Tuesday, April 8, 2008


Today I wanted to focus some attention on the issues of regulation and over-regulation. This is super important now that Wired has called this "business" an Industry. (Mr Goetz, next time feel free to call me when looking for quips.) When writing any good business plan one should obviously do a risk analysis and a SWOT analysis. If this is not done there likely will be failure to identify perceived threats to your business or business model.

Why is the Sherpa talking about business? Because, Genomic Medicine is being driven by business. Why? Because academia has failed to take the bull by the horns. Why? They are comfortable in their own realm. This is a stretch for them. I often like to blame this on the fact that Geneticists aren't usually trained in Internal Medicine (Most are Pediatricians) and Internists aren't trained at all in Genetics. While this is true, there are many other physician stake holders out there including OBs, Surgeons, Oncologists (Which are usually Internists), FPs, RNs, DOs, I could go on and on. But the mere fact that I don't mention much about them is simply because it is more of the same. In addition, only recently has the government been putting its dollar behind genetic research in common diseases. So why touch this risky topic of Pharmacogenomics, Risk Stratification and Genomic Medicine?

If you look at the business side of Genomic Medicine it becomes clear it was designed by those who do not value genetic services....other than testing. But here's the real reason: Genetic Care is a losing proposition. You cannot make millions of dollars from hiring the best genetic counselors and geneticists and taking Insurance payments. In fact you would be lucky to get minimum hourly wage for their services. Don't believe me? Talk to the Advisory Board Company.

So why is it a push, push, push for testing? Because insurers pay for testing...in fact they pay a pretty penny. Myriad charges 3125 for the BRCA analysis, some DTC companies charge several hundred more for "brokering" the test. They claim that the rest is cost for genetic counseling. If this is true, I applaud them for paying the genetic counselor 300 to 400 per case. That is the proper salary for them. If not, then where is that money going?????

To bring it full circle......Testing is where the money is at (right now). What is the Threat to testing? Over-regulation. The government can make it so tough to operate a lab that it is not economically feasible. Will that ever happen? I sure hope not....but it is headed in that direction. This is why the big firms like 23andMe are now scrambling to switch to CLIA approved labs.

Ladies and Gentleman, I submit to you that CLIA is only the beginning.......

I know that I have been pushing for self-restraint from these companies. Media hype and Marketing Ploys even affect physicians. This is the reason why they could kill this field for all of us if not done properly. Don't get me wrong, in the seeds of these companies lies some potential to do great things....It just hasn't been growing that way yet. But if you piss off the AMA, ACP, SACGHS, FDA, CMS, GAO, US Senate, Department of HHS, FTC, ACMG, NHGRI....I could go on and on.....Point is, the beltway is salivating over this topic.

But the truth is, by rushing to market they have brought this plague of over-regulation on all houses. This is coming, trust me. Government always has a way of stepping in too late and then over reacting (at least when it comes to legislation). This was the threat that should have been anticipated.....but more importantly...In any good business plan there should be some strategy to mitigate this threat. Where in the hell was that? Why hasn't this been enacted? Rookie mistake.

The Sherpa Says: We need to work with the government. Now more than ever. Otherwise....the US Govt. could crush the entire promise of Consumer Invested Health Care. Or at least destroy the vendors who stand poised to bring about this revolution. Look no further than at our candidates


Anonymous said...

You mean I won't be able to get a Ph.D and start a personalized genetic testing company the day after I graduate with my Ph.D. and offer a new genetic testing every time a research paper shows a link between a gene and a health condition? (sarcasm...but readers should get my point).

One should take their time in developing a personalized genetic testing company and do it right. I don't know to many doctors that will change the way they treat their patients every time a new paper comes out that a new treatment method works better or this or that drug works better.

Steve Murphy MD said...

There is an old saying in medicine...."Don't be the first or last to use a new drug"