It seems the payors are starting to catch on. Yes, it makes sense to pay for a $2,000 esoteric cancer test if it will show that a $20,000 drug treatment is unnecessary and potentially harmful – seems simple, right? The advent of powerful diagnostics and biomarker technologies that can better characterize a patient’s individual cancer will slowly usher out the age of one-size-fits-all medicine, but it is also creating new challenges for payors, who are faced with determining a new set of values in the treatment chain – as well as drug makers and diagnostics companies who are shifting traditional ideas about buasiness models in a post-blockbuster-drug era.
Rhonda Greenapple, President and founder of New Jersey-based Reimbursement Intelligence(www.reimbursementintelligence.com), noted this shifting landscape in an article published this Summer in FierceBiotech (http://www.fiercepharma.com/story/industry-voices-personalized-medicine-will-drive-management-and-restrictions-health-plans/2008) as it relates to insurance reimbursement and the new family of K-ras genetic biomarkers.
Our take is that the value chain will continue to tilt from big pharma towards diagnostics companies as tumor characterization and individual biomarkers become standard and as companion diagnostics are eventually required to be paired with new targeted therapies. Those smallcap companies that will likely see those benefits are specialized cancer testing companies and labs, includinginclude Clarient, Inc (Nasdaq:CLRT) www.clarientinc.com, Esoterix www.esoterix.com, and Genoptix (Nasdaq:GXDX) www.genoptix.com.