Originally Published IVD Technology April 2005
Roundtable
Ten years of diagnostics
A look back at the achievements and challenges of the past decade, where we are today, and what to expect in the future.
The IVD industry has experienced remarkable change over the last 10 years. In the early days of the 21st century, the decoding of the human genome captivated the scientific community, creating opportunities for exciting new technologies, and with them the breathtaking promise of personalized medicine. Diagnostics have risen to the challenges presented by changing health demographics and the threat of disease—bovine spongiform encephalopathy (BSE), the West Nile virus, severe acute respiratory syndrome (SARS), and the continuing spread of HIV. The past decade has also seen dramatic economic shifts—the rise in the overall cost of healthcare and the drop in testing prices, the consolidation of the IVD industry, and the growing shortage of skilled laboratory workers.
To help make sense of the industry’s transformation, IVD Technology invited three IVD industry executives to share their diverse perspectives on the regulatory, technological, and economic milestones of the past 10 years, and how they have affected the way IVD companies do business today. We also asked them to predict what the challenges of the next decade will be, both in traditional markets as well as around the globe, and how industry can face these new trials together.
IVD Technology: In your opinion, what have been the largest changes in the IVD industry during the past 10 years?
Rich Schifreen: One of the things that has struck me is the incredible diversity we have seen develop in the industry, both in terms of the technology and how it is regulated. We have seen new product classifications such as analyte specific reagents (ASRs) come on the scene. We have seen greater diversity in the locations that actually perform diagnostic tests—point of care, different hospital environments, and home testing, as well as commercial laboratories.
Glen Freiberg: Over the past 10 years, there have been significant strides made in automation, both in stand-alone instruments and laboratory automation. One other change has been from the impact of the Clinical Laboratory Improvement Amendments of 1988 (CLIA). While there has been a shift to point of care in some areas where products are used for emergencies, there has also been a shift away from doctor’s office testing. I believe this shift has caused a disservice to many patients in that such care has become paperwork prohibitive. There has been a trend under CLIA to focus testing in larger laboratories. CLIA, as a laboratory regulation, has caused some confusion between quality care and compliance with paperwork. Going back to shortly before 1995, before CLIA changed the marketplace, there really were no laboratory problems other than Pap testing that CLIA solved. Now we have patients not getting the immediate care that they deserve.
Mike Whelan: What was emerging a decade ago was a focus on cost and the recognition that labor was going to become expensive. Now, 10 years later, we are at the point where labor is a major component of cost and it is very difficult to get qualified labor. These dynamics have fed an increasing interest in automation.
Another dynamic appeared in the 1990s, when there was a lot of testing moving to large commercial laboratories. In the last few years, though, this trend seems to have reversed itself. Commercial laboratories now seem to be focusing more on high-value tests and pushing more of the routine tests back into the hospital. This, too, at a time when hospitals are facing reduced operating budgets.
How else has the IVD industry changed from a regulatory standpoint?
Freiberg: Negotiation with FDA to create the ASR regulation has allowed us to fill the gap between research use and clearance for innovative laboratories, which use ASRs, developing home brews in a more controlled environment. So from the manufacturer’s perspective, we have been given this additional foothold to work collaboratively with laboratories and accelerate delivery of care to patients.
From the OIVD clearance side, there has been innovation in getting products to the market. Again, industry working with FDA has allowed the agency to look at its past and optimize how we are moving forward. Examples include the development of the “Special” 510(k) program in which a device is modified, but does not change its clinical output or utility. We have the de novo approach for which there is clearance with no predicate device. In other words, this process is a mutual agreement between FDA and industry that certain products will not rise to the level of a PMA, even without a predicate, thus allowing this different approach. We also have abbreviated 510(k)s, but this option has not had a major impact on the IVD industry because there are not many standards that can be used to reference full IVD submissions. CDRH as a whole has endorsed these approaches, and that has helped industry.
Schifreen: Another significant change has been in the molecular area, in the interaction between researchers at universities and diagnostics companies over gene patents. If a useful new gene is discovered at a university, the school may grant an exclusive license to a diagnostics company. Alternatively, the company may have discovered the gene on its own. In the past, diagnostics companies would market that product as a kit that would be run in any laboratory that wanted to pay the price. Today, the company may market it as a laboratory service only available from their own commercial laboratory. Myriad Genetics (Salt Lake City) is the most recognized example with its BRCA testing, although there are many others.
Practitioners now find that they are unable to offer particular tests in their hospital or laboratory. They believe it limits their ability to practice laboratory medicine —to the detriment of patients. This has resulted in controversy both in the industry and among molecular diagnostic practitioners. There has been a lot of pressure to change this structure that has reached the Congress and government agencies. We are going to have to see what happens and the impact this will have on the development of the molecular diagnostics market over the next several years.
Going back to CLIA, what are the sorts of regulatory hurdles and challenges that manufacturers have faced?
Freiberg: During the last several years and up until just recently, there was significant confusion for the responsibility of the CLIA waiver assessment. This originally was assigned to FDA, and FDA claimed that it did not have the funding for it. It then moved to CDC. The approach of CDC was quite different and much more restrictive. Industry again tried to work with CDC and FDA, especially as part of the CLIA Advisory Committee, or CLIAC. CLIA waiver determination is only now moving back to FDA, and we believe this will allow more products to end up in more point-of-care situations, which will benefit patients.
The other challenges that have been most significant to those of us who process applications are in the inconsistency of reviews, both within the diagnostic branch of CDRH and in CBER. During the time frame in question, many in industry were so upset with CBER that we started talking about a congressional mandate to move diagnostics all under one roof. Only with that threat over their heads did CBER senior management start meeting with the trade groups again and addressing our top-10 list of issues. CBER has made tremendous progress trying to accommodate the standardization of guidance and create more consistency with CDRH diagnostic reviews, and CBER is to be commended for its effort. On the other hand, even with the advent of user fees, it has only been in the last few months that CBER has actually added any personnel, and even so, only one reviewer and one statistician.
Whelan: Some of the biggest hurdles have been nontechnical. The IVD manufacturer has maintained a position of fiscal responsibility, especially the public companies. I think it has been a very challenging process.
But on the technological front, this is an industry that does not accommodate rapid change. When you consider that a piece of laboratory equipment has a seven- to nine-year life span on average, change does not come as dramatically as one would expect. It has accelerated in the last four or five years, but I believe this is driven by the issue of looking at total costs and the need to address management of these costs.
The Present
How do you view the current status of the IVD industry?
Whelan: That’s a short question with a long answer, but to be brief, the IVD industry does not represent its product very well. We are a very cost-effective contributor to the management of healthcare, but we do not communicate that. We do not communicate this as a body. We still, as an industry, get consolidated into the cost of providing healthcare as opposed to the efficiency that we generate in managing total costs.
Freiberg: AdvaMed (Washington, DC) does have a “value of diagnostic technology” objective that we are working on. Contracting on this initiative has begun and we are trying to get the value message out in much stronger terms. Some of the financial data that AdvaMed does have show that if you look at the cost of healthcare over the last 10 years compared with drugs, hospital stays, and medical devices, all have risen dramatically. Considering the effect of inflation, however, the cost of diagnostic testing has remained flat. So, the value of diagnostic technology is making an ever-growing contribution and yet the price pressure is getting more and more severe. This is why the value-of-diagnostic-medicine message must be broadcast stronger and clearer. Additional price pressure in this sector could stifle innovation.
Whelan: We can all contribute to that, but from a technological perspective, the industry is beginning to focus more on disease-state approaches as opposed to just generating results. If you look at some of the latest areas like cardiology, you will see that the volume of testing has grown enormously—in excess of 80% over the last few years—but at the same time, other, less-clinically-valuable, tests are not being done. So the net effect is that you see what looks like a fairly level productivity of results, but the results have more clinical significance and utility.
The last decade has seen incredible changes in IVD technology as well as in access to IVD products. Would you have believed it if someone told you 10 years ago that the industry would be where it is today?
Schifreen: I agree that in some areas we have exceeded expectations. I do not think any of us would have expected that we could possibly have delivered the level of technology in today’s products as cost-effectively. The area where I had thought we might be a little further along is in converting what was being learned through sequencing of the human genome into useful diagnostic tests. There was a lot of excitement and high expectations that things were going to happen a lot faster than they have actually turned out. I would have expected a newer generation of molecular diagnostic tests to come along sooner than what is probably going to happen.
Whelan: For me, there are two elements. One expectation presented 10 years ago was the proliferation of near-patient testing within the hospital. Ten years ago, it was definitely going to occur, but it did not materialize. The other surprise, which is a positive one for us, is the drive and the demand for more automation in the lab itself. So, there are two opposing views, if you like. Ten years ago, the lab was going to be diminished and the work was going to move to the bedside. There is bedside opportunity today, but it seems that the laboratory is actually producing more clinical results than previously anticipated.
Do you think the IVD industry should be further along than where it is today?
Freiberg: Over the last 10 years, we have seen a growing discrepancy between the different playing fields. For the diagnostic industry in particular, we have comparisons between the advent of the CE mark in Europe and our FDA process, which I believe hampers us internationally for the homegrown companies. We also see a growing gulf between home-brew regulation via CLIA and FDA regulation. This challenge is, in part, tied to clinical utility text in our Food, Drug, and Cosmetic Act, but it is still hampering the delivery of new tests through a GMP environment from manufacturers in the United States versus the home brews.
Schifreen: I see it from a slightly different vantage point, being more on the technology side and working with smaller companies. Many of the researchers who are developing the technology do not understand the difference between utility in a research setting, where you may have a level of statistical significance, and real clinical utility, where something is going to be useful in treating a population of either unselected patients in the screening mode or a patient whose physician needs to make a differential diagnosis. For those companies that are trying to turn new technologies into products, this is a lesson that is going to have to be learned. Unfortunately, right now it is being learned the hard way as companies spend a lot of money to try to develop new technology and find that they cannot market it into diagnostics.
Whelan: It gets back to some of the commercial changes that have taken place. The bulk of purchases today are not made by technical people; they are being made more and more by business people or business-related people. These purchases are very much driven by the macroeconomics of the institution. So, unless you are university associated with a large medical center, you may not have the funding, and you will not have the skill sets, either. The environment out there is becoming very process oriented, and we find that more and more people are buying for group hospitals, for as many as 50 at a time, which does not allow for the kind of proposal that Rich may be speaking of.
The Next 10 Years
Moving on to the future, what do you think will be the biggest achievements in the IVD industry during the next decade?
Schifreen: I think we are going to see personalized medicine become a reality, but it is going to take a lot longer than anyone anticipated. There’s a lukewarm response in the pharmaceutical sector to the concept of personalized medicine. On the one hand, it reduces the size of the patient population, and thus the market size, for a particular drug. But on the other hand, it avoids the disruptive situation we just saw with Vioxx and Celebrex, and earlier with Seldane and others. Over time, I think the pharmaceutical industry is going to warm up to this idea.
Whelan: Today, you can very clearly bring diagnostic value to a therapeutic treatment where currently none exists. I think you are going to see similar advances in the management of the whole vascular area. We have a lot of activity going on with universities/medical centers for the improvement of the whole cardiac and vascular system, so you are going to see stroke markers and more-differentiated cardiac markers (i.e., troponin measurements). Under those circumstances, I think the leverage we have is going to be directly or indirectly effective in attracting pharmaceutical companies.
Freiberg: What I am seeing is that more drug companies that do innovative things are actually trying to improve diagnostic qualification for the patient. They recognize that the sooner you have an approval for a new drug, even if it is for a very targeted market, the sooner you can do concurrent research to make it available for other uses. For instance, methotrexate, which was developed to treat cancer, became a great treatment for arthritis almost accidentally. Working with the diagnostic companies, we are going to have some really big achievements in the next 10 years.
It was brought up earlier that the IVD industry does not do a good enough job in communicating its contribution to healthcare. Keeping this in mind, as a whole, what should the IVD industry’s primary goals and objectives be during the next 10 years?
Whelan: The IVD industry delivers a lot of data and clinical information that contribute significantly to patient cost management. When you can get in front of a large GPO and express the value you deliver relative to that contribution, you do get a very positive response. But the documentation we can deliver to large multiple-buying organizations like Kaiser cannot necessarily be delivered to Congress and the public to explain our value.
Freiberg: When industry accepted the user-fee deal, Congress did not hold up its end. We are currently working to have Congress institute a trigger fix and we also need better control of the escalating rates on these fees. We have to continue to work on FDA appropriations, but we probably need to do it a little differently than we have done in the past. Congress and industry need to take a look at the agency and the people that they have and measure all their activities against their charter. There are probably entire departments that should be eliminated. We need to reallocate the resources within FDA to be more focused on compliance and reviews and less on some of the other things that are eating up a lot of FDA dollars. For example, modular reviews for PMAs have become pretty popular and we need to work with FDA to allocate more review resources and improve the performance of that project.
Following this line of discussion, what do you think the industry will look like 10 years from now? Do you think, for example, that it will become more global?
Whelan: There are opportunities outside the United States. The bulging opportunity for healthcare delivery in China or India is an enormous opportunity for us in the IVD industry. Close to 70% of what we make, we ship overseas. I do believe that our record, in that respect, is maybe a little better than most industries within the United States. So, we do have a card to play with our friends in Congress relative to the value that we offer. I would like to see that proliferate to the degree where the IVD industry retains its leadership. The number of players in the market has shrunk and it is difficult to see how there will not be a rapid escalation of proliferation.
Schifreen: I see what I think is a disturbing trend: that is it is very difficult to be successful as a new, small diagnostic company. One estimate is that you can’t be profitable as a diagnostics company until you can generate $50 million in revenues. Given this trend, I think we will see greater consolidation favoring larger companies and less ability for the small, innovative company to get a foothold into the market.
Freiberg: As we mentioned earlier, in 10 years, the baby boomers are going to be taking much greater advantage of the healthcare system. One of our biggest challenges will be in the reimbursement environment, where we already see Medicare saying that you can only get a PSA test once a year. While this frequency may be valid, I think we are going to see more and more controls on a doctor’s ability to make a request for certain tests. For those patients following their cholesterol and lipid profile, it could be a very big challenge. Considering that many of the statins have side effects, this is going to be an intensive area. Our ability to document and promote value is the only way to counter reimbursement issues.
Roundtable panelists
For the roundtable presented here, IVD Technology sought out the views of three IVD experts with considerable experience in regulatory, technological, and business activities. Biographical details about the panelists are provided below.
 |
Richard S. Schifreen, PhD, is director of technology and market development at Promega Corp. (Madison, WI). He is also an adjunct professor in the masters of science in biotechnology program at the University of Wisconsin–Madison and an advisory board member for the medical technologist program. He is currently involved in the identification and development of new technologies for life science research and molecular diagnostics.
 |
Glen Freiberg is vice president of regulatory, quality, and government affairs at Gen-Probe Inc. (San Diego). He has served three terms as the industry representative on FDA’s advisory panels, first for clinical chemistry and toxicology and then the immunology panel. He is an active member of the Advanced Medical Technology Association (AdvaMed; Washington, DC), the Regulatory Affairs Professional Society (RAPS; Rockville, MD), and Biocom, a San Diego–based biotechnology trade group.
 |
Michael J. Whelan is vice president, immunoassays and nucleic acid testing, for Beckman Coulter Inc. (Brea, CA). He is responsible for current and future development of the company’s Access immunoassay system platforms, and oversees the development of chemiluminescence-based assays available on the system. In addition, he is responsible for the company’s new nucleic acid testing business, which will feature molecular diagnostic technologies.
Copyright ©2005 IVD Technology
