DNA Diagnostics Market, Kaiser Permanente, TriPath Imaging, LifeScan

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FOR THE YEAR 2000, total DNA diagnostic technology sales were estimated to be $517 million. By 2005, this number should increase to $771 million, a growth rate of 8.4% per year.

This is the conclusion of Laura Roth, author of “The DNA Diagnostics Market,” a study recently released by Business Communications Company. The sales figures represent revenues generated by manufacturers of DNA-based diagnostic tests.

For laboratory executives and pathologists tracking the development of diagnostic tests based on DNA technologies, this study provides some revealing insights. Roth points out that PCR-based diagnostics currently comprise $394 million of year 2000 sales. With a 76% market share, PCR technology is dominant.

The remaining 24% of the market is split primarily among fluorescence in-situ hybridization (FISH), hybrid capture, line probe assays (Inno-LiPA™ ), RFLP, and sequencing. Molecular and cytogenetic testing for various diseases totaled $66.3 million in 2000 and will grow by 10.3% per year, reaching $103 million by 2005.

Roth believes that the brightest future for DNA diagnostics is the area of SNP (single-nucleotide polymorphism) analysis. SNP testing will make it possible to look at genetic variations within individuals to determine their affect on cancer, disease, and therapeutic options. She links SNP testing to the evolving concept of “personalized medicine.”

The practice of personalized medicine will require advanced microarray technologies that permit genetic analysis, for example, of individual tumors, even down to individual cancer cells.

But test microarrays are currently priced in the range of $45 to $90 per unit. Roth believes such price levels limit the market. She predicts that, when unit prices fall below $10 per unit, the market will expand rapidly.

Roth also made an observation on a segment of medicine often overlooked by laboratory administrators. Roth points out that the demand for genetic counseling services grew 32.8% between 1996 and 1999. She stated, “The increase in the number of genetic counselors may reflect the increase in demand for people educated and trained to discuss risk assessment and genetic testing results.”

Finally, Roth notes that research and development efforts in DNA diagnostics technology are wide- spread and well-funded. There are at least 50 to 60 companies, mostly in the United States, which are developing DNA diagnostics products.


IT’S BEEN MORE THAN TWO YEARS since Kaiser Permanente first inked a national agreement to acquire and use the automated Pap smear screening technology of Tri-Path Imaging, Inc. (formerly Neopath, Inc.).

Last month it was announced that Kaiser Permanente had “renewed its national pricing agreement” and was accepting delivery of four AutoPap© Systems in its Northern California Laboratory.

This is a major milestone for Tri- Path Imaging. In the fall of 1998, two nationally-respected Medical Directors, after evaluating the AutoPap System, declared they were ready to install AutoPap Systems throughout their national laboratory organizations.

Within weeks of each other, both Edward A. Kaufman, M.D., National Medical Director for SmithKline Beecham Clinical Laboratories (SBCL) and Gene A. Pawlick, M.D., Director, Regional Laboratory for Kaiser Permanente Northern California, decided to incorporate AutoPap Systems into their national Pap smear screening programs. (See TDR, November 9, 1998.)

In total, the two companies per- formed about 6.4 million Pap smears annually. This represented about 12.5% of the 55 million Pap smears done annually in the United States. It was an auspicious moment for Tri-Path Imaging and its economic future.

However, the hoped-for success never materialized. Within 90 days, Quest Diagnostics Incorporated announced that it would purchase SBCL. Medical Directors at Quest Diagnostics decided to emphasize Cytyc Corporation’s ThinPrep© technology. Consequently, SBCL never became a TriPath customer.

At Kaiser Permanente, it was a different story. TriPath Imaging actually delivered AutoPap Systems to Kaiser. But the instruments were turned back at the loading dock. Few details have been disclosed about the situation, but apparently internal corporate agendas above the laboratory level blocked the move to AutoPap technology.

This situation has been one of the more interesting “unwritten” stories in the laboratory industry. In 1998, TriPath Imaging was poised to place its automated Pap smear screening systems in two of the most respected laboratory organizations in the United States. At that same time, Cytyc was struggling to gain market acceptance for its ThinPrep technology.

Now, just 24 months later, Cytyc Corporation has captured a sizeable share of the Pap smear testing market. It is arguably the “big dog” in the cytology marketplace. In contrast, TriPath Imaging has only a small portion of the market and is the company in the “come from behind” position.


ON DECEMBER 18, 2000, LifeScan Inc., a division of Johnson & Johnson, pled guilty to federal criminal charges related to the marketing of its SURESTEP© Blood Glucose Monitor.

The instrument is a home testing device used by diabetes patients to self- monitor blood sugar levels. A version called SURESTEP PRO is used in hospitals. Lifescan will pay a fine of $29.4 million and additional restitution of $30.6 million to the government.

There were two separate problems with the SURESTEP instrument systems which could generate error messages or false low results in certain situations. The government’s case was that LifeScan, which introduced the device in 1996, knew of these defects in advance of applying to the FDA for marketing approval, but that it failed to disclose them in submissions and did not inform customers of the problems.

It is known that at least 61 patients suffered injury associated with the device, including some hospitalizations. The plea bargain agreement does not mention any deaths. LifeScan fixed both problems by early 1998 and offered free replacements to all affected customers.


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