Spending on genetic tests has reached $5 billion annually and could top $25 billion within a decade, according to an insurance industry study published Monday.
The rise in spending is likely to intensify the debate over genetic testing as policymakers and employers struggle to contain spiraling healthcare costs.
The growing availability of genetic and molecular diagnostic tests offers the promise of earlier detection of disease and more personalized treatments that could wring substantial savings from the nation’s $2.6 trillion-a-year healthcare tab.
But many medical providers and other experts worry that those benefits may be outweighed by indiscriminate use of genetic testing, similar to what has occurred with some spending on popular prescription drugs and expensive imaging tests.
The research arm of UnitedHealth Group Inc., the nation’s largest insurer with 34 million members, conducted the study as well as a survey of physicians and patients on their attitudes toward genetic testing. Researchers and patient advocates have not only raised questions about costs but also expressed ethical and legal concerns about how genetic test results are used by families, insurance companies and physicians.
The study estimates the nation spent about $5 billion on these tests in 2010, and it projects spending to reach $15 billion to $25 billion by 2021.
“We are now in the era of truly personalized care,” said Reed Tuckson, chief of medical affairs at UnitedHealth. “However, this also poses significant challenges to a system that is increasingly unaffordable.”
The Minnetonka, Minn., company estimated its members in private plans, Medicare and Medicaid spent $483 million on genetic tests in 2010 with 40% related to infectious diseases, 16% for cancer and the rest for inherited disorders and other conditions.
Average annual spending on genetic tests for UnitedHealth members increased 15% from 2008 to 2010, driven by higher utilization. Much of the current spending is focused on women because of the wide array of tests available for breast and ovarian cancers as well as prenatal genetic testing.
In a Harris Interactive survey of 1,254 physicians included in the report, 56% said new genetic tests will drive up overall healthcare spending, compared with only 19% who thought they will lower costs from improved care. Seventy-four percent of doctors said there are patients in their practice who would benefit from a genetic test.
More than half the 1,506 consumers surveyed by UnitedHealth were concerned about their physician’s ability to know when a genetic test is needed and interpret it, the confidentiality of test results and about possible discrimination. In 2008, the federal Genetic Information Nondiscrimination Act strengthened consumer protections regarding genetic information as it relates to people’s employers and health coverage.
Rapid advances in genetic testing have made it applicable for more people and decreased the average price. Genetic testing is currently available for about 1,800 conditions and three to five new tests become available monthly, the study found.
Tom Bologna, chief executive of Response Genetics Inc. in Los Angeles, said his company is working on molecular diagnostic tests that help determine the appropriate drug therapy for cancer patients.
“These can be $100,000 treatments, and for a few thousand dollars we can identify those patients where the drug has real value,” Bologna said. “This has all changed very quickly.”
The rise of genetic testing has been a boon to many California companies. The San Francisco Bay Area, Los Angeles and San Diego ranked among the top seven industry clusters nationwide for life sciences work, according to a report last year on medical employment, research and funding by Jones Lang LaSalle.