Clarient, Generation Health, GenMark, Osmetech, Laboratoire Cerba, UCLA Med Center


PAYER PRE-AUTHORIZATION OF GENETIC TESTS is the reason for the newly-announced contract between Clarient, Inc., and Generation Health, Inc., of Upper Saddle River, New Jersey.

Announced on June 10, the agreement positions Clarient to be the preferred provider of genetic tests for Generation Health. Generation Health was founded in 2008 to be a genetic testing benefit management company.

It has adopted the pharmacy benefit management (PBM) business model to genetic testing. In fact, Generation Health was founded by its President and CEO, Richard K. Schatzberg, who spent 20 years at Medco Health Solutions, one of the nation’s largest PBMs.

Under the new agreement, effective July 2010, Clarient will collaborate with Generation Health (GH) “to facilitate the diagnostic testing for gene mutations in patients who suffer from certain oncology indications. In January 2011, plans are to expand the program, offering managed diagnostic testing to all GH clients.”

As more managed care plans take steps to pre-authorize expensive genetic and molecular diagnostic tests, it will become harder for local clinical labs and pathology groups to provide such testing. It is widely-expected that these companies will limit testing only to laboratories contracted by payers or GBMs to do this work.

Pathologists and laboratory directors should be aware of these developments. THE DARK REPORT has predicted that payer pre-authorization of genetic testing will be a fast-moving trend. In fact, there is already a term to describe this new classs of health company. It is “genetic benefit manager” (GBM).

The growing line-up of players in the GBM field illustrates the swift uptake of this trend. Already this year, DNA Direct was acquired by Medco to handle pre-authorization of genetic tests for its customers. Earlier this spring, McKesson Corporation launched its Advanced Diagnostics Management (ADM) business unit to managed genetic test pre-authorization for payers. CVS Caremark is a part owner of Generation Health.

It is not a coincidence that so many billion-dollar corporations want to be in the “genetic benefit manager” business. It will be one of the faster-growing sectors of healthcare.


ON MAY 28, the shares of GenMark Diagnostics, Inc. began trading on the NASDAQ exchange under the symbol GNMK. It thus became the newest molecular in vitro diagnostics (IVD) manufacturer to have its shares trade in the public markets.

But GenMark Diagnostics is actually the new public face for Osmetech, PLC, based on London, England. Upon completion of the initial public offering (IPO), which raised $28 million, Osmetech’s assets were placed into GenMark Diagnostics, which is based in Pasadena, California.

GenMark intends to develop its proprietary eSensor detection technology, sold as the GenMark XT-8 System. It supports multiplex detection of DNA and RNA targets. GenMark is moving forward with plans to clear three diagnostic test kits with the FDA. The tests—a Cystic Fibrosis Genotyping Test, a Thrombofilia Risk Test and a Warfarin Sensitivity Test—will be designed to run on the XT- 8 system.

Osmetech has struggled to develop this technology and bring it to market. In GenMark stock filing, it noted that “losses attributable to continuing operations were approximately $4.8 million for the three months ending March 31, 2010 and for the years ending December 31, 2009, 2008 and 2007 [losses] were approximately $20.0 million, $28.4 million and $23.9 million, respectively.”


PATHOLOGISTS interested in the globalization of laboratory testing may be interested in the details of the recently announced sale of Laboratoire Cerba, based in Paris, France. Laboratoire Cerba is considered to be France’s largest commercial laboratory company and does business in several countries.

The French private equity firm PAI Partners announced that it would pay €500 million (US$600 million). The Financial Times reported that “PAI plans to take advantage of a change in French regulation that allows Cerba to acquire smaller rivals in the routine clinical pathology and clinical trials markets, which remain highly fragmented in France.”

Cerba has said that its consolidated revenue in 2010 is projected to be €250 million (US$309 million), of which 35% will come from international sales. It has 34 locations in Europe, South Africa, Australia, China, and the United States. There are 1,300 employees, including 85 clinical pathologists. Laboratoire Cerba performs 85,000 tests per day.


ON JUNE 10, IT WAS ANNOUNCED that the State of California had fined UCLA Medical Center a total of $95,000 for violations of patient privacy laws. Press coverage of the fine identifies workers in the pathology department as the lawbreakers.

When these patient privacy violations happened in 2009, it was widely reported by the media that patient records of two celebrity patients had been viewed by personnel at the UCLA Medical Center in Los Angeles, California, in violation of the hospital’s regulations and state law.

Although neither the state nor UCLA Medical Center have identified the patients, media outlets reported that the records of pop singer Michael Jackson and actress Farrah Fawcett, who both died at the medical center, were accessed by unauthorized personnel.

Officials at the UCLA Medical Center discovered the unauthorized access to those patient records within days of the incidents. The violations were promptly reported to state officials.

A report on the case indicates that a “medical school employee and an employee in the Department of Pathology and Medical Support Services were found to have accessed the patient’s records two days before. The medical school employee had even printed labels for laboratory tests that had been performed on the patient.”

Days later, hospital officials determined that a second breach of the same patient’s records had occurred, involving two contract workers with the hospital’s pathology billing service. When confronted with the privacy breaches, these two individuals are reported to have “admitted inappropriate access, they were curious.”

The details about the involvement of individuals working within UCLA’s clinical laboratory and pathology department were not known until the release of this report. However, this new information about the breach of privacy for celebrity patients is a reminder to all clinical laboratory managers and pathologists of the need for ongoing diligence in protecting the privacy of all patients at all times. This is particularly true because passage of the HITECH Act has created new patient privacy compliance requirements for health-care providers.


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