PCN128 Estimating the Value of Companion Diagnostics: Are the Incentives Right?

Abstract

Targeted therapies are hoped to deliver high-quality, effective treatments that control cost growth. Companion diagnostics (CDs) –biomarker tests to identify patients likely to benefit– are key to this potential. However, as the US's IOM has noted, reimbursement for CDs may not provide optimal incentives to develop critical CDs. To illustrate, we examined the cost:benefit of CDs based on current reimbursement levels and the clinical and economic benefit allowed by biomarker targeting. We identified 6 approved CD/therapeutic combinations, all in oncology. Several parameters were obtained: efficacy of therapeutic in indicated but otherwise un-targeted patients and in patients with the biomarker, therapeutic and diagnostic costs, and prevalence of the biomarker. CD clinical benefit was measured by the improvement in therapeutic efficacy in targeted versus untargeted patients. CD economic benefit was based on therapy cost avoided assuming that patients in a non-screened scenario undergo 1-month trial. To compare, we estimated a similar measure of the clinical cost:benefit for all oncology therapies approved since 2000. Estimated net economic benefit of CDs ranged from about $250 to $8,000. Estimated economic cost: benefit ranged from approximately $0.05 to $0.55 per USD saved. Estimates of the clinical cost:benefit of CDs ranged from approximately $1.50 to over $15 per one-percent improvement in clinical efficacy. Comparison oncology therapies are reimbursed at rates that imply an average clinical cost:benefit of about $750 per one-percent improvement in efficacy for non-OS benefits to $2400 per one-percent improvement in OS. Our calculations support the IOM statement that current reimbursement for CDs may not be optimal. Relative to the value placed on oncology therapeutics, the reimbursed value CDs is a small fraction of what would be expected under value-based pricing. This has implications for the structure of the CD industry as well as the potential for future innovations in diagnostics.