We are in the early days of precision medicine but it is on the back of widespread gene testing that promise of this approach of treating diseases stands.
And there are plenty of companies offering some kind of gene testing – on the tumor DNA sequencing or somatic testing side, there are companies like Foundation Medicine and on the germline testing side where a blood test reveals the propensity for certain types of diseases there are companies such as Myriad Genetics.
A smaller competitor of Myriad believes that the only way the true value of genomics testing can be yielded is if it becomes mainstream. For that, two things must happen — costs must continually come down and the addressable market has to expand.
“The rationale path to market is to move away from high prices, really high margins, niche offering that dribble access out to a small subset of people that need testing,” said Sean George, CEO of the San Francisco company, in a recent interview. “Instead it’s going to move to a world where everybody in the modern healthcare system is going to get genetic testing.”
George believes that up to 10 percent of the population is affected by an inherited genetic disorder and if gene test makers charge $4,000 per test with gross margins of 90 percent as they have been wont to do, it wouldn’t be affordable for most patients.
In other words, prices need to come down.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
And George believes Invitae is leading that effort to democratize genetic testing. The company’s tests, unlike those offered by direct-to-consumer gene testing companies like 23andMe, have to be ordered by a healthcare provider.
Invitae offers a range of genetic tests — from cardiology and inherited cancer, to dermatology and metabolic disorders and even pediatric genetics — and the cost is typically around a $1,000 per test for hospitals and payers.
If insurance doesn’t cover a patient, but a healthcare provider believes the test is important, patients pay $475 for the test, George said.
“And then for insurance that patients are out of network with, the highest we will charge is $1,500,” he said. “That is the top end.”
Lowering prices goes hand in hand with having a large population who need such tests. As a result, there is a ton of education that has to be done and Invitae has a team of genetic counselors who can help answer providers or patients’ questions.
And more payers need to be informed as well so they can add tests to their coverage list.
“Sometimes getting coverage means going test by test by test,” George said. “It depends on the payer.”
As prices go down, there will undoubtedly be consolidation in the marketplace.
“A lot of companies have raised capital and gone into the space thinking, ‘Hey this is going to be awesome. We can go in and make a ton of money on genetic testing, go compete with Myriad,’ ” George declared. “I agree with you that in four/five years may be even 2/3 years instead of the hundreds of providers of direct testing in the market today, how many will there be? Three maybe four.
George is confident that Invitae will be one of them.
“We started six years ago with the mission to lower the cost of genetic testing and making it accessible to everybody, bringing into the mainstream medical care,” George said.
While Invitae has stuck to genetic testing for diseases, other testing companies like Pathway Genomics, which allows consumers to order tests by themselves, are offering wellness-related testing too.
The San Diego-based company is offering a limited-time offer currently for U.S. consumers to understand what a person’s fitness level is for $349 (usually $599). The test analyzes how a person’s body processes sugars, fats, vitamins, and nutrients as well as provides information on how it responds to exercise.
Lab-developed tests such as those created by Inviate, Pathway Genomics and other gene testing companies are not regulated by the Food and Drug Administration.
The overall direct-to-consumer testing market has invited its fair share of controversy from critics. A 2010 report from the Government Accountability Office found results of genetic tests are often misleading.
