Diagnostic innovations are slowed by bureaucratic roadblocks

Imagine, for a minute, that you are a cardiologist working in the emergency department of a busy hospital. You have several patients with chest pain: some of them are having heart attacks, or are about to; others have heartburn or muscle strains. It would be great to have a diagnostic tool that quickly and accurately tells one from the other.

Physicians outside the U.S. could already have access to this type of diagnostic test. But in the U.S. it’s still pending clearance by the Food and Drug Administration. FDA-required processes for a new commercial test to gain approval for marketing and use can be costly and take years, depending on how complicated a test is.

This raises the question: Should we be making it easier for companies to bring new tests to market, rather than having a process that is so complicated and expensive that they give up? Have we set up a system so complex that we’re inadvertently stifling diagnostic innovations and possibly endangering the health of our nation?

As vital as diagnostics are — 70 percent of health care decisions are guided by diagnostic tests — there are ever-increasing obstacles and roadblocks to getting them to market. Those coming from overseas must jump through additional barriers that are largely fueled by the perception that even well-designed clinical trials aren’t valid unless they are performed in the U.S.

While it’s essential to have policies in place to ensure that new tests and technologies are safe and effective, U.S. regulators are making it so challenging that some valuable tests never make it to patients and physicians here.

I see three main roadblocks to bringing diagnostic innovations into the U.S. market.

Roadblock 1: FDA clearance and payer coverage

The lengthy and expensive process of attaining FDA clearance does not guarantee that insurers and other payers will cover the use of a new test or diagnostic technology — an important factor in how well the innovation will be adopted by the market. Developers of diagnostic innovations must demonstrate to both the Centers for Medicare and Medicaid Services and commercial payers, which independently make coverage decisions, that the test or technology meets validity and utility requirements.

For Medicare alone, coverage requests may need to be submitted to each of the Medicare jurisdictions.

With tests taking from two to six years to gain a critical mass of positive coverage policies, I have seen too many companies close their doors simply because it was taking too long to finish the proof-of-concept stage and move on to market expansion. With a growing number of new technologies hitting the market, physicians are flooded with new options, making it extremely difficult to evaluate the growing number of diagnostic tools and decide which to adopt. Many tend to stick with what they’ve done in the past rather than adopt something new, thus slowing the demonstration-of-use phase. The volume of new tests also makes it challenging for payers to evaluate all the diagnostics that are available.

Roadblock 2: clinical adoption and value

When deciding whether to cover a new diagnostic test or technology, payers want to know that physicians are using it for their patients. Use for patients is also required to obtain a Category 1 Current Procedural Terminology (CPT) code, which is essential for physicians to be adequately reimbursed.

CMS and most payers require at least two clinical validation studies, which test whether the diagnostic tool matches its intent, and two clinical utility studies, which measure whether the diagnostic supports clinical decision-making and improves outcomes. Basically, makers of diagnostic innovations must show that they are being used properly and that physicians are using them to make decisions, such as employing a different treatment protocol or changing the dosage of a drug.

It is challenging to demonstrate clinical utility without wide-scale adoption in appropriate patient populations, and equally challenging to gain that adoption without meaningful coverage and reimbursement. It’s quite literally a chicken-or-egg situation.

Whether laboratories have developed a new test or are using one, they face the additional challenge of being unable to control whether physicians use it correctly or properly understand the results. Lab directors can educate physicians and patients about the types of tests and technologies offered, but if they can’t control how they are being interpreted or used, it makes it extremely difficult to demonstrate clinical utility.

Roadblock 3: international barriers

The U.S. isn’t the only source of clinical innovation. Diagnostic tests and technologies are being developed around the world. Bringing them to market in the U.S. requires overcoming additional obstacles. Trials performed outside the U.S. often do not meet the requirements for getting a CPT code and do not pass muster for most payers. This means additional time and money are needed for peer-reviewed studies to be done in the U.S.

Partnering with advisers who deeply understand U.S. processes and requirements can benefit international diagnostic companies aiming to enter this market. Yet when presented with the realities of the U.S. market, including realistic expectations for reimbursement and the economics of market expansion into the U.S., many international companies decide to not pursue the opportunity.

Simplifying the road ahead

I worry that the U.S. has set up a system for clearing new diagnostic tools that is so complex that we’re potentially missing out on innovative new approaches, thus preventing the possibility of giving patients the timely, necessary treatments they need. There are a few ways to expedite the process:

Parallel reviews by the FDA and CMS: Under the parallel review program, device makers can request a simultaneous, overlapping review by both the FDA and CMS. That can reduce the time between a clearance decision by FDA and a national coverage determination by CMS. Only a few companies have used this option to date.

Right to try: “Right to try” legislation gives terminally ill patients the right to use experimental medications that have not yet been approved by the FDA. Congress and the pharmaceutical industry recently adopted this policy so physicians can use a “why not try it and see” policy to determine whether an investigational drug is right for a certain patient. Taking this approach toward diagnostics could be beneficial as it speeds the availability of the test and the availability of demonstration-of-use data.

Risk sharing or coverage with evidence: On the commercial side, the diagnostic industry can consider risk sharing and “coverage with evidence” protocols that could potentially offer more expeditious mechanisms for a diagnostic to prove its clinical and economic value. Under these protocols, a payer agrees to cover a test for a limited amount of time if it feels the test has great promise but lacks proof of clinical utility. By adhering to certain data-gathering requirements, the diagnostic’s developer can gain reimbursement coverage while proving a test’s utility.

While the safety and effectiveness of diagnostic tests and technologies remain vital, we must find ways to simplify the road to clearance, reimbursement, and market adoption, not only so valuable new tests and technologies can make their way to the physicians and patients who need them, but so companies see returns on their investments.

Several international companies are opting out of bringing their diagnostic innovations to the U.S. simply because the return on investment isn’t there, either because it takes too long to get coverage or the price of the test ends up being too low — or both.

For a growing number of companies, this means not enough revenue will be made to offset development and go-to-market costs once they complete their long and winding journey to diagnostic innovations.

Rina Wolf is vice president for commercialization strategies and consulting and industry affairs at XIFIN, a San Diego-based health information technology company.