 Dr. Furuki from LabCorp will tell us how LabCorp implements genomic testing now, before and in the future. Thank you for coming. Okay. Thank you very much for inviting me. It's a privilege for me to address this group and really talk about LabCorp's experience and perspective on the implementation of genomic testing. And I'll start off with a few comments about who is LabCorp or what is LabCorp. This is our headquarters building in Burlington, North Carolina, which is about 45 minutes from Research Triangle Park. We're a large diagnostic laboratory company with 30,000 employees, approximately 1,500 patient centers. These are our draw stations around the country. We serve 220 customers. They are doctors, physicians, hospitals, medical centers, academic institutions, et cetera. We offer about 4,000 different diagnostic tests ranging from simple things like a CBC and a urinalysis all the way up to the most sophisticated sequencing, SNP for Rays, copy number variants, et cetera. And we have a complicated infrastructure to collect close to 400,000 specimens a day and deliver over a million results every single day. So in order to meet that objective, we employ about over 750 MDs and pathologists. We have 150 or more genetic counselors who support our operations. There are 10 centers of excellence scattered throughout the country that have specialized expertise, 38 primary testing locations and stat centers. And obviously, we need an infrastructure of couriers and corporate jets to move all those specimens around. So just looking across a map of the United States, all the light blue are the draw centers, and they're concentrated primarily in the population dense areas. The darker blue are our regional labs, and then the yellow circles are actually the centers of excellence that have unique expertise. Lab Corps operates with a spoken hub sort of where specimens are collected regionally. They go through a branch and then to a regional lab and for specialized testing to those centers of excellence. That allows us economies of scale and to offer some very specialized services as well. We also operate a global clinical trial service and capabilities and have labs gathered throughout the world. We have a recent acquisition of Clearstone, so we now also have a CAP accredited lab in Beijing and a variety of other interactions with various other countries in South Africa and Australia, in India, in Abu Dhabi, and so on. Lab Corps also has a companion diagnostics program, and we have been instrumental in the introduction of many of the companion diagnostics tests that are out there today. And Lab Corps serves in a capacity sometimes in the early development stages such as with some of the HER2 studies way back many years ago. But also in a clinical trial capability to support a lot of the validation and submission for those assays and drugs to the FDA. So whether it's on the science, on the regulatory or on the commercial aspects, Lab Corps has provided a lot of support for many of the companion diagnostics that are out there today. We like to maintain scientific leadership and to do that we need to continually review new opportunities. So we review probably over 400 new opportunities for diagnostics a year. And we introduce every year over 100, close to 130 new diagnostic tests. They're not only genomic, they span the whole range of diagnostic offerings. But they often involve collaborations with pharma, with universities, with biotech companies, with academic centers, with the government, etc., to make that actually happen. So where do these new diagnostic opportunities come from? Many of them come from academic institutions and Lab Corps has developed good relationships with many of the tech transfer offices at most of the major universities so that we can be in their mind when they develop new diagnostics and want to want assistance in getting it out into the clinic. The biotech companies often seek Lab Corps hoping for access to the market through Lab Corps infrastructure. Through our clinical trials and companion diagnostics, we often get a first look at diagnostics long before they're useful in the clinic. But in the early stages of development, drug development, or development of a diagnostic. We, I mentioned our PhDs and MDs, and we have many connections to the scientific literature, to meetings, presentations, and our peers who also bring all kinds of new ideas to us. Lab Corps is active in the acquisitions and mergers, and sometimes we acquire technology from companies. And we also monitor our send-out requests so that when we do have send-outs and we see it growing to a certain volume, that necessitates bringing a certain assay in house. So what do we look for? Scientific and clinical evaluation is key, and that's one of the first things that we do. And I work with a group of scientists at Lab Corps in looking at these new opportunities. We look at analytical validity and clinical utility. So the basic things like sensitivity, specificity, positive predictive value, negative predictive value. But key also is, does it lead to improved outcomes? Does it lead to decreased health care costs? Is there a therapy that's guided by that diagnostic? Can we avoid a toxicity? If we diagnose something earlier, if the sensitivity is increased, does that impact the outcome? We're looking for an actionable result, something that actually changes management. Not just that looks good in a chart, but that actually changes management. And finally, we look for evidence, and that could be publications or guidelines, professional society endorsements, endorsements from the government like the Department of Health and Human Services or CMS. And even if those things are not in place at the time that we license or look at an opportunity, we are thinking about are these things that we could anticipate in the future? Or how far off might those guidelines be? Because they're critical to, as I'll show you in a few minutes, to reimbursement and to growth and acceptance of the test. So for financial and other considerations, we also explore what's the reimbursement outlook for that particular opportunity, for that licensing or that diagnostic? How will we get paid, and how much will we get paid? Is there intellectual property associated with it, and will we have freedom to operate? And is there a licensing? Is there a need to have a license? And if so, what's the royalty burden for that license? What will it cost us to actually bring it to market? And that's what additional validation will be needed. We have to sponsor the study to do that. Will it require, are the specimens available? Do we have enough annotated specimens to do that with? So all of those things are part of the cost of actually bringing it to market. And then those are weighed against what's the likely reimbursement, thus what's the return on the investment? Is the assay feasible given our platform? And here there's a few things that we might not be able to engage in, such as very an analyte stability issue, where it's really not amenable to our sort of infrastructure. Or potentially a requirement for the result within minutes. We do have some stat facilities, but again that's not available in every location across the U.S. The regulatory landscape, which Deborah Leonard touched on briefly, but practically all the molecular tests, with very few exceptions, are laboratory developed tests. And we've been able to react to the changing environment, the developing scientific information, et cetera, by being innovative and by creating these laboratory developed tests. So if there's movement to restrict our ability to do that, I think that will have an impact on our ability to react to the changing environment. And finally, some market dynamics and competition that we also look at as we evaluate new opportunities. So what is success? And so we've modeled this, because we've looked at, and I've been at LabCorp now for over 10 years, and we've seen many test adoptions, and we kind of have a pretty good feel of what creates success. So we've modeled this, and this particular modeling was done in the context of HLAB5701, the association with the Bacovir allergic reaction. But it really is mirrored in a number of other examples which I'll share. But there's typically a several year process early on in which the markers first identified and early publications support its use, and people like LabCorp actually develop a lab developed test and bring it on and put it on the menu. And then there's some key studies, and in each one of these examples I could probably name the key studies that were drivers. In this case it was the predict study and shape to study sponsored by Glaxo that led to a clinically established test with clear clinical utility. And what happens with that is, following that is just a very dramatic test acceptance period during which all of these other players fall into place. So the clinical utilities established, the payer reimbursement coverage happens shortly thereafter. Professional society guidelines are happening at the same time, and all of those together drive a huge increase in volume. Now that, and then that increase in volume goes over a short period of time, a few years during which there's logarithmic growth of the particular test. And I can tell you at LabCorp we often struggle during those periods trying to meet demand, you know, trying to have enough people trained and enough people in place to meet the demand for a particular test. Okay, so, and I've mentioned, historically we've seen many, many examples of this, HIV guidelines that followed Viradapt and GART studies in 2001, the ALT study with HPV testing, the HCV genotyping after the ribovirin interferon trials and that data, the CF testing after the ACMG guidelines, et cetera, and each one of those cases, that's the event that drives that huge increase in volume. And we've also looked at it in some of these oncology markers, and I can say the pattern is pretty much the same in the Herceptin, is this working or not? Yeah, I guess the Herceptin approval here, both the diagnostic and the test, in 2003-2004 was quantitative BCR-ABLE and the GLEVEC monitoring and NCCN guidelines and ASCO guidelines, et cetera, to support that. And then the KRAS story, which happened really between 2007 and 2008, again with publication of guidelines, a rapid adoption coverage policy, et cetera. And then I'll point out these two here at the bottom, the green and the purple, our UGT-1A1 and 2D6 with tamoxifen, where coverage policies are not favorable with where guidelines have not included it, and where the definitive studies we're still waiting for. So I've already mentioned UGT-1A1 and cytochrome P450-2D6 in the setting of SSRIs, EGAP has published on that. In the setting of tamoxifen, I know UNC is working towards creating the clinical utility story around that, but it's an emerging area and we still have very low volume. And let me say also that warfarin and the coumogen studies and so on relating to warfarin, pharmacogenetics, again, very low volume at LabCorp for those applications. So I can't emphasize enough the clinical utility impact. If the clinical utility is not well established, and that could be because it's a non-actionable result, it could be because there's conflicting studies of clinical utility, and I'll show you a very good example of conflicting studies. It could be simply because there's limited availability of well-annotated samples to conduct the study. The end result is lack of endorsement, coverage and reimbursement denials, and low utilization, and those three things all happen together. So this is a really good example of conflicting studies, and I want to show you what's going on with Plavix 2C19. This is not published, this is just internal data that we have. But it's an interest of mine personally about what constitutes and why is it that certain tests are adopted and some aren't. So if we look back, again, the early markers that support the use of this go back many years. In 2009, early in 2009, there were two papers published in the New England Journal of Medicine, both of them supportive of the use of 2C19 in the management of patients on Plavix. And we, shortly thereafter, actually, Labqur had been doing 2C19 testing for a while with very low volume. But in light of the New England Journal of Medicine papers, we actually in March of 2009 introduced a clopidogrel-specific test in which the interpretive language was supportive of that particular application and made certain recommendations based on the use of the what alleles were picked up. In any case, the FDA alerts happened shortly thereafter and there was a large increase in volume as a result of that. It's interesting though that shortly thereafter, so in June, the FDA alerts happened in November of 2009 and in March of 2010. In June of 2010, the American Heart Association and the cardiologists put out some guidelines that were very, very lukewarm about the use of the test and kind of leaving it up to the clinician and it may not be necessary and there may not be enough data, et cetera. And that followed by the Canadian study, again, that did not show, again, had a profound impact on utilization of that test. And you can see it and that controversy continues with volume relatively low compared to where it was at the peak. Now there are a variety of reasons for conflicting studies and many of them are legitimate reasons about the choice of patient population or the choice of the clinical setting in which a test is used. But that controversy is kind of lost on the masses and the masses choose not to use the test. So let me move on to payer reimbursement. Payor adoption and reimbursement has been, so for the last 10 years or so, we've had these existing molecular CPT codes, procedural codes. So provided that the scientific validity, the clinical utility was established, practice guidelines were there, coverage policy, we could immediately use those stacking codes to be reimbursed for the testing we're doing. That model is changing. So we are no longer going to be able to use those procedural codes and in 2013 there's a new coding system going in. And Deborah Leonard alluded to this briefly, but the new coding will allow greater transparency which is really a positive thing for everybody. In other words insurers, payers, billers, hospitals, et cetera, will be able to know what they're paying for in those tier one codes. And the tier one codes will really cover most of the diagnostic, the molecular diagnostic tests that we're doing today, virtually 95% or more. I think the problem is that the tier two, so those are tier one. And at least tier one, our understanding is that those will be, fee setting will be comparable to what's currently being reimbursed for those tests. Tier two are complexity-based codes and it's not clear yet whether payers will be denying those tier two or will be paying or will choose to deny those. So I think there's a lot of uncertainty about how we're going to get paid for the tier two which are kind of complexity-based codes. And finally, historically, getting a new CPT code was a multi-year process and I was just talking to someone during the break. I would be applying today for the code that would go into effect in 2014. So if that's the model we have for introduction of every new genomic test to get paid for it, I mean, obviously that's a huge problem for us. So it's not clear yet about how new codes and new genomic testing is going to be handled in this environment. And I'll just say one other thing, fee setting is usually a separate process from CPT coding. So 2014 is when I would get the code. I would still then have to pursue getting a fee set for that code. So and finally, licensing and royalty burden, which again, it's not clear what's going to happen in that arena. But when we start talking about multiple gene panels, we're also talking about multiple licensing agreements, multiple royalty potentially. And that stacking of licensing and royalty is really not, there's no CPT code for that. Nor is there a CPT code for another issue that was brought up earlier, which has to do with going back to sequence data and doing a reanalysis based on the latest scientific information. So other factors that might impact market adoption. And these are some analyte stability. And I mentioned some of these. And for most DNA based tests, this is not an issue. But I think for RNA expression, the use of FFPE, formal and fixed tissue and RNA expression, that is clearly an issue. Access limitations that can sometimes slow down test adoption if it's only available at a single site. That restricts access and slows down. Physician related modulating. And I call these modulating because the clinical utility story that I mentioned is the initial driver. But these can modulate adoption. Economic conflicts. So if a physician is paid for a certain procedure, but the test perhaps replaces a procedure that a physician can be paid for, there's some disincentive there. And despite everybody's best intentions, sometimes the adoption can be slower in those situations. This physician specialty group involved. The HLA, a back of your example, was HIV practitioners who are really very used to taking molecular information, resistance testing information, et cetera, and adjusting therapy and treatment. If we go into the psychiatrist realm or something like that, we're talking about a very different specialty group that's not at all used to an accustomed to incorporating that sort of information. So we need to kind of take that into consideration with how rapidly the adoption will occur. And then finally, physician education. Although I think this area, there is improvement with greater number of physicians being connected to the internet and dissemination of information is clearly happening a lot faster than it used to. I think this is an area where there's still a lot of room for improvement. So in conclusion, I want to just summarize the points that I made well controlled and adequately powered studies demonstrating analytical validity and clinical utility are key. We see these areas where there's clear actionable results. And I can tell you that LabCorp is currently engaged in multi-gene panels that address some of these areas. In other words, areas that prevent drug toxicity in the drug metabolism area. Multi-gene panels that identify a treatment path or select for drug. This is in tumor profiling. And the diagnosis of rare heritable disorders or carrier testing. I mean, these are three areas that we think are kind of ripe for prime time and where LabCorp is currently engaged in developing multi-gene panels using next generation sequencing to offer clinical services in this area. And then path to fair reimbursement is and freedom to operate be it from a perspective of intellectual property and or from the regulatory world. Thank you very much. I'll take questions. Thank you, Mark. And then Teri has a question. I really was interested in the adoption curves that you presented. I think those are fantastic. And again, these are the search of data that I think groups like this need. In my view is I think about the takeaways for the genomic medicine group. It seems to me that this if we could have access to data like this, it would be a really nice metric to look at some of the things that either come out of this group or other NHGI related activities to say, you know, when we have a publication that comes from a funded study or something else, what impact does that actually have on the adoption of a given test or technology? I think that would be a very interesting thing to do. The other thing I'll just notice about those types of curves is that Clay Christensen has noted in his study of innovation that that's the typical, of course, innovation adoption curve of the early adopters and then the rapid and then the holdouts at the end, the Luddites at the end. You can actually take that curve and integrate it so that you can actually say here is the point at which 50% of people will consider the standard of care and plot that on a timeline. So it would also be very useful to be able to use that prospectively in addressing what Sean had talked about for prioritization, saying, where do we need to put our efforts? Because these are going to be emerging sooner than those if we had regular access to those types of data. So we can talk about that further. I think in the past, Labquire has not disclosed publicly their actual volumes, although we can reconsider. That would be great. Maybe for those of us who aren't familiar with CPT, could you maybe give us two or three minutes on what they are, why they're important, and how one gets them changed? Yeah. OK, so the laboratory industry, CPT coding is kind of the basis for how laboratories get paid for their testing. And CPT stands for procedural terminology or current procedural terminology. And these cover all of the medical procedures that physicians do. And initially, in the molecular diagnostic space, initially, what happened is as molecular infectious disease testing got started with viral loads 10 or 15 years ago, the people like Labquire. In fact, I wrote some of those initial ones for resistance testing and so on. You would apply to the AMA, and you would fill out an application that had to do with how the test was being used and what procedures it included, et cetera, and request a unique CPT code. And then that application would go to a committee, and I think it's run by AMA if I'm not mistaken, that then evaluated it and decided, either yes or no, that they would give it a code. And within a couple of years, you'd have a code, and then you would follow that up with efforts with CMS, and et cetera, to get a fee set for that particular code. And so that's why I'm saying it used to be a several-year process to do that. And for the infectious disease applications 10 years ago, people applied, and they added each organism as a code. So HIV viral load got a code, and HPV got a code, and HCV got a code, and a quant had a different code than a qual, and a genotype had a different code than a quant, et cetera. Now, for molecular oncology and molecular genetics, although I have to say, 10 years ago I lobbied against this, but I was overruled, the group decided that they didn't want to have specific codes for specific genes, that they wanted to use procedural codes, things like an extraction or a hybridization or a sequencing reaction, et cetera. So each one of those procedures got a code, and then molecular testing labs were left to stack the codes as they saw fit based on their particular assay format. So what ended up happening is payers, and maybe the total dollars weren't significant enough for them to care at the time, but now as the volume of genomic testing is growing, there's an increasing need to be able to say, well, that hybridization and sequencing and probe and interpretation and et cetera, what was that for? Was that a K-RAS? Was that an oncotype? Was that a, you know, which test does it relate to? So this new effort is really to give unique names to a K-RAS test, to a CF test, et cetera, so that payers and everybody else has greater transparency. So is there, it does sound like a 90s construct for now a much more contemporary pursuit. So, I mean, is there a single CPT code for sequencing a genome? There is, no, there is a code for sequencing, and it's, I think, based on one intron or multiple introns or... That just seems absurd, right? I mean, has anybody taken a step back and just said that this is like fitting a round peg in a square hole or something? This is absolutely not gonna be generalizable to the circumstance we're gonna find here. I think there are many people on the committee who are familiar that this is not gonna work for the future, and I think that's been brought up several times on those calls. Let's have, Deborah, can you add your comment and then we're gonna move on, I think. So one of the issues here is that these stacking codes while they usually don't pay very well for single gene tests, if you actually stack them together, you talk about being able to do a genome for $1,000 or $3,000, you actually can get paid a million dollars for doing a genome. So, I'm sorry to tell the payers that, but... Yes, that's right. And the payers are aware from a practical perspective. So it's gotta be rationalized somehow for genomics. Okay, well, and I wanna add one other thing. Really, I doubt anybody's paying a million dollars because most payers have limits on how many times a recurrent CPT code will be paid. So Paul, Ricker, Kate, and then we're gonna move on to Howard. So two very quick comments and then a question for you. The comments are to go back to those curves. This is really important, I think, for Eric to sort of hear from, as someone who lives in this very translational end of this spectrum, and I'll have the opportunity to talk tomorrow more about this in length, but the x-axis is typically... You'll have 20 minutes tomorrow, not at length. It's 15, correct? Sorry. The x-axis is typically 15 to 20 years and you need to understand that and there's reasons for that that are very important. The second is, your very last slide appropriately showed not just laboratory utility, but the clinical utility piece and it's really hard and we'll come back to that. My question to you, though, is something a lab core, I don't know if they do it or not, but your view of it, how do you feel about the marketing of this? I mean, what's the role of your industry for selling these tests and the promotion of them because sometimes what we've seen, at least in my field, is things being promoted that probably aren't the right ones to promote and that doesn't help us versus things that we actually think work, not getting much promotion because perhaps they're not particularly cost effective for someone. And just your perspective on if that happens, what we do about it. Turn your microphone on please, I speak really into it. Yeah, I don't know if I can speak for marketing, but what I can tell you is that there's no marketing efforts that can achieve what the clinical utility can achieve and there's really no comparison. We're talking about orders of magnitude with any marketing effort versus what that clinical utility professional society endorsement guideline et cetera does. There's just no comparison. So I wanna point out that we're talking a lot about CPT codes but we're not addressing the issue of ICD-9 codes. And so I can tell you as a clinical geneticist the dearth of ICD-9 codes once you make a diagnosis is incredible impediment to getting care for patients. And I think that while it's not totally germane to this conversation that I think as you make additional genomic diagnoses, the lack of having ICD-9 codes even from known genetic diseases really actually makes it very difficult to do even follow NCCN guidelines for screening because we don't have those codes. I just wanna point that out. If I could just quickly respond to that. Of course, we'll be moving to ICD-10 next year, which is one of the reasons that the molecular codes got pushed back a year. That has better specificity but certainly not perfect specificity to address the question that was brought up. But this whole issue of the coding problems has been addressed in a number of publications including Secretary's Advisory Committee report on oversight. It's a huge issue. The ability to actually impact the codes is limited because of who actually maintains the codes. The AMA running CPT, groups like who and CDC are involving in the ICD-9 and 10. And actually having tried to interact in those systems to make these types of points that are being raised here is extraordinarily difficult. So that was a great, really great morning. We look forward to more discussion this afternoon. We're gonna change gears a little bit and sort of interspersed during the meeting will be reports from the current five or six. I can't even keep track. Working groups and Howard Jacob.