Payers
commercial insurance | Medicare Advantage | MEDICAID CONTRACTORS | Medicare administrative contractors
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We are using the smartest drugs on the planet in the worst possible way—trial and error.
— Craig Leonardi, MD, Dermatologist
In an era where every drug developed in the past 30 years is a rationally designed, targeted therapy and diagnostics can be used to determine risk adverse events, predict response and determine therapy selection, the fact that we are not using more diagnostic tools to make decisions in healthcare is a huge contributor to wasted spend and perpetuates Imprecision Medicine (below).
Alva10 endeavors to streamline the process of diagnostic development by brokering relationships between diagnostic developers and their customers: the payers. Alva10 works with payers to identify areas of high cost and poor outcomes within their populations, and either determine coverage for existing diagnostics on the market that can be utilized to address a specific area, or developed to satisfy a clinical and/or economic need.
Imprecision Medicine
PAYERS ARE BEING ASKED TO PAY FOR ‘IMPRECISON MEDICINE’
Crestor (cholesterol)
Copaxone (MS)
Cymbalta (depression)
Abilify (schizophrenia)
Humira, Enbrel, Remicade (RA)
1. Adaptation of Nature Graphic, 2015 Schork, N. Personalized Medicine: Time for one-person trials.
For every patient drugs help (orange), the 10 highest-grossing drugs in the U.S. fail to improve the conditions of between 3-24 people (teal). Select drugs are represented below.
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Vicious vs Virtuous
The standard diagnostic development cycle, coined the ‘Vicious Cycle’ of diagnostics, creates hesitation for investors to back these innovative technologies, and uncertainty for you, the payers, to get involved with these ventures. Companies tend to develop their test with the input from key opinion leaders, large academic centers, and their own scientists. They internally determine what the minimally viable product is, and launch onto the market with the intention of asking payers for pilot studies and joint development agreements in order to generate more data.
This is almost never successful because the payers (customers) see a product that isn’t fully complete and doesn’t have enough supporting evidence. Frequently, the payer also doesn’t agree with either the clinical utility, value proposition/pricing, or both. Therefore the payers deem the test ‘experimental’ and do not cover it, waiting for more data. The diagnostic developer then needs to go to their investors, or board, and ask for more resources to generate sufficient data. Frequently, that request is turned down, because there is no clear path to market success. Even with additional funding, it can take 18-24 months to begin to get market traction. This is the valley of death for diagnostics.
Let’s consider the above Vicious Cycle compared to the Virtuous Cycle, where the diagnostic developer engages with the payer ahead of the validation data development. This ensures that there is agreement on:
1. Clinical utility
2. Value proposition (payer economics)
3. Reimbursement (diagnostic company and investor economics)
By coming to agreement upfront, the same resources are used on the payer side, but now the diagnostic developer has a clear path to the market, and therefore the investor, has a clear return on investment.
Its a WIN-WIN-WIN
Vicious Cycle
Virtuous Cycle
Vicious vs Virtuous
Vicious Cycle
Virtuous Cycle
The standard diagnostic development cycle, coined the ‘Vicious Cycle’, creates hesitation for investors to back these innovative technologies, and uncertainty for you, the payers, to get involved with these ventures. Companies tend to develop their test with the input from key opinion leaders, large academic centers, and their own scientists. They
internally determine what the minimally viable product is, and launch onto the market with the intention of asking payers for pilot studies and joint development agreements in order to generate more data.
This is almost never successful because the payers (customers) see a product that isn’t fully complete and doesn’t have enough supporting evidence. Frequently, the payer also doesn’t agree with either the clinical utility, value proposition/ pricing, or both. Therefore the payers deem the test ‘experimental’ and do not cover it, waiting for more data. The diagnostic developer then needs to go to their investors, or board, and ask for more resources to generate sufficient data. Frequently, that request is turned down, because there is no clear path to market success. Even with additional funding, it can take 18-24 months to begin to get market traction. This is the valley of death for diagnostics.
Let’s consider the above Vicious Cycle compared to the Virtuous Cycle, where the diagnostic developer engages with the payer ahead of the validation data development. This ensures that there is agreement on:
1. Clinical utility
2. Value proposition (payer economics)
3. Reimbursement
(diagnostic company and
investor economics)
By coming to agreement upfront, the same resources are used on the payer side, but now the diagnostic developer has a clear path to the market, and therefore the investor, has a clear return on investment.
Its a WIN-WIN-WIN
Determining the amount of evidence required at each stage is critical to market success and patient impact. Diagnostic companies need to engage the payer to answer questions including:
LDT or IVD?
Retrospective or prospective clinical study?
Real world evidence study?
Reimbursement threshold and rate?
Diagnostic companies need to be able to work with their customers (payers) to understand the validation requirements for a novel test, and come to agreement on evidence development, clinical utility and reimbursement, in order to be able to develop diagnostics that impact healthcare.
Developing Evidentiary Thresholds
DATA DEVELOPMENT, MARKET & REIMBURSEMENT
CLINICAL/MARKET VALIDATION
TECHNICAL
VALIDATION
Determining the amount of evidence required at each stage is critical to market success and patient impact. Diagnostic companies need to engage the payer to answer questions including:
LDT or IVD?
Retrospective or prospective clinical study?
Real world evidence study?
Reimbursement threshold and rate?
Diagnostic companies need to be able to work with their customers (payers) to understand the validation requirements for a novel test, and come to agreement on evidence development, clinical utility and reimbursement, in order to be able to develop diagnostics that impact healthcare.
HIGH VALUE TESTS DECREASE SPEND & IMPROVE OUTCOMES FOR PAYERS AT NO ADDED COST
Low value tests give payers impression that Precision Medicine doesn’t work
ALVA10 Model
Status QUO
Dx Company plans evidence
MedTech Committee reviews evidence plan
Dx Company incorporates feedback, develops evidence
High value Dx test successful
Dx Company develops evidence
Dx Company launches test
MedTech Committee finds evidence insufficient
Low value Dx test unsuccessful
SAME RESOURCES. IMPROVED RESULT.
What does this all mean?
When we move to a Virtuous cycle, with Proper Evidentiary Thresholds we can leave behind Imprecision Medicine in favor of Precision Medicine to improve and ensure the utility of diagnostics.
