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.

Enter Generation Health. “This is a rapidly growing field that is largely disorganized from a payer perspective,” says Lofberg. He compares his company’s approach to that of a pharmacy benefit manager, which largely took over the prescription business 15 years ago, negotiating cheaper drug prices and developing tools to reduce medication errors and inappropriate prescriptions from physicians. The company will use data from research studies and insurance claims to create models for how to put the tests into use, and then offer those services to payers, such as CVS Caremark, insurers, and employers.

Taken together, CVS Caremark and the two other behemoths in the pharmacy benefits field, Express Scripts and Medco Health Solutions, cover about three-quarters of the nation’s prescription market. They face such tight competition that they are continually looking for new services, such as access to genetic testing. Medco has already waded into this territory, funding studies on genetic testing for warfarin and the breast-cancer drug tamoxifen–some women have a genetic variation that makes them metabolize the drug into its active form less effectively. Medco has already instituted a software program for some of its members that automatically highlights these tests to pharmacists when a patient puts in a prescription for warfarin or tamoxifen.

Generation Health is building a preferred-provider network of labs that perform the different tests. It’s also developing patient and physician educational materials. “Today, if you google a genetic test, there is no simple way for a physician or patient to figure out how to use it,” says Lofberg.

One test Generation Health will explore–and one that is likely to be of great interest–is for the anti-clotting drug Plavix, often prescribed to people given heart stents. To work, the drug must be metabolized into its active form. A study published earlier this year in the New England Journal of Medicine found that about 30 percent of Caucasians have a poorly functioning variant of the gene for a drug-metabolizing enzyme and thus are more likely to suffer heart attacks and die after surgery. “It’s a common drug with a big effect in a significant part of the population, meaning it can have a large clinical effect,” says Marc Sabatine, a physician at Brigham and Women’s Hospital who ran the study.