Missing the target?

Both providers and payers have been saying for years that personalized medicine will radically alter the way that cancer patients receive care.

By using genetic tests to identify certain disease biomarkers, clinicians are beginning to predict whether a patient is more likely to get a disease, whether some diseases can be prevented and, most significantly, whether one of the expensive new targeted cancer drugs will work for a particular patient.

That prospect excites physicians and insurers. Not only will fewer patients have to undergo ineffective treatments, but personalized treatment plans also hold out the promise that broader healthcare costs will drop. The Food and Drug Administration has approved several new drugs with companion diagnostics in recent years.

Yet practice in the field may be undermining the technology's promise.

Laboratories in some cases have created their own versions of companion diagnostic tests, which have never been approved by the FDA. It may be leading to less-than-accurate results, but physicians may order tests from labs that promise lower costs or more convenience for the provider.

In addition, some oncologists are prescribing personalized treatments for patients who don't have the specified gene, insurers say. And even when the drugs are used with the proper diagnostic test, they are still extending life only by a few weeks or months.

That suggests to some payers and providers that the new targeted therapies aren't living up to their promise.

“What new technology is supposed to do is lower the cost of care, not just keep it equal,” says Dr. Lee Newcomer, UnitedHealthcare's senior vice president of oncology, genetics and women's health. “We spend more money on that than we do on chemotherapy medicines. It is an expensive field. What we have to do there is learn to be just as responsible by using the right test in the right situation and they can't be priced so exorbitantly.”

Even as the healthcare community heralds the arrival of personalized medicine, questions remain about whether more targeted therapies will, in fact, bend the cost curve and improve outcomes for patients with cancer.

UnitedHealthcare estimated it spent about $500 million on genetic and molecular diagnostic testing for its members in 2010, according to a report released in March 2012 by the UnitedHealth Center for Health Reform & Modernization. About 16% of that spending went toward cancer-related testing.

Newcomer says the insurer requires that biomarker tests be conducted for a dozen or so cancer drugs, including those that were approved with companion diagnostics, before they will be reimbursed. Yet in some cases, physicians are confused about the requirement and wind up prescribing the new drug without proper testing. They are also under pressure from patients who are eager to try anything if they have failed other therapies.

A major challenge facing payers comes from providers who order tests from laboratories with copycat versions of the test that have not been FDA-approved, a practice that has no federal oversight. This usually occurs when a particular lab is more convenient for a physician or if the lab offers a lower price.

“It's very critical that the test be done correctly, otherwise you're about to get a medicine that won't work for you,” Newcomer says. “FDA-approved tests are the gold standard. There's really good evidence to show that that test gives you a consistent answer. It's associated with that drug and we know that you can change a clinical decision based on that test.”

The FDA has taken steps to improve the regulatory process for drugs developed with companion diagnostics. The agency encourages early communication with diagnostic and drug companies so it can establish major milestones during the development program for the drug and the test. It issued draft guidance in mid-2011 that specifically addressed the development of drugs that depend on the use of a diagnostic test to meet safety and effectiveness claims.

“We have to believe that the use of the companion diagnostic with the drug is essential for the safe and effective use of the drug,” says Dr. Richard Pazdur, FDA's director of the office of hematology and oncology products.

He also expressed concern that copycat versions of FDA-approved tests might be used. “It's not just dotting the 'I' and crossing the 'T' and 'This is some regulatory hurdle,' so to speak,” Pazdur says. “There's a purpose behind it. The key word here is the generalizability of the clinical trial results to a population of patients that will eventually get the drug when the drug becomes commercialized.”

The promise of personalized medicine so far has focused mainly on oncology treatments. The FDA approved two therapies that both came to market with companion diagnostics in 2011, more than a decade after the agency first approved Herceptin for women with metastatic breast cancer whose tumors were HER2-positive, which tend to be more aggressive than other forms.

Roche's Zelboraf targets patients with advanced melanoma who have the BRAF V600E gene mutation. Xalkori, developed by Pfizer, is aimed at patients with advanced non-small-cell lung cancer whose tumors over-express the ALK gene.

“We're still guessing if something is going to work,” says Edward Abrahams, president of the Personalized Medicine Coalition, a Washington-based not-for-profit organization. “With these new diagnostics, the so-called companion diagnostics, we're better able to figure out who's going to better respond. When you're dealing with expensive and toxic drugs, you want to know.”

Proponents such as the Personalized Medicine Coalition say that targeted therapies can increase efficacy and reduce side effects for patients. In addition, by targeting a smaller patient population, the therapies could lead to shorter and less expensive clinical trials.

However, the drugs that have been brought to market with companion diagnostics over the past few years have come at exorbitant prices. The estimated cost over six months of treatment for patients receiving Zelboraf is $61,400, or about $10,200 a month. Pfizer's Xalkori costs about $10,350 a month.

Zelboraf could be used for about 40% to 70% of the population with metastatic melanoma. However, “the vast majority of patients will eventually develop resistance to the therapy,” the ECRI Institute reported in 2012. Xalkori targets a much smaller subset—only about 4% to 7% of patients with non-small-cell lung cancer who have the specified gene.

Another Roche drug that was approved by the FDA in February is Kadcyla, which targets women who were previously treated for HER2-positive metastatic breast cancer. The drug was approved alongside two tests developed by Dako, a Danish cancer diagnostic firm acquired last year by Agilent Technologies for $2.2 billion. Kadcyla costs $9,800 a month, with the average course of treatment lasting about nine months.

“That's pretty expensive,” says Dr. Sandra Swain, president of the American Society of Clinical Oncology and the medical director of MedStar Washington (D.C.) Hospital Center's cancer institute. “Something has got to be figured out in the future. Our system can't bear that much expense if each one keeps coming out at $10,000 a month.”

A Roche spokeswoman says the company looked at four factors when setting the price points for Kadcyla and Zelboraf: how well the medicine works; what other therapies are used to treat the same disease; the amount of money needed to pursue development of new medicines for life-threatening diseases; and how to ensure that the drugs reach patients who need them regardless of their ability to pay.

“It's not unit cost that matters,” the Personalized Medicine Coalition's Abrahams says. “It's the overall cost to the insurer. The insurer has got to know in advance that new therapies, even if they come with a hefty price tag, are only going to those patients who will benefit. That's the attraction of these new therapies to the payer.”

Swain says she remains hopeful that more targeted therapies will reduce research and developments costs for drugmakers, as well as cut down on the lengths of clinical trials and produce more specificity in treatment.

In general, providers and payers have become increasingly concerned about the rising costs of oncology treatments and how they are reimbursed.

“If insurers, including the government, don't want to pay for particular products, they are not going to be developed,” Abrahams says. “We're in a new era of cost restraints where insurers, including the government, are rightly looking at utility of new therapies and diagnostic tests and demanding levels of evidence that could impede their development.”

However, new payment models that are beginning to take root might benefit from more targeted therapies. UnitedHealthcare has created five bundled-payment pilot programs where the insurer set up payments based on genetic information for certain oncology treatments. Care of patients who have HER2-positive breast cancer, for instance, receive higher payments.

“Those patients will need more expensive drugs,” UnitedHealthcare's Newcomer says.

Another issue that has been of concern is that many of the newer cancer drugs are oral products, rather than the traditional intravenous and injected forms of oncology therapies.

Oral drugs are covered by the Medicare Part D drug benefit rather than a beneficiary's pharmacy benefit, leaving patients responsible for copayments, which are typically 20%. For a drug that costs $10,000 a month, this “can be a real problem with patients,” Swain says.

The American Society of Clinical Oncology, or ASCO, has supported efforts to move oral cancer drugs to the pharmacy benefit or to ensure the same level of coverage, an initiative it refers to as oral parity. The organization is also in the early stages of developing “an algorithm” that will help patients and physicians navigate a drug's cost, efficacy and toxicity issues before a clinical decision is made.

Still, despite all the promise of personalized medicine, many of the new drugs coming to market are not much better than older chemotherapy regimens. Swain gave an example of a drug that costs $10,000 and has a two-week median survival benefit.

“Is that really worth it for the patient if it's an oral drug, for example?” Swain says. “What we're looking at in our cancer research group at ASCO is trying to define what really is a clinical benefit.”

Other groups are focused on developing clinical standards that seek to address questions about how biomarkers should be used. The National Comprehensive Cancer Network, an alliance of 21 cancer centers, developed a tool last year for physicians to better understand how to use the tests.

The alliance says it expects payers to use the biomarkers compendium it developed in a similar way to how they use the cancer network's drugs and biologics compendium for coverage decisions.

“We developed the biomarkers compendia because there is such a proliferation of molecular tests in medicine today,” says Joan McClure, the network's senior vice president of clinical information and publications. “It's very hard for clinicians and payers to differentiate between the tests that have … true clinical relevance and those that are useful for research purposes but are not really ready to guide standard-of-care treatment.”