Lab Soft News

The "Early Health Model" as an Example of Disruptive Innovation

I am pleased to announce that Dr.Jason Hwang has agreed to deliver a lecture at the next Lab InfoTech Summit that will take place in Las Vegas on March 16-18, 2009. He is a co-author with Clayton Christensen of a book (The Innovator's Prescription: A Disruptive Solution for Health Care) that discuses disruptive innovation as it relates to the healthcare industry entitled. You are going to have to wait for it to be published -- it won't be available until October 23, 2008. However, we will be distributing complimentary copies of this book to the first 100 conference registrants. Details about this offer to follow.

To launch this discussion about disruptive innovation, here are two brief quotes from the Wikipedia defining the term with boldface emphasis mine:

A disruptive technology or disruptive innovation is a term describing a technological innovation, product, or service that uses a "disruptive" strategy, rather than a "revolutionary" or "sustaining" strategy, to overturn the existing dominant technologies or status quo products in a market....Christensen replaced disruptive technology with the term disruptive innovation because he recognized that few technologies are intrinsically disruptive or sustaining in character. It is the strategy or business model that the technology enables that creates the disruptive impact.

"New market disruption" occurs when a product fits a new or emerging market segment that is not being served by existing incumbents in the industry.

I have posted a number of previous notes about the early health model (EHM), defined as pre-clinical, pre-symptomatic diagnosis of disease, which I believe is an example of disruptive innovation. I put the question to Jason about the extent to which the that the EHM is disruptive for the various major participants in our healthcare system. Here is his answer:

One of the key tests of whether something is disruptive is to ask if it serves the interests of the industry’s most favored customers and, conversely, if it serves a market that was previously disenfranchised or altogether ignored. Obviously, healthcare is bit more complex, because [the term] “customers” is not so clearly defined. However, here’s my take on the early health model:

• [The early health model] is almost certainly disruptive to MDs and hospitals, because they have little to gain (and almost certainly will lose income) when they diagnose diseases pre-symptomatically. More importantly, if the early health model implies that someone with less skill and training, especially the patient herself, can do some of the diagnostic workup, then it is clearly disruptive.
• The answer is not so simple with insurers. I think all of them would say they would prefer to pay for pre-symptomatic and preventive care, so it’s difficult to say they would be disrupted. I’m also not convinced that their business model necessarily prevents them from paying for such a model of care, other than the fact that they could potentially alienate their existing network of providers. My best prediction is that it will take a new insurer that primarily promotes early health through the use of health savings accounts, combined with a more traditional provider for acute and complex care, paid through the use of catastrophic insurance.
• Pharma and other suppliers would indeed object, because this naturally squeezes their opportunities for downstream care, much like it does for the providers. Profit margins would also be predictably lower at the preventive end of care, so it would be difficult for their business model to adapt. Needless to say, they could be the ones being disrupted.
• Finally, the new markets that would open up would primarily benefit patients and purchasers. However, the first customer segments would be those who have the right incentives to seek out early care, such as patients paying out-of-pocket, self-insured employers, or proactive/educated patients. From their perspective, I’d agree this is a new-market disruption, since they have no real alternative otherwise.

Proposed Naming Schema for All Clinical Lab Testing

A recent post (see: Comparison of "Traditional" Lab Testing with Direct Access Testing) marked an effort on my part to begin to establish a naming convention for all clinical lab testing. Here's a quote from the note:

The key difference between traditional lab testing (TLT) and direct-access-testing (DAT) is that physicians order the former and they are always performed by someone other than the patient/consumer. Patients/consumers order and frequently pay out-of-pocket for the latter and they may or may not perform the tests themselves.

In response to this note, I received the following comment from Mark Terry:

I'm the author of the article [quoted in the blog note]....Although I don't disagree with your definitions in general, they are very, very broad, which poses a lot of difficulties in terms of market research and analysis. DTC, Direct-To-Consumer, would include pregnancy tests, ovulation tests, even blood sugar urine strips and test kits, which is a very different market (and market size) than DAT, Direct Access Testing, which is typically referring to Minute Clinics and Doc-in-The-Box or online services that provide laboratory testing without a physician's order, but generally send the samples to an independent laboratory (most often LabCorp and/or Quest Diagnostics).

I think that I will hold firm to my original idea to label all lab tests not ordered by physicians as direct-access-testing (DAT) instead of direct-to-consumer testing. After all, the consumer is "directly accessing" the tests without a physician as an intermediary. Having made this first cut of physician-ordered versus consumer-ordered tests, it seemed necessary to continue this naming schema to include additional levels. Below is a diagram of this work-in-progress.

There will be little question or argument about the left side of the diagram: traditional lab testing (TLT). On the right side of the diagram is what I refer to as direct-access-testing (DAT), all of which is ordered by patients/ consumers. What is slightly confusing about this right side of the diagram is that some of this testing involves involves self-collection and submission to a professional lab (e.g., submission of cheek swabs to the DNA labs), some involves self-collection and home testing with a kit or home instrument like a glucometer, and some involves collection in a patient service center (PSC) and test performance in a professional lab. This latter category, as well as DNA testing, is the "classic" form of DAT advertised and brokered by a web site.

I anticipate that there will be more variations on this DAT theme in months to come despite the attacks on genomic testing by the California lab regulatory body (see: Direct Access Genetic Testing in California). As noted above, this naming and classification schema is a work-in-progress so I am interested in any comments from readers of this blog about whether it makes sense and also how it can be improved.

IICC Kickoff Meeting Scheduled for July 28 at the AACC Conference

I was contacted by Eric Olson of Siemens Healthcare Diagnostics and asked to alert the readers of Lab Soft News to the upcoming kickoff meeting of the IVD Industry Connectivity Consortium (IICC). It will be held on Monday, July 28th, 7:00 to 10:00 a.m., at the Renaissance Washington Hotel, Meeting Room 15. (Note that this room number has been corrected from the original entry). All vendors of IVD instruments and lab software systems, including LISs, are are cordially invited. Eric says that the IICC is particularly interested in the participation of LIS vendors. RSVP to Scott Goss whose contact information is listed below.

Here is the IICC mission statement:

To create and ensure adoption of an interoperable connectivity paradigm to reduce the complexity and variability of data exchange between IVD testing systems and healthcare informatics systems.

Here is the contact information for the IICC leadership:

Mojgan Lefebvre, Chief Information Officer, bioMerieux
IICC President Nominee
5 Cambridge Center, Suite 802
Cambridge, MA 02142   
Office: +1 (617) 679-8004
Email: mojgan.lefebvre@biomerieux.com

Scott Goss, Global Marketing Director Automation & Informatics, Abbott Diagnostics
IICC Treasurer & Corporate Secretary Nominee
100 Abbott Park Road, Dept. AICO, AP6C-4S
Abbott Park, IL 60064
Office: +1 (847) 937-4588
Email: scott.goss@abbott.com

Eric Olson, Vice President, Informatics & eBusiness, Siemens Healthcare Diagnostics
IICC Chief Technology Officer Nominee
8450 Falls of Neuse Road, Suite 304
Raleigh, NC 27615
Office: +1 (919) 870-9675 x202
Email: eric.olson@siemens.com

Eric also supplied me with a PowerPoint file that contains all of the information listed above as well as a brief history of the IICC and an update on its current status. The goals of the IICC are obviously critical so please consider offering the support of your company.

DAT Franchise in Fort Lauderdale Focuses on "Sex and Drugs"

A recent article about a Florida direct access testing (DAT) franchise operation provides more details than are generally available about this type of business but casts the field in a somewhat unsavory light (see: Store does walk-in lab tests). I have covered direct access testing in detail in many previous notes. Below is an excerpt from this article with boldface emphasis mine:

Tom Noonan and son Travis stand outside their Any Lab Test Now store...in Fort Lauderdale. Their franchise conducts about 1,500 kinds of lab tests...."This is a business of sex and drugs.''...Since the May opening of the Any Lab Test Now store, tests for sexually transmitted diseases and illegal drugs have been the most common....Travis Noonan is the first franchisee of Atlanta-based Any Lab Test Now to open in Broward or Miami-Dade counties....[Any Lab Test Now] was founded in 1992, but only began offering franchise opportunities last year....Prices for tests, including cholesterol, hepatitis and PSA (prostate-specific antigen), to name a few, start at $49....Any Lab charges a franchise fee of $30,000 and estimates it takes another $50,000 to launch a store....Franchisees also pay a royalty fee to Any Lab of 6 percent in the first year and 8 percent after the first anniversary. The store employs two medical assistants who are trained to administer tests, including drawing blood. Specimens are then sent to a lab -- giants Quest Diagnostics and Laboratory Corp. are used -- for diagnostic testing....Any Lab has its share of competition. Besides hospitals and doctors' offices, there are online companies that arrange for low-cost testing. Among them is Miami's EconoLabs. EconoLabs has negotiated discounts with Quest and Laboratory Corp. of America because of the large volume of business it sends them, says Dr. Efrain Arroyave, EconoLabs' medical director. It sends customers directly to the labs for the tests.

I have the following comments about this article:

• It's true that a large component of DAT testing relates to STDs and illegal drugs. Because many companies screen job candidates as part of the interview process, individuals often test themselves using DAT sites to see if they are "clean" prior to applying for such jobs. Of course, home drug testing kits will also provide the same information. Here is a link to such a site that displays the following motto on its home page: Creating a Drug Free World Begins in the Home.
• Any Lab Test Now is the first company, to my knowledge, that offers franchises for "bricks and mortar" DAT sites. As noted in the article above, the company's business model differs from that of competitors such as EconoLabs, cited in the article, and web-based DAT sites. The Any Lab Test Now personnel perform their own blood draws for clients as opposed to sending them to the patient service centers (PSCs) maintained by the large national reference labs that actually perform the lab testing.
• Probably because of their higher cost structure, the Any Lab Test Now site described in the article above charges more for its lab tests. Note the charge of $49 for a cholesterol. EcnonoLabs in Miami charges $26 for a "Comprehensive Metabolic Panel (CMP-14) (AKA: SMAC-12)" that includes 14 individual tests.
• I was a little surprised that the article reveals that Lab Corp and Quest Diagnostics are the test performing labs for both Any Lab Test Now and EconoLabs and also that these lab giants discount their work for their DAT clients. Both of these companies have kept their involvement in the DAT world relatively quiet to avoid channel conflict with their physician clients. Quest had a DAT subsidiary called QuesTest but exited this market in 2006 (see: QuesTest Bails Out of the DAT Market).

Here's a recent and authoritative article on the DAT industry (see: Direct-to-Consumer Testing and Its Impact on the Lab Market) that has this to say about LabCorp's involvement:

... the primary lab provider for DTC companies is LabCorp. The reason for this is straightforward: DTC companies now operate nationally via the Internet and, as a result, need a national network of service centers where patients can have blood drawn or provide urine. [A provider of DAT services] says, "We primarily use LabCorp and have Quest as a backup, as needed. They're the only two labs we can work with because they're the only two labs that have a national network of patient service centers, and that's important for delivery."

Futurescape 2008 PowerPoint and Audio Files Now Available

In a previous note (see: CAP Foundation's Futurescape Coming Up Soon), I made mention of the second annual CAP Foundation Futurescape Conference that was held on June 6-8, 2008. I was very impressed with the inaugural conference in 2007 and covered it with three separate notes (see: The Future of Medicine and, Therefore, of Pathology and Lab Medicine; Need to Establish a Value Proposition for Digital Pathology; CAP Futurescape Conference: A Pathology Resident's Perspective).

The PowerPoint and audio files for the 2008 Futurescape Conference have now been posted on the CAP web site and I recommend all of them for your review. I will single out for additional comment in the future some of the presentations that made the most lasting impression on me. However and for the present time, I want to congratulate the CAP Foundation for continuing to respond to the pressing need in pathology and lab medicine for highlighting what I regard as the most strategic issues facing those of us working in the field. The subtitle for this conference captures the essence of this conference -- Transforming Pathology: Emerging Technology Driving Practice Innovation.

For me, very few conference that I encounter are designed to grapple with strategy as opposed to tactics. Here is a simple definition that can be used to differentiate between these two ideas:

A strategy is a long term plan of action designed to achieve a particular goal....Strategy is differentiated from tactics or immediate actions with resources at hand by its nature of being extensively premeditated and often practically rehearsed.

How much thought and energy, with an eye toward developing a plan of action, do any of us give to the challenging issues in lab medicine and pathology? If the answer is very little, a good place to stimulate our thinking about the future would be a review of the lectures presented at Futurescape over the last two years.

 

BioImagene Launches a Contract Research Organization (CRO)

I have posted a number of previous notes about various contract research organizations (CROs), particularly Covance that has special expertise in supporting the clinical lab testing associated with clinical trials. I have also posted previous notes about the growing popularity of holding clinical trials offshore in countries such as India (see: Status and Challenges of Offshore Clinical Trials; When Clinical Trials Go Awry). I was interested to learn recently that BioImagene, a provider of digital pathology and life sciences services has launched a CRO business (see: BioImagene Launches AgilityBio, a New Generation Contract Research Organization Leveraging Its Innovative Digital Pathology System). Below is an excerpt from the article with boldface emphasis mine:

BioImagene...launched AgilityBio -- an integrated contract research organization (CRO). AgilityBio offers preclinical and clinical services in partnership with well established Indian CROs. It provides its clients with a US-based customer liaison team to facilitate management of international projects....AgilityBio’s integrated service offerings include preclinical services, Phase I - IV clinical and diagnostic trials and biomarker discovery for the pharmaceutical and biotech industries. It has the advantage of using BioImagene's web-based digital pathology technology, to provide access to image data anywhere, any time. 

This initiative strikes me as interesting. This new U.S.-based CRO entity, AgilityBio, partners with established Indian CROs and brings special imaging expertise to the game. So, in essence, CROs seem to be getting more complex and forming networks with each of the network partners contributing a specific set of skills. I must say, however, that I was a little mystified by the assertion of the BioImagene web site that "In the life sciences industry, two-thirds of the data is in the form of images." This strikes me a being a little high but I suspect that they are including document images in their definition of the total number of images.

Some Interesting Insights into Companion Diagnostics

I have posted a number of previous notes about companion diagnostics (see, as one example, the following: Companion Diagnostics Gaining Ground, But Slowly). Now comes an interesting article that describes in detail about the partnership between a diagnostics company and a pharmaceutical in the future development of such a companion lab test. Below is an excerpt from the article with boldface emphasis mine:

The area of companion diagnostics - ideally defined as a diagnostic developed in tandem with a drug to screen patients for clinical studies and then be commercialized alongside the drug for diagnostic and treatment purposes - has been getting more attention since last year's approval of Selzentry (maraviroc) from New York-based Pfizer. That drug, designed specifically to target HIV patients who test positive for the CCR5 receptor, was developed with the help of Trofile, an HIV co-receptor tropism assay, from Monogram Biosciences. The companies began working together in 2002, and Pfizer used the assay to determine which patients would most likely to respond to treatment for enrollment in clinical studies. In 2006, South San Francisco-based Monogram licensed to Pfizer global rights to Trofile. In that case, "Pfizer came to Monogram," [an analyst] said. "They were developing an entry inhibitor for CCR5 and wanted to select patients appropriately for the trial." And that's the way it likely will have to work between pharma and diagnostics firms in the future, with pharma responsible for driving the development. "For diagnostics firms, it's difficult for them to develop a test without seeing the drug on the other side," [he] said. "It's tough for them to fund that innovation. You wouldn't have seen Monogram developing Trofile on its own, hoping that somebody comes out with a CCR5 therapy."

Here's another quote from the same article:

But [the analyst also] said one of the biggest hurdles is convincing pharmaceutical firms to jump on board the diagnostic train, mostly because pharma has been reluctant to move away from their blockbuster-drug approaches, selling a single pill that can reach a broad market. "Drug companies can be somewhat cautious that having a companion diagnostic might limit the drug's label," .... So "pharma and diagnostics firms aren't really on the same page yet."

All of this makes perfect sense. Big Pharma has been cautious about the wide availability of companion diagnostics in the past because of the belief that such lab testing may constrain the sale of a particular drug. However, as the goal of developing blockbuster drugs begins to fade, Big Pharma now finds it useful to approach diagnostics companies to develop a companion test in parallel with the drug development and clinical trials in order to select the most appropriate subjects for clinical trials and also patients downstream. As I composed this note, I could not help thinking about my previous note (see: Moving Resources from the Therapeutic to the Diagnostic Silo) about using lab tests to monitor therapeutic efficacy. Companion diagnostics provide one of the means by which the right drug can be selected for the right patient.

"Eminence-Based" Surgical Pathology and the Digital Pathology Department

In a recent note, I commented on the new strategic alliance between GE Medical and the University of Pittsburgh Medical Center (UPMC) in the pursuit of the digital pathology department and whole slide imaging (see: GE Medical Partners with UPMC in Pathology Imaging Venture). It is often stated that digital radiology took about a decade to mature and that digital pathology will take an equal amount of time to become the accepted standard of practice. However, major incentives were available in the conversion to digital radiology such as the ability to offer new imaging procedures with attractive profit margins plus a groundswell of enthusiasm on the part of hospital clinicians for these new offerings. These same incentives do not exist for digital pathology -- there are no additional profit margins to be gained for the hospital and the pathology reports to clinicians are largely the same except for the routine integration of digital images into surgical pathology reports.

However, it you are searching for a "killer app" associated with digital pathology, it is most certainly image search. By this I mean the ability to isolate "fields of interest" in a challenging surgical pathology case, an unusual malignant tumor for instance, and then match them against a large image database of diagnosed lesions for similar lesions. For challenging cases today, this same process often takes place laboriously by searching surgical pathology atlases on the shelf. Parallel to this process, many such cases are also referred to local colleagues for their opinions and also sent to "marquee" surgical pathologists who have established reputations as having superb diagnostic skills in various specialty areas. This is the basis for what has been called eminence-based surgical pathology.

And now comes the rub. These marquee pathologists have little to gain and much to loose by the introduction of digital pathology and image searches. Image searches and pattern matching is, in fact, what is taking place in the brains of these eminent pathologists. I suspect that they will have little enthusiasm for any technology that serves to lessen their influence, prestige, and livelihood. Many of these latter pathologists are also highly placed in the hierarchy of prestigious pathology departments. I suspect that they will be leaders of the chorus opposing the conversion to digital pathology and perhaps highlighting the failures and inadequacies of digital pathology departments.

Pathology Is Not Disintegrating in Canada!

Today's guest blog has been written by the very distinguished Canadian pathologist, Dr. Michael McNeely. Mike is currently the President of the Association for Pathology Informatics (API) and Past-President of the Canadian Association of Pathologists. He lives in Victoria, British Columbia, Canada.

No, Pathology in Canada is NOT “coming apart at the seams”.  Our country continues to enjoy exemplary clinical laboratory service. The situation is tight and, in certain instances, is dangerous.  Recent newsworthy events and an editorial in the CMAJ (see:  Canada's pathology) speak to two issues which I would like to clarify: (1) “lack of a national QA program” and (2) a shortage of laboratory professional staff.

Quality Assurance: This part of the report has caused some to believe that Canada does not use QA. This is clearly not correct. Although Canada has government-funded health care, each individual province is responsible for the administration and management of health care within its own jurisdiction. With some provincial variation, lab accreditation and mandatory QA has been standard across the country for 30+ years.  What has not been routinely available (until several recent notable projects were launched) has been scrutiny of the professional work of pathologists.  This has been compounded by situations where pathologists work alone. 

Professional Staffing: During the 1960s and early 70s, Canada was the beneficiary of an influx of highly trained pathologists from other countries (mainly the UK). This bolus took up the open positions but neutralized the need to develop a full stream of residents. Twenty-seven years ago (commenting on research conducted by the late Vern Waldorf), I wrote an editorial in the Canadian Association of Pathologists Newsletter (Vol 24: March 1982; p. 18) in which I stated “It is probable that retirement will produce a manpower shortage that will start in about five years and will reach crisis proportions around the year 2000.”  Since, the early 80s, medical school output was curtailed and pathology residencies not expanded to meet the declining requirements. Today, we are “holding on” but all groups are stretched thin and specific locations are inadequately serviced.

FDA Accepts Kidney Toxicity Biomarker in Drug Approval Process

I have posted a number of previous notes about the use of biomarker panels by clinicians, particularly when referred to as IVDMIAs, but had not given much thought to the use of these test panels in drug toxicity testing. A recent article (see: FDA will Accept Kidney Toxicity Biomarkers in Drug Approval Process) caused me to think more about this topic. Below is an excerpt from the article with boldface emphasis is mine:

The ...FDA has decided to allow data for seven kidney toxicity biomarkers as part of the drug approval process. Both the FDA and the  European Medicines Association (EMA) have agreed to accept the biomarker data, making it the first use of a framework allowing submission of a single application to the two agencies....Ultimately, the pharmaceutical industry would like to see the FDA adopt a range of such biomarker tests for human clinical trials that would signal dangerous side effects like heart failure, liver damage or cancer. Under current testing protocols, experimental drugs are subjected to animal testing before they can move on to human clinical trials....To date, both the FDA and EMEA have required drug companies to submit the results of two blood tests — blood urea nitrogen and serum creatinine — to evaluate renal toxicity. Now, in addition to those tests, the agencies will accept results from the seven biomarker-based tests as part of the drug-review process. The FDA and EMEA will now accept the results of tests that measure the levels of seven proteins found in urine that are indicative of drug-induced damage to kidney cells.  Drug makers are not required to collect this biomarker data, but if they do, “it must be submitted to FDA,” the agency said.

The FDA press release cited above provides the names of the seven approved biomarkers: The new biomarkers are the following:  KIM-1, Albumin, Total Protein, β2-microglobulin, Cystatin C, Clusterin, and Trefoil Factor-3. The article goes on to speculate on ramifications of this decision for greater clinical use of these or similar biomarkers:

"The development of these and other biomarkers can result in important tools for better understanding the safety profile of new drugs," said Janet Woodcock, M.D., director of FDA's Center for Drug Evaluation and Research. "We hope these biomarkers will lead to human tests that detect drug-induced kidney injury in people earlier than is now possible, and help health care professionals better manage potential kidney damage from drugs." Woodcock added that such human tests could one day open the door to the approval of more powerful drugs, especially for diseases where renal toxicity currently prevents promising experimental drugs from being approved. With more sensitive tests for renal toxicity, FDA could approve such drugs because health care professionals could closely monitor patients and halt the drug if early signs of renal toxicity appear.

All of the above suggests that a pathway is rapidly opening up for the greater use of biomarker panels in clinical practice.