorization of the Medical Device User Fee Act of 2013, which would change the regulatory scheme for all of these tests. The operative question for all of us is what is the risk that these tests are introducing? You have to ask that because you want the regulatory paradigm to be based on the risk, to regulate to the risk.”

Dr. Jacques brought the discussion back to the clinical evidence, “if you can give me good evidence of clinical utility, I’m going be very happy, and anything short of that will cast a pall of uncertainty over the test and will make me wonder if we should be paying for the test.”

Dr. Kolodziej was asked how well is the information from these tests understood and used? He said, that “when the test matters, we do it. I have to be pragmatic. Meaning, I don’t have the specimen so first I have to convince the hospital to send the specimen to a commercial laboratory, then I’ve got to convince the payer to pay for the test, and then I’ve got to interpret the results.”

Moving on to value for money, Dr. Kris told the audience that the EGFR test is roughly $800, while other more commonplace tests are pretty much free. Dr. Kolodziej iterated that “we don’t know whether there is value for the money yet,” and echoed that this is still an immature system. But he is cautiously optimistic that there will prove to be value in some molecular testing, and “it will prove to be predictive of a response to therapy.”

Regarding value for money, Dr. von Eschenbach also said that there is no question that these tests are a methodology for saving money and costs in healthcare. “These tests are intended to reduce the variance around the mean, and when you reduce variance around the mean, quality, by definition, goes up. Patients will be getting the right treatment, the right dose, for the right reason, and in the end will get the right outcome. And what goes away in this process is waste.”

Also commenting on value for money, Dr. Newcomer said one of the problems is that the system needs a new billing process. Currently at United, they can determine when they’ve been billed for tests but can’t decipher what tests were performed. The coding system is very antiquated.

Dr. Jacques stated that as a matter of policy, CMS doesn’t evaluate cost effectiveness. Bottom line on this topic, he said, “is that everything about cancer is expensive. Genetic or molecular testing may be expensive, but so is chemotherapy, hospitalizations, and serious adverse events.”

Thus, it would appear that the panel of experts was in agreement that molecular tests are in an early stage of development, that these tests have the potential to deliver great value if they prevent unnecessary therapies or conversely allow important treatments to be delivered, and hopefully improve quality while reducing healthcare costs. It also appears that this group would welcome regulation in the next 12 to 24 months as a way to build a platform which will improve accuracy of the tests, and deliver better clinical utility.

Closing Thoughts

It appears that there was a critical point missing from the debate. Innovation was touched on, but probably not adequately represented in the roundtable. Where was the molecular test manufacturer during the debate? LDT manufacturers would argue that by incorporating more regulation, the innovation which could lead to greater value will be stifled. Everybody on the panel is aware of this argument, but didn’t seem concerned about it. Neither did the audience, as the question did not come up during the Q & A session.

The problem is that these tests are not priced like a therapeutic. A course of Avastin at $50,000 delivers more revenue/profit to the manufacturer than a molecular test manufacturer could hope to attain. Without the margins available to them, the regulatory and risk hurdles that molecular test manufacturers face may be more than they can fund. It doesn’t seem fair to apply the same regulatory hurdles to molecular test manufacturers that are applied to prescription drug manufacturers. And if we do, will we see the innovation slowly deteriorate because of the hurdles.

The debate regarding regulation of molecular tests will go on, but as Dr. Gottlieb points out it seems pretty certain that greater regulation is coming. The hope is that that greater regulation will improve accuracy, payment, and outcomes.

Contact OBR

March 16, 2011 - 10:03 am Posted in Featured comments0 Comments

Incyte (INCY) and their partner Novartis have reported that ruxolitinib (INC424), has met its primary endpoint of significantly reducing spleen size in patients with myelofibrosis (MF), when compared to best available therapy in a second Phase 3 trial. The European study, called COMFORT-II, showed that treatment with ruxolitinib provided a statistically significant reduction in spleen size in patients with primary MF, post-polycythemia vera myelofibrosis (PPV-MF), or post-essential thrombocythemia myelofibrosis (PET-MF), when compared with best available therapy. The company reported that the safety profile for ruxolitinib was consistent with previous studies. Regarding concerns about the potential for anemia, we will have to see the full details before we can put the issue to rest. Complete study data was not revealed in the company’s press release which will allow INCY to submit the data for presentation at an upcoming medical meeting. We expect the data to be presented in Chicago at this year’s ASCO. It should be well received since there are no current treatments approved specifically for MF.

An NDA filing for ruxolitinib consisting of COMFORT-II and COMFORT-I will be submitted to the FDA in the second quarter, with a European filing shortly following the FDA filing. The drug candidate has received orphan drug status in both the U.S. and in Europe which means that it will be reviewed in six months, rather than the normal 12 months for regular NDAs, positioning ruxolitinib for two regulatory approvals by year-end. The news flow for the drug candidate in 2011 will be outstanding:

• Submit NDAs in both U.S. and Europe in Q2.
• Present COMFORT-I and COMFORT-II data at ASCO in June.
• FDA advisory committee meeting.
• Receive FDA/European approvals in late Q3/early Q4.
• Launch ruxolitinib in the U.S., possibly before the end of the year.

We raised our buy limit on INCY in late January from $12 to $15 based on a short piece (written by supporters of a rival drug from YM Biosciences, which has potential, but clearly is behind ruxolitinib) that claimed ruxolitinib caused anemia and only reduced symptoms. They claimed these problems would lead to an inevitable delay by the FDA. We believe that the addition of positive Phase 3 results from COMFORT-II to COMFORT-I will be sufficient to earn ruxolitinib regulatory approval. Finally, the full data set that we expect to be presented at ASCO should put to rest lingering safety concerns. 2011 is shaping up to be a transformative year for INCY as they bring their first drug to market. The bottom line is that stock is less risky now than when we raised our buy limit in January. Since that time the stock price has drifted lower, and we urge subscribers to take advantage. INCY is a buy under $15.

You can view a previous blog entry on INCY from John McCamant here:

By John McCamant

March 06, 2011 - 09:03 pm Posted in Featured comments0 Comments

ORLANDO, FL – The high cost of managing prostate cancer could be substantially reduced if physicians incorporated results from three important studies presented at the 2011 ASCO Genitourinary Cancers Symposium held here on February 17-19, 2011. The take-home messages from these studies are as follows:

  • Intermittent androgen suppression (IAD) is as effective as continuous androgen deprivation (CAD) in men with prostate cancer and a rising PSA after definitive primary treatment such as radical prostatectomy or radiotherapy. This means that patients could receive about one-quarter of the amount of these costly drugs per year with no detrimental effect on outcome.
  • Robotic-assisted laparoscopic radical prostatectomy (RALP) has a much steeper learning curve than assumed and should be restricted to surgeons who treat a high volume of patients with prostate cancer. This has huge financial implications, given the exponential growth in adoption of robotic techniques across the U.S.A.
  • Imaging is being utilized in a substantial number of patients where it is not only unnecessary, but is also not recommended.


An Intergroup randomized Phase III trial found no difference in survival between IAD vs CAD in men with rising PSA after radical therapy for prostate cancer (Abstract 3). These results were called “practice changing” by lead author Laurence Klotz, MD, Professor of Surgery at the University of Toronto, Canada, and Oliver Sartor, MD, Tulane University, New Orleans, LA, who was a formal discussant of the trial. Dr. Klotz said this trial provides level 1A evidence that IAD should be the new standard of care for most patients with PSA recurrence after radical therapy. Smaller trials have also shown no difference between the two strategies in terms of survival.

“Patients in the IAD arm were on therapy only 27% of the time, “reducing the cost of therapy on average by 73%,” said Dr. Klotz.

The interim analysis of this trial included 1386 patients with rising PSA and non-metastatic prostate cancer after radical therapy. Median survival was 8.8 months in the IAD arm versus 9.1 months in the CAD arm. Time to development of castration resistance was close to 10 years and favored IAD. No difference in adverse events was reported between the two arms, with the exception of more hot flashes in the CAD arm. Time to development of castration resistance was close to 10 years and favored IAD. No difference in adverse events was reported between the two arms, with the exception of more hot flashes in the CAD arm.

Joel B. Nelson, MD, University of Pittsburgh, PA, said that the totality of evidence should influence physicians who routinely treat patients with CAD to change their practice to IAD. “In this era of health care reform, we are pushed to reduce expenditures. Androgen deprivation therapy constitutes a significant portion of the Medicare budget, and if these drugs are not necessary continuously, that will be cost-saving,” he stated.

Robotic Prostate Surgery

It is not easy to learn how to perform robotically- assisted laparoscopic radical prostatectomy (RALP) surgeries at an expert level so as to achieve <10% of positive margins in the tumor specimen – a goal that is considered acceptable for radical prostatectomy. A retrospective review of RALP procedures performed by three different high-volume surgeons at three different centers over a 6-year period found that it took a total of 1,600 RALP procedures to gain this level of competence. These findings are concerning, since an estimated 70,000 of the 90,000 radical prostatectomies performed each year in the US are done robotically. Moreover, more than 70% of RALP surgeries are done by surgeons who do fewer than 100 cases per year.

According to lead author of this study, Prasanna Sooriakumaran, MD, PhD, Visiting Fellow in Urology at the Weill Cornell Medical College in New York City, “Our study suggests there is a long learning curve to become competent at achieving negative surgical margins, which is the goal of prostate cancer surgery. We recommend that RALP be performed by surgeons who see a high volume of patients.”

“Even for surgeons who perform hundreds of RALP procedures each year, it takes a long time to get to the stage where they are getting the best possible cancer control results. Our results show that it takes a significant amount of experience to achieve good cancer cure rates and low positive surgical margins with this operation,” said Dr. Sooriakumaran.

Dr. Sooriakumaran hopes these data will stop the exponential rise of purchasing robots to be used by relatively naïve surgeons. “The operation is not easy to perform. It is expensive. It would be more sensible to use robotic surgery at Centers of Excellence to optimize results,” he stated.

Imaging Study

A retrospective review of a large SEER-Medicare database of men with newly diagnosed prostate cancer found that about one-third of men with low- and intermediate-stage prostate cancer received unnecessary imaging contrary to AUA and NCCN guidelines stipulating that imaging be reserved for patients with high-risk features (Abstract 120). According to lead author, Sandip M. Prasad, MD, University of Chicago Medical Center, Chicago, IL, this accounts for an estimated $35 million in wasted money, which represents about 10% of the National Cancer Institute’s total annual research budget for prostate cancer. Another worrisome finding, although not related to cost-savings, was that almost 40% of high-risk men were not receiving recommended imaging tests that would help guide management.

The database included 30,183 men; 9,640 were diagnosed with low-risk prostate cancer; 12,966 were diagnosed with intermediate-risk prostate cancer; and 7,577 men were diagnosed with high-risk prostate cancer. The study found that 36% of low-risk men, 49% of intermediate-risk men, and 61% of high-risk men underwent radiographic imaging.  “These percentages should have been 0%, 0%, and 100%, respectively,” Dr. Prasad stated. “These figures are cause for concern.”

He suggested that many doctors may be practicing “defensive medicine” and ordering unnecessary imaging to leave no stone unturned. Bone scan was the most frequently ordered test in all three risk groups.

By Alice Goodman

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