Myriad Rebounds After CMS Reversal on BRACAnalysis Pricing

Shares of Myriad Genetics (Salt Lake City) have continued to rise following last week’s announcement by the Centers for Medicare and Medicaid Services (CMS) that it had reversed its previous cut in payment for the company’s BRACAnalysis test (CPT 81211), increasing the reimbursement rate to $2,184. The new rate is an increase of 52 percent over the $1,483 price announced last November. For an integrated BRACAnalysis test, the price is increased by 37 percent to $2,767. The new reimbursement amounts will take effect for tests ordered after April 1, 2014. As of April 7, Myriad’s stock was trading at $40.87, almost double the stock price on Dec. 30, 2013. In an explanation posted on CMS’s gap-fill inquiries Web page, the agency says the original payment amount announced in November 2013 was based on Medicare contractor Noridian’s price for CPT code 81211 of $1,449.09. “The prices in the November 2013 files were based on information current at that time,” says CMS in its explanation. “We have numerous data from our contractors that test prices at that time ranged from $995 to $2,800. . . . During the two subsequent comment periods in 2014, three Medicare contractors provided additional information that they had received data indicating that the prices for CPT code 81211 ranged from $2,000 to $2,500. Based on the available information . . . we are revising the median price for CPT code 81211.” While the median price is revised to $2,200, applying the negative 0.75 percent update factor results in the new national limitation amount of $2,184. The $1,438 price announced in November was a cut from the previously proposed rate of $2,795. The list price for the test ranges from $3,000 to $4,000. Following the April 1 announcement, several investment banks raised the price target for the stock and upgraded the stock to “Buy” from “Neutral.” Amanda Murphy, an analyst with William Blair (Chicago), says that the CMS decision is a “somewhat surprising move” but notes that single gene test pricing will be under pressure over time given that the industry is moving more toward the use of gene panels, particularly since there is building evidence that there are four or five additional genes that are relevant in hereditary breast cancer. “We believe single-gene pricing pressure will occur over time (not across the whole book all at once) and will become more and more difficult to tease out as Myriad diversifies its revenue base (given addition of Crescendo, impact of new Colaris guidelines, ramp[ing up] of MyRisk, potential private payer contracts for hereditary cancer panels/incremental genes tests, and potential coverage for Prolaris.” Myriad’s stock has been under pressure since last summer, when the Supreme Court ruled that the company could not hold patents on unaltered genes. Following that ruling, a number of labs have launched competing tests, including panels that include assays for the BRCA1 and BRCA2 genes. Among that labs that have launched competing BRCA tests are GeneDx, Ambry Genetics, and Gene by Gene. Myriad Genetics has sued a number of companies over the competing assays, arguing that the testing would infringe patent claims that have not been struck down by the high court decision. Takeaway: Myriad’s stock has rebounded in recent weeks, but the company still faces market pressure from competitors offering BRCA tests.