David L. Veenstra, PharmD, PhD

 To systematically assess clinical and economic evidence for oncology orphan drugs marketed in the United States and to highlight the challenges and opportunities for evidence development within this pharmaceutical category.

 We conducted systematic literature searches of the Medline and Embase databases for clinical and cost-effectiveness studies published before June 2010 for all oncology orphan drugs marketed in the United States. We used the Grading of Recommendations Assessment, Development and Evaluation method and the Quality of Health Economic Studies criteria to assess the quality of the selected studies.

We identified 60 randomized controlled trials and 21 cost-effectiveness analyses to support 47 oncology orphan drugs. A total of 21 drugs had moderate or high-quality bodies of clinical evidence, 11 had low-quality or very low quality clinical evidence, and 15 drugs could not be evaluated because we were unable to identify clinical evidence that met our inclusion criteria. The Spearman rank correlation coefficient for the level of evidence for oncology orphan drugs and disease prevalence was 0.3 (95% confidence interval, 0.0-0.5). The cost-effectiveness analyses received quality scores between 72 and 100 (range 0-100), with a mean score of 85.

The results of our study show that oncology orphan drugs marketed in the United States have varying levels and quality of clinical evidence and a paucity of evidence regarding economic value. Innovative analytic and policy approaches are needed to develop and implement a decision-making framework for this pharmaceutical category that is consistent with evidence-based medicine and comparative effectiveness research.

	We conducted a systematic literature review to critically assess the clinical and economic evidence supporting oncology orphan drugs marketed in the United States.

		Oncology orphan drugs marketed in the United States have varying levels and quality of clinical evidence, and a paucity of evidence demonstrating their economic value.

		The current levels of clinical and economic evidence present challenges for decision making about oncology orphan drug availability and accessibility.

		Innovative analytic and policy approaches are necessary to develop and implement a decision-making framework for oncology orphan drugs that is consistent with evidence-based medicine and comparative effectiveness research.

	Comparative effectiveness research (CER) can be described as the assessment of a medical intervention against alternative interventions with the intent of identifying treatment strategies that are likely to have preferable benefit-risk profiles or are considered cost-effective in real-world clinical settings. The purpose of CER is to assist healthcare providers, payers, patients, and decision makers in making informed healthcare decisions that will improve individual and population health.

	Definitions of a rare disease differ around the world and the prevalence threshold varies between countries.

 In the European Union, a disease is considered rare if it affects fewer than 215,000 individuals, while in the United States, a rare disease is described as a condition with prevalence of less than 200,000 or a disease with distinct subpopulations consisting of fewer than 200,000 individuals nationwide.

 As of 2010, 362 drugs indicated for rare diseases (orphan drugs) have received US Food and Drug Administration (FDA) market approval, and oncology therapies comprise the largest clinical subcategory.

 In general, orphan drugs have relatively higher costs than other drugs because manufacturers must rely on smaller patient populations to recoup development investments. In the United States, 15 orphan drugs were commercialized between 2006 and 2008; 6 of these cost more than $100,000 per patient per year.

	Previous studies have suggested that orphan drugs have less robust bodies of evidence because smaller patient populations and limited knowledge of rare conditions constrain the design, conduct, analysis, and interpretation of clinical trials.

 Due to the rapid rate of oncology orphan drug development and the significant financial burden associated with cancer treatments, there have been increasing pressures on drug manufacturers to demonstrate the value of their products. Less robust bodies of evidence will present particular challenges to CER and will make decision making about orphan drug accessibility difficult. The comparative effectiveness data supporting oncology orphan drugs marketed in the United States have not been well studied. The primary objective of this study was to systematically and critically assess the level and quality of clinical and economic evidence currently available for all oncology orphan drugs marketed in the United States. A secondary objective was to highlight the challenges and opportunities for evidence development within this pharmaceutical category.

	The Cumulative List of Designated Approved Orphan Products (www.fda.gov/orphan/designate/allap.rtf) describes drug products that have received orphan designation and have ever received marketing approval from the FDA.

	We used this list, updated May 5, 2009, by the FDA, to identify products indicated to treat rare cancers. Orphan products indicated for diagnosis, palliative care, or treatment of secondary conditions associated with cancer, such as neutropenia, were not included in this study. Any product withdrawn or discontinued from the US market as of June 2010 was also excluded.

	For each oncology orphan drug included in this study, we conducted a literature search in the Medline and Embase databases for randomized controlled trials (RCTs) and cost-effectiveness analyses published prior to June 2010, using search terms that included the drug’s US brand name, generic name, disease indication, and the terms “randomized,” “efficacy,” “cost-effectiveness,” and “economic.” Our priority was to identify RCTs, but we also used the literature search to identify observational studies (prospective or retrospective) or other studies that described the treatment effect of the drug. We also identified published articles through information provided on the FDA Web site for new drug approvals and manual searches of article references. We defined cost-effectiveness analysis using the definition established by the Panel on Cost-Effectiveness in Health and Medicine as “An analytic tool in which costs and effects of a program and at least one alternative are calculated and presented in a ratio of incremental cost to incremental effect.”

	For each literature search, 1 author (MMC) reviewed all of the titles and abstracts of studies likely to meet the following inclusion criteria: (1) original RCT or cost-effectiveness analysis evaluating the orphan drug used for its approved orphan indication, or observational study or published article describing the treatment effect of the orphan drug used for its approved orphan indication; (2) comparative RCTs in which the orphan drug is compared with placebo or a clinically relevant comparator; (3) if the orphan drug (eg, drug A) is used as part of a combination therapy regimen, the trial is designed so that the clinical effect of the orphan drug can be isolated and directly assessed (eg, drugs A, B, and C vs drugs B and C); (4) article is published in the English language; and (5) entire article is available for review. 

 presents a flow diagram that describes the literature search methods and the restrictions applied to our search.

	For each clinical study that met the inclusion criteria, we abstracted information about the comparator, patient characteristics, study design and treatment allocation, primary outcome measure, statistical analytic method, reporting of treatment effect with uncertainty, and study sponsor. For each cost-effectiveness analysis that met the inclusion criteria, we abstracted information about the comparator, study perspective, methods, data sources, primary outcome measure, base-case and sensitivity analysis results, and study sponsor (if reported).

	We used the Grading of Recommendations Assessment, Development and Evaluation (GRADE) method, an evaluation system created by a diverse group of international guideline developers, to assess the quality of clinical bodies of evidence. The GRADE system assesses the quality of a body of evidence by focusing on 4 main components: study design, quality, consistency of evidence, and directness of comparator, population, and intervention. The method also evaluates limitations, potential biases, and uncertainty to assign 1 of 4 possible grades: high, moderate, low, and very low.

 We adapted the grading system to our study by including a fifth grade category, “not able to assess,” to describe circumstances where we could not identify published studies that met our inclusion criteria. 

 details the GRADE methodology and how it was implemented in this study, and defines each quality grade.

	We used the Quality of Health Economic Studies (QHES) grading criteria, a validated quantitative instrument developed by health economists, to assess the quality of cost-effectiveness studies. The QHES grading system consists of 16 criteria that are described in 

 Each criterion is associated with a weighted score that was\ assigned in its entirety for each criterion perceived by the lead author to be satisfactory. Zero points were assigned to each criterion that was perceived to be unsatisfactory. Certain criteria, such as subgroup analysis, were not applicable for all studies. In these circumstances, we used both a best-case and worst-case scoring method where full points and zero points were assigned to each inapplicable criterion. The weighted scores were summed across all criteria for a total of 100 possible points for each study.

	We graphically explored whether disease prevalence was associated with the level and quality of evidence for oncology orphan drugs and calculated the Spearman rank correlation coefficient to estimate the strength of the relationship. We obtained estimates of disease prevalence from Orphanet, an electronic reference for rare disease information in Europe (www.orpha.net).

 This resource was the only one we identified that provided a collection of prevalence estimates for rare diseases. Although the data were derived in Europe, we believe the estimates are of similar magnitude in the United States, assuming similar risk factors for rare cancers. The assessment of correlation excluded 5 drugs: aldesleukin for metastatic melanoma, valrubicin for urinary bladder carcinoma, doxorubicin liposome for metastatic ovarian cancer, and toremifene citrate and exemestane for breast cancer. These cancers are not considered rare. The drugs are indicated for smaller subpopulations of patients with specific disease, physical, or genetic characteristics. Prevalence estimates for patients with these specific characteristics were not reported. We also explored whether the level and quality of evidence for oncology orphan drugs is associated with receipt of FDA accelerated approval.

	We initially identified 48 oncology orphan drugs for inclusion in this study from the Cumulative List of Designated Approved Orphan Products. Of these drugs, 3 (Idamycin, Vesanoid, and Mylotarg) have been discontinued or withdrawn from the US market, and 5 drugs (Gleevec, Sprycel, Tasigna, Velcade, and Temodar) were indicated to treat more than 1 orphan indication or patient population; each indication was independently evaluated for these drugs. We did not include expanded or supplemental approvals for nonorphan indications. In total, 47 orphan drugs and indications were included in this study and are listed in 

 by their brand and generic names. The majority of oncology orphan drugs are indicated for rare blood cancers (n = 30). Table 3 also describes the date of full and/or accelerated regulatory approval, and lists the number of RCTs identified in the published literature that met the inclusion criteria with citations of all published articles that were used to inform the body of evidence.

	We identified a total of 60 RCTs that met our inclusion criteria. The greatest number of RCTs were conducted for interferon alpha-2a indicated for chronic myelogenous leukemia (CML) (n = 7), aldesleukin indicated for metastatic renal cell carcinoma (n = 7), and rituximab indicated for non-Hodgkin B-cell lymphoma (n = 6). The majority of trials we identified comprised the evidence base used for regulatory approval.

 summarizes the clinical evidence grades assigned in this study. Twelve drugs had moderate-quality evidence, including cladribine for hairy cell leukemia and arsenic trioxide for acute promyelocytic leukemia. Although we did not identify any RCTs for these drugs that met our inclusion criteria, their clinical bodies of evidence consisted of observational studies that consistently reported similar treatment effects or a dose-response association with little threat to validity. Individual GRADE ratings assigned to each drug and their clinical bodies of evidence are listed in Table 3.

 shows that there are drugs indicated for cancers with lower prevalence that had high-quality evidence and drugs indicated for cancers with higher prevalence that had low-quality evidence or lacked a sufficient body of evidence for review. The Spearman rank correlation coefficient between disease prevalence and the level of evidence for oncology orphan drugs was 0.3 (95% confidence interval [CI], 0.0-0.5). This indicates that there may be a weak correlation between the prevalence of rare cancers and the number of RCTs conducted for drugs indicated to treat rare cancers. A total of 14 drugs in our study received accelerated approval for the orphan indication. Of these, zero had high-quality bodies of evidence and 5 had moderate-quality bodies of evidence. Although our sample size was small, these results provided some indication that the accelerated approval provision does not optimize high-quality evidence generation for oncology orphan drugs.

	We identified 21 cost-effectiveness studies that met our inclusion criteria. Of those studies, 10 evaluated the use of either interferon alpha or imatinib mesylate, or compared both for CML. 

 summarizes the cost-effectiveness studies included in this assessment and describes comparators, study perspectives, base-case incremental cost-effectiveness ratios, and results of sensitivity analyses.

	The cost-effectiveness analyses received QHES scores ranging from 72 to 100, with a mean score of 85. The clinical data used to inform the studies were largely obtained from either randomized trials or patient medical records. The majority of studies implemented modeling techniques to project longer-term health outcomes that could not be obtained from limited clinical data. Cost inputs were obtained from administrative databases and the published literature. The most common shortcomings were as follows: 11 studies used data inputs from sources that might potentially incorporate bias and did not provide explicit discussion about the direction and magnitude of potential biases; 6 studies did not specify the source of funding for the study, which is recommended to add transparency; and 5 studies either failed to specify the time horizon for analysis, conducted analysis using a short time horizon that is not expected to fully capture clinically significant costs and effects, or did not implement adequate discounting for both future costs and outcomes. Table 4 reports the quality scores assigned to each cost-effectiveness study using the best-case scoring method where full points were assigned to inapplicable criteria. Scores assigned using the worst-case approach, where zero points were assigned to inapplicable criteria, are reported in parentheses.

	We conducted a systematic literature review to identify and assess clinical and economic evidence for 47 oncology orphan drugs marketed in the United States and applied 2 independent grading frameworks to the selected studies to critically assess the quality of each body of evidence. The supporting bodies of evidence available for marketed oncology orphan drugs vary in quality, with limited evidence demonstrating their economic value.

	Although the GRADE methodology is relatively explicit, reviewer judgment is required. In particular, we found that it was necessary to grade certain criteria subjectively in order to better accommodate oncology orphan drug characteristics. For example, the majority of RCTs for oncology orphan drugs had relatively small sample sizes that could lead to substantial imprecision (eg, lack of power, wide confidence intervals). We assigned lower ratings for studies that did not meet predetermined enrollment criteria or appeared underpowered to detect differences in their primary end point, but we did not consider a smaller sample size in itself to be a limitation. We critically assessed each study and lowered ratings when we identified instances of bias that were not explicitly addressed. We also lowered ratings when studies were poorly reported, or when bodies of evidence consisted of studies that reported inconsistent treatment effects.

	The number of RCTs identified in our study is comparable to the number in a study conducted by Tsimberidou and colleagues that evaluated the long-term marketing outcome of oncology drugs approved by the FDA without a randomized trial.

 In their study, 68 approved oncology drugs were identified and almost half (n = 31) were approved without an RCT. Kesselheim and colleagues recently evaluated pivotal trial characteristics of orphan and nonorphan drugs approved between 2004 and 2010 to treat cancer and concluded that pivotal trials for approved oncology orphan drugs were more likely to be smaller, nonrandomized, and unblinded, and to use surrogate end points to assess efficacy.

 The study is limited in that it only evaluated pivotal trials and did not account for other available clinical information. Also, the study was restricted to recently approved oncology orphan drugs and did not review the entire pharmaceutical category. We observed the same characteristics in the clinical trials that were included in our study. We also observed that there is a lack of published post-marketing studies and information about longer-term safety and efficacy.

	We hypothesized that the level of evidence available for oncology orphan drugs would have a strong correlation with disease prevalence in that larger patient populations enable better evidence generation. However, our results suggested a potentially weak correlation between the prevalence of rare cancers and the level of evidence available for drugs indicated to treat rare cancers. A weak relationship suggests that evidence development for oncology orphan drugs may not depend as much on the size of a particular patient population. Instead, evidence development in this pharmaceutical category may depend more on other factors, possibly regulatory requirements or reimbursement considerations.

	The overall dearth of cost-effectiveness studies in this pharmaceutical category, and in oncology as a whole, may reflect evidence limitations or publication bias, where studies of drugs with higher costs, greater benefit-risk uncertainty, or lower effectiveness are not published. In assessing the economic challenges of orphan drugs, Drummond and colleagues stated: “In short, if standard health technology assessment (HTA) procedures were to be applied to orphan drugs, virtually none of them would be ‘cost-effective’.”

 This conclusion was largely based on 2 factors: (1) high incremental cost per quality-adjusted life-year and (2) insufficient breadth and quality of clinical evidence for orphan drugs compared with drugs for more common diseases.

 Our results demonstrated that, contrary to these prior suggestions, it is feasible for some oncology orphan drugs to be considered cost-effective in specific healthcare settings using standard methods of health technology assessment. The clinical and economic value of each orphan drug should be assessed individually, on a case-by-case basis. We observed that all of the drugs considered cost-effective in their respective studies had moderate-quality to high-quality bodies of clinical evidence. This finding suggests there may be a relationship between the level and quality of clinical evidence and the likelihood that an oncology orphan drug has published estimates of cost-effectiveness.

	Evidence development is costly and challenging for all healthcare interventions, but particularly for orphan drugs, due to smaller patient populations and limited clinical knowledge of rare conditions. The trade-offs to generating more robust bodies of evidence may include delayed product accessibility, higher costs, or reduced availability of therapies. For conditions that have therapeutic alternatives, these trade-offs may be acceptable. However, for life-threatening conditions with limited therapy options, these trade-offs may not be considered acceptable. For rare diseases with only a single treatment option, one may question whether economic analysis should apply. Cost-effectiveness analysis is useful in that it provides information about the value of a health intervention compared with an alternative, which may be best supportive care or no therapy. From an equity perspective, McCabe and colleagues argue that there is no sustainable reason why the cost-effectiveness of orphan drugs should be evaluated differently from other drugs.

 However, healthcare systems may wish to consider additional factors when making decisions about orphan drugs, such as budget impact, disease severity, availability of alternative therapies, or societal preferences toward patients with rare diseases.

	Our study highlights 3 important policy questions. First, what types of study designs, incentives, or methods can be used to encourage better evidence development for oncology orphan drugs? Second, how much evidence is necessary or considered sufficient to healthcare decision makers, and what types of evidence should be generated prior to and after marketing approval? Finally, what are the process and decision-making criteria for evaluating comparative effectiveness data for oncology orphan drugs? Emerging private and public initiatives are attempting to address these questions to some extent with evolving methods such as coverage with evidence development

 but additional innovative analytic methods and policy approaches are necessary.

	We recognize several limitations to this study. The most important limitation is that the GRADE assessment framework provides information about the amount of confidence that can be associated with a body of evidence and does not relay any information about the magnitude of clinical benefit or safety of a drug. Certain oncology orphan drugs with low-grade published evidence may yield significant clinical benefits, and conversely, certain drugs with high-grade evidence may yield very little benefit. Currently, there is no established framework for quantifying the magnitude of benefits or risks from health interventions. Garrison and colleagues suggest pairing CER and benefit-risk analysis into 1 framework and describe how cost-effectiveness analysis models could be adapted to conduct quantitative benefit-risk assessments.

 It is important for manufacturers to engage in continuous evidence generation, even after a product is commercialized, so that the effectiveness and safety of their products can be accurately assessed. Comparative effectiveness research methods that capture and incorporate nonpublished clinician or patient experiences could also be useful to help better identify the real-world value of marketed oncology orphan drugs.

	Given the large number of drugs included in this review and the numerous keywords we could have used to search for potential clinical and economic studies, this review may not have captured all relevant drugs or studies. We used broad search terms in 2 major databases and also conducted manual searches of reference citations; this methodology allowed us to screen as many studies as possible. Only 1 author (MMC) reviewed potential studies, abstracted information, critically assessed articles, and assigned quality ratings. Although attempts were made to be accurate and consistent, it is possible that unintentional errors and inconsistencies could have reduced or improved the quality rating for a body of evidence. The QHES is limited in its ability to identify poorly analyzed studies and does not have a benchmark for total scores, which limits its ability to quantitatively categorize and distinguish high-quality studies from low-quality studies.

	The results of our study show that oncology orphan drugs marketed in the United States have varying levels and quality of clinical evidence and a shortage of evidence demonstrating economic value. It is uncertain whether the current evidence levels for oncology orphan drugs marketed in the United States are sufficient to support decision-making practices consistent with principles of evidence-based medicine and CER. This issue remains an open policy question that requires additional evaluation.

Articles

This study critically assessed the published clinical and economic evidence supporting oncology orphan drugs marketed in the United States.

Systematic Review of Comparative Effectiveness Data for Oncology Orphan Drugs

Despite the pervasiveness of laboratory tests and their importance to medicine, evidence for their appropriate use often is very limited. In this article, we argue for a fundamental restructuring of the process by which laboratory tests are evaluated and reimbursed. We present an approach that would promote more evidence-based appraisals for laboratory tests. In addition, we urge that coverage and reimbursement for laboratory tests move toward an evidence- and value-based approach, using the tools that largely have been adopted for pharmaceuticals by many US healthcare payers. To address this information gap for laboratory tests, we note several potential strategies to encourage manufacturers, laboratory service providers, and payers to collect outcome and cost data that will better support effective use of new laboratory tests. Integral to increasing appropriate use and reimbursement will be the development of a common language and format for dialogueâ€”facilitating the development, review, and delivery of evidence-based tests by manufacturers, clinical laboratories, and healthcare payers. 

Laboratory tests are an important yet often underappreciated component of healthcare and the health economy.

It is estimated that as much as $56 billion will have been spent on laboratory diagnostic services in 2005.

More important, laboratory tests by their very nature are designed to initiate a cascade of decisions regarding further testing, prevention, or treatment–decisions that ultimately determine the course of illness and cost of healthcare for patients who receive them. A recent report estimated that although diagnostics account for 1.6% of the Medicare total costs, they influence 60% to 70% of downstream treatment decisions.

Despite their pervasiveness and importance to medicine, the evidence for the application and utility of laboratory tests often is limited.

Tests being brought to market do not require the same data as therapeutics do, and technology assessments of laboratory tests have not undergone the revolutionary changes in evidence review that have occurred for drugs.

Instead, payment for tests is linked to an antiquated coding system.

 Finally, innovative insurance coverage and payment policies that are common for drugs are rare for laboratory tests.

In this article, we argue for a fundamental restructuring of the way laboratory tests are evaluated and reimbursed. We propose that coverage and reimbursement for laboratory tests should move toward an evidence- and value-based approach, using some of the tools that have been adopted for pharmaceutical assessment by many US healthcare payers. Furthermore, reevaluating the methods used to assess and pay for tests is a timely endeavor, as diagnostic tests are on the forefront of the trend toward personalized medicine.

Public and private health insurers pay for tests performed in laboratories that meet standards certified under the Clinical Laboratory Improvement Amendments (CLIA) of 1988, according to 

code does not exist, health insurers sometimes reimburse the new test by using a 

code for an existing test, a process known as "mapping."

code is established, test payments are established by "cross-walking" or "gap-filling." In cross-walking, a new test is determined to be similar to an existing test, multiple existing test codes, or a portion of an existing test code. Payment is set at an "appropriate" percentage of the payment for the existing test.

In gap-filling, insurers are left to determine an appropriate payment amount for the new code. The Centers for Medicare & Medicaid Services uses local carrier decisions as a basis for the next year's clinical laboratory fee schedule.

A recent report by the Institute of Medicine suggested that the process of establishing reimbursement levels for novel laboratory tests is out-of-date and not equipped to handle emerging diagnostic and genomic tests: 

[Medicare] payments for some individual tests likely do not reflect the cost of providing services, and anticipated advances in laboratory technology will exacerbate the flaws in the current system. Problems with the outdated payment system could threaten beneficiary access to care and the use of enhanced testing methodologies in the future.

More broadly, some argue that reimbursement must more accurately reflect clinical and economic value.

Public and private payers have not developed uniform methods for requesting information from laboratory test service providers about novel tests. There are several likely reasons. The first reason is historical: most health plans do not have standing test evaluation groups similar to pharmacy and therapeutics (P&T) committees, possibly because laboratory tests have not been viewed as clinically or economically significant enough to justify the expense associated with these groups. Second, in contrast to pharmaceutical manufacturers, neither test manufacturers nor laboratory service providers generally have large, sophisticated marketing teams targeting physicians, health plans, and patients. (A relevant exception may be the marketing of the ThinPrep test.

) Third, as noted above, federal regulatory requirements do not compel manufacturers or distributors to provide the type of evidence (eg, randomized clinical trials) that lends itself to systematic review.

Finally, the way laboratory tests are used in practice makes it difficult to apply the pharmaceutical evaluation model. Unlike most pharmaceuticals, laboratory tests are used in a wide range of clinical settings. For example, a complete blood count is used in hundreds of clinical situations, while antihypertensive drugs are used in a limited number of conditions. 

In lieu of an evidence-driven, value-based approach, the process of adopting new laboratory tests is essentially what economists call an "administering pricing" system. Pricing is set through a negotiation process that may be based on historical comparators in the case of cross-walking or perceived levels of analytic complexity in the case of gap-filling. As a result, there is little reward for creating additional value (either in a clinical or an economic sense) and hence little incentive to create the evidence to support value creation (L. P. Garrison, PhD, and M. J. F. Austin, PhD. The economics of personalized medicine: a model of incentives for value creation and capture. Unpublished observations, January 2006). We describe a process that is designed (1) to improve the quality of the evidence that is available when an insurance coverage decision is being made and (2) to increase the transparency and uniformity of the process by which payers request information from test manufacturers or laboratory service providers. 

Developing a Language for Describing Benefit

Test manufacturers, laboratory service providers, and health insurance plans will benefit from standardizing the way evidence supporting new laboratory tests is presented. Methodological standards for the evaluation of diagnostic tests have been published.

In addition, several domains relevant to health insurers, clinicians, and patients are considered in a published framework to evaluate diagnostic technologies (

Although many agree about the value of using these domains to evaluate tests, there is less agreement on how much evidence is necessary for an insurance coverage decision. 

In addition to considering the relevant domains from the Table, it is important to evaluate the incremental impact of a test; that is, the improvement that the new test provides over current diagnostic strategies (L. P. Garrison, PhD, and M. J. F. Austin, PhD. The economics of personalized medicine: a model of incentives for value creation and capture. Unpublished observations, January 2006). Because prospective trials directly comparing new laboratory tests with established diagnostic strategies are uncommon (particularly those evaluating the impact of the tests on patient outcomes), decision-analytic modeling techniques often are necessary to conduct quantitative evaluations.

Modeling is an underappreciated approach to evaluating new tests. Models help frame questions, provide transparent mechanisms for stating hypotheses about cause and effect, highlight deficiencies in clinical data, and force decision makers to make explicit judgments about values for data that are used to inform the model. Although some clinicians and health insurance plan executives remain skeptical of decision models, quality standards for models have been published and are readily accessible to decision makers who wish to assess their quality.

We define value for laboratory tests as it is defined for other health technologies: The intervention provides an overall benefit to the patient at an acceptable cost (ie, it is cost-effective). Petitti notes that there are 4 well-recognized criteria for identifying an intervention as cost-effective

More effective and more costly, with the added benefit worth the added cost. 

Cost saving with an outcome equal to or better than that of the alternative. 

Assessing value for tests can be difficult because tests are intermediate steps in the treatment pathway. The advantage of Petitti's framework

is that it allows flexibility, because value for tests can be defined narrowly (eg, the least expensive way to make a diagnosis) or broadly (improvement in survival at an acceptable added cost). 

Format for Dialogue Among Test Manufacturers,

Manufacturers and laboratory service providers cannot expect, and payers cannot promise, coverage of and appropriate reimbursement for every new test that comes to market. Similarly, payers cannot expect, and manufacturers and their delivery partners cannot promise, the same level of evidence for all tests. Nevertheless, the process should be transparent, and adopting a standard format would help clarify expectations and improve the decision-making process. We propose a process for information content and interaction that is intentionally similar to the format developed by the Academy of Managed Care Pharmacy (AMCP) for the evidence-based evaluation of drugs. More than 50 public and private health insurers covering more than 100 million lives have adopted the AMCP format.

 provides a template for manufacturers' reporting of clinical and economic information regarding laboratory tests. This template takes into account differences in evidence that are typically available for new laboratory tests compared with new pharmaceuticals. 

Some health plans might have a designated organizational unit that evaluates laboratory tests, providing a structure for soliciting and reviewing manufacturers' products. In the case of pharmaceutical products, that unit is the P&T committee. Health plan staff working with P&T committees usually are receptive to receiving information from manufacturers or service laboratories about new products. Indeed, the "unsolicited request" process pioneered by AMCP was designed to create a structure for dialogue between manufacturers and payers. A similar scheme would improve transparency and the flow of information for new laboratory tests. 

P&T committee members often are not health plan employees. Having such a quasi-independent group evaluate novel laboratory tests may improve the credibility of the decision process in the eyes of manufacturers, clinical laboratories, physicians, and patients. Still, maintaining committees is costly, and such maintenance may not be justified given the relatively low volume of tests that are introduced annually. One option is to fold the test evaluation process into the existing P&T structure. Alternatively, payers could hire consultants to evaluate select novel tests and make recommendations regarding coverage and reimbursement. 

Payers should be timely both in coverage decisions and in setting reimbursement levels, and when decisions are made, they should be supported with a rationale. In cases where requests for coverage are denied, such information allows manufacturers to design studies or collect other data that address concerns regarding the quality or content of the information supporting the product. 

To address known methodological weaknesses in studies evaluating diagnostic tests,

we describe in this section options for improving the quality of information. Some focus on market incentives; others are more regulatory in nature. At this early stage, we do not advocate one approach over another. Rather, we hope to foster a dialogue among stakeholders. 

Testing services in the United States are regulated by both federal and state laws and agencies, and are further reviewed by accrediting professional entities. All laboratory tests that meet the legal definition of in vitro diagnostic devices (IVDs; generally, diagnostic assays made for distribution outside a single provider laboratory) are evaluated by the US Food and Drug Administration's (FDA's) Center for Devices and Radiological Health. However, most tests offered by laboratory service providers are not IVDs; the manufacture of analytes or other components of such tests (called analyte-specific reagents) may need to meet FDA specifications for legal distribution. IVD approval, which typically is based on analytical performance, does not require other types of evidence that the FDA often mandates for devices that carry significant risk (eg, prospective controlled trials for implantable defibrillators). Although laboratory tests usually pose little direct risk of injury or death, they often lead to a cascade of clinical decisions, sometimes involving procedures that do carry significant risk for patients. For example, a positive prostate-specific antigen test often leads to prostate biopsy, which carries risk of bleeding and infection. As an extreme example, women whose genetic tests show BRCA mutations often choose to have prophylactic mastectomies and oophorectomies.

Genomic tests that are used to guide therapy choices also could represent a class of laboratory assays that pose unique patient risks. 

To address potential downstream indirect risk, the FDA could require test manufacturers or service providers distributing IVDs to submit clinical algorithms with recommended follow-up plans based on test results. In cases where the downstream consequences are significant, the FDA could require specific post-marketing studies. Another area of concern is laboratory-developed or "home brew" tests–those that are supplied by a single laboratory or laboratory company and therefore are not subject to federal regulatory review beyond CLIA. Many tests, including genetic assays, are brought to market as home brew tests.

 Strengthening regulatory requirements for some of these tests might enhance the ability of payers and clinicians to gauge their value. With a goal of more uniform quality standards for testing, federal, state, and professional oversight measures should be considered in toto. 

To increase funding of high-quality clinical studies focused on patient outcomes,

some advocate levies on medical services to fund prospective and retrospective clinical and economic studies for new and existing technologies.

Such research could be directed through existing agencies within the National Institutes of Health, the Agency for Healthcare Research and Quality, or freestanding private clinical research facilities. Such a system would be expensive and difficult to administer and manage only for laboratory tests, however, given the inconsistencies in reimbursement for tests across the settings where they are ordered. Levies also may create a significant disincentive for test development. In this context, levies could not be directed solely at laboratory testing; rather, they should include all reimbursable health services. 

-based reimbursement, if novel tests are not promptly and specifically assigned codes, reimbursement and hence use are hindered. And because 

codes are updated only annually, opportunities for gathering clinical information are lost. To avoid these problems, novel tests could be assigned unique temporary 

codes that would allow billing and tracking of the test's use in delivery systems, and its effect on clinical decision making and patient outcomes. 

These unique codes would allow manufacturers or service laboratories to obtain reimbursement for novel tests, but such a strategy would shift a large part of the cost of test development and evaluation to payers. To address this problem, a risk-sharing approach could be implemented: payers could agree to preliminarily cover new tests on the contingency that manufacturers and service laboratory providers have a certain amount of time to establish clinical utility and value. Although these types of agreements are just beginning to be used for pharmaceuticals, they may offer promise for laboratory tests, given the fact that the evidence available at the time of market launch is different from the evidence that will be available after clinical use.

Finally, and perhaps most important, consideration should be given to rewarding innovative and novel tests with greater reimbursement based on an explicit measure of the additional value they create. Health economists have developed techniques for measuring the incremental value of new technologies in terms of cost savings, morbidity reduction, and life extension, and for integrating these impacts into models that provide a measure of overall incremental value. Furthermore, higher expected levels of reimbursement can be used to justify greater investments in measuring and demonstrating ultimate clinical utility and economic value. 

Laboratory tests are developed under a different regulatory structure than pharmaceuticals and have a unique and complex function in medical care. Novel tests may come to market with little information supporting their role in clinical decision making or evidence regarding their impact on patient outcomes. To address these issues and to improve patient care and outcomes, we have outlined a structure and process for information sharing among laboratory test manufacturers, clinical laboratories that provide tests, and payers that make coverage and reimbursement decisions about these tests. Although it is unlikely and perhaps unnecessary that the evaluation process for laboratory tests will equal that required for drugs, we can move much further toward a system that supports better gathering and sharing of high-quality evidence. Test manufacturers, clinical laboratories, payers, and clinicians all must play a role in this process. 

From the Fred Hutchinson Cancer Research Center, Seattle, Wash (SDR); the Department of Medicine (SDR), the Department of Pharmacy (DLV, LPG, SDS), and the School of Public Health (RC, JC), University of Washington, Seattle; and the Laboratory Corporation of America, Research Triangle Park, NC (PB). 

This research was supported by an unrestricted grant to the University of Washington from Laboratory Corporation of America. 

Address correspondence to: Scott D. Ramsey, MD, PhD, Fred Hutchinson Cancer Research Center, 1100 Fairview Ave N, M2-B230, PO Box 19024, Seattle, WA 98109. E-mail: sramsey@fhcrc.org. 

Toward Evidence-based Assessment for Coverage and Reimbursement of Laboratory-based Diagnostic and Genetic Tests

 To determine the potential impact of genetic testingand pharmacogenomics on healthcare delivery and costs.

 We examined 3 examples: (1) BRCA1/2 testing forbreast cancer risk, (2) HER2/neu overexpression testing to guidedrug treatment in women with breast cancer, and (3) CYP2C9 testingbefore the use of the anticoagulant warfarin. We discussedeach genetic testing example from the perspective of the patient,provider, insurer, industry, government, and society.

 The expanded use of genetic information offers manypotential clinical benefits, but also many economic challenges.One of those challenges will be managing the impact of genetictesting on healthcare delivery and costs.

 Systematic, evidence-based technology assessmentsand economic evaluations will have to be used to guide theincorporation of genomics into clinical practice. More researchalso will be needed to assess patient preferences and willingness topay for genomic technologies; how providers can assess and usegenomic technologies; and how the industry, insurers, and governmentcan best balance the relevant costs and benefits.

Many have asserted that the wealth of knowledgeoffered by the human genome portends a timeof rapid change in medicine.

 However, genomictechnologies will influence not only health outcomesbut also the delivery and cost of healthcare; and in thisera of increasing concern about healthcare costs, it willbe impossible to consider the implications of genomicmedicine without also considering the economic implications.

 Harold Varmus, MD, former director of theNational Institutes of Health, noted in an editorial in 

 that a key questionis: "How much will the expanded use of genetic informationfurther escalate the cost of healthcare, and who willpay for it?"

 Although many studies have addressedissues related to the privacy and fair use of genetic information,

 there has been surprisingly little discussion ofthe implications of genetic testing and pharmacogenomicsfor healthcare delivery and costs.

 Ultimately,these issues will substantially influence how patients andproviders adopt and utilize genomic technologies.

This paper reviews the current literature to assessthe potential impact of genetic testing and pharmacogenomicson healthcare delivery and costs. Our objectivesare: (1) to provide an overview of the key issues fromthe perspectives of patients, providers, insurers, industry,government, and society; (2) to discuss examplesfrom the empirical literature; and (3) to point out areasfor future research. In particular, we highlight how keyconsiderations are evolving as genetic testing is beingdeveloped for common conditions and drug-prescribingdecisions, instead of being used only to predict futurerisk of disease in small, relatively high-risk populations.

 illustrates 2 applications of genomics: (1)the use of genetic testing to predict disease risk and (2)the use of genetic information to guide drug developmentand prescribing ("pharmacogenetics/pharmacogenomics").This review examines both of theseapplications (also called "genetic testing" or "genomicmedicine" for brevity), but it does not examine the useof genomics to develop gene-based therapies.

The majority of growth in genetic testing todayinvolves finding tests that aid in diagnosing diseases,predicting future disease risk, or predicting drugresponse.

 The number of genetic tests that areexpected to move from the research setting to marketwill require providers without specialty training ingenetics to become "practitioners of genomic medicine."

 For example, Roche announced the launch of agenetic test to predict how individuals will react to a"large range of drugs."

 Therefore, the translation ofbasic science findings in genomics into clinical practicemust become a major priority.

It is critical that we begin now to understand theimpact of genetic testing&#150;both positive and negative&#150;on healthcare delivery and costs, even though thesenew technologies have generally not been widelyadopted in healthcare systems. With concerns over risinghealthcare costs, the impact of genetic testing onhealthcare delivery and costs will need to be consideredin assessing its potential added value before suchtechnologies are disseminated. Analyses can informfuture decision making and highlight the circumstancesunder which genetic testing strategies couldprove to be either a poor or a good use of scarce healthcareresources.

Below we examine the conflicts and challenges tothe relevant US stakeholders in implementing genetictesting. We provide illustrations throughout using 3types of genetic testing that offer interesting contrastsand comparisons:

Genetic testing for the purpose of predicting futuredisease risk based on an inherited mutation in anindividual (ie, germline mutation). We use theexample of testing for BRCA1/2 mutations,which are associated with a higher risk ofbreast and ovarian cancer. It has been estimatedthat 5% to 10% of breast cancers have aninherited component (including BRCA mutationsas well as others), and that approximately60% to 80% of women with BRCA mutationswill develop breast cancer.

 BRCA testing(BRACAnalysis&#174; test)is relatively expensive (>$2000 for counselingand testing

), and theprimary available interventionsrequire surgery (prophylactic removalof the breasts and/or ovaries).

prescribingdrug therapy based on genetic variation of thedisease

 such as acquired mutations in tumors (ie,somatic mutation). We use the example of testingfor overexpression of HER2/neu oncogenes,which are genetic alterations in specific cell typesthat determine prognosis and the potential forresponse to drug therapy, specifically trastuzumab(Herceptin&#174;, Genentech, South San Francisco,Calif) in the case of breast cancer. It has been estimatedthat 25% to 30% of breast cancer casesexhibit overexpression of HER2/neu,

 and womenwho are treated with Herceptin have demonstrateda 25% improved median survival time.

 Thetest for HER2/neu is relatively inexpensive, but anannual course of Herceptin therapy has been estimatedto cost $27 000 to $81 000.

prescribingdrug therapy based on genetic variation of theindividual

 such as variant alleles in drug-metabolizingenzymes. We use the example of testingfor variation in CYP2C9 before the use of theanticoagulant warfarin, which requires carefuldosing and patient follow-up because of bleedingrisk and significant interpatient variability indrug response. Approximately 20% to 30% ofCaucasian patients receiving long-term warfarintherapy have at least 1 variant allele, which hasbeen shown to be associated with an increasedrisk of overanticoagulation and bleedingevents.

 A genetic test for warfarin is not yet inroutine clinical use, but because warfarin is prescribedto more than 1 million patients in theUnited States annually, the potential cost impactis large. 

 summarizes these examples andstakeholder perspectives, which are discussed indetail below.

Patients are the ultimate consumers of healthcaretechnology, and many are aware of or interested ingenetic testing. According to a nationally representativesurvey, 41% of individuals in the United States haveheard that genetic tests can determine whether a personis at greater risk of developing cancer,

 and 79% ofrespondents in a population-based survey stated thatthey would take a genetic test to predict whether theywill develop Alzheimer's disease.

Will patients actually agree to genetic testing or individualizeddrug therapies based on genetics? Most of thepatient preference research to date has been conductedwithin research settings, focusing on testing for rare,high-penetrance mutations such as BRCA1/2. Thesestudies have generally shown that uptake of genetictesting is much less than interest in testing because ofconcerns about cost, lack of effective treatment optionsfor those testing positive, privacy and discriminationconcerns, limited predictive value, and negative impacton quality of life.

Will patients pay out-of-pocket or higher prices forgenetic testing or individualized drug therapies? Thereis little evidence on this issue. One poll found that twothirds of respondents said they would pay extra for a"genetically customized drug that you knew would workfor you."

 Anecdotal evidence suggests that patientsoften pay out-of-pocket for genetic testing for risk susceptibilitybecause of concerns about confidentiality orlack of coverage by insurance companies, although thisis unlikely to be the case for testing for drug therapies.

One indication that demand for genetic technologiescould soon affect clinical practice is the increase indirect-to-consumer advertising of genetic testing.

For example, Genelex advertises testing for 3 importantdrug-metabolizing enzymes (CYP2D6, CYP2C19, andCYP2C9) at $250 per test or $650 for all 3 tests(http://www.healthanddna.com, accessed July 31, 2003);and Myriad Genetics advertises testing for inheritedcancer risk including BRCA1/2 (http://www.myriad.com, accessed July 31, 2003). As with other tests,

there is widespread debate over the wisdom of marketingtests directly to consumers.

Overall, the clinical and economic impact of genetictesting will be larger if direct-to-consumer advertisingand insurance coverage cause patients to embracegenetic testing for common diseases and for individualtargeting of drug therapies. Research can help us understandthese preferences,

 particularly in situationswhere the information reveals modest increases in riskfor common diseases or adverse drug effects.Ultimately, if consumers come to consider genetic testsin the same way they perceive, for example, a cholesterolscreening test, demand for these tests will be drivenless by concern about the risks of their use than bytheir perceived benefits and costs. The examples ofBRCA1/2 and HER2/neu testing illustrate how patientdemand is likely to differ for genetic testing to predictrisk versus drug prescribing. In a nationally representativesurvey of the US adult population, only 1% reportedhaving had any genetic test for cancer risk.

 For example,1 study found that only one quarter of high-riskwomen actually pursued BRCA testing after counseling.

 In contrast, there was strong patient demand andadvocacy for access to Herceptin and for fast Food andDrug Administration (FDA) approval of the therapy andtesting.

 Thus, it appears likely that there will be strongpatient demand for genetic testing when it is directlyrelated to key treatment decisions.

Providers face complex questions regarding the costs,benefits, and risks of genetic-testing technologies (seeSuther and Goodson

 for a review). First, they face thechallenge of keeping abreast of what tests are available;their accuracy, predictive validity, and cost; and whichpatients are most appropriate for testing. Second, theymust consider whether the test offers true advantagesover the current standard of care. For example, therehas been debate about whether genetic tests are superiorto ferritin screening for detecting individuals at riskfor adverse effects of hemochromatosis because of thelow penetrance of the relevant mutations.

 A third issueis how the test might change patient management. Asnoted above, many genetic tests are available to identifyrisks for diseases for which there is no treatment. Giventhe rising costs of healthcare, health insurers may limitpatients' and providers' interest in getting this informationbecause of the need to limit the use of tests withuncertain clinical benefit.

 Fourth, clinicians mustdecide the appropriate level of counseling and informedconsent for genetic tests&#150;and who will provide and payfor it. Most providers are not trained to provide geneticcounseling,

 and insurers may not reimburse for counselingoutside of genetics-specialist settings. Finally,some genetic variants may be quite uncommon in certainracial or ethnic groups.

 Clinicians will face the difficulttask of balancing the arguments against testing inpopulations where prevalence of the variant is quite lowagainst the practical and ethical issues of identifyingindividuals from these populations and informing themthat testing is not indicated.

These challenges are likely to differ for genetic testingto predict risk of disease versus genetic testing toguide drug prescribing. Genetic testing to predict highdisease risk in currently healthy persons (eg, BRCA testing) often requires providers to have extensiveknowledge of genetic counseling. A nationally representativesurvey found that, although 31% of physicians hadordered or provided cancer susceptibility tests in thepast 12 months (including, but not limited to, testing forBRCA), the majority of these physicians (87%) hadreferred these patients elsewhere rather than providingthe testing themselves and 50% of physicians overall feltunqualified to recommend cancer susceptibility testing.

 In contrast, testing for specific drug targets (eg,HER2/neu testing) involves clinical decisions that arepart of treating a person with a medical condition.However, future use of genetic testing to target drugsbased on individuals' genetic variation may be morecomplex, for example, when determining the appropriateuse of genetic testing for drugs with complex metabolicpathways.

The availability of genetic tests and targeted drugtherapies will depend on the economic incentives forpharmaceutical, diagnostic, and genomics companies todevelop and market them. From the pharmaceutical-industryperspective, genomic technologies offer aninteresting contrast in opportunities for drug developmentversus threats to market share.

On the one hand, there are economic incentives forindustry to develop genomic-based drug therapies.Genomics will likely provide a multitude of new drugtargets, enable the development of drugs that avoidproblematic genetic variants in drug-metabolizingenzymes, and increase the development of preventiveinterventions for patients identified as being at higherrisk for future disease (eg, use of cyclooxygenase-2inhibitors to reduce risk of familial colon cancer

).Furthermore, if pharmacogenomics leads to drugtherapies with greater efficacy and safety, these therapiesare likely to have a higher price that reflects thisadded value. Genetic profiling of patients enrolled inPhase I and II clinical trials may allow for smallerPhase III clinical trials that have a greater chance ofsuccess, resulting in decreased development time andcost, and shorter FDA approval times. Additionally,genomics offers the opportunity to rescue drugs thathave not been approved because of side effects or lackof efficacy by targeting them to patients with specificgenetic profiles.

There also are economic disincentives for the pharmaceuticalindustry to develop genomic-based drugtherapies. Of most concern, targeted drugs may lead todecreased market share and fewer blockbuster drugs.For example, genetic testing may help us decide whichpatients will not respond well to specific types of antihypertensives,cholesterol-lowering medications, orantidepressants.

 If the relevant mutations are prevalent,large numbers of patients may be steered towardspecific drugs. It also is not clear whether the currentmarket structure will provide the necessary incentivesfor the development of drugs targeted toward patientswith rare genetic variants, such as many racial minoritypopulations.

 However, even a "niche" drug, ifused as a presymptomatic preventive measure for thoseat increased genetic risk, may prove profitable.

A major shift as a result of the availability of geneticinformation is that drug/diagnostic combinations arebecoming more important; thus, the diagnostics industrywill play a critical role in the implementation ofgenetics.

 (We thank an anonymous reviewer for thispoint.) The shift toward combination products also portendsgreater integration of the diagnostics and pharmaceuticalindustries, which have historically operatedand been regulated relatively independently.

In contrast to the mixed incentives for pharmaceuticalfirms, the diagnostics industry has a potentiallyclearer incentive to use genetic information.

 Geneticinformation is likely to increase the market for diagnostics,as genetic tests will be required for risk predictionand to stratify patients regardless of whether theyreceive a drug or intervention.

 Indeed, it has beensuggested that diagnostic firms may profit sooner fromgenomics than pharmaceutical firms.

 Still, the availabilityof tests will depend on reimbursement rates,which to date have varied.

 Moreover, the regulatoryclimate as it relates to the diagnostic industry is uncertain.The regulation of diagnostics has historically beenless comprehensive than the regulation of drugs, but theuse of genetic information may require changes in theprevailing regulatory framework.

Herceptin and the associated tests offer an illustrationof the issues for both the pharmaceutical and diagnosticsindustries. Herceptin, which is considered to bea major success story for the biotech industry, illustratesthe promise of finding novel therapies for certaingenetic variations in a disease state. Herceptin also illustratesthe potential for diagnostic firms, as 2 availabletests are listed on the label, thus conferring a monopolyto those firms.

Health insurers play a large role in defining patientand provider access to new medical technologies throughtheir coverage policies and clinical guidelines.

Limited data suggest many genetic tests are not coveredor coverage policies have not been determined. Forexample, 84% of insurers reported having never made adecision to cover BRCA testing, 12% had received aninquiry and decided not to cover testing, and 4% hadmade a decision to cover the test.

 Another surveyfound that half of plans had no coverage policy for prophylacticmastectomy or oophorectomy followingBRCA1/2 testing, and an additional one quarter of plansdid not cover such surgery.

Genetic tests can be expensive; for example,BRCA1/2 full sequencing costs $2975 (http://www.myriadtests.com/doc/Myriad_Patient_Auth_Form.pdf.Accessed June 15, 2004), and the downstream coststhat follow from testing can be much more costly thanthe test itself (eg, prophylactic surgery). In addition,although the cost of genetic testing is expected to continueto drop, health insurers may face large outlays ifinitial testing results in extensive testing of family members.Because most genetic tests will become availablewell in advance of evidence that using these tests willfavorably affect patient outcomes, insurers will face thedilemma of whether to bear the economic burden oftesting while waiting for definitive studies to be conducted.

 Although cost is only 1 factor in determiningcoverage policies, insurers have reported concerns thatthe costs of covering genetic testing will be too high.

Furthermore, many patients change plans frequently;thus, individual health plans are unlikely to realize thefull benefits of preventive interventions.

Another determinant of the impact of genetic testingwill be clinical guidelines. For example, many managedcare organizations use drug formularies to guide drugutilization.

 However, targeting drugs based on genetictest results will increase the complexity of formulariesand require that formularies consider relative trade-offs.Payers also will have to determine whether to requiregenetic testing before initiating certain drug therapies.

From the insurer perspective, testing for risk predictionversus drug prescribing provides a study in contrasts.Insurance companies have not universally covered testingfor risk prediction (eg, BRCA testing); in contrast,because HER2/neu testing and appropriate treatmentnow are considered the standard of care, insurers coverboth testing and Herceptin. It remains to be seenwhether insurers will cover broader genetic testing.Testing for relatively rare, highly penetrant gene mutationsis expensive on an individual level but modest ona health plan level. In contrast, testing for more commonmutations and for targeting drug therapies is relativelyless expensive on an individual basis, but willapply to a much larger population; thus, the total costsmay be substantial, although these costs may be balancedby improvements in health and savings in othermedical costs. Therefore, it will be critical that insurershave the cost and outcome data necessary to evaluategenomic technologies.

Government and regulatory agencies have a role indetermining (1) the safety and efficacy of genomic technologies;(2) reimbursement policies for public healthinsurance programs; and (3) relevant laws, regulations,and guidelines.

 The FDA will face a number of issuesregarding the approval of genetic tests, including towhat extent genetic data may be required in the drugapproval process, whether there will be further reviewof previously approved drugs as relevant genetic databecome available, whether testing may be requiredbefore drug therapy is initiated or after initiation, thecomarketing and labeling of tests and drugs, and patentprotection for drugs developed for small, geneticallydefined populations through the Orphan Drug Act.

A long-standing issue that will gain prominence asmore genetic tests are developed is the current statusof regulatory review of genetic tests. Although theFDA oversees the safety and efficacy of new drugs anddiagnostics in the United States, most genetic tests arenot regulated by the FDA because they are considered"clinical services" rather than marketed kits.

Laboratory testing is regulated under the ClinicalLaboratory Improvement Amendments (CLIA); however,CLIA does not examine clinical validity or utility(http://www.cms.hhs.gov/clia).

Reimbursement policies are determined for publicinsurance enrollees through the Centers for Medicare &Medicaid Services. The government also has a role indeveloping guidelines for population screening

 and inprotecting individuals from discrimination based ongenetics for purposes of health insurance.

Overall, any changes in the regulatory structure relevantto genetic tests will be key events in the future ofgenomic medicine. Government may have a role in encouragingprivate and increasing public investment ingenomic technologies if current levels are not sociallyoptimal.

 This is particularly true because commercialtesting has advanced rapidly in the United States, causingconcerns about the effects on accessibility, price,and quality.

 Because of this commercialization,industry and economic incentives will play a relativelylarger role in determining the overall impact of genomictechnologies unless there is government intervention.

BRCA testing in particular illustrates the controversiesover the commercialization of genetic testing andthus where the government may play an important role.The patenting of human genes has been very controversial,and the case of BRCA has been no exception. Thepatent for the BRACAnalysis&#174; test is held by MyriadGenetics, which has been criticized for monopolizing theBRCA test by requiring that full sequencing testing bedone only at its laboratory and by pricing the test higherthan if were more readily available. The concern isthat these restrictions will reduce access and discouragefurther research.

The perspectives discussed above ultimately contributeto an overall societal perspective. From this perspective,the goal is to maximize the benefits fromgenetic testing while minimizing the risks and costs forall stakeholders. Two formal, systematic approaches toweighing the costs, benefits, and risks of genetic testingare cost-effectiveness and cost-benefit analysis.However, in a systematic review of theliterature, we found that there are currentlyfew economic analyses of genetictesting, particularly for drug therapies,and that the studies cover a limited numberof genetic mutations and diseases (ie,the majority of analyses of genetic testingfor risk prediction are concerned with prenatalscreening such as that for cystic fibrosis; K. A. Phillips, S. L. VanBebber, J. Sakowski, unpublished data, 2004).

Although the lack of cost-effectiveness evaluations ofgenetic testing undoubtedly reflects the currently limiteduse of these technologies, it is important to systematicallyevaluate their likely costs and benefits 

they are widely implemented. We have identified keyfactors that are likely to determine the cost-effectivenessof genetic testing, and they provide a researchagenda for future analyses (

David L. Veenstra, PharmD, PhD

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