March 18, 2019 Intelligence: Late Breaking Lab News

Because of a $25 million grant from philanthropist Denny Sanford, the Veterans Administration and Sanford Health will provide free genetic testing to 250,000 veterans by 2022. These will be pharmacogenomic (PGx) tests designed to help VA physicians prescribe medication and dosages customized to the unique characteristics of individual patients. This innovative program was announced on Mar. 15 and plans are to make this testing available at 125 VA sites throughout the United States.

MORE ON: PGx Tests

Last summer, Sanford Health of Sioux Falls, S.D., began offering a genetic test panel to primary care patients which includes markers for 20 diseases and 20 medications. It is priced at $49 for the patient and the balance of the cost is subsized by Sanford Health. Reports are that this genetic test program is popular with patients.

$100 GENOME?

It may soon be possible to sequence a whole human genome for $100. Bloomberg reported last month that Illumina CEO Francis deSouza predicted that “two things need to happen for us to get to that price point. One is we need to do engineering work. The second one, which is equally important, is to make sure that our customers have been thinking about what they could do if they had a $100 genome.”

CORRECTION: For LabCorp’s Q4-2018 Conference Call

This is to correct errors in our reporting on the latest quarterly conference calls that executives from the nation’s two largest publicly-traded clinical lab companies had with Wall Street analysts that was published in our issue of Feb. 25, 2019. We made three errors regarding the effects of the federal Protecting Access to Medicare Act (PAMA) of 2014.

First, we should have reported that both Laboratory Corporation of America’s diagnostic testing business and Quest Diagnostics reported a decline in revenue in the fourth quarter of 2018 but an increase in revenue for the full year. For LabCorp in 2018, fourth quarter revenue for the diagnostic-testing segment was $1.69 billion, a decrease of 2.8% from $1.74 billion in the year-earlier quarter. For the full year, LabCorp reported revenue from its lab-testing business of $7.03 billion, an increase of 2.5% over the $6.86 billion it reported in 2017. For the fourth quarter, Quest reported revenue of $1.84 billion, down 1.4% from the $1.87 billion it reported in the year-earlier quarter and full-year revenue of $7.53 billion, an increase of 1.7% from the $7.40 billion it reported in 2017.

Second, LapCorp executives did not discuss Medicaid denials for certain tests or any increase in the application of prior-authorization rules. The comments about Medicaid denials for certain tests, and the increase in the use of prior authorization, should have been attributed to Quest’s executives.

Third, PAMA will reduce LabCorp’s lab-testing revenue by about 1.6% this year as a result of lower direct Medicare payments of some $85 million, and, LabCorp executives said, there will be an indirect effect that will lower other payments, primarily from Medicaid-related plans, by $30 million.

That’s all the insider intelligence for this report.
Look for the next briefing on Monday, April 8, 2019.

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