One of the challenges developing a companion diagnostic is creating a test that runs well in both clinical trials, and following regulatory approval, clinical testing laboratories Unfortunately, in our experience, the incentive structure for these two laboratory settings operate under different incentive structures:

A clinical lab operates with the following incentives:

  • CPT coding Laboratories depend upon reimbursement according to CPT coding Reimbursement may not necessarily reflect the costs of inputs, or may not cover new technologies The inability to charge a premium for testing services leads to limitations in operations such as the following
  • Turnaround time and batching Laboratories prefer to maximize batch sizes to upscale labor efficiencies and reduce reagent waste Tests that are run at low volume may not be compatible with a quick TAT Instead, low volume tests might be batched every 1 or 2 weeks
  • Non-standard sample types Accommodating non-standard sample types or special sample collection procedures are difficult to incorporate into high-volume pre-analytical procedures For example, FFPE is standard for solid tumors There is very little infrastructure to support fresh frozen or fresh samples
  • New Technologies and platforms Reimbursement may not be supported by CPT coding Furthermore, if these platforms are utilized for only one test (instead of multiple test types, which is the preference), the assay may not be profitable to offer

A CRO lab operates with fewer constraints than clinical laboratories:

  • Pricing CRO labs can charge value-based pricing This more flexible approach allows for the following
  • Faster Turnaround time Laboratories can provide faster TAT on samples by providing additional labor (or even FTE labor) and accommodating more reagent waste Price per test will of course be higher
  • Non-standard sample types Laboratories can charge a premium to accommodate non-standard workflows
  • New Technologies and platforms Associated capital expenditures can be passed on to the pharma sponsor

What does this mean for companion diagnostic development? Generally, a preference for a conservative approach in development:

  • Preference for technologies with established reimbursement
  • Sample types compatible with standard pathology practice
  • Preference for established platforms, preferably those that can be used for multiple test types, especially if widely placed at laboratories globally
  • Technologies compatible with fast turnaround time

In the age of NGS and multiplex technologies, this is why PCR and IHC remain popular choices for IHC development.

While these limitations exist, they should not necessarily hinder biomarker development for clinical trials With the breadth of new technologies for biomarker analysis now available, there is no reason that a pharma company should limit themselves to IHC and single-plex PCR analyses Furthermore, current laboratory practice is not written in stone, and new technologies continue to make their way into routine practice and gain reimbursement by payers As a closing thought, it helps to consider how a test will be deployed in a clinical laboratory.

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About Scott Reid, PhD, MBA

Vice President, Strategic Alliances and CDx

About Scott Reid, PhD, MBA

Vice President, Strategic Alliances and CDx

Scott Reid heads up companion diagnostic services and strategic alliances at NeoGenomics. He has been with NeoGenomics since 2016 and previously covered Business Development for the New England territory. He has been working in oncology since graduate school with a focus on diagnostics and IVD commercialization that has included previous positions at LabCorp and Covance. Scott completed his PhD in Biochemistry and MBA at Duke University.

These articles reflect the views of a group of experienced practitioners in subspecialty practice, with the goal to provide practical and useful guides to a specific diagnosis or problem area.