$10,000 genomes? Don't get sick.

This is from the Nicholas Wade article on James Watson's genome:

Some scientists believe that it will be medically useful to sequence patients' genomes when the cost of sequencing falls to around $10,000 or less. Dr. Egholm said that with improvements already under way, the 454 sequencing machine would soon be able to sequence a human genome for $100,000. The cost of sequencing has been dropping so fast in the hands of groups like 454 Life Sciences and Solexa Inc., a subsidiary of Illumina Inc., that some technologists predict the $10,000 genome will be attained in a few years.

Doesn't $10,000 seem like an interesting price point? I've written a couple of times about the idea of $1000 whole-genome sequencing. Here's what I wrote last year:

My question is, why are they shooting for $1000? It seems to me that if you can go from $2.2 million to $1000, it won't take very much longer to go to $100, or even less. The materials cost and computational resources certainly won't cost that much in volume.
They are framing the cost in terms of the cost of a personal computer, but it wasn't so long ago that the "accepted" cost of a PC was over $3000, and now most buyers spend a lot less than $1000. So that's arbitrary too.
My guess is that the magic $1000 figure that keeps getting quoted is an attempt to prime insurers to expect that billing amount when the process becomes common. The question is not how much you would pay for a genome, but how much an insurance company would pay on your behalf. A lot of diagnostic procedures approach that billing amount, so it is a convenient pricing hook.
If I'm right, then you can place the $1000 genome in the same category as MRI scans and X-rays, neither of which is priced at what it is worth in materials or energy, but in terms of amortization of equipment and expert interpretation.

But $1000 won't be practical for quite a long while. So what are the implications of the $10,000 genome?

Remember that most young people just don't care very much about their genomes. Here's what I found of my students in 2005:

The results: only two would pay more than the price of a CD, around $16.00. Most didn't want the information at all --- they didn't see what possible use it could have for them.

In contrast to my undergraduates, an insurer would probably find a $1000 genome pretty useful, particularly for current customers. That's too expensive for screening potential clients, but well in the price range of procedures that they normally cover.

$10,000, on the other hand, is not in the usual range of diagnostic procedures. We have to think about what would make a genome worth that much more than a typical diagnostic procedure. It seems pretty obvious that you would only pay that much for a procedure if it had the potential of preventing something much more expensive. But for this much money, it can't be a mere long-term potential, it must be an immediate potential.

So we are looking for medical bills far in excess of $10,000 that would be prevented by a genome sequence. Read that carefully: bills that would be prevented, not diseases that could be cured.

It seems like the main application of a $10,000 genome sequence would be to prevent people from having expensive surgeries, particularly transplants.

Suppose you are an insurer that might normally approve a $250,000 transplant surgery, with a 30 percent failure rate. For $10,000, suppose you could gain some better prediction of long-term survival or organ rejection rates. So you implement a required whole-genome screening before approving surgery, and require that the patient's genetic "risk" factors don't exceed some threshold. If you eliminate 10 percent of surgeries, your investment in whole-genome sequencing yields a 250% return -- assuming the cost of care without surgery approximates that after failed surgeries.

Now, I have my doubts about whether this scenario will come to pass. For one thing, SNP screening is going to be a lot cheaper than whole-genome sequencing for a long time, and probably will be just as informative. The benefit of the whole-genome sequence -- that it finds the rare variants that no one else has -- also makes it much less medically useful, since nobody knows what your unique rare variants actually do.