Complexity and cost of personalized medicine challenge health plan budgets

By Chris Hanson-Ehlinger
Thu, Dec, 19, 2013 @ 14:12 PM

describe the imageDepending on genetic makeup, some drugs may work more or less effectively for some patients than they do for other people. Pharmacogenomics, or personalized medicine, is a field of study that uses genetic testing to match patients with the medications most likely to help them. Using genetic information opens new possibilities for drug discovery and clinical management of complex chronic conditions such as cardiovascular disorders, depression, bipolar disorder, attention deficit disorders, HIV, tuberculosis, asthma and diabetes. 

The importance of using a patient’s genetic markers to target therapy has many advantages including developing personalized medicines, reducing adverse effects, improving patient outcomes with well-targeted therapies, reducing waste from secondary costs such as hospitalization, absenteeism, trial and error of different treatments.

Biologic medications that require genetic testing are particularly exciting because clinicians can use a patient’s genetic profile to select the most appropriate therapy. For example, in 2012 the Food and Drug Administration (FDA) approved Kalydeco, a breakthrough drug for cystic fibrosis (CF). Only about 4 percent of patients with CF, or roughly 1,200 people, are believed to have the specific genetic defect targeted by Kalydeco. A genetic test identifies those patients who may benefit from the drug.

Genetic tests are also used to exclude some patients from certain medications due to the risk of treatment failure or adverse effects. For example, Perjeta is a new anti-HER2 breast cancer therapy approved to slow disease progression in patients with HER2-positive metastatic breast cancer. A genetic test is used to exclude breast cancer patients who lack the expression HER2 gene in order to avoid drug-related complications, including the risk of metastasis.

In 2012, nearly a third of the novel medicines approved by the FDA required genetic testing or had some form of genetic instruction for prescribing.  IMS Institute for Healthcare Information estimates that biologics cost, on average, 22 times as much as ordinary drugs and global sales of biologic drugs are expected to reach $200 billion by 2015, up from $138 billion in 2010.

Increased use and cost present a legitimate concern for health plans. One way plans can manage the cost of biologic therapies is to rely heavily on utilization management programs such as quantity limits, step therapy and prior authorization.

Genetic testing offers another tool to manage utilization of biologics. It uses an individual’s genetic profile to select or exclude certain therapies. While the tests present some additional costs to health plans, the return on investment can be significant by alleviating expensive and potentially dangerous trial and error. At the very least, genetic tests provide clinicians and patients an opportunity to objectively select the appropriate treatment based on genetic evidence, while plan sponsors and health plans can have some certainty about the clinical efficacy of biologic therapies.

Kathryn Jonsrud, RPh, managing consultant at The Burchfield Group, provides clinical and strategic PBM leadership to some of the nation’s largest organizations. For more information on this topic or related matters, please call the The Burchfield Group at 800-778-1359 or send us a note (

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