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PHARMA/TECHNOLOGY: Picking your statin to match your genotype

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It’s for long been a somewhat dirty little secret of the pharma world that not all drugs work for not all patients. That goes for statins too, despite the best medical advice saying that we should all be on them. Forbes has an interesting little article showing some developments in the combination of genomic diagnosis with therapy to figure out which statin works best for which genome. Some farsighted pharma professionals (notably Kim Slocum at Astra Zeneca) have been preaching for years that the combination of genomics, information systems and better targeted pharmaceuticals will not only improve health, but also improve the financial health of big pharma.

Of course the corresponding fear of many within big pharma is that as a result of this trend there will be no such thing as a blockbuster, because genomic testing will show that most drugs should be restricted to a smaller segment of their target population. So instead of 3-4 leading statins, we’ll need 20-30 — each with their own need for clinical trials, $800m development costs and expensive outreach programs.

Whether Kim’s right or the nay-sayers are right, it looks like we’re going to a world where genomic testing, drug delivery and outcomes information will be better linked. And that will be a different world for pharma and doctors, and hopefully a better one for patients.

HOSPITALS: Capital issues for hospitals

The NY Times has an article suggesting that hospitals may soon have less ability to invest in capital projects than they have had in the last few years. The blame is put mostly on higher interest rates. I’m a little suspicious about that logic. Hospitals are in much better financial shape now than in the very late 1990s as they are over the worst effects of the Medicare cuts in the BBA, and they now tend to be in bigger systems which have better credit ratings and are able to borrow more cheaply.

Molly Coye from HealthTech said at the conference last week that there are 160 acute care hospitals under construction, with another 223 in planning. This is all based on several forecasts that we’ll need lots more (20-40% more) hospital beds in 10-15 years. (There are around 5,000 hospitals in the US now). Obviously some of the new ones are replacing older ones, but we clearly are going to a world of more beds, and a world of more demand.

The article in the Times says correctly that if money gets tight hospitals will spend on stuff they can bill for (new Cardiac cath labs) and less on stuff they can’t bill for (new CPOE or other IT systems). But my sense is that these long term plans to invest in plant and IT are based on long term strategies as much as on the availability of cheap interest rates. So I’m not as pessimistic as some quoted in that article about the likelihood of these investments drying up.

Of course, exactly how much hospitals are spending and will spend on IT and other capital improvements is a matter for some debate, with several leading analysts out with recent reports that disagree. I’ll comment on that later this week.

HOSPITALS: Tenet borrows another $500 million

Speaking of hospital systems accessing capital, after the market close Tuesday Tenet borrowed another chunk of cash, about $550m worth and rolled over some of its shorter-term debt to longer-term notes. It now has about $1.1 billion cash available, but remember that it "acknowledged in March that its current capital structure was not meant to cover any major settlements." Whether these newly issued bonds (paying over 10%) will be a good buy or will be future wallpaper is anyone’s guess.

HEALTH PLANS: Calpers to vote against Anthem-WellPoint merger

In a quick update to a story I commented on last week, the payout to Wellpoint execs has got the big Kahuna of all shareholders, CalPERS (the California State employees’ pension system), in a tizzy. Calpers now plans to vote against the Anthem-WellPoint merger. Realistically this won’t stop the merger, and neither probably will the disapproval from the State government. But expect there to be some more to-ing and fro-ing between the state and Wellpoint.

However it’s hard to see what the state would usefully do with the extra money. There are already two huge Foundations in California pumping out (very good!) research and programs with the money from the Wellpoint conversion back in the 1990s. And realistically there’s not enough money available to solve California’s real health care crisis–the 25% uninsurance rate–even if Len Schaeffer gave all his marbles back.

TECHNOLOGY: Open Source EMRs, the AAFP, and CMS grants gone awry? (with apologies to George Lucas)

Following a Matt Quinn story in THCB last month, Mark Spohr, MD, has written to me about the AAFP and its grant from CMS to further the use of EMRs in family practice. This topic is a little obscure but it’s worth me attempting to relay the story and see if there’s any meat here. Much of the credit here goes to Jacob at DocNotes who’s been much involved. As some might find this all a little dry, I’ll try to confuse it with a popular movie trilogy.

Long, long ago, in a galaxy far far away, a feisty EMR company called Oceania (which was a client of mine in the mid-1990s) developed a really cool template based EMR, which a friendly giant promised to use. But the giant, known as Kai-Sir, went over to the Dark Side and turned its Death Star rays on poor Oceania in favor of a more Epic adventure.

But while Oceania’s life ebbed away, its force continued to be felt faintly in far corners of the galaxy. A few years later the EMR that was Oceania’s was seized on by the noble AAFP as the basis for its open source initiative which attempted to free the poor doctors of that galaxy from dependence on expensive proprietary EMRs. Rebel fighters cheered at the thought of the open source force being with them.

But of course the Empire always Strikes Back, and last November as Jacob blogged direct from Republic’s council meeting the AAFP changed gears and went with an "open standards" approach cutting a deal with nine bounty hunting proprietary EMR vendors, for which it lined up discounts. So is Java The Family Doc actually helping to kill off the open source force, or are there simply not enough rebel doctors to help resist the pull of the Empire? In any event, a suspicious organization declaring itself to be at the Center of the M&Mpire gave some tribute to Java the Family Doc.

Now in June 2004 Matt in THCB and others reported that Center for M&Mpire said the grant was supporting open source. As Mark Spohr wrote to me.

    The AAFP grant reported in your June 3 blog has been widely reported as a grant to report open source software (including in the Federal Register). However, it appears that the AAFP has changed the project and will be supporting a proprietary software system.

    According to a communication from William Saunders, Deputy Director, Office of Research, Development, and Information at the Center for M&Mpire:"CMS’ grant provides some funds to support an evaluation of AAFP’s effort to develop and pilot test a low-cost, standards-based electronic health record that could be used by smaller family medical practices. Originally, AAFP intended the project to develop open source software, however, they were unable to achieve the support they had anticipated from information technology companies and from other physician specialty societies, and found it advisable to focus on testing open standards software instead."

    I find it very odd that a grantee is able to change the purpose of a grant after it has been approved. This is not a minor change, it is a fundamental change in the activity from supporting open source to supporting proprietary software. The fact that the proprietary software will be testing data standards is irrelevant.

    I’ve been trying to pin down CMS on this and they don’t seem to think it’s a problem for AAFP to change the terms of the grant after the fact. I think an audit should be done.

The AAFP is presenting it’s current activities as a way for a few brave rebel family docs to experiment with various EMR systems, and fight the forces of proprietariness. But as Mark believes, has the dark side of the force over come them and upon accepting the Evil Empire’s aid, have they become Darth Vaader? With possibly much more tribute on offer from the forces of the emperor is there hope that the Millenium Falcon will turn back to help destroy the Death Star so that the brave rebels may regroup for another try? And do the citizens of the Galaxy care?

If you’re interested in this subject, comments to me please, and I promise that I won’t do any pre-quels in the same style, even if George Lucas couldn’t resist the same temptation!

QUALITY: The “White” Wall of Silence, by MATT QUINN

In Washington state a doctor wants a fellow doctor suspended over malpractice testimony. Matt Quinn (again endearing himself to my physician readers, and now getting THCB on the California Correctional Officers Association hit list too) comments:

    More intra-physician contentiousness regarding the malpractice issue with some advocating reprisals on docs who serve as expert witnesses against other docs… I thought that was limited to cops and prison guards!

    While I’m sure that there are plenty of docs who are more than willing to say just about anything on the stand for a buck, wouldn’t having (either or both) institutionally agreed-upon care standards (by which to validate testimony) and quality ratings for docs make things much clearer for juries?

    Again, this speaks to the state of the medical profession… and the AMA and other institutional organizations should step up to take the megaphone away from those who act like children…

HOSPITALS: Can Tenet really afford $1 billion to settle?

Those dumb speculators who gave up on Tenet when its stock fell to $9, should have hung on. In the past week it’s been up as high as $13. However, that may all change with the reports that Tenet is discussing a global settlement with the Federal government of around $1 Billion to settle claims that it defrauded Medicare. Even if it sells all its California hospitals (for a guestimated $600m) and it dips deeply into its credit line (which is around $800m), this certainly puts Tenet in a very tough spot. If the number required to keep operating and to be allowed to stay in the Medicare program is that high, you have to suspect that the company will have trouble surviving. And back when I was losing money on its stock it allegedly had only $30m put aside for this settlement.

Meanwhile not many questions about the settlement were raised at the Tenet shareholders meeting, which Matt Quinn reviewed recently in TCHB. Perhaps shareholders should have been paying more attention.

PHARMA/POLICY: Kaiser FF reports on Seniors views on the Medicare bill

In a vain attempt to clear THCB’s backlog — I tend to save every interesting story and lately there have been too many — I’m just posting a quick link to the Kaiser Family Foundation’s recent focus groups with Medicare recipients. Lots of good stuff here which the wonks among you will dive into (if you haven’t already) but the top line is that seniors think the new law is confusing and a bad deal. Seems to be proof that while Tom Delay and Denny Hastert can please the drug companies, PBMs and HMOs all at one, it indeed could all cause their good friend George W. Bush some dis-pleasure come November. Not that he hasn’t got his hands full elsewhere.

Note another senior (Ted Kennedy)’s line on the matter–(I can’t find it so I’m paraphrasing…please send it to me if you have it) "Who do you trust, the Republicans who fought against Medicare every step of the way and are now giving your money to the drug companies and the HMOs, or the Democrats who founded Medicare and will fight every day until it covers every senior completely"

POLICY: Craziness and deception from the College of Pediatricians

So the American College of Pediatricians has come out in unanimous favor of a constitutional amendment to ban gay marriage. In their terms this is based on "the firm knowledge that the basic father-mother family unit, within marriage, is the optimal setting for childhood development". So how many of you reading this think that the leading national association for Pediatricians has just gone off its rocker?

Don’t worry it hasn’t, or at least not completely. The actual mainstream organization is the American Academy of Pediatrics. And although they too have some very dubious policy reccomendations, such as this one promoting the ban on marijuana for adults because this will supposedly help children (whatever the cost to adults or society, if indeed prohibition does help children, which it doesn’t),they’re unlikely to move into the firestorm of the gay marriage "debate". Not that I’m an expert but it seems to me that kids brought up in gay families do OK, and plenty brought up in heterosexual ones don’t!

However, my real concern is that when the wider public hears this news, how are they supposed to know that the American College of Pediatricians is a bunch of radical fundamentalist wingnuts who bitterly oppose abortion, gays, sodomy, contraception, and probably opening hours for supermarkets on Sunday? (OK I made the last piece up, but it’s probably true). Their web site demands that their members "maintain high ethical standards personally and professionally". Pity that the organization itself is prepared to be completely deceptive in its very name!

PHARMA: A quick update on the GSK Paxil probe, by The Industry Veteran

The Industry Veteran has a quick contribution to the Paxil story, gathered from the home town press of GSK.

    The London press claims that the British Healthcare Regulatory Agency is too cozy with GSK and that it took an outsider such as Eliot Spitzer to initiate a probe of the company’s Paxil malfeasance. It looks to me as if the Brits are already less inclined than the American press and government to swallow Big Pharma’s propaganda. If they decide to really get off their asses, the industry better set aside billions in litigation reserves.

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