Health Business Blog

Here’s one more reason to visit Israel. From the Jerusalem Post (The Medical Tourist)

When one-and-a-half-year-old Anna Sherevenko was diagnosed with a rare form of cancer, her physicians in St. Petersburg, Russia, recommended a bone marrow transplant in the U.S., Germany or Israel. Her parents chose Israel because it was the least expensive of the three. Anna is one of many who come to Israel to receive medical treatment. The money that these “medical tourists” spend is a valuable contribution to the economy. In 2006, 15,000 foreigners came to Israel’s hospitals for treatment, generating some $40 million in revenue; in 2007 the number of patients grew to 20,000 and hospitals more than tripled their intake to $150 million because more complex, and therefore, costlier, procedures were performed. The sum includes money spent by family members who stay at hotels and might do some sightseeing and shopping on the side.

Amitai Rotem, marketing director at the Hadassah Medical Organization, says Hadassah started the medical tourism program in earnest just five years ago and it generated some $500,000 in its first year. Today revenue has topped $10 million, with 200 to 300 admissions each month. Herve Deknuydt, administrative director of medical tourism at Sheba Hospital, near Tel Aviv, says his institution treated several hundred patients in 2008. Most came from Mediterranean countries, such as Cyprus, Greece and Turkey, or from the former Soviet Union, particularly the eastern states, such as Azerbaijan, Georgia and Kazakhstan.

I’ve written on this topic before in case you’re interested. See Dubai Healthcare City or Hadassah Medical Center?

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Mayor Menino and health care have a funny relationship. He’s against Minute Clinics in drug stores –for reasons that escape me. He’s also seemingly in favor of drug reimportation from Canada, yet his program to encourage it was ill-conceived and is now being abandoned.

Boston made Canadian drug reimportation an option for some of its retirees but almost none took up the offer. It seems the culprits are poor publicity and a lack of incentives provided to the retirees to give it a go. The much smaller city of Springfield, MA has saved about $3 million per year through its reimportation program but Boston’s only captured $4300! What a joke. Now the program is ending.
Truth be told there is little reason these days for seniors to turn abroad for drugs. Generic equivalents (or therapeutic substitutes) are available for more drugs, the Canadian dollar is stronger than it used to be, Medicare Part D provides seniors with coverage they used to lack, and safety scares on overseas drugs are all factors.

Still, Boston continues to live down to its poor reputation for governance.

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GOOD, a do-gooder media company “serving people who want to live well and do good” and Starbucks are partnering to provide “The GOOD Sheet,” a weekly page that explores key political topics. It’s an exclusive arrangement, so you won’t see these sheets at Peet’s. For 11 weeks leading up to and following the US presidential election, GOOD Sheets will be produced and distributed on specific topics, including gas prices, voter turnout and the environment.

Health care is the topic for the second Sheet. You can see a reproduction here in case you miss it at Starbucks. It includes quite a bit of interesting information such as:

• “A look at what’s wrong”
• Spending breakdowns
• International comparisons of costs and outcomes
• A matrix of “how to health the system,” which lays out various alternatives (like single payer), compares them on key dimensions, and notes which aspects Obama or McCain have endorsed
• Along the bottom is a timeline of “how we got into this mess,” covering key events and trends over the past couple hundred years

I like the idea of the GOOD Sheet. It presents useful, relevant information in a visually compelling way without dumbing down the issue or taking too strong a stance in favor of a particular outcome. I can imagine the Sheet elevating the discussion about health care to a level where arguments are productive and informed.

The next topic is immigration, which is another area where it would be beneficial to elevate the conversation.

Although I’m not a frequenter of Starbucks –I don’t drink coffee and don’t like the atmoshphere– GOOD Sheets might just get me to go.

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I got an email a few days ago from a publicist for diagnostics company Ikonisys, asking me to mention the launch of a new test to determine the early progression of low grade dysplasia to cancer of the cervix.

Ikonisys, a leading provider of next-generation, cell-based diagnostic solutions, announced today the launch of its clinically-validated, novel cervical cancer test, oncoFISH® cervical.  Used in conjunction with the company’s proprietary CellOptics® platform, a robotic microscopy system, oncoFISH cervical provides the physician, while still adhering to current practice guidelines, with an assessment of risk of progression of low grade dysplasia to cancer of the cervix.  oncoFISH cervical will be offered as a laboratory developed test through Ikonisys’ licensed CAP-accredited Clinical Laboratory.
It sounded compelling to me, but I don’t know much about diagnostics and couldn’t really evaluate it.

So I turned to my diagnostics expert, Keith Batchelder, MD, CEO of Genomic Healthcare Strategies (GHS), and asked him if this new test is a big deal. He gave me two answers:

Short answer No, Longer answer Yes.

Why no?  This test is based on the premise that automated quantitation –using Ikonisys’s proprietary digital microscopy analysis system with reagents– of “rare cells”  gives insight into regression/progression of cervical dysplasia to frank cancer.   The premise is compelling, and may ultimately prove valid, but I don’t see enough current data (prospective) that warrants wild optimism.  It’s still hype, with more research needed. Do the number of rare cells (and/or the cells they have a proprietary FISH “stain” for) directly correlate to progression in general (there are circulating tumor cell Dx companies that have yet to gain market traction), and in particular cervical cancer?

Why yes?  Automated quantitation for diagnosis in a particular disease (like Cytyc thinprep for pap smear) is already  big business and it will become even bigger. Ikonisys is poised to be part of that wave.  The bigger picture, we at GHS believe that companies that demonstrate the clinical utility of a quantitated Dx with real data and those that move that Dx closer to the point of care will be even bigger winners.

So there you have it. Thanks, Keith.

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I learned today that Daniel Palestrant, CEO of Sermo will be the keynote speaker at the Health 2.0 Northeast event in Cambridge, MA on October 7. That should make an already strong line-up even better. You can read my previous post on the event to learn more or register here.

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My fellow MedPharma Partners co-founder Patrick Kager and I have an article in this month’s Pharmaceutical Executive magazine entitled How Do You Solve a Problem Like Manufacturing? Pat is our pharma manufacturing guru at MedPharma Partners and the article reflects his deep experience in consulting to big pharma, biotech and contract manufacturers.

Manufacturing isn’t well understood within pharmaceutical companies. Top management and board members typically have little background in manufacturing and the head of manufacturing usually reports to someone in the commercial organization rather than directly to the CEO. It’s unusual for the head of manufacturing to sit on the executive committee at big pharma companies. When top management does examine manufacturing –usually at the behest of the CFO– they are surprised to find how much capital is invested and how low capacity utilization is. “Why don’t we just outsource it?,” they ask.

Especially in these times of cost cutting, moving to a fully outsourced model seems like a good solution. But actually, there are good reasons not to rush down that path:

• It’s hard to dispose of the existing assets. Unlike in consumer electronics there are few companies capable of buying and running the facilities. Exceptions –like Catalent (formerly Cardinal) and Patheon –are subject to acquisition by private equity funds or to screwing up their operations and getting into trouble with the FDA.
• Owning manufacturing plants can yield tremendous tax advantages, which are difficult to replicate in a purely outsourced model (though there are ways to achieve some of the benefits through tolling)
• There are increasing opportunities for tight integration between pharmaceutical development and manufacturing, and the interfaces between the two can be much more robust in an in-sourced model. Truly new drugs are rare within pharmaceutical company pipelines. New combination products and modified release formulations require advanced manufacturing knowledge
• Manufacturing costs are a very low percentage of revenue for pharmaceutical companies. Even in these tighter times it makes good sense to keep spare capacity and go overboard on spending on quality and support services. However contract manufacturers look at the world differently. What represents a mere 5 to 20% cost of goods sold for the pharma company is 100% of the contractor’s revenue. They are more prone to squeeze out spare capacity and take shortcuts elsewhere simply because they have a greater economic incentive to do so. That can lead to trouble
• Recent troubles in China and India reveal the dangers of losing control of the supply chain

That doesn’t mean pharma should use a purely insourced model either. In general, pharmaceutical companies should make greater use of third-party manufacturers. Left to their own devices, manufacturing divisions will look to keep everything in house. And with top management not understanding the fundamentals of the business, it’s easy for the manufacturing folks to exaggerate the dangers of third parties and present unfair cost comparisons. A favorite approach is to compare the marginal costs of in-house production with fully loaded third-party costs, something we explore in greater depth in the article.

Pat and I are available to discuss this topic at greater length so if you’re interested please send us an email.

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The latest edition of the Cavalcade of Risk is up at American Consumer News.

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The terms Electronic Health Record (EHR) and Electronic Medical Record (EMR) are usually used interchangeably these days and I’ve basically decided to stop worrying about it. I used to use EMR but now mainly say EHR. I’ve figured it’s kind of a like the shift from Disease Management to Care Management –takes the edge off by shifting to a more benign –if less descriptive– term.

But I do cringe when EHR is used interchangeably with Personal Health Record (PHR), as I often do.

In any case, Software Advice has an excellent column explaining the difference and documenting the confusion.

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As part of its program to prevent drugs with cardiac safety problems from reaching the market, FDA requires products in development to be tested for their tendency to lengthen the heart’s QT interval. This guidance (ICH E14), issued in 2005, adds substantial costs and time to clinical trials. Drug developers must collect ECGs from trial participants and then hire expensive cardiologists to perform the QT measurements by hand.

That’s changing now thanks to an innovative approach from iCardiac Technologies, Inc. The company has completed the industry’s largest validation study for an automated ECG analysis technology. The FDA has reviewed the data and told the company that it would consider such analyses acceptable as part of drug approval submissions.
According to the press release (iCardiac Completes Industry’s Largest Validation Study of Highly Automated QT Analysis; Represents First Automated Approach to Comply with Regulatory Guidance):

In the validation study, conducted with leading pharmaceutical companies and academic partners, iCardiac’s highly automated QT method has demonstrated results equivalent to manual measurements performed independently by U.S. board-certified cardiologists. iCardiac’s highly automated QT method was shown to reliably detect the effect of the drug moxifloxacin. Moxifloxacin is used as a positive control in cardiac safety studies and is included in the FDA’s E14 industry guidance.

“iCardiac’s highly automated QT analysis provides drug developers with the cost advantages of automation – which are significant – without compromising the rigor of drug safety testing,” said iCardiac’s Co-Founder and Executive Vice President Sasha Latypova.  “We leverage validated algorithms and keep cardiologists involved at critical decision points. This principle has been successfully applied in many fields where safety is of paramount concern, such as air traffic control systems and energy generation.”

The results of the completed validation study were presented at the FDA’s interdisciplinary review team (IRT) meeting in August and will be published by iCardiac and its partners over the coming months. This study is part of iCardiac’s broader validation program that aims at both reducing the cost of cardiac safety studies and developing the next generation of ECG biomarkers that are more predictive than the QT interval for characterizing arrhythmia risk associated with novel medicines.

If the pharmaceutical industry is to get back on track it needs to embrace technologies like this one, which reduce costs and speed up trials.

For more information you can contact Sasha Latypova at (617) 359-7088.
I am a board member of iCardiac Technologies.

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Dr. Val Jones hosts Grand Rounds this morning. Since she’s temporarily blogless, the post appears on KevinMD. I understand it is also due to appear on Emergiblog but it’s not there yet.

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