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New health economy, patient-centric system yield opportunities for tech providers

BY Richard Monks

As health care in the United States continues to move toward a patient-centric system, new opportunities are opening up for technology providers.

(For the full chain pharmacy section of DSN's Aug. 25 issue, click here.)

According to “Healthcare’s new entrants: Who will be the industry’s Amazon.com?” a report released this spring by the PricewaterhouseCoopers Health Research Institute, the United States’ $2.8 trillion healthcare industry is being upended by “companies attuned to the needs and desires of empowered consumers.”

These emerging players, the report noted, are setting the stage for what researchers call the “New Health Economy” that has the potential to alter how the country ‘s healthcare dollars are spent, and give more companies a piece of the pie.

“These new entrants are poised to shake up the industry, drawing billions of dollars in revenue from traditional healthcare organizations while building lucrative new markets,” a team of PwC analysts wrote in the 20-page report that was released in April.

“Within a decade, health care will feel very different than it does today,” the report said. “The players may be different, with partnerships between new entrants and traditional organizations.”

PwC, which surveyed 1,000 people across the country as part of its research, said that many of the companies that will drive this revolution will be able to provide healthcare providers with cutting-edge technologies that will make delivering patient care more efficient and convenient.

The report stressed that these technology providers are in a particularly good position to play a central role in the New Health Economy. Many of those polled for the study said they are ready to abandon traditional care models for ones that more closely resemble experiences in banking, retail and entertainment. Many of the healthcare services that would be directly affected by these new models are ones that are already being offered in pharmacies and in-store clinics.

“Respondents were presented with a series of familiar medical tests and treatments, from strep throat diagnosis to administration of chemotherapy, in new settings closer to home and often enabled by technology,” the researchers wrote. “About half indicated they were likely to choose these alternatives.”

PwC noted that people between the ages of 35 years and 54 years, and those struggling to cope with rising healthcare costs, were most likely to choose the new possibilities.

Many of the technology companies that will become more central players in providing health care in the future are already staking their claim. PwC said that 38 of the Fortune 50 companies with a major stake in health care, 24 are new entrants, with eight of them being technology and telecommunications firms.

Armed with consumer prowess, brand recognition and digital savvy, these companies already have begun making forays into health care. Many of them have centered their efforts on mobile technologies, something the report said will be a centerpiece of the New Health Economy.

Earlier this year, for example, Samsung included a built-in heart-rate monitor in its new Galaxy S5 smartphone. That comes on the heels of Apple being given a patent last year for a “seamlessly embedded heart-rate monitor” for such devices as its iPhone.

Meanwhile, AT&T, Time Warner Cable Business Class and Google have formed spinoff companies or entered into joint ventures with established healthcare providers, melding traditional services with new technologies to make health care more convenient for consumers.

“These players arrive on the health scene with strong consumer credentials,” the PwC report noted. “Many have deep relationships with millions of customers and rich databases of information on them.”

The researchers said that as the possibilities of these new ventures become apparent and they find their way into everyday use, investors are becoming more willing to back further game-changing technologies.

“At a time when venture capital investment in life sciences is down, money is pouring into start-ups targeting digital health, price transparency, workflow and electronic medical records systems and population health management,” PwC said. “In some cases, these companies are looking for a piece of the $2.8 trillion pie. In others, they hope to entice customers to other parts of their business with quality health care.”

The newest entrants into the healthcare arena are creating new markets and making inroads to controlling costs, the report said.

“[They are] helping customers make wise, cost-effective health choices.” the authors wrote. “And with the array of mobile apps, online e-docs, neighborhood retail clinics, urgent care clinics, primary care doctors and hospital emergency departments, the appetite for smart customer guidance will grow.”

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Backlog of generic drug applications at FDA

BY Richard Monks

Despite creating a detailed plan to speed up the rate at which generic drug applications are reviewed, experts say a backlog has developed at the Food and Drug Administration’s Office of Generic Drugs.

(For the full chain pharmacy section of DSN's Aug. 25 issue, click here.)

“They are buried,” Robert Pollock, a former acting deputy director of the OGD, told the Wall Street Journal earlier this month.

“They are on track to receive more than 1,500 [applications] this fiscal year,” he said. “The estimates were for between 800 and 850 applications, and the funding was based on assumptions of a workload that were far below what they are seeing. I believe that OGD needs to change the way it reviews applications.”

Pollock, who is now with Lachman Consultants, where he advises generic drug makers on regulatory issues, said the FDA needs to find ways to boost staffing even as it faces budgetary constraints.

Two years ago, the agency was authorized to start collecting fees from generic drug makers in order to increase the number of facility inspections — especially those overseas — and speed up application reviews in order to ensure safety and bring new generics to market faster.

This summer, however, the FDA has seen an unexpected number of applications that have not been processed. Regulators say the situation was created partly by a deadline for submitting applications that reflected required changes in testing medicines.

However, some in the industry contend that the backlog is due to a more fundamental problem, as the FDA struggles to deal with a growing amount of paperwork.

Pollack said he feels OGD’s problems could worsen if the number of applications from companies based in China starts to accelerate. Any further slowdown in approvals, he said, could result in generic drug makers and the FDA sparring over the next round of fees that are used to fund the program.

The number of generic drugs approved by the FDA has been relatively stable over the past few years. In fiscal 2010, the agency approved 426 medicines. A year later, the total hit 458, and the number of approval topped out at 517 in fiscal 2012. Last year, the FDA approved 330 generics.

The number of applications received, however, has not kept pace with the approval rate. The FDA said that in the current fiscal year, it already has received 1,440 approval requests, including 600 in July alone.

While not causing any disruptions in the market so far, some have suggested that further approval delays could adversely impact efforts to control healthcare spending.

According to the IMS Institute for Healthcare Informatics, 86% of all prescriptions in the United States last year were for generics.

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Focusing clinical collaboration on prevention

BY Jim Frederick

“It’s not enough to pull drowning victims out of the river. You have to walk upstream to find out who’s throwing them in.”

Physician and educator David Kilgore invoked that piece of wisdom from Episcopal bishop V. Gene Robinson to describe the current state of medicine in the United States — and the steps needed to drag the nation’s outmoded, costly and inefficient healthcare system into the 21st century. For doctors and other health providers, Kilgore noted in a panel discussion at the New York Times “Health for Tomorrow” conference, “walking upstream” means changing the focus of care from treating serious health complications after they occur to preventing them in the first place whenever possible.

(For the full chain pharmacy section of DSN's Aug. 25 issue, click here.)

“We’re still stuck in the model from the first transformation of medicine, which did a great job with infectious disease, acute illness and injuries. But it’s not an effective model for chronic disease,” said Kilgore, clinical professor of family medicine at the University of California School of Medicine. “The river is full of drowning people, and we’re going to need a lot more than drugs or devices to usher in the second transformation of medicine.”

That transformation, he said, “has to … focus on prevention, health and wellness.”

“We have more than two decades of research that clearly shows what keeps us healthy and what prevents chronic disease,” Kilgore said in a group presentation on the future of the doctor-patient relationship. “It’s the four foundational pillars of health: healthy diet and nutrition; exercise and activity; [attention to] mind/body [living conditions], including social support; and healthful sleep.”

Those factors, along with “toxin avoidance,” Kilgore said, are critical to long-term wellness. “These are powerful interventions that keep us alive longer, that help us have less disability and suffering for a lower-cost, greater-quality of life and less side effects. So the challenge for us as a profession and a society is how to move that second transformation … into [community outpatient settings like] clinics, so that the primary care physician, instead of rushing from room to room … is replaced by a new kind of healthcare team that surrounds and is part of that physician’s practice.”

That collaborative team of professionals, including nurses, pharmacists, clinic staff and nutritionists, Kilgore said, “then helps patients develop healthy lifestyle skills, self-management skills and self-efficacy.”

Driving the acute need for fundamental transformation in healthcare delivery, he added, is the fact that “in just the last 20 years, there’s just been an explosion of chronic disease. The incidence of diabetes has more than tripled. Sixty-eight percent of U.S. adults are now overweight or obese.”

“It’s a tsunami of diabetes and chronic disease,” Kilgore said. “And it’s completely changed what it means to be a family physician on the front lines. It very much seems like a ‘sick care’ system.”

Indeed, Kilgore said, “out of the $2.7 trillion [U.S. healthcare] budget, just 5% is spent on prevention and public health. We need to think about moving the whole enterprise upstream, targeting people even before they have that chronic disease. That means bringing tools for health and wellness to the workplace … to schools, to community centers. It’s really incumbent on us to make sure patients have the tools they need for a healthy lifestyle.”

Other panelists agreed. “Despite lifestyle behaviors being primary contributors to most chronic diseases — which according to the CDC, are consuming at least 70% of our healthcare dollars — we don’t have a practice model that leads to achievable or sustainable behavior change,” said Karen Lawson, a physician who directs health coaching at the Center for Spirituality and Healing.

“I think there’s a missing provider … who partners in a relationship-centered, client-driven process to facilitate and empower patients to achieve the health beliefs and behavior changes that they want,” Lawson said. “We call that person a health coach … who applies their knowledge and skills to assist clients to mobilize their own internal strengths, to access their best external resources and to make the changes they want to make to optimize their well-being.”

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