Diagnostic R&D is Just as Valuable as Star Wars

No one doubts the value of precision diagnostics. This sector of device development is tailored to respond to the evolving healthcare system by emphasizing cost reduction and patient outcome improvement.

Pascale Witz, President and CEO of GE Healthcare, Medical Diagnostics, puts it this way: “The value of precision diagnostics is that it leads to precision medicine, which benefits all stakeholders, including the patient, the physician, the payers, pharmaceutical partners, and the diagnostics development companies.”

In a story on NPR, David Kestenbaum explored the value of R&D across multiple industries, such as the song writing of Lady Gaga and the creative process of making the film, Star Wars. According to Kestenbaum, the U.S. government will be adjusting the national GDP to better reflect the intangibles that go into production. Those IP exercises will soon be considered part of the GDP. The rethink should bump the U.S. GDP about 3% up.

If this R&D money is soon to be calculated as investment into the GDP, it stands to reason that the R&D that goes into diagnostic product development should count for the final price of the item as well.

Witz agrees, saying that such a formula is actually already in place for pharmaceuticals.

“In pharma, its relatively understood that payers are not just paying for the drug or the base manufacturing of the drug, but for the years of clinical trial work and research that have gone into developing the drug.” Witz says. “This is not the case with diagnostics assays.”

In the diagnostics sector, payers only calculate the cost of administering the diagnostic test, and do not necessarily reimburse for the costs of R&D that went into creating the assay.

Such an imbalance discourages companies from pursuing R&D in diagnostics, even though the outcome of such products can have an enormous benefit on the entire healthcare system. “Something like, 60% of decisions are impacted by diagnostics,” Witz claims.

As mentioned earlier, precision diagnostics can influence nearly every point of the healthcare system. Patients benefit from precision diagnostics because they receive the right therapy at the right time, which enables the best possible outcome. Physicians are able to make confident medical decisions based on the best possible data. Payers see reduced waste in the healthcare system and are secure in that they are paying for the right treatments. Pharma partners can develop drugs better, faster, and cheaper. It also helps them identify homogenous patient populations to run more efficient clinical trials. And diagnostic development firms become a valuable part of healthcare reform that places emphasis on reducing waste and costs on all levels of the healthcare system.

Witz says firms need to be properly incentivized to develop the diagnostics that all the stakeholders desperately needs. Part of that incentivizing starts with getting players to recognize and discuss the value. “We need new value models that show the clinical evidence that diagnostics provide.”

Another step is for reimbursement schemes to catch up with that value. “As diagnostic systems get more sophisticated, the reimbursement system needs to move along with it.”

Finally, says Witz, “We need to look at therapy and diagnostics together.”

Such partnerships seem to be getting more popular these days. “The era of the blockbuster is over—and pharma companies recognize that they need diagnostic partners.”

A case in point might be GE’s own research collaboration project with Eisai Inc. Eisai is a pharmaceutical firm based in Woodcliff Lake, NJ, which has developed an investigational beta-site amyloid precursor protein-cleaving enzyme (BACA). This compound could treat Alzheimer’s, since the accumulation of beta amyloid in the brain is believed to play a role in the degeneration of neurons. It is also thought to be a pathological characteristic in the development of Alzheimer’s. GE’s diagnostic component provides visualization for the amyloid sack. It supplies a PET amyloid imaging agent, [¹⁸F]flutemetamol

Eisai has launched a Phase I clinical trial designed to test the applicability of its compound on treating Alzheimer’s disease. GE’s role is to employ its diagnostic test to screen for suitable candidates.

“Alzheimer’s is difficult to diagnose—there is no certain diagnosis except post mortem,” says Witz. “But a high concentration of amyloid fluid is an indication that helps rule out other diseases. GE helps Eisai develop the patient population it needs to test the therapeutic effects of the BACA.

The key tool to bringing precision diagnostics to the fore is communication. Witz says she has to talk to everyone. “We talk to payers, to CMS, and to FDA on how to assess the value of these diagnostic products and processes. We talk to physicians to ensure they understand how use the diagnostic tools appropriately.”

Witz also sees it as her responsibility to advocate for greater transparency and clarity in the reimbursement process. “We have to be able to know what is going on—the lack of transparency is a major reason many companies do not invest in diagnostics.”
 

--Heather Thompson

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