Holy Crap! MedCo Follows in CVS footsteps

By December 21st the writing was on the wall. It was pretty obvious CVS/Caremark had jumped over the number one PBM in the field MedCo.....

How so?

Well, the increased ownership in Generation Health that CVS/Caremark laid down was the way.....

The newest of the benefits management companies.....this time the focus was on genetic testing benefits.

Personally, this type of company should have been formed in 2005 when Insurers were hemorrhaging cash from those BRCA tests........

But, slow and deliberate do Insurers move....

On the 21st it of December it was all but decided for MedCo. Ummm, Ummmmm, who looks like this Generation Health company?????

I knew back then and now everyone knows today.

MedCo buys DNADirect.....

In 2005 when My Partner at the time Leslie Manace went out to "see" Ryan...... In what turned to be a huge probe of Leslie by Ryan, Ryan revealed......"We are interested in PGx" Which was funny because so were we. So much so that we really thought that this was the bees knees and in fact was likely the only useful and scalable testing to come out in the next 5 years.

The DTC Genomics companies were merely a twisted dream at the time.

Well, Ryan. Our hunch paid off.

By Diversifying your DTC genetic testing company into something useful such as a GBM, you have moved shrewdly. And when the PBM leader gets trumped by CVS, you reap the rewards.

I look forward to the first quarter report from MedCo to see exactly how much they acquired you for.

I have been saying on this blog that the answer for these DTC genomics companies is to follow your lead. Now the question is, which big insurer will now but a DTC genomics company?

For MedCo, I am a little disappointed that you decided to choose the exact type of company as Caremark did. There are lots of other solutions out there. I hope you still plan on increasing your footprint in this space. Because it would be bad if CVS/Caremark continues to gobble these companies up and you end up buying the second in class.....

Not that DNADirect is second in class, but Heather Shappell et.al. ARE First Class.......

The Sherpa Says: There has got to be a way to make these companies less reliant on people. Even in the genetics testing space, there is a way to automate.

Congratulations Generation Health. Nice pick up!

Is it any surprise that insurance companies have no clue what the hell is going on with genetic testing?



You see, there are a set of ICD9 codes that can mean 2C19 testing or hepatitis pcr........



The coding system doesn't allow the companies to run their algorithms accurately......



Insurers have no clue which is which and they are getting banged out for these tests.



Don't believe me, just take a look at what United has done with their BRCA testing (which BTW has their own codes)



"By instituting a prior notification policy and placing Myriad in charge of determining which patients get tested, United Healthcare can monitor more closely which of its policy holders are receiving testing on BRACAnalysis."



Add in the SGO guidelines which suggest a 5% BRCA carrier risk may be worthwhile and you can see why the companies are looking to stop the carnage or testing overuse.



Myriad on the other hand would beg to differ. They see years of under utilization as something to combat. And they are very successful at it, just check out MYGN.



The answer is somewhere in the middle. What is a responsible insurance company to do?



Answer: Generation Health.



What happens when genetic testing costs less than 100 bucks? Well, then maybe Generation Health will need to speak with me regarding a diversification company we are working on.....



With other PBM companies actively looking at new automated strategies for GBM (not glioblastoma multiforme) Generation Health is an interesting play.



I remember speaking with a certain player who also was involved with the DTC companies, who agreed with me. DTC is a bull$h!t play, benefits management of real testing, hyperlipids, HCM, etc are where the puck will be......From the Genome Web article (HT Turna Ray)



"The partnership will also “allow the companies to explore future programs in the medical diagnostics arena to encourage appropriate and cost-effective testing for certain hereditary diseases, and eliminate unnecessary testing where evidence for clinical validity and utility is lacking,” the collaboration partners said in a statement. "



We talked about this for some time (unnamed MD and myself) and then.....radio silence.......Only to show up with funding and some small hits.



They chose genetic counselors instead of my band of geneticists......



These guys are moving in the right direction. The industry is shaping up and guess what the killer app for genetic testing is?????



That's right, actual, honest, regulated medical testing........ Go figure.



Now, who gets what, how is it paid for, how is it used?



These are the questions that will need to be solved.



Until of course the accuracy and cost of a genome is less than 500 USD Which could be quite a while.



Meaning, Generation Health has about 10 years of life as the company it is right now. Not bad.



Imagine saving insurers millions per year, then taking 10-20% of those savings......... per year CVS/Caremark is a great partner and now owner/investor.........A very strategic investment.



My guess is that the DTC companies will fall in line or perish. Then labs will have to start marketing better, offer faster turnaround times and there will be "preferred" lab status.....per insurer.



Basically creating a super confusing land mine for physicians and patients. Just like radiology, just like surgery, just like chemo, just like......medicines



The Sherpa Says: Finally, corporations and investors are figuring out what IS important. Staying alive and having your medications work!!

I am for MedCo's Snow

I was sent this article by a reader and I have to tell you, I see both sides of this argument. Have you heard? Dave Snow, CEO of MEDCO the largest pharmacy-benefits manager has stated emphatically

"I have no patience for a doctor who says, ‘I’m above it all, I don’t want to practice cookbook medicine"

He says this when doctors use the excuse that algorithms dumb medicine down and are only needed for PAs ans NPs.

Snow is pushing for pay for performance and uses physicians' lack of knowledge against them.

Recently MEDCO polled 1000 physicians about the CYP 2C9 genotype test approved by the FDA for Warfarin dosing.....guess how many knew about the test? 3....

Yes, that is correct......3 physicians. Do you see how this could infuriate someone who is not a doctor or who has trained in the system. As I doctor, I understand that medical school doesn't prepare you for genetics, I understand that Internal Medicine residency doesn't prepare you either.

So I have a much higher threshold to get pissed at people who have dedicated 12 years of their lives to study and learn how to care for human beings and get paid crap for it, unlike Mr. Snow or most corporate attorneys/accountants/hedgefunders.

However, even my patience does wear thin. Boy, imagine if you were paid an extra 100 dollars per patient that you know the genotypes and dose warfarin appropriately. Imagine if they actually taught about the VKORC1 variation in Asians versus African Americans and dose requirements......they don't even teach that in residency....

So, you want to fix the system? Punish the medical schools, not the doctors trying their best with what they were taught. If you want doctors to learn, pay for all of them to take 6 months off to learn genetics. Or pay them in a manner such that they don't have to see 20 patients a day or more to break even!

The system is broke, everyone is blaming each other, when the real problems lies in the system itself.

1) Doctors don't get paid the way they deserve, so to make the money they deserve, the system has turned into a volume NOT a quality system

2) Medical schools do not hire clinician teachers in genetics, therefore the PhD's teach this field. Inevitably boring medical students because the clinical translation is lost....assuming they actually teach genetics in medical schools less than 34 of the near 200 medical schools do.

3) Costs soar when you don't have the time to critically think and instead you use shotgun methods, which are less efficient than algorithms. But neither is true intelligence.

4) When we know patients' genomic make up we will be able to devise much more nuanced algorithms so Mr Snow is on to something, but........

What good is it when only 3 in 1000 doctors know about your algorithm?

5) Personalized Medicine is not coming without this education, therefore companies looking to profit from it, would be well served by teaching doctors....not trying to punish them...

The Sherpa Says: We need to stop blaming others in the system and work to fix the system. We will only get the whole story and solution by collaborating rather than punishing any side.....

HT:JW