Tag Archives: FDA

Reforming U.S. Healthcare: Even Research Statistics Are Rigged

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , , , , , , • Leave a comment

https://fixushealthcare.blog/2019/04/13/reforming-u-s-healthcare-even-research-statistics-are-rigged/

Slide1

To paraphrase Elizabeth Barrett Browning, How do I rig thee? Let me count the ways.

Even research statistics are all too often rigged, according to a commentary in this month’s Journal of the A.M.A.  These rigged statistics are being applied to clinical studies of new drugs, devices, and treatments to put them just far enough over the line of “significance” to win Food and Drug Administration approval.

And to win big dollar profits for research companies and the researchers themselves – my claim, not the Journal’s.

This goes beyond what Mark Twain called “lies, damned lies, and statistics.” Twain was referring to “spinning” legitimate statistics to show results in a favorable light.

But Stanford’s John P. A. Ioannidis MD, ScD, calls out statisticians-for-hire for actually cherry-picking, distorting, and manipulating post-hoc the statistical analyses themselves in scientific publications, in the service of Big Pharma.

Ioannidis’s Observations

Here are some of his observations:

  • Some policy makers have an exaggerated sense of certainty about research results based simply of a P-value less than 0.05 (P-value is a statistical construct that estimates the probability that an observed difference between the study group and control group is a true difference rather than a coincidental difference caused by random factors alone.)
  • Some policy makers hype results based on statistical differences that are technically correct but weak at best
  • Some policy makers focus on “statistical significance” only and fail to consider “clinical significance” as well as other practical considerations when interpreting study results
  • “Some fields that claim to work with large, actionable effects (eg, nutritional epidemiology) may simply have larger, uncontrolled biases.” That is, just because a study appears to have a robust statistical effect does not mean the conclusion is iron-clad. An observed difference might have another hidden explanation that contradicts the study conclusion.
  • “Absent pre-specified rules, most research designs and analyses have enough leeway to manipulate the data and hack the results to claim important signals.”
  • “Studies have shown that unless an analysis is prespecified, analytical choice (eg, different adjustments for covariates in nonrandomized studies) may allow obtaining a wide range of results.”
  • “In a recent survey completed by 390 consulting statisticians, a large percentage perceived that they had received inappropriate requests from investigators to analyze data in ways that obtain desirable results.”
  • “Passing the threshold of “statistical significance” … such as P < .05 is typically too easy…”
  • “Clinical, monetary, and other considerations may often have more importance than statistical findings.”

Ioannidis’s Solution

Dr. Ioannidis’s offers a solution to keep honest statisticians honest:  Require researchers to post in advance, such as at ClinicalTrials.gov, not only the overall research design but also detailed descriptions of

  • numbers of subjects to be studied (since cohort size affects the “power” of the statistical analysis)
  • which statistical methodologies will be used
  • advance definition of subgroups designated for separate analysis
  • specification of the threshold for statistical significance (choice of P value)
  • criteria for altering statistical methods in the face of unexpected problems occurring during the course of a study
  • plans to post raw data for all to see and analyze.

Comment:

Prestigious medical journals could adopt Ioannidis’s solutions without waiting for comprehensive reform of the whole health system. But the Journal’s surfacing of issues around abuse of research statistics illustrates the extent to which that system has fallen under the pall of profits, the depth to which the system has been rigged, and the degree to which Hippocratically-pledged professionals have been coopted. And this means that the full weight of our society, government and nation will be needed to fix it.

Take Action

Now, take action.

 

 

 

ELITE HOSPITALS PLUNGE INTO UNPROVEN STEM CELL TREATMENTS

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , , , , , , , , , , , , , , , • Leave a comment

https://www.healthleadersmedia.com/clinical-care/elite-hospitals-plunge-unproven-stem-cell-treatments?utm_source=silverpop&utm_medium=email&utm_campaign=ENL_190402_LDR_BRIEFING%20(1)&spMailingID=15395736&spUserID=MTY3ODg4NTg1MzQ4S0&spJobID=1620119090&spReportId=MTYyMDExOTA5MAS2

Hospitals say they’re providing options to patients who have exhausted standard treatments. But critics suggest the hospitals are exploiting desperate patients and profiting from trendy but unproven treatments.

The online video seems to promise everything an arthritis patient could want.

The six-minute segment mimics a morning talk show, using a polished TV host to interview guests around a coffee table. Dr. Adam Pourcho extols the benefits of stem cells and “regenerative medicine” for healing joints without surgery. Pourcho, a sports medicine specialist, says he has used platelet injections to treat his own knee pain, as well as a tendon injury in his elbow. Extending his arm, he says, “It’s completely healed.”

Brendan Hyland, a gym teacher and track coach, describes withstanding intense heel pain for 18 months before seeing Pourcho. Four months after the injections, he says, he was pain-free and has since gone on a 40-mile hike.

“I don’t have any pain that stops me from doing anything I want,” Hyland says.

The video’s cheerleading tone mimics the infomercials used to promote stem cell clinics, several of which have recently gotten into hot water with federal regulators, said Dr. Paul Knoepfler, a professor of cell biology and human anatomy at the University of California-Davis School of Medicine. But the marketing video wasn’t filmed by a little-known operator.

It was sponsored by Swedish Medical Center, the largest nonprofit health provider in the Seattle area.

Swedish is one of a growing number of respected hospitals and health systems — including the Mayo Clinic, the Cleveland Clinicand the University of Miami — that have entered the lucrative business of stem cells and related therapies, including platelet injections. Typical treatments involve injecting patients’ joints with their own fat or bone marrow cells, or with extracts of platelets, the cell fragments known for their role in clotting blood. Many patients seek out regenerative medicine to stave off surgery, even though the evidence supporting these experimental therapies is thin at best, Knoepfler said.

Hospitals say they’re providing options to patients who have exhausted standard treatments. But critics suggest the hospitals are exploiting desperate patients and profiting from trendy but unproven treatments.

The Food and Drug Administration is attempting to shut down clinics that hawk unapproved stem cell therapies, which have been linked to several cases of blindness and at least 12 serious infections. Although doctors usually need preapproval to treat patients with human cells, the FDA has carved out a handful of exceptions, as long as the cells meet certain criteria, said Barbara Binzak Blumenfeld, an attorney who specializes in food and drug law at Buchanan Ingersoll & Rooney in Washington.

Hospitals like Mayo are careful to follow these criteria, to avoid running afoul of the FDA, said Dr. Shane Shapiro, program director for the Regenerative Medicine Therapeutics Suites at Mayo Clinic’s campus in Florida.

‘EXPENSIVE PLACEBOS’

While hospital-based stem cell treatments may be legal, there’s no strong evidence they work, said Leigh Turner, an associate professor at the University of Minnesota’s Center for Bioethics who has published a series of articles describing the size and dynamics of the stem cell market.

“FDA approval isn’t needed and physicians can claim they aren’t violating federal regulations,” Turner said. “But just because something is legal doesn’t make it ethical.”

For doctors and hospitals, stem cells are easy money, Turner said. Patients typically pay more than $700 a treatment for platelets and up to $5,000 for fat and bone marrow injections. As a bonus, doctors don’t have to wrangle with insurance companies, which view the procedures as experimental and largely don’t cover them.

“It’s an out-of-pocket, cash-on-the-barrel economy,” Turner said. Across the country, “clinicians at elite medical facilities are lining their pockets by providing expensive placebos.”

Some patient advocates worry that hospitals are more interested in capturing a slice of the stem-cell market than in proving their treatments actually work.

“It’s lucrative. It’s easy to do. All these reputable institutions, they don’t want to miss out on the business,” said Dr. James Rickert, president of the Society for Patient Centered Orthopedics, which advocates for high-quality care. “It preys on people’s desperation.”

In a joint statement, Pourcho and Swedish defended the online video.

“The terminology was kept simple and with analogies that the lay person would understand,” according to the statement. “As with any treatment that we provide, we encourage patients to research and consider all potential treatment options before deciding on what is best for them.”

But Knoepfler said the guests on the video make several “unbelievable” claims.

At one point, Dr. Pourcho says that platelets release growth factorsthat tell the brain which types of stem cells to send to the site of an injury. According to Pourcho, these instructions make sure that tissues are repaired with the appropriate type of cell, and “so you don’t get, say, eyeball in your hand.”

Knoepfler, who has studied stem cell biology for two decades, said he has never heard of “any possibility of growing eyeball or other random tissues in your hand.” Knoepfler, who wrote about the video in February on his blog, The Niche, said, “There’s no way that the adult brain could send that kind of stem cells anywhere in the body.”

The marketing video debuted in July on KING-TV, a Seattle station, as part of a local lifestyles show called “New Day Northwest.” Although much of the show is produced by the KING 5 news team, some segments — like Pourcho’s interview — are sponsored by local advertisers, said Jim Rose, president and general manager of KING 5 Media Group.

After being contacted by KHN, Rose asked Swedish to remove the video from YouTube because it wasn’t labeled as sponsored content. Omitting that label could allow the video to be confused with news programming. The video now appears only on the KING-TV website, where Swedish is labeled as the sponsor.

“The goal is to clearly inform viewers of paid content so they can distinguish editorial and news content from paid material,” Rose said. “We value the public’s trust.”

INCREASING SCRUTINY

Federal authorities have recently begun cracking down on doctors who make unproven claims or sell unapproved stem cell products.

In October, the Federal Trade Commission fined stem cell clinics millions of dollars for deceptive advertising, noting that the companies claimed to be able to treat or cure autism, Parkinson’s disease and other serious diseases.

In a recent interview Scott Gottlieb, the FDA commissioner, said the agency will continue to go after what he called “bad actors.”

With more than 700 stem cell clinics in operation, the FDA is first targeting those posing the biggest threat, such as doctors who inject stem cells directly into the eye or brain.

“There are clearly bad actors who are well over the line and who are creating significant risks for patients,” Gottlieb said.

Gottlieb, set to leave office April 5, said he’s also concerned about the financial exploitation of patients in pain.

“There’s economic harm here, where products are being promoted that aren’t providing any proven benefits and where patients are paying out-of-pocket,” Gottlieb said.

Dr. Peter Marks, director of the FDA’s Center for Biologics Evaluation and Research, said there is a broad “spectrum” of stem cell providers, ranging from university scientists leading rigorous clinical trials to doctors who promise stem cells are “for just about anything.” Hospitals operate somewhere in the middle, Marks said.

“The good news is that they’re somewhat closer to the most rigorous academics,” he said.

The Mayo Clinic’s regenerative medicine program, for example, focuses conditions such as arthritis, where injections pose few serious risks, even if that’s not yet the standard of care, Shapiro said.

Rickert said it’s easy to see why hospitals are eager to get in the game.

The market for arthritis treatment is huge and growing. At least 30 million Americans have the most common form of arthritis, with diagnoses expected to soar as the population ages. Platelet injections for arthritis generated more than $93 million in revenue in 2015, according to an article last year in The Journal of Knee Surgery.

“We have patients in our offices demanding these treatments,” Shapiro said. “If they don’t get them from us, they will get them somewhere else.”

Doctors at the Mayo Clinic try to provide stem cell treatments and similar therapies responsibly, Shapiro said. In a paper published this year, Shapiro described the hospital’s consultation service, in which doctors explain patients’ options and clear up misconceptions about what stem cells and other injections can do. Doctors can refer patients to treatment or clinical trials.

“Most of the patients do not get a regenerative [stem cell] procedure,” Shapiro said. “They don’t get it because after we have a frank conversation, they decide, ‘Maybe it’s not for me.'”

LOTS OF HYPE, LITTLE PROOF

Although some hospitals boast of high success rates for their stem cell procedures, published research often paints a different story.

The Mayo Clinic website says that 40 to 70% of patients “find some level of pain relief.” Atlanta-based Emory Healthcare claims that 75 to 80% of patients “have had significant pain relief and improved function.” In the Swedish video, Pourcho claims “we can treat really any tendon or any joint” with PRP.

The strongest evidence for PRP is in pain relief for arthritic knees and tennis elbow, where it appears to be safe and perhaps helpful, said Dr. Nicolas Piuzzi, an orthopedic surgeon at the Cleveland Clinic.

But PRP hasn’t been proven to help every part of the body, he said.

PRP has been linked to serious complications when injected to treat patellar tendinitis, an injury to the tendon connecting the kneecap to the shinbone. In a 2013 paper, researchers described the cases of three patients whose pain got dramatically worse after PRP injections. One patient lost bone and underwent surgery to repair the damage.

“People will say, ‘If you inject PRP, you will return to sports faster,'” said Dr. Freddie Fu, chairman of orthopedic surgery at the University of Pittsburgh Medical Center. “But that hasn’t been proven.”

A 2017 study of PRP found it relieved knee pain slightly better than injections of hyaluronic acid. But that’s nothing to brag about, Rickert said, given that hyaluronic acid therapy doesn’t work, either. While some PRP studies have shown more positive results, Rickert notes that most were so small or poorly designed that their results aren’t reliable.

In its 2013 guidelines for knee arthritis, the American Academy of Orthopaedic Surgeons said it is “unable to recommend for or against” PRP.

“PRP is sort of a ‘buyer beware’ situation,” said Dr. William Li, president and CEO of the Angiogenesis Foundation, whose research focuses on blood vessel formation. “It’s the poor man’s approach to biotechnology.”

Tests of other stem cell injections also have failed to live up to expectations.

Shapiro published a rigorously designed study last year in Cartilage, a medical journal, that found bone marrow injections were no better at relieving knee pain than saltwater injections. Rickert noted that patients who are in pain often get relief from placebos. The more invasive the procedure, the stronger the placebo effect, he said, perhaps because patients become invested in the idea that an intervention will really help. Even saltwater injections help 70% of patients, Fu said.

A 2016 review in the Journal of Bone and Joint Surgery concluded that “the value and effective use of cell therapy in orthopaedics remain unclear.” The following year, a review in the British Journal of Sports Medicine concluded, “We do not recommend stem cell therapy” for knee arthritis.

Shapiro said hospitals and health plans are right to be cautious.

“The insurance companies don’t pay for fat grafting or bone-marrow aspiration, and rightly so,” Shapiro said. “That’s because we don’t have enough evidence.”

Rickert, an orthopedist in Bedford, Ind., said fat, bone marrow and platelet injections should be offered only through clinical trials, which carefully evaluate experimental treatments. Patients shouldn’t be charged for these services until they’ve been tested and shown to work.

Orthopedists — surgeons who specialize in bones and muscles — have a history of performing unproven procedures, including spinal fusion, surgery for rotator cuff disease and arthroscopy for worn-out knees, Turner said. Recently, studies have shown them to be no more effective than placebos.

MISLEADING MARKETING

Some argue that joint injections shouldn’t be marketed as stem cell treatments at all.

Piuzzi said he prefers to call the injections “orthobiologics,”noting that platelets are not even cells, let alone stem cells. The number of stem cells in fat and bone marrow injections is extremely small, he said. In fat tissue, only about 1 in 2,000 cells is a stem cell, according to a March paper in The Bone & Joint Journal. Stem cells are even rarer in bone marrow, where 1 in 10,000 to 20,000 cells is a stem cell.

Patients are attracted to regenerative medicine because they assume it will regrow their lost cartilage, Piuzzi said. There’s no solid evidence that the commercial injections used today spur tissue growth, Piuzzi said. Although doctors hope that platelets will release anti-inflammatory substances, which could theoretically help calm an inflamed joint, they don’t know why some patients who receive platelet injections feel better, but others don’t.

So, it comes as no surprise that many patients have trouble sorting through the hype.

Florida resident Kathy Walsh, 61, said she wasted nearly $10,000 on stem cell and platelet injections at a Miami clinic, hoping to avoid knee replacement surgery.

When Walsh heard about a doctor in Miami claiming to regenerate knee cartilage with stem cells, “it seemed like an answer to a prayer,” said Walsh, of Stuart, Fla. “You’re so much in pain and so frustrated that you cling to every bit of hope you can get, even if it does cost you a lot of money.”

The injections eased her pain for only a few months. Eventually, she had both knees replaced. She has been nearly pain-free ever since. “My only regret,” she said, “is that I wasted so much time and money.”

 

 

 

FDA to ramp up cell and gene therapy activity as tidal wave of new products approaches

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , • Leave a comment

FDA to ramp up cell and gene therapy activity as tidal wave of new products approaches

In a statement, Commissioner Scott Gottlieb said the agency anticipates more than 200 cell and gene therapy INDs per year by 2020, and 10-20 approvals annually by 2025.

The Food and Drug Administration plans to add 50 new staffers to its clinical review group for cell and gene therapies as it anticipates a surge in new products entering the clinic and the market over the next several years.

In a statement Tuesday, FDA Commissioner Scott Gottlieb said that by next year, the agency will receive on an annual basis more than 200 Investigational New Drug applications – used by companies to get regulatory approval to start clinical trials – and approving 10-20 cell and gene products per year by 2025.

“The activity reflects a turning point in the development of these technologies and their application to human health,” Gottlieb’s statement read. “It’s similar to the period marking an acceleration in the development of antibody drugs in the late 1990s, and the mainstreaming of monoclonal antibodies as the backbone of modern treatment regimens.”

That picture stands in stark contrast to the current roster of approved cell and gene therapies. Those consist of two CAR-T cell therapies for blood cancers – Novartis’s Kymriah (tisagenlecleucel) and Gilead Sciences’ Yescarta (axicabtagene ciloleucel) – and one gene therapy, Spark Therapeutics’ Luxturna (voretigene neparvovec-rzyl), for a rare, inherited form of blindness.

For the application review of Kymriah’s initial approval in August 2017, for acute lymphoblastic leukemia in children and young adults, the agency convened the Oncologic Drugs Advisory Committee, a panel of outside experts who offer advice on approvals when the agency requests it. But it did not do so for Yescarta’s approval two months later for diffuse large B-cell lymphoma in adults, nor did it for Kymriah in DLBCL – the relative ease of the latter approvals indicating the agency had quickly become more comfortable approving the then-unprecedented cell therapies.

But Gottlieb noted there are now more than 800 active INDs for cell and gene therapies on file with the FDA. In a panel discussion at last week’s Biotech Showcase in San Francisco, which coincides with the annual J.P. Morgan Healthcare Conference, Iovance Biotherapeutics CEO Maria Fardis noted that competition in CAR-T therapy is heating up at clinical trial centers, making it harder to recruit patients. She was speaking in the context of CAR-Ts for solid tumors, which remain a much less well-established area of the field than blood cancers. Other types of cell therapies are in development as well, including T-cell receptors and tumor-infiltrating lymphocytes, respectively also known as TCRs and TILs.

Of course, the announcement took place against the background of the ongoing government shutdown. As a result, the FDA is currently only able to perform activities covered by user fees paid before the impasse, but is unable to perform many activities for which user fees had not yet been paid.

Several cell and gene therapy products are expected to reach the market in the near term. Celgene anticipates two CAR-T filings: bb2121 in multiple myeloma; and lisocabtagene maraleucel, which it acquired when it bought Juno Therapeutics last year. Both therapies were touted as near-term opportunities in Bristol-Myers Squibb’s recent $74 billion acquisition of Celgene. Separately, bluebird also anticipates approval in the US by next year for LentiGlobin for transfusion-dependent beta-thalassemia. BioMarin Pharmaceutical also anticipates filing for approval of valoctocogene roxaparvovec in hemophilia A.

 

HOW SEN. ORRIN HATCH CHANGED AMERICA’S HEALTH CARE

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , , , • Leave a comment

https://www.healthleadersmedia.com/strategy/how-sen-orrin-hatch-changed-americas-health-care?utm_source=silverpop&utm_medium=email&utm_campaign=ENL_190103_LDR_BRIEFING_resend%20(1)&spMailingID=14894079&spUserID=MTY3ODg4NTg1MzQ4S0&spJobID=1560203883&spReportId=MTU2MDIwMzg4MwS2

How Sen. Orrin Hatch Changed America's Health Care

Utah’s Orrin Hatch is leaving the Senate, after 42 years. The Republican led bipartisan efforts to provide health care to more kids and AIDS patients. He also thrived on donations from the drug industry.

https://www.npr.org/player/embed/673851375/681125070

Sen. Orrin Hatch, the Utah Republican retiring from 42 years in the Senate as a new generation is sworn in, leaves a long list of achievements in health care. Some were more controversial than others.

Hatch played key roles in shepherding the 1983 Orphan Drug Act to promote drug development for rare diseases, and the 1984 National Organ Transplant Act, which helped create a national transplant registry. And in 1995, when many people with AIDS were still feeling marginalized by society and elected leaders, he testified before the Senate about reauthorizing funding for his Ryan White CARE Act to treat uninsured people who have HIV.

“AIDS does not play favorites,” Hatch told other senators. “It affects rich and poor, adults and children, men and women, rural communities and the inner cities. We know much, but the fear remains.”

Hatch, now 84, co-sponsored a number of bills with Democrats over the years, often with Sen. Ted Kennedy of Massachusetts. The two men were sometimes called “the odd couple,” for their politically mismatched friendship.

In 1997, the two proposed a broad new health safety net for kids —the Children’s Health Insurance Program.

“This is an area the country has made enormous progress on, and it’s something we should all feel proud of — and Senator Hatch should too,” said Joan Alker, executive director of Georgetown University’s Center for Children and Families.

Before CHIP was enacted, the number of uninsured children in America was around 10 million. Today, it’s under half that.

Hatch’s influence on American health care partly came from the sheer number of bills he sponsored — more than any other living lawmaker — and because he was chairman of several powerful Senate committees.

“History was on his side because the Republicans were in charge,” said Dr. David Sundwall, an emeritus professor in public health at the University of Utah and Hatch’s health director in the 1980s.

When Ronald Reagan was elected president in 1981, the Senate became Republican-controlled for the first time in decades. Hatch was appointed chairman of what is now known as the Health, Education, Labor and Pensions Committee. The powerful legislative group has oversight of the Food and Drug Administration, Centers for Disease Control and Prevention and the National Institutes of Health.

“He was virtually catapulted into this chairmanship role,” Sundwall said. “This is astonishing that he had chairmanship of an umbrella committee in his first term in the Senate.”

In 2011, Hatch was appointed to the influential Senate Finance Committee, where he later became chairman. There he helped oversee the national health programs Medicare, Medicaid and CHIP.

Hatch’s growing influence in Congress did not go unnoticed by health care lobbyists. According to the watchdog organization Center for Responsive Politics, in the past 25 years of political campaign funding, Hatch ranks third of all members of Congress for contributions from the pharmaceutical and health sector. (That’s behind Democratic senators who ran for higher office — President Barack Obama and presidential nominee Hillary Clinton).

“Clearly, he was PhRMA’s man on the Hill,” said Dr. Jeremy Greene, referring to the trade group that represents pharmaceutical companies. Green is a professor of the history of medicine at Johns Hopkins University School of Medicine. Though Hatch did work to lower drug prices, Greene said, the senator’s record was mixed on the regulation of drug companies.

For example, an important piece of Hatch’s legislative legacy is the 1984 Hatch-Waxman Act, drafted with then-Rep. Henry Waxman, an influential Democrat from California. While the law promoted the development of cheaper, generic drugs, it also rewarded brand-name drug companies by extending their patents on valuable medicines.

The law did spur sales of cheaper generics, Greene said. But drugmakers soon learned how to exploit the law’s weaknesses.

“The makers of brand-name drugs began to craft larger and larger webs of multiple patents around their drugs,” aiming to preserve their monopolies after the initial patent expired, Greene said.

Other brand-name drugmakers preserved their monopolies by paying makers of generics not to compete.

“These pay-for-delay deals effectively hinged on a part of the Hatch-Waxman Act,” Greene said.

Hatch also worked closely with the dietary supplement industry. The multibillion-dollar industry specializing in vitamins, minerals, herbs and other “natural” health products, is concentrated in his home state of Utah.

“There was really no place for these natural health products,” said Loren Israelsen, president of the United Natural Products Alliance and a Hatch staffer in the late 1970s.

As the industry grew, there was a debate over how to regulate it: Should it be more like food or like drugs? In 1994, Hatch sponsored the Dietary Supplement Health and Education Act, known as DSHEA, which treats supplements more like food.

“It was necessary to have someone who was a champion who would say, ‘All right, if we need to change the law, what does it look like,’ and ‘Let’s go,'” Israelsen said.

Some legislators and consumer advocacy groups wanted vitamins and other supplements to go through a tight approval process, akin to the testing the Food and Drug Administration requires of drugs. But DSHEA reined in the FDA, determining that supplements do not have to meet the same safety and efficacy standards as prescription drugs.

That legislative clamp on regulation has led to ongoing questions about whether dietary supplements actually work and concerns about how they interact with other medications patients may be taking.

DSHEA was co-sponsored by Democrat Tom Harkin, then a senator from Iowa.

While that kind of bipartisanship defined much of Hatch’s career, it has been less evident in recent years. He was strongly opposed to the Affordable Care Act, and in 2018 called supporters of the heath law among the “stupidest, dumb-ass people” he had ever met. (Hatch later characterized the remark as “a poorly worded joke.”)

In his farewell speech on the Senate floor in December, Hatch lamented the polarization that has overtaken Congress.

“Gridlock is the new norm,” he said. “Like the humidity here, partisanship permeates everything we do.”

 

 

The Burgeoning Role Of Venture Capital In Health Care

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , , , , , , , • Leave a comment

https://www.healthaffairs.org/do/10.1377/hblog20181218.956406/full/?utm_source=Newsletter&utm_medium=email&utm_content=ACA+Contraceptive+Coverage+Mandate+Litigation%3B+Venture+Capital+In+Health+Care%3B+Telehealth+Evidence%3A+A+Rapid+Review&utm_campaign=HAT&#038;

Image result for healthcare venture capital

The US health care system relies heavily on private markets. While private insurers, provider organizations, and drug and device companies are familiar to many, little is known about the increasing presence of venture capital in today’s delivery system. The growth of venture capital and venture capital -backed, early-stage companies (startups) deserves the attention of patients and policy makers because advancements in medicine are no longer exclusively born from providers within the delivery system and increasingly from innovators outside of it.

While venture capital -backed startups in digital health offer opportunities to affect the cost and quality of care, often by challenging prevailing modes of care delivery, they pose potential risks to patient care and raise important questions for policy makers. To date, however, an analytic framework for understanding the role of venture capital in medicine is lacking. 

A Brief History

Venture capital firms provide funding to startups judged to have potential to disrupt existing industries in exchange for ownership and some control over strategy and operations. Venture capital businesses have recently funded hundreds of startups developing technology-enabled digital health products, including wearable devices, mobile health applications, telemedicine, and personalized medicine tools. Between 2010 and 2017, the value of investments in digital health increased by 858 percent, and the number of financing deals in this sector increased by 412 percent; more than $41.5 billion has been invested in digital health this decade (see Exhibit 1). This growth far exceeds the growth of total venture capital funding (166 percent) and total number of venture capital deals (50 percent) (in all fields) in the overall economy, as well as growth in health care spending (34 percent). In 2017 alone, venture capital firms invested more than $11.5 billion in digital health, from patient-facing devices to provider-facing practice management software to payer-facing data analysis services.

Exhibit 1: Venture Capital Funding For Digital Health Versus US Health Care Spending

Sources: Data are from StartUp Health Insights 2017 Year End Report and the National Health Expenditure (NHE) Accounts Team. Notes: Dollars invested (blue bars) have units of billions. The NHE plot is expressed in trillions (T) of dollars. A deal is a distinct agreement reached between venture capital investors and a startup company, typically including parameters such as the amount of money invested and equity involved in a given startup company. 

Three key elements have likely driven this growth. First, the inability of physicians to consistently monitor patients and persistent challenges with patient adherence have created a need for digital technologies to serve as a mechanism for care delivery. Second, the increasing migration of medical care out of the hospital and fragmentation of care among specialties has increased demand for new forms of patient-to-provider and provider-to-provider communication. Third, expansions in insurance coverage and new payment models that encourage cost control have aligned incentives for technologies that aim to substitute higher-cost services with lower-cost, higher-value services.

Strategies For Disruption

The venture capital movement will likely be judged on two factors: whether it improves patient outcomes and experience, and whether it saves money for society. To date, rigorous evidence on the impact of venture capital -backed innovations is scarce. Most deals have occurred in the past few years, and most startup technologies take time to scale and are not implemented with a control group or a design that facilitates easy evaluation. Traditional provider groups may often be too small, hospital operations too rigid, and delivery systems too skeptical for a given digital health innovation to be implemented widely and tested rigorously. Moreover, data on the impact of such technologies on patients and costs may often be held privately akin to trade secrets.

However, some early small-scale randomized controlled studies have suggested potential health benefits (for example, improved glycemic and blood pressure control) of mobile health applications and wearable biosensors. Evidence may grow as startup products are brought closer to market.

Despite the shortage of rigorous public evidence, the strategies of startups to influence use and spending are apparent. Many startups target wellness and prevention among self-insured employers, using smartphones and wearable devices to engage and track patients with the hope of lowering costs through decreasing use. Although this strategy of saving money through helping people become healthier in their daily lives remains largely unproven, hundreds of companies in this space have received substantial amounts of funding. Among the most well-known is Omada Health, which provides proprietary online coaching programs and other digital tools to help prevent diabetes and other chronic diseases. It is considered the nation’s largest federally recognized provider of the Centers for Medicare and Medicaid Services (CMS) Diabetes Prevention Program, having received more than $125 million in venture funding since it was founded in 2011. 

Another segment of startups focus on a separate driver of health care costs—the prices of medical services. These firms are increasingly partnering with employers to steer patients toward lower-cost providers for expensive treatments such as joint replacements. Their path to success—creating savings through price transparency—is also largely unproven, although lowering prices through enhancing competition is a reasonable approach. 

Still other digital health startups focus on improving access to primary care via telehealth, virtual visits, and related mechanisms of accessing care. Some use biometric data (genetics or biosensor data) to facilitate early detection of medical problems. While evidence is sparse, these efforts may lead to increased use and spending. Moreover, there is no guarantee that the startup technologies will be priced below existing substitutes. To the extent that these technologies improve outcomes but at a greater total cost, policy makers and adopters of such innovations may face difficult decisions over access and tradeoffs. 

Points Of Caution 

Given differences among health care and other industries, the success of the digital health boom is far from promised. Medical evidence suggests that changes in practice typically lag behind technological advancements. For evidence-based guidelines, randomized controlled trials remain the gold standard despite their considerable expense and length, which place them out of reach for many startup technologies. In addition to showing efficacy, interventions must convincingly demonstrate that they “do no harm.” 

This culture directly conflicts with the “fail fast, fail hard” reality of venture capital, in which a return on investment is typically sought within several years. Furthermore, the complex clinical workflows of traditional medical practices offer little room for disruption without potentially putting provider satisfaction or patient safety at risk (at least in the short term). In a profession in which institutions move slowly and health is at stake, technological innovations face a higher threshold for acceptance relative to other industries.

Other barriers to adoption include: the difficulty of building successful business models centered on lowering spending in a largely revenue-maximizing system in which providers often lack the incentives to eliminate waste; HIPAA-related privacy rules and restrictions that hinder data sharing across digital platforms; incompatibility between newer cloud-based technologies that startups build and old legacy technologies used by traditional providers; and the lack of billing codes and ways of recognizing provider effort in digital health, which complicates budget or price negotiations. It is perhaps no surprise that 98 percent of digital health startups ultimately fail. 

Outlook For The Future 

In the first three quarters of 2018, venture capital involvement in health care has further accelerated. The third quarter saw an estimated $4.5 billion in digital health funding—the most of any quarter on record. As this industry grows, policy makers have an important role to play. 

Regulatory guidance is needed to shape the scope and direction of new technologies, with patient safety and societal costs in mind. Venture capital firms and startups often point to a lack of regulatory guidance on what must undergo formal approval. The current Food and Drug Administration (FDA) Digital Health Innovation Plan is a positive step toward defining the path to market for low-risk digital devices and specifying what digital health tools fall outside the FDA’s scope.

Second, a reimbursement framework for digital technologies is needed. Thoughtful debate about their prices and new billing codes should be had in an open forum. Outcomes-based pricing and other value-based approaches that go beyond the fee-for-service standard should be considered.

Most importantly, policy makers and government agencies such as the FDA, CMS, and the National Institutes of Health should study the effects of startups in health care and facilitate research on these products to inform payers and the public of their benefits and drawbacks. In the current climate, little funding has been allocated toward such research. This leaves providers and patients relying almost exclusively on industry-funded studies, at times conducted by the same startup that is selling the product or service. Publicly funded, independent studies of the impact of venture capital-backed products and services on clinical and economic outcomes are needed to establish an evidence base that patients and providers can broadly trust.

 

 

 

What We Learned in 2018: Health and Medicine

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , • Leave a comment

Developments in medicine and health that we’re still thinking about at year’s end.

We learned many doctors do not disclose financial ties when they publish research.

Dr. José Baselga, a towering figure in the cancer world, resigned from his post at Memorial Sloan Kettering Cancer Center in New York in September. An investigation by The Times and ProPublica had found that he failed to disclose millions of dollars in payments from health care companies in dozens of research articles. But Dr. Baselga wasn’t the only medical researcher who failed to make such disclosures, a problem that is aggravated by confusing advice from medical journals and a failure to adequately vet the contributors to their pages.

We were reminded about how bad the flu can really be.

In the winter of 2017-2018, 80,000 Americans died from the flu. It was the highest number in over a decade, and included 180 young children and teenagers. Some hospitals had to bring out their “surge tents” to treat the overflow of patients. While no flu vaccine is perfect at this time, the shots are particularly effective with children, and the secretary of health and human services, Alex M. Azar II, compared getting vaccinated with wearing your seatbelt. You already do that, don’t you?

We learned that when hospitals combine, patients can end up paying more.

Everywhere in the United States, hospitals are merging. Instead of creating savings that get passed on to consumers, an analysis found that in some regions, the opposite occurred. From 2010 through 2013, the price of an average hospital stay soared, with prices in most areas going up between 11 percent and 54 percent.

We learned how one city has started to turn the corner on the opioids epidemic.

Dayton, Ohio, had one of the highest opioid overdose death rates in the nation. Now, it may be at the leading edge of a waning phase of the epidemic. While the data are preliminary, a variety of factors contributed to the reduction in deaths: Medicaid expansion paying for treatment; dwindling availability of one particular drug; greater use of naloxone, which can reverse overdoses; a large network of recovery support groups; and, law enforcement and public health workers improving their coordination.

We learned that vaping among young people is a growing national problem.

E-cigarettes may help some people quit smoking, but the soaring use of Juul and other vaping devices by teenagers has motivated the Food and Drug Administration to place new limits on the sales of e-cigarette flavors. Schools are grappling with students furtively vaping, as teenagers who may never have smoked a cigarette find themselves struggling to shake a new addiction to nicotine.

We learned the disease may no longer be “a lifelong thing,” as one patient put it.

People with hemophilia, the inability to form blood clots, spend their lives menaced by the prospect of uncontrolled bleeding into a muscle or joint, or even the brain. Experimental gene therapy treatments have rid a few patients — for now, at least — of the condition. It does not yet amount to a cure, and the treatment is imperfect. But some who received the treatments are finding themselves uneasily adjusting to a life with new freedoms.

We learned untreated strep throat leads to heart failure in poor countries.

In the United States and other rich countries, cheap antibiotics cure children with strep throat easily. But in poor countries, strep can result in rheumatic heart disease and a long, slow death sentence. In Rwanda, doctors from a group called Team Heart visit once a year to perform heart valve-replacement surgery for 16 people. But there are thousands more people who need the procedure in a country that has no heart surgeons.

We learned how public health research can be compromised by private interests.

In June, the National Institutes of Health shut down a study of the effects of moderate drinking on heart attacks and stroke, following an investigation by The Times. The researchers who proposed the study sought funding from beer and liquor companies, and suggested that the results would support a daily drink as a healthy choice. The N.I.H.’s director, Dr. Francis Collins, said the trial seemed to be “set up in a way that would maximize the chances of showing a positive effect of alcohol.”

 

 

 

 

Sean Parker: Health care’s big breakthroughs aren’t going to come out of Google or Amazon

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , , , , , , , • Leave a comment

Sean Parker: Health care’s big breakthroughs aren’t going to come out of Google or Amazon

Sean Parker, the tech billionaire and cancer research philanthropist, may be a product of a Silicon Valley tech giant — but he’s skeptical about the impact those companies will have as they increasingly make a play in medicine.

“I just don’t think the innovations that are going to drive this revolution in health care and discovery are going to come out of Amazon or Google,” Parker said Tuesday at an event put on by the Washington Post. “Google has a big group that’s focused on this — they’re really smart, they’re not unsophisticated, they’re not naive — but I don’t think that’s where you’re going to see the big breakthroughs happening.”

Silicon Valley’s tech giants have invested significant resources in health care and science in recent years — and attracted big-name talent.

Amazon, along with JPMorgan and Berkshire Hathaway, has launched a new health care company aimed at developing solutions that could be implemented elsewhere in the U.S. health care system.

Alphabet, Google’s parent company, has been scooping up some of the biggest names in health care. Google just hired David Feinberg, the forward-thinking CEO of the Geisinger health system, the Pennsylvania health plan and hospital system confirmed last week. Dr. Toby Cosgrove, the longtime president and CEO of Cleveland Clinic, joined Google earlier this year. And Dr. Robert Califf, the former commissioner of the Food and Drug Administration, last year joined Verily, Alphabet’s unit working on solutions to disease.

While coders face their own formidable challenges, Parker said, “tech people coming from tech to biology so dramatically underestimate the complexity of the human body. It’s not designed by us. It doesn’t work in ways that make sense.”

Parker, the former president of Facebook, has since become a major funder of research into therapies that seek to fight cancer by harnessing the patient’s own immune system through his foundation Parker Institute for Cancer Immunotherapy, which he founded in 2016. It has funded prominent research scientists across the country, most notably James Allison, one of the recipients of this year’s Nobel Prize in medicine.

 

 

Something Happened to U.S. Drug Costs in the 1990s

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , , , , , , • Leave a comment

International Comparison of Drug Spending

American pharmaceutical spending started taking off in the late 1990s compared with other advanced nations. 

Image result for Something Happened to U.S. Drug Costs in the 1990s

Two decades ago, the costs began rising well beyond that of other nations, and in recent years have shot up again. What can explain it?

There was a time when America approximated other wealthy countries in drug spending. But in the late 1990s, U.S. spending took off. It tripled between 1997 and 2007, according to a study in Health Affairs.

Then a slowdown lasted until about 2013, before spending shot up again. What explains these trends?

By 2015, American annual spending on prescription drugs reached about $1,000 per person and 16.7 percent of overall personal health care spending. The Commonwealth Fund compared that level with that of nine other wealthy nations: Australia, Canada, France, Germany, the Netherlands, Norway, Sweden, Switzerland and Britain.

Among those, Switzerland, second to the United States, was only at $783. Sweden was lowest, at $351. (It should be noted that relative to total health spending, American spending on drugs is consistent with that of other countries, reflecting the fact that we spend a lot more on other care, too.)

Several factors could be at play in America’s spending surge. One is the total amount of prescription drugs used. But Americans do not take a lot more drugs than patients in other countries, as studies document.

In fact, when it comes to drugs primary care doctors typically prescribe — including medications for hypertension, high cholesterol, depression, gastrointestinal conditions and pain — a recent study in the journal Health Policy found that Americans use prescription drugs for 12 percent fewer days per year than their counterparts in other wealthy countries.

Another potential explanation is that Americans take more expensive brand-name drugs than cheaper generics relative to their overseas counterparts. This doesn’t hold up either. We use a greater proportion of generic drugs here than most other countries — 84 percent of prescriptions are generic.

Though Americans take a lower proportion of brand-name drugs, the prices of those drugs are a lot higher than in other countries. For many drugs, U.S. prices are twice those found in Canada, for example.

Prices are a lot higher for brand-name drugs in the United States because we lack the widespread policies to limit drug prices that many other countries have.

“Other countries decline to pay for a drug when the price is too high,” said Rachel Sachs, who studies drug pricing and regulation as an associate professor of law at Washington University in St. Louis. “The United States has been unwilling to do this.”

For example, except in rare cases, Britain will pay for new drugs only when their effectiveness is high relative to their prices. German regulators may decline to reimburse a new drug at rates higher than those paid for older therapies, if they find that it offers no additional benefit. Some other nations base their prices on those charged in Britain, Germany or other countries, Ms. Sachs added.

That, by and large, explains why we spend so much more on drugs in the United States than elsewhere. But what drove the change in the 1990s? One part of the explanation is that a record number of new drugs emerged in that decade.

In particular, sales of costly new hypertension and cancer drugs took off in the 1990s. The number of drugs with sales that topped $1 billion increased to 52 in 2006 from six in 1997. The combination of few price controls and rapid growth of brand-name drugs increased American per capita pharmaceutical spending.

“The scientific explosion of the 1970s and 1980s that allowed us to isolate the genetic basis of certain diseases opened a lot of therapeutic areas for new drugs,” said Aaron Kesselheim, an associate professor of medicine at Harvard Medical School.

He pointed to other factors promoting the growth of drug spending in the 1990s, including increased advertising to physicians and consumers. Regulations on drug ads on TV were relaxed, which led to more advertising. More rapid F.D.A. approvals, fueled by new fees collected from pharmaceutical manufactures that began in 1992, also helped push new drugs to market.

In addition, in the 1990s and through the mid-2000s, coverage for drugs (as well as for other health care) expanded through public programs. Expansions of Medicaid and the Children’s Health Insurance Program also coincided with increased drug spending. And Medicare adopted a universal prescription drug benefit in 2006. Studies have found that when the potential market for drugs grows, more drugs enter it.

In 2007, U.S. drug spending growth was the slowest since 1974. The slowdown in the mid-2000s can be explained by fewer F.D.A. approvals of blockbuster drugs. Annual F.D.A. approvals of new drugs fell from about 35 in the late 1990s and early 2000s to about 20 per year in 2005-07.

In addition, the patents of many top-selling drugs (like Lipitor) expired, and as American prescription drug use tipped back toward generics, per capita spending leveled off.

The spike starting in 2014 mirrors that of the 1990s. The arrival of expensive specialty drugs for hepatitis C, cystic fibrosis and other conditions fueled spending growth. Many of the new drugs are based on relatively recent advances in science, like the completion of the human genome project.

“Many of the new agents are biologics,” said Peter Bach, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center. “These drugs have no meaningful competition, and therefore command very high prices.”

A U.S. Department of Health and Human Services issue brief estimated that 30 percent of the rise in drug spending between 2000 and 2014 could be attributed to price increases or greater use of higher-priced drugs. Coverage expansions of the Affordable Care Act also contributed to increased drug spending. In addition, “there has been a lowering of approval standards,” Dr. Bach said. “So more of these new, expensive drugs are making it to market faster.”

“As in the earlier run-up in drug spending, we’re largely uncritical of the price-value trade-off for drugs in the U.S.,” said Michelle Mello, a health law scholar at Stanford. “Though we pay high prices for some drugs of high value, we also pay high prices for drugs of little value. The U.S. stands virtually alone in this.”

If the principal driver of higher American drug spending is higher pricing on new, blockbuster drugs, what does that bode for the future? “I suspect things will get worse before they get better,” Ms. Sachs said. The push for precision medicine — drugs made for smaller populations, including matching to specific genetic characteristics — may make drugs more effective, therefore harder to live without. That’s a recipe for higher prices.

Democratic politicians have tended to be the ones advocating governmental policies to limit drug prices. But recently the Trump administration announced a Medicare drug pricing plan that seems to reflect growing comfort with how drug prices are established overseas, and there’s new optimism the two sides could work together after the results of the midterms. Although the effectiveness of the plan remains unclear, it is clearly a response to public concern about drug prices and spending.

CVS also recently announced it would devise employer drug plans that don’t include drugs with prices out of line with their effectiveness — something more common in other countries but unheard-of in the United States. Even if these efforts don’t take off rapidly, they are early signs that attitudes might be changing.

 

 

 

 

Congress Is Making Quiet Progress on Drug Costs

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , , , , , , , , , , • Leave a comment

https://www.commonwealthfund.org/blog/2018/congress-making-quiet-progress-drug-costs?omnicid=EALERT1477719&mid=henrykotula@yahoo.com

Progress on drug costs

While the Trump administration has taken small steps to implement its blueprint to lower prescription drug prices, Congress has recently made quiet progress on some policies that could help lower drug costs for patients.

First, both the Senate and House advanced legislation to ban “gag clauses” that prevent pharmacists from telling patients that they can save money on medications by paying for them out of pocket. Certain prescription benefit managers (PBMs) have used gag clauses as part of their formulary design. While this is not a widespread industry practice, a 2016 survey of community pharmacists found that nearly 60 percent had encountered a gag clause in the previous 10 months. Two bills (S. 2553 and H.R. 6733) would prohibit private Medicare plans from instituting gag clauses. A third, related bill (S. 2554) — passed by the Senate on Monday with overwhelming support — prohibits private health insurance plans from using them. While they enable pharmacists to advise patients on how to spend less at the pharmacy counter, these bans won’t necessarily lower the prices of drugs.

Second, a lesser-known provision of S. 2554, added by the Senate Committee on Health, Education, Labor and Pensions (HELP), could help lower drug prices by shedding light on patent-settlement agreements between drug manufacturers. Brand-name manufacturers sometimes use these agreements to extend their monopolies and keep drug prices higher by directly and indirectly compensating generic manufacturers for voluntarily delaying generics from coming to market. The Congressional Budget Office has found that setting a standard to rein in these types of settlements would produce $2.4 billion in savings over 10 years.

The HELP committee provision would require manufacturers of biologics (large-molecule drugs) and biosimilars (nearly identical copies of original biologics) to report patent-settlement agreements to the Federal Trade Commission (FTC) — an important step in understanding and preventing abuse of what is sometimes referred to as “pay for delay.”

Pay-for-Delay Stalls Drug Competition, Costing Patients Billions

In 2003, Congress required patent-settlement agreements between brand-name and generic small-molecule drug manufacturers to be filed with the FTC for review after they are made. (Currently most drugs sold are small-molecule drugs, but the biologics market is growing rapidly.) Such agreements effectively delay the sale of lower-cost generic drugs by nearly 17 months longer than agreements without payments, according to a 2010 report by the FTC. These anticompetitive agreements cost taxpayers approximately $3.5 billion each year.

In 2012, the U.S. Supreme Court decided in FTC v. Actavis that a brand-name drug manufacturer’s payment to a generic competitor to settle patent litigation can violate antitrust law. After the Court’s decision, the number of pay-for-delay agreements declined two years in a row. With drug companies now required to report these settlements to the FTC, the agency has been able to act to protect patients from anticompetitive deals that delay cheaper, generic drug products from coming to market. The FTC reviews reported settlements and, if it determines an agreement violates antitrust law, the agency challenges the agreement in the courts.

For example, in 2008 the FTC sued Cephalon, Inc., for paying four generic companies $300 million to delay marketing of their generic versions of Cephalon’s sleep-disorder drug, Provigil, until 2012. In 2015, the FTC reached a settlement with Cephalon’s owner, Teva Pharmaceutical Industries, Ltd., which agreed to ending pay-for-delay agreements for all their U.S. operations. The company also paid $1.2 billion in compensation for Cephalon’s anticompetitive behavior.

FTC Reporting Requirement Does Not Apply to Biologic and Biosimilar Manufacturers

The FTC reporting requirement applies only to small-molecule drugs, however, and not to far more expensive biologics and biosimilars. The potential savings of having biosimilars available for sale are significant: even one biosimilar competing against a brand-name biologic can result in a 35 percent lower price for patients and payers. Without delays in competition with brand-name biologics, biosimilars could save $54 billion to $250 billion over 10 years.

But there are concerns that manufacturers are entering into pay-for-delay agreements to keep prices for these drugs artificially high. Since 2015, when the biosimilar pathway was implemented, the FDA has approved 12 biosimilars, yet only three are currently available to patients — likely because of patent litigation and pay-for-delay agreements.

FTC Review Is Part of the Solution

In his remarks upon releasing the U.S. Food and Drug Administration’s Biosimilars Action Plan in July, FDA commissioner Scott Gottlieb noted the FTC’s key role in monitoring U.S. markets to protect consumers from anticompetitive behaviors, including those of prescription drug manufacturers. He also pointed out the patent litigation tactics manufacturers use to delay biosimilar competition.

As it does for the small-molecule drug market, the FTC can play a proactive role in monitoring what is happening in the biologic and biosimilar markets. At a workshop on drug pricing held last year, acting FTC chair Maureen Ohlhausen said that while her agency has been making progress in eliminating pay-for-delay agreements, it has not seen the last of them. She said they will remain a target. But to move forward, the FTC needs clearer authority to review patent settlements between biologic and biosimilar manufacturers.

With Senate passage of S. 2554 and its FTC reporting provision, Congress has taken an important step in encouraging a robust biosimilar market. (While the House has not passed a similar measure, the Senate bill could be added to a reconciliation of the House and Senate gag clause bills.) Engaging all the relevant market regulators — including the FTC, the U.S. Patent and Trademark Office, the Centers for Medicare and Medicaid Services, and the FDA — will inject needed competition into this nascent market and help lower drug prices for U.S. consumers.

 

Why the Theranos saga and Holmes’ trial is good for innovation

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , • Leave a comment

Why the Theranos saga and Holmes’ trial is good for innovation

The criminal trial of Theranos CEO Elizabeth Holmes will help entrepreneurs see the legal ramifications of hyping and under-delivering presumed medical advances and be ultimately be good for innovation.

“Fake it until you make it” is an oft-repeated phrase among entrepreneurs promising to revolutionize, disrupt or transform.  It can, however, have severe consequences for the healthcare sector when doctors and patients place their trust in the new or evolving venture.  The criminal trial of Elizabeth Holmes, who faces a 20-year prison sentence, will help healthcare entrepreneurs see the legal ramifications of over-promising and under-delivering presumed medical advances.

This trial will generate headlines. More importantly, it will be a teachable moment for all of us trying to innovate our way through a deeply complicated and entrenched healthcare system – especially regarding patient-empowering technology. Holmes, and the company she founded, Theranos, marketed a means to disrupt traditional diagnostic business models where two large companies dominate a $54 billion market.  The idea was to put patients in control of blood testing, using less amounts and creating a faster, lower-cost alternative.   The business model envisioned consumers using Theranos equipment at retail locations including drug stores and supermarkets.  As the marketing phrase goes, that was the “steak,” or substance to her pitch, but there was also “sizzle.”

The young, telegenic, and articulate Holmes became the widely-known public face of the company. Wearing black turtlenecks to draw comparisons to Steve Jobs and calling one of her blood-test devices “Edison” to align herself with the famous inventor, the media could not resist the story.  That part worked: Theranos at one point was valued at $9 billion.  Holmes declared her lab-test device was “the most important thing humanity ever built.”  Much of the narrative she created about Theranos will now be used as evidence in her criminal trial just as it was in a separate Securities and Exchange civil fraud case in March.

Here is something we already know from the federal indictment handed down last month: prosecutors will cite Theranos press releases, media interviews, and promotional materials to support allegations that Holmes knowingly committed criminal fraud.  In one example, the U.S. Attorney’s office for the Northern District of California cites a specific interview in which Holmes told a media outlet that Theranos could run “any combination of tests” from a single small blood sample.  The indictment goes on to list public statements such as one on the company’s website that, “one tiny drop changes everything.”

In the Securities and Exchange Commission civil case, which Holmes settled, media interviews with the business press, which in turn were said to solicit investors, are likewise cited as evidence of financial fraud.  The SEC’s civil complaint states that in 2013, “Holmes and Theranos began publicly touting Theranos’ proprietary analyzers in interviews with the media, notwithstanding Theranos’ use of commercially-available analyzers for patient testing.”  Here too, several interviews with financial media outlets were used as examples including an e-mail exchange between Holmes and a reporter in which she tried to shape the story.   As is widely known, the generally favorable media coverage that accelerated in 2013 abruptly ended.

Her company came under the scrutiny of The Wall Street Journal in 2015 when company whistleblowers went public raising questions about the underlying technology.  This put Holmes and her company on the government’s radar.   The narrative soon changed to actions intended to correct the company’s mistakes. Most notably, Theranos voided or corrected nearly a million blood-test results, calling into question untold numbers of health decisions made between doctors and patients.

Judges and juries take an especially harsh view of potentially harmful impacts on consumers.  The FBI agent who investigated the case described charges of misleading consumers and doctors as endangering “health and lives.”  Likely the most serious charge among the 11 counts Holmes faces is being unable to produce accurate and reliable results for numerous blood tests, including the detection of HIV, despite assertions to the contrary.

Yet Holmes is only the most recent and well-known among many healthcare practitioners who face charges or convictions of fraud.  We can go back to the patent medicine movement in the early 1900’s, where a popular advertising slogan at the time was “a cure for what ails you.”  In the late 1800’s there was actually a real-life snake oil salesman who traveled the country and gave demonstrations with live reptiles on how he made his product.  Such antics with fake medicine led to the passage of the Pure Food and Drug Act in 1906.  So, a century later, why does this keep happening?

One recurring theme leading to healthcare fraud is what medical scholars have labeled “eminence-based” medicine.  Simply put, this is an over-reliance on personality and stature from the individual believed to have authority on a particular medical subject.  The term is a play on the words “evidence-based” medicine, where facts are supposed to be used to evaluate medical advances.

Some lessons are already being learned. Early stage and start-up blood-testing companies are emphasizing peer-reviewed data and clinical trials.  One telling insight from an entrepreneur, as reported in Marketwatch, describes Theranos as a “big crater in the industry.”  The founder of privately-held Athelas, a blood-testing firm, said Theranos, if executed correctly, “would make a massive impact in a really old, archaic industry.”

Faking it until you make it may work to a certain point and allow entrepreneurs a limited degree of latitude among investors as they develop technical approaches to support business models.  As an entrepreneur myself, I am well aware of the need to convincingly show the promise of an invention – even before it is fully finished. However, it becomes financial fraud — potentially criminal activity — when you are not honest about the risk.  Medical and consumer fraud, when patients are sucked into the hype and subsequently misled, becomes exponentially more serious. Neither is acceptable. The bottom line: Holmes’ trial will offer insight leading to less hype and more high-quality innovation.