As we’ve seen in previous posts, the world of diagnostic test development is quite complicated. In addition to the multiple ways a diagnostic test can get to market, there are many different types of organizations that develop and run tests. Take a look at this zoomed-in view of the Map of Biomedicine:
As a reminder, the little colored bars in each box show the types of organizations that perform those activities, based on the legend. In this view of the Map, I’ve highlighted activities related to creating and running diagnostic tests in red. As you can see, many different types of organizations perform these activities.
In one approach, traditional diagnostic companies, such as Roche Diagnostics, Thermo Fisher or Siemens, create diagnostic tests and then sell those tests to diagnostic labs, like Quest or LabCorp. They sell the devices, reagents and analytical software to labs that run the tests in their own facilities. These tests have to be approved by the FDA.
In previous posts (here and here) I discussed Laboratory Developed Tests (LDT’s), which are tests offered in a single lab, and which are regulated by the Clinical Laboratory Improvement Amendments (CLIA). The LDT model for testing has made it possible for many different kinds of organizations to offer diagnostic tests. One company I’ve mentioned before is Myriad Genetics, which has a test that can tell women if they have an increased risk of breast and ovarian cancer based on the mutations in the BRCA1 and BRCA2 genes.
But there are many more examples of such companies. One is a company called Natera, that makes tests that look at fetuses’ DNA before they are born. Another company, Pathway Genomics, tests your DNA to look for risk factors for dozens of diseases. I couldn’t find a reference for how many LDTs there are on the market, but I’m sure it is in the hundreds, if not the thousands.
Companies that make instruments sometimes also create labs to perform tests. An example is Illumina, the leading maker of DNA sequencing machines. They also run a lab that will sequence your entire genome, using their instruments, and return the results to your physician. This kind of test has been especially useful for patients with cancer and for infants with rare and hard-to-diagnose genetic disorders. Sequenom is another example of this kind of company; they have a non-invasive test, also based on their own instrument, that can diagnose Down Syndrome before a baby is born without doing an amniocentesis, which poses a slight risk of injury to mothers and babies.
While the companies’ approaches are similar - their own tests run using their own machines - each company has a different business goal. In Illumina’s case, I don’t believe they expect make a huge amount of money off their tests, but it is a great way to market the capabilities of their sequencing machines. On the other hand, the market for Sequenom’s test is huge, since every expectant mother could take the test. They are looking at a potentially large source of income.
In addition, hospitals and other treatment providers, such as Vanderbilt University Medical Center and MD Anderson Cancer Center, are developing their own tests to run in their own labs. They have access to clinical cohorts for validation and running trials and they are well-placed to incorporate their own tests into a learning healthcare system model where the use and interpretation of test results is adjusted over time to optimize care. Being able to say they are providing better care with tests that are integrated into patient care is a good marketing tool and a competitive advantage.
Diagnostic labs, such as LabCorp and Quest, are also creating their own diagnostic tests. For instance, Quest acquired Celera Diagnostics a few years ago. Celera is developing tests based on the correlation between genetic variants and certain diseases and reactions to medicines. This is personalized medicine that starting at diagnosis! For Quest, having tests that are unique to their lab can be a competitive advantage.
Lastly, drug companies are developing companion diagnostics, which are diagnostic tests that are tied to specific therapeutics and can be used to predict response or adverse events. Drug companies typically do the research associated with these tests but partner with diagnostic or instrument companies to bring the test to market. For example, AstraZeneca is partnering with Roche Diagnostics to create a companion diagnostic for one of AstraZeneca’s lung cancer drugs. The test looks for a specific mutation in the lung tumor that the drug is designed to target. Only patients with that mutation would be eligible for the drug.
As you can see, many different kinds of companies run diagnostics tests, and while I’m sure the tests provide reliable cash flows to the companies, it’s clear that there can be other benefits, such as creating a competitive advantage by drawing patients who might also pay for other services; and potentially better, more individualized care.
In my next post I’ll talk about what happens to the test results once the lab work is done. Of course your doctor gets those results, but there are other people who might get access to them. Including you.
