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Why 23andMe Terrifies Health Insurance Companies

The FDA's threat to the Google-funded makers of a $99 genetic test is a victory for insurance companies concerned about their business model.

The FDA dealt a blow to 23AndMe Monday morning, ordering the makers of a $99 DNA test to halt marketing of the product. And at least one interest group watched eagerly from the front row: health insurance companies. 23andMe’s tests, designed to tell people if they're at risk for certain health conditions, could lead to an increase in care--necessary or not--which insurers could end up covering.

Here's a hypothetical. Say 23andMe's results indicate a 30-year-old client has the three most common BRCA1 and 2 gene mutations that 23andMe tests for, suggesting high risk for breast cancer. That person might book an appointment with a doctor, an appointment she might never had made without the DNA results. The physician might recommend a mammogram, a test a thirtysomething would not normally get. In more extreme cases, such as the much-talked about case involving actress Angelina Jolie, someone with particularly alarming results might decide to get a preventative mastectomy. Insurance companies are concerned that they'll end up paying for every step.

At the same time, health insurers can’t increase premiums for these potentially expensive customers because of the Genetic Information Nondiscrimination Act (GINA), a law that makes it illegal to do just that. The logic goes: People don’t get to pick their genes, so it’s unfair to penalize them for the unfortunate bad luck of having a predisposition to Alzheimer’s.

GINA does not, however, extend to long-term-care insurance. Some states ban discriminatory use of genetic information in all areas, but there's no federal law. "A company can use your genetic information as part of their decision in your coverage," Jennifer Wagner, a lawyer who works out of the University of Pennsylvania's Center for the Integration of Genetic Healthcare Technologies (and a 23andMe customer), told Fast Company for our November cover story. But would you be required to disclose results of a genetic test? Or even that you've been tested? It's not hard to imagine people getting their 23andMe results back, finding out their likely to get, say, Alzheimer's, and then rushing out to buy a long-term-care policy. If too many people did that, there would be no business model for long-term-care insurance companies who'd end up covering care for a skyrocketing percentage of customers.

In practice, it’s unclear exactly how these preventative procedures would fit into the insurance landscape. “Physicians have told us that the biggest problem with 23andMe is that we generate non-billable questions,” Wojcicki said at Fast Company's recent Innovation Uncensored event in San Francisco. Meaning, at this early stage, providers don’t know how to bill for preventative care based on genetic tests. “If a patient goes to their doctor and says 'I'm at high risk for a blood clot, what do I do?' the doctor will say, 'Come back to me when you have a blood clot,'” Wojcicki added.

The fact that health insurers can’t factor these expenses into their plans makes them uneasy. “What these executives make clear is they are a business, and if consumers of their business have information that they [themselves] do not have in order to practice their underwriting, they cannot function,” Dr. Robert Green, a medical geneticist and genomics researcher at Harvard Medical School told Fast Company for our November cover story. Insurance, after all, is economics, and economics doesn’t do well with uncertainties.

Since 23andMe has made genetic information more accessible to the general public, health insurer concerns about the costs of gene-based care have risen. In 2012, UnitedHealth put out a report “about the accuracy and affordability of the tests.” Inaccuracies, a concern also cited by the FDA, might lead people to seek unnecessary (and costly) care.

Of course, those fears don’t include the situations in which preventative procedures lead to healthier people with lower overall health expenses. Insurance companies should like that since, in theory, sick people generally cost money. But, as Wojcicki explains in the video above, insurers don’t always think in terms of qualitative outcomes, but economics. “The system around you is not necessarily aligned with your incentives.”

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60 Comments

  • acgirotto

    I've had my dna testing through 23andme and I was so happy with the amount of information they provided to me that I had my entire family tested. I got in under the wire so I received the health risk portion of my test. It very clearly states the average risk of getting a particular disease and then your risk...sometimes it's higher, sometimes it's lower and sometimes it's the same.

    The FDA must be kidding me. There are a number of other companies you can run your raw data from 23andme through and get the same health information that 23andme used to provide. Epic fail FDA.

    I tested positive for some mutations when I was pregnant with my daughter 10 years ago through a perinatalogist ($$$$) and I tested positive for them again through 23andme ($). I have no reason to suspect that any of the information they provided to me is wrong, but if I did, I would just run it through a different genome testing site to compare it. It's by far the best $99 I've ever spent.

  • acgirotto

    I've had my dna testing through 23andme and I was so happy with the amount of information they provided to me that I had my entire family tested. I got in under the wire so I received the health risk portion of my test. It very clearly states the average risk of getting a particular disease and then your risk...sometimes it's higher, sometimes it's lower and sometimes it's the same.

    The FDA must be kidding me. There are a number of other companies you can run your raw data from 23andme through and get the same health information that 23andme used to provide. Epic fail FDA.

    I tested positive for some mutations when I was pregnant with my daughter 10 years ago through a perinatalogist ($$$$) and I tested positive for them again through 23andme ($). I have no reason to suspect that any of the information they provided to me is wrong, but if I did, I would just run it through a different genome testing site to compare it. It's by far the best $99 I've ever spent.

  • 23&Me needs to move outside the US, outside the jurisdiction of stupidity.

    If they went to Canada, Mexico or other places they could do their business cheaper and without interference. There is no law preventing a person from sending a company a DNA swab and since the company does not send DNA genetic material back.... it is both safe and legal.

    If the you cannot do business inside the US, you can always do business with American residents irregardless of the US Government. We are not North Korea... yet.

  • Paul Hosse

    I purchased the 23 & Me test. I found the medical results interesting, but additional testing showed that most of the genetic results were wrong. On the genealogy side, the results were equally inaccurate based on known history and test results through another company and by distant cousins.

  • James@ swift-codes.org

    I am a 22 and I am customer. I paid for the test myself and by free will.
    It´s great. It democratizes health care and empowers the people. Bloody
    bureaucrats and big corporate protectors wake up is all I can say!

  • rwb

    I am a 23andme customer. I paid for the test myself and by free will. It´s great. It democratizes health care and empowers the people. Bloody bureaucrats and big corporate protectors wake up is all I can say!

  • breemy

    The problem here is that the company is selling a direct to consumer genetic test which has a high likelihood of being inaccurate and which may create extreme confusion among those who have the test performed. I'm all for empowering the public, but you can't sell a $99 genetic test and expect patients to interpret the results on their own. When the co-founder states that the biggest problem they've had is that they "create non-billable questions for physicians," she is exhibiting a level of either arrogance or ignorance which is bordering on criminal. The fact of the matter is that broad genetic screening for multiple diseases in the general population is just not yet ready for wide dissemination. Genetic screening should be performed in individuals for specific diseases, only if the risk for the disease that individual is significant and only after the individual has had appropriate counseling regarding how to interpret the result and how the result may affect them/their offspring, etc... The FDA is taking appropriate action here to limit the activities of a company which is selling snake oil. This is far from a big industry conspiracy.

  • bigBlueMango

    Insurance companies, if they were a person, are idiots. It seems logical that preventing something, disease or otherwise, is less expensive than treating something. Is the insurance business filled with mediocre thinkers and economists?

  • Waqas

    So instead of senseless bashing of DTC testing take the facts strait and balanced for the next time.

  • karlj324

    I have a right to know....It's my body..my health..Give me the information...let me ask the questions..let me decide..why is it that just a few(doctors, lawyesr, insurance companies0 get to decide my faith?

  • CommentsFrom92649

    It seems to me that 23andme should call upon the US House and Senate to sponsor legislation modifying the Food Drug and Cosmetic Act to permit for non-diagnostic genetic testing. This situation is analogous to the Dietary Supplement Health and Education Act of 1994(DSHEA). DSHEA wisely permitted dietary supplement manufacturers and distributors to make certain approved claims. Furthermore, those claims must be disclaimed by adding the following disclosure. "This information has not been reviewed by the FDA, this product should not be used to cure, prevent or mitigate disease." Finally, dietary supplements products have to specify that they are indeed DIETARY SUPPLEMENTs rather than approved drugs, by disclosing that name on the label. People aren't stupid. The testing and resulting information is useful but not diagnostic, therefore as long as the testing is reasonably distinguishable from validated genetic testing services, and properly disclaimed, FDA should permit the services to continue. FDA always seems to start from the point-of-view that consumers are too dumb to live. For that I fault them, but 23andme appears to have blown off FDA's attempts to help them define a new "non-diagnostic" genetic testing category. As a company, they may not live to regret that, even with google funnelling money into it. Didn't the article say it Sergey Brin's ex-wife?

  • randomgirl7

    Preventative health actually saves more money for the insurance companies then major health issues later where they hit the ER. Also... more people LIVE.

  • J. E. Browne

    It doesn't actually rise to the term of ''preventive healthcare". It's more along the lines of informational usage. Nothing listed there is a 100% guarantee, DNA is subject to environmental conditions i.e. chemical changes, foods or drugs ingested, poisons or toxins, even exercise and health living choices. The results are guidelines NOT a diagnosis.

  • Franc Jasig

    This article is wrong at just about every level. Insurance companies love preventative care, do you have any idea how much cheaper a mammogram and a mastectomy are compared to treating breast cancer? GINA and HIPAA not only prevent insurance companies from increasing rates based on genetic info (a good thing) the law also prevent companies from using that information to improve care coordination and do things like send out reminders to get a test.

    I also don't understand why physicians would have a problem with billing. If someone came into a physician's office and said that they are prone to blood clots the you would preform any number of the cardiovascular tests that check if a person is actually at risk of a heart attack, all billable tests.

    The FDA, the real enemy here, is simply flexing their regulatory muscle, even though they do not have statutory authority to regulate DNA tests. Why don't you write a useful article on how the FDA is a major barrier to healthcare innovation instead of creating a silly argument against insurance companies.

  • Rhuidean

    'Flexing their regulatory muscle' is what they do when they ensure that drugs actually work and don't cause horrifying side-effects before being sent to market. Their letter to 23andMe was very polite, pointed out the issues and mentioned that several letters had been sent to the company in the past.

    We currently have no proof that 23andMe actually works. Auditing by a government department to ensure that people aren't being conned by snake-oil salesmen prevents people from being mislead about their health. What exactly is so onerous about responding to the FDA anyway? It's not as if 23andMe is a tiny, poor company just trying to get by. They can afford to comply with the FDA, unless, of course, what they're selling doesn't actually work.

  • Anthony James

    concern also cited by the FDA, might lead people to seek unnecessary (and costly) care.

  • J. E. Browne

    How can people demand their tests or surgery? Can you imagine walking into a hospital and telling them you want your prostate removed because you took an online test that said you MAY have a gene that says you MIGHT have tested positive in three out of 4 studies where OTHER PEOPLE with the same gene got prostate cancer? That's crazy. No doctor in his/her right mind would order surgery based on such sketchy info. But they might order more tests...

  • Charles

    At your written request we will close your account. As a result, all Genetic Information will be removed from the account and will no longer be accessible. 23andMe will not use your Genetic Information in new research that starts thirty (30) days or more after account closure...

  • Charles

    Has anyone ever considered the threats posed if everyday people could actually get a real leg-up on their personal health and the ultimate prolonging of their longevity with intimate and accurate details of their genes? HOLY SH!T, man.