New Report Shows Rising IVD Procedures

Testing is on an upward trend, according to Kalorama Information's IVD Procedure Volume and Pricing Analysis   Clinical laboratory medicine plays an integral role in healthcare and disease management, as it estimated that approximately 80% of physician’s diagnoses are a result of laboratory tests.

Lab procedures will go from 19 billion in 2012 to 23.5 billion in 2017, according to our procedure volume analysis, as testing proves its importance in diagnostics and treatment regimen decisions to providers, payors and patients.

 In addition to disease diagnosis, clinical lab testing is also performed to evaluate disease progression, monitor drug treatment and conditions, determine individual therapy, and several other reasons.

Diagnostic laboratory technology has changed dramatically in the past few years, due to the publication of the human genome project and advances in functional genomics, bioinformatics, automation, miniaturization and microelectronics as well as rapid development and proliferation of novel telecommunications technologies.  Molecular assays are among the fastest growing procedures, according to the report.  

Surprise Over Oxytrol Approval

In a press release last week, Kalorama Information said that there would be more Rx to OTC switches, and to count on it.... but we had no idea how quickly that would happen.  Last Friday, the FDA announced that Oxytrol was approved by the FDA for OTC status this year.   Merck's OXYTROL is a prescription medication that has been proven to treat the symptoms of overactive bladder.   The product is expected to be released end of year.  

The FDA advisory panel in November recommended not allowing the drug to switch yet, so Kalorama did not include the product in it's Rx to OTC Switches report.  

"Everyone is a bit surprised," analyst Melissa Elder tells the Kalorama Editors. "especially in light of no restrictions mentioned--such as pharmacist-dispensing option--and the concern over men gaining access to the product without the monitoring of a pharmacist. "

According to Elder, it raises some concerns over the possibility of men not being evaluated for prostate problems--and as we all know many men will avoid a Dr. visit if at all possible. 

Kalorama had forecasted 2014 approval in its report so our forecast is not affected in any large scale by the faster than expected approval, especially as Merck should not see revenues until fall 2013.    

Even Beds Subject to New Device Tax

From Kalorama Information's medical bed analyst and author of The World Market for Medical Beds Mary Ann Crandall, medical beds are subject to the new 2.3% medical device excise tax that went into effect in 2013.  " Anything that has a 510k,  which would include medical beds is subject to the tax. " she told the Kalorama Editors this month.  

Some companies have already seen the effects.  Hill-Rom Holdings said that it would lay off about 3% of its workforce, or roughly 200 workers, as it maneuvers to confront the medical device tax set to go into effect next year.    

Of course that beds would be considered a medical device is not surprising to Kalorama, our report on medical beds gets into the features that these beds provide.  Electric beds, birthing beds, respiratory treatment beds and bariatric beds for overweight or obese patients are among the specialty beds that companies provide for hospitals.  

Behind The Counter (BTC) Drugs: Are We There Yet?

Drug products typically fit into two segments: over-the-counter and prescription. However there are a small number of drugs that fit in a segment called “behind the counter.” These drugs require the consumer to get the attention of the pharmacy staff in order to obtain the medicine.  Typically a drug would not need the high level of doctor supervision but still raises concern for direct consumer access.

 The FDA has been discussing the possibility of formalizing a behind-the-counter (BTC) product segment since the 1970’s. Even without specifically establishing a third class of drugs, there is potentially more pharmacists can do to help patients. Currently there are select products such as Mucinex, a cough medicine, and Plan B, an emergency contraceptive, available through BTC status. These products can be purchased without a prescription and customers have better access to them than prescription products.

In mid 2002, Adams Laboratories made a bold move to put its new cough tablet Mucinex in this unique third drug category. For the first time, consumers can buy a cough medicine tablet that contains guaifenesin, a powerful phlegm-releasing ingredient. The drug is available OTC but can be obtained only by getting the attention of someone at the pharmacy counter.  The company considered placing the product next to the standard OTC cough preparations such as Vicks and Robitussin, but that would have required the company to spend millions of dollars in print and TV ads. The company opted for the third drug category, dispatching its sales force to lobby doctors about Mucinex and its unusual location in stores.

Drugs containing pseudoephedrine (a decongestant found in various OTC and prescription products), ephedrine and phenylpropanolamine have been moved behind the counter due to use in illegal methamphetamine production. This process was started in 2005 and continued in 2006 with the Patriot Act signed by President Bush in March of 2006. Some states in the U.S. have required that products containing the drug be limited to prescriptions only.

Another argument for the addition of BTC products is the availability of more products at lower prices.  The growing consumer trend in using OTC products would also be seen in the BTC category. The improved access over prescription medicines could provide consumers with a source for treatments that only requires a kiosk or pharmacist involvement. Pharmacists could potentially provide support either through counseling before the purchase or by limiting the purchase quantities. Pharmacists have the knowledge to advise patients about drug interactions as well.

Drug companies have also shown an interest in a BTC option for marketing a product. This may be a good way to provide access in a way that fits products better, and gives companies more options. In effect a product may not be safe enough for OTC status but not unsafe enough for physician monitoring.

The FDA has continued to look at several ways to increase access to medicines but also remove the burden on physicians. Physicians offices must take time to see a patient, send in prescriptions orders, or schedule a second visit even for some routine cases which takes time away from more critically ill patients. Physicians are considered the most qualified personnel to make health decisions but there is continued pressure to change the system in a safe and effective manner. 

Insurance companies have reported mixed feelings about reimbursement for BTC medicines. Some companies say that if the medication is medically necessary and/or covered under the patient’s formulary, they would provide reimbursement. However, other health insurers may be less likely to provide reimbursement if this segment of medicine materializes. Some of the reimbursement options would likely follow a certain decision by the FDA concerning the specific type of access granted. 

Product classes which could benefit from a third class of drug include oral contraceptives, influenza antivirals, sexual dysfunction treatments, bladder treatments, osteoporosis prevention, and hormone replacement drugs.

An industry evaluation of these potential costs savings indicates that some of the savings would be shifted to the pharmacists to pay for added consultation and to the manufacturers. If a product requires diagnostics the savings may be limited. Expanding OTC access is likely to be more beneficial on a product-by-product basis. If a consumer is looking for a simple product that requires only a kiosk, the costs could be less than if they require a blood test administered at a pharmacy. 

Kalorama's Reprot, Rx to OTC Switches, discusses this topic.  

Retail Clinics: Build It, They Will Come?

The Amednews.com site of the American Medical Association Journal noted our study of adults (http://www.ama-assn.org/amednews/2012/12/17/bibf1217.htm#1) and the results that more adults are visiting clinics.  The AMA is no friend to retail clinics, and has strong criticism of them for breaking the continuance of care, as a patient may see a doctor, then visit a clinic, then see a doctor again, without each entity knowing about the other visit.  Once of the things that Amednews noted is that usage is up where more clinics are located.  Patients will visit if a clinic is near their home and makes themselves available as a physicians' office.

Several studies have found that patients who live near retail clinics are more likely to use them. According to Merchant Medicine, a retail medicine consultancy based in Shoreview, Minn., 1,420 retail clinics operated in 39 states as of early December. In October 2006, there were 202 such clinics across the country.

Patient Satisfaction May Impact Testing Markets

In the Kalorama Linked In Group we discuss the pressures of patient satisfaction for doctors and healthcare organizations.

Our discussion is based on an article in The American Medical News of the American Medical Association. regarding the focus on keeping patients happy in healthcare organizations.  The AMA article relates the pressure that doctors feel to keep patients happy, which is often in direct conflict with treatment procedures and According to one physician quoted in the article:

"If I feel the patient is not an appropriate candidate for opioids, I should say no,” she says. “But in the back of my mind, the question can arise, ‘What will the patient do with that?’ Especially since the No. 1 question on our patient-satisfaction survey is, ‘Are you happy with the way the physician treated your pain?’ ”

This is an especially important trend because  patient satisfaction could have a direct impact on doctor's salaries, according to the article.

For Dr. Zgierska and a growing number of physicians, saying no could carry a price tag. The University of Wisconsin Medical Foundation, the clinical practice organization for UW faculty physicians, recently created a new compensation plan for its primary care doctors. They can receive a 5% increase in their base pay if they meet benchmarks on certain performance measures, including patient-satisfaction metrics.

If this trend holds that patient satisfaction is winning out over cost-cutting. We note that it could have interesting ramifications for diagnostic market forecasts.  Diagnostics is expected to be a cost saver - the idea is that tests save because you test a patient for appropriate treatment before using.  But if doctors skip steps for patient satisfaction reasons, this may hurt testing markets.    At the highest level, the idea of advanced pharmacogenomic testing is to reduce costs by keeping a therapeutic to patients most able to use.  But there again if the introduction of a companion test causes patient satisfaction problems.

Our personalized medicine report takes a look at market for diagnostic tests intended to target a specific patient with the most effective therapy.

Mixed Reviews on Final Medical Device Tax Rules

Is the medical device industry full of cheer about the newly-defined healthcare tax parameters?  Yes and no.  The IRS released its guidelines for how the 2.3% excise tax associated with the Patient Protection and Affordable Care Act of 2010 will be implemented.  This was anticipated by an industry that is soon to face the impact of the taxes.  The guidelines were met with a mixed reaction from device companies.   Some breathed a sigh of relief, others still are concerned about the tax's impact.

On one hand, the IRS waived some late fees and clarified the policy on prepackaged kits (in most cases, if a product within a kit already incurred a tax liability, companies would not be double-taxed.) and clarified on combination drugs (in most cases, combo drug/device products would not be taxed.  

On the other hand, some things the industry wanted such as a delay in implementation, a waiver for dental products, and an exemption for leased products were rejected by the IRS.

Major device companies still say profits and layoffs will be impacted by the tax.  Cook Medical's CEO recently indicated his company would not expand manufacturing in the United States given the tax policy.

Kalorama Information's The Global Market for Medical Devices 3rd Edition examines the overall medical device market and assesses the impact of the tax on several companies.