Lab Soft News

Why Can't Hospitals Avoid Simple Errors and Subsequent Patient Harm?

A recent article cited numerous cases in which significant errors were made in the same hospital (see Why Can’t Medicine Seem to Fix Simple Mistakes?). The question is raised why "medicine", in part specific hospitals, can't seem to prevent similar errors from happening. Below is an excerpt from it. It's lengthy, so read the whole thing if you are interested in the topic.

NYU's Langone Medical Center announced this week that it was adopting new procedures after the death of a 12-year old boy from septic shock. The hospital's emergency room sent Rory Staunton home in March and then failed to notify his doctor or family of lab results showing he was suffering from a raging infection.  In response to the case...,the hospital promised a bunch of basic fixes: ER doctors should be immediately notified of certain abnormal lab results and, if such results come in after a patient is sent home, the hospital should call the patient and his doctor....[S]adly, decades of experience covering such incidents suggest the medical system may prove resistant to change ....History suggests it would be a victory if NYU Langone manages to follow its own new rules as we all hope they will.  It's long been known that medical errors are a major problem.... Despite the resulting national focus on patient safety, patients continue to be harmed and killed by medical shortcuts, inadequate training and breakdowns in communication.  Unlike the airline industry, which relies on a safety net of checklists, the medical community has been slow to adopt them in all areas and often puts its faith in the outdated idea that doctors are infallible....Time and again, hospital officials have put in place solutions that seem ridiculously obvious.  And, inconceivably, the fixes are frequently ignored or ineffective.

Articles of this type often draw analogies between the airline industry and healthcare delivery in hospitals with the assumption that flight errors are rare. I don't want to categorize errors in hospitals as uncorrectable but the two settings are not really that comparable. Most plane flights last a relatively short time, the planes are staffed usually by a veteran crew, in-flight emergencies are the exception rather than the rule, and the customers normally just sit in their seats and are pacified by bags of peanuts. Hospitals and their staffs run around the clock, emergencies are common, the staff, although highly trained, keeps turning over, many of the staff such as interns and medical students are relatively untrained, the customer (i.e., the patient) is highly involved in all of the work processes, and it's hard to apply "standards" to the regimens of the individual patients.

I agree that checklists are important but this is only a band-aid on the larger problem. Medicine has always diagnosed and treated each patient in a semi-customized manner. This makes sense because it's often said that each patient is unique until a diagnosis and subsequent care is rendered. This one-off customization for each patient often leads to mistakes. What we need is a standardized approach to diagnosis and treatment. Consider a busy cardiology service that might insert dozens of coronary artery stents each day. The error rate here is extremely low because the volume and the similarity of cases is such that each is similar to amenable to a common set of procedures.

Given the randomness of patient intake in many hospitals, how does one achieve a similar standardization? Start with the idea that physicians and nurses are not infallible. Hence, we need to increase the development of computerized algorithms that allow rapid convergence on both a diagnosis and treatment plan with detailed guidance about how to proceed with each step. In the past, such an approach has been ridiculed as "cookbook" medicine and avoided. Moreover, the information systems and the algorithms historically have not been up to the task. Part of the problem has also been the "macho" culture of medicine that has basked in its own complexity. It's now time to move toward a more predictable, standardized method of diagnosing and treating patients. This will reduce errors and also reduce costs.

Roper Industries to Acquire Sunquest for About $1.42 Billion

Sunquest is in play again (see: Huntsman Gay Purchases Sunquest Information Systems). The Huntsman Gay purchase was announced in December, 2010. The early details about Roper just announced (see: Roper Industries buying Sunquest for about $1.42B):

Medical and industrial equipment maker Roper Industries is buying hospital software company Sunquest Information Systems Inc. for approximately $1.42 billion.  Sunquest, based in Tucson, Ariz., provides diagnostic and laboratory software to more than 1,700 hospitals globally....Roper says Sunquest will continue to operate under its own name and market products and services under their current brand names.  Privately held Sunquest is owned by a group that includes Huntsman Gay Global Capital and Vista Equity Partners. Sunquest President and CEO Richard Atkin says that the deal will supply the company with the finances and strategic resources needed to bolster its product offerings and expand into new areas.  The buyout is expected to close within 30 days.

Complete Schedule for Pathology Informatics 2012 Now Available On-line

Pathology Informatics 2012, the preeminent U.S. conference focusing on automated information management in pathology and the clinical laboratories, will take place on October 9-12 at the Hyatt Regency Chicago. The first day of the conference is devoted to workshops with one of them, A Review of Pathology Informatics, designed particularly for residents and fellows in pathology.

The Association for Pathology Informatics (API), the sponsor of the event with the Department of Biomedical Informatics at the University of Pittsburgh, has a special program to support travel awards for trainees. This year, 43 such awards will be granted to trainees. In addition, special attention is being given to pathology residents and fellows in the Chicago area pathology departments. Working in collaboration with the chairs of these departments, special conference registration arrangements are being offered to all trainees. Including the aforementioned travel awardees, we anticipate that more than 100 pathology residents and fellows will be in attendance this year. 

The complete schedule of PI-2012 is available on-line with lectures delivered by more than 50 faculty members. In addition to plenary lectures, three separate, parallel tracks are offered: Clinical Information Management, System Support/Connectivity, and Digital Imaging. Twenty-four exhibitors have signed-up for the meeting thus far; there is additional table space for more companies. On-line registration is available as well as information about the hotel. Pathology Informatics 2012 was formed nearly three years ago by the merger of two preexisting conferences -- APIII and Lab Infotech Summit. A precursor conference, AIMCL, dates back to 1983.

Division of Informatics Created within the UAB Pathology Department

Many pathology departments have a division of pathology informatics embedded within it. Such units are always assigned responsibility for managing the LIS and also, logically, all of the data generated within the department. Many medical schools have also established separate departments of biomedical informatics. These latter units always have an informatics research mission but sometimes also have responsibility for clinical systems and clinical data management in the associated medical center. A number of departments of biomedical informatics such as that at the University of Pittsburgh have pathologist chairs like Mike Becich. I have just learned about another model -- a division of pathology informatics/bioinformatics embedded within a pathology department (see: UAB Division of Informatics to manage medical research data). Below is an excerpt from an article describing one such organizational structure:

[Jonas] Almeida is a recent addition to the University of Alabama at Birmingham medical center, recruited away from the prestigious University of Texas-MD Anderson Cancer Center... to launch a newly formed Division of Informatics in the med school's pathology department.  At MD Anderson as a professor of bioinformatics, Almeida was deeply involved in the Cancer Genome Atlas, a shared site for cancer data started with the help of National Cancer Institute funding in 2006.....An effort like the Atlas, Almeida said, takes advantage of "the cloud" -- a web-based set of programs and standardized data formats that allows researchers to build interactive masses of data....At UAB, the Portuguese-born Almeida has hired five faculty and now has about 15 researchers and staff in the informatics division.  UAB pathology chairman Dr. Kevin Roth was the key to luring Almeida to UAB.  "He offered me something that is special -- a strategic vision about the future," Almeida said. "He sees biostatistics and bioinformatics to be part of the tools of select medical centers."  Almeida gave another example of the potential use of bioinformatics for clinicians -- shared cancer databases in the cloud where oncologists can find answers to questions that could improve patient care.  Such questions, Almeida said, include, "What patients have been seen before that were like the one that I'm seeing? What happened to those patients? What drugs did they respond to?"

Many pathologists have an affinity and skill in managing large research and clinical databases. Such a skill set is particularly important these days given the new importance of the -omics disciplines plus personalized and precision medicine. As noted in the article above, the division of informatics within the UAB's pathology department is no small undertaking with five faculty members and 15 researchers and staff. Needless to say, I am enthusiastic about this model. It can only add to the prestige of those pathology departments that move in a similar direction. Academic pathology departments tend to straddle the basic science/clinical science divide in medical school so I can't think of a better home for a division of bioinformatics/biostatistics.

More EMRs/EHRs for Sale in the Market Than One Could Imagine

How is it possible to explain the large number of EMRs and EHRs available in the U.S. market? I personally use the term EMR to refer to hospital systems and EHR to refer to physician office/clinic systems. A recent article raised this topic (see More electronic health record systems than you imagined). Below is an excerpt from it:

Anyone who's wandered the showroom floor at a Healthcare Information and Management Systems Society convention knows there are tons of health information technology companies. There were upwards of 1,100 exhibitors this year.  But earlier this month, Jodi Daniel, director of the Office of Policy and Research within the Office of the National Coordinator for Health Information Technology, presented a slide at an Health Information Technology Policy Committee meeting with some health IT market numbers that I found nothing short of astonishing.  Believe it or not, according to Daniel, there are 613 "complete" electronic health record systems and 399 "modular" systems that have been tested and certified for use in the federal EHR incentive payment program in the ambulatory-care market alone.  There are another 87 complete and 378 modular EHR systems for inpatient venues.... Simply put, it is a market that is still expanding and not yet consolidating.  "It is amazing to see the rise of solutions being considered outside of the top 11," [a consultant] said. "You can see that in the ONC numbers and the number of private venture capital groups getting into the business. It's just a market in total upheaval."  So, I asked [him], do you think it's possible there's an EHR out there in that herd of 602 “other” EHRs not in your top 11 that's the "killer app" in the making, one that may one day challenge today's market leaders?  He said he's had conversations with several CEOs of name brand companies and "they're very cognizant of the fact there is somebody out there who could replace them."  "I'm sure there is somebody in the weeds," [he] said. "I just can't say who it is. I just don't know."    

Here are some some of my explanations why we are seeing 1,012 complete/modular systems in the ambulatory care market and 465 complete/modular systems for inpatient venues:

• There are 5,754 hospitals in the U.S. of which about a third are rural and two-thirds are urban (see: Fast Facts on US Hospitals). These rural hospitals are often quite small as are some of the urban facilities. One could speculate that the hospital EMR market is fairly large and providing an EMR for a smaller hospital would not be that technically challenging and possibly remunerative
• The EHR market (i.e., physician-office/clinic systems) has always been chaotic outside of the market leaders. It's not that that difficult to develop such a system. Moreover, physician buyers may not always be that sophisticated or looking for low-price bargains. Such buyers may tilt toward a system recommended by a friend or relative or respond to a good sales pitch from a smaller company.
• The start-up costs for a software company entering the market for a physician office system are relatively low. Many such costs are labor-related for writing code so there is plenty of wiggle room for new companies that want to develop a product.

Finally, I want to speculate about whether the EMR/EHR market leaders need to worry about some smaller ("killer app") companies in the pack replacing them as suggested in the excerpt above. In my view, this scenario is almost a certainly. In the LIS world, some of the market leaders have been replaced roughly every 15 years. However, this pace may quicken these days due to the more rapid emergence of new technology such as cloud computing. Healthcare computing in general lags about a decade or more behind the technology in other industries and has a higher cost, relatively speaking. The explanation for this is that hospital executives are less IT-savvy than their counterparts in other industries and the industry is more regulated and therefore more cautious. In my opinion, one of today's smaller EMR companies is going to hit the jackpot in the near future with the following system and business model: (1) a modern computing language; (2) a focus on cloud computing, providing a substantial cost advantage; and (3) a high degree of functionality plus an opportunity for some local customization that will be more appealing to customers than the lock-step rigidity of a leading EMR vendor like Epic.

Trends in the Stock Market for Tech Companies for the Past Thirty Years

A recent article about trends in the stock market for technology stocks had some very interesting insights (see: Four Trends In The Public Technology Market). I am not reproducing the charts from the article so you may want to link to it a more in-depth perspective. Below are some of the key highlights:

• Boom, bust, boom: Over the past 30 years, technology companies have boomed, busted and boomed again. In 1980, the global market cap of technology companies totaled $50B, 1.7% of all global equities. Ten years later, tech market caps tripled to $176B. Then, technology companies entered hyper-growth, registering 140% annual growth rates for ten years surpassing $8T in global market cap in 2000. At its zenith, IT companies represented one-fourth of all equity value in the world – pure euphoria. At its post-2000 nadir three short years later, technology market caps deflated 63% to $3T. Today, the sector has settled: technology equity is worth $7T and represents 14.7% of the total global market cap.
• Fragmentation of tech market: In 1990, technology oligarchs controlled the industry. The largest 10 IT companies represented over 80% of the value of the entire IT sector. In 2000, at the height of the boom, that figure dropped to 5% due to the overzealous IPO glut. In 2012 the top 10 companies’ shares rebounded to 30% of total IT market cap, marking a healthy and competitive industry.
• The P/E ratios of most of todays titans: At its peak Microsoft’s market cap eclipsed $640B in 2000, 14% larger than Apple’s current value $565B. Simultaneously, Docomo and Cisco each amassed market capitalizations of $360B, which equalled Apple’s market cap in January 2012 and bested the second largest tech company, Microsoft, by 65%. Today’s tech industry has its share of titans, but at an average 17 price-to-earnings (P/E) ratio, these giant’s valuations fall within the current market norms and are a distant cry from the 70 P/E characterizing the bubble.
• Software dethrones hardware: In 2000, software dethroned hardware as market leader. Growth in IT spending fueled this boom as enterprises clamored to install new technology stacks. Microsoft surpassed IBM, who fell off the top 10 list. Oracle trailed closely, growing with the demand for enterprise databases. Networking and telecom remained at the table as PC sales boomed as telcos deployed the networking infrastructure to interconnect millions of terminals.
• Mobile becomes dominant; In 2012, mobile became the zeitgeist. Samsung and Apple rocketed to the fore. Mobile carriers form the largest bloc comprising ATT, Verizon, China Mobile and Vodafone. A reinvigorated, software-services-focused IBM joined Microsoft and Oracle representing enterprise software. Google cracked into the rankings as the sole entrant embodying pure Internet.
• Persistence of Microsoft and Intel: Through it all, Microsoft and Intel are the only companies present the top 10 market caps each decade, a testament to technology’s relentless pursuit of invention and innovation.

A few of the key points captured from the article my attention. First the idea of the 1990 "technology oligarchs" being dethroned. Secondly that the the P/E ratios of most of the tech giants fall within today's market norms. Third that many of today's market IT leaders produce software rather than hardware. Finally that mobile computing is now so important.

I have posted previous notes about Microsoft in the past (see: The Decline of Microsoft: The Clues Seem to Be Obvious; Why Steve Ballmer, CEO of Microsoft, May Be in Trouble). Despite the fact that the financial markets still hold Microsoft in relatively high esteem, the company is viewed as an also-ran by many consumers and IT enthusiasts. Here's a quote from a longish but on-point article about how Microscoft might be able to turn-around its sketchy reputation (see: How can Microsoft clean up its bad reputation?):

I think now Microsoft needs to put the same amount of effort that they put into improving the reliability of Windows 7 into convincing the public that when they introduce a new product or service, they’re “all in” for the long haul. They need to make us believe that the cool new technology they show us today won’t disappear in six months....Companies are too quick to abandon anything that doesn’t catch on immediately. And it extends far beyond the tech industry....It’s a societal problem, but Microsoft could go against the grain by being more selective about the products and services they introduce and making a real, long-term commitment to those they do choose to release. A key element in getting past a bad reputation is to replace it with a reputation for treating others well. In the case of a company like Microsoft, that means your customers, your partners, your employees, even your competitors....They might not have a choice if they want to survive and thrive.

Smartphone Otoscope: Diagnosing Middle Ear Disease at Home?

Smartphones are continuing to exert a broad impact on healthcare delivery. The latest twist that I have come across is the smartphone otoscope for parents who want assistance in the diagnosis of possible ear infections in their children (see: Now Your Smartphone Can Be Used To Diagnose Ear Infections At Home). Below is an excerpt from the article:

Using your smartphone to check for ear infections could reduce trips to the pediatrician's office. Cameras in smartphones will inevitably replace nearly all portable cameras and camcorders, but could they also make basic medical instruments obsolete? A startup called CellScope plans to do just that by turning smartphones into digital first aid kits. To kickoff its campaign, the company is developing an iPhone attachment that turns the smartphone into an otoscope, providing a magnified view of the middle ear....The peripheral attaches to the top of an iPhone and provides a 10x magnification. Using CellScope’s web platform, users can upload captured images and pediatricians can remotely assess the severity of the infection. Doctors can then provide a diagnosis, prescribe antibiotics, or recommend the child be brought into the office for a more thorough examination....The technology for CellScope originated at the University of California, Berkeley, where researchers were focusing on the development of a fluorescence microscope peripheral that could help diagnose tuberculosis in patients in developing countries....CellScope was formed in order to bring smartphone microscopes to market, but to begin, it’s aiming at microscopy applications that require lower magnification, such as the otoscope and another device in the pipeline, a dermascope to diagnose rashes and other skin ailments. .

Here's a short blurb about inflammatory diseases of the middle ear (see: Inflammatory Diseases of the Middle Ear):

Inflammatory diseases of the middle ear include a broad range of pathological conditions, including acute otitis media (AOM; suppurative or nonsuppurative), bullous myringitis, granular myringitis, eosinophilic otitis media, and chronic suppurative otitis media (CSOM), with or without cholesteatoma. The range and complexity of the problems that can arise pose a challenge to the clinician, who sometimes has only subtle clues that lead to the discovery of extensive disease.  AOM is characterized by a short-lived infection (< 3 mo) that may be initially viral and then bacterial in origin. Patients generally experience pain and some hearing loss and often develop a fever. Discharge from the ear usually accompanies this infection in patients with acute suppurative otitis media.  

I am not sure how easy it will be for a mom or dad to hold a squirming child, manipulate the otoscope/smart phone, and capture an image of the possibly inflamed ear canal and typanic membrane. Nevertheless, the story is interesting in terms of the new uses for smartphone cameras that are being developed. It also supports the idea of people taking more ownership of their health and that of their families. If this works, it sure beats a trip to the pediatrician's office.

23andMe Acquires Curetogether; Pursues "People-Powered" Research

The strategic direction of 23andMe has always been of interest to me (see: Web-Based Genomic Testing Sites Fail to Attract Large Paying Audience, Clinical Labs Have Much to Learn from the Genetic Testing Web Sites). On one hand, the company is positioning itself as a personal genomics web site to avoid the regulatory pressure associated with rendering medical diagnoses. On the other hand, it has also been involved in projects of significant medical interest (see: 23andMe Builds Online Sarcoma Research Community). The question remains whether it can continue to straddle this fine line and evolve in both directions. A new acquisition may help to define the future direction for the company (see: Genetic testing company 23andMe acquires Curetogether). Below is an excerpt from a recent press release:

California-based genetic testing company 23andMe has acquired Curetogether in a deal it says will enhance its capacity for 'people-powered research'. Curetogether was launched in 2008, with an initial focus on helping people who live with chronic pain, while 23andMe, whose investors include Roche and Johnson & Johnson, offers a personal genome service and web-based research programmes....Both companies are built around online social communities and 23andMe said the deal would bring it additional tools and systems for gathering data from health-based communities. 23andMe’s customer communities include a disease-specific research communities for Parkinson's disease, sarcoma, myleoproliferative neoplasms and the Roots Into The Future research community for African-Americans. The company’s interest in Parkinson’s was extended last year to the realm of intellectual property when it was awarded its first patent for a variant in the SGK1 gene that may be protective against Parkinson’s disease. Meanwhile, CureTogether’s platform includes more than 4m phenotypic data points across those different health conditions that could help inform future genetic discoveries....Earlier this year Curetogether released the first results from its bipolar treatment study. This involved 227 patients who said the condition was best managed without drugs and reported the most effective interventions to be exercise, reducing alcohol intake and a better regimented sleep schedule. The most popular drug treatment in the three-year study was Roche’s Klonopin (clonazepam), while Lilly’s market-leading Zyprexa (olanzapine) languished outside the top three.

Hmmm! People-powered research? Some bench scientists may sneer at this idea but it makes sense to me. Here's how the Curetogether web site describes its mission: The smarter way to find the best treatments. Get access to millions of ratings comparing the real-world performance of treatments across 590 health conditions. Here is a cut-and-paste from the home page about recently posted news and reports:

What's new at CureTogether

• Bipolar Managed Best Without Drugs: 227 Patients Report
• 800 Patients with Arthritis Report Which Treatments Work Best
• Surprising things that work for Vulvar Vestibulitis, or make it worse
• Stanford Fibromyalgia Study on LDN Replicated at CureTogether

As I understand the mission of CureTogether, it's to harness the power of social media to gather and aggregate health and treatment data submitted by  readers. I am sure that their results are not perfect and subject to the vagaries of such an approach. For example, the web site TripAdvisor has grown very wary of attempts to skew its hotel ratings by positive fake reviews (see: TripAdvisor responds to 'fake reviews' controversy with phone lines for aggrieved hotel owners). If and when pharmaceutical companies become aware of negative results about their products generated by on-line health communities such as CureTogether, they may pursue similar strategies. That's probably part of the reason that such companies have invested in 23andMe. These on-line social media sites are trying to fend off such attempts with computer algorithms to weed out fake "recommendations" on the basis of their artificial wording.

Hospital "Weekend Effect": Bad Outcomes for AF and Stroke Patients

Late June and July are not favorable times to be admitted to the hospital. Some of the house officers are still quite green and even the more experienced among them may be new to the hospital and not know all of the local routines. There is also some irony in the fact that the new regulations restricting house officer work hours, designed to protect patients, may be having a negative effect by disrupting continuity of care (see: Duty-Hour Restrictions For Surgical Interns Causing Concern). It had not occurred to me before but there is also a risk involved with weekend hospital admissions (see: Weekend hospital visits more deadly, more expensive, and result in longer stays). Below is an excerpt from an article on this topic:

Previous studies have identified a “weekend effect” in terms of a poor outcome for patients hospitalized with various acute medical conditions.  The aim of our study was to investigate whether weekend admissions for atrial fibrillation (AF) result in worse outcomes than those admitted on weekdays. In the Nationwide Inpatient Sample 2008 database, we identified a total of 86,497 discharges with a primary discharge diagnosis of AF.  The use of a cardioversion procedure for AF on weekends was lower than that on a weekday....After adjusting for patient and hospital characteristics and disease severity, the adjusted in-hospital mortality odds were greater for weekend admissions.... The length of stay was significantly longer for weekend admissions.  In conclusion, patients admitted with AF on weekends had lower odds of undergoing a cardioversion procedure and greater odds of dying.  

It turns out that a "weekend effect" has also been observed for stroke patients (see: High cost of ‘weekend effect’ in stroke care). Below is an excerpt from this latter article:

Weekend admission affected two measures of quality care [for 93,621 stroke patients in England], reducing the proportion of brain scans undertaken within 24 hours to 42.6%, down from 47.8% during the week, and reducing thrombolysis use to 2.2%, down from 2.7%. These values were adjusted for variables including age, gender, comorbidities, and stroke subtype.  Patients were more likely to develop a complication - aspiration pneumonia - if they were admitted at the weekend, rather than during the week, at 5.6% versus 5.1%. As in previous research, 7-day in-hospital mortality was significantly higher if patients were admitted at the weekend, at 10.3% versus 9.0% for weekday admissions.

So what steps should you take to guard against this "weekend effect" for yourself and family members? Clearly you can't schedule a day for your atrial fibrillation or stroke. If you are being treated by a private physician, he or she needs to be alerted immediately when you are admitted to the hospital on an emergency basis. I have similar advice if you are admitted to a teaching hospital. Get some attention for your case beyond the reduced staff that may be working on the weekend. Another possible solution is to ensure that you are transported to a larger hospital for acute care (see: Weekend Effect Persists). Here's an excerpt from an article written about after-hours quality from the perspective of a hospitalist:

For hospitalists trying to address the underlying problems of after-hours quality, the size of the hospital is relevant. Only larger hospitals can afford hospitalist groups large enough to cover night and weekend shifts. For those that can, are all members of the group taking their turns at night, does this duty fall to the junior members, or is the group lucky enough to employ nocturnists who want to work at night?....Whether the hospital has an academic emphasis also can influence who responds to crises after hours—attendings or house staff (in other words, sleep-deprived residents).

Battle Heats Up Over Generic Versions of Lipitor; Retail Chains Sue Pfizer

In a previous note, I discussed the tension between pharmacy benefit managers (PBMs) and Pfizer. The latter company has lost patent protection for its blockbuster Lipitor (see: Pfizer Cuts Deal with PBMs to Continue to Profit from Lipitor). Five retail drug store chains, lead by Walgreen, are now suing Pfizer over this same matter (see: Pharmacies Sue Pfizer Over Lipitor):

Five retailers joined a legal battle against Pfizer,...accusing the drug maker of using anticompetitive tactics to delay the introduction of competing generic copies of Pfizer's blockbuster cholesterol-lowering pill Lipitor. The lawsuit ...by Walgreen....adds to litigation against Pfizer in the wake of Lipitor's loss of U.S. market exclusivity last November, which triggered the launch of lower-priced generic versions and began eroding sales of the brand-name drug....The lawsuit alleges Pfizer used "an overarching anticompetitive scheme" to delay generic Lipitor until November. Specifically, the drug maker was accused of the following: defrauding the U.S. Patent and Trademark Office to obtain a Lipitor patent; filing a sham citizen petition with the U.S. Food and Drug Administration; and securing a 2008 agreement with Ranbaxy Laboratories Ltd....that barred Ranbaxy from selling generic Lipitor until November 2011. Like other lawsuits, the latest suit also alleges that Pfizer's arrangements with pharmacy-benefit managers forced purchasers to buy more brand-name Lipitor at higher prices—and less lower-priced generic versions—than they would otherwise have bought....Pfizer used an aggressive strategy to preserve Lipitor market share as it lost exclusivity, offering discounts to consumers and certain payers. Pfizer has defended those arrangements by saying that many patients wanted to keep using branded Lipitor, and that its contracts didn't add cost to the health-care system. The latest lawsuit alleges, however, that retailers paid hundreds of millions of dollars more for drugs containing Lipitor's active ingredient than they would have paid if Pfizer hadn't taken these actions.

It was news to me that generic drugs are high profit items for the national drug store chains (see: Record quarter for Walgreen; Expiring patents give drug chain a boost). By way of contrast, the pharmaceutical manufacturers realize their highest profits from patented biotech drugs, particularly for the treatment of cancer. The pipelines for new drugs has been problematic in recent years but now apparently shows signs of life (see: Drug Makers Refill Parched Pipelines). Nevertheless, Pfizer has been relentless in protecting its market for Lipitor, even cutting sketchy deals with PBMs and generic drug manufacturers. 

What we are now seeing is a high-stakes, pharmaceutical poker game in the U.S. with the following players: Big Pharma, manufacturers of generic drugs, PBMs, and retail pharmacy chains. Interestingly and as pointed out in a recent Forbes article, the generics will dominate in the exploding global marketplace (see: Why Big Pharma Won't Get Its Piece Of The $1.2 Trillion Global Drug Market). Here's a fascinating quote from this latter article about the strategic direction of pharmaceutical companies in the developed world:

But more than anything else, the drug business in Europe, the U.S., and Japan will be focused on cancer and diabetes. Want an explanation for why AstraZeneca and Bristol-Myers Squibb bid for Amylin Pharmaceuticals? Look no further. That may not be enough to make up for the massive waves of patent expirations that are still going to be buffeting the drug business, though. [For the period of 2012-2016], more than $127 billion in annual sales will be lost as drugs go generic.