OptumInsight Study Describes Cost Savings of DermTech’s Pigmented Lesion Assay in the Management of Melanoma

DermTech, Inc. (NASDAQ: DMTK) (“DermTech”), a leader in precision dermatology enabled by a non-invasive skin genomics platform, announced today the topline results from its second economic study of the Pigmented Lesion Assay (“PLA”), a non-invasive genomic test that enhances early melanoma detection. The PLA increases detection of lesions at high risk for melanoma while reducing unnecessary surgical procedures relative to the existing diagnostic pathway of visual assessment and histopathology (“VAH”). OptumInsight (“Optum”) developed an actuarial model to evaluate the economic impact of inserting the PLA into the VAH pathway for pigmented skin lesions clinically suspicious of melanoma.

Using a health plan population of 10 million commercial covered lives, the findings suggest that inserting the PLA into the VAH pathway can produce aggregate savings of between $56.6 million, or $0.54 per member per month, to $81.3 million, or $0.77 per member per month, over a three year period when compared to the VAH pathway alone, assuming the Medicare reimbursed rate for the PLA of $760. This aggregate savings varies according to use in a primary care or dermatology office setting. The plan’s present value net neutral costs for using the PLA after three years of tracking the population within the plan is between $1,196 and $1,386, also according to whether the PLA is ordered in a primary care or dermatology office setting. These net neutral costs of $1,196 and $1,386 for the PLA at year three are 36% to 45% higher than the Medicare reimbursed amount for the PLA.

The actuarial model looked at over 27 million commercial claims from 2019 and analyzed the care and management of patients with pigmented lesions suspicious of melanoma. It estimated the costs saved by identifying melanoma at an earlier stage, reduction in volume and spend associated with avoidable biopsies of benign lesions, and the incidence rate and costs of additional surgical procedures following a negative or inconclusive biopsy.

The Optum actuarial model found that the average costs of treating advanced melanoma exceed $150 thousand dollars per patient per year and that some of these costs can be avoided by identifying and treating melanoma at earlier stages. Additional key findings from the actuarial model are: 95.7% of biopsies performed are benign, in 14.9% of these benign cases an additional surgical procedure is performed. As the model was built by reviewing claims data within each calendar year, there is support, based on prior published literature, that the additional surgical procedures on benign biopsies may be higher than found in the patients studied.