CEO SUMMARY: Here’s an important development in the battle to get the healthcare community to accept new technology for the preparation of Pap smears. Aetna/U.S. Healthcare announced that it would cover the monolayer preparation tests offered by Cytyc and AutoCyte. Aetna’s decision makes it more difficult for other insurers to refuse reimbursement for this test. Aetna will also cover NeoPath’s AutoPap® test.
IF RODNEY DANGERFIELD WERE to pick a laboratory company that “don’t get no respect,” he might well choose Cytyc Corporation of Boxborough, Massachusetts.
Over the last five years, Cytyc has battled red ink, obstreperous HMOs, and skeptical pathologists as it struggled to bring its ThinPrep® monolayer Pap smear preparation technology to market.
However, that long-awaited respect may finally have arrived with the September 2 announcement that the nation’s largest health insurer, Aetna/U.S. Healthcare, is now providing coverage for Cytyc’s ThinPrep test and AutoCyte, Inc.’s PREP™ test.
Aetna/U.S Healthcare will also cover NeoPath, Inc.’s AutoPap® Primary Screening Test. Given Aetna’s acceptance of these three Pap smear technologies, it was a banner achievement for the entire spectrum of companies offering enhanced Pap smear technologies.
For Cytyc, Aetna’s acceptance of its ThinPrep test is a major boost. The company has worked diligently to introduce ThinPrep technology to clinical laboratories throughout the country. At the same time, it has relentlessly pressed managed care companies to provide reimbursement for these tests.
Can Turn A Profit
Aetna’s decision to reimburse the ThinPrep test will make it easier for Cytyc to become profitable. During the past 24 months, the company’s sales volume has increased steadily. Cytyc’s revenues are now reaching the point where some financial analysts believe it can turn a profit. When that occurs, Cytyc will be the first of the four pioneering cytology companies to attain black ink.
It has been a difficult struggle. In recent years, these four firms have chewed through a quarter billion dollars of investor money. One company, Neuromedical Systems, Inc., maker of the PapNet system, went bankrupt earlier this year. NeoPath and AutoCyte are merging in order to eliminate redundancies and combine their technologies.
The significance of Aetna’s decision is that it brings credibility to the entire range of enhanced cytology technologies. Since 1995, THE DARK REPORT has declared that new Pap smear technology faced an uphill battle for clinical and market acceptance.
Tangible Clinical Benefits
Unlike fee-for-service medicine, today’s managed care companies do not want to spend money on any clinical procedure which costs more than an alternative method without delivering tangible clinical benefits.
Critics regularly attacked monolayer Pap smear products and NeoPath’s AutoPap system as not being costeffective when compared to traditional Pap smear methods. These criticisms might have had lots of validity back in 1995, when the FDA began to allow these products to enter the marketplace.
But the products sold today are much improved over their 1995 versions. This process of steady improvement will continue into the near future. For that reason, pathologists and lab executives will see a different cost-performance equation each time they inspect the next generation of Pap smear technology.
Aetna Not Endorsing
Aetna’s public comments on the subject of new Pap smear technology make it clear that it is not endorsing any one product. Rather, it is allowing the clinician to choose whatever method of Pap smear testing he/she prefers.
“While we recognize that there is still considerable controversy over the proper role for these new technologies…we feel it best to have the treating physician make the decision about whether the patient is best served by one of these new approaches, knowing that coverage is not an issue,” declared Arthur Leibowitz, M.D., Aetna’s Chief Medical Officer.
THE DARK REPORT believes that Aetna’s decision to reimburse for new Pap smear technology ends the first market cycle of this infant industry. New Pap smear products have established a permanent place within the clinical laboratory industry.
Although the battle for sufficient reimbursement will continue, Aetna’s decision means that most managed care plans will probably fall into line. Now the attention of Cytyc, and its main competitor, AutoCyte/NeoPath, will shift to clinicians and pathologists. It is these doctors who actually order Pap smears, perform the tests, and act upon the results.
Cytyc Sues AutoCyte For Patent Infringement
It didn’t take long for Cytyc Corporation to begin attacking its newest competitor. Last Monday it filed a lawsuit against AutoCyte, Inc. of Burlington, North Carolina. This action may be the opening salvo of a particularly rancorous battle in the Pap smear marketplace.
AutoCyte recently gained FDA authorization to bring its PREP™ automated monolayer Pap smear preparation system to market. (See TDR, June 28, 1999.) This brings it squarely into competition with Cytyc’s ThinPrep® monolayer product.
Cytyc’s lawsuit, filed in a Delaware federal court, claims that AutoCyte infringed Cytyc’s patent covering its proprietary preservative solution, called PreservCyt®. It seeks a preliminary injunction to keep AutoCyte from “making, using, offering for sale, or selling AutoCyte’s CytoRich Preservative Fluid in the United States.”