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ASCO '14: Foundation Medicine Builds Case for Insurance Coverage

CHICAGO ( TheStreet) -- Foundation Medicine (FMI - Get Report) released the results of its decision analytics study earlier Saturday morning at the American Society of Clinical Oncology (ASCO) annual meeting, demonstrating 27.3% of doctors altered their prescriptions based on a FoundationOne diagnostic test. The study examined 132 patients with refractory, advance metastatic disease, where over half of the patients had tumors in the lung, breast, or colon. In addition, the effects were not isolated to one tumor type in that each of those three major groups saw the rate of switching over 20%.

Why does this matter?

As I noted last week, one of the keys challenges for Foundation Medicine going forward is gaining insurance reimbursement for the its cancer diagnostic test. Insurance companies will pay for Foundation's test if they determine there is clinical utility. An insurance company is simply not going pay for a diagnostic that does not either improve patient outcomes, physician decision making, or both.

Unlike a clinal trial that can have a relatively clear hurdle, there is not a predefined set of study outcomes that will convince payers to pay for a FoundationOne test. The company needs to compile results over time showing its diagnostic tests can positively affect the course of cancer treatments. Saturday's results were a good first step, but more studies will be needed.

Foundation Medicine also released new findings for pediatric cancers and adolescent/young adult patients on Monday.

Sobek is long Foundation Medicine.

David Sobek has been writing on biotech for a number of years through various outlets with a general focus on small cap oncology and antibiotics companies. He received his PhD in political science from Pennsylvnia State Univeristy in 2003 and a BA in international relations from The College of William and Mary in 1997.

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