A funny thing happened in the race to realize the substantial benefits of precision medicine: healthcare payer reluctance to reimburse for testing with molecular diagnostics until there is evidence connecting test results with improved patient outcomes.

On the one hand, we are witnessing rapid progress in identification of biomarkers and development of related assays. On the other, payer opposition to reimbursement for such diagnostics is deterring investment necessary for rapid commercialization and widespread adoption of molecular diagnostics. While the demand for evidence of clinical utility seems reasonable in typical circumstances, medical science is in the midst of a scientific revolution. Business as usual at healthcare payers is discouraging venture investments that are essential for rapid commercialization of any new technology. There is some venture investment but given the transformative opportunity there should be more.

On the eve of the microprocessor revolution that rapidly transformed research, manufacturing, service industries and recreation, there was no equivalent of the healthcare payer – no one to halt adoption and deter investment until shown evidence that an office and lab equipped with microprocessors and software had in fact produced improved productivity outcomes by comparison with typewriters, calculators, mainframes and dumb terminals. To be sure, there were some unsuccessful products and business failures in the midst of the microprocessor revolution – incorporating a microprocessor in a product did not guarantee business success or increased productivity. But on balance, the microprocessor revolution delivered enormous

worldwide improvements and did so rapidly.

The Threat to Venture Investment and Entrepreneurship in Precision Medicine

A key factor in the success of the microprocessor revolution was venture investment in new entrepreneurial companies. Diagnostics giants that are able to fund large, long-term studies to establish clinical utility and patiently await results will not be deterred by healthcare payers. They will invest heavily in molecular diagnostics for indications offering the greatest returns. However, the story may be different for some of the entrepreneurial molecular diagnostics companies dependent on venture funding and for diagnostics to assess less common indications. Such entrepreneurial companies provide a substantial portion of the energy and imagination that drive technological progress and deliver business and consumer benefits. Entrepreneurial companies in the field of molecular diagnostics would almost certainly accelerate the transition to precision medicine and help make a reality of the worldwide improvements in healthcare and health outcomes that will be made possible by an understanding of molecular mechanisms of disease and the ability to track the activity of such mechanisms over time, including response to new targeted treatments.

If precision medicine is to become a reality for this generation, there will have to be some initiative, public or private, to prevent typical policies of healthcare payers from postponing an inevitable and greatly needed revolution in healthcare. The President’s Precision Medicine Initiative and its million-person voluntary research cohort are commendable but will not replace the contribution of a vibrant, well-funded entrepreneurial community in the realization of precision medicine.

Establishing Clinical Utility of Molecular Diagnostics

There are things that molecular diagnostics companies can do to ensure that they identify the most efficient approach to establishing clinical utility of their new products. A new Health Decisions white paper, Ten Tips for Establishing the Clinical Utility of Molecular Diagnostics – Stepping Stones to Precision Medicine, offers guidance and suggestions.

We expect requirements for early evidence of clinical utility to be a hot topic at the 2015 Annual Meeting of the Association for Molecular Pathology in Austin, Texas November 5-7. Please visit Health Decisions in booth #123 to exchange views on how best to address this critical issue in principle or for a specific investigative diagnostic.