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TMFHelical (99.09)

Healthcare News of Note through 10/14/2012

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October 16, 2012 – Comments (4) | RELATED TICKERS: UNH , PFE

Healthcare News Week starting 10/8/12

Are accountable care organizations (ACOs) the answer to the problem of escalating care costs?  In theory, they should help move from a system where the incentive is on performing procedures to one more focused on outcomes.  One recent study simulation found that an ACO group showed only modest cost savings, but when significantly improving outcomes.  Isn’t that a degree of win-win?  It will be some time before the real data weighs in.

The Nobel Prize for medicine goes to Shinya Yamanaka, for the groundbreaking work of demonstrating that mature cells could be reverted to stem cells.

One to give shivers“Representative Paul Broun (R-Ga.), a medical doctor who is on the House Science, Space, and Technology Committee, told a church group that evolution, embryology, and the Big Bang theory are "lies straight from the pit of hell, …..Broun's spokesperson, Meredith Griffanti, tells the AP that Broun was speaking off the record about his religious beliefs.”  Oh, OK.  As long as he was ‘off the record’.  Groan. But why isn’t he ‘off those committees’ too.

PWC has a report on the impact and logistics of Health Insurance Exchanges.  I’m convinced there is a play here for investors, but still at a loss to identify what it may be.  It is expected that Public exchanges will create an irreversible shift in the insurance market that will ultimately change the way medical care is sold in the US.  For the insurance industry, the new state-based exchanges represent a major business opportunity—an estimated $205 billion in premiums by 2021.”  “Medicaid Managed Care organizations, which have experience addressing the unique needs of a lower income population, may be well-equipped to initially serve the market.”

A list of the top 25 ‘biotech’ companies.  In this context, biotech means biopharmaceutical and the list is organized according to market capitalization.

How does Pfizer manage to make the bulk of its earnings overseas, in lower tax burden jurisdictions?  The SEC would like to know. 

Luke Timmerman of Xconomy talks about the factors that make Boston a top biotechnology ub.  The combinations of academic excellence, clinical experience, and risk capital make the area ideal for spurring innovation.  I had the pleasure of attending a presentation and round table discussion on the future of Boston as a biotechnology hub, with my only complaint being the event was too short and left a few items under discussed.  For those who know me and want to play find Waldo, here are some photos (I’m in 1 and 11).

Improve medical care by …. Hyperlinking“As part of a regional breast cancer screening program, doctors were sent a link to a website about the program and breast cancer in general. In all, 108 (45 percent) reported using the link--22 percent from the paper letter and 37 percent from the hyperlink in the electronic test results.”  This makes intuitive sense to me.  I like this format for taking notes because of the ability to record information via hyperlinking.  Ready access to information of interest / importance is never a bad thing.

With Lipitor and Plavix off patent, the list of the best selling drugs is changing.  Here is a look at what the top 15 for the year are likely to be.  As the accompanying article notes, the list is becoming ever more populated with biologics.  I don’t think it is a surprise that pharmas have embraced biologics, as the margins can be very good and perhaps more importantly the product lifetimes longer.  Hatch-Waxman may have given us access to cheaper generic chemical based drugs earlier, but the blowback has been more expensive biologics as well as higher prices on new therapeutics.

A mathematics journal may not be where we often find items of interest in biotechnology, but one article takes a look at the mathematics of insulin delivery via an artificial pancreas.  I do believe that an artificial pancreas will be a future reality – and a large market opportunity.

The Nobel Prize in Chemistry goes to  Bob Lefkowitz (Duke) and Brian Kobilka(Stanford) for those nice drug targets, G-protein coupled receptors.  Derek Lowe talks about why this is indeed chemistry, not biology.

Even though the audit is backwards looking (as it must be), the companies that score highly on the PharmExec biopharmaceutical and pharmaceutical industry review of profitability metrics often do well going forward.

More on Healthcare politics.  The New England Journal of Medicine often has free perspective series editorial pieces that cover, contrast, and criticize the positions of the major candidates.  This month, the Romney position is criticized in “Health Care Policy Under President Romney”, and the Obama position challenged under “The Shortfalls of Obamacare”.  I encourage reading both.

A Contract Pharma article does a nice job of commenting on the emerging biosimilars marketplace.  This is a more complex area than traditional small molecure generics, where drugs can be exact duplicates of the originals.  But with a US pathway, or at least a guide to it, now in place there is expected to be a rush of activity.

With venture capital spending into medical innovation still struggling since the financial crisis, an editorial in Nature Biotechnology looks at alternate possible funding mechanisms, including pooled risk situations and crowd funding.

A few years back, Medicare instituted a controversial provision under which it would not pay for rehospitalization due to hospital acquired infections.  The idea being that this burdened cost would force hospitals to clean up (literally) their act.  But … it seems to have not been all that successful in lowering infection rates.  With more incentive / punishment programs on the horizon (EHR for example), this is not a good signal.  Hospitals are not convinced that readmission is necessarily a good signal for quality in any case.

The search for an effective Alzheimer’s treatment will go global and incorporate multiple therapeutics.  On one hand, I’d love to see something work here, the need is desparate.  But on the other, I fear that a very expensive drug cocktail that shows marginal / modest benefit in this indication could be the straw that breaks the camel’s back regarding healthcare spending.

My favorite of the Pharma Execs, Andrew Witty of GSK, has shaken thing up a bit yet again with an initiative to put out all their clinical trial data for analysis.  In an era where big pharma is routinely criticized for withholding or only partially releasing (spinning) clinical data, such a move would indeed be considered significant.  Will others follow?

A recent outbreak of meningitis draws negative attention to compounding pharmacies.  Increasingly it seems, these operators are acting more like manufacturers than just local site suppliers.  I’m inclined to think the FDA should indeed step in and disable any processes that are more manufacturing than compounding in nature.

The Synthes (now part of JNJ) execs who did jail time over unauthorized clinical use of bone cement have been banned from the industry.  Good.

United Health is going global, with a bid to acquire Brazil’s largest insurer.  This move has a lot of potential in my opinion, and may prove quite savvy for UNH.  Hmmm….

The last decade has seen an increasing trend in outsourcing both in clinical development and manufacturing.  Lately the move overseas to lower cost areas has been part of this.  But I’m increasingly seeing news of a shift back, or as this one article notes, a ‘flight to quality’.  My own experience in this area is that overseas outsourcing can be low quality and require excessive oversight, so a rebound trend does not surprise, though there still seems to be a reagent supply sourcing move to China in particular.

More politics.  This article notes that both Biden and Ryan took some liberties with the truth when it came to their debate on the topic of healthcare.  Shame how politics is more about labeling the opponent than offering ideas and choices.  Here is a clip from the debate.

Assisting with smoking cessation is a goal worth pursuing, but was there ever much doubt that Pfizer drug Chantrix would be a legal volleyball for years to come.  This latest serve relates to whether the CEO should testify in a liability trial.  In my opinion, they should indeed.

How do you like these apples?  Specifically, ones genetically modified to not brown as quickly after being cut.  On the one hand, this is distasteful and potentially misleading as to freshness, but on the other, it should better enable restaurants to economically offer healthier choices like apple slices without having to treat them (calcium ascorbate, vacuum seal).

OT: I see my copy of What's Behind the Numbers?: A Guide to Exposing Financial Chicanery and Avoiding Huge Losses in Your Portfolio, by John Del Vecchio and Tom Jacobs shipped.  Looking forward to it.   Ralph Helical Investor

4 Comments – Post Your Own

#1) On October 16, 2012 at 10:35 AM, TMFHelical (99.09) wrote:

Oops.  Looks like I had a formatting glitch at the end.  Oh well, I don't mind the added emphasis.

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#2) On October 16, 2012 at 11:04 AM, edwjm (99.88) wrote:

@TMFHelical:

+1 rec and a big thank you for this interesting and informative post.  I also thank you for keeping it free of partisan politics!

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#3) On October 16, 2012 at 11:48 AM, Mega (99.96) wrote:

Great post as usual Helical. 

In addition to the prizes for chemistry and medicine, the prize for economics was also related to healthcare. Alvin Roth helped design the matching market used by the United Network for Organ Sharing, which increased the number of kidney transplants by 2200% over the last 8 years.

http://www.reuters.com/article/2012/10/15/nobel-prize-roth-kidney-idUSL1E8LFFW320121015

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#4) On October 16, 2012 at 12:17 PM, TMFHelical (99.09) wrote:

MegaShort,

Thank you.  I was unaware of the economics prize. 

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