Molecular testing is a hot spot for investment in the global in vitro diagnostics (IVD) market, which has generally seen slow progress for the last decade. In fact, clinical laboratories might expect to find a parallel, positive trajectory for reimbursement and coverage from payers today because of the number of research and development (R&D) dollars dedicated to molecular testing. But public and private payers continue to lag behind scientists’ innovation in this field, and new warning signs point to a complex and uncertain fight for reimbursement and coverage, reports Bill Malone in the April issue of CLN.

Even as Congress and President Obama tout the power of precision medicine, payers are requiring definitive evidence of a test’s value to patient care—a moving target that is getting more difficult for diagnostics to reach, according to Genevieve Tang, director of strategic product planning at Quorum Consulting. “The reimbursement environment for molecular diagnostics is rapidly evolving, and you need to be able to adapt on the fly in order to survive,” Tang said. “The trend for regulators and payers is to place increased value and emphasis on proprietary, single-source tests with strong evidence of clinical utility. This is in contrast to commodity testing, where the perceived value and reimbursement rates are decreasing.”

Still, IVD companies continue to bet on the molecular space as a key driver for their businesses. Tests for infectious diseases and cancer dominate, and will likely sustain the estimated 5% compound annual growth for the molecular sector this year, according to Kerri Weinert, CEO of Boston Biomedical Consultants (BBC). Roche still leads the market, but has lost some ground due to the “enormous” amount of investment by competitors, Weinert explained. “The investment in R&D for molecular diagnostics is very costly, and companies that are willing to develop automation and ongoing assay improvements will also have to invest heavily in customer education, physician education, and deal with regulatory and reimbursement challenges.”

The key to success for IVD companies will likely involve reliable automation. “When you consider that the first moderately complex molecular test was introduced in 2006, and we just had the first CLIA-waived molecular test approved this month, I think the industry is capable of anything in terms of innovation,” Weinert said earlier this year. The Alere i Influenza A&B assay received CLIA-waived status from the Food and Drug Administration in January.

Price erosion is likely to confront companies as they continue to invest in innovation, Weinert predicted. To be successful, IVD businesses will have to meet clinical laboratories’ needs. That means offering a strong test menu that is consolidated on a single, automated platform.

Pick up the April issue of CLN to read more about the outlook for reimbursement for molecular diagnostic tests.