As most of our readers are likely aware, the FDA this week issued a scathing letter effectively prohibiting the 5 year-old, 23andMe personal genomics testing company from doing business. Quite frankly, this is all pretty unnecessary, and reflects poor policy on the parts of both institutions. Furthermore, this ruling may have longer-term implications that will cripple the process of democratizing genetic testing and research.
23andMe: Naiveté or Arrogance
First and foremost, 23andMe has been selling their personalized genetic testing kits for the last few years despite notice that they needed FDA clearance and have not yet received it. According to the FDA, there have been many interactions with the company to work together to make this test safe and reliable for consumers. In their scathing letter, they lay this out very specifically:
“As part of our interactions with you, including more than 14 face-to-face and teleconference meetings, hundreds of email exchanges, and dozens of written communications, we provided you with specific feedback on study protocols and clinical and analytical validation requirements, discussed potential classifications and regulatory pathways (including reasonable submission timelines), provided statistical advice, and discussed potential risk mitigation strategies. As discussed above, FDA is concerned about the public health consequences of inaccurate results from the PGS device; the main purpose of compliance with FDA’s regulatory requirements is to ensure that the tests work.”
Anne Wojciki, the CEO, yesterday posted their response to the FDA’s letter on the 23andMe blog. In it, she admits that they have not been on top of the filing process:
“In July 2012 23andMe submitted its first application for FDA clearance and followed on with another submission at the end of August. We received feedback on those submissions and acknowledge that we are behind schedule with our responses.”
The FDA is a regulatory body and therefore should never be taken lightly or overlooked. Put simply, they have the power to cripple your business. This leads one to wonder why 23andMe seems to have taken such a lackadaisical attitude towards the FDA and taking so long to follow through with a renewed application that took the FDA’s concerns into account. Did 23andMe really think there would be no repercussions to their inaction? Were they truly that naïve or worse, arrogant?
Legally, yes. The ‘Legal Argument’ website Mootus has taken this issue to the masses, asking for contributions to answer the question of the legality of the FDA’s actions. The clearest predicate case is to Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. (Supreme Court 1984):
Courts must give deference to an agency’s reasonable interpretation of an ambiguous provision within the agency’s own organic statute.
If this sounds a little self-serving for the government, that’s because it is. In fairness though, it makes sense as no government agency can foresee every possible permutation of how it’s regulations will be interpreted. Hence the many loopholes federal agencies are always trying to stay on top of.
Before I became interested in healthcare IT, my first jobs out of undergrad were conducting genetics research. I worked in labs at Massachusetts General Hospital and Novartis Institutes for Biomedical Research looking for novel ways to genetically characterize disease for both treatment and risk. Our understanding of ‘genetic risk’ for disease is still very much in its infancy. Like almost all of healthcare, genetic testing is not something that a medical practice will just do for you – there needs to be a legitimate medical need.
Because of my background, the rise of consumer companies selling genetic test kits has always been of interest. My first boss, Rudolph Tanzi, one of the world’s experts on genetics (specifically related to Alzheimer’s disease), was of the opinion that there has not been enough research published to truly inform patients of their risk for different illnesses. For strict medical purposes, this is a prudent position. If you are going to tell someone they have a specific illness based on genetics, then the science better be conclusive.
This is where things with 23andMe become murky. 23and Me has never stated that they are providing medical advice, which very much would make them a medical diagnostic under FDA regulation. To the contrary, they and other consumer genetic testing companies clearly state that they provide information. In the case of 23andMe, they first got their start promoting their ability to do genetic matching to determine an individual’s ancestry. Today, 23and Me promotes that they are disseminating medical information that is already in the public domain, and making it accessible to a layperson for very low cost. Therefore, if one looks to recent FDA mHealth guidelines (PDF) as providing some indication on how the FDA may rule on consumer genetic testing, one could easily assume that 23andMe is “safe” from FDA regulatory burden.
23andMe uses CLIA-certified labs to conduct testing. They cite all of their reference articles for how they determine risk (see asthma example here). They very clearly state in their Terms of Service (TOS) that they are not a medical service, and do not provide diagnostic services. Listed below are the main subheadings from Section 5 of their TOS, “Risks and Considerations Regarding 23andMe Services”:
The 23andMe service is meant to be an interesting glimpse into your own history, and potential future. It can also be a powerful information tool to identify what you can do to live a healthier life, much in the way of the Quantified Self movement.
As with all of medical care, allowing patients to have access to their own information seems to be against the interests of some very powerful entities. Only in recent years have patients been given access to their own health information, although it can still be a struggle to obtain that information.
Part of what plagues this industry is the continued belief by many healthcare professionals that consumers cannot be trusted – that they can only navigate their health with the assistance of a physician and can’t be relied upon to do their own research. And while this is changing, it is happening ever so slowly. This patronizing paternalism on the part of the healthcare establishment is outdated and needs to change. A new world order is coming to the healthcare sector much like it has come to many others. One where the consumer requests a more dynamic role and the provider becomes more of a coach to help guide the consumer, not dictate what the consumer can and cannot do with information about themselves.
For now, it looks as though access to your own genetic information will continue to be overseen by the FDA, but hopefully in the future such regulating bodies will see the benefit of opening up the floodgates. By allowing curious individuals to assess their genetic information, and then share that at their own discretion, companies like 23andMe are creating a vast new data pool for genetic research. By updating profiles with relevant health developments, this information can be mined to find new correlations that were previously unidentified by the current methods of conducting genetic research after knowing that someone has an illness. Predictive models only get better the more they learn, and more users in this case is more education for the entire genetics community. Similar to what PatientsLikeMe has famously done with testing drug efficacy, 23andMe can theoretically do for genetics. 23andMe may be forced to halt testing for medical issues until this dispute is resolved, but they can still provide ancestry information, and will always have your sample on file if and when they get the clearance to start marketing for medical purposes again.
Clearly, the FDA is a fickle master, and there are still a lot of gray areas around what they expect to regulate. With the pace of technology advancements continuously accelerating, any regulatory body would be hard-pressed to keep up. The recent publication of their mHealth Guidance provided tremendously valuable clarity to that new industry. However, it also shows that not all products in the healthcare space are expected to adhere to the same set of rules and corporations from any sub-industry should be aware of the specific constraints relevant to them.
Our recommendation is that you always enter the space with open eyes, and regularly interface with the FDA to ensure you are working in concert. Regulations will always be in flux, and showing a willingness to cooperate early will only go in your favor. Eventually, the FDA may realize that the service 23andMe provides is not actually a medical service – although it does touch medicine. This goes for any new medical innovation that is not clearly defined in the FDA charter. In the meantime, at least attempt cooperation and show the organization the respect it merits so it won’t shut you down.
A common and somewhat unique aspect to EHR vendor contracts is that the EHR vendor lays claim to the data entered into their system. Rob and I, who co-authored this post have worked in many industries as analysts. Nowhere, in our collective experience, have we seen such a thing. Manufacturers, retailers, financial institutions, etc. would never think of relinquishing their data to their enterprise software vendor of choice.
It confounds us as to why healthcare organizations let their vendors of choice get away with this and frankly, in this day of increasing concerns about patient privacy, why is this practice allowed in the first place?
The Office of the National Coordinator for Health Information Technology (ONC) released a report this summer defining EHR contract terms and lending some advice on what should and should not be in your EHR vendor’s contract.
The ONC recommendations are good but incomplete and come from a legal perspective.
As we approach the 3-5 year anniversary of the beginning of the upsurge in EHR purchasing via the HITECH Act, cracks are beginning to show. Roughly a third of healthcare organizations are now looking to replace their EHR. To assist HCO clients we wrote an article published in our recent October Monthly Update for CAS clients expanding on some of the points made by the ONC, and adding a few more critical considerations for HCOs trying to lower EHR costs and reduce risk.
The one item in many EHR contracts that is most troubling is the notion the patient data HCOs enter into their EHR is becomes the property in whole, or in-part, of the EHR vendor.
It’s Your Data Act Like it
Prior to the internet-age the concept that any data input into software either on the desktop, on-premise or in the cloud (AKA hosted or time sharing) was not owned entirely by the users was unheard of. But with the emergence of search engines and social media, the rights to data have slowly eroded away from the user in favor of the software/service provider. Facebook is notorious for making subtle changes to its data privacy agreements that raise the ire of privacy rights advocates.
Of course this is not a good situation when we are talking about healthcare, a sector that collects the most personal data one may own. EHR purchasers need to take a hard detailed look at their software agreements to get a clear picture of what rights to data are being transferred to the software vendors and whether or not that is in the best interests of the HCO and the community it serves..
Our recommendation: Do not let EHR vendor have any rights to the data – Period!
The second data ownership challenge to be very careful of is the increasing incorporation of patient generated health data into the healthcare delivery system. We project an explosion in the use of biometric devices, be it consumer purchased or HCO supplied, to monitor the health of patients outside of the exam room. Much of this data will find its way into the EHR. Exactly who owns this data and what rights each party has is still debatable. It is critical that before HCOs accept user data they work out user data ownership processes, procedures, and rights.
If the EHR vendor has retained some rights to data the patients need to be informed and have consented to this sharing agreement. In our experience this is rarely if ever explicitly stated. HCOs need to be careful here as this could become a public relations disaster.
We are not lawyers, we are offering our advice and experience to HCO CEOs, CFOs and CIOs, from the perspective of business risk and economics. At Chilmark we have deep experience in best practices used in other industries with regards to data use and sharing agreements. We have also spent significant time reviewing the entire software purchasing lifecycle and culture, and are here to help HCOs in reviewing these contracts.
Addendum: Rob and I worked together on this post but our WordPress backend doesn’t like to do co-authored posts.
Certainly Wall St. sees value in Twitter with its share price sky-rocketing on first day of trading, but is there truly value in Twitter for us out there wandering the Internet ether?
Simply put: Yes
With the caveat, that you are cautious and go into it with clear objectives on what you hope to get out of Twitter.
Prior to creating a Twitter account (@john_chilmark) around 2008/2009, I conducted much of my research/market scanning activities via RSS feeds. I tracked both new sources and various healthcare related blogs. There were a couple of services for which I subscribed to periodic email, including HIStalk, but that has all come to an end with the exception of HIStalk.
Twitter is a far more useful as a research tool. With Twitter I can now tap a vast array of “experts” on various HIT subjects who tell me what is important to read and what is not. Whereas in the past I had to wade through RSS feeds to eek out what was important, now I just let those I follow do it for me – they have become my adjunct research assistants. This approach has broaden my horizons, helped to inform me as to what areas of research Chilmark analysts should focus and often given me an inside look as to some of the struggles that clinicians are facing in these turbulent times. It also has given me an opportunity to connect and expand my network, an invaluable asset for a young start-up.
However, Twitter, for all its usefulness, can be a colossal waste of time. The trick to making Twitter work for you is two-fold:
Rule #1 Only follow those who are discussing subjects of interest to you. With some quarter of a billion plus users on Twitter, there is a tremendous amount of noise. Pulling the signal out of the noise is your responsibility. My trick: before “following” someone I first look at their tweet stream and apply the 1:20 rule. If they make anymore than one tweet in 20 about some personal issue that does not directly pertain to HIT, I don’t bother following. Having followed that rule, at this point I have roughly a 1o:1 ratio of followers to followings.
Rule #2 If you intend to follow rule one above, then by all means do likewise and don’t tweet unless you have something meaningful to say – give back to community. This is one area where a lot of healthcare brands fall down. They tweet far too much marketing and far too little knowledge. Sad thing is, most of these companies/orgs have a wealth of knowledge to share and could be contributing meaningfully to various conversations.
While some may poo-poo Twitter as the latest social media craze, I beg to differ. Give it a try, start slowly and give back to the community that you are a part of. You’ll be pleasantly surprised how much that community will give back to you.
Addendum: We have also just set-up a Twitter account for Chilmark Research proper from which all of our analysts can contribute to all conversations HIT. Please give us a follow: @ChilmarkHIT
WebMD, the once-darling of consumer health who seemingly lost its way following pharma dollars, may at last be coming back to its roots. Last week, WebMD made headlines by announcing it had purchased the young patient engagement start-up, Avado, for an undisclosed sum.
Avado, based in Seattle is a product of a healthcare accelerator, Start-up Health. Their core focus is Patient Relationship Management (PRM), which honestly, is just another term for patient engagement via a patient portal or traditional Personal Health Record (PHR). Like its top competitors MEDSEEK, RelayHealth, Medfusion, who was recently spun-out from Intuit and NoMoreClipboard, these solutions are EHR agnostic and typically deployed at enterprise sites where there are numerous legacy systems in place across the enterprise (e.g., EHRs, radiology, labs, etc.). Providing a patient with a single longitudinal view of their record along with an the ability to conduct some transactional processes. PRM solutions seek to accomplish two objectives – meet regulatory requirements and drive loyalty.
Within the healthcare sector patient engagement is becoming an increasingly hot topic. While we at Chilmark Research have been following this sector since our founding, only in the last 6-12 months have we seen interest significantly accelerate. Healthcare organizations (HCOs) of all sizes are now looking to deploy a patient engagement/PRM strategy, partly in response to stage two meaningful use requirements and increasingly, an understanding among HCOs that value-based reimbursement will necessitate a more engaged and loyal patient – can PRM facilitate.
But this acquisition is less about Avado than it is about WebMD, who has signaled their intent to diversify the business by adding some teeth to their own consumer portal offering in the near term. In the longer term, WebMD’s strategy will hinge on execution of their B2B platforms and their ability to turn informed consumers into engaged patients.
Short Term: An Investment in Diversification
WebMD has led the online consumer health information market since 1999, growing steadily into a publicly traded company (market cap: just under $1.6B) and a household name. Unsurprisingly, advertising and site sponsorship comprise 84 percent of their revenue; they enjoy over 138M unique monthly Web visitors and 22M mobile views. Remaining revenue comes from a provider-geared information network (Medscape being the best-known brand), and a private portal service, through which they create and manage customized health portals for self-insured employers and health plans.
WebMD has been milking these revenue streams for years, bringing little innovation to market. Frankly, they didn’t have to as the pharmaceutical industry with their fat marketing coffers kept WebMD fat and happy, for awhile.
That all changed when the pharmaceutical industry started hitting the wall with fewer new blockbuster drugs in the pipeline, while their breadwinners start coming off patents and succumbing to inevitable, low-cost generic competition. Marketing budgets crashed and with them, WebMD’s once highly profitable model. Of course it didn’t help that WebMD began seeing increasing competition from the likes of Everyday Health, Patient Conversation Media, and Demand Media (who runs livestrong.com).
After six quarters of being unprofitable from 2011-2013, WebMD is beginning to come out of its drug-induced stupor finally posted profits in Q2 and Q3 of this year. Consequently, it appears that WebMD has also come to realize that it will need to diversify. Hence, the Avado deal.
Avado has no strong brand, and fewer than a dozen customers, but it does have a vision that WebMD sees strong potential in. Coupling WebMD’s massive scale with a compelling PRM vision and platform could open new, untapped markets for WebMD, particularly among smaller ambulatory provider networks where Avado has gained traction and WebMD has strong presence. There is a huge opportunity here.
This is not to take anything away from Avado, who had not-so-quietly emerged over the last couple of years as a flag bearer for patient engagement through health IT. Dave Chase, Avado’s co-founder and CEO, has been one of the most vocal proponents of a business case for patient engagement, rooted in the growing realization that getting serious about between-visit care will be pivotal in bending the cost curve by managing the health care needs of an aging, and increasingly chronically ill population.
WebMD’s extant portal was/is somewhat rudimentary, with an HRA tool, access to some claims data, education/information features, and some health coaching functionality. They will likely fold these capabilities in with the Avado platform, which consists of the usual spate of tech features bundled into a PRM platform: secure messaging with Direct, a dashboard and visualization tools, administrative support (scheduling and billing), integration with existing practice management/EHR systems, and Blue Button+ compatibility.
Rather than going after a more established vendor, such as a MEDSEEK, this move allows, for relatively little money, an opportunity for WebMD to augment their portal offering with more sophisticated functionality without breaking the bank (some reports put deal value at $20-30M range, though our guess is closer to $8-10M). By choosing Avado, WebMD has opted to get a batter on base rather than swing for the fences.
More Than a Website…Or Are They?
It is unlikely that this deal vaults WebMD to the top of the patient engagement market – they will continue to be an information website above all else. However, they have steadily matured their platform over the last few years with improved, diversified content, a flagship mobile app (over 20M downloads), and a more personal, customized user experience.
More recently, they have incorporated a provider search function and begun integrating with their MedScape network so clinicians can push specific information (e.g. discharge instructions or care plans) directly to patients. At HIMSS they announced a partnership with Qualcomm Life’s device ecosystem so consumers could manage device-generated data directly through their WebMD accounts.
Yet with all these developments, some of which have been little more than announcements, the proof is in the pudding, which in this case isn’t out of the kitchen yet. Many questions remain: There hasn’t been a peep about the Qualcomm deal since March. How well do/will the provider tools work, and how many patients will use them? How is this going to integrate into clinicians’ workflow, and/or broader population health management solutions? And with any such offering, how will it be packaged and delivered to market?
Looking Ahead: Has the Giant Awakend
This is likely just the start for WebMD, which has a tradition of being a highly acquisitive company. Providing PRM solutions to ambulatory providers through their existing network is an easy first step, though success will be defined by execution and rationalization across the multitude of WebMD B2B offerings. Design, usability, and functionality will be crucial.
Next will be layering in additional functionality that is of high interest to consumers and physicians alike. Expect to see such features as pricing transparency, quality scores, and enabling additional transactional processes that simplify a consumer/patient’s interaction with the healthcare system. For the physician practice, WebMD may develop or acquire solutions that facilitate referrals, care coordination and possibly even administrative functions such as eligibility checking. Look for future acquisitions here as WebMD still has many gaps to fill.
The biggest implication of this acquisition is, however, that a sleeping giant may have awoken and has decided that too many mice have been eating from its plate. The market is awash in small companies who are all looking to tackle some aspect of consumer/patient engagement. Some of these, like Avado, may ultimately be acquired, but many, many others may be squashed underfoot. The next 6-12 months will show whether or not the giant has truly awakened, or simply was walking in its sleep.