Exact Sciences scraps lung cancer test, citing challenging reimbursement environment

Exact Sciences' Cologuard test--Courtesy of FDA.gov

Exact Sciences ($EXAS) is scrapping plans to develop a lung cancer screening test in partnership with the University of Texas MD Anderson Cancer Center, citing high costs and the difficulties imposed by the U.S. Preventive Services Task Force.

In October, the USPSTF failed to recommend Exact Science's flagship Cologuard stool test for colorectal cancer. The news cut the company's stock price in half, and is ironic, for the test was the first product to go through the "parallel review" FDA/CMS pilot program, which is designed to result in accelerated reimbursement via interagency cooperation.

Exact Sciences did not want to risk getting burned by the USPSTF again. "The amount of evidence that the Task Force requires for a new screen modality is so incredibly high that even one large study may not have been enough. And that one large study could have cost $50 million to $50 million plus. So, at this juncture, maybe it would have even cost $100 million, depending on what the FDA requires," CEO Kevin Conroy said during the company's Q4 earnings call.

The USPSTF is not a government agency, but its recommendations (in the form of an A through D grade) play a critical role in determining Medicare and private payer reimbursement.

"We think it (the decision to scrap the partnership) also highlights the significant barrier for anybody in the U.S. to develop a screening test that Medicare actually would pay for. The path leads through USPSTF. So we believe that, for the fundamental industry to be altered, the regulatory pathway has to be altered, and you have to give Medicare the ability to cover some of these new tests without the Task Force first grading it A or B. Until that happens, I think that companies that spend hundreds of millions of dollars trying to develop blood-based screening test are probably all in for a rude awakening," Conroy said during the earnings call.

Xconomy reports that one of the tests planned would have screened current and past smokers to decide whether they should undergo a CT scan to check for lung cancer.

Meanwhile, Exact Sciences will continue to develop a blood test to distinguish between lung nodules and lung cancer in collaboration with the Mayo Clinic. In addition, Conroy said Exact Sciences is also working on a test that will discriminate between pancreatic cancer and benign pancreatic masses and cysts.

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