The Food and Drug Administration (FDA) has granted approval for Exact Sciences’ Cologuard Plus, an upgraded version of its existing stool-based test for colorectal cancer detection. The company announced that the new test, which boasts higher specificity than its predecessor, is expected to be launched with Medicare coverage and guideline inclusion by 2025. Although Exact Sciences recently did not secure a Medicare price premium for Cologuard Plus, analysts from Leerink Partners and William Blair are optimistic about its future pricing prospects.
Cologuard Plus is designed to offer a non-invasive method for colorectal cancer screening with enhanced accuracy. According to Leerink analysts, the new test proposes a sensitivity of 95% and a specificity of 94%. This represents a significant improvement compared to the older version of the test, which had 87% specificity. This increase in specificity essentially leads to a decrease in false positives, which is particularly beneficial to healthcare providers managing patient care.
Despite these impressive statistics, a study by The New England Journal of Medicine in March reported slightly different figures, with 94% sensitivity and 91% specificity. However, Leerink analysts explained that the discrepancies in these figures are due to the different populations covered in the study compared to those the new test targets.
The FDA approval of Cologuard Plus has been viewed favorably, especially as it allows Exact Sciences to leverage its established commercial organization and technological capabilities to enhance the launch. William Blair analysts described the approval as a procedural win, enabling the continuation of efforts to receive a higher pricing premium while preparing for market release.
Nevertheless, the pursuit of a premium price faced a setback when the Centers for Medicare and Medicaid Services (CMS), in September, recommended that the price of the current Cologuard test be applied to Cologuard Plus without the desired 25% increase. This decision could potentially change following public comments and further evaluations by the CMS.
Although this pricing decision did not favor Exact Sciences at this stage, there is still potential for the company to achieve a higher price in future evaluations or through the advanced diagnostic laboratory test pathway. This optimistic outlook is shared by William Blair analysts, who foresee a modest pricing increase to be realized over the following years, albeit with minimal impact anticipated for 2025.
Economically, Cologuard Plus is expected to benefit Exact Sciences even without the premium price initially sought. By driving down the cost of goods sold by 5% to 7%, the product will aid the company in improving its profit margins as it transitions clients to the more efficient test. Furthermore, the enhanced specificity and sensitivity of Cologuard Plus could provide a competitive edge, improving the company’s market share amid increased competition from new entries such as Guardant Health’s blood test and Geneoscopy’s test developed in partnership with Labcorp. The new offerings are coming into a market where another contender, Freenome, faced underwhelming responses to its blood test data earlier in the year.
In summary, the FDA approval of Exact Sciences’ Cologuard Plus marks a significant advancement in the options available for non-invasive colorectal cancer testing. With superior specificity and sensitivity, the test promises to reduce false positives and provide reliable diagnostics, benefiting both healthcare providers and patients. Despite early setbacks in achieving a desired premium price, there is confidence among experts that Exact Sciences will secure advantageous pricing adjustments in the future, bolstering its financial performance and competitiveness in a rapidly evolving diagnostic market.
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