On November 5, 2024, Exact Sciences held its 3rd quarter earnings call. This generated news because of a downgrade in expected revenue, at one point, share price was down 30%. E.g. here.
The earnings call (9300 words long) also includes multiple snapshots that are like a class in CMS lab test pricing. In the transcript, Exact discusses CLDT (crosswalk) pricing, ADLT pricing, and the lower cost of goods for Cologuard Plus.
(Transcript here at NASDAQ).
Crosswalk Process
Exact Sciences very recently got FDA approval for Cologuard Plus, a new version of its stool test incorporating nucleic acid analysis. In the summer public comment meeting for new codes, Exact asked that it be priced at 1.25X the current price (that is, a crosswalk of 1.25X). In its September proposed prices for comment, CMS offered a 1.0X crosswalk.
(There was a public comment period from September 25 - October 25.)
(CMS offers fractional crosswalks, like 1.25, quite rarely. One code got the fraction 0.5, in Fall 2023.)
The transcript mentions Medicare about 12 times. Exact notes, "Next, we plan to establish a higher price through an available Medicare pathway before launching the test with Medicare coverage and guideline inclusion."
Pivot to ADLT Discussion
There was a question regarding pricing: "Can you just kind of remind us of the pricing strategy for 2.0, sounds like ADLT will be the focus, given the clinical at schedule, I think the interim update didn't go your way. So can you let us know kind of what price you look to seek with ADLT status? You talked about it, it will apply to Medicare?"
The response includes:
In terms of how we intend to price that, we are still before Medicare with a clinical lab fee schedule process that plays out before the end of the year. And we remain -- we continue to engage with CMS on getting a clinical -- the CDLT process to seek a price increase.
But if not, then we will go the ADLT path, and the ADLT path is just a slightly longer path. We get there's a benefit that you probably start with the higher price than the CDLT path. The process then takes a couple of years to transition from Cologuard to Cologuard Plus. The patients who have access to Cologuard Plus will get Cologuard Plus.
And over time, we will start with the Medicare patients and then move into the commercial and then Medicaid patients. That process probably takes 12 to 24 months to play out. Obviously, there are a lot of benefits for payers and their members to have access to Cologuard Plus, including the performance. And also the price -- the cost makeup of Cologuard Plus is lower.
In response to a follow up question about ADLT, Exact notes,
In terms of the mechanics, yeah, you have that essentially right that you have a list price, you pick that list price. You get paid, find [by?] Medicare for that list price. [ADLT] And then at the end of a period, it reverts to the median of the commercial rate if there's commercial rates that are -- where there are claims that have been processed. And you can dig into how the mechanics of the ADLT process works.
That's the essence of it. And then you get that price for 2 years, and then it readjusts and every year after that. So you do have the ability to control that price, and you get paid on the Medicare claims. Initially be the Medicare fee-for-service claims over time as you get commercial contracts or your commercial contracts that exist, cover Cologuard Plus.
