US Markets – January 23, 2018

Healthcare Policy

US Healthcare Policy Highlights

  • CMS plans to release a final version of an Obama-era rulemaking that outlines new standards that critical-access hospitals must comply with to continue billing under Medicare. The federal agency released the proposed version of the rule in June 2016, and it was not finalized before the Trump administration started in January 2017. According to Federal Register notice, CMS plans to release a final version of the rule sometime over the next 17. CMS estimates the implementation cost of the rule to the industry would be USD 773 million to USD1.1 billion (Modern Healthcare)
  • More than 100 of the nation's leading patient and provider organizations - including the American College of Rheumatology - are urging Congressional leaders to immediately reverse a new CMS policy that will create enormous financial uncertainty for specialty providers and jeopardize patient access to vital Part B drug therapies (Eurkalert)
  • HHS’s new civil right division will protect health-care workers who refuse to provide services that run counter to their moral or religious convictions. This office will consider complaints from doctors, nurses and others who feel they have been pressured by employers to perform, accommodate or assist with procedures that violate their beliefs. If a complaint about coercion or retribution is found to be valid, an entity receiving federal dollars could have that funding revoked (Washington Post)

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Healthcare Economy

US Healthcare Economy Highlights

  • The US Department of Veterans Affairs, Intermountain Healthcare, Ascension Health, SSM Health and Trinity Health are aligning together to establish a not-for-profit generic drug company with the goal of addressing shortages and the high costs of medications. All the participating organizations represent more than 450 hospitals around the country. The organizations intend to make the not-for-profit an FDA approved manufacturer and will either directly manufacture generic drugs or sub-contract such work to reputable companies. Few facts from US Government Accountability Office (GAO), which highlights the rising healthcare costs:
    • The retail prescription drug expenses accounted for about 12% of total US healthcare spending in 2015, up from about 7% through the 1990s
    • Pharmaceutical companies' profit margins rose by an average of 17.1% between 2006 and 2015
    • The drug spending is expected to increase by 8% in 2018, mostly fueled by the use of expensive brand-name drugs, although some pharmaceutical companies have increased generic-drug prices as well (Healthcare IT News; Modern Healthcare)
  • According to Reuters, healthcare costs and rising rents are expected to boost US inflation rate
    • Overall, the costs of medical care increased by 0.3% last month, while prescription drug prices jumped 1 percent after a 0.6 percent rise late last year.
    • Hospital and doctor visits saw their costs increase by 0.3%
    • The core index for personal consumption expenditures rose about 0.2% in December, after a 0.1% gain in November 2017 (Reuters)

Technology Briefs

  • In the current US Healthcare industry, which is encumbered with soaring costs, inconsistencies in medical care and patient access barriers, consumers face major obstacles when seeking quality and affordable health services. The blockchain-centric projects can reshape the healthcare landscape for both health service providers and individuals utilizing a free-market, self-directed approach.
    • Universal Health Coin (UHC) (a public benefit corporation) is about to launch token-based healthcare system that employs blockchain technology to arbitrage, decentralize, fund and provision the fair payment of health services worldwide
    • UHC plans to leverage blockchain technology and cryptocurrency to create a direct personal and financial relationship between a UHC consumer and their health service provider and eliminates third-party intermediaries who bog down the healthcare delivery process, wasting critical dollars that could be redirected to more effective medical options (Nasdaq)
  • The US Department of Veterans Affairs (VA) is seeking proposals on how blockchain technology can help improve its operations. The chief technology officer of VA, Charles Worthington mentions this while speaking at AFCEA Bethesda’s 10th Annual Health IT Day. He also mentions the challenges with respect to interoperability and the sharing of health information between entities as key problem areas to be addressed through IoT and Blockchain (Government CIO Magazine)
  • Targeted and personalized therapeutics are likely to modify the existing precision medicine landscape. Post the FDA approval of Novartis’ CAR T-cell therapy, Kymriah, Frost & Sullivan finds that extensive work in CAR-T cells will fuel the development of transformative treatments. The FDA approval of Kymriah and other T-cell engaging antibody platforms will spur continued investment in, and development of, unique CAR T-cell therapy platforms across research and clinical settings.

    Frost reveals that CAR-T therapies will be expensive initially due to high production costs. However, the pricing may decrease with future technological advancements (Frost & Sullivan)

  • A report commissioned by HHS and Robert Wood Johnson Foundation, states artificial intelligence is starting to play a transformational role in the healthcare industry, even if opportunities for using it are just beginning to be explored. The report highlights the three forces currently driving the use of artificial intelligence are:
    • Frustration with legacy medical systems
    • The ubiquity of networked smart devices in society
    • Acclimation to convenience and at-home services such as those provided by Amazon and other companies (Health Data Management)
  • According to a survey conducted by the Ponemon Institute and sponsored by Opus, “What CISOs Are Worried About in 2018”, that included responses from 612 CISOs, CIOs and other information security professionals across a broad range of industries:
    • 67% of respondents believe their companies are more likely to fall victim to a cyberattack or data breach in 2018. And, 60% are more concerned about a data breach from a third party, such as a partner or vendor
    • 65% respondents state "inadequate inhouse expertise" as the top reason for data breach
    • 69% respondents anticipate their roles will be even more stressful in 2018 and 45% fear job loss in the event of a data breach (PR News Wire)

Market Segments

Oncology/Genomics

  • Foundation Medicine enters into a partnership with Pfizer to focus on development, regulatory support, and commercialization of companion diagnostics (CDx) that will be included in updates to FoundationOne CDx. FoundationOne CDx is FDA approved comprehensive genomic profiling (CGP) assay for all solid tumors that incorporates multiple companion diagnostics.
    • Pfizer will benefit from access to FoundationInsights, Foundation Medicine's data analytics platform, to facilitate novel biomarker discovery and to optimize clinical trial design
    • The unique combination of FoundationInsights and FoundationOne CDx will potentially enable Pfizer to leverage Foundation Medicine's platform technology to accelerate discovery and development of precision oncology therapeutics (Foundation Medicine)
  • Via Oncology is acquired by Elsevier, a part of RELX Group. Elsevier is a global information analytics business that helps institutions and professionals progress science, advance healthcare and improve performance for the benefit of humanity. Elsevier provides digital solutions and tools in the areas of strategic research management, R&D performance, clinical decision support and professional education (Elsevier)
  • CancerLinQ LLC and Association for Molecular Pathology (AMP), a global, molecular diagnostics professional society, form a collaboration. CancerLinQ ASCO (health information technology platform designed to leverage the power of big data to help conquer cancer) will benefit from AMP’s leadership and members, and will be applying the breadth of their knowledge (ASCO)
  • GE and Roche enter into a partnership to develop integrated digital diagnostics platform to improve oncology and critical care treatment.
    • Companies aim to develop jointly-branded clinical decision support software for faster, more accurate, more confident decision-making, enabling earlier diagnosis and individualized treatment
    • Partnership will apply advanced analytics to in-vivo data from GE’s medical imaging and monitoring equipment with in-vitro data from Roche’s biomarker, tissue pathology, genomics and sequencing portfolio (Business Wire)

Life Sciences

  • IQVIA named to FORTUNE magazine’s 2018 list of World’s Most Admired Companies. IQVIA received the distinction in FORTUNE’s Healthcare: Pharmacy and Other Services category with high marks in quality of management, value as a long-term investment, effectiveness in conducting business globally and wise use of corporate assets.
    FORTUNE’s World’s Most Admired Companies list is the definitive report card on corporate reputations. Since 1997, FORTUNE has identified, selected and ranked the World’s Most Admired Companies, uncovering the business practices that make these companies highly regarded among their peers (IQVIA)

Imaging

  • The potential joint venture between, Xerox and Fujifilm raise concerns for one of the print giant's largest investors. Former Affiliated Computer Services CEO Darwin Deason (who sold his company to Xerox in 2010) blasts the Norwalk, Connecticut based company's handling of the Fujifilm talks in a letter penned to its board of directors, demands that Xerox disclose details of its "critical joint venture agreement" with Fuji, arguing that doing so is clearly required by US securities laws (CRN)

Watson Platform for Health

  • According to an update on the HealthVault site, Microsoft plans to remove its HealthVault Insights application from the iOS, Android and Windows stores before the end of January 2018. Microsoft will continue supporting HealthVault patient-records system, as well as Microsoft Health, a service for actionable insights for healthier living (ZDnet)
  • Google Cloud launches Cloud AutoML platform aiming to make machine learning more accessible to applications from healthcare to retail. The service will be available to Google Cloud customers on a case-by-case basis, with app makers paying proportionally for how often their apps make use of Google’s API (Forbes)

VBC - Providers

  • The Cerner EHR contract with the US Department of Veterans Affairs (VA) is on hold pending an independent assessment of the agency’s interoperability requirements for the new EHR. The VA has contracted MITRE (an American not-for-profit organization) to perform an assessment and pool comments and recommendations for the final report due at the end of this month (Healthcare IT News)
  • Kairoi Health partners with Athena Health to deliver cloud-based clinic schedule optimization solution. Kairoi launches of KairoiScheduler, its solution for clinic schedule optimization, on Athena Health's market place. KairoiScheduler is part of KairoiSuite, the company's integrated software solution for maximizing productivity of healthcare organizations (PR News Wire)
  • Allscripts is recovering from a ransomware attack that took down several applications (on 18th Jan) hosted in data centers in Raleigh and Charlotte, North Carolina. Few things about this attack:
    • Company's Professional EHR and Electronic Prescriptions for Controlled Substances services were hit hardest by the attack
    • This ransomware was a variant of SamSam unrelated to the version that infected Greenfield, Indiana based Hancock Health and Decatur, Adams Health Network earlier (Becker’s Hospital Review)