Per Lofberg wants to bring genomic medicine to the masses by overcoming one of the field's biggest barriers--getting insurers and other payers to cover the growing numbers of genetic tests reaching the market. To achieve that, he founded Generation Health, a health benefit management company that aims to sift through the data on these tests, which range from those that predict an individual's risk of heart disease or cancer to those that determine how well a patient metabolizes a certain drug. Lofberg's goal is to find the ones that provide the greatest medical utility and economic value.

Earlier this month, the startup, based in Upper Saddle River, NJ, announced a partnership with CVS Caremark, which manages prescription benefits for about 50 million people. Generation Health will analyze 17 drugs that have accompanying diagnostic tests indicating how well the drug would work in an individual, including those for cancer, heart disease, and HIV, and determine which tests CVS should offer to its customers next year. "Now there is the opportunity to bring genetics to all the people CVS Caremark serves, and that is significant," says Raju Kucherlapati, a geneticist at Harvard Medical School in Boston.

A number of genetic tests can influence treatment decisions. For instance, a test might suggest which drug or how much of a drug a patient should take. But only a handful of such tests are commonly used. That's in large part thanks to economics. In an informal poll at a conference on personalized medicine last week at Harvard Medical School, attendees identified "lack of reimbursement" as the major barrier preventing the adoption of personalized medicine. "From the payers perspective, there is overall skepticism of the clinical efficacy and cost-effectiveness," said Jerel Davis, a consultant at McKinsey and Company, speaking at the conference. From the providers perspective, not only will they get no reimbursement for the tests, they might even lose income, because the tests might indicate that some procedures should be avoided, Davis said.

In some cases, tests can reduce costs by reducing prescriptions or procedures that are unlikely to help an individual patient. But they can also increase costs.Sir Michael Rawlins, chairman of the National Institute for Health and Clinical Excellence in the U.K., said at the conference that it's cheaper to give all patients undergoing a specific surgery the blood thinner heparin than it is to do genetic testing to determine who is most at risk of blood clotting. On the other hand, he said, the breast-cancer drug herceptin, which is most effective in patients with a high concentration of a protein called human epidermal growth factor receptor 2, is only cost-effective if physicians can identify the small percentage of patients most likely to benefit from it. This type of testing is now routinely done in breast cancer.

The data needed to decide whether a particular test falls into the latter category is complex, and sometimes controversial. For example, the U.S. Food and Drug Administration changed the label of the blood thinner warfarin in 2007 to note that two specific genetic variations affect a patient's sensitivity to the drug. However, there has been huge disagreement among physicians, insurers, and others over whether genetic testing improves outcomes and is more cost-effective than traditional methods of monitoring warfarin response.