Conference Roundup: The Year for Diagnostics
September 7th, 2016
Posted by Caroline Popper, M.D., M.P.H.
The global molecular diagnostics market continues to grow and change at a rapid pace. Danaher’s recent announcement that they are building their diagnostics portfolio by acquiring Cepheid is just the latest example. Several trends are driving this growth including changes in clinical practice, innovations in technology, and a changing regulatory environment aimed at promoting point-of-care diagnostics.
Last month, the Popper and Company team joined healthcare leaders in Philadelphia and Washington, D.C. to discuss some of the most innovative and promising advances in clinical diagnostics and patient care. The month began with over 20,000 people gathered in Philadelphia for the 68th Annual AACC event. This year’s event included a highly-anticipated presentation from Theranos CEO Elizabeth Holmes, as well as presentations on new developments in point-of-care testing, genomics, and cancer.
Later in the month, more than 1,000 international diagnostic professionals convened in Washington, D.C. for this year’s Next Generation Dx Summit. Now in its eighth year, this event included tracks focused on novel immunotherapy biomarkers, cell-free DNA, companion diagnostics, infectious disease testing, point-of-care, pharmacy-based diagnostics, commercialization strategy, and reimbursement issues.
Here are some of the interesting takeaways from those events we will continue to follow in coming months:
The intersection of point-of-care (POC) testing and mobile health will vastly change how healthcare is delivered. This market, driven largely by the need to reduce healthcare costs and shorten the time required to get test results, attracted over $650 million in investments and funding between 2009 and 2013.
While this market is expected to more than triple to $3.9 billion by 2024, challenges still loom for POC diagnostics. Financial implications pose the greatest barriers to adoption. Health providers need to generate a sufficient volume of tests to justify acquiring molecular diagnostics systems, particularly for POC testing. Additionally, while reimbursement for POC and lab version testing is the same, the processing cost per test ranges from $40-$50 for POC tests compared to $10-$25 for lab versions of the same test.
Despite these challenges, advancements in technology and increased consumer engagement will continue to drive POC use. Global leader Roche expanded into this market in 2014 via its acquisition of IQuum and generated $11.2 billion in diagnostic sales in 2015, including $1.8 billion in molecular diagnostics. Abbott followed suit earlier this year with its $5.8 billion acquisition of Alere. Most recently, Danaher added to its diagnostics portfolio by announcing an agreement to acquire Cepheid.
In a timely AACC presentation, Andrew Feinberg, M.D., M.P.H., explored the role of epigenetics as the basis of common human disease. The epigenetics field presents incredible opportunities for patients and is experiencing market growth rates of 14-28%. By 2018, it is expected to become a $4.92 billion market, driven primarily by a high incidence of cancer, a wide range of applications, and increasing investments and funds in this space.
Dr. Feinberg introduced stochastic epigenetic variation as the underlying mechanism for phenotypic variation, as well as certain aspects of development and disease. As this space evolves, key players such as Thermo Fisher Scientific, Merck, Syndax Pharmaceuticals, and Illumina are focusing on technology aspects of epigenetics, such as DNA methylation, and the development of new therapeutic drugs, primarily for cancer.
The result is an increasing number of biopharmaceutical companies entering into collaborations with diagnostic companies to develop new therapies based on novel epigenetic markers. New product development and venture capital investments will continue to create opportunities in this space and drive growth.
Theranos Science and Technology
Perhaps this year’s most anticipated presentation – from both a professional and a public perspective – came from Theranos CEO Elizabeth Holmes. In an AACC breakout session, Holmes described her company’s lab testing framework but left unanswered many of the key questions about the science behind its blood tests.
The CEO used the event to debut a new machine, the miniLab, which will enable small samples of blood to be analyzed remotely using cloud computing. She avoided, however, answering questions about the specific clinical challenges the company is facing and the financial state of Theranos.
Her claim that the company can run more than 70 tests on a single drop of blood was met with skepticism from moderator Stephen Holmes. His comment that “The evidence you presented fell far short of that” was met with applause from the audience. Our take on this at Popper is that while data matters, clinical utility matters too. It is not clear why one needs 70 points of data from a single drop of blood and what value miniLab truly provides to customers.
In the meantime, Theranos will move forward with the miniLab, submitting data for peer review and FDA approval on the new technology. Our team will continue to closely watch the developments as they will have ripple effects on the evolution of Smarter Healthcare.
We also paid close attention to discussions with Centers for Medicare & Medicaid Services (CMS) representatives and others regarding the implications of the Protecting Access to Medicare Act of 2014 (PAMA) and regulations on advanced diagnostic laboratory tests (ADLT). As one NextGeneration Dx Summit speaker noted, the increasing regulatory burden and possible monetary penalties for non-compliance combined with downward pressure on pricing from revisions to CMS reimbursement rates is likely to lead to a less attractive business environment for smaller laboratories and an increase in industry consolidation.
Sobering payment trends shone a bright light on the need to measure true value in the context of an entire episode of care. This was particularly apparent with new developments in liquid biopsy (cell based and cell free) and immuno-oncology diagnostics. These two segments have certainly come of age and are reaching the tipping point where addressing the opportunities they present as part of a therapeutic strategy, is essential.
At Popper, we look forward to continuing our work in these key areas shaping the molecular diagnostics landscape. Our team leverages our unconventional thinking to help our clients understand this market, identify opportunities, and commercialize new products and solutions.
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