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Innovation In The Health Care Sector Marches Forward May 14, 2012

All eyes are on the Supreme Court as the nation awaits its decision aboutObamaCare, but progress in the health sector nonetheless marches on. These changes in the real world of health care are driven not by Washington’s laws, rules, and endless regulations, but by companies, large and small, that are developing new ways to improve health care.

The Galen Institute held a conference adjacent to Capitol Hill on Wednesday in which speakers from more than a dozen companies described the investments they are making in better health, better health care services, and more efficient care delivery.

They demonstrated that the best solutions to the problems in our health sector come not from remote Washington bureaucrats trying futilely to re-engineer our health sector through costly, cumbersome, and confusing rules and regulations, but from innovators who are listening to doctors, patients, and consumers.

Here are examples of some of their real-world solutions:

Incentives for healthy lifestyles:

Walmart is making a major investment in its new “Healthy Food Initiative” to help families stressed for time and money to eat better, more nutritious meals.  Joe Quinn, senior director of issue management and strategic outreach for Walmart, described the company’s new five-year program to make it easier to live healthy by making more nutritious food more accessible and affordable.

Walmart will work to reduce sodium, sugars, and trans fats in the packaged foods it sells, buy more local products, and develop algorithms for labels that will help shoppers identify healthy foods offering the best value, as just a few examples of the Walmart initiative.  This will bring “better nutrition to kitchen tables across the country,” Quinn said.  Only the world’s largest retailer would have the market power to facilitate this transformational change by working at the micro level with suppliers, developing educational programs, and responding to customers who want to live better at affordable prices.

Innovations in drug development:

Robert Sweetman, M.D., the lead lung cancer researcher for the OncologyBusiness Unit at Pfizer, explained that innovations in technology, genetics, and basic science are helping companies discover and develop effective treatments at a much faster pace.

For example, researchers have new tools to better understand the molecular characteristics of a tumor so they can more precisely target treatment options.  They also are able to determine which patients are more likely to respond to treatment.  As a result, Pfizer was able to expedite clinical trials and bring its newest drug for a specific type of lung cancer, Xalkori® (crizotinib) to market 4 years from target discovery to approval, rather than decades using the older research models.  This represents a new chapter in drug development.

Powerful computer software is speeding the process of drug discovery and development.  This means smaller clinical trials that are targeted to patients likely to benefit from the drug, helping to lower the extraordinarily expensive cost of drug testing, and getting new drugs to patients faster.

Threats to innovation:

ZOLL Medical Corporation is one of the medical device companies in the bull’s eye of ObamaCare.  ZOLL President Jonathan Rennert explained that the new taxes the law imposes on his company’s revenue – revenue, not profits – will raise ZOLL’s tax rate to greater than 50%, which will in turn drastically curtail the company’s investment in research and development.  “The medical device tax would have completely wiped out our profit if it were in effect over the last several years,” Rennert said.  “Every one of the jobs in our company is now in the U.S.  But we will have every incentive to move jobs offshore” when the tax takes effect in 2013.  “The medical device tax will lead to less innovation, fewer jobs, and fewer lives saved.”

Timothy Ring, chairman and CEO of C.R. Bard, Inc., said the medical device tax is killing jobs, innovation, and America’s leadership in medical science.  He cites as evidence:  Investments in health technology firms are down 65% over the last five years.

Similarly, Michael Russell, M.D., president of the board of directors of Physician Hospitals of America, described the health law’s crushing impact on the newer, more efficient doctor-owned hospitals.  ObamaCare effectively blocks creation of new doctor-owned hospitals and it even kept those which already were under construction from opening, denying patients access to care and medical professionals access to jobs.  So far, the bigger, lumbering community hospitals have been successful in using their political clout to crush these smaller, more efficient competitors.

Better care with better information

Keynote speaker John Niederhuber, M.D., CEO of Inova Translational Medicine Institute and former director of the National Cancer Institute, says we should expect that, within a decade, each one of us will have our genome sequenced.  (The cost has fallen from $1 billion to map the first human genome to about $2,000 now.) “The next 10 years in biomedical research and patient care will be defined by genomics and our ability to analyze and integrate this data effectively with a patient’s phenotypic information into their actual care,” he said.

“The power of genomics and information management is the key to bending the cost curve,” he said, as better and earlier information allows us to get the right treatment to the right patient at the right time – even before any symptoms manifest.  He said the challenge will be in managing the explosion of information (measured in “zettabytes”).

William Hanson, M.D., chief medical information officer and vice president at the University of Pennsylvania Health System, discussed how genetic mapping will transform our understanding of disease:   “A treatment that appears to be eminently sensible based on phenotypic appearance can look very wrong-headed when genotypic information becomes available,” he said.  “It has become increasingly clear that, as we gain more information about the genetics of illness…we’ll find that we’re going to need to re-label many diseases and rewrite a lot of textbooks.”

William O’Leary, Microsoft’s executive director of policy, health and human services, explained his company’s investments in new technologies to get and keep consumers engaged in their health and health care and navigate the delivery system, as well as its investments in cloud, shared services, and emerging technologies to facilitate “connected health.”  Better information is the key to better health care and greater efficiency in the health sector, O’Leary said.

Imran Andrabi, M.D., chief physician executive officer and senior vice president at Mercy Health Partners, explained that reforming basic procedures also can have a transformative effect.  He described his work in better understanding of what’s happening – and not happening – at the patient’s bedside and described changes that reduced infections and falls, dramatically improved patient satisfaction, and increased quality of care by such simple changes as getting lab results into doctors’ hands earlier in the day as they were doing their rounds.  The constellation of changes at Mercy lowered costs and helped improve the hospital’s bottom line.

Challenges for the future

Alex Azar, president of Lilly USA, provided a visionary overview of the challenges and opportunities ahead. People are living more than 60% longer today than they did at the turn of the last century and “drugs, used properly, are part of the solution, not the problem,” he said.

The U.S. remains the undisputed leader in bio pharmaceutical research, but our continued leadership in this industry sector is not guaranteed.  “We are facing today an innovation crisis in the life sciences sector,” Azar said. The cost of developing a new drug now exceeds $1.3 billion, and the number of new drugs winning approval during the last five years is lower than at any time since the 1970s.  The rest of the world is gaining on us because of our outdated regulatory and tax burdens, while other countries are competing ferociously for biotech jobs.

Azar believes history demonstrates that consumers are best served by competition and innovation, not unaccountable boards like the Independent Payment Advisory Board created in the new health law.  Policy must focus on three primary solutions:  Open access to markets with market-based pricing policies, tax policies that encourage innovation, and regulatory polices with consistent standards.

“What seems unimaginable today will become a reality tomorrow,” Azar said.  “And we know that our success will continue to rely on keeping the doctor-patient relationship at the center” of decision-making.

Policy perspective

Three members of Congress who spoke at the Galen conference showed their understanding of the opportunities and challenges discussed at the conference:  House Majority Whip Kevin McCarthy (R-CA) echoed a theme that was woven throughout the conference:  The need for major tax reform to restore America’s global competitiveness, the importance of FDA reform to modernize the approval process, and repealing the health law to “restore innovation and unshackle the economy.”

Rep. Renee Ellmers (R-NC) is a registered nurse who was inflamed by a government takeover of health care.  She ran for Congress, having never before held elective office, defeated a long-time incumbent in 2010, and is working tirelessly to repeal the law and restore control over decisions to doctors and patients.

Rep. Todd Rokita (R-IN) is a member of the House Medical Technology Caucus, and he described the devastating impact that the law is having on investment and jobs creation in the medical device companies in his district.  This tax must go! he said.

Galen held the conference across the street from Capitol Hill.  It was our reminder to government officials who don’t get it that the real solutions in the health sector come, not from government, but from the millions of entrepreneurs who are working every day to improve care, find new treatments, and put new ideas into action.  These are the people who will lead us to transformational change.

A webcast of the full conference is available at www.galen.org along with the full agenda, biographies of speakers, and PowerPoint presentations.

Posted on Forbes: Health Matters, May 14, 2012.