Hannah Mamuszka is founder of ALVA10, a Boston-based consultancy that aims to help diagnostics innovators work with payers from early on.
She has an interesting article in the December 2017 issue of Journal of Precision Medicine. Titled, "Economics for Diagnostics: Why Paying for Value is Necessary to Drive Market Success and Uptake." It's one of 3 articles she's written for J.P.M. on the economics and dynamics of the market for diagnostics to serve precision medicine. I've stored the 3 PDFs in a cloud zip file here.
She gives the example of a costly drug that is overused 60% of the time. A diagnostic could control that overuse effectively. However, developers might presume, and safely, that the diagnostic would be priced at $200 or less. Given the costs of clinical trials (falling on the diagnostic manufacturer, because they lower drug use and aren't an interesting investment for the pharma), the test won't be developed.
If the test COULD be developed, it might require a $5K price tag to recoup its investment - but could dramatically lower total health system costs for the $100,000 drug, while also preventing treatment of patients for whom the drug is ineffective (see her Fig. 2).[*]
She includes a nice figure how, rationally, all the stakeholders would need to work together (her Fig. 3):
For another example of payers working with diagnostics manufacturers ahead of coverage, see CareFirst's effort called HealthWorx.
In an early entry in this blog series, I noted that there's little motivation for work on generic genes to improve outcomes of generic drugs, despite the potentially large health system benefits.
For a link to a 2017 FDA guidance document about pre-approval value communications between manufacturers and payers, here.
[*] A Feb 28 article in Genomeweb may be unrelated, but has an eerie echo to Mamuszka's hypothetical case study. According to the article, Nanostring was developing an immunotherapy selection signature with "exciting results" but it was "scrapped" due to a "strategic decision" by a pharma.