With use of molecular diagnostics tests widely expected to skyrocket in the coming decade, insurers like UnitedHealth Group are getting increasingly nervous about the trend and looking for ways to manage their use and expense.
Bloomberg highlights the issue in a story about a new report from UnitedHealth that predicts that the market will grow from $5 billion in 2010 to $25 billion within 10 years. What's more, the diagnostics market is booming in incredible terms, with three to 5 new tests hitting the market each month along with 1,800 molecular diagnostics tests already in play. Because health care costs are already ballooning, the insurer is calling for a counterbalance: Cheaper and quicker ways to evaluate which tests are most effective in terms of both cost and quality.
As Bloomberg points out, an exploding market bodes well for diagnostics companies ranging from Genomic Health ($GHDX) to Myriad Genetics ($MYGN) and others. And other companies without a molecular diagnostics presence are gunning for a piece of that growing pie. Roche ($RHHBY), for example, wants to buy genetic sequencing company Illumina ($ILMN) and submitted a $5.7 billion hostile bid a few weeks back. General Electric ($GE), Bloomberg reminds us, bought molecular diagnostics innovator Clariant for $580 million two years ago.
UnitedHealth clearly sees the impending growth as alarming. The tests will help people, the insurer notes, but it is trying to find a way to reduce their impact as a healthcare cost driver. By identifying the most effective tests for the price, insurers can reimburse the ones that pass muster and decline to cover those that fall short. An unanswered question here: How do you develop an evaluation of diagnostic tests that both diagnostics companies and insurers will be happy with?
UnitedHealth's decision to stake out a position in this issue is significant, in part because the insurer is so large. Bloomberg reports that it covers 36 million people and spent $500 million for genetic exams and molecular diagnostics in 2010 alone (focused on cancer and HIV diagnostics, mostly). The insurer's report, presented at a gene testing conference in Washington, D.C., is based on internal claims projections as well as Medicare and Medicaid data. Growth will vary, the story notes, based on test price, popularity and whether insurers will cover the diagnostics.
The call for a measured use of molecular diagnostics isn't driven just by the bottom line. Bloomberg recaps that barely a week ago, the New England Journal of Medicine published a study that risks bringing personalized medicine to a screeching pause, if not an outright halt. Researchers found that a single tumor biopsy doesn't necessarily paint the full genetic picture of a given cancer, which risks diminishing the effectiveness of cancer diagnostics and screening.
- read the Bloomberg story