As the costs of next-generation sequencing (NGS) continue to plummet, researchers are able to draw upon increasingly rich sources of data to identify genetic patterns relevant to the risk, cause, and treatment of disease.
Next-generation techniques have begun to make their way into the clinic in a range of diagnostic applications, including prenatal screening for genetic disease, transplant typing, and risk assessment and treatment selection in oncology. While traditional molecular diagnostic techniques such as PCR (polymerase chain reaction) and ISH (in-situ hybridization) will remain relevant for years to come, many emerging applications require the rich information NGS can offer. New associations between the broad/deep genetic information NGS can provide and disease prognosis or treatment are being reported with increasing frequency. However, for these advances to generate clinically – and economically – relevant outcomes, researchers face a range of scientific, clinical, regulatory, and reimbursement-related hurdles.
In this feature, Managing Principals
Brian Gorin and
Ed Tuttle and Vice President
Matthew Barrett consider these opportunities and challenges.
In the past two decades, molecular diagnostics – that is, the identification of individual genes or groups of genes or mutations from a tissue specimen – have become increasingly valuable in both research and clinical settings. A variety of molecular diagnostic techniques now allow clinicians to assess the risk of disease development and recurrence in patients and to identify specific sub-types of a disease, before selecting the most appropriate, targeted therapies. More advanced next-generation sequencing (NGS) techniques are well-known to researchers but remain emergent in clinical applications. Like Sanger sequencing techniques that were used to first map the human genome, NGS techniques work by identifying the base pairs that make up a segment of DNA.
As these NGS technologies have matured, the cost of determining sequence information has fallen dramatically. From 2001–2014, the cost of mapping base pairs of DNA fell by a factor of 100,000 – from more than $5,000 to less than $0.05 per million base pairs mapped.1 These declining costs have been accompanied by a concomitant increase in the number of human genomes sequenced and available to researchers. New NGS platforms can now sequence longer stretches of DNA (read lengths) in a single “run” and provide information about methylation patterns that regulate the expression of DNA (epigenetics), which can be relevant to disease diagnosis and treatment. This can provide researchers with unique opportunities to discover genetic patterns relevant to disease risk or etiology (e.g., inherited disease, cancer).
Courtesy: National Human Genome Research Institute. Wetterstrand KA. DNA Sequencing Costs: Data from the NHGRI Genome Sequencing Program (GSP) available at: www.genome.gov/sequencingcosts. Accessed 9/8/2014.
Although the volume of genetic information collected with these new NGS techniques has continued to grow at a rapid clip, there remain few NGS clinical applications. Current applications include areas in which NGS’s capacity, sensitivity, and specificity position it for dominance, such as prenatal testing, tumor transplant matching, and an increasingly large segment of oncology tests.2
Regardless of the regulatory and reimbursement environment, establishing clinical utility for a diagnostic test is demanding. Innovators must not only demonstrate that a new test provides reliable incremental predictive information, they must also show that this new information will change clinical decisions and thereby improve clinical and/or economic outcomes. This involves overcoming a variety of challenges: scientific, clinical, regulatory, and reimbursement-related.
Non-Invasive Prenatal Testing (NIPT) – NGS is the only technology able to reliably detect possible genetic abnormality in the very low concentrations of fetal DNA circulating in maternal blood, and thus avoid the need for amniocentesis, which carries a risk of very serious fetal health impacts.
Transplant HLA matching – Ensuring compatibility between organ donor and recipient Human Leukocyte Antigen (HLA) types is key to minimizing the risk of transplant rejection. NGS can provide more reliable information about more genes, including important regulatory regions, and can distinguish between maternal and paternal DNA, resulting in a faster and more reliable determination of compatibility.
Oncology – Uses of molecular information include predictive, diagnostic, and prognostic applications to identify genetic patterns that increase risk of disease, determine the genotype of an existing tumor, and understand tumor aggressiveness and response to therapy.
The successful transition of NGS techniques from more established research settings to clinical testing settings requires not only the identification of robust predictive patterns in the underlying data, but also tests that can reliably detect these patterns and communicate actionable implications to physicians. This transition is often far from straightforward, however, due to the sheer volume and complexity of NGS sequencing data, which require more sophisticated informatics than sequencing platforms have historically offered. The emergence of specialized providers of interpretive content, such as N-of-One®3, underlines the growing importance of this market need.
Yet, the development of technical capabilities to identify patterns or associations in NGS sequencing data is not in itself sufficient to create widespread acceptance of clinical testing based on NGS data. A range of stakeholders that includes regulators, physicians, and payers must be convinced that these patterns can translate into clinical utility – that NGS techniques offer concrete recommendations with respect to treatment decisions and can either improve patient outcomes (e.g., by recommending strategies for prevention, early detection, or targeted treatment) or achieve comparable outcomes at lower cost.
This process is already under way. Today, clinical, regulatory, and reimbursement stakeholders are already engaging with the emerging reality of NGS diagnostic tests. Such tests are likely to raise distinctive concerns from both payers and regulators, increasing the evidence thresholds for developers.
Some NGS techniques have already received endorsement from clinicians. In the treatment of lung cancer, for example, the detection of mutations in oncogenes, such as EGFR, KRAS, and ALK, can help practitioners determine the effectiveness of targeted therapy for patients with non-small cell lung cancer, which includes 85% of lung cancers.4 The effectiveness of these techniques recently led the National Comprehensive Cancer Network to recommend that testing for mutations associated with specific forms of lung cancer be conducted via a multiplex/NGS panel for all lung cancer patients.5
For payers, a major concern is that the proliferation of many-gene tests could give rise to unnecessary treatments or additional diagnostic procedures that produce little or no utility. The reimbursement environment has already become favorable for some NGS applications, such as NIPT and HLA tests. For many other NGS applications, establishing clinical utility and securing adequate reimbursement remains a challenge. This has been the case for years in diagnostics, and in recent years the bar has only gotten higher. One challenge is that innovators cannot rely on uniform criteria. Although guidelines, such as those outlined in MolDx (molecular diagnostic services), play an important role, reimbursement determinations are made by individual payers. The move away from code-stacking (i.e., utilizing miscellaneous codes and/or process step codes) has increased the importance of obtaining new CPT (current procedural terminology) codes for novel diagnostics. Recognizing the potential of these NGS techniques, the American Medical Association (AMA) has proposed new CPT codes to cover a broad range of NGS-based tests, which are under consideration for introduction in 2015.6 Historically, however, securing new CPT codes has been a multi-year proposition, and the effectiveness of changes in the AMA’s process remains unknown.
For regulators, safety will be a primary concern, due to the complexity of demonstrating clinically actionable guidance in the move from detection to interpretation with respect to a panel spanning tens or hundreds of genes. Although the FDA is now developing regulatory frameworks for NGS-based tests, NGS test developers face significant uncertainty that has the potential to undermine product economics. Historically, a significant proportion of diagnostic tests in the United States have been conducted in FDA-certified labs as “laboratory-developed tests” (LDTs), rather than with the use of “kits” designed for the purpose by a diagnostics manufacturer. Unlike manufacturer-developed kits, LDTs have not traditionally been subject to FDA approval. This means that late-stage opportunists could market “copycat” tests that draw on the same underlying pattern and mode of detection as FDA-approved tests, without taking on any of the cost or risk necessary to secure regulatory approval (see below). “Companion diagnostics” tests to support targeted oncology therapies, for example, are predominantly conducted as LDTs – even though the existence of an FDA-approved kit is required for FDA drug approval.7
FDA-approved test: Assemble clinical evidence to assure safety and efficacy for a “kit,” comprising dedicated reagents and interpretive guidance (or software) for use on a specific platform to make a specific clinical determination.
Lab-developed test: No test-specific regulatory requirements. Test developer/implementer must conform to CLIA (clinical laboratory improvement amendments) standards. (Note, however, that the FDA has recently proposed test-specific regulatory oversight – see main text.)
Anticipated reimbursement and regulatory changes are likely to significantly affect market structures. While many of these changes are likely to support innovation, they also pose new challenges and uncertainties. Recently announced Medicare reimbursement changes,8 for example, will require CMS to establish unique reimbursement codes for tests. This, in turn, will compel LDT providers to independently secure reimbursement, rather than piggybacking on a reimbursement code established by the innovator (as they can now). This should enhance innovator economics – perhaps significantly. At the same time, however, CMS’s shift to market-based pricing could challenge smaller labs, which lack the scale necessary to offset the cost of applying for unique LDT codes or to perform non-LDT tests. This could have unintended consequences with respect to test manufacturers’ negotiating positions.
For LDT suppliers, too, changes are also on the horizon. The FDA recently announced its intention to increase regulatory oversight over LDTs9 and will soon require LDT providers to offer evidence of safety and efficacy, similar to that required from “kit” manufacturers. The FDA intends to apply these requirements immediately to LDTs that mirror already approved companion diagnostics and other already approved high-risk (“Class III”) tests, and later phase them in for other tests: within two years for all high-risk tests and within four years for moderate-risk (Class II) tests. These requirements may ultimately close the LDT pathway for novel NGS diagnostics. On the one hand, these new LDT requirements will reduce the risk of “copycat” competition for innovator-developed test kits; on the other, the new rules will impose costly and lengthy premarket approval evidence-development requirements on new tests. The result may be slower, and perhaps less, innovation.
Although in many areas of the personalization of health care progress has not yet matched early expectations, NGS techniques that successfully negotiate these challenges unquestionably offer the opportunity to improve treatment paradigms in a range of disease areas. ■
As leaders in Analysis Group’s Health Care practice, Managing Principals Brian Gorin and Edward Tuttle and Vice President Matthew Barrett have extensive experience working with a variety of diagnostics firms in the development and execution of evidence strategies.
From Health Care Bulletin: Fall 2014