NEW ENGLAND CAPITAL VENTURES

I attended the Personalized Medicine conference in Boston recently. The overall theme centered around clinical effectiveness of genetic tests, the economics, the logistics of interpreting these tests and innovation in this space.

Talks began by discussing issues facing healthcare in the US today and what measures, federal and private, were being put in place to mitigate some of them. There is no right or wrong on any of these arguments being made because the truth is – no one has a darn clue about what the right path is to ‘fix’ the system. One could assert from logical conclusions that the top 2 issues of increasing costs and decreasing access to care providers is not sustainable – even in the short term. Here is my view on this issue.

A capitalistic economy has way too many inter-dependant relationships influencing each other at different intervals. By that I mean one cannot expect to have 100% success by introducing a pseudo-socialist healthcare model in a capitalistic economy. And a capitalistic economy is far from perfect, rather thrives on hype cycles and steep economic curves. But somehow, our economy has managed to correct itself over the decades, by way of intervention from the market itself or by way of the feds helping us out or some combination of both. This is the price we pay for innovation.

The notion that ‘one-size-fits-all’ will act as a pixie-dust solution to mend our broken ways is ludicrous. We need data exchange standards by way of a federal mandate (kudos to the CMS/HHS office who is already doing this piece), we need to re-align the payment system to where its needed the most (i.e. Primary Care) and provide incentives to enter medical school and lastly, pay for outcomes and not for producing widgets (the most difficult of metrics). Science is and will always be there to compliment medicine – but science is not the answer to fix medicine.

o v e r h e a r d “Less than 1% of total payments in healthcare actually go to the primary care doc”.

Then there was the grim news of some retail genetics companies like Decode Diagnostics declaring bankruptcy – which was typically expected for any hype-cycle. DNA Direct saved itself by realigning its strategy to work directly with labs and care providers than relying entirely on retail. Besides, retail genetics is more of a fad than a real science that is clinically actionable at this point. Sorry 23ANDME, no one really cares about you at this point. Maybe in 5 years I will throw a glance at you. We really don’t have time for what’s cool right now. My advice to you – stop ‘selling risk’ and scaring people, educate the medical community (your biggest allies are primary care docs) and stop making claims that instigate litigations behavior by the patient.

The figure-heads in healthcare IT presented the usual challenges of IT and operational infrastructure to support genetic tests. And the potentially shifting lab test market from the ‘lab’ to the physician office ultimately to the patient’s house and into the patients hands in real-time. The expected time-line for these events to be a reality was 2020.

o v e r h e a r d “It won’t be long before users will be able to whip out their Blackberry’s and swipe their finger across the screen for a real-time genetic test that will tell them exactly what they need to be doing to maintain their health”.

We heard from several venture capitalists on panels with CEO’s from big name firms like McKesson, Labcore, Elli Lily, United Health and Blue Cross Blue Shield. VC’s, known for their brutal honesty, were . . . . well . . brutally honest. Accusing VC’s of ‘funding crap and creating market turmoil’ is meaningless because VC’s create markets for which people pay. And sometimes people pay for crap. In this case, the ‘value’ equation is $’s. If you don’t agree with me, help me understand what real social interaction value does a company like Facebook provide?

There are exceptions of course – but I am trying to defend against general notions here. VC’s go where there’s money and they do create sustainable value. If BCBS or United Health or J&J pay for solutions from companies funded by VC’s, then that’s an innovation factor that should be addressed at United Health – not the start-up. The start-up exists because United Health fails to innovate. VC’s fuel innovation gaps. And entrepreneurs are the ones who mitigate these gaps. They are my true hero's.

o v e r h e a r d “VC’s should make decisions that help sustain tangible value, not just focus on investor $ ”.

There was a ton of discussion around clinical efficacy from genetic tests compared to current guidelines and standard treatment protocols. The room was basically divided 50-50. The scientific community urged the medical community to lean towards genetic tests as the gold standard for the future but reality is very different and there is no established clinical value in deferring screening or diagnostic decisions to genetic tests. Family or social history is good enough without any significantly better outcomes. This might change 10 years from now, but not in the foreseeable future – thus putting primary care out of the equation (again). The business community felt that payments and reimbursements should be addressed before anything else. Physicians like to see administrative efficiencies and clinical effectiveness – but more importantly – there needs to be a financial argument for a switch.

o v e r h e a r d “when all else fails, examine patient”.

There were many start-up companies touting their solution as the nest best thing. In today’s economy and from what I have seen in the past, I am not easily impressed by such claims – no matter who you are or what you do. This is healthcare, not eCommerce. There were a few that seemed to be adding tremendous value to existing infrastructure – whether its making benefits management decisions on behalf of the employee / insurance company or helping pharmacies get better at medication error / interaction management at the point of dispensing.

There was no mention of GoogleHealth or MS Health Vault or any other PHR’s. I was expecting to at least see them because the distribution and interpretation mechanism behind the education piece for patients seemed synonymous with PHR’s. One would think that Navigenics or Genetech may want to partner with the likes of Dossia but I guess that remains to be seen.

There was also very little discussion about privacy and the odd-ball state vs. federal law issues facing compliance officers and regulators alike.

o v e r h e a r d “GINA is just HIPAA in disguise – a law without teeth”.

Lastly, the opportunity for biggest impact still remains in the asymptomatic domains of oncology and cardiology (highest mortality biggest procedure costs). Yes, there are R&D dollars in infectious disease, chronic disease conditions like diabetes, asthma and certain degenerative states like Alzheimer’s – but they pale in comparison with the former two I mentioned above. It also seemed that there were more resources being put in areas of diagnostic testing compared to procedural or pharmacogenomics.

Some of the pharma folks with the old school block-buster drug mentality are clearly showing signs of nervousness and they should. The philosophy of long drawn out clinical trials for large baseline population based on homogenous stratification will not work. There are ~a dozen or so drugs which currently require (by the FDA) to have a genetic test done before they can be administered. And there are several dozen in the FDA pipeline slated to hit the market that will absolutely require very specific genetic tests to be qualify as administrable. Medications are no longer considered patient agnostic, rather patient dependant.

o v e r h e a r d “over 80% of women diagnosed with breast cancer undergo chemo, however it is shown only around 5% or so actually benefit from this therapy and an even smaller percentage of this 5% are 100% successful in the long term”.

This country faces big challenges. Basic care delivery and access issues still persist and ~80% of the physicians across the US have no computers or any way to share any information outside their office. Physicians today struggle with payments from insurance companies, catering to the free care and under-insured pool and have very little human contact time to make good of what the patient really cares for.

Our ability to make sense of care delivery before delivering science is critical. As long as we put science before how humans behave and what they expect, we will still be struggling with the same questions 10 years from now.

o v e r h e a r d “Healthcare is the last cottage industry in America other than dry-cleaners. And even they use computers”.