FALL 2021, THE EVIDENCE FORUM, WHITE PAPER
David January, PhD, MWC
Associate Scientific Director
Evidence Synthesis, Modeling & Communication
Evidera, a PPD business
Introduction to NGS
The term “next-generation sequencing” (NGS) refers to a variety of technologies that allow for rapid, high-throughput genetic sequencing.1,2 NGS technologies allow for much faster, less expensive sequencing of the genes in a sample than the conventional Sanger sequencing technique, which is restricted to sequencing specific genes one at a time.1,3 NGS also allows for the identification of multiple allelic variants (alternate forms of the same gene) simultaneously, whereas only one allelic variant can be identified per sequencing run when using older sequencing methods.1 NGS technologies achieve this increase in speed and identification of allelic variants by fragmenting DNA into shorter strands of base pairs and performing the sequencing reaction for each fragment simultaneously.2
The decreased cost and potential for rapid whole genome sequencing afforded by NGS technologies has many potential applications in healthcare. One area of use is in newborn screening for genetic diseases.4-6 NGS has been widely used to determine whether newborns have genetic variants associated with lysosomal storage disorders and other inborn errors of metabolism, allowing for potentially earlier diagnosis and treatment to avoid the progressive clinical deterioration, disability, and, ultimately, mortality resulting from these diseases if left untreated.5 NGS can also be used to diagnose genetic diseases after patients present with clinical manifestations, and the ability to target multiple allelic variants simultaneously may help reduce the sometimes long and difficult diagnostic journey for patients who present with symptoms associated with several differential diagnoses.2,5
Another area of focus for the use of NGS technologies has been oncology. NGS can be used to test for germ-line mutations to establish a patient’s risk for developing certain cancers, such as with the BRCA mutation.7 NGS can also be used in a complementary fashion to assess cancerous tissue directly for certain genetic mutations that might predict response to certain anti-cancer agents, such as for del(17p) chronic lymphocytic leukemia (CLL).2,8,9 This latter use is the focus of this paper. As of 2017, most oncologists in the United States (US) reported relying on NGS tests when making decisions relating to treatment for their patients.10 Further, several of the newer oncology therapeutics being released are very targeted for specific mutations and do not work well for tumors with different genotypes (for example, Herceptin’s indication in HER2 overexpressing tumors or tumors with HER2 gene amplification).11 Foundation Medicine maintains a list of over 20 such therapies at their website: https://www.foundationmedicine.com/test/foundationone-cdx. As these newer, powerful, targeted treatments are typically very expensive,12 NGS may be useful in identifying those patients who are most likely to benefit from the treatments and avoid inefficient healthcare spending. This recognition of the usefulness of NGS in guiding treatment decisions for patients with cancer, and the potential to make use of these targeted therapies economically feasible, highlight the urgency of the question of how these tests can gain reimbursement and wider use. This paper explores this question.
Key Questions for This Paper
In this paper, we examine the following questions relating to the use of NGS in oncology:
- How are NGS diagnostics being assessed and reimbursed in different markets (Australia, Canada, and the United States [US])?
- What evidence do manufacturers need to generate to promote favorable reimbursement?
Assessing NGS Tests for Reimbursement
Across payer systems, several key concepts are relevant to the determination of whether NGS diagnostics, or any diagnostic, will achieve reimbursement:13
- Analytical validity, or the ability of the diagnostic to detect the presence or absence of the biomarker of interest
- Clinical validity, or the relationship between the presence of a gene variant and the presence or risk of a disease
- Clinical utility, or the impact of the test results on clinical decision making related to patient care and prevention of disease
- Cost and/or cost effectiveness
While these concepts recur across payer systems, the specific methods of analysis and definitions vary, and ethical or social considerations may be incorporated into the evaluation as well.13
Graphic 1. Concepts for Reimbursement Assessment of NGS Tests
For diagnostic tests, often there is no direct clinical trial evidence of the impact of the test on patient outcomes.14 In situations like these, decision makers often rely on evidence linking the use of the test to clinical outcomes.14 For example, in CLL, the del(17)(p13) mutation is associated with poor response to traditional chemotherapy, and there is high quality, randomized controlled trial (RCT) evidence that certain newer treatments continue to be effective in these patients.8 In light of these facts, payer decision makers may link the evidence about the analytical validity of the test (that is, the ability to reliably identify del(17)(p13) variant) to the already established evidence on the clinical validity of that variant (the evidence of poor response to traditional treatment) and the evidence on the improved outcomes under alternative treatment to establish clinical utility (see Graphic 2).14 Thus the evidence burden may be somewhat reduced for manufacturers seeking reimbursement for NGS tests if there is already a body of literature establishing the relation between the presence of a variant and prognosis. The evidence burden will likely vary by the nature of the test: payers will want evidence for multiple tumor types if reimbursement for the use of the test is being sought in multiple tumor types.
In the sections that follow, recent decisions and guidance from Australia, Canada, and the US are summarized and presented as case studies to illustrate how these payers are making decisions relating to NGS and provide concrete examples of the types of evidence that manufacturers may need to generate to secure reimbursement.
In Australia, the Department of Health’s National Health Genomics Policy Framework and Implementation Plan 2018-2021 presupposes that any test being used has demonstrated analytical validity, clinical validity, and clinical utility when they are accredited by the National Association of Testing Authorities/Royal College of Pathologists of Australasia and validated with the Therapeutic Goods Administration.15,16 The Framework then stresses the cost effectiveness of NGS diagnostics as a key consideration for ensuring appropriate allocation of healthcare resources.16
The reimbursement for genetic tests in Australia involves multiple payers, including the national Medicare service and also private insurance companies and local hospitals, depending on the circumstances.17 To obtain reimbursement from Medicare, the diagnostic must go through the Medical Services Advisory Committee process, which evaluates the clinical validity, clinical utility, and cost effectiveness of the diagnostic.17
Studies such as those completed by Wong 2015 and Gordon 2020 provide the type of evidence sought here. Wong and colleagues performed NGS on samples from 854 patients in Victoria, Australia.18 Of these patients, 534 (63%) were found to have clinically relevant mutations; of these, 222 (26% of the overall sample) exhibited mutations that indicated whether an approved or pre-clinical drug would be especially effective or ineffective in treating their cancer.18 This study, then, demonstrates the clinical utility of the NGS diagnostic in determining treatment for patients with cancer. Gordon and colleagues collected cost information for a variety of NGS diagnostics used in diagnosing patients in Brisbane, Australia, with a variety of different cancers.19 While this paper did not perform an analysis of cost effectiveness, collection of costs of this nature are a step toward the cost-effectiveness analysis that would be needed. As of May 2021, NGS for use in cancer had not been approved for reimbursement in Australia through the Medicare Benefits Schedule.20
Diagnostics are assessed in Canada by the Health Technology Expert Review Panel (HTERP),21 a division of the Canadian Agency for Drugs and Technologies in Health (CADTH), which uses a multi-criteria decision framework that assesses the need for the technology, the benefits, the harms, patient preferences, economic impact, and considerations from several other domains to determine whether a technology should be reimbursed.21 NGS technologies have received preliminary guidance in A Rapid Response Report from CADTH issued in 2014.22 This report posed the question “what is the cost effectiveness of next-generation sequencing?” as one of the core research questions to be addressed by the report,22 suggesting that, similar to Australia, Canada is looking to incorporate NGS into the existing framework for evaluating health technologies. The report conducted a systematic literature review looking for comparisons of NGS versus other sequencing techniques that reported cost-effectiveness outcomes and found the literature at the time to be lacking clear evidence addressing this question.22 Notably, the report calls out the (at the time) high rate of false-positive findings for deleterious variants as a limitation for the use of NGS technologies;22 this perception of decreased analytical validity versus Sanger sequencing must be overcome for NGS to gain greater market share.
Since 2014, additional programs and guidance for genetic technologies have been developed in Canada. Specifically, Canada has rolled out the CADTH process for drugs with expanded health system implications23 and the CADTH review process for cell and gene therapies.24 Under the first process, health technologies that have the potential for “substantial system-wide implementation challenges” may apply to undergo a separate evaluation process which assesses the broader impacts on the healthcare system and seeks greater stakeholder engagement.23 Under the second process, manufacturers of cell and gene therapies may apply for special review that incorporates broader ethical and implementation considerations than the standard review.24 Part of this application must include budget impact analysis from a pan-Canadian perspective of the new technology.24 While both of these new processes are focused on drugs or therapies, they reflect a recognition in Canada that advanced health technologies relying on genetic information require special consideration. It therefore seems likely that such considerations would factor into the assessment of any NGS diagnostics.
A review by Weymann and colleagues published in 2019 found that economic evidence for NGS in Canada is improving since the 2014 Rapid Response Report.25 In a structured literature review from 2005 to 2018, 25 references were identified that met the inclusion criteria. The included studies assessed resource utilization, cost-consequence analysis, and cost-effectiveness analysis. NGS tests were found to be cost effective at willingness-to-pay thresholds of $50,000 to $100,000 per life-year gained or quality-adjusted life year. More evidence of this sort will be needed to help guide payer decision making in Canada. Weymann and colleagues noted that evidence that properly accounts for all NGS outcomes, both health outcomes (such as changes to treatment and survival) and non-health outcomes (such as the value individuals place on knowing their risk profile), is difficult to develop but essential to estimate the true cost effectiveness of NGS diagnostics. They also note that greater consistency in assessing cost effectiveness and reduced uncertainty in the results are needed to help payer decision making.
In the US multi-payer system, coverage for NGS panel tests is widely variable and dependent on a range of factors, including payer type (public or private). Within private payers, there is also variation in coverage decisions, notably related to the size of the plan, among other factors.26 The largest US payer is the publicly funded Centers for Medicare and Medicaid Services (CMS). In 2018, CMS issued a favorable national coverage determination (NCD) for NGS testing in patients with recurring, relapse, refractory, or advanced metastatic solid tumors.26,27 This NCD was updated in 2020 to cover NGS testing for patients with suspected hereditary breast and ovarian cancers, regardless of stage.27 Notably, in their decision, CMS stipulated that the NGS test must be either (a) approved by the FDA (typically achieved as a companion diagnostic evaluated alongside a precision medicine therapy28) or (b) approved by regional Medicare administrators via a local coverage determination (LCD).27 These stipulations indicate that CMS is starting from a position of presumed analytical validity. To reach its coverage determination, CMS relied on a systematic literature review yielding 24 studies.27 It is important to note that many NGS tests conducted in the US are not approved by the FDA.29 Instead, NGS panels are frequently developed, owned, and performed by individual laboratories.29 The quality of these tests is assured by oversight and certification from the Clinical Laboratory Improvements Amendments (CLIA).27 Thus, many patients who would seek NGS testing as part of an informed cancer treatment strategy may not be granted access by CMS if providers choose to order one of the many tests that are regulated under CLIA as opposed to the FDA. Such laboratory-developed tests must be approved by local Medicare administrators,27,29 which introduces opportunity for regional variation in the proportion of qualified patients who receive testing. In addition, the burden of determining whether there is a favorable LCD in place for a specific test could serve to limit access to NGS testing.
The studies from the systematic literature review by CMS established the clinical validity of the test by demonstrating the association between the presence of the variant gene and the development of disease and examined the relationship between genotype and prognosis and response to treatments.27 Additionally, the NCD requires the results of the test specify treatment options.27 Together, these aspects of the decision-making process show a crucial role for clinical validity and clinical utility in determining the reimbursement for these tests. Notably, CMS does not examine societal costs and benefits when reaching coverage determinations.
The NCD gave rise to the question of whether private payers would consider the CMS position when making their own decisions about NGS coverage.26,29 A recent study by Trosman et al. determined that 33 of 69 payers (48%) with explicit policies regarding the use of NGS in sequencing tumors had positive coverage in April 2019, compared with a single payer in November 2015. Just under half of payers (48%) initiated positive coverage in the 17 months following the NCD, whereas 52% had initiated positive coverage in the 25 months preceding the NCD.26 These data indicate that US private payers did not universally wait for CMS to cover NGS before doing so themselves. While the faster rate of coverage of NGS by private payers following the NCD is suggestive, it could also be related to other factors, such as maintaining competitiveness with other private payers.
In contrast to the CMS requirement, none of the adopters in the study had made FDA approval of NGS as a companion diagnostic a prerequisite for reimbursement.26 Of the 33 payers with favorable NGS coverage, most (67%) had a general, National Comprehensive Cancer Network (NCCN) guideline-dependent policy. Twenty-one percent of adopters covered NGS testing for non-small cell lung cancer (NSCLC) only, and 79% covered testing across multiple cancer types, either listing specific cancers or referring to the NCCN guidelines.26 Inclusion in guidelines may be seen by private payers as establishing the analytical and clinical validity as well as clinical utility of the tests. Thus, developers of NGS tests who are not positioned to receive FDA approval via the companion diagnostic route, whether due to cost, time, or operational constraints, may wish to consider guideline outreach as an alternative strategy for gaining reimbursement. The Trosman study did not indicate whether cost or cost effectiveness of the tests was performed by the private payers.
For targeted use of the newer, more powerful anti-cancer treatments, NGS technology is essential and must be made widely available. Use of NGS will enable the identification of the genetic variants associated with an individual’s cancer and, through avoiding repeated testing for single variants and avoiding use of less effective treatment, should result in efficient use of healthcare resources while simultaneously improving health outcomes.30 NGS also helps avoid issues previously seen with sequential testing due to the limited amount of tissue available from tumor biopsy and may avoid the need to harvest additional samples, thus potentially reducing patient and healthcare system burden. In this brief review of how some markets are reimbursing NGS technologies, we have seen that manufacturers of these diagnostic tests will need to be able to demonstrate the analytical validity, clinical validity, and clinical utility of their tests13 to support positive reimbursement decisions in the US and as part of developing the data to illustrate cost effectiveness in Australia and Canada.
Acknowledgment: I would like to acknowledge Megan Duda, PhD, who was involved in the early stages of planning and development of this paper, and Ann Menzie, MA, MS, and Marcia Reinhart, DPhil, who provided guidance and helped with refinement and development.
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- Boemer F, Fasquelle C, d’Otreppe S et al. A Next-Generation Newborn Screening Pilot Study: NGS on Dried Blood Spots Detects Causal Mutations in Patients with Inherited Metabolic Diseases. Sci Rep. 2017 Dec 15;7(1):17641. doi: 10.1038/s41598-017-18038-x.
- van Campen JC, Sollars ESA, Thomas RC et al. Next Generation Sequencing in Newborn Screening in the United Kingdom National Health Service. Int J Neonatal Screen. 2019 Dec;5(4):40. doi: 10.3390/ijns5040040. Epub 2019 Nov 5.
- Yang Y, Wang L, Wang B et al. Application of Next-Generation Sequencing Following Tandem Mass Spectrometry to Expand Newborn Screening for Inborn Errors of Metabolism: A Multicenter Study. Front Genet. 2019 Feb 14;10:86. doi: 10.3389/fgene.2019.00086. eCollection 2019.
- Lee MV, Katabathina VS, Bowerson ML et al. BRCA-Associated Cancers: Role of Imaging in Screening, Diagnosis, and Management. Radiographics. Jul-Aug 2017;37(4):1005-1023. doi: 10.1148/rg.2017160144. Epub 2017 May 26.
- Stefaniuk P, Onyszczuk J, Szymczyk A et al. Therapeutic Options for Patients with TP53 Deficient Chronic Lymphocytic Leukemia: Narrative Review. Cancer Manag Res. 2021 Feb 12;13:1459-1476. doi: 10.2147/CMAR.S283903. eCollection 2021.
- Avila M, Funda Meric-Bernstam F. Next-Generation Sequencing for the General Cancer Patient. Clin Adv Hematol Oncol. 2019 Aug;17(8):447-454.
- Freedman AN, Klabunde CN, Wiant K et al. Use of Next-Generation Sequencing Tests to Guide Cancer Treatment: Results From a Nationally Representative Survey of Oncologists in the United States. JCO Prec Oncol. 2018(2):1-13.
- Genentech. Herceptin (Trastuzumab) Prescribing Information. Available at: https://www.gene.com/patients/medicines/herceptin. Accessed October 11, 2021.
- Leighl NB, Nirmalakumar S, Ezeife DA et al. An Arm and a Leg: The Rising Cost of Cancer Drugs and Impact on Access. Am Soc Clin Oncol Educ Book. 2021 Mar;41:1-12. doi: 10.1200/EDBK_100028.
- Garfield S, Polisena J, Spinner DS et al. Health Technology Assessment for Molecular Diagnostics: Practices, Challenges, and Recommendations from the Medical Devices and Diagnostics Special Interest Group. Value Health. Jul-Aug 2016;19(5):577-87. doi: 10.1016/j.jval.2016.02.012. Epub 2016 May 11.
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- Australian Government Department of Health. National Health Genomics Policy Framework and Implementation Plan 2018-2021. Available at: https://www1.health.gov.au/internet/main/publishing.nsf/Content/national-health-genomics-policy-framework-2018-2021. Published 2019. Accessed October 11, 2021.
- Australian Government Department of Health. National Health Genomics Policy Framework and Implementation Plan 2018-2021: Supplementary Information to the National Health Genomics Policy Framework. Available at: https://www1.health.gov.au/internet/main/publishing.nsf/Content/national-health-genomics-policy-framework-2018-2021. Published 2019. Accessed October 11, 2021.
- Burns BL, Bilkey GA, Coles EP et al. Healthcare System Priorities for Successful Integration of Genomics: An Australian Focus. Front Public Health. 2019 Mar 11;7:41. doi: 10.3389/fpubh.2019.00041. eCollection 2019.
- Wong SQ, Fellowes A, Doig K et al. Assessing the Clinical Value of Targeted Massively Parallel Sequencing in a Longitudinal, Prospective Population-Based Study of Cancer Patients. Br J Cancer. 2015 Apr 14;112(8):1411-20. doi: 10.1038/bjc.2015.80. Epub 2015 Mar 5.
- Gordon LG, White NM, Elliott TM et al. Estimating the Costs of Genomic Sequencing in Cancer Control. BMC Health Serv Res. 2020 Jun 3;20(1):492. doi: 10.1186/s12913- 020-05318-y.
- Australian Government Department of Health. MBS Online: Medicare Benefits Schedule. Available at: http://www.mbsonline.gov.au/internet/mbsonline/publishing.nsf/ Content/Home. Accessed October 11, 2021.
- Canadian Agency for Drugs and Technologies in Health (CADTH). Health Technology Expert Review Panel: Process for Developing Recommendations. 2015 Nov. Available at: https://www.cadth.ca/sites/default/files/pdf/HTERP_Process.pdf. Accessed October 11, 2021.
- Canadian Agency for Drugs and Technologies in Health (CADTH). Next Generation DNA Sequencing: A Review of the Cost Effectiveness and Guidelines. 2014 Feb 6. Available at: https://www.cadth.ca/sites/default/files/pdf/htis/apr-2014/RC0519%20-%20Next%20Generation%20Sequencing%20Final.pdf. Accessed October 11, 2021.
- Canadian Agency for Drugs and Technologies in Health. CADTH Process for Drugs with Expanded Health System Implications. Available at: https://cadth.ca/sites/default/files/pdf/Drugs_Health_System_Implications.pdf. Accessed October 11, 2021.
- Canadian Agency for Drugs and Technologies in Health. CADTH Pharmaceutical Reviews Update – Issue 12. January 9, 2020. Available at: https://www.cadth.ca/cadth-pharmaceutical-reviews-update-issue-12. Accessed October 11, 2021.
- Weymann D, Dragojlovic N, Pollard S et al. Allocating Healthcare Resources to Genomic Testing in Canada: Latest Evidence and Current Challenges. J Community Genet. 2019 Jul 5. doi: 10.1007/s12687-019-00428-5. Online ahead of print.
- Trosman JR, Douglas MP, Liang SY et al. Insights From a Temporal Assessment of Increases in US Private Payer Coverage of Tumor Sequencing From 2015 to 2019. Value Health. 2020 May;23(5):551-558. doi: 10.1016/j.jval.2020.01.018. Epub 2020 Mar 19.
- CMS.gov. MLN Matters. National Coverage Determination (NCD 90.2): Next Generation Sequencing (NGS) for Medicare Beneficiaries with Germline (Inherited) Cancer. 2020. Available at: https://www.cms.gov/files/document/mm11837.pdf. Accessed October 11, 2021.
- LUNGevity Foundation, American Cancer Society Cancer Action Network. Landscape Analysis: Payer Coverage Policies of Tumor Biomarker Testing. 2018 Dec 12. Available at: https://www.lungevity.org/sites/default/files/biomarker/ACS-CAN-LUNGevity_PayerCoveragePoliciesofTumorBiomarkerTesting_112018.pdf. Accessed October 11, 2021.
- Phillips KA. Evolving Payer Coverage Policies on Genomic Sequencing Tests: Beginning of the End or End of the Beginning? JAMA. 2018 Jun 19;319(23):2379-2380. doi: 10.1001/jama.2018.4863.
- Kearney. Preparing Health Systems for Tumor-Agnostic Treatment. Available at: https://www.de.kearney.com/health/article/?/a/preparing-health-systems-for-tumour-agnostic-treatment. Accessed October 11, 2021