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Precision medicine: Barriers to investment

The case for precision medicine has been made. Now, how do we make it happen?

Susan Morse, Managing Editor

Precision medicine is a subject that keeps coming up when financial leaders plan their hospital capital investments.

CFOs, and others, know a change is coming and they don't want to make millions of dollars in technology investments that could become obsolete in 5-10 years due to advancements in the genetic space, according to Michael Allen, CFO at OSF HealthCare and incoming chairman of the Healthcare Financial Management Association.

"The Eric Topol's of the world have spoken, the topic is coming up in various degrees," said Allen, referring to outspoken cardiologist Eric Topol, promoter of genetic medicine. "It's not so much showing up in operating plans or year-to-year budgeting. We're trying to navigate all kinds of disruption."

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OSF does long-term financial planning out 10 years, but is more focused on the five-year plan.

Conversations generally start with the chief strategy officer and subject matter experts sitting around the table with the CFO and others who ask the questions to begin the dialogue on what technology is on the horizon that could displace what we're investing in, Allen said.

OSF is a large health system that has a venture capital fund to invest in the disruption to the way care has been traditionally delivered.

Out of OSF's 14 to 15 capital investments, one or two are in the precision medicine space around precision dosing software and chemotherapeutic agents, Allen said. Another investment is in the genomic sequencing area to develop a better turnaround time in lab testing for tumor biopsies.

"Where we're starting when we do these kinds of investments, we've made a commitment operationally, to try to use them," Allen said.

From a macro planning view, a CFO, for example, must think about the type of investments to treat cancer in the future beyond chemotherapy and radiation oncology. 

"More and more we're asking the question, in the past we thought investments were indefinite," Allen said. "Now with precision medicine what we're understanding on the future, 'Wow, if going to put $30 to $40 million into this expensive, more permanent equipment, am I feeling good about how long the technology is viable?' We're in an ambiguous and uncertain time."


Investment in care using precision medicine requires knowing what payers will include in their contracts for reimbursement.

Insurers are looking at precision medicine reimbursement, knowing that 30 percent of health is genetic driven, according to Meredith D. Duncan, regional strategy officer for the Texas/Oklahoma market at Aetna. Duncan has also worked on provider side so has both perspectives.

The strategy from a payer point of view is to evaluate genetic testing and contracts with preferred and innovative labs for utilization management, Duncan said.

Aetna has a 20-year history of evaluating precision medicine when it began to look at genetic testing for breast and ovarian cancer.

"We now provide genetic counseling services by phone," Duncan said. "We were the first plan to require quality review of genetic labs. I think as we look forward we want to continue to be involved in policy and better understand how precision medicine care gets delivered."

The challenge is in knowing that the tests being done are based on evidence, she said, because it could change the course of treatment.

"We have to have good policies in place," she said. "To move forward we have to drive quality outcomes."

Reimbursement, especially for diagnostics, remains one of the biggest challenges, according to Daryl Pritchard, Ph.D., senior vice president for Science Policy at the Personalized Medicine Coalition.

Pritchard agrees that the key is more focus on the evidence development that payers need.

"The field is now at a point where it needs to develop the evidence for coverage," Pritchard said.

This presents what is known as the evidence conundrum. The payers need evidence based on practice and there can be no practice without reimbursement.
"One way this struck a chord with payers is to do modeling studies," Pritchard said. "Economic studies have been done to model and then populate that model with real world evidence."

The ROI is done on the downstream cost analysis, to determine the 10-year benefits when the treatment is only 5 years old.

"That's where modeling comes in," he said. "Reimbursement is a big barrier, but really it's practice. It's practice gaps in the delivery system. How do we ensure information gets incorporated properly and drives treatment decisions? If it takes six weeks to get results back from a genetic test, and you're not willing to wait six weeks, you get into standard treatment."


Since the completion of the Human Genome Project in 2003, there's been a real pivot to clinical adoption, Pritchard said.

"In the last five years, we've been seeing now over time that enough evidence  has developed to reach a threshold where there is a case for saying, 'This is a good strategy, this is working,'" Pritchard said.

This is being used to a greater extent in pharmacogenomics, where real strides have been made in personalized medicines.

In the last five years there's been an increase in targeted therapies for new drugs that have biomarkers.

Ten years ago, about 5 percent of new drugs represented personalized medicine. Over the last four years, this has grown to more than 25 percent, Pritchard said. In 2018, 42 percent of the new drugs approved are for personalized medicine.

The venture capital market has so far been lukewarm for the diagnostics industry, with funding more readily available for targeted therapies, he said.

"There's a general thought things will change for the better for diagnostic market," he said. "The current challenge is around integrating into the healthcare system. The case for personalized medicine has been made. How do we make it happen?"

Twitter: @SusanJMorse
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