Paying for personalized medicine

1 minute read

Virginia Hughes writes about the challenges on the business side of personalized medicine: “Genomics Revolution(s)”. She builds the topic up from a few people pursing the information challenge of finding new therapies and fitting them to patients who may benefit, and the problems of scaling up to the insurance and government payers.

A more united, collaborative commercial genomics industry not only could spur scientific progress, but better equip itself to tackle challenges in insurance reimbursement and government regulation. No matter how effective a particular test, it wont sell if insurance companies wont pay for it. Most entrepreneurs are totally naive in thinking that the secret sauce, the magic formula, is in the technology, says Steve Burrill, whose San Francisco venture capital firm, Burrill and Company, specializes in personalized medicine. God, in this world, is the payer Medicare or your insurance company or your employer will determine what you get. Working alone, companies have a tough time convincing payers to reimburse for specific technologies. The companies must demonstrate, to each individual payer, that a test is reliable, leads to better outcomes, and saves money in the long run. The studies needed to prove the technologys effectiveness are expensive, which can be problematic for most diagnostic tests because they will have relatively small markets and slim profit margins.

A good perspective to read in addition to my “Genomes too cheap to meter”, which examines the future price curve for genetic testing and the possible barriers to price reduction in the medical testing field.