Tuesday, August 2, 2016

Foundation Medicine Announces FDA/CMS Parallel Review; Pathway to PAMA ADLT?

On August 2, 2016, Foundation Medicine (FMI) announced it was part of a Parallel Review program with FDA and CMS.   The FDA pathway will be "Expedited Access Pathway" for "breakthrough devices."  Press release clipped at bottom.  FMI's FDA/CMS project, coverage at Genomeweb, here; Fierce Biotech, here.  For additional coverage of FMI's quarterly investor call, here.  More details after the break.

Foundation Medicine (FMI) has had a slower than desired pathway to Medicare coverage and payment.  FMI is based in Cambridge, MA, and the JK MAC (NGS MAC) handles claims from Medicare patient nationwide if there specimens are processed in Massachusetts.  The NGS MAC appears to have a non-coverage policy for the most obvious code FMI would use, which is tumors, somatic mutations, >50 genes (81450, see here.)  Several MACs including NGS MAC have limited coverage for the 5-50 gene panel sister code, 81445, but CMS has priced it at only about $600.  See this policy, here.
New England Genomic Test Coverage:  
81410-81440 Genomic Sequencing Procedures
81450-81471 Genomic Sequencing Procedures
A May 4, 2016, article by Julia Karow at Genomeweb noted that FMI had recently acquired a North Carolina molecular testing laboratory, formerly owned by Sequenom (here).  Medicare patient specimens billed to Medicare from that lab location would be processed and priced by the Medicare MolDX program in Medicare Jurisdiction M (NC/SC/VA/WV).

In molecular medicine, the most prominent prior use of the FDA/CMS parallel pathway was parallel review of the Exact Sciences Cologuard test.  It was approved by FDA in August 2014, and CMS released a "proposed" coverage policy on the same day, which CMS finalized a few months later after a required public comment period. For some trade journal articles, here, here.

FDA has discussed evolving parallel review from a CMS-only partnership to one which could include private payers as well, here.

Assuming FMI gets FDA approval and a paired CMS proposed and final coverage status over the coming few quarters, CMS would need to assign a code and set a price for the test.

Presumably, FDA approval would trigger the "ADLT" or Advanced Diagnostic Test Clause of PAMA, which may involve nine months of CMS payment at list price, followed by annual CMS payment at the median of FMI's private payer payments.  ADLTs are eligible for their own proprietary codes, either to be issued by CMS as "G" codes or to be issued by the AMA on a quarterly based as "PLA" or Proprietary Laboratory Analysis codes.   The ADLT/PLA policy area continues to evolve in a pathway started by the passing of PAMA Section 216, reforming the CLFS, in April 2016.

FMI Press Release:

Aug. 2, 2016 20:00 UTC

FoundationOne® Accepted by FDA and CMS for Parallel Review and FDA Expedited Access Pathway

Parallel Review of FoundationOne, if Successful, Could Result in FDA Approval of the First Pan-Cancer Comprehensive Genomic Profiling Assay Incorporating a Range of Companion Diagnostics, Concurrently with a CMS National Coverage Determination--

CAMBRIDGE, Mass.--(BUSINESS WIRE)-- Foundation Medicine, Inc. (NASDAQ: FMI) today announced that the U.S. Food and Drug Administration (FDA) and the Centers for Medicare and Medicaid Services (CMS) have accepted FoundationOne for Parallel Review as an innovative technology most likely to benefit from the efficiencies of this program. The FDA also accepted Foundation Medicine’s request for review as part of its Expedited Access Pathway (EAP) for breakthrough devices.
If approved, FoundationOne could be the first FDA-approved comprehensive genomic profiling (CGP) assay to incorporate multiple companion diagnostics (CDx) to support precision medicine in oncology, including an indication for use as a companion diagnostic across a diverse range of solid tumors. Importantly, obtaining a Medicare National Coverage Determination (NCD) from CMS concurrently with FDA approval will allow FoundationOne to be offered as a covered benefit under Medicare and avoid the significant time interval and uncertainty that often occurs between FDA approval and an NCD. Based on discussions with FDA and CMS, Foundation Medicine believes the Parallel Review will conclude in the second half of 2017.


CMS/FDA announced the parallel review program in October 2011, here.  For a federal memorandum on the program, here. For a law firm memo about the program, here.


According to Genomeweb, August 2, quoting FMI's investor call, the company is running a quarterly loss of $29M, spends $18.5M quarterly on R&D, and has about $200M in cash and marketable assets.  Annual revenue for 2016 should be $110M-$120M with about 40,000 total tests between FoundationOne and FoundationHeme.  (In simple terms, not allowing for the rolling test volume or income accrual over time, that's about $2750 per test in plain-jane arithmetic.)