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Survey: Majority of Providers Predict Success for New Generic Drug Company, Project Rx

May 25, 2018
by Heather Landi
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Back in January, four health systems, in consultation with the U.S. Department of Veterans Affairs (VA), announced a collaboration to develop a new, not-for-profit generic drug company with the aim of making generic medications more available and more affordable for patients and bringing more competition to the generic drug market.

A recent survey from Reaction Data, a market research firm focused on the healthare and life sciences industries, has found that 90 percent of hospitals and clinics said they would become a customer of this new drug company.

Salt Lake City-based Intermountain Healthcare is leading a collaboration with St. Louis-based Ascension, SSM Health, a health system also based in St. Louis, and Trinity Health, a health system based in Livonia, Michigan, along with the VA to develop the new nonprofit generic drug company, called Project Rx. The five organizations represent more than 450 hospitals around the U.S.

In the press release issued back in January, health system officials said the new company intends to be an FDA-approved manufacturer and will either directly manufacture generic drugs or sub-contract manufacturing to reputable contract manufacturing organizations. The health system officials state that the new company will “provide patients an affordable alternative to products from generic drug companies whose capricious and unfair pricing practices are damaging the generic drug market and hurting consumers.”

Reaction Data surveyed 700 key decision-makers in the provider, payer, and pharmaceutical industries to gauge what impact they thought Project Rx, as it’s called, would have on the healthcare industry. The report reflects responses from executives from 605 provider organizations, 91 big pharma and 53 payers.

While 60 percent of providers were unaware of the venture, when asked if it will be a success, the responses were overwhelmingly positive. Sixty-nine percent of providers believe the new venture will be successful, while 58 percent of payers expressed optimism.

Respondents also were asked if they think other hospitals will follow suit Among providers, 77 percent said they believe other hospitals will become customers of the new drug company. Among payers, only 63 percent think other hospitals will follow suit.

According to the report, prescription drug prices are rising at an alarming rate. In 2016, total drug costs went up about three times the rate for other goods and services, according to the U.S. Department of Labor. About 20 percent of generics have had price hikes of at least 100 percent between 2013 and 2017, according to analysis by the Drug Channels Institute.

The survey also gauges healthcare executives’ attitudes of big pharma. Seventy percent providers have a negative attitude of big pharma, 11 percent are neutral and 19 percent have a positive attitude, according to the survey. Of those respondents who had positive feelings toward pharmaceutical companies, R&D appears to be the key.

“The willingness of providers to open their arms to Project Rx likely lies in the general negative attitude toward big pharma,” the report states, noting that when asked about the current market as it relates to the existing pharma industry, one provider responded, “I think they are out to make large profit for investors even if it hurts patients. They are self-serving. They spend large amounts of money lobbying the government for their own ends, not those of patients.”

The majority of pharmaceutical executives (72 percent) said they don’t feel this poses any real threat to the industry. Asked about their attitude towards Project Rx, 22 percent of pharmaceutical executives have a positive attitude, 49 percent have a negative opinion and 29 percent are neutral. One pharma exec said, “Their money would be better spent in negotiations with current generic drug manufacturers.”

When respondents were asked about the motivation behind the development of Project Rx, the vast majority alluded to reducing drug prices (81 percent), reducing the cost of care (71 percent) and increasing the supply of drugs (61 percent). Sixty percent of respondents cited having better control of the healthcare value chain. Also, 45 percent cited “force pharmaceutical companies to change” and 9 percent said “accelerate the move to personalized medicine.”

The report also notes that Project Rx faced both challenges and opportunities as it enters the pharma space. Participants in the survey expressed concerns about whether the new company would be able to focus on the right generics and their ability to scale. “Combined with gag clauses, clawbacks, and drug patents, Project Rx certainly faces an uphill battle,” the report stated. However, with the general negativity toward the pharmaceutical industry, the new venture may have the wind at its back, the report notes.

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Will IBM Watson Repeat History?

August 15, 2018
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Recently, there have been some articles about IBM Watson and healthcare.  In particular, a blog by John Lynn speculates on the “health” of IBM Watson in healthcare.

I’ve had my own personal experiences with IBM in healthcare.  While with GE, we did a joint venture with IBM in the early days of PACS and RIS, and I was an original IBM MedSpeak/Radiology reseller in the early days of speech recognition.  In both cases, IBM did not have the financial wherewithal to play the long game in terms of the technology and exited both.

Interestingly enough, MedSpeak/Radiology was not the first foray into digital dictation for IBM, so they exited that business multiple times.  I also have to say, MedSpeak/Radiology was a pioneering technology that was very competitive.  It just wasn’t the business case the IBM management was looking for.  Similarly, IBM’s effort with GE toward RIS and PACS was naively predicated on employing IBM’s RIS product, and not on interoperability with other RIS vendors.

There are countless business examples of companies launching products based on great expectations, only to have them fail to achieve those expectations.  There are also countless examples of companies getting into products that have no relevance to existing businesses because the think they have a “better mousetrap.”  One that comes to mind is GE.  Years ago, GE developed in their research center an electric garden tractor which was very innovative for the 1970’s.  Unfortunately, when GE attempted to bring the product to market, they discovered they did not have a single market channel that addressed lawn-care equipment!  GE ended up selling it to Bolens for a fraction of the development cost.  And, in retrospect, it was premature given the current fascination with electric vehicles!

I am not implying that IBM hasn’t done its homework on IBM Watson.  I suspect it may be more of two other factors at play.  One, it’s a question of chicken and egg.  Is the advancement of Artificial Intelligence more about the application or the platform?  Secondly, does IBM have the infrastructure to succeed?  In the case of the first factor, IBM is more about the platform than the application.  In the second case, the same could be said for the platform versus the application, as IBM does not have a significantly parallel channel that would address AI applications.

I think this is why IBM initially acquired Merge Technologies, as they saw it as both a “sandbox” to learn imaging, but they may have also seen it as a potential distribution channel.  With further understanding, they were quick to learn that attempting to develop and market applications through Merge would make them a competitor to other viable players such as GE, Philips, and Siemens.  That resulted in a move to create “consortiums” that could develop applications on the IBM Watson platform, thus broadening the appeal of IBM Watson across a broader distribution channel.

The question going forward is – has IBM learned from its history of past healthcare ventures?  If IBM can make a business case for addressing Watson as the platform for AI, it might be a stronger case than trying to be the end point for AI.  This would be consistent with its strength in computational platforms in business, which have classically been a better business model than applications (OS2 or Lotus vs. Microsoft Windows and Office anybody?!). 

I recall the OS2 days versus Microsoft Windows.  As a fan of OS2, I had hoped it would succeed.  Unfortunately, as I learned, there were very few applications for OS2, which is ultimately why people purchased personal computers in the first place.  If IBM had been smart, they would have given OS2 software licenses away in an attempt to build consumer demand for the development of applications.  Unfortunately, that didn’t happen, and I doubt there are any OS2 users out there today.

If IBM can take stock of its history, there is a fighting chance for IBM Watson to be a significant factor in healthcare.  But, the company will need to learn how best to foster the development of AI applications.  In his blog, John Lynn relates the experience of Lukas Wartman of the McDonnell Genome Institute at the Washington University School of Medicine in St. Louis, who laments on how much faith one can put in the results (of using Watson).  As with past technologies, we are at the tip of the iceberg in terms of applying the technology.  Here’s hoping that IBM can figure this one out, be in it for the long game, and live up to the hype of IBM Watson!

 

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Analyzing Blockchain’s Evolution in Healthcare: Two Experts Dive into the Details

August 15, 2018
by Rajiv Leventhal, Managing Editor
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Two healthcare leaders at KPMG believe that blockchain activity in healthcare will ramp up in the next 12 to 24 months

Earlier this year, five prominent healthcare organizations—Humana, MultiPlan, Quest Diagnostics, and UnitedHealth Group’s Optum and UnitedHealthcare—announced they would be launching a blockchain-based pilot program with the aim to improve healthcare data quality and reduce administrative costs. The organizations said they would be specifically examining how the technology could help ensure that the most current healthcare provider information is available in health plan provider directories.

While many more details of this initiative are not yet known, this announcement has opened the eyes of other healthcare IT leaders who have become increasingly curious about this emerging technology. For instance, at the Nashville Health IT Summit earlier this summer, a senior executive from MultiPlan, which is part of this pilot project, was asked about his perspectives on the research and development work done on blockchain in healthcare in the past few years.

To this point, two leaders at KPMG—Arun Ghosh, the firm's U.S. blockchain leader; and Michael B. Yetter, director, healthcare management consulting—recently spoke with Healthcare Informatics about the impact of this new initiative, what the greatest use cases are for blockchain in healthcare today, and how quickly providers and payers might start moving into full-scale projects. Below are excerpts from that discussion.

What are you hearing about blockchain right now as it relates to its greatest use cases in healthcare? What are people most bullish about?

Yetter: From a client perspective, things are a bit on the early side. But [we often see that] as many emerging technologies gain momentum in some other sectors, you will see the pathway through pharma and then into healthcare with payers and providers. We are seeing that same pattern here. On the ground in the healthcare space, especially amongst payers and providers, we’re starting to see more interest in meaningful pilots. We have had some earlier adopters doing proof of concepts and pilots—many around claims or aspects of claims management, and some around the regulatory impacts of the supply chain.

Michael B. Yetter

We are starting to see the nature of conversations around what those use cases could be become increasingly sophisticated around things such as consortiums on provider data, and making sure the historical challenges around getting provider data to agree across multiple entities—who are either submitting or processing claims—that those specific data elements or attributes or shared or reconciled in a better way. So that’s one good example for where you are starting to see collaboration.

Ghosh: The additional capability that blockchain provides, versus traditional EHR (electronic health record) systems, and other enterprise technology that exists today, is that from the time of an encounter to the time of discharge, we see blockchain being piloted around records and interactions with the patient, but also interactions with the pharmaceutical ecosystem—from drug provisioning or procurement to drug administration. Even with the Obama administration saying that we need EHRs across the board, it’s still nascent in terms of who has access to what kind of record and what kind of electronification exists.

Arun Ghosh

So blockchain is coming as the next level of granularity: if we can provide immutable records that are now at the time of pre-diagnosis all the way to wellness, we can track getting better, but also not returning to the hospital. Now, we have a story. Between payers, providers, pharmaceuticals, and distributors, we are seeing varying levels of interest and adoption. They are saying, “let’s pilot a certain part of this,” but there is still no end-to-end view yet, from what we have seen.

What are your thoughts on the MultiPlan/Humana/Optum/Quest/United initiative? Would you classify this as a meaningful pilot?

Yetter: From an outside view, and we haven’t been directly involved, it’s my understanding that this collaboration is focused on provider data sharing. I would classify that as more meaningful because they are bringing multiple parties together to solve for a specific use case and problem. So it goes beyond the earliest conversations, going back a year or more, that were more about learning and understanding the technology. Now they are saying that they get the technology, so let me apply this to a problem we have and something that we can enhance in the industry. And seeing multiple big players involved is encouraging.

Some have said that the greatest use of blockchain in healthcare could be improving on how HIEs (health information exchanges) operate today. Do you agree?

Yetter: I don’t think this is achievable in the short term, and there is the bigger picture of truly getting to a complete HIE—and when I say complete, I mean the truly clinical data that is shared between entities, and ideally something that is more accessible to the patient. The ingredients are there for blockchain to make that significantly more usable, and something that can be potentially controlled and accessed by the actual patient or member. And the patient or member can then have the ability to access the information, and also to permission through some of the mechanisms through blockchain, the sharing of that data or specific parts of the data to others who need it in the healthcare environment. There is a lot of good capabilities there that will evolve in this direction to have blockchain enabling more advanced HIEs, but it will be several steps along the pathway before we truly get to that transformation.

Ghosh: Part of this [potential] disruptive model is that it’s the true democratization of healthcare data—if my data is now being “streamed” into a blockchain, I have ownership of it. So the hypothesis of value here is that if the individual can control his or her data, and then can choose who to share it with—the plan, provider, or someone like Nike or Under Armour—the concept is that there are rewards, such as avoiding rehospitalizations.

How can healthcare organizations better prepare their infrastructures now to implement blockchain in the future?

Yetter: I think the blockchain [implementation] would be more of an add-on, especially in the near term. And I think you will see some of the major vendors out there, be it EHR or adjudication systems, start to consider and build in aspects of blockchain into their own platforms. So there will be a broader enablement that will naturally flow into the infrastructure as it moves forward. But in the near term, there is a good opportunity to add blockchain capabilities to what they already have, and then leverage it for specific cases of pilots or at-scale activities.

Ghosh: The big thing to recognize is that the way enterprise blockchain is evolving, from an infrastructure perspective, it is becoming augmentative rather than disruptive. So you can take an EHR and then you can augment the whole EHR workflow, from encounter to discharge, on the blockchain, [while maintaining] what the traditional EHR looks like. You don’t have to transmit all the data, like you would do in a data warehouse, into another ecosystem. You can leave it as source and hash parts of it on the blockchain as you build the blocks along the workflow. The enterprise blockchain vendors are making this easy to adopt.

There has been plenty of back-and-forth about just how much security blockchain can provide. What are your thoughts on this?

Ghosh: Anytime you encrypt data, it can always be decrypted. A blockchain is nothing but a distributed database at the end of the day. If you have access to that database that doesn’t have a consensus mechanism attached to it, then it is a little insecure. Looking at the T.J. Maxx breach a few years ago, people were swiping their credit cards and the transmission from the point of fail system to the storage system was being intercepted; that was the hack. In the same way, from the time that the traditional system would write to the blockchain, you can intercept that data, and that’s when the insecurity could come into play. And those standards are still evolving. There is no vendor out there that can not only encrypt the transmission protocols between source and blockchain, but also ensure that the blockchain itself is secure.  

What predictions could you offer for blockchain’s continued evolution in healthcare?

Yetter: In 12 to 24 months, you will see a lot of fast-moving activity, and with the changing nature of conversations and the work being done now, there is a clear signal that we are at a bit of an inflection point. But I think we will accelerate the meaningful work in this space and bring the technology in. Going back to the idea of acceptance and use of emerging technologies in other sectors first, we are seeing blockchain in place in financial institutions in meaningful ways. So in the next year or two, I think we will see the same thing in healthcare, whether it’s aspects around provider data, or getting into exposing things to the patient or member so they have greater control. We’ll see a lot of energy and investment in that space.

Ghosh: I think that beyond the pilots that you see today, the voice of the customer will be increasingly automated with enterprise blockchain. Within healthcare, the issue is, how do you provide greater autonomy, depending on who has the data and where? It’s not one or two companies that are trying to do something; it’s five or 10 that want to get together before someone else beats them to it.

 

 


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AHRQ Launches App Challenge for PRO Data Standardization

August 15, 2018
by Rajiv Leventhal, Managing Editor
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The Agency for Healthcare Research and Quality (AHRQ) has launched a competition to address the need for greater use of standardized patient-reported outcomes (PRO) data in clinical care and research.

The total prize pool for the challenge, called the AHRQ Step Up App Challenge, and which will be spread out over three phases, is $250,000. PRO data, according to AHRQ, are defined as any report on the status of a patient’s health condition that comes directly from the patient, without interpretation of the patient’s response by a clinician or other medical expert.

But a key challenge for providers and patients is that PRO data are not routinely collected and used in practice. One reason is that there is no standardized way to collect and integrate PRO data into health IT systems, thereby limiting the ability for clinicians to use the data or easily share these data across health systems for research or other purposes, including quality improvement, according to AHRQ officials.

As such, the AHRQ Step Up App Challenge seeks innovative technologists who can develop and present user-friendly apps capable of collecting standardized PRO data in various ambulatory settings, including primary and specialty care. The winning app will be tested in nine practice settings affiliated with MedStar Health in Washington, D.C., Maryland, and Virginia.

The challenge has three specific phases:

  • Phase 1: Participants will submit a five-page business proposal, demonstrating the originality and feasibility of their app idea.  Up to 10 winners will be selected with a prize of up to $12,000 each.
  • Phase 2: Phase one winners will develop and present an app capable of collecting standardized PRO data in various ambulatory care settings, including primary and specialty care.  First prize in this phase is up to $35,000, second prize is up to $30,000, and third prize is $25,000.
  • Phase 3: The grand prize winner in phase two will collaborate with MedStar Health to test the app in nine practices.  Upon completion of a successful pilot test, the grand prize winner will be awarded up to $40,000, bringing the winning prize to as much as $87,000.

The AHRQ Step Up App Challenge seeks innovative technologists who can develop and present user-friendly apps capable of collecting standardized PRO data in various ambulatory settings, including primary and specialty care. The winning app will be tested in nine practice settings affiliated with MedStar Health in Washington, D.C., Maryland, and Virginia.

“While some digital tools exist to collect these data, they are not in wide use due to problems with integrating them in practice workflow, as well as patients’ discomfort with using such tools,” AHRQ Director Gopal Khanna, said in a statement. “This competition will address this issue and result in a user-friendly app that can enhance healthcare data collection and thereby improve the quality of care for all Americans.”

In partnership with AHRQ, the Office of the Secretary is providing financial support from the Patient-Centered Outcomes Trust Fund, and the Office of the National Coordinator for Health IT (ONC) is leading stakeholder efforts to develop the technical specifications for the Step Up App Challenge.

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