NEW YORK (GenomeWeb) – United Healthcare has included coverage of fecal DNA testing for colorectal cancer in its latest Coverage Determination Guideline, making it the final big US insurer to cover Exact Sciences' Cologuard, according to analysts who cover the firm.
The decision marks a reversal for United Healthcare, which had recently declined to cover Cologuard, citing insufficient evidence to show that fecal DNA tests accurately screen for colorectal cancer in asymptomatic, average-risk patients.
Effective July 1, United Healthcare will cover fecal DNA testing for patients 50 to 75 years old once every three years. The insurer became the latest to cover Cologuard. In late March, Aetna issued updated its colorectal cancer screening policy to note that it now considers Exact Sciences' Cologuard screening test a "medically necessary preventive service" every three years for average-risk patients 50 and older. Aetna also considers colorectal cancer screening medically necessary for African Americans starting at 45.
Among the other major payors to have previously included Cologuard in their coverage guidelines are Cigna, Humana, and Tricare.
According to Cowen analyst Doug Schenkel, with the United Healthcare coverage, Exact Sciences should have around 95 percent of lives covered heading into 2018.
"It usually takes [six to]12 months for a coverage decision to be contracted in network," Schenkel wrote. "That being said, getting a positive coverage decision from the largest US commercial payor and the last major holdout is a clear positive and should address any lingering concerns/arguments about the company's ability to gain what is considered 'full coverage' heading into 2018."
Canaccord Genuity analyst Mark Massaro added in a note this morning that he estimates United Healthcare will add around 30 million covered lives for Cologuard, bringing the total number of lives covered to approximately 227 million.
Brian Weinstein of investment bank William Blair wrote that "by the middle of 2018 most payers should be contracted at, or above, the current [Medicare] rate of $510. We maintain that [Exact Sciences] management has no incentive or requirement to drop its price below the level paid by the largest payer in the country and as a result, we suspect this rate will hold for United and everyone else."
In Wednesday morning trade on the Nasdaq, shares of Exact Sciences were up around 10 percent at $36.02.
The firm's stock has rebounded from a hit it took in mid-May, after short seller Citron Research put out a report saying Cologuard was "a seriously inferior product," and questioned Exact Sciences' business model. Citron also cited United Healthcare's earlier decision not to cover the test as further proof of its thesis.