Personalized Genomics, Data-Hoarding, and Drug Companies

How do genetic-testing companies make money?

Posted Jan 14, 2015

Just over a year ago, in November 2013, Scientific American ran an important article about the rise of genetic-testing companies and the risk that they would engage in data-hoarding and, eventually, the sharing of highly sensitive information. At the time, the companies—often small startups with ties to Silicon Valley—had begun marketing low-cost “Personal Genome Service” kits requiring only a small sample of saliva, with the promise that individuals could unlock their genetic traits and ancestry while getting an authoritative glimpse into their associated health risks.

Although the testing companies—including 23andMe, a startup backed by Google—insisted they did not give medical diagnoses and kept personal data far from associated genomic data, Charles Seife warned in Scientific American that drug companies and health insurers would have a vested interest in buying and accessing the vast amounts of data gathered, the former to target individuals directly with pharmaceutical treatments, and the latter quite possibly to deny reimbursement for such treatment. In addition, Seife noted, the testing companies themselves would have a powerful incentive to hoard the data, eventually to make money from it. He quoted Patrick Chung, a board member to 23andMe, as bragging to FastCompany one month earlier, “The long game here is not to make money selling kits. Once you have the data, [the company] does actually become the Google of personalized health care.”

Citing such admissions in his detailed account of why 23andMe initially flunked approval by the FDA, despite months of careful coaching and hundreds of emails offering “statistical advice and … potential risk mitigation strategies” (the FDA’s frank, somewhat exasperated admission), Seife appeared justified in warning: “The Personal Genome Service isn’t primarily intended to be a medical device. It is a mechanism meant to be a front end for a massive information-gathering operation against an unwitting public.” He called the implications of stored and potentially sold data “terrifying,” for reasons worth considering.

23andMe—named after the twenty-three paired volumes comprising each person’s genetic blueprint—set off alarm bells at the FDA after the startup adopted as its marketing tag the breezy, seemingly innocuous assurance, “Know more about your health!” A host of medical and ethical issues accompany the revelation of that information, including not just its accuracy but whether it could be misused and misinterpreted, perhaps generating a false result or implied diagnosis that a client was at risk of early death when the medical basis for such claims remained wholly inconclusive. As Lukas F. Hartmann wrote on, in a chilling account of his own genetic-testing experience, 

Everything went well for a long time. There were no special surprises. I will probably die from a mix of heart attack and prostate cancer; nothing special there. But some weeks [later] there was, suddenly, an unnerving update in my inherited conditions report. I clicked the link and a warning appeared. You have to specifically agree if you want to know the result of potentially unnerving, life changing results. I clicked OK and was forwarded to the result. It said:

Has two mutations linked to limb-girdle muscular dystrophy. A person with two of these mutations typically has limb-girdle muscular dystrophy.

“I had absolutely no idea what the 'technical information' behind the fine print link on the 23andMe result page meant," he added, though a medical diagnosis was strongly implied by the genetic match. “Some people with limb-girdle muscular dystrophy lose the ability to walk and suffer from serious disability,” he learned from a frantic online search for more information, which indicated as well that LGMD can result in early death.

But the focus on sharing genetic information for medical intervention, already fraught and complex, despite the stated benefits of discovery and prevention, turned out to be only half the story. The testing company’s underlying business objective, Seife contended, was “to hoard your personal data” before finding the most profitable ways to use it. He noted, “23andMe reserves the right to use your personal information—including your genome—to inform you about events and to try to sell you products and services.”

The company strenuously insists it would never engage in such selling or marketing without the consent of affected parties. But Seife gives detailed reasons why comparable assurances from Google, the company's backer, about the mere aggregation of client searches without advertising, turned out to be highly misleading. Alongside the risks of the data being hacked, sold, and virtually impossible to delete, there’s the added complexity that genomic information about a close relative gives a fairly comprehensive picture of the genetic make-up of other family members, so revealed or sold information about one person amounts to data about many more.

In hindsight, Scientific American seems right to have sounded the alarm. Two days ago, 23andMe Director of Business Development Emily Drabant Conley announced on Bloomberg that her company had agreed to collaborate with Pfizer—one of several such recent partnerings, she noted, but the only one she was willing to discuss on the record. Her focus was strictly on the plus side of research and disease prevention, including into conditions such as lupus and the possibilities of widespread data-pooling. The idea from the outset, she said, was that 23andMe “would empower people by giving them direct access to their genetic information, and the tools to understand it, and then we would invite those people to help us build a massive database for researchers to accelerate discovery.”

But complete and reliable “tools to understand” such genetic information clearly remain elusive, given the status of medical research into many conditions. And the focus on “empowering people” with their genetic information belies the very real question of what Pfizer and other drug-makers will end up doing with the information and how 23andMe and other testing companies will generate long-term revenue. As Caroline Chen of Bloomberg noted more bluntly, “23andMe Inc., the genetic-testing startup backed by Google, is sharing DNA data on about 650,000 individuals with Pfizer Inc, to help find new targets to treat disease and to design clinical trials. The collaboration with Pfizer is the broadest announced so far in 23andMe’s ambitious plan to become a repository for humanity’s genetic makeup, and to turn data gathered from $99 saliva tests sold to consumers into multimillion-dollar deals with drugmakers.”  Follow me on Twitter @christophlane