DIANON Systems, United Health, Aetna, Quest Diagnostics, Orchid, AmeriPath

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A NEW NATIONAL AGREEMENT between DIANON Systems, Inc. and UnitedHealthcare was announced last week.

The agreement allows DIANON Systems to provide pathology and genetic testing services to all the beneficiaries in health plans offered by UnitedHealthCare, a division of UnitedHealth Group. It consolidates a number of existing agreements between the two companies.

DIANON Systems now has full access to the HMO, PPO, and POS (point-of-service) plans operated by UnitedHealthGroup. Approximately 16.5 million people are covered by these plans.

This national agreement is a milestone event for DIANON Systems. It validates several parts of the company’s business strategy. First, DIANON has generally preferred having contracts with significant managed care plans before marketing to physicians’ offices in regions where those plans have lots of beneficiaries. This strategy insures that DIANON gets paid for the tests it performs.

Second, DIANON Systems’ Care-Path™ Health Information Service was designed to offer value to the payer, as well as the physician and the patient. DIANON’s success at getting anatomic pathology carveouts with important payers, such as Aetna and Oxford Healthcare, and now UnitedHealthCare, provides marketplace proof that payers find at least some aspects of CarePath to be useful.

Once DIANON Systems has gained status as a contract provider, its sales team has been effective at convincing physicians to refer patient specimens to DIANON. This new national agreement gives DIANON’s sales team access to an additional 5.8 million of the 16.5 million beneficiaries at UnitedHealthCare.


EXTENSIVE CHANGES at Aetna Inc. were announced last week. These changes may affect lab testing contracts in a number of regional markets.

The nation’s largest health insurer will eliminate another 16% of its workforce, mostly through layoffs. About 6,000 of its 37,000 workers will be affected. These changes are in response to market conditions and restructuring plans made public late last year.

At that time, Aetna said it would eliminate 5,000 jobs, drop plans in certain markets, and reduce overall membership levels. Currently, enrollment numbers about 17.5 million, compared to 19.5 million beneficiaries at the end of last year.

For clinical laboratories and pathology group practices, the restructuring of Aetna’s workforce will certainly have an impact. There will be changes to regional medical directors and network contracting managers. This will disrupt current business relationships many labs have with Aetna managers.


Two unrelated events illustrate the speed with which genetic diagnostics and genetic therapeutics are heading toward general clinical usage. Last week, the journal Science published results of an experiment where Massachusetts researchers successfully used genetic technology to cure sickle- cell anemia in mice.

A day later, Quest Diagnostics Incorporated announced that it had signed an agreement with Orchid BioSciences, Inc. to license Orchid’s proprietary SNP-IT™ technology for gene-based diagnostic testing services. It is expected that SNP (single nucleotide polymorphism) testing will be a primary tool in pharmocogenomics.

In Cambridge, Massachusetts, researchers at Harvard University and Massachusetts Institute of Technology removed bone marrow from the mice. They then carefully stripped potentially harmful components out of the AIDS virus and used it to deliver a therapeutic gene to the bone marrow of the mice.

Researchers used radiation to kill the diseased cells remaining in the bone marrow, then returned the treated bone marrow cells into the mice. Following the procedure, researchers measured a high proportion of normal, round blood cells. The beneficial effects lasted as long as ten months.

Despite the technical hurdles and concerns over using the AIDS virus to deliver the therapeutic gene, Genetrix Pharmaceuticals believes it can commercialize this technology and have it ready for testing in humans within three years.

At Quest Diagnostics, the acquisition of SNP-scoring technology demonstrates that there is commercial potential. Differences in the SNPs of individuals are believed to be the reason some people respond better to therapeutic drugs than other people.

Quest Diagnostics intends to develop diagnostic tests with the SNP-IT technology. For Orchid BioSciences, the Quest relationship is a way for it to move its technology into the diagnostics marketplace.

SNPs, or single nucleotide polymorphisms, represent the change in one base pair of DNA bases at a specific site on the gene. Pharmacogenomics is built upon the theory that individuals with the same disease will react differently to the same therapeutic drugs because of the differences in their SNPs. Between now and the eventual arrival of FDA-approved test kits that utilize SNP technology, Quest Diagnostics is in a position to both gain experience with SNP testing and start a library of relevant SNP information.

What these two events illustrate is that advances in genetic-based technologies are bringing new capabilities closer to widespread clinical use.


WITH NEWS THAT IT HAD ACQUIRED a pathology group in Birmingham, Alabama, AmeriPath, Inc. served notice that it’s back in the acquisition mode. It purchased Dermatology Services P.C. and Histology Services, P.C., a practice doing about $4 million per year in revenues.

In recent months, AmeriPath made changes to its line of credit. On December 10 it announced a new credit facility of $200 million. Some funds from this new credit facility have been used to retire certain existing debt instruments. The new credit agreement increased AmeriPath’s borrowing power as well as positioning it to launch another round of pathology group practice acquisitions.

Since pathology practice acquisitions are an important part of AmeriPath’s business strategy, it maintains an ongoing program to identify and negotiate with pathology groups in preferred regions around the country. This “deal pipeline” will be the source of its acquisitions during the next year.


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