What are companion diagnostics (CDx)?
A companion diagnostic (CDx) is a medical test, often an in vitro diagnostic (IVD), that provides information essential for the safe and effective use of a specific drug or biologic. Companion diagnostics identify patients who are most likely to benefit from a therapy, those at increased risk of adverse reactions, or those for whom the drug is unlikely to be effective.
In labeling a therapeutic product, the FDA will typically define a companion diagnostic as required testing. In most cases, a drug and its companion diagnostic are developed and approved together.
How are companion diagnostics used?
CDx play a critical role in precision medicine, linking diagnostic testing to targeted therapies. As personalized treatment strategies expand—particularly in oncology, rare disease, and immunology—companion diagnostics increasingly influence regulatory approval, coverage decisions, reimbursement, and patient access.
Companion diagnostics are designed to guide treatment decisions at the point of care. Common use cases include:
- Identifying patients with a specific biomarker or genetic mutation
- Predicting response or non-response to a therapy
- Assessing risk of serious adverse events
- Selecting appropriate dose or treatment pathway
CDx tests are most commonly associated with oncology, but their use is expanding into rare disease, neurology, cardiology, and autoimmune conditions.
How are companion diagnostics regulated?
In the U.S., companion diagnostics are regulated by the FDA’s Center for Devices and Radiological Health (CDRH). They are typically classified as Class III medical devices, requiring premarket approval.
CDx approval is often coordinated with the drug’s approval timeline, and changes to the drug label may require updates to the diagnostic test. Post-market surveillance applies to both the drug and the CDx. Global markets may apply different regulatory frameworks, adding complexity for manufacturers launching therapies internationally.
How do companion diagnostics impact market access for new therapies?
Payers evaluate both the drug and the diagnostic when making coverage decisions. Even if a therapy is covered, lack of coverage for the associated CDx test can create a significant access barrier. Coverage considerations often include:
- Clinical utility and evidence strength
- Alignment with FDA labeling
- Test setting (hospital, lab, physician office)
- Coding, billing, and reimbursement pathways
Payers can also be skeptical about new developments in CDx, such as liquid biopsy testing, which can limit patient access (see our research into restrictive testing coverage in the non-small cell lung cancer space).
How do companion diagnostics impact formulary decisions?
For targeted therapies, payers may condition coverage on documented test results from an approved CDx test. This can include:
- Prior authorization requirements
- Step therapy tied to biomarker status
- Restrictions to specific labs or testing platforms
As a result, companion diagnostics often shape utilization management criteria as much as clinical guidelines do.
