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6
Regulation, Reimbursement,
and Public Health
Important Points Highlighted by the Individual Speakers
• The lack of a coherent oversight system could create a chasm
between the use of genomic diagnostic tests and improved
health.
• Collaboration among and within federal agencies could ease
some of the limitations of the current regulatory system.
• Agencies have been experimenting with progressive approval
as one way to provide more regulatory and reimbursement
flexibility.
• A public health approach to genomic diagnostic tests would
evaluate their utility to reach evidence-based recommendations
and then evaluate their impacts at the population level.
Government has the responsibility to protect the public health and
safety, yet it does so with a patchwork of laws and regulations and must
base its decisions on evidence that is poorly developed in many areas. Three
speakers discussed the approaches taken by the Centers for Disease Con-
trol and Prevention (CDC), FDA, and CMS. All acknowledged the many
difficulties of overseeing genomic diagnostic tests while pointing toward
promising innovations.
39
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40 GENOME-BASED DIAGNOSTICS
A 21ST-CENTURY OVERSIGHT SYSTEM
Major components of 21st-century medicine lack suitable oversight
mechanisms, said Muin Khoury of CDC. Huge quantities of data have
become available and much more is on the way, yet in many areas there
remains an evidence gap between interventions and outcomes. Stakeholders
have different perspectives on this evidence gap. While some may feel that
sufficient evidence exists to meet their needs, others may not. The confusion
generated by the lack of oversight creates less than optimal awareness and
knowledge among consumers, providers, and systems.
In the area of genomic diagnostic tests, the lack of coherent oversight
creates what Khoury termed “premature translation.” Genomic tests move
from the bench to the bedside quickly with no strings attached because they
go through the LDT route. “Spit in a test tube and you get results.” How-
ever, there remains a chasm between the use of these tests and improved
health, which Khoury described as the “lost in translation” gap. Products
seep through the translation process, some good and some bad, while infor-
mation about their effectiveness is often lacking.
Khoury pointed to the need to develop what he called a public health
approach to genetics (Figure 6-1). He admitted that the term is something
of an oxymoron, since genetics is about personalized medicine and public
T1
Bench Bedside
Bench Bedside
(Base Pairs, Etc.) (Promising Tests
and Interventions)
T0 T2
Knowledge Evidence-Based
Population Recommendation
Integration
Health
Health or Policy
or Policy
T4 T3
Health Care Systems
and Prevention
Programs
Programs
FIGURE 6-1 The public health genomics model allows for a balance of the trans-
lational research (T0 through T4) needed to convert discoveries into better health.
SOURCE: Khoury, IOM workshop presentation on November 15, 2011.
Figure 6-1
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41
REGULATION, REIMBURSEMENT, AND PUBLIC HEALTH
900 827
800
700
600
500
400
300
174
200
100
9 8 1
0
TO T1 T2 T3 T4
FIGURE 6-2 An analysis of 2007 National Cancer Institute cancer genetics and
genomics grants indicates very few supported research studies in later translational
stages, with the majority falling into discovery or early translation.
SOURCE: Schully et al., 2011. Figure 6-2
health is about populations. But combining the two would benefit both
endeavors through the development of a robust translational research enter-
prise that not only gets tests from bench to the bedside but evaluates their
utility to reach evidence-based recommendations and then evaluates their
impacts at the population level.
The current system does not fund this kind of research though, Khoury
observed. According to a recent portfolio analysis of cancer genetics and
genomic research at the National Cancer Institute, most funding goes for
discovery or early translation (Figure 6-2). Less than 2 percent of funding is
focused on clinical utility or later stages in the translation process (Schully
et al., 2011). As a result, different stakeholders use different evidentiary
frameworks to decide on the value of tests.
Potential Solutions
The way to solve this problem, according to Khoury, is through a 21st-
century oversight system. For example, one such system would be the one
suggested by Hayes, in which LDTs are eliminated and FDA oversees the
approval of all tests. Another potential solution is greatly increased public
and private funding for research focused on clinical utility and beyond.
These may or may not be the right solutions “but at least [they are] outside
the box.”
A third potential solution is a knowledge integration enterprise that
would involve both information brokering and knowledge synthesis. One
approach to knowledge integration has been pioneered by CDC’s Evalua-
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42 GENOME-BASED DIAGNOSTICS
tion of Genomic Applications in Practice and Prevention (EGAPP) group.
EGAPP is an independent multidisciplinary working group that has been
a “lightning rod” for discussion, according to Khoury, since it was formed
in 2005. It has developed methods and outcomes processes, has conducted
systematic reviews, has pointed to evidence gaps, and is beginning to tackle
evidentiary standards for whole genome sequencing. “What EGAPP has
tried to do is create analytical frameworks that allow data to be gathered
across multiple platforms from observational studies to clinical trials,”
Khoury said.
A second initiative launched by CDC and other public and private
organizations in 2009 is the Genomic Applications Practice and Prevention
Network (GAPPNet), which is designed to put stakeholders in the same
room and connect them to data. The first objective of GAPPNet, according
to Khoury, is to build the necessary information from discovery through
health impacts. The second is to deal with stakeholder forces that affect
translation by letting them talk through issues. “Maybe they will or will
not reach consensus, but they need to be aided or helped by that oversight
system.”
Overcoming Obstacles to Progress
The most important obstacle to the establishment of a 21st-century
oversight system, said Khoury, is a lack of incentives. There are few incen-
tives for public or private funding of research beyond the discovery phase,
for knowledge synthesis and stakeholder convening, or for public and
provider education.
To overcome these obstacles, it is necessary to start at the top. Pilot
oversight “experiments” need to be developed and applied to deal with
insufficient evidence, said Khoury. Public and private initiatives could come
together to fund the generation of clinical utility evidence. The new Patient-
Centered Outcomes Research Institute established by the Patient Protection
and Affordable Care Act could potentially investigate these issues if it had
sufficient funding. Small experiments by FDA, CMS, and the Agency for
Healthcare Research and Quality (AHRQ) have moved in the right direc-
tion, but these need to be coordinated and expanded. As an example of a
pilot project that Khoury initiated with funding from the American Recov-
ery and Reinvestment Act of 2009, seven groups were funded to conduct
comparative effectiveness research in genomics and personalized medicine
and to develop a collaborative road map. Much of this work is about to
be released. In addition, EGAPP continues to explore new methods and
approaches. What is needed, said Khoury, is “a stakeholder-driven knowl-
edge integration enterprise that explores novel methods of synthesis, deci-
sion analysis, and modeling.”
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43
REGULATION, REIMBURSEMENT, AND PUBLIC HEALTH
FDA REVIEW
The 1976 Medical Device Amendments defined in vitro diagnostics as
“medical devices” and established a risk-based regulatory paradigm for
their oversight. The safety standard is that “there is reasonable assurance
. . . that the probable benefits . . . outweigh any probable risks” [21 CFR
860.7(d)(1)]. The effectiveness standard is that “there is reasonable assur-
ance that . . . the use of the device . . . will provide clinically significant
results” [21 CFR 860.7(e)(1)].
The risk-based strategy has “strengths and weaknesses,” said Alberto
Gutierrez of FDA. The standards are similar to those for drugs but they also
differ in significant ways. For example, a premarket approval application
(PMA) for a diagnostic is thought of by individuals to be similar to a New
Drug Application in many ways, but controlled clinical trials are rarely
submitted as the evidence base. Half of the devices that are currently on
the market were not reviewed by FDA prior to their release and for another
40 percent, they just have to be similar to an already existing device. Only
very high-risk devices require a PMA submission.
Gutierrez emphasized that the regulations extend from premarket to
postmarket to compliance. In the premarket, industry provides the evidence
and FDA reviews and clears or approves the device. In the postmarket,
industry has the responsibility and FDA monitors and provides guidance.
With compliance, FDA monitors companies to make sure that they comply
with the law and regulations.
Progressive Approval
Gutierrez briefly discussed the idea of accepting a lower level of evidence
premarket while relying on postmarket studies to gather additional evidence.
FDA has done that in some cases, partly because the performance of a diag-
nostic is closely tied to the population in which it is used. Sometimes, good
evidence for safety and effectiveness exists in one population but not another
and, in this case, FDA will clear or approve the test but require postmarket
data to be collected. For example, FDA cleared a test used in women with a
pelvic mass that helps determine whether the mass should be removed by a
gynecologist or by an oncologist,1 but it also required postmarket study to
gather additional data on premenopausal women, for whom fewer data were
available than for postmenopausal women.
1 Ovarian Adnexal Mass Assessment Score Test System; see http://www.fda.gov/Medical
Devices/DeviceRegulationandGuidance/GuidanceDocuments/ucm237299.htm.
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44 GENOME-BASED DIAGNOSTICS
Elements of Review
FDA evaluates analytic validity and clinical validity in its reviews, but
Gutierrez stressed that the major factor that FDA considers is actually the
intended use of a device, which does not necessarily preclude an evaluation
of clinical utility. Some uses are very broad, in which case clinical utility
is generally hard to assess, whereas others are very specific, in which case
clinical utility is very important, said Gutierrez. If the claim behind an
intended use is one of clinical utility, then that needs to be demonstrated.
FDA also tries to be very transparent in its reviews, both consulting with
expert panels when necessary and publishing the basis of its clearances.
Many groups, including FDA, recognize that there are regulatory gaps
regarding LDTs, Gutierrez said, though they do not necessarily agree on
how to solve these problems. Laboratories rightly observe that they are
governed by CLIA. They also observe that clinical validity emerges from
the published scientific literature, so that peer review is essential. However,
“when the devices are very difficult to replicate, we’ve seen peer review and
the literature not be a good form of regulation.”
A major problem with LDTs is that they have created confusion regard-
ing the rules of the road from test development to research. How can
patients be protected during postmarket research? How can it be deter-
mined that a test has failed, and what happens when a test has failed? “In
general, this is an area we need to fix,” Gutierrez said.
Barriers to Successful Test Development
Gutierrez acknowledged the many problems raised by other presenters:
diagnostic tests may not provide a sufficient return on investment; a lack of
regulatory clarity can introduce uncertainty into the development of tests;
many tests do not have much evidence regarding their utility; and LDTs
lack standards and can be difficult to integrate into medical practice. These
problems do not have easy solutions, said Gutierrez. Collaboration between
FDA and CMS could help, and a pilot program between the two agencies
is testing this approach. Collaboration within FDA also can be important.
Much remains to be done in this area, but some of the collaborations within
the agency are working well, according to Gutierrez.
FDA also has collaborated for many years with standards-setting bod-
ies such as the National Institute for Standards and Technology. However,
these efforts have been piecemeal and depend largely on finding someone
who is willing to collaborate and the money to enable the collaboration.
“It’s not an approach that is well thought out or that people can actually
plan on in a very straightforward way.”
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45
REGULATION, REIMBURSEMENT, AND PUBLIC HEALTH
Putting the Patient First
The broader obstacles are that the health care system is “fairly cha-
otic,” with different people and institutions pulling in different ways. Finan-
cial interests favor the status quo, so change generally has to come from the
political arena. However, this setting may not be optimal for discussions to
identify and fix these issues, said Gutierrez.
Gutierrez concluded by pointing out that the focus should remain on
the needs of patients. “We all need to figure out what is our responsibility
in making this work.” People may need to take actions that are not in their
best interest but are necessary to improve the overall system. “We all need
to pull together, otherwise it’s not going to happen.”
COVERAGE BY CMS
The task of a test developer is to make investors, regulators, and users
more confident about their test, said Louis Jacques of CMS. This task is
made much easier when certain conditions apply.
First, it is easier when clear and consistent scientific evidence supports
clinical utility, though this is a difficult condition to achieve, said Jacques.
It also is easier when the risks of “medical misadventures” are known, mea-
surable, and acknowledged. For instance, how easy is it for a physician to
know that a genomic test result is mistaken or was not run on the proper
sample? In addition, managing a perceived risk may affect an unknown or
unrecognized risk. “If we arguably knew how to reduce our risk of heart
disease by doing certain things, taking certain medications, how do we
know that we haven’t increased our risk of neoplasm?”
Physicians need to consistently use the test where it fits in an overall
management scheme, though this, too, is often difficult in practice. Even if
CMS covered and paid for all genetic tests, they would probably be used
chaotically in practice, Jacques said.
A standard nomenclature and taxonomy can increase confidence in the
utility of a test. Having the relevant components consistently and precisely
identified in a claims stream for a test would allow for easier evaluation.
Currently, because of the use of stacking codes, Medicare already pays for
many genetic tests, said Jacques, but “we’re not doing it in an intentioned
or well-reasoned manner.” Rather, the test is part of a claims stream and is
reimbursed unless someone prevents it.
Finally, a genomic test generates more confidence when there is agree-
ment on its value. The evidence base is still largely immature, said Jacques.
It stops well short of clinical utility, and at times short of analytic validity.
Also, the evidence is not holistic, in that it is challenged to incorporate par-
ticular factors. For example, what is known about particular patient sub-
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46 GENOME-BASED DIAGNOSTICS
groups? “Is the relevance of a particular biomarker or a particular genetic
test the same thing when you’re 70 years old and you’ve already expressed
certain diseases as it is when you’re much younger?”
Factors in Coverage Decisions
Age is also a factor in assessing the value of genetic tests. Young people
have a lifetime to manage their risks but may have little personal incentive
to do so. Genomic testing may not be as relevant for a person who joins
the Medicare program at 65 as it is when he or she is 2 years old, said
Jacques. “Why shouldn’t people arrive . . . in the Medicare program with
whatever predictive genetic factors that may be brought to bear, in fact,
already done?”
Another factor Jacques cited is that genetic tests can have multiple plat-
forms, multiple vendors, and multiple indications. In such a setting, refer-
ence standards can be critical. Several years ago, Jacques attended a meeting
in which test developers could not agree on the definition of the colors used
in their test. “I told them at that meeting that they had absolutely no chance
of Medicare reimbursement unless they could at least agree on standards,”
he said. “Sure enough, by the next year they had collaborated with NIST
and actually developed standards.” Evaluating a product without knowing
the starting reference point is a real difficulty, said Jacques.
Finally, a major challenge within CMS, as with FDA, is that payment
decisions are binary. Statutes dictate how CMS must pay for covered health
care practices. For example, congressional mandates delineate coverage for
screening tests versus diagnostic tests, with screening tests tied to the find-
ings of the USPSTF recommendations.
In contemplating the evaluation of tests, Jacques wondered if grant-
ing full reimbursement for a covered test would act as a disincentive to
the development of further evidence. Jacques questioned whether it might
make sense to pay initially at a lower level—say at 75 percent. Then, as
the evidence base matured and if evidence demonstrated clinical benefit, a
payment premium could be awarded—say 135 percent. Such a system could
support future innovation and the development of “the next big thing.”
Innovation in Review
Several initiatives have been developed to enable collaboration between
CMS and FDA, including the parallel review process and CMS representa-
tion on FDA’s Council for Medical Device Innovation. CMS has been open
to accompanying test developers and others if they choose to meet with
FDA for initial feedback, Jacques said.
CMS also has been doing coverage with evidence development for sev-
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REGULATION, REIMBURSEMENT, AND PUBLIC HEALTH
eral years, though it recently sought new public input on its CED guidance
document. “I’m seeing big players in industry . . . make public comments
that CED is good for innovation,” he said. Jacques also would like to see
CED have greater breadth and flexibility so that not every new molecular
indicator and LDT needs to be reviewed.
Medicare still has considerable local authority, Jacques pointed out,
and local decisions do not necessarily apply nationwide. More collaborative
review processes could help create greater nationwide consistency.
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