The Big Health Care Conundrum: How To Sustainably Unlock The Value Of Diagnostics
Source : IN VIVO
It is never a bad time to spotlight the value of early and effective diagnosis, the benefits of which extend far beyond the innovator, beyond individual patients and to national economies and wider society. While COVID-19 has wrought unprecedented global disruption, the pandemic has also demonstrated the importance and the value the diagnostics industry has created for society.
That was the contention of Boston Consulting Group’s Ulrik Schulze, in a foreword to a high-level panel hosted by Novo Holdings on “Unlocking the Value of Diagnostics,” which, in the immediate aftermath of the pandemic, looked at incentivizing the use of diagnostics.
Some COVID effects, such as the rise in testing and Emergency Use Authorizations will be temporary, said Schulze, BCG’s global sector leader, biopharma/life sciences. But others, such as increased use of molecular diagnostics and new patient behaviors, will be more permanent changes.
Still, there needs to be sustained change in how diagnostics and the diagnostics industry are understood by the public, and how government decision-makers value their role in health care delivery.
Panelists at the Novo Holdings round table stressed the need to drive further adoption of diagnostics and to raise awareness and understanding of these tools among physicians and patients. They spoke critically of the ongoing market access challenges. Reimbursement mechanisms for in vitro diagnostics (IVDs) are “broken,” Roche Diagnostics Corp. CEO Thomas Schinecker told the panel.
And more attention must be paid to antimicrobial resistance, the inequity in diagnostic rates between the US and EU, and the need to balance the diagnosis and prevention equation.
The inequity between two different parts of the health care industry also bears scrutiny. The value pool of the top 20 global IVDs players, the COVID effect included, is less than 10% of the same figure for the pharmaceutical industry.
Is this, asked Schulze, appropriately valuing the significant contributions of diagnostics and appropriately incentivizing investments in R&D by commercial players to support patients and society? Put another way, “Who makes the money?” asked GE Healthcare CEO Kieran Murphy.
Widening the debate to the “technology shift,” panelist Eric Lefkofsky, CEO of Tempus Labs Inc., claimed the system was not ready to fully appreciate or even understand the effect that technology could have. Health care still lacks health technologists, he said, and paying mere lip service to the need would not be sufficient. “Technology will permeate all diagnostics, whether it be it in five, 10 or 20 years, and it will fundamentally change how diagnostics are ordered, used clinically and reimbursed,” he said, noting that some diagnostics stakeholders might find this controversial.
But he went on: “In a technology shift, the best thing to do is get out of the way.” In such a climate of change, the US and China, two markets that are technically advanced and ready to embrace innovation, currently seem best able to take the industry to the next level. In China’s case, being “bold, aggressive and not collaborative” in this respect are not disadvantages. 'Might Europe have to figure out how to be a fast follower?' Lefkofsky wondered.
Stakeholders in the IVDs sector are aware that diagnostics and screening are at a rare moment in time. But while diagnostics are “the unsung hero of COVID-19,” in the view of bioMerieux SA’s Jean-Luc Bélingard, the bottom line for diagnostics is that, right now, there remain vast unmet needs in the health care marketplace, and the value proposition of diagnostics is not being realized.
These contentions were shared and aired in different ways by the Novo Holdings panelists, whose recommendations about how to make diagnostics innovation more central in day-to-day health care are summarized here.
Adam Schechter: The health care spend globally is already too high and is growing too fast. As a percentage of GDP, the US spends 17% on health, and that could hit 25% in the US by 2030. In Europe, the spend range currently is 9-12%.
"STUDY THE COSTS ARISING FROM NOT IMPLEMENTING EFFECTIVE DIAGNOSTICS POLICIES." ADAM SCHECHTER – CHAIR AND CEO, LABCORP
On the other hand, diagnostics account for just 3% of health care costs in the US, but they are a factor in over 90% of health care decisions. In the drive to decrease costs in the US and elsewhere, diagnostics can be a big part of the solution. Reimbursement in the US is low, and there are multiple layers of reimbursement for manufacturers to contend with in the US. New technologies take time to reimburse and there is a cost associated with that. In the drive for earlier adoption of innovation, we have a way to go.
One major challenge for diagnostics companies is how to use the results of the tests they perform as the basis for delivering better care based on those results. The potential is huge. Labcorp and Quest Diagnostics Incorporated, which together represent 20% of the US market, deliver one billion tests per year.
Health care systems will be under increasing pressure to reduce costs in the coming years, given that the broad health care consequences of COVID will take some time to work out. For instance, cancer diagnosis rates were down 30% in the US in 2020, and there will be a cost for that in the coming years.
Were we to focus more on prevention of disease, we could add more value and reduce health care costs.
'EDUCATION WILL LEAD TO A BIGGER FOCUS ON PREVENTION." MATHIEU FLOREANI – CEO, SYNLAB INTERNATIONAL
Mathieu Floreani: The main value the sector can create will come from focusing more on prevention than reaction. We tend to look at cost of care, not what it costs when people are not productive. Some 54% of days lost as a result of ill health happen during the productive days of a person’s life. The cost of that to society is not understood well enough.
The cost of health to society should be split equally among the needs for: therapy, preventive measures and improved social and environmental conditions.
Education is the name of the game. The problem is not so much in securing reimbursement for tests, but that the education of practitioners about the tests is not good enough. It is hard to train a doctor in new ways of diagnosing or to refocus on prevention.
Frequency of testing is too high in some cases, and we waste a lot of money on unnecessary tests. The challenge is: where can we put the effort and spending in areas where it adds more value?
AI will really be helpful, with doctors able to select tests online, and this will be a way to fast-track education and ensure we get a bigger shift towards prevention.
"REIMBURSEMENT POLICY NEEDS REVIEW, AND DIVERGING GLOBAL REGULATORY REQUIREMENTS HARM INNOVATION." THOMAS SCHINECKER – CEO, ROCHE DIAGNOSTICS
Thomas Schinecker: Reimbursement remains a difficult hurdle for innovation to clear. The slow pace of adoption in some – even major – markets (for example, HPV cervical cancer screening is still not approved in many countries) is worse than a disaster. It’s a scandal, because all the economic and clinical evidence can be provided, but still some countries don’t [reimburse] it. Women die needlessly of cervical cancer as a consequence.
Diagnostics needs a mechanism that is similar to the system used in the pharma sector. In Germany, there is a time limit for a decision for reimbursement of a pharmaceutical; it cannot be postponed. In diagnostics, this can be postponed for years, even when all of the data is provided. In diagnostics, the whole mechanism of reimbursement is completely broken. A change in the law is needed.
It takes longer to get innovations into the US market than in the EU, for regulatory reasons, but that will change with the new EU IVD Regulation. The IVD Directive was ‘rather quick,’ but under the IVDR, the 10:90 ratio (where, under the IVDD, only 10% of IVDs required the involvement of an EU notified body, and 90% were self-certified) is inverted overnight, but this is good in terms of the quality of the products.
But the regulatory process will lengthen in the EU. We might lose some smaller players, as they don’t have the resources to do post-market surveillance, etc. Also, while regulatory approval can be comparatively fast, it does not help if there are no working mechanisms for reimbursement – these are two different things.
Beyond the EU IVDR and US FDA system, every country seems to come up with new [regulatory] requirements. It is hard to comply with all of them. They should all agree to the same criteria, otherwise a lot of different data is generated to comply with every country’s requirements, which does not benefit patients. It is against innovation!
Clinicians do not always order the right tests, but AI will guide that decision-making process. It is not the case that too much testing is being done, just the wrong testing.
"DRIVE FASTER SCREENING THROUGHPUT AND THEN PUT THE PREVENTION ARGUMENT TO GOVERNMENTS." KIERAN MURPHY, CEO, GE HEALTHCARE
Kieran Murphy: Across the world, we are under-indexed on screening, but screening has a huge value to health care and outcomes by determining, say, the stage of a cancer. We have been very poor at connecting the data sets between IVDs and imaging.
Industry owes it to governments to see how much it can drive both lower test costs, and higher rates of screening at lower cost. We should emulate what happens in China, where a CT scanner can do 250 scans a day and an MRI scan takes just 10 minutes. MRI scans in the US take three times as long and cost more.
With the right technology, we can drive faster throughput, get the costs down and then have the leverage to go to governments to request their support in changing the health of populations. The entire sector needs to look at the margin pool, at who makes the money and how it gets distributed.
Joydeep Goswami ̶ SVP corporate development and strategic planning, Illumina
Joydeep Goswami: Adoption is stymied because of some of the challenges we see on the reimbursement side. In western geographies, adoption rates are less than 30% in terms of treatment selection.
In the US, there is an average timeline of seven years before a screening test is even considered for reimbursement.
The lack of partnerships between payers, providers and technology developers remains a matter to challenge and change. The UK has pioneered a collaborative approach, and we [as a company] are also working with governments in Japan, Singapore and Taiwan, among others. These are single-payer type systems and will give single payers a better view of costs.
A whole new way of managing health and disease is the multi-modality approach, using longitudinal data. There is a need for more collaboration on clinical data.
"WORK WITH INDUSTRY TO DEFINE EVIDENCE GENERATION IN A REAL WORLD SETTING." DAME SUE HILL ̶ CSO AND SENIOR RESPONSIBLE OFFICER FOR GENOMICS, NHS ENGLAND
Dame Sue Hill: With Grail Inc. and Illumina, Inc., we designed a study accessing longitudinal health data and use that to drive a reimbursement and adoption strategy across the NHS, to make those happen faster.
The UK has a single payer system, but diagnostics is often the responsibility of a local provider organization, so there is de facto no systematic approach in UK.
But in genomics, a different approach is being taken. The UK has a genomic test directory, to guide usage, which is looked at twice yearly. We can then have a discussion with industry on what evidence is needed for a product to enter the health system. We must work more closely with industry and define evidence generation in a real world setting.
"LINK DATA BETTER TO AVOID DUPLICATED TESTING." HENRIK ULLUM – CEO, STATENS SERUM INSTITUT, DENMARK
Henrik Ullum: Digital preparedness is vital, and we must get better at linking data. We do diagnostic tests outside the hospital that are lost or no longer available when the patient reaches the hospital.
We need to link them, so we avoid double testing. That is also an argument for having tests done closer to the patient, and earlier, and then linking the data across diagnostic modalities. Maybe the right data is derived from a combination of X-rays, circulating mRNA and genotype, and then layering AI decision tools on top. Testing done by the patient will also be very useful in the future.
"STARTING WITH BIOMARKERS, THE CONTENT AROUND A TEST HAS EVOLVED FROM A YES/NO ANSWER." JEAN-LUC BÉLINGARD ̶ CHAIR, STRATEGY COMMITTEE BIOMÉRIEUX AND NOVO HOLDINGS ADVISORY GROUP MEMBER
Jean-Luc Bélingard: The medical and diagnostics industries are converging very rapidly, and they should become just one industry to provide optimal care pathways.But the regulation of diagnostics and pharma is very different. It is up to us [as an industry] to change the way we function. We must fully express this convergence notion.
Starting with biomarkers, the content around a test has evolved from a ‘Yes/No’ answer to a more sophisticated reality, whereby the ‘Yes’ is further augmented in terms of its health care value through a full description of the nature/specificity of the diseases that are identified and signaled with a ‘Yes.’
Schinecker: There is a lot of opportunity in genomics and proteomics. In routine testing, we must work out the next step for solutions like HPV detection, to take just one good example, and another, Hepatitis C Virus, which causes liver cancer and affects 80 million people globally. We need to invest more in early detection of disease when the patient outcomes are significantly better.
Floreani: Non-invasive prenatal testing (NIPT) and BRCA testing are just two opportunities, but there is a long list of very simple products that can still take six to ten years to be adopted/reimbursed. Products can be in medical guidelines for many years, but still not be in medical practice. The move from classical microbiology to molecular testing will provide a tailwind of progress.
Murphy: Follow the patient more and build a picture in a multi-modality way, looking at EMRs and seeking to catch the disease earlier. Linking data is a big investment opportunity. By aggregating and integrating data sets, amazing insight can be delivered. There is gold in the hills there, but mining it will require a massive amount of collaboration between companies involved in IVDs, screening and EMRs, and the big hospital systems, so we get a longitudinal picture of the patient. In addition, we have poor understanding of neurological disorders. Combining imaging with diagnostic tests to identify the best immuno-oncology approaches for some diseases is another opportunity.
Ullum: Data integration is the big solution ahead of us. Denmark is already very good at linking data, but we still need to overcome “data scepticism” in a small but vocal minority. Our political messaging must stress the importance of collaborating in order to create better therapies for the future. If the public sees any of the work as a potentially commercial gain, we lose their support.
Lefkofsky: Invest money in digitizing and cleaning data. Focus on AI-enabled diagnostics. It has taken Tempus five and a half years to amass its data, and it now has good traction in cancer and is adding 4-5 petabytes of data per month.
Hill: We need to explain the unmet needs that diagnostics can address. Multi-modality diagnostics technologies will be part of our future, and they will help build up a picture of the genome. Diagnostic utility will be improved with multi-modality diagnostics approaches.
The UK’s 100,000 genomes project is a good example of how to gain insight into disease by working with industry.
Being more systematic is one challenge, said Hill, and others are enabling the work that industry does and setting up methods of review.
Although a lot of data is being sequenced, it needs to be combined over time with clinical information about the individual patients, the outcomes they have experienced, and how they have been performing under various drugs, Novo Holdings’ Sibel Arnes observed.
Access to longitudinal data will enable the full potential of the multi-modality approach referred to often by panelists to be realized.
The UK has the best data, claimed Murphy, and yet, in Lefkofsky’s view, it is the US that currently has the data advantage. On 2 April, the US passed a law giving patients access to their electronic healthcare records (EHRs). 'How long will it be until the global tech giants create technologies that allow the public to upload and carry around their own EHR data?' he wondered.
A lot of data is not usable, said Schinecker, and a lot of things still have to change to make it more immediately usable.
Denmark has a digital health care system that can follow the 5.8 million Danish population from the cradle to the grave, but the big challenge for an EU player is the EU's General Data Protection Regulation (GDPR), and, related to that, how to get data into play in a faster way, said Ullum.
There was a consensus about the importance of creating more access to longitudinal data, given its capacity to unearth valuable knowledge as the basis for future care pathway planning. Post-discussion, Novo Holdings partner Aleks Engel noted the collective enthusiasm shown in creating a surveillance panel for respiratory diseases, using the infrastructure that was built for COVID. The company now seeks to explore that opportunity, starting in Denmark, with input from other diagnostics stakeholders.
In the diagnostics world we were not ready for COVID, but we will need to be prepared for the next pandemic, said Ullum. Denmark now runs 200,000 PCR tests per day. “There is a political willingness to invest in [linking that data], and we should probably harness that somehow.”
When the pandemic started, Labcorp was already running at 80-85% capacity. Excess capacity is needed, said Schechter. “If we ran at 50-55%, that would be smart.” Most governments think a maximum of three to four years ahead. “But we need to think longer term, and we need to work on it, as it’s not simple.”
During the pandemic, antimicrobial resistance (AMR) did not disappear. There are some one million antimicrobial drug resistant deaths every year, a number that will only get bigger year on year.
But AMR will become a global issue, looking, for example, at the high rates of AMR in countries like Russia and India. We are not prepared, and must learn the lessons from COVID-19, said Schechter. AMR will presage similar capacity issues regarding skills, equipment and reagents.
AMR is indeed the next big threat, in Ullum’s view. “We need industries that can deliver solutions fast enough. During COVID, we saw bottlenecks, and we need to prepare for that [on AMR] with industry, governments and the health care sector.
Goswami observed that, while the pharma industry has strong advocacy groups, diagnostics does not have lobby groups or industry associations with money. “We need to do more as an industry.”
Bélingard agreed that there is both a lack of recognition of the societal issue of AMR, and a lack of reimbursement of diagnostics.
He added “The optimum approach would be to form non-competitive consortia or partnerships between diagnostics and biopharma companies to solve common AMR issues with mutual approaches, rather than taking a shotgun approach.”
Finally, Engel observed that the failure of business models to develop novel antibiotics is very similar to the experiences see in the diagnostics sector, as neither product groups are adequately rewarded vis-à-vis the vast savings they provide to the wider health care system. He added that part of the solution lies in value-based reimbursement.
Diagnostics technologies, enhanced and improved by digital capabilities, AI input and machine learning, will evolve over the next five or ten or 15 years. “This is a new moment in time, but who owns the data? The patient does, and that is still not acknowledged,” Lefkofsky asserted.
"FREE FLOWING DATA WILL UPEND THE SYSTEM." ERIC LEFKOFSKY
When data flows freely, “it will upend the system as we know it.” Patients will choose the best care, not just the nearest care, he said. “We have to embrace it, or fight it,”he added.
Others think the short-termist approach to budgeting should itself be upended. Schinecker said: “How can we get to the point in incentivizing the system to take the mid-term view – not just the short-term view?”
Schechter shared those sentiments. “Concern is voiced over the cost of health today, but few think about the cost in, say, five years’ time. We don’t think long term enough.”
The need to think differently was a subtext that ran through the Novo Holdings round-table. The panel's chef chair, Novo Holdings CEO Kasim Kutay, concluded: “Something needs to change as we must address the broken business model and demonstrate the vast value that exists. Post-COVID, the partnerships born out of goodwill during the crisis can be recreated if stakeholders, including governments, simply stepped up to the challenge. We have become more emboldened to work towards the change that is needed.”
By Ashley Yeo