Case | HBS Case Collection | November 2012 (Revised January 2013)

Companion Diagnostics: Uncertainties for Approval and Reimbursement

by Richard G. Hamermesh, Norman C. Selby and Phillip Andrews

Abstract

The FDA approvals of novel therapeutics were seen as signs in the personalized medicine community of real progress in the growth of personalized medicine. The FDA's approval of such drugs, along with companion diagnostics, suggested a shift in thinking and regulatory practices at the agency. Beyond the regulatory questions, many considered the reimbursement system archaic, dispersed, unpredictable, and unnecessarily time consuming. Many questioned whether the traditional models of reimbursement were relevant in the era of personalized medicine, and who should be covering the cost of tests needed to identify the sometimes small number of patients who could benefit from expensive targeted drugs. This case focuses on the array of possibilities and the ambiguity surrounding these regulatory and reimbursement issues.

Keywords: models of reimbursement; personalized medicine; regulation; healthcare reform; Health Care and Treatment; Health Industry; United States;

Citation:

Hamermesh, Richard G., Norman C. Selby, and Phillip Andrews. "Companion Diagnostics: Uncertainties for Approval and Reimbursement." Harvard Business School Case 813-037, November 2012. (Revised January 2013.)