March 11 (Bloomberg) -- Medco Health Solutions Inc., the second-biggest U.S. manager of drug benefits, is encouraging doctors to use genetic tests to determine whether drugs will work for particular patients -- saving money and reducing harm caused when prescriptions are wrong.
Medco, based in Franklin Lakes, New Jersey, said on Feb. 2 that it acquired DNA Direct Inc., a genetic testing company in San Francisco. In December Medco’s larger rival, CVS Caremark Corp., had increased its investment in Generation Health, another provider of genetic testing services to guide drug prescribing. The companies, which help employers and health plans administer drug benefits, say targeting medicines to people whose genetic makeup shows they will benefit may cut the use of drugs, and the expense.
While scientists have touted genetic testing for more than a decade, the benefit managers will spur the adoption of screening, said Edward Abrahams, executive director of the nonprofit Personalized Medicine Coalition. “The pharmacy benefit managers are bringing personalized medicine to millions of patients for the first time,” said Abrahams, whose Washington-based group includes the drugmakers Bristol-Myers Squibb Co. and Pfizer Inc., as well as government agencies and patient-advocacy groups. “It could be the tipping point, bringing better medical outcomes and lower costs.
”Medco rose $1.85, or 3 percent, to $64.64 at 4:15 p.m. in New York Stock Exchange composite trading and has increased 75 percent in the past 12 months. Twenty-six analysts have ‘buy’ ratings on Medco and seven have “hold” opinions, according to data compiled by Bloomberg. CVS fell 19 cents to $34.66.
Going Generic - Driving the Medco shares is the number of drugs going generic, as Medco has a higher profit margin on those than on branded products, said Arthur Henderson, an analyst at Jefferies & Co. in Nashville, Tennessee. Medco’s role in personalized medicine and disease management will benefit the company in 2015 and beyond, he said. Because of its acquisition of DNA Direct, Medco will get revenue from genetic tests, said Steven Schubitz, an analyst at Edward Jones & Co. in Des Peres, Missouri. Larger boosts will come from signing up employers for the genetic testing service, and from snaring more clients for its overall drug management business, Schubitz said in an interview.
“With the genetic testing service, Medco is really trying to differentiate itself. The genetic testing service will help them gain business and retain the business that they have. ”There are more than 50 companies in the genetic testing business, including lab equipment companies, according to the American Society of Human Genetics, based in Bethesda, Maryland. Further acquisitions of testing companies by pharmacy benefit managers aren’t expected, said Abrahams of the Personalized Medicine Coalition.
Spending Estimate - Genetic differences between people are one reason almost half of the $292 billion spent on prescription drugs in the U.S. in 2008 went to medications that didn’t help the patients, Jerel Davis, a project manager at the consulting firm McKinsey & Co.’s Palo Alto, California, office, said in November at a conference at Harvard Medical School in Boston. The figures are based partly on reviews of studies and interviews with doctors.
“When you look at the data, it’s shocking,” said Robert S. Epstein, a senior vice president and chief medical officer at Medco, which manages drug prescriptions for 60 million Americans, according to a regulatory filing. Drugs often simply don’t work because of a patient’s genetic makeup, said Peer M. Schatz, chief executive officer of Qiagen NV, a testing company based in Venlo, the Netherlands. “We are throwing chemicals at people that only have an efficacy of 30 to 50 percent,” Schatz said in an interview.
Test Market - The annual market for diagnostic tests and drugs tailored to individuals was expected to total to $24 billion last year, according to a report last October from New York-based PricewaterhouseCoopers LLP. The sum may grow 10 percent annually, reaching $42 billion by 2015, the consulting company said. The report didn’t estimate results for earlier years.
Medco has signed up more than 200 employers for its program, begun in May 2008, to use genetic tests to ensure that people get only the drugs that will benefit them, Epstein said. Those clients cover the health care of 7 million people. While Medco offers tests for just the two drugs -- the blood thinner warfarin and the breast cancer drug tamoxifen -- on which it expects the best results, the company aims to expand the program eventually to more medicines. The blood thinner Plavix, from Bristol-Myers, is among drugs for which tests may be added at Medco.
How It Works - Here’s how the testing works: As a pharmacy benefit manager, Medco sees all the prescriptions written for patients in its programs. When the company sees an order coming in for warfarin, a Medco employee calls the patient’s doctor and recommends genetic testing before the prescription is filled. Medco also phones the patient to explain the test. In Medco’s experience, 67 percent of doctors and 82 percent of patients agreed to testing for warfarin or tamoxifen, according to company figures. Medco reviewed “thousands” of cases, Epstein said. Once the doctor and patient agree, Medco mails out a genetic testing kit. The patients typically spits into a tube and sends it to a laboratory for DNA analysis. Then the dose of the prescribed drug is adjusted to reflect the test results.
International Business Machines Corp., the information technology company based in Armonk, New York, signed up last March to purchase Medco’s personalized-medicine services, Martin Sepulveda, an IBM vice president for health matters, said in an interview. ‘Extremely Useful’While IBM didn’t disclose the number of employees involved or the cost of the program, Sepulveda said the company had “several thousand” employees on warfarin and that information from the genetic test offered through the Medco program was “extremely useful” in helping doctors prescribe the right dose of the drug.
CVS, based in Woonsocket, Rhode Island, owns a majority interest in Generation Health, a provider of targeted-medicine services. CVS plans to roll out a genetic-testing program in May, Richard K. Schatzberg, CEO of Upper Saddle River, New Jersey-based Generation Health, said in an interview. Personalized medicine began with herceptin, a breast cancer drug from Genentech -- now a unit of Basel, Switzerland-based Roche AG -- that works only in patients whose tumors overproduce a protein called Her2/neu. In approving the drug in 1998, the U.S. Food and Drug Administration required the labeling information to say the drug should be used only in those patients.
FDA View - Now the agency requires genetic testing for six drugs, Abrahams said. The FDA also recommends testing before prescribing for more than two dozen medicines, and mentions diagnostic tests in the labels, the detailed information included with each medication, of more than 150 others. “Tailoring medicine, so that the right therapeutic is delivered to the right person, is likely to be one of the most important themes in health care,” FDA CommissionerMargaret Hamburg said in a Feb. 25 speech. In July, after reviewing evidence that Amgen Inc.’s Vectibix and Bristol-Myers’s Erbitux don’t work in the 40 percent of colon cancer patients with a mutation in the K-RAS gene, the FDA changed the drugs’ labels to discourage such people from taking them. Amgen, based in Thousand Oaks, California, backs the use of a test for K-RAS before patients take Vectibix, which costs $8,400 a month, said Ashleigh Koss, a company spokeswoman, in an e-mail. Bristol-Myers recommends that colon-cancer patients be tested for the K-RAS mutation before considering treatment options,Sarah Koenig, a company spokeswoman, said in an e-mail. K-RAS ProjectionQiagen projects that the market for K-RAS tests will climb to $100 million annually within five years, from $25 million to $30 million now. Using the $200 tests for all colon-cancer patients would save $604 million a year in drug costs in the U.S., according to a study by Veena Shankaran, a doctor at Northwestern University Feinberg School of Medicine, in Chicago.
Medco decided to explore personalized drug treatments in 2005, when an FDA advisory committee recommended that genetic information be considered in making treatment decisions with warfarin. It is difficult for doctors to get the dose of that drug right, Issam Zineh, associate director for genomics at the FDA’s Center for Drug Evaluation and Research, in Silver Spring, Maryland, said at a November briefing.People have different forms of the enzyme that changes warfarin so that it is excreted from the body. Some versions work slower. Too much warfarin raises chances of bleeding and strokes, while too little allows deadly clots to form.‘We Kill People’“We know that we kill people with warfarin all the time,” said Zineh, who has reviewed studies of the generic drug.
When Medco’s Epstein looked at the company’s medical records for its million patients on the drug, he discovered that a quarter of them ended up in the hospital within six months of starting on warfarin, he said.“Avoiding one hospitalization could underwrite the cost of the test for 100 patients,” Epstein said.
To contact the reporter on this story: John Carey in Washington atJcarey9@bloomberg.net
No comments:
Post a Comment