Payer view of personalized medicine

The process and methods used by payers when evaluating coverage of personalized medicine testing are described.Personalized medicine encompasses a number of diagnostic tools that measure drug metabolism, genetic risk for disease development, and tumor type or markers that can guide oncology treatments. However, whole genome testing, tumor marker testing, and testing for drug metabolism are additional costs to the healthcare system. In order to justify these costs, payers and health technology assessment bodies must evaluate the individual tests or groups of tests on their own merits. In order for a test to be covered by payers, test developers must demonstrate clinical utility as measured by improved outcomes or well-informed decision-making. In the United States, payers generally focus on clinical benefit to individual patients and benefits to the healthcare system. Clinical benefits include improved outcomes. Benefits to the healthcare system are generally considered to be cost offsets, which may be due to reductions in the use of unnecessary interventions or to more efficient use of resources. Provider organizations have been assuming more responsibility and liability for healthcare costs through various risk arrangements, including accountable care organizations and patient-centered medical homes. Diagnostic tests that increase efficiency, reduce unnecessary interventions, and improve outcomes will be chosen by specialists in provider organizations.For personalized medicine approaches to be adopted and covered by health plans, the methods must be shown to be analytically and clinically valid and provide clinical utility at a reasonable level of cost-effectiveness to payers.