Biomarkers
Medicare and Biomarkers – What Does the Future Look Like?
Bruce Quinn Senior Health Policy Specialist, Foley Hoag LLP
Abstract
Biomarkers have many roles in drug development, but when biomarkers become companion diagnostics and are used as clinical tests, the biomarker diagnostics must comply with all appropriate regulations for clinical chemistry tests. In addition, they must comply with all coding, coverage and payment rules for clinical chemistry tests as established by health insurers or government payers. This article reviews the extent to which payment systems for diagnostic tests differ from those for drugs and biologicals. Insurers, such as the US Medicare system, will need complementary innovation in diagnostic test policies to accommodate the growing power of diagnostics in drug therapy.
Keywords Clinical chemistry, molecular tests, Medicare, health insurers, reimbursement, coverage
Disclosure: The author has no conflicts of interest to declare. Received: 5 April 2010 Accepted: 10 May 2010 Citation: Drug Discovery, 2010;7:27–9 Correspondence: Bruce Quinn, Senior Health Policy Specialist, Foley Hoag LLP, 155 Seaport Blvd, Boston, MA 02210, US. E:
bquinn@foleyhoag.com
How will the US Medicare system face a medical system that is increasingly empowered by the use of biomarkers to diagnose and manage disease? This question is important to everyone who works in drug discovery. Biomarkers per se have long played a key role in drug development. To cite only a few examples, biomarkers are key measures during the development of statins and anti-HIV drugs and are used for renal or hepatotoxicity surveillance. However, many experts have predicted that in some therapeutic areas, such as oncology, we are on the brink of a personalised medicine paradigm shift, after which patient- (or tumour-) specific biology will steer the selection of therapies. If so, biomarkers would no longer just monitor the success of a class of drugs (such as statins): biomarkers would fundamentally create marketplace winners and losers among drug candidates.
Although the conceptual relationship between drugs and selective biomarkers is not hard to grasp, drugs and clinical chemistry tests have traditionally travelled through completely different channels in the health insurance system, such as Medicare. Looking forward, we can already see that better co-ordination of policy-making, coverage and payment will be critical to maximising the benefit of biomarker- selected therapies for patients.
This article focuses on Medicare, the US health insurance system for citizens over 65 years of age.1
This focus is a good starting point for
three reasons. First, as a nation, the US has the largest single healthcare economy in the world, and within the US, Medicare is the largest payer of healthcare services. Therefore, to the extent that manufacturers steer a course that fits or is compatible with Medicare’s policies, such policies can have some an impact on development and marketing plans worldwide. Second, within the US itself, Medicare is not only a flagship insurer, but its coding systems (by law) and many of its policies are replicated across numerous
© TOUCH BRIEFINGS 2010
private and local governmental payers. Third, Medicare is emblematic of the completely different treatment of drugs and laboratory tests in a number of healthcare systems, and most readers of this volume will be more familiar with drug, rather than diagnostic, payment policies and systems. In a biomarker-driven therapeutic area, it becomes important to track both drug and diagnostic payment policies.
In a real sense, there are different approaches to the question ‘What is Medicare?’ For example, in one sense, Medicare is a healthcare financing system that will dole out some US$400 billion in cash flow for healthcare in the US in 2010. In a quite different sense, Medicare is a giant, silent ‘paper behemoth’ of federal laws, regulations and thousands of pages of background procedures and policy documents. In a third sense, Medicare is ‘people’ – some 2,000 staff who work in a large federal agency and constantly tune and control the flow of policies and payments. In a fourth sense, Medicare is an enormous distributed system, everywhere and nowhere, since the vast majority of payments ‘autopay’ – one patient’s gall bladder operation, another’s office visit for depression, another’s cancer chemotherapy, all passing back and forth as electronic claims submission and digitial funds transfers, by the billions, with little human intervention. Although this digression may seem a bit fanciful, when we ask ourselves to predict ‘how will Medicare change’ the answer depends on each of these perspectives of what Medicare ‘is’ now.
Medicare is a federally funded programme, but its claims processing operations are handled by regional contractors throughout the US. About 80% of patients are enrolled in a purely fee-for-services system administered by ‘claims processing contractors’ that follow federal policies. This is called ‘Medicare Part A’ in regard to their hospital payments and ‘Medicare Part B’ in regard to their outpatient and physician services payments. About 15–20% of patients are
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