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Are payers ready to assess the combined value of drugs with a companion diagnostic?

by Anick Dubois PhD and Marie-Pierre Dubé PhD

The high cost (average of $100,000 to $300,000 USD per year)4and rapid market expansion of CDx-Rx pairs has put pressure on Health

Technology Assessment (HTA) bodies to conduct joint assessment and to provide reimbursement guidelines for CDx-Rx pairs. HTA bodies

and payers have much experience in the assessment of drugs, but adding a test to the assessment of a drug is creating additional challenges.

In particular, the establishment of a unique and clear approach for the assessment of CDx has been difficult. Consequently, guidance on the

appraisal of the combined value of CDx-Rx pairs for decision-making is lacking.

Anticipating the expansion in the availability of CDx-Rx pairs, HTA agencies in some countries are in the process of, or have already adapted

their policies and methods, to accommodate the assessment of CDx-Rx pairs including the HTA agencies of the United-Kingdom (UK) and

Australia. But, in general, there is a striking lack of evaluation frameworks to enable assessment of CDx-Rx package. Canada and the US do

not yet have specific policies or guidance for CDx appraisal, except for Palmetto GBA in the US. Palmetto GBA was the first Medicare carrier

to provide specific reimbursement guidelines for CDx, developing the Molecular diagnostic services program5 and establishing clear coding,

coverage and payment policies for CDx. In Australia, the Medical Services Advisory Committee (MSAC) framework6 was the first fully integrated

national framework for the co-assessment of CDx-Rx pairs. Applications for CDx-Rx pairs have been accepted in Australia using this updated

framework since 2010 via the Health Technology Assessment Access Point to ensure that each codependent technology is evaluated by the

relevant committee (i.e., the Pharmaceuticals Benefits Advisory Committee for the Rx and the MSAC for the CDx) and has the ability to inform

each committee’s decision and can provide coordinated advice. The UK HTA body, the National Institute for Health and Care Excellence (NICE),

published an update to their methods of technology appraisal to include CDx in January 20137. NICE has two paths for CDx: the technology

appraisal program and the diagnostics assessment program. Drugs that are dependent on the use of a CDx are evaluated in the technology

appraisal program. Within this evaluation, the CDx used in the pivotal trials is likely to be considered as well as the potential impact of using

alternative tests. However, these alternative tests are appraised under the diagnostics assessment program, which can enable more complex

assessments involving multiple technologies. The MSAC also compares various testing options in its appraisal of CDx.

argeteddrugsthataretailoredtobiomarkersaremostoftendevelopedorco-developedwith

acompaniondiagnostictoidentifypatientswhoaregoodresponders.Suchcompanion

diagnostic(CDx)-drug-(Rx)pairshavegainedsubstantialinterestintherecentyears.Thismarket

iscurrentlyworthapproximately$42billionandshouldbeworthover$60billionby20191.

Theoncologyarealeadsthemarket(e.g.Herceptin,Erbitux,Vectibix,Gleevec,Iressa,Giotrif,Zelboraf,

Xalkori,Mekinist,Tafinlar).Currently,42%ofalldrugsand73%ofoncologydrugsindevelopmentare

targeteddrugs2.In2014,20%ofdrugapprovalsintheUnited-States(US)weretargeteddrugs

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Australia and the UK HTA bodies have made

a more concerted effort to grow from their

traditional guidance appraisal in order to

include CDx, but the process remains

challenging. The major challenges that will

be discussed in this article are related to

evidentiary requirements and standards

(summarized in Table 1), and to new economic

evaluation modeling complexities assessing

the CDx. In many countries, the economic

impact of introducing a new heath technology

into the healthcare system is assessed using

budget impact analyses and pharmacoeco-

nomic analyses such as cost-effectiveness

analyses (CEA). A CEA compares two or more

health technologies by looking at the ratio of

incremental costs over the incremental benefits

of the new technology. Cost–effectiveness is

an established criterion for reimbursement in

Canada, Australia and the UK, and many US

payers and other international HTA bodies or

payers are using it for guiding decision making.

Distinct needs, same evidence source and

challenges for HTAs

In CDx-Rx pairs, the CDx and Rx are linked,

but distinct in terms of scientific knowledge,

of their evidence base, and with respect to the

system to set the price and the requirement for

the different decision-makers implicated. For

instance, regulators and payers do not have the

same decision drivers and evidentiary needs

(Figure 1). Regulators are gatekeepers who grant

market access on the basis of efficacy and safety

profiles using clinical evidence provided by

randomized clinical trials (RCTs). Payers’

roles are to maximize the expected health

benefits given healthcare budget constraints

and the clinical evidence as well as the economic

impact compared to other available treatments

(i.e., comparative effectiveness and cost-

effectiveness). Regardless of their distinct

needs, the evidence provided by manufacturers

for their assessment is generally idem. Data

from RCTs are analyzed and used to answer

the different questions of regulators and

payers. However, the data provided through

RCTs are sometimes not supplying the necessary

No clear guidance

Distinct for regulators and payers

Distinct for CDx and Rx

Unclear and not transparent for CDx (compare to Rx)

Variable depending of HTA bodies/markets (country to country)

Variable within a country (multilevel of HTAs: national, regional or provincial, local)

Table 1 Major challenges related to evidentiary requirements and standards

Figure 1. Distinct needs for regulators and HTAs, same evidence source and related challenges for HTAs.

answers to reimbursement and coverage questions,

creating evidence translation issues or

evidence gaps, and a need to use a number of

assumptions which leads to uncertainties.

How to make evidence translation work for HTAs?

As an example, direct and real-life outcomes

are particularly important for payers as

compared to the intermediate and surrogate

outcomes that are often provided as part of

RCTs (e.g., improved survival or quality of life

vs reduction in tumour size). Although this

does not present a new challenge, it does

present a recurrent problem, particularly

while assessing oncology drugs. Yet, with the

increased availability of CDx-Rx pairs and

targeted-oncology drugs with expedited or

conditional approval, this challenge is bound

to increase in frequency. Clinical trials are

powered to study differences in median overall

survival and progress free survival or other

intermediate and surrogate parameters (e.g.,

overall response rate) from smaller, open-label

trials. But for economic evaluation the gains in

a mean survival is a requisite outcome.

Thus, even if a drug is granted conditional

approval by a regulatory agency on the basis

of results from a Phase II or III trial with a

lack of overall survival benefit, it may not

be reimbursed. Also, as Jönsson B. (2013)8

indicated, progress free survival may be useful

for assessing efficacy, but it has many flaws

when it is used to predict survival and quality

of life. Quality of life is required to estimate

quality-adjusted life-year (QALY), which is

typically the preferred outcome measure in

REGULATORS NEEDS

QualitySafety

Efficacy

HTAs’ NEEDS

Direct / Real-world outcomesComparative effectiveness

Cost-effectiveness

CHALLENGES for HTAs

Evidence translation issuesEvidence gapsAssumptionsUncertainties

Validity of results challenged

RCTs’OUTCOMES

IndirectIntermediate

Surrogate

Provided evidence

economic evaluations (i.e., CEA is expressed

as an incremental cost-effectiveness ratio

(ICER) of costs per QALY or other health

gains). QALY is the preferred valuation method

by the HTA bodies of UK, Australia and Canada

when making recommendations for reimbursement,

but it requires evidence throughout the care

pathway. Commentaries in HTA bodies’ assessment

reports of targeted-oncology drugs are

frequently related to evidence translation and

gaps, lack of direct outcomes and uncertainty

related to long-term benefits.

From evidence to uncertainties

When faced with limited information available

from the RCTs, assumptions and uncertainties

are often introduced in the estimates calculated

(e.g., benefits, QALY, test performance, costs,

clinical management) in order to predict

comparative effectiveness. Complete and

perfect evidence is typically not available for

CDx. While clinical utility is provided through

RCTs for co-developed CDx-Rx pairs, other

parameters are sometimes lacking, creating

input assumptions issues in CEA and many

uncertainties. The extent of uncertainties

may affect decision–making. If two technologies

have the same incremental cost per QALY

but one has a higher degree of uncertainty,

the intervention with the higher degree of

uncertainty will be less likely to receive a

positive recommendation.

How much uncertainty should decision

makers accept?

Uncertainties in parameters can be evaluated

by means of scenario and sensitivity analysis,

but a large number of sensitivity analyses in a

CEA model can become burdensome and the

validity of these estimates may be confronted

by decision makers. To reduce decision-making

uncertainty in the absence of direct evidence,

a linked-evidence approach (i.e., chain arguments

linking different types of evidence from various

sources, e.g. epidemiological data, expert

opinion, observational and retrospective

studies, web-based surveys) was first proposed

in the Australian guideline of 2005 for the

appraisal of diagnostic tests and was used for

CDx assessment by the Australian Medical

Services Advisory Committee and NICE. But

the linked-evidence approach comes with

drawbacks. As Merlin T (2014)9 point out, the

main limitation is finding evidence to support

all areas of the linkage and to ensure that there

is transferability of populations, tests, biomarker

definitions and outcome criteria between each

linked piece of evidence, particularly when

used in economic modeling. Merlin gives as

example the assessment of EGFR-TK (Epidermal

growth factor receptor tyrosine kinase) testing

by NICE under the diagnostics assessment program

where ten EGFR-TK testing methods were

compared10: two Food and Drug Administration

(FDA)-approved and Conformité Européenne

(CE)–marked tests, one only CE-marked, five

laboratory developed test (LDTs), and two test

strategies combining a CE-marked test and a

LDT. Three modeling methods were used to

estimate the cost-effectiveness of the different

tests: a comparative effectiveness analysis, a

linked-evidence analysis and an ‘’assumption of

equal prognostic value’’ analysis that included

the tests for which the costs and/or technical

performance was available only from an online

survey of the National Health Service laboratories

in England and Wales. The accuracy estimates

used in the linked-evidence model were

considered unreliable as they were sampled

from different populations, using different

testing methods and having different levels of

diagnostics accuracy. The agency considered

that the CEA was not sufficiently robust but

they did recommend three tests in spite of all

the uncertainties: the Sanger sequencing based

methods and the two FDA-approved tests: the

cobas®EGFR mutation test and the therascreen

EGFR RGQ PCR kit. In Australia, the MSAC

recommended the cobas test.

HTA bodies and payers have much experience in the assessment of drugs, but the addition of a diagnostic test is challenging. A clear evaluation framework for the joint assessment of CDx-Rx is lacking and would help provide guidance for HTAs and economic evaluation.

The market of companion diagnostic drug pairs (CDx-Rx) is currently worth

approximately $42 billion and is expected to increase to over $60 billion by 2019.

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and reimbursement processes as mentioned

before, but also according to markets, which

fragment reimbursement processes. Moreover,

there can be national, regional and local frag-

mentation of reimbursement decisions within

a country making it even more difficult for

manufacturers to design a study that can meet

all of the data needs for regulators and all

payers on a global scale. Stakeholders do not

incur the same burden related to the CDx.

As Payne K and Annemans L (2013)11 stated,

CDx-Rx pairs offer an opportunity cost, and

decision makers need information on areas

in which costs will be saved or reallocated.

The impact on the capacity to provide the

test and the associated service requirements

has become an issue. This situation creates

challenges mostly for accessibility of the

CDx in clinical practice (which may be

replaced by LDTs), but sometimes it will

impact the uptake of the drug. For example,

in Canada, a publicly-funded healthcare system,

funding decisions for genetic tests are made

at the provincial level and decisions may vary

across jurisdictions. As the Canadian Agency

for Drugs and Technologies in Health (CADTH)

related in their Environment Scan on CDx-Rx

(2014)12, some provinces may not have dedicated

processes in place to review, fund, and

implement such tests.

Thus, these situations may result in increased

pressure on individual hospitals to evaluate

and offer new genetic tests, but when the local

decision is made to offer the test, usually it is

done without additional funding. We see a lot

of ‘’manufacturer-pay-for-testing scenarios’’

for CDx in Canada and it is unknown how this

trend will progress.

The ‘’too high ICER’’ trend

Another factor that is influencing reimbursement

of precision medicine, and which has also been

raising issues among decision-makers, is the

high premium of targeted drugs. The cost of

the Rx is an impactful value driver in the overall

value of CDx-Rx pair. In a context of budget

constraints and steadily increasing healthcare

costs, it is not unusual for HTA bodies to defer

Regulators and payers have different decision drivers and evidentiary needs but commonly receive the same evidence for assessment. This leads to evidence translation problems and evidence gaps, leaving them to rely on assumptions which lead to uncertainties. Avenues for new evidence generation and harmonization are required.

What value drivers’ parameters should be

included in CEA for CDx appraisal?

In addition to input assumptions and uncertainty

issues in the economic modeling due to lack

of direct evidence or further evidence gaps,

other modeling challenges exist with CDx

assessment. One of these challenges is modeling

with different value drivers’ parameters that

can impact the overall value of the CDx. There

is currently only limited harmonization on

the CDx parameters that should be assessed,

amplifying the necessity for clear guidance.

Looking at existing guidance and commentaries

in reports from assessments made by HTA

agencies for CDx, parameters of importance

that should be considered in economic

modeling are the following:

l Test-related costs;

l Test performance characteristics (e.g.

accuracy, economic consequences of false

positives and false negatives, predictive

value, clinical utility);

l Real biomarker prevalence;

l Diagnostic suitability;

l Clinical management and implementation

strategy (e.g. infrastructure to support

testing and samples collection practices,

current local laboratory platform, etc.) as

well as associated resource utilization.

New evidence requirements related to these

value drivers are emerging for CDx assessment.

HTA evaluators generally rely on a ‘’test and

treat’’ vs ‘’no test’’ economic model where the

clinical management and the costs and health

outcomes in both situations are evaluated. But

if most of these parameters are not integrated

or considered, the model and assessment may

fail to fully capture all relevant health and

economic outcomes.

Reimbursement fragmentation

The uneven reimbursement landscape across

jurisdictions is also problematic due to a lack

of standardization in regulatory, coverage and

reimbursement processes, from country to

country. Evidentiary standards and decision

criteria differ not only for market authorization

or reject applications based on an unacceptable

ICER, and several favourable recommendations

necessitate a price reduction. The situation

has been trending in oncology. In Canada for

example, of the 26 submissions recommended

from the Pan-Canadian Oncology Drug

Review between May 2011 and April 2014,

nineteen (73.1%) had price reduction requests

and only two were accepted without conditions13.

The problem of high pricing is not new but

it has been on the rise for targeted drugs in

oncology, and can be expected to recur

with the recent availability of CDx-Rx pairs

with high premiums (e.g. Zelboraf, Xalkori).

Multidrug regiments with these new targeted

drugs and expansion to other indications after

approval (e.g. Gleevec) impose an increasing

burden and concerns for payers. More

reimbursement conditions or arrangements

(e.g. performance-based risk-sharing arrangements,

coverage by evidence development), stronger

evidentiary support and a clearer codependent

proposition value are required by payers that

must cope with budgetary constraints. This

will require manufacturers to adjust to these

demands and develop early robust co-development

strategies with strong biomarker science,

appropriate trial designs and implementation

strategies, etc.

How could the requirements of diverse

stakeholders be aligned?

All these challenges highlight the need for all

stakeholders to change their approach in order

to better align combined assessment. Manufacturers

may have to adjust to enable the development

of the evidence needed for both regulatory

and reimbursement assessments from the

earliest stages of development and to better

communicate their proposition value to

agencies. This may require the conduct of

different or more complex study designs.

HTA bodies of major global markets need to

provide formal and clear guidance to assess

CDx and CDx-Rx pairs in an effort towards

harmonization and standardization. Australia

is an example that should inspire other HTA

agencies with the establishment of joint

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Marie-Pierre Dubé is Associate Professor in the

Department of Medicine at the Université de Montréal.

She is the Director of the Pharmacogenomics Centre

at the Montreal Heart Institute where she leads clinical

research projects in personalized medicine. Dr. Dubé

completed a Ph.D. in genetics at McGill University and

post-doctoral studies in public health at University of

Toronto. She worked at Xenon Pharmaceuticals before

taking her current academic position. Dr Dubé has

authored over 110 peer-reviewed articles.

marie-pierre.dube@umontreal.ca

Anick Dubois, is the Director of personalized medicine

implementation at CEPMed, the Center of Excellence

in Personalized Medicine of the Pharmacogenomics

Center at the Montreal Heart Institute where she is

looking at socioeconomic benefits and translation of

personalized medicine as well as developing,

coordinating or managing projects. Dr Dubois holds

a Ph.D. in Pharmaceutical Sciences from the University

of Montreal. Prior to CEPMed, she worked as program

manager at Génome Québec and as Vice-Director of

R&D at Seryx Signature Genetics.

anick.dubois@cepmed.com

T

References

1. http://www.prnewswire.com/news-releases/personalized-medicine-targeted-therapeutics-and-companion-diagnostic-market-to-2019---strategic-analysis-of-industry-trends-technologies-participants-and-environment-300114875.html; consulted July 20th 2015.2. http://www.phrma.org/sites/default/files/pdf/pmc-tufts-backgrounder.pdf 3. http://www.personalizedmedicinecoalition.org/Userfiles/PMC-Corporate/file/2014-fda-approvals-personalized-medicine2.pdf4. http://www.imshealth.com; consulted July 20th 2015. 5. http://www.palmettogba.com/palmetto/MolDX.nsf/DocsCatHome/MolDx; consulted July 28th 2015.6. Australian Government Department of Health. Framework for evaluating co-dependent technologies for a reimbursement decision: Additional file 1. Canberra: Commonwealth of Australia; 2010 Sep 16.7. Guide to the methods of technology appraisal 2013 [Internet]. London: National Institute for Health and Care Excellence; 2013. Available from: http://publications.nice.org.uk/guide-to-the-methods-of-technology-appraisal-2013-pmg9/the-reference-case.8. Jönsson B. Technology assessment for new oncology drugs. Clinical Cancer Research. 01 Jan 2013;19(1):6-11.. 9. Merlin T. 2014. The use of the ‘linked evidence approach’ to guide policy on the reimbursement of personalized medicines. Personalized Medicine (2014) 11(4), 435–448.10. National Institute for Health and Care Excellence. EGFR-TK mutation testing in adults with locally advanced or metastatic non-small-cell lung cancer. NICE diagnostics guidance 9, National Institute for Health and Care Excellence, Manchester, UK, 46, (2013).11. Payne K, Annemans L. Reflections on market access for personalized medicine: recommendations for Europe. Value in health: the journal of the International Society for Pharmacoeconomics and Outcomes Research. Sep-Oct 2013;16(6 Suppl):S32-38.12. Canadian Agency for Drugs and Technologies in Health. Pharmaceuticals Requiring Companion Diagnostics. Environmental Scan. Issue 47. Ottawa, ON, 2014.13. Rawson N. Has pCODR Improved Access to Oncology Drugs? Timeliness and provincial acceptance of pan-Canadian Oncology Drug Review recommendations. 2014:30.14. http://www.prnewswire.com/news-releases/qiagen-announces-first-ever-regulatory-registration-of-a-lung-cancer-companion-diagnostic-based-on-liquid-biopsies-288226911.html; consulted July 28th 2015.15. Marrone M et al. Multi-marker Solid Tumor Panels Using Next-generation Sequencing to Direct Molecularly Targeted Therapies. PLoS Curr. 2014 May 27; 6.16. https://www.whitehouse.gov/the-press-office/2015/01/30/fact-sheet-president-obama-s-precision-medicine-initiative; consulted February 10th 2015.

applications and reviews with coordinated

advice for the Rx and the CDx. Evidentiary

requirements and standards for reimbursement

decision-making need to be clarified

and aligned with marketing authorization

requirements within a country to optimize

process efficiency and enable uniformity of

outcomes. Interagency collaborations and

coordination is important to determine and

harmonize necessary requirements for both

regulators and payers. Health economic

evaluation as early as the development phase

could help to identify the most valuable

information in an attempt to reduce uncertainty

in CEA. These potential solutions to enable a

better appraisal of CDx-Rx pairs, are summarized

in Table 2.

Such challenges do present themselves with

the “one CDx, one Rx” paradigm. Convincing

global payers and assessing the value of CDx

will become more challenging as possibilities

enabled by advances in technology and their

potential applications increase. In January 2015,

the therascreen EGFR Plasma RGQ PCR Kit

(CE-marked) using blood samples instead of

tissue samples was launched as the first “liquid

biopsy” for patients in whim surgical biopsies

were not assessable14. Multi-biomarker panels

(e.g. including EGFR, BRAF, KRAS mutations

and multiple other common markers) for

selecting one or multiple targeted-oncology

drugs have been or are being developed

(mostly LDTs) using next generation sequencing

(e.g. SuraSeq™NGS, Foundation One™) or

other multiplex technology15. The 2015, $215

million Obama Precision Medicine Initiative16

is a hallmark of the end of the traditional

one-size-fits-all drug model. Precision medicine

is leading the way toward the future of

healthcare. Regulators, HTA bodies, payers

and decision-makers should all work together

to be prepared to assess the value of the new

codependent technologies that will result

from these advances, and have clear and

aligned requirements for manufacturers to

better satisfy their needs.

Table 2 Potential solutions enabling better co-value appraisal of CDx-Rx pairs

Multi-stakeholders efforts

HTAs joint applications/review and guidance for CDx-Rx co-assessment

Manufacturers to improve combined value proposition and provide stronger evidentiary support

Joint advice, harmonize review and requirements for regulators and payers (within a country)

Identify parameters (value drivers) of CDx to be included/considered in economic modeling

Better Harmonize HTAs requirements and standards

Interagency collaborations and coordination