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Employers Test Whether Genetic Testing Is Worth the Cost

March 16, 2009
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Related Topics: Benefit Design and Communication, Health and Wellness, Featured Article, Compensation
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Genetic testing, with its ability to decode a person’s genes and serve up probabilities of health risks, offers patients the hope of answers to life’s immutable questions around sickness and death.

And yet while many patients think genetic tests will answer life’s big questions, many doctors—and with them the employers and insurers that pay for medical care—look for answers to immediate issues like: Will a medicine do what it is supposed to do when it enters the peculiar ecosystem of an individual’s body? And is a genetic test a cost-effective tool to answer that question?

With national drug expenditures exceeding $210 billion, some doctors, insurers and employers are using pharmacogenomics, a field of pharmacology that attempts to understand how a person’s genes affect their response to certain drugs, to answer these questions.

Pharmacogenomic tests can help doctors make better medical decisions when it comes to prescribing drugs and establishing dosing levels. Whether they are cost-effective is a question without a definitive answer.

Some employers, insurers paying for test
Unlike other types of genetic testing, pharmacogenomic tests don’t tell a person whether they are prone to breast cancer. Rather, they indicate whether that person’s body can absorb a certain breast cancer treatment, such as tamoxifen, the world’s top-selling breast cancer drug. Pharmacogenomic tests can help doctors fine-tune dosages with the goal of making the drugs they prescribe more effective and less dangerous. The tests can also rule out a drug that doesn’t work if a patient’s genomic test shows that her body would be unable to metabolize it.

Employers and health insurers are already cautiously embracing these tests in hopes of improving the effectiveness of expensive drugs and avoiding costly and potentially dangerous therapies that, based on a person’s genetic makeup, may prove ineffective or possibly even dangerous. But, researchers say, the cost-effectiveness of these tests remains inconclusive.

The health plan of the California Public Employees’ Retirement System (CalPERS), which provides retirement and health benefits to more than 1.6 million Californians, says it supports genetic testing that has a proven medical benefit. For example, CalPERS covers a test to determine whether HIV patients can properly metabolize the drug maraviroc, spokeswoman Karen Perkins says.

Cigna covers genetic testing to help determine appropriate dosage levels for people taking medicines to treat Crohn’s disease, a disorder that causes chronic inflammation of the digestive tract. The Philadelphia-based health insurer also covers tests for people taking the blood thinner warfarin (known also by the brand name Coumadin), spokesman Mark Slitt says.

Aetna, however, said that it does not cover genetic tests for patients on warfarin or tamoxifen.

"These tests are currently deemed experimental and investigational because the clinical value of this type of genetic testing has not been established," Aetna spokeswoman Wendy Morphew wrote in an e-mail.

In October, Medco Health Solutions, a pharmacy benefit manager in Franklin Lakes, New Jersey, formed a strategic alliance with Burlington, North Carolina-based Labcorp to provide testing services to patients who take warfarin or tamoxifen.

Teresa DeLuca, vice president of personalized medicine at Medco, says the cost of the tests—about $350—is a small investment that could prevent hospitalizations that can occur when doctors prescribe doses that are too high for patients.

While direct-to-consumer companies offer the tests at a lower cost—$150 from Quest Diagnostics, for example—Medco says the extra amount it charges goes toward making sure the doctor gets the results of the tests and then changes a patient’s care accordingly.

DeLuca says tamoxifen, a drug women must often take for several years to prevent a recurrence of breast cancer, must be fully metabolized to work. She says a genetic test that uses a cotton swab rubbed inside the cheek to collect a person’s cells has "the ability to save money or, more importantly, save a patient" from adverse drug reactions or an illness.

"Personalized medicine is really about precision, about getting the right medication to the right patient at the right time," DeLuca says. "It’s going to be a big component of health care improvement. It will bring down the overall health care costs by improving the quality of care."

Waiting for Medicare
Health officials are closely monitoring whether a genetic test for people who take warfarin is worth covering. The drug is the second leading cause, after insulin, of adverse health outcomes in emergency rooms, according to the Food and Drug Administration. The agency approved a warfarin genetic test in 2007 as well as updated labeling to explain that people with variations of the genes known as CYP2C9 and VKORC1, totaling about one-third of the patients that receive the drug, may have an adverse reaction to it. Still, while a genetic test could reduce adverse outcomes, the FDA says it is not meant to be a stand-alone tool to determine the drug’s optimum dosage.

About 100 health plans that are clients of Medco have access to the testing, which is part of the company’s personalized medicine service, the company says. This year, benefits managers for the public school districts in Central California’s Kern County signed on to Medco’s genetic testing service, says Russell Bigler, CEO of the Self Insured Schools of California. Bigler, whose health plan serves about 250,000 people, says that given the size and health needs of his population, the plan expects to save money in the long term by using genetic testing.

"Their data convinced us it was worthwhile," he says of Medco.

The cost-effectiveness of these genetic tests, however, is a subject of debate. In a 2006 joint paper on the subject, the American Enterprise Institute and the Brookings Institution, both think tanks, estimated potential cost savings of genetic testing for warfarin alone to be about $1.1 billion annually, or about $550 for each patient, not including productivity savings and economic other benefits that come from being healthy.

A study published January in the journal Annals of Internal Medicine says the tests’ cost-effectiveness varied. The study concludes that genetic testing may not be cost-effective for a typical patient on warfarin, but could be cost-effective for patients who have a higher risk of hemorrhaging. In order for the test to be cost-effective, the test’s results would have to be available within 24 hours, cost less than $200 and prevent 32 percent of major bleeding events.

The country’s single largest payer of health care services, the Centers for Medicare and Medicaid Services, is not yet convinced that the tests are worth covering. CMS was slated to decide in February whether it would cover genetic tests for warfarin but extended its deadline until May to deliberate the decision.

Regardless of CMS’ decision, the field of pharmacogenomic testing is likely to grow, and with it questions for employers over whether to pay for tests. Sean Brandle, national pharmacy practice leader for the Segal Co., says genetic tests may provide more immediate savings if they are used to determine a whether a patient is compatible with extremely expensive specialty drugs.

The growth of personalized medicine could mean an end to one-size-fits-all blockbuster drugs. Genetic testing may force drug makers to produce specialty drugs for each genome, a degree of specialization that would have untold consequences on prescription prices.

"If personalized medicine takes off, and I think it will in the coming years, it will throw a whole monkey wrench in the entire process," Brandle says.

Workforce Management Online, March 2009 -- Register Now!

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