Next-Generation Sequencing: Are We There Yet?

August 5, 2015
Surabhi Dangi-Garimella, PhD

Volume 21, Issue SP12

While scientists agree that NGS is the way of the future, payers are as yet apprehensive on the value afforded by the tests to clinical decisions.

Personalized medicine is here to stay, and the advantages are not lost on anyone, as is evident from the articles in this issue by experts from diverse healthcare fields. In contrast to the traditional method of healthcare, in which a clinical observation is followed by an investigation into the cause, technological advances have now placed the provider a step ahead based on genomic or proteomic information, a physician or a health system can predict an individual’s health trajectory and could even prescribe preventive measures through lifestyle changes.

Bioinformatics research has developed rapid, increasingly specific, and cost-effective tools to analyze and interpret health information. Next-generation sequencing (NGS) is one such tool. Also called massively parallel or deep sequencing, NGS is an advanced technique that can sequence the entire genome in a day, a tremendous leap forward from the Sanger technique, which took over a decade to do so.1

NGS can include exhaustive parallel sequencing of individual small nucleotide fragments, with the follow-up analysis requiring bioinformatics to reconnect the puzzle based on the reference human genome. The technology has the flexibility to sequence the entire genome or specific areas of interest, such as the whole-exome (22,000 genes) or individual genes.1

Applications of NGS

Sequencing panels such as OncoType DX, MammaPrint, and Prolaris have had a tremendous impact on clinical diagnosis, prognosis, and treatment decisions in oncology. NGS gene sequencing panels have also found their place in the National Comprehensive Cancer Network guidelines for patients with ovarian cancer.2 Despite persistent regulatory and reimbursement challenges, multiple gene panels and NGS diagnostic services are offered by several companies (Table).

While NGS has helped research scientists identify a number of abnormal cancer-causing genes, targeted drug development against those genes has not kept pace. There are a few success stories, though, including imatinib (which was developed to target the product of the BCR-ABL gene fusion) and trastuzumab (which targets HER2).

Need for whole-genome sequencing

While whole-exome (the exome is the coding region of the genome) is currently the most popular method of sequencing, there is still a need for whole-genome sequencing funneled by the knowledge that the noncoding regions (introns) of the genome may have direct tumorigenic effects and can cause genomic instability. Individualized whole-genome sequencing offers the potential for personalized treatment and care management.1 Identifying specific mutations, developing drugs to target those mutations, and individualizing treatment can improve outcomes and simultaneously reduce some of the side effects associated with the use of cancer drugs.

Cost of Sequencing the Human Genome

The National Human Genome Research Institute has categorized the expenditures associated with NGS as “production” and “non-production” costs (Figure).3 Production costs include:

  • Labor, administration, management, utilities, reagents, and consumables
  • Sequencing instruments and other large equipment
  • Informatics activities directly related to sequence production (eg, laboratory information management systems and initial data processing)
  • Submission of data to a public database
  • Indirect costs as they relate to the above

The non-production costs include:

  • Quality assessment or control for sequencing projects
  • Technology development to improve sequencing pipelines
  • Development of bioinformatic or computational tools to improve sequencing pipelines or to improve downstream sequence analysis
  • Management of individual sequencing projects
  • Informatics equipment
  • Data analysis downstream of initial data processing.

The sequencing of the first human genome, concluded in 2003, required 13 years and cost a staggering $3 billion.4 The picture is very different today: Illumina boasts that the cost of sequencing a single genome is around $1000 (see Figure) and requires just days. These advances create an entirely new spectrum of opportunities to exploit.

The cost-efficiency boast has a caveat, though: the low price is applicable only for high-volume users that handle huge DNA databases, such as the Broad Institute and the Sanger Institute. Additionally, the up-front cost of the instruments is high, ranging from $50,000 to $750,000.4

Populationwide Genomic Screens

Despite the obvious challenges, there are those who believe in the long-term advantages of NGS. The Department of Health in the United Kingdom has established Genomics England, a company that is currently working to sequence 100,000 genomes of individuals who have provided consent. With an anticipated 2017 completion date, the project is focused on patients with rare diseases and their families, and patients with common cancers.5

Closer to home, Regeneron Pharmaceuticals and the integrated healthcare delivery organization Geisinger Health System have initiated a tremendous genetics undertaking—an attempt to improve drug discovery, development, and precision medicine. Announced at the beginning of 2014, the collaboration is aimed at sequencing the genomes of 100,000 patient volunteers and predicting long-term health outcomes by identifying and validating their association with diseases.6

David H. Ledbetter, PhD, executive vice president and chief scientific officer of Geisinger Health System, said in a press release, “For Geisinger, this relationship is about the potential to improve individualized patient care. We expect that many of our patients will directly benefit from their participation in this research because of Geisinger's ability to validate and return clinically actionable results to them, and all of our patients will benefit from the knowledge we gain in how to help set the standard for genomically informed care. This collaboration has the potential to provide Geisinger with tools to transform our ability to foresee disease before the onset of symptoms, diagnose chronic and potentially fatal conditions before it's too late to intervene, and determine how best to optimize the health and well-being for each of our patients.”6

Challenges With NGS

Despite the opportunities envisioned for NGS to identify the right patient population for a specific treatment, the technology has not been adopted extensively, and for a reason rather, several.


While scientists surmounted the entire gamut of technical challenges as NGS was being developed, several aspects of the technology remain disputed.

a. Data storage. Storage, in a compressed format, of the data generated by a single exome sequencing requires about 10 GB of disk space; at just 3 runs a month, that adds up to 1.4 TB of data. Data analysis requires additional disk space. It all translates into an expensive bargain.

b. Statistical significance. Achieving statistical significance for the data may be challenging, with respect to finding as many samples to analyze and the associated cost. Collaboration may be key.

c. Data safety/privacy. Patient data may be difficult to keep secret. Safety of patients’ genetic information is a prime public concern—information from SNP arrays, exome, or whole-genome sequencing could find its way into wrong hands and be exploited.

d. Finding samples. Interinstitutional collaborations may assist with obtaining large numbers of good quality samples. High standards are required to be maintained for sequencing samples obtained by using public funds.

e. Functional validation. Genetic information by itself is difficult to sell or make a persuasive argument with, and requires credible support from phenotypic or functional data.

f. Translation to the clinic. While several sequencing panels are already being used in the clinic, exome/whole-genome sequencing panels may not be far behind—if challenges with Clinical Laboratory Improvement Amendments (CLIA) certification are overcome.7


Assuming that technical hurdles will be met, how will manufacturers and users ensure that NGS will be reimbursed by payers? Similar to the challenges faced by existing diagnostic panels, analytical validity and clinical utility will top the list of concerns that payers would have with NGS, particularly whole- genome sequencing. Another important concern will be whether the results from an NGS test are clinically actionable to necessitate medical intervention.

The lack of coordinated data generation—based on regulator and payer requirements has created a difficult-to-cross chasm in the healthcare world. Payers use clinical utility (the impact of diagnostic tests on patient health outcomes) as the gold standard when making coverage decisions. What payers hope to learn prior to making these decisions is whether the test is safe for patients, whether it reliably provides the information needed for clinical decision making, and whether it would add to the rising cost of healthcare.8

With the movement toward value-based payment, the other important question that needs to be answered is whether payment for NGS will be based on current reimbursement practices, or a new value-based paradigm will be established, the premise for which would be improved outcomes or reduced spending that results from using the test. While data from diagnostic tests focused on specific disease-associated genes might be relatively easy to analyze and interpret, a broad genomic interrogation by NGS might be complex and would likely require a team of professionals to interpret the results. This would prompt additional questions regarding what is being “valued” when making coverage decisions.8 Additionally, most NGS-based tests are laboratory developed tests, or LDTs, and fall under CLIA regulations, not those of the FDA. This raises payer as well as provider concerns about the regulatory oversight of these tests, as was indicated by participants in a panel discussion convened by The American Journal of Managed Care earlier this year.9

Said panel participant Daniel F. Hayes, MD, clinical director, Breast Oncology Program, University of Michigan Comprehensive Cancer Center, and presidentelect, 2016-2017, of the American Society of Clinical Oncology: “We critically need to take 3 actions: modify the regulatory environment, discuss the analytical validity of a diagnostic test, and identify who really decides the utility of LDTs.”9 EBOReferences

1. Behjati S, Tarpey PS. What is next generation sequencing? Arch Dis Child Educ Pract Ed. 2013;98:236-238.

2. Shen T, Pajaro-Van de Stadt SH, Yeat NC, Lin JC-H. Clinical applications of next generation sequencing in cancer: from panels, to exomes, to genomes. Front Genet. 2015;6:215. doi:10.3389/fgene.2015.00215.

3. DNA sequencing costs. National Human Genome Research Institute website. Accessed July 7, 2015.

4. Thayer AM. Next-gen sequencing is a numbers game. Chem Eng News. 2014;92(33):11-15.

5. About Genomics England. Genomic England website. Accessed July 13, 2015.

6. Regeneron and Geisinger Health System announce major human genetics research collaboration [press release]. Tarrytown, NY: Regeneron Pharmaceuticals, Inc; January 13, 2014.

7. Koboldt D. New challenges of next-gen sequencing. MassGenomics website. Accessed July 7, 2015.

8. Deverka PA, Dreyfus JC. Clinical integration of next generation sequencing: coverage and reimbursement challenges. J Law Med Ethics. 2014;42(suppl 1):22-24.

9. Dangi-Garimella S. The challenges with ensuring the validity and utility of diagnostic tests. Am J Manag Care. 2015;21(SP6):SP173-SP174.