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DermTech Trying to Drum up Payor Coverage for Melanoma Test With Study Results

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NEW YORK – Armed with the results of a registry study, DermTech is trying to convince more commercial payors to cover the firm's pigmented lesion assay (PLA).

In the study, which DermTech collaborated on with a group of US dermatology offices and providers, the firm demonstrated that physicians alter their diagnostic and treatment procedures after applying its PLA test to detect patients with melanoma. The changes in physician behaviors, the La Jolla, California-based firm believes, may help expand payor coverage of the assay.

In the year-long study, published in the Journal of Drugs and Dermatology last month, researchers processed 3,418 pigmented skin lesions — submitted from 53 US dermatology offices and 90 providers from July 2018 to June 2019 — that were clinically suspicious for melanoma.

According to Brook Brouha, a La Jolla-based dermatologist and pathologist who has used DermTech's PLA since 2017 and is the study's lead author, the researchers wanted to see how real world management of pigmented skin lesions changed by using the PLA gene expression data and to further confirm the rule-out test's negative predictive value (NPV) of 99 percent.

PLA is a noninvasive gene expression test that uses reverse transcriptase PCR to measure Preferentially Expressed Antigen in Melanoma (PRAME) and Long Intergenic Non-Coding RNA 518 (LINC) using an adhesive patch sample collection platform for epidermal RNA. The technology assesses skin cells to distinguish potential melanoma gene expression from benign pigmented skin lesions. 

After marking the lesion with a marker pin on each of the patches, the clinicians send the samples off to DermTech's CLIA-certified, CAP-accredited lab in San Diego. The firm then generates a molecular pathology report on the sample within two to three days.

In the JDD study, out of the 3,418 lesions suspicious for melanoma, the team identified 324 lesions as PLA-positive and 3,092 as PLA-negative. Most lesions evaluated by PLA existed on a patient's trunk, followed by the extremities, and locations in the face, head, and neck areas.

PLA test results were positive if the test detected LINC, PRAME or both targets in the sample. Brouha pointed out that the molecular pathologies corresponded to histopathology findings, and the study authors noted that both targets are often overexpressed in melanoma. 

Of the PLA-positive cases, about 5 percent only had LINC, about 2 percent only had PRAME, and about 2 percent were positive for both mutations.

The team surgically biopsied lesions in about 98 percent of the PLA-positive tissue samples, while it only monitored most PLA-negative cases. PLA-positive cases with detectable levels of both target genes or detectable levels of PRAME were surgically biopsied in all cases, while about 95 percent of LINC-only cases were biopsied. The 5 percent of LINC-only cases not biopsied were instead monitored over time, as the study authors noted tests with the transcript "carry a lower probability of being diagnosed histopathologically as melanomas than with the PRAME transcript."

In addition, the study authors found that there was no significant difference in how board-certified dermatologists (n = 2,146) and other licensed clinicians (n = 1,272) followed the guidance of the PLA based on the "assessment of the proportion of biopsies ordered as follow-up cases for either PLA-positive or PLA-negative specimens."

In short, clinicians chose not to biopsy most PLA-negative samples, but instead monitored them, leading Brouha's team to conclude that most physicians will appropriately follow the test's recommendations.

"There is clear clinical benefit to patients assessed by PLA who avoid surgical biopsy procedures as well as risks of scarring, infection, bleeding, and abnormal wound healing, which may occur in a small subset of patients, but which is magnified by the higher number pigmented lesion biopsies," the study authors noted.

Based on the study's results, DermTech believes that clinicians could use PLA to help avoid costly and invasive tissue biopsies for melanoma.

"On average, the overall cost to adjudicate a pigmented lesion is about $1,000, which incorporates the surgical procedure, complications costs, special staining, as well as costs associated with delays in treatment for melanoma," said DermTech CEO John Dobak, adding the cost could be as high as $1,500.

Since the launch of PLA in 2018, DermTech has scored some payor coverage wins, including a final coverage determination from Palmetto GBA in January. DermTech also has multiple contracts with preferred provider networks, including CareFirst Blue Cross/Blue Shield.

According to Dobak, DermTech's PLA costs $760 per run, which he argued yields up to $240 in cost savings per test compared to the cost of standard detection methods, and reduces potential downstream complications if the clinician initially misdiagnoses the condition.

While DermTech is in discussions with commercial payors to establish coverage, Dobak expects patients who qualify under the US federal financial hardship guidelines to pay a $50 copay per assay out of pocket to get tested with PLA.

The initial plan is to achieve reimbursement from Medicare. In particular, DermTech is targeting Medicare Advantage plans, though Dobak did not explain why. By getting such plans — which are Medicare plans offered by private health plans rather than the federal government — to adopt Medicare policy for the Medicare patients they cover, DermTech aims to integrate the Medicare patient policy with its commercial patient policy.

"We will then need to then go out and speak to other [groups] that aren't [part of] Medicare advantage plans and convince them to give us coverage policy," Dobak explained.

Plans for 2020 and beyond

Dobak said that DermTech is still evaluating whether it will pursue a 510(k) application with the US Food and Drug Administration.  

In addition to using the study's results to obtain coverage policy with commercial payors, DermTech is currently performing a longitudinal study with patients who were initially negative for melanoma. By testing the patients one to two years later with PLA, the team aims to further confirm that its assay has an NPV of 99 percent in a clinical setting.

Brouha emphasized that DermTech needs to follow PLA-negative samples over a longer period to determine how long the lesions stay negative, and whether their change to PLA-positive status happens at a different rate than with other lesion types. 

"We've not looked at what happens to these large groups of negative lesions over time," Brouha said. "The study of the [unclear lesions] is underway, but we don't have [clear data] on it, so I’m not willing to say to patients 'Hey, don't ever worry about this lesion again.'"

DermTech is also exploring the possibility of developing diagnostic products for tracking mutations linked to non-melanoma skin cancers — such as squamous cell and basal cell skin cancer —and assays to diagnose individuals who are at high risk for skin cancer.

Dobak said that DermTech is partnering with pharmaceutical firms such as Biogen, Incyte, and AbbVie, who deploy PLA in their clinical trials to assess changes in biomarkers consistent with treatment response, as well as to identify responder populations for inflammatory diseases.

"[PLA has] been deployed in Phase I through Phase III programs in studies ranging from a few dozen patients to several hundred patients," Dobak explained. "Disease types include atopic dermatitis, psoriasis, lupus, vitiligo, and other [conditions]."

In addition, DermTech expects to scale up its commercial efforts with additional sales managers, marketing, and patient outreach, through funds from a completed $65 million private placement round earlier this week. The firm will also use the funding to scale its commercial laboratory and develop its product pipeline.