Myriad Genetics ($MYGN) risks a new potential threat to its genetic testing business, this time from Cigna. As of Sept. 16, the national insurance giant will begin mandating genetic counseling before it decides to cover any tests for BRCA genes affecting hereditary breast and ovarian cancer, both signature areas of focus for the company.
As Bloomberg reports, the policy changes create a potential financial headache for Myriad, whose tests for the BRCA1 and BRCA2 genes for hereditary breast and ovarian cancers sell tremendously well and generate much of the company's revenue. In June, the U.S. Supreme Court ruled in a lawsuit against Myriad that human genes are products of nature and can't be patented. But it upheld other Myriad patents, such as those covering synthetic versions of the genes. In the wake of the decision, rivals such as Gene By Gene and Ambry Genetics launched BRCA tests of their own, and Myriad sued for patent infringement. Both companies have since countersued, accusing Myriad of monopolizing the BRCA market.
For Cigna, mandating genetic testing is intended to cut back on unnecessary BRCA tests, something not surprising in an era when healthcare cost controls trump most things. Myriad's most thorough BRCA test costs about $4,000, Bloomberg notes. (A Cigna spokesman confirmed the policy change to the news service, which affects tests for BRCA1 and BRCA2 gene mutations.)
Myriad spokesman Ron Rogers denied to Bloomberg via an email statement that BRCA tests are overused. He told the news service that any BRCA tests Myriad handles for Cigna are performed within the insurer's guidelines. Rogers added that Myriad looks forward "to working with Cigna to continue to provide the best possible care for its members."
Even so, the decision could cause some potential financial pain. For the fiscal year ending June 30, BRCA tests generated 85% of the company's $613.2 million in revenue, Bloomberg notes, adding that those sales, as of now, are projected to jump 13% for fiscal 2014.
By requiring genetic testing first, counselors could point women to non-Myriad tests or help them avoid BRCA testing altogether, which could harm Myriad's business in the long term, Ellen Matloff, head of cancer genetic counseling at the Yale Cancer Center in New Haven, CT, is quoted as saying. Matloff, as the story explains, was also a plaintiff in the U.S. Supreme Court case against Myriad.
Beyond Cigna, other insurers have differing policies on the matter. UnitedHealth Group, the nation's largest insurer, urges genetic counseling for some patients, for example. But WellPoint doesn't mandate a genetic counselor. Cigna's new policy change should affect 70% of its U.S. members, and they can obtain genetic counseling by phone, according to the article.
- read the Bloomberg story