For Healthcare Marketers, Severability is Key

While political protesters have spent the past few days on the steps of the United States Supreme Court arguing for or against an individual mandate, for healthcare marketers it is today may be the most important day of oral argument. This was the day the Court was to consider the severability test on the healthcare reform bill of 2009. That is to say, if the idea of an individual mandate to purchase healthcare reform is unconstitutional in their interpretation, does the court throw out the rest of the law?

That will determine among other things if device makers face a new tax, or if a new tax would have to be re-enacted. A highly unlikely possibility in the current House of Representatives.

The argument of severability has legal scholars divided just as they are divided on the mandate. It could be argued that only the mandate portion is unconstitutional. But at least one Federal Circuit judge ruled the whole law unconstitutional, because lawmakers designed it as parts that would move together - mandate, prexisting condition discrimination ban, and subsidies. Taxes are designed to fund the subsidies. The logic is, if only the mandate is thrown out by the Court, then insurance companies would be unfairly punished -- all pain and no gain. All the burden of new insurees with pre-existing conditions without the gain of new healthy customers from the mandate.

This has increasing importance as watchers of the oral argument seem to agree that the mandate portion of the bill could be in danger with a court skeptical of the government's ability to order a citizen to purchase insurance or be penalized. Justice Anthony Kennedy's comments seemed to go in this direction:

Justice Anthony Kennedy said that the federal government "is telling an individual he has the obligation he must act" and purchase insurance.

"That threatens to change the relationship between the government and the individual in a profound way," Kennedy said.

And Chief Justice Roberts seemed to follow the same logic.

If Congress could regulate health care in the name of commerce, added Chief Justice John Roberts, "all bets are off" on a range of areas subject to federal oversight.

The mandate would determine if the healthcare industry will see millions of newly insured person, for its good and bad consequences to the industry. On one hand, there is the possibility of millions of device consuming, drug-taking, doctor-visiting customers, on the other primary care docs might see waiting rooms strained and hospitals may not be able to handle the influx for industries to ever see new revenue.

Will Pharmacies Push Docs to Adopt Electronic Records?

The government wants physicians to use EMR.  Affiliated hospitals in many cases would like physicians to use EMR.  And now, an additional encouragement comes from pharmacy chains.  According to this story in Fierce EMR, Walgreens' pharmacies and retail health clinics to share patient data directly to physicians electronically to improve the coordination of care.  7,800 Walgreens and Duane Reed pharmacies and 350 of its associated 'Take Care Clinics' retail clinics  will use Surescripts' network to deliver immunization data and patient summaries to physicians.

The good news about such a system is that physicians can check on their patients in terms of completing prescriptions, rather than having to take their word for it.  

We took note of this in the story, an accommodation for the not-so-paperless:

Cronin pointed out that while the project is designed to share information electronically, physicians will not be precluded from obtaining the information simply because they don't have an EHR. "We'll still get the information to them by fax or regular mail," as well, he said.

 So doctors do not have to use EMR to benefit from the program Still, Kalorama believes that with a major pharmacy chain now submitting information about patients that is easily to adapt into an EMR, the usefulness of adopting a system increases. The more EMR is relevant to all facets of practice, the higher adoption should grow.

Will the Real EMR Market Please Stand Up?

In what must be good news for the healthcare IT industry: EMR is growing.  Incentives, better patient outcomes, cost-savings EMR revenues grew 14.2%.  It doesn't mean the U.S. will have paperless medicine overnight, but the healthcare system is getting there, and some of the companies who help it along are making money.   How large is the market now?  That might vary according to what account you read. 

Each year since 2007, Kalorama Information has looked at the EMR market. Kalorama's latest study of the electronic medical records market estimates a market of over 17 billion dollars. We get a few questions from time to time about that number, because there are highly respected research firms with numbers in the single billions.  We can assure on this report that we have run the numbers by industry executives and they confirm or if anything say they are conservative.  Two things one should keep in mind.  a) We include 'Big EMR' if you will; the companies like McKesson, Cerner, GE Healthcare and the like as well as the smaller EMR companies.  b) we include ALL revenues related to the sale of an EMR: service fees, software, installation, training, CPOE.  Not including these would not reflect the real money that is being made in EMR.   Other estimates one sees in the press may only include software, or may exclude large companies who entered EMR by virtue of their strength in Patient Management IT. 

The revenue growth mirrors increased physician and institutional usage. Statistics from the National Ambulatory Medical Care Survey (NAMCS) indicate that 56.9 percent of the office-based physicians used partial or full EMR systems in 2011, an increase from the percent reported in 2010.  The first incentives were paid in 2011 based on 2010 performance. More than $1.3 billion in Medicare EHR Incentive Program payments have been made between May 2011 and the end of December 2011 and more than $1.1 billion in Medicaid EHR Incentive Program payments have been made between January 2011 and the end of December 2011.  We expect sales to grow further when the penalties are threatened , when Medicare and Medicaid could penalize providers who are not using certified EHRs by 2015.

The report can be found at Kalorama's website. 

http://www.kaloramainformation.com/EMR-6842545/

Major Companies Move Into PMx

A mention of Kalorama's personalized medicine market forecast in this Healthcare IT News article.   The magazine is published by HIMSS, the top trade association for tech companies involved in the healthcare space.   

Thus its not surprising that they make note of the digital connection to personalized medicine(PMx); the tech that will be needed to analyze data gathered to make the concept more of a reality.   And they note GE's recent acquisition of NanoString, whose nCounter Analysis System, is a fully automated platform for digital gene expression and other applications requiring the detection and counting of single molecules.

 They also note Dell's recent launching of a cloud computing technology to support pediatric cancer research programs, including what's billed as the world's first personalized medicine trial for pediatric cancer, conducted by the Neuroblastoma and Medulloblastoma Translational Research Consortium (NMTRC) and supported by the Translational Genomics Research Institute.

How New is "Personalized Medicine?"

Not as new as you think.  If we define personalized medicine as 'using testing to develop and individual therapy for a patient,' then there are all sorts of diagnostic products that fit the category of 'personalized.' or as we say PMx testing.   This broad scope is used by our analyst Shara Rosen in her latest report, Personalized Medicine Diagnostics.   

Glucose testing, antimicrobial susceptibility testing (AST), blood typing, transplant typing, HbA1c testing, coagulation testing.  These are among the tests already on the market and in routine clinical practice that can be said to do the same thing that any novel companion diagnostic test does: align a treatment strategy to the individual characteristics of the patient.   Another way of stating this broad scope in lay language perhaps is: tests to decide if a patient gets Treatment X, Treatment Y, both Treatment X and Y, or no treatment at all.  It's almost always applying to drugs but could in future applications apply to radiology or surgery. 

With all of these testing methods considered, and the new tissue diagnostics and tumor marker studies considered, Kalorama estimates a 28 billion-dollar market for tests that are personalized to a patient.  The primary growth drivers in the market for PMx tests, are the continued discovery of protein and genetic markers with proven clinical utility, the increasing adoption of these diagnostic tests as markers for personalized medicine, and the expansion of reimbursement programs to include a greater number of companion diagnostic tests. 

 Our recent report states in it's methodology section that "In accordance with a broad application of PMx, the market estimate in this report covers tests that can also provide therapy decision-making information that is tailored to the individual in the following ways:

• Tests that identify a population in which the therapeutic product will achieve greater (or little) effectiveness.
•  Tests that identify a patient population that should not receive a particular therapeutic product due to the possibility for therapy-related serious adverse events.
•  Tests that identify the characteristics of a disease, condition, or disorder to specifically determine what type of treatment is appropriate.  This area of disease stratification is one of the fastest growing areas of personalized medicine.  It includes tests for: tumor aggressiveness, risk of tumor reoccurrence, aggressive rheumatoid arthritis, pathways for severe cardiac disease and many others. 
•  Tests that are the basis for selecting a safe and efficacious therapeutic dose.  This is probably the oldest application of PMx that has been in use in clinical laboratories for at least 50 years. "

Our report details specific market estimates but overall it makes it clear that PMx testing is on an upswing; the number of assays introduced has been growing at a remarkable clip.  The expanding menu of PMx tests can be attributed in part to the publication of the human genome project and advances in functional proteomics, bioinformatics, miniaturization and microelectronics. 

 

Portable Units Could Ease the Sequencer's Move to Clinical Labs

 A sequencing device that is the size of a USB memory stick and that costs under $1,000.  Right now, it sounds like science fiction.  According to a recent New York Times article, this development is possible if a company named Oxford Nanopore is able to produce a very different kind of DNA sequencer as promised by the end of the year.  

Sequencing currently requires samples to be sent to one of a few central labs with a sequencing device.  The instruments are large and costly.  Price varies, but top models can cost more than half a million dollars.  A few companies, among them Roche, Illumina and Applied Biosystems compete in this market.  Price is not the only competitive factor - as cheaper models such as Polanator that use open-source technology and bring the price down to 170K have not made a dent in the market for the higher end systems; Kalorama's surveys of this market show  throughput and accuracy win out here.  Though the proposed price is much lower for the portable sequencer, its unclear that a nanopore or 'strand sequencing,' which Oxford relies on, has the accuracy/resolution of the next-generation sequencers.  

If it does it is not only the price but the portability that could disrupt the market.  Such a device might bring dna sequencing into the point of care (POC) diagnostics market, and as the article details, may help doctors to sequence genes at a patient’s bedside, wildlife biologists to study genes in the field, or food inspectors to identify pathogens.

Kalorama Information's latest report on personalized medicine diagnostics details the increasing role and potential of sequencing in clinical use.  The introduction of a portable unit with the capability to present results on a standard laptop could increase the penetration of sequencing.

A hurdle remains even if a portable unit is developed -- data analysis.  It's one thing to sequence a tumor or a pathogens in food, its another to inspect the office physician or hospital lab tech to be able to crunch very large data sets analyze the meaning of dna sequences to a preciseness that makes it relevant to treatment decisions.  Well-designed  computer software will be needed to get from the taking of a sample to a diagnosis that can impact treatment. 

For MRI, It's All About Efficacy

The use of any clinical diagnostic tool is rooted in its proven ability to enhance the diagnosis of a patient.  Efficacy drives procedures and procedures drive system sales.  A recent EVA (Evaluation of the Efficacy of Diagnostic Methods (Mammography, Ultrasound, MRI) tria of 700 has confirmed the efficacy of MRI  (Magnetic Resonance Imaging) in a key concern of the healthcare system - breast cancer, and thus Kalorama believes, the sales growth of these systems are no accident.  

" The results of the EVA confirm that MRI is substantially more accurate for early diagnosis of breast cancer than digital mammography or breast ultrasound: MRI is three times more sensitive for breast cancer than digital mammography," says our imaging analyst Joe Constance.   "Efficacy drives procedure volume and along with technological improvements to systems, is driving sales growth."

For the EVA trial, almost 700 women were enrolled. The goal of the trial was to refine existing guidelines for surveillance of women at high and moderately increased risk of breast cancer. Findings suggest that in these women, MRI is essential for early diagnosis, and that a mammogram or an ultrasound examination does not increase the cancer yield compared to what is achieved by MRI alone. Researchers conclude that annual MRI is not only necessary, but in fact sufficient for screening young women at elevated risk of breast cancer. In women undergoing screening MRI, mammograms will have no benefit and should be discontinued. Moreover, MRI screening is important not only for women at high risk, but also for those at moderately increased risk.

Between 2002 and 2007, the EVA trial recruited 687 women who carried a moderately increased risk of breast cancer – a life time risk of 20% and over. Women underwent 1,679 screening rounds consisting of annual MRI, annual digital mammography and half-annual screening ultrasound examinations. During this time span, 27 women received a new diagnosis of invasive cancer or ductal carcinoma in situ. Of all imaging methods under investigation -- digital mammography, ultrasound and MRI -- MRI offered by far the highest sensitivity. MRI identified 93% of breast cancers. About 37% of cancers were picked up by ultrasound. The lowest sensitivity was achieved by digital mammography, which identified only one-third of breast cancers (33%).

Kalorama Information's survey of both the MRI and Ultrasound markets, Medical Markets: MRI and Ultrasound, has just been published and can be obtained at http://www.kaloramainformation.com/Medical-Imaging-MRI-6830575/.