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Natera Says Bet on Average-Risk Pregnancies Paying Off as It Faces Changing Reimbursement Landscape

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NEW YORK (GenomeWeb) – Natera said its focus on penetrating the average-risk pregnancy market with its noninvasive prenatal test is paying off as its test volumes for both average- and high-risk patients both grew in the first quarter of 2016. 

In addition, the company has made progress on the reimbursement front, signing agreements to become an in-network provider for United Healthcare, Aetna, Cigna, and HealthNet, as well as some Anthem plans and some state Blue Cross Blue Shield plans. Nonetheless, some payors do not reimburse on tests for average-risk pregnancies, and the firm expects that reimbursement will decline for microdeletion testing, Natera management said during a conference call this week discussing its first quarter results.

Natera currently has around 175 million lives covered under commercial contract through its direct sales channel, about 75 million of which include average-risk pregnancies.

"We've seen a steady growth of incremental addition to payor policies," Natera CEO Matt Rabinowitz said on the call. "We're very comfortable with the bet we made on growing the average-risk market."

Natera's recent payor contracts to become an in-network provider have helped increase the number of noninvasive prenatal and carrier screening tests it sells, as well as the percentage of tests that are reimbursed, but it also has resulted in a lower overall per-test rate, the company said this week. As such, it is looking to continue to reduce the cost of its tests, focus on profitable tests and accounts, and to cross-sell its three reproductive health tests — the Panorama NIPT, its prenatal microdeletion panel, and the Horizon carrier screening test.

One particularly fruitful strategy has been the ability sell all three tests at once, Rabinowitz said, with a single blood draw and requisition form. In fact, he said, when physicians order the NIPT test through Natera's direct sales channel, about 75 percent of the time they also order microdeletion testing.

In addition, Natera is working to decrease the costs of goods sold to make up for the pricing pressures of going in-network and moving into the average-risk pregnancy market. Currently, COGS for its Panorama NIPT are around $300, and the firm said that through changes to lab processes as well as reducing the number of samples that have to be resequenced, it is aiming to reduce its COGS toward the $200 price point range over the next few years.

Ultimately, Chapman said, the company anticipates that payors will reimburse NIPT for average-risk pregnancies somewhere in the $400 range. "We have a good sense of where the market will converge," he said, and so the company is trying to reduce its COGS to accommodate for that lower per-test reimbursement.

In January, Natera initiated a strategy to increase orders from the most profitable accounts and to de-emphasize accounts that were unlikely to be profitable in the future.

Steve Chapman, Natera's vice president of commercial operations, said that this initiative has revealed some interesting trends. Notably, he said, carrier screening orders are shifting from just cystic fibrosis testing to broader panels. Natera's Horizon carrier screening panel sequences the full genes of 274 genes. In contrast, microdeletion orders are shifting from broader panels to testing for the 22q11.2 deletion (DiGeorge syndrome) only.

While reimbursement for NIPT has been increasing, reimbursement for microdeletion testing has been declining, Rabinowitz said. In addition, he said, Natera expects further reduction in microdeletion reimbursement throughout the year.

However, Rabinowitz said that the company's SMART trial, a multi-center prospective observational study designed to track birth outcomes of 10,000 women who receive the Panorama NIPT for aneuploidy and DiGeorge syndrome screening, as well as the recent issuance of a CPT code specific for DiGeorge syndrome screening, would present "a strong case for microdeletion testing" and act as the "foundation for stable reimbursement of microdeletion panels" over the longer term.

Reimbursement for NIPT performed for average-risk pregnancies is a mixed bag, although Rabinowitz said that, increasingly, payors are covering it. In the first quarter, the company said that it received payment for around 49,000 tests, and the majority of those that were denied payment were NIPT for average-risk pregnancies. Nonetheless, the company said that just over 35 percent of its covered lives are under policies that include average-risk pregnancies.

Aside from focusing on its prenatal health business, Natera is also investing in technology development and clinical trials to commercialize products in the oncology space, which Rosenman said represents an opportunity between three and five times greater than the $4 billion prenatal health market.

The company is collaborating with researchers from Columbia University, Cancer Research UK, Stanford University, and Vanderbilt, and Rabinowitz said it would announce additional collaborations this year.

Researchers from CRUK presented initial data from Natera's TRACERx lung cancer study at the American Association for Cancer Research meeting in New Orleans last month. Rabinowitz said that those data showed that its circulating tumor DNA technology could detect stage 1 squamous cell carcinoma lung cancer, as well as sub-clonal mutation with sensitivities as low as .01 percent. He added that the firm is continuing to optimize the technology and its performance and is "on track to deliver additional data on multiple indications" this year.