About the Authors: Joshua Barrett is a member of the 2019 Flare Capital Partners Scholar program and a third-year medical student at Georgetown University School of Medicine, who completed his MBA at the Columbia Business School. He plans to pursue a career in healthcare technology or life sciences investing.
Dr. Dan Gebremedhin (@dangebremedhin) is a partner at Flare Capital Partners, a healthcare technology and services-focused VC Firm. He is a former practicing physician at the Massachusetts General Hospital, previously served as a medical director at the Harvard Pilgrim Health Plan and spent time as an entrepreneur in the health IT industry.
Beginning in 2001 with the simultaneous Venter/Collins announcements of the complete mapping of the human genome, the rate of genome sequencing has exploded, pervading daily life and medicine today. Personal genetics companies such as Ancestry or 23andMe are empowering individuals to discover long-lost relatives or reveal their genetic heritage. Foundation Medicine and Guardant Health are changing how oncologists approach cancer diagnoses, shifting from a one-size-fits-all paradigm to a far more personalized strategy defined by a tumor’s unique DNA sequence.
With these applications, the genetic testing market is expected to cross $22 billion by 2024, with $2.5 billion coming from direct-to-consumer genetic testing alone. Driving this surge in genetic testing is the steady cost decline for next-generation sequencing (NGS). The cost per genome has dropped from $300,000 in 2006 to nearly $100 today, far outpacing Moore’s Law and making non-targeted sequencing more accessible to a broader population of consumers and patients. Despite these dropping costs, certain proprietary genetic panels covered by insurance receive high reimbursements, surpassing $3,000 per test, providing an incentive for genetics companies to engage prescribing physicians.
With more genes being sequenced than ever before, how can clinicians make sense of all this genetic information? In this post, we seek to briefly review the sequencing options regarding the amount of DNA, differentiate between actionable and non-actionable genetic information, describe particular use cases for how genetic testing can be integrated into clinical workflow and highlight ascendant companies helping clinicians apply genetic sequencing in patient management.
Approaches to genetic sequencing
Three major approaches to sequencing and characterizing a patient’s genomic makeup are whole-genome sequencing (WGS), whole-exome sequencing (WES) and targeted panels. Each of these approaches has its advantages, associated use cases and costs. Understanding each approach is important to maximize clinical utility and cost effectiveness.
WGS reads the entire genome, encompassing over 3.3 billion DNA base pairs including the 30 million base pairs in the protein-coding exome. This allows for a more complete understanding of the genome, particularly how the non-coding regions may affect gene expression and disease phenotype. But retrieving this amount of data extends the turnaround time, costs more and complicates data analysis. Public and private insurance, including Medicare, UnitedHealthcare and Cigna, do not currently provide reimbursement for WGS. For these reasons, WGS is currently used mainly for research purposes, such as assembling novel genomes and distinguishing causative variants, but clinical applications to inform prognosis or treatment may arise as the analytical complexity declines.
WES sequences only the protein-coding exome, roughly 1% of the genome, which requires less time and lower costs than WGS. When used to diagnose nonspecific genetic conditions, WES can receive commercial reimbursement of roughly $4,700. WES samples are sequenced to a higher depth than WGS (100X versus 30X), meaning more unique reads of a given nucleotide to improve sequencing accuracy. However, not only alterations in coding genes can have clinical significance. Mutations in non-coding introns, such as promoters, enhancers and suppressors, can modify gene regulation while variations in splice sites may lead to misshapen proteins. In atypical clinical presentations or multigene disease phenotypes, WES is currently the method used for complex clinical diagnosis and treatment selection.
Targeted panels offer the simplest and fastest sequencing option. By sequencing a predetermined set of genes with a known disease association, targeted panels can detect novel or inherited mutations with implications for diagnosis or treatment. Often, proprietary targeted panels receive high reimbursements despite sequencing relatively few genes. For example, the Myriad Genetics’ two-gene BRCA genetic screen and Foundation Medicine’s 324-gene companion diagnostic are reimbursed over $2,000 and $5,800, respectively. These panels sequence to the highest depth (more than 500X), providing accurate, easy-to-interpret results. However, not all diseases have predesigned panels and producing a diagnosis from conditions with multiple vague clinical features requires more than just a prearranged set of sequences. Therefore, targeted panels are best used for hereditary cancer screening, population genetics and microorganism identification.
Use cases for genetic testing in patient management
According to the American Medical Association (AMA), clinicians currently use genetic testing for diagnostic, predictive and screening purposes. Diagnostic genetic testing determines whether a patient has a certain genetic disease, such as cystic fibrosis or Huntington’s disease, by detecting the specific gene alteration. Predictive genetic testing indicates whether a patient has an increased risk for a particular disease, such as hereditary breast or colorectal cancer.
The BRCA tests for breast and ovarian cancer account for a substantial portion of all genetic testing, with further growth anticipated as updated surgical oncology guidelines recommend that all patients with a personal history of breast cancer receive genetic testing. Screening genetic tests, such as newborn screening or non-invasive prenatal screening, identify individuals within large asymptomatic populations who require further testing to diagnose an inherited disease. In addition to these purposes, we have identified three emerging use cases for genetic testing for patient management: pharmacogenetic testing for medication management, complex case diagnosis in children with rare disease and companion diagnostics in treatment selection.
Pharmacogenetic testing (PGx) seeks to understand how patients will respond to drugs based on inherited differences in drug-metabolizing genes. PGx can help clinicians select appropriate medications and dosages while preventing adverse drug reactions. Most stakeholders, including clinicians, patients, pharmaceutical companies and laboratories, are in favor of obtaining such information, and research has shown the potential of PGx to decrease healthcare utilization and reduce costs.
However, private and government payer coverage for PGx has been an undulating battle, with current CMS and private payer coverage limited to just a few tests associated with anti-coagulation therapy and rare conditions such as targeted cancer therapy. We predict that more payers will start to experiment with coverage of PGx for high-cost, targeted populations in whom medication management drives real cost savings and value. There will be a significant opportunity for health tech companies focused on managing decision support around selection of appropriate tests, and utilizing this information appropriately at the point of care to improve medication-associated outcomes.
Rare diseases diagnosis
When young children present with a collection of severe clinical symptoms, pediatricians often exhaust diagnostic options with an array of blood tests, imaging scans and specialist referrals. This diagnostic odyssey is expensive, time-consuming and anxiety-inducing for parents. In such complex diagnostic cases, performing WES or WGS can detect rare childhood diseases sooner and direct care appropriately. A study in Genetics in Medicine found that using WES as a first-line sequencing test for infants can considerably shorten and simplify the diagnostic process and improve clinical management. Other studies have found that WES identifies significantly more conclusive diagnoses than the standard diagnostic pathway, without incurring higher costs. If clinicians can identify which patients may benefit from genetic testing, companies performing and interpreting rare disease genetic tests can create value for both patients and healthcare systems.
Companion diagnostic testing means finding the right drug for the right patient at the right time. Such testing has been used to direct precision medicine in cancer, neurological and cardiovascular disease to determine whether patients will benefit from certain targeted therapies. Drug development is trending toward companion diagnostics with personalized medicine drugs accounting for 20% of new molecular entities approved by the FDA in the last 3 years. In cancer, finding the most effective treatment right away makes a significant difference for patients. In colorectal cancer, 40% of patients have mutations in the RAS gene and do not respond to certain adjuvant chemotherapies. Understanding which patients will benefit prevents expensive, unnecessary and potentially harmful treatments. Furthermore, as genetic targets in tumors evolve, repeat gene expression testing is required. As the paradigm shifts from one biomarker/one disease to many biomarkers/one disease, companion diagnostics testing will be necessary to direct cost-effective treatment with multiple targeted therapies.