Health Tech: Economics Can Play an Unusual Role in Entrance to Market
April 21st, 2011
Posted by Jamie Lacey-Moreira (guest blogger)
Entrance-to-market is always a challenging process in the bio-med industry, but where one would normally consider product quality and peer assessment as lead indicators of success, it can be something quite different and unexpected that affects rapid market adoption—such as simple profit-based economics. This is a lesson learned by the San-Francisco-based company XDx, Inc. (Expression Diagnostics) in conjunction with the launch of its diagnostics test Allomap®.
XDx’s Vice President of Corporate Development and Legal Affairs Matthew J. Meyer recently presented at the 3rd Annual Personalized Medicine Partnerships Conference in Bethesda, Maryland. Here, I recap some of the highlights of Meyer’s case study presentation and then offer some insights from Ken Walz, one of the founder’s of Popper and Company.
According to Meyer, the heart transplantation market in the U.S. encompasses nearly 140 centers performing more than 2,000 transplants per year. With the average cost of the procedure at around $750K and topping out at nearly $1M when post-transplant therapy and care is included, the industry fully supports a growing $2B impact on the U.S. healthcare system. Transplant patients and hospital institutions not only face substantial costs in upfront care, but the patient must also pay for and endure between 20 and 35 painful biopsies in an attempt to reduce rejection and minimize immunosuppression.
Founded in 2000 with the goal of significantly improving patient management in transplant care and autoimmune diseases like lupus through the development and commercialization of non-invasive diagnostic tests, XDx gained FDA clearance in 2008 for its groundbreaking Allomap® molecular diagnostic test. AlloMap uses simple blood draws to achieve the equivalent of biopsy results by analyzing genetic activity (gene-expression testing) to predict the absence of heart transplant rejection. Allomap’s Molecular Expression Test has become a “standard of care” and after several successful validation studies, including the landmark IMAGE trial published in the New England Journal of Medicine in April 2010, it has been clinically demonstrated to be “non-inferior” to biopsy and written into the International Society of Heart and Lung Transplantation (ISHLT) guidelines—the first and only blood test ever included in such guidelines.
So what’s delaying Allomap® from achieving market success? One significant factor that appears to be at play is that the Allomap® test reduces the need for biopsy, a procedure which generates revenue for some physicians performing the test and the institutions in which the tests are performed. XDx has learned a lesson that other companies entering the personalized medicine market will surely need to heed—a product needs more than comparative clinical effectiveness and clinical validation to achieve rapid market penetration. Financial considerations matter and when costly invasive procedures are replaced, companies will need to engage all stakeholders and focus on a financial middle ground where physicians gain something of value.
Following are Walz’s insights on the implications of this case study and its potential impact on advances in quality care.
Jamie: Ken, what are your reactions to this case study? How do you feel about physicians being slow to adopt a new diagnostics tool because use of this test removes part of their revenue stream? Can this happen with other diagnostics tools?
Ken: I’m not surprised. Because of the financial structure of our health care system, reimbursement (i.e., revenue) comes into play often when a physician is deciding whether to order a test or to do a procedure. We have seen many examples of this across diagnostics.
Jamie: Is there anything you’d suggest XDx could have done to soften the marketplace in advance of approval of Allomap® and its introduction into the market?
Ken: Engage patients. Based on Matthew’s presentation (and from my recollection of hearing XDx’s CEO speak last year), the Allomap® test is a much better option for the patient than biopsy. Within the parameters of what FDA allows, XDx should continue to look for ways to raise awareness among patients who would in turn demand the test as an alternative to biopsy.
Jamie: What broader implications based on this example would you like to highlight?
Ken: This case study is somewhat typical of what should be expected from a health care system with multiple actors and misaligned incentives. That’s not likely to change so companies should look for ways to engage the ultimate user (i.e., patient) to try to force alignment of those incentives and to ensure the patient can receive a medical solution that is in his or her best interest.
Let us know your thoughts on this issue of profit-based incentives impeding the adoption of new health care technologies that are better for the patient and save the healthcare system precious dollars. Should these issues be more strongly addressed through and by advocacy groups? How do you feel about how these issues can impact patient access to quality care? We look forward to hearing from you.
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