CEO SUMMARY: Advances in the speed, accuracy, and cost of next-generation gene sequencing making it possible for clinical labs to create thousands of new tests. How many new tests? NextGxDx, an information technology company, says the nation’s clinical laboratories are introducing new molecular and genetic tests at the rate of 10 per day! The company, in Franklin, Tennessee, has compiled a database that contains 60,000 of these tests, along with detailed specifications and prices. Hospitals are using this database to select appropriate genetic tests and reduce the cost of testing.
CLINICAL LABORATORIES ARE INTRODUCING 10 new molecular and genetic tests every day, a rate of growth that has produced 60,000 tests currently available for clinical use!
THE DARK REPORT is first to publish this remarkable number. Among other things, it helps to explain why Medicare and private payers are finding it impossible to stay up with all the requests from labs to establish coverage guidelines and reimbursement for these new lab tests.
This information was developed by a new company, NextGxDx Inc. of Nashville. It has assembled an extensive data base of molecular and genetic tests offered for clinical use, and, for the past two years, NextGxDx has tracked the details for each of these 60,000 tests.
“The rising number of testing products makes it all but impossible for clinical laboratory directors, pathologists, and treating physicians to know what’s available, which tests are comparable, and which are best for their patients,” observed Jud Schneider, PhD, NextGxDx’s Vice President of Bioinformatics.
“With tens of thousands of assays being offered by hundreds of clinical labs, we recognized the need for an online catalog and a curator who can collect all the information on these tests and group them into clinically relevant categories,” he continued. “Such a catalog makes it possible for pathologists and laboratory scientists to track the development of new tests and compare new tests to existing tests.”
The foundation for such a curated catalog exists. The Human Genome Nomenclature Consortium (HGNC) approves the unique symbols and names for human genes.
Designed to foster communication in the scientific community, HGNC runs a website at genenames.org that is a curated database of gene nomenclature and families, and other resources for scientists and clinicians involved in both research and clinical care.
But curating the various testing products to identify those genes and gene mutations may be a more complex endeavor. That’s where NextGxDx has developed a niche. An information technology company, NextGxDx seeks to improve the genetic test ordering process for clinicians by offering two services: GeneSource and GeneConnect.
“Each of these services draws upon extensive data—including product attributes, turnaround time, and list prices—for each genetic and molecular test listed in our catalog,” stated Schneider. “Of course, we may not have a price for each test tracked in our database because not all labs publish their prices. Nonetheless, because we update all the prices we can access monthly, our database is a reliable source for prices and pricing trends of molecular and genetic tests.”
In a recent interview with the editors of THE DARK REPORT, Schneider and Gillian Hooker, PhD, Vice President of Clinical Development at NextGxDx and a genetic counselor by training, talked about the two products, GeneSource and GeneConnect, how NextGxDx collects the data on the 60,000 tests in its database, and how it iden- tifies trends in the pricing of genetic tests.
Manual processes Will Fail
“The genetic testing market is growing so rapidly that manual processes to stay on top of it—such as binders or documents in a file—are no longer sufficient,” noted Schneider. “The volume of current testing products and the rapid development of new products requires a searchable, online database, along with a rigorous curating system to manage that data.”
Hooker explained how NextGxDx works. “The best way to think about our company is that we have a core database of information on more than 60,000 different testing products now on the market,” she stated. “It’s up-to-date, comprehensive and includes all testing products, such as genetic and molecular tests for cancer and other conditions. The clients who can benefit from using our two products include clinical labs, clinicians, and hospitals.
“The first product we launched was GeneSource, which is a freely available public website designed to meet the needs of clinicians,” she said. “GeneSource is a genetic testing database and online marketplace that allows treating physicians and other providers to view a list of all genetic tests from CLIA-certified laboratories.
“Not only can they can see pertinent information about each test,” added Hooker, “but providers logged into GeneSource can then order tests online and manage results electronically within a HIPAA-compliant portal.
“Ordering clinicians use it to find genetic tests for specific conditions and to search and compare one test against other tests in a way that is clinically intuitive,” she said. “Our bioinformatics team organizes these molecular and genetic tests so that clinicians can view and compare them side by side and then order one.”
In the two years since GeneSource was introduced, the company says it has built a base of clinicians and laboratory users that includes individuals from:
- 14 of the top 15 adult hospitals
- 10 of the top 12 children’s hospitals
- 37 of the top 50 hospitals for neurology
- 34 of the top 50 hospitals for cardiology
- 39 of the top 50 hospitals for cancer.
Tracking and Managing Tests
“Our other product, GeneConnect, is designed for hospitals to enhance and simplify their utilization management,” explained Hooker. “GeneConnect lets hospitals streamline the process. It does so by: 1) helping hospital labs document preferred relationships with reference labs, 2) by tracking electronic orders and results, and 3) by monitoring test utilization.”
The GeneConnect platform has signed a growing list of leading institutions. These include three of the top six children’s hospitals. Among these is Seattle Children’s Hospital, which is well-known for its Pediatric Laboratory Utilization Management Services (PLUGS) program. (See TDR, April 20, 2015.)
“Hospitals have a diverse array of tests that they order and, in particular, they need a way to manage molecular and genetic tests,” she said. “They order these tests through GeneConnect because then they can track their orders and manage their relationships with the labs that offer these tests.
“Another benefit of the GeneConnect service is that it is designed to help hospital labs better manage the cost of genetic test sendouts,” Hooker noted. “It allows them to see where they are spending money and where they are losing money. This allows them to identify opportunities to make informed choices.
Identify Comparable Tests
“Pathologists supervising hospital laboratories know how expensive many genetic tests are,” she stated. “Our hospital clients are finding it much easier to use the database that has information about 60,000 molecular and genetic tests to identify comparable tests that are less expensive. In turn, that opens an opportunity to reduce per-test costs for send-out genetic tests in their lab.”
Clinical laboratories and anatomic pathology groups across the United States will see another benefit from NextGxDx’s effort to assemble this database of genetic tests and the prices for these tests. The company is producing data on the prices for the same type of molecular and genetic test data, along with the changes in these prices over time. It will be the lab industry’s first opportunity to have reliable information on pricing trends for such tests.
How does NextGxDx get regular pricing data on 60,000 tests from hundreds of labs without making phone calls? “We’ve built software with the capability to pull detailed data directly from the website of the lab organizations that offer molecular and genetic tests for clinical purposes,” stated Schneider. “It is not necessary for those labs to submit that pricing data to us. We collect it automatically.
“Of course, we can only see lab test prices that are publicly available,” he emphasized. “Not all lab organizations publish their prices, but a significant number of them do. That is the source of our pricing data.”
Decline In published prices
Schneider and Hooker revealed that, over the past two years, competition among labs developing molecular and genetic tests continually increased, correlating with a decline in published prices. “Looking at the prices for molecular and genetic tests that were published, we tracked a significant overall decrease of 14% in the list prices of tests from early 2014 through the end of 2015,” stated Schneider. “Single gene tests dropped in price by 15%, panel tests dropped by 8%, and whole exome tests dropped by about 13%.
“Interesting changes in prices can be seen,” he said. “For example, we observed the price of single gene tests dropped more than the price of gene panels from 2014 to 2015. We think that’s because next-generation sequencing is starting to supplant Sanger sequencing in laboratories.
“Many NGS panels were launched in 2013 and 2014, and prices for these tests did not decrease as much as the prices for single gene tests,” Schneider noted. “We also know that many panels done with Sanger sequencing are still offered and have not changed much in price.
“Another significant trend we observed is how some hospitals and ordering physicians are shifting their orders to NGS-based products and panels because they see that the costs are lower and the quality is the same or slightly better,” he continued.
“Increasingly, next-gen sequencing is being recognized as a viable technology that is, in some cases, better than Sanger sequencing for specific applications. Also, we see hospitals and ordering physicians shifting more of their single gene tests into assays that incorporate NGS as well.”
At this point, Schneider added an observation about pricing trends. “From these numbers, we draw two inferences about the dynamics in the molecular and gene testing market,” he said. “The first is that increased competition is affecting price. Given that we’re drawing information and pricing data from about 300 labs, and many offer similar tests, we presume some labs reduce prices to capture more market share. The second factor is that many labs recognize that reimbursement from health plans and other payers is increasingly selective, and that patients often bear a significant share of costs.”
Forms of pricing pressure
“That is an additional source of pricing pressure and labs that offer molecular and genetic tests are responding to this pressure,” commented Hooker. “As a genetic counselor, over the past several years, we hear from many patients who received bills for molecular and genetic tests that amount to thousands of dollars.
“Costs can be so high that—even after the health plan pays the hospital—the patient has to pay the remainder and those amounts can be distressing for everyone,” she explained. “Consequently, there is continual pressure from many parties to move away from extremely high-priced genetic tests whenever possible. And NGS gives labs and hospitals an opportunity to do so.
“Another factor contributing to lower prices for genetic tests is supply and demand,” she stated. “More labs that provide the same test are entering the market.
“We studied price data from labs offering the same genetic tests,” continued Hooker. “We put prices for whole exome sequencing tests from September 2014 to September 2015 into a chart and compared that with the growth in exome products offered.
Decrease in List prices
“We saw that the price of exome sequencing tests dropped significantly,” she noted. “List prices decreased from an average of over $7,000 to about $5,000 to $5,500. This is evidence that increased competition in the genetic testing market will be good for patients, payers, and any provider or payer sensitive to high prices.”
Schneider pointed out that, among the more than 300 labs from which NextGxDx pulls data, not all labs offer all molecular and genetic tests. “There are numerous specialty lab test companies that may offer one or several tests,” he observed. “Then there are labs that have large catalogs of genetic and molecular tests that they offer. These labs include Seattle Children’s, Claritas Genomics, CTGT, MNG Laboratories, Cincinnati Children’s, and many academic medical center labs.
“Two other labs that have large test catalogs are Prevention Genetics and Fulgent,” Hooker added. “In fact, Prevention’s catalog is one of the largest that we track in the United States.”
Growth in NGS
Schneider explained that the market for molecular and genetic tests is growing so quickly that it would be impossible to keep pace with the need for increased data on tests and prices without an online catalog such as the one NextGxDx has built.
“On average, we update every product in our database every two weeks, and we do that by processing about 3 million data points each month,” he commented. “Considering how quickly the number of molecular and genetic tests is growing, any type of manual process designed to get a handle on this sector of the lab testing market is doomed to fail.”
What is significant about NextGxDx is that, if information is power, then this company is positioning itself to be a major player in genetic testing. If it can show its clients—hospitals that are ordering expensive genetic tests—how to use that data to lower the cost of send-out testing while still achieving improved patient outcomes, then NextGxDx may find itself enjoying first-mover advantage in the fast-developing field of genetic testing.
Further, although Schneider and Hooker did not discuss how Medicare administrative contractors (MACs) and private health insurance companies could use its database of molecular and genetic tests, it probably won’t be long before health insurers begin to tap that database to help them establish coverage guidelines and prices for these assays.
Contact Nick Tazik at 615-673-5881 or firstname.lastname@example.org.
Designing a Way to Track 60,000 Genetic Tests Requires a Big Database and Analytical Tools
KEEPING TRACK OF MORE THAN 60,000 MOLECULAR AND GENETIC TESTS is a problem unseen in the clinical laboratory industry until recent years. To build its GeneSource database of this information and keep it up to date, NextGxDx uses a three-step process.
“The first step is to regularly collect data from more than 300 labs, primarily from their websites,” noted Jud Schneider, PhD, NextGxDx VP of Bioinformatics. “We also collect data from journals, reports, and any other reliable sources of information we can find.
“Step two is to convert that data into structured information,” he said. “One way we do this is by standardizing the terminology. We start with the terms already used in known standards such the Online Mendelian Inheritance in Man. OMIM is a catalog of human genes, genetic disorders, and traits that focuses on the molecular relationship between genetic variation and phenotypic expression. It is a companion to the Human Genome Project. We also use HGNC.
“Should there be no published standards for a particular test, we develop them,” explained Schneider. “For example, we’ve developed standards to describe the different attributes of tests that did not exist previously.
“Step three happens after we collect the data,” he noted. “Each molecular and genetic test is put into a category, a process we call binning. Each test is assessed, then added to the categories of tests that are clinically comparable.
“That way, whenever a pathologist, for example, searches the GeneSource database, he or she will see all the categories of tests and each category is in one of our bins. Next, the pathologist or a physician who is ready to order a test can dive down into that bin to discover the specific products in that category.
“Once the data about these 60,000 molecular and genetic tests are in place, we then maintain that database,” Schneider said. “Along with regular updates from the source labs, we do audits of some of the information and continual quality improvement, and we use algorithms that sift through the data to identify and correct errors.”
Understanding the Ongoing Explosive Growth in Number of Molecular and Genetic Tests
THESE TWO CHARTS DEMONSTRATE the astounding rate of growth in the number and variety of molecular assays and genetic tests, as tracked by NextGxDx.
Chart A: shows the total number of tests each month, along with the number of offerings that are panels and single gene tests. NextGxDx says that 40% of these incorporate next-generation gene sequencing. As of December 2015, labs offered more than 60,000 unique tests.
Chart B: illustrates how many tests that incorporate specific genetic markers are available in the market. For example, in September 2014, there were 110 tests offered. That number had increased to 355 by September 2015.