(Updates with closing shares in sixth paragraph.)
Aug. 19 (Bloomberg) -- Cigna Corp. will become the first U.S. health insurer to require genetic counseling nationwide before it pays for tests for hereditary breast and ovarian cancer, a move that may threaten sales for Myriad Genetics Inc.
The policy affects tests for the BRCA1 and BRCA2 genes, the most common cause of hereditary breast cancer, as well as genes for hereditary colon cancer and a heart abnormality called long QT syndrome, David Finley, a national medical officer for the Bloomfield, Connecticut-based insurer, said in an Aug. 16 interview. It takes effect Sept. 16.
Cigna’s ruling may cut sales growth for Myriad if other insurers follow suit. The company’s diagnostics helped generate $613.2 million in revenue in the fiscal year ended June 30, and sales are projected to rise 13 percent in fiscal 2014, according to 19 analysts’ estimates compiled by Bloomberg. The BRCA tests, costing as much as $4,000, generated 85 percent of revenue.
Forcing patients in advance to use counselors “is bad for Myriad’s business,” said Ellen Matloff, who heads cancer genetic counseling at the Yale Cancer Center in New Haven, Connecticut, and was a plaintiff in the recent U.S. Supreme Court case that successfully challenged portions of the company’s gene patents.
Counselors may determine that women need other tests not sold by Salt Lake City-based Myriad or that their cancer risk is low and they don’t need BRCA testing, she said.
Myriad fell 1.5 percent to $27.01 at the close in New York. The company’s shares have declined less than 1 percent this year. Cigna rose less than 1 percent to $77.43 and has gained 45 percent this year.
“Too often the wrong family member is tested or the wrong test is ordered, so this program will ensure that individuals receive appropriate testing and support when it’s necessary,” Rebecca Nagy, president of the National Society of Genetic Counselors, said in a statement.
The bad BRCA1 and BRCA2 genes, the most common cause of hereditary breast and ovarian cancer, are present in roughly 1 in 400 women, giving them an elevated risk of the disease.
Bloomberg News reported last year there is a general lack of training and understanding among doctors about complex genetic tests, creating the potential for catastrophic errors that may go undetected for years. A 2010 study done by ARUP Laboratories, a nonprofit lab affiliated with the University of Utah, found that 30 percent of orders for complex gene tests contained mistakes in handling by clinicians.
“There is no evidence that doctors have been over- utilizing BRCA testing for their patients,” Ron Rogers, a Myriad spokesman, wrote in an e-mail. “We look forward to working with Cigna to continue to provide the best possible care for its members.”
All the BRCA tests the company performs for Cigna are done within the health insurer’s general guidelines, he said.
Myriad sent the statement after canceling an interview with an executive. The company decided “not to do any phone interviews on this subject,” Rogers said in his e-mail.
Cigna’s Finley said the policy was put into effect because the breast, colon and heart gene tests “are commonly performed, they have big consequences and they are frequently misunderstood.”
“We want to make sure these tests are being used according to national guidelines, that our customers are receiving good quality care and that we are not paying for tests with no clinical value,” he said.
Some doctors may not follow medical guidelines for testing, may not fully understand the criteria for genetic testing or may accede to patient demands for an unneeded genetic test, Finley said.
Cigna expects to roughly break even on the program, Finley said, as any savings from eliminating inappropriate tests will be mostly offset by higher reimbursement for counseling. The program will affect about 70 percent of the company’s U.S. members, he said. Genetic counseling services are available by phone under the Cigna program.
The biggest U.S. health insurer, UnitedHealth Group Inc., recommends genetic counseling for certain patients, said Tyler Mason, a spokesman for the Minnetonka, Minnesota-based company. He didn’t immediately respond to an e-mail asking whether the carrier might require counseling like Cigna.
Jill Becher, a spokeswoman for Indianapolis-based WellPoint Inc., the second-biggest insurer, said the company doesn’t require a certified genetic counselor.
“Our policy for genetic testing, such as BRCA, indicates that genetic testing is appropriate only when offered in a setting with adequately trained health-care professionals to provide appropriate pre- and post-test counseling,” Becher wrote in an e-mail.
Peter Beitsch, a surgical oncologist in Dallas and president of the American Society of Breast Surgeons, said doctors are educated enough to provide appropriate counseling on the test in straightforward cases.
The policy “is too rigid and will restrict women’s ability to get the testing they need,” Beitsch said in an e-mail.
It’s been a difficult year for Myriad. The company lost its long-standing monopoly in the U.S. on BRCA tests in June when the Supreme Court invalidated key parts of Myriad’s patents on the genes.
In July, Myriad sued Ambry Genetics Corp. and another closely held company that introduced BRCA tests, saying the competing tests violate other Myriad patents. Ambry, in a countersuit filed in August, said Myriad is misusing its patents to “intimidate and chill competition.”
--With assistance from Alex Nussbaum and Meg Tirrell in New York. Editors: Reg Gale, Andrew Pollack