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“A man without his professional journals in this age is not far
from the end of his professional race.”

John Hamilcar Hollister (1824–1911), US physician

By David Woods (hmi3000@comcast.net)

The European Union is moving to strengthen rights of EU patients to seek care in countries other than their own, while the UK government has stated that the National Health Service definitely won't fund medical tourism.

At the same time, India , Thailand , Korea and Thailand are all ramping up their efforts to attract medical tourists, and polls show that some 4% of Europeans sought treatment overseas in 2007. Some estimates put the global market for medical tourism at between 60,000 and 85,000 inpatient medical travels a year.

Leonard Karp (pictured right), president and CEO of Philadelphia International Medicine (PIM), heads an organisation that attracts medical tourists from outside the USA – more than 3,000 last year. He notes that inbound travel to the USA for medical care is valued at more than $1 billion a year by the United States Department of Commerce.

In an interview with HOC , Mr Karp said that in general he believes that international pooling of medical resources will save costs. But he warns that there's a downside – visa and payment issues among them – plus possible language and cultural barriers. And then there's the matter of legal recourse if anything should go amiss. That might be a problem outside the USA , he says; but patients coming into the country have the same legal rights as do US citizens. Before setting out for treatment at such well-known medical centres as the Mayo Clinic and at sites in New York, Boston, Miami, Los Angeles, Seattle and Philadelphia, patients should be able to show legitimate medical need, ability to pay - and should check with their clinic or hospital of choice, says Karp.

PIM, now in its tenth year of operation, not only brings overseas patients into Philadelphia , it is also, according to Karp, looking for new ways to enhance its mission. For example, it is increasingly active in Asia and recently signed its first payer contract with an Indian health insurance company; it also completed a feasibility study to develop an international hospital in South Korea . The company also plans to offer its services to additional hospitals that have an interest in medical travel but lack the infrastructure to manage an international patient population.

Back in Philadelphia , PIM not only attracts patients to the city for specific medical procedures, but also produces an adjunctive economic benefit. Says Karp: “Patients stay at local hotels, often for six weeks or more. Their families utilise the region's restaurants, shop for gifts for family back home, and rely on local interpreters, medical equipment providers, and other services.”

Asked if he sees a time when US insurers will look to specific foreign countries for particular services or procedures, Karp notes that some Southeast Asian countries have established a focus on organ transplants. But so far, the major American health insurance companies have not bought into outbound medical tourism. As healthcare costs continue to soar beyond the present 16% of GDP, that might change. Having your heart transplant and getting to see the Taj Mahal in the same trip and for half the cost of the procedure at home could have piqued the insurance company accountants' interest.

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By Laura Goldman (laura.goldman@rxcomms.com)

“Valuations of small cap biotechs – stocks with a market capitalisation under $1 billion – were down more than 50% for the year 2008. Our analysis shows that more than 90 of the small caps were trading below the cash in their bank account,” said Daryl Pritchard, director of Research program at the trade organisation Biotechnology Industry Organization (BIO).

Willy de Greef, head of the trade organisation EuropaBio, predicts that 2009 could be even more of a “bloodbath.” “Some of these companies are now in deep trouble. If the banks are beginning to put down the phone on the General Electrics and General Motors of this world, what chance do we have in the biotech industry?”

Roger Longman of Windhover Information predicts the low prices will spur deal-making in the biotech sector. “While buyers say they aren't going to radically change their strategies simply to take advantage of cheap prices, it's clear that more deals will get signed – mostly because more sellers will accept terms they once would have rejected.”

Biotech companies may have no choice but to be a reluctant bride in a shotgun wedding. BIO reported 180 of US listed biotech companies with a market capitalisation of less than a billion dollars have less than one year's operating expenses in the bank; 22 companies have less than 6 months cash.

G. Steven Burrill, CEO of life sciences venture firm Burrill & Co, is worried about the future health of the biotech industry. “Finance has been the biotech industry's umbilical cord for the past 40 plus years. The implosion of financial institutions severed this chord, and, as a result, left many companies on life support. Biotech financings dropped 32% in 2008 as compared to 2007.”

There has been a flurry of biotech purchases by pharmaceutical companies, beginning last July. Roche announced its intention to buy the 44% of Genentech's stock that it did not already own for $89 a share, or approximately $44 billion. Shortly thereafter, Bristol-Myers Squibb bid $4.5 billion for ImClone Systems and Novartis AG bought Swiss biotech company Speedel for $880 million. SGX, which isolated a cancer fighting enzyme, was acquired by Eli Lilly in August for $64 million. In the same month, King Pharmaceuticals offered $1.4 billion in cash for Alpharma.

The acquiring trend continued into the fall. Roche bought for $50 million Memory Pharmaceuticals, its partner on a potential treatment for Alzheimer's disease. Omrix, an Israeli company that sells blood clotting agents, was acquired for $438 million by Johnson & Johnson in the same month. In the first deal of 2009, Wyeth has reported that it is in talks to purchase Dutch vaccine maker Crucell NV for more than $1 billion.

Robert Cyran, a commentator for Breaking Views, suggests that biotech's low share price is not the sole reason for the recent pharmaceutical buying binge. “Big pharma labs are notoriously unproductive. The $50 billion that was spent last year by the pharmaceuticals is approximately four times greater than the R&D budget of all US biotech companies combined. Yet nearly three quarters of all new drugs approved for sale in the USA last year originated from biotech labs. For the $50 billion that big pharma spent on research in 2008, they could have purchased the entire biotech industry exclusive of the top five. This might have been a better use of their cash.”

Bernard Dichek, editor of Bio Israel, concurs, “Biotech companies in Israel have been very productive. I suspect it is because they are typically formed around a specific research idea. That research has generally been subsidised and incubated for many years at an academic institution. This focus on one idea gives biotech companies a head start.”

Mr. Cyran attributes the difference in productivity between scientists at biotech and pharmaceutical company labs to the different corporate cultures. “Biotech and big pharma attract different kinds of scientists. A scientist working for big pharma expects to be a lifer. The biotech industry attracts more risk takers who expect that their individual research will be more important due to the smaller size of the firm.”

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“I keep six honest serving men, (they taught me all I knew),
their names are What and Why and When and How and Where and Who.”
R udyard Kipling (1865–1936)

By Mary Gabb (mary.gabb@rxcomms.com)

January 1, 2009 – typically a day of new beginnings – marked the beginning of the end of SWAG (stuff we all get, or freebies) for doctors from pharmaceutical companies in the United States . This change was the result of new voluntary industry guidelines published by the industry group, Pharmaceutical Research and Manufacturers of America (PhRMA). As of 15 January 2009, 41 companies have signed on to abide by the code.

Pharma swag has typically come in the form of free pens, notepads, soap dispensers, coffee mugs, and the like, all with the company and drug name prominently displayed. These “reminder items” serve a purely promotional purpose – to reinforce the brand. More recently, swag has also taken the form of more medically useful or educational items, such as anatomy displays or posters for doctor's offices, or patient educational pamphlets or DVDs – all with the pharma company, drug name and logo in plain view.

The new guidelines ban the distribution of “items for healthcare professionals' use that do not advance disease treatment or education – even if they are practice-related items.” Items that can be given away should be “designed primarily for the education of patients or healthcare professionals... are not of substantial value ($100 or less) and do not have value to healthcare professionals outside of his or her professional responsibilities.” Thus, other freebies such as DVD players or free sporting event tickets are now verboten.

While some doctors bemoan such blatant promotion, others insist it does not affect their prescribing habits, that they make prescribing decisions based on the individual patient. Given the billions of dollars spent by pharma on advertising each year, one imagines that the swag must have had some effect or the companies wouldn't have bothered.

But what impact will the swag vacuum have on physicians' practice balance sheets? For those in private practice, having to buy their own pens and notepads may not throw their budgets into the red, but free clinics and practices that serve predominantly Medicaid/Medicare or uninsured patients and operate on more strict budgets may be feeling the pinch.

Shannon Ortiz, the office manager for the Free Medical Clinic in Iowa City , Iowa , says her office will now rely on donations for such office supplies; such items are included on a “wish list” for donors. The pharma sales reps who visit her clinic don't typically bring medical items (eg, branded tongue depressors, exam table paper) as swag but if they need such items, other doctors' offices typically donate them.

By contrast, Carle Clinic in Urbana , Illinois , (which employs more than 330 physicians) has had some form of non-solicitation policy for the last few years and has actively discouraged both pharma reps from distributing swag and physicians from accepting them. This new pharma policy was not formally announced to the clinic and, according to Jennifer Hendricks-Kaufmann, Public Relations and Communications Manager for Carle Clinic, should have “minimal, if any, impact” on their budgets, because the office items and even patient education materials are already provided directly by the clinic.

The impact of this swag reduction remains to be seen – for both physician practices and pharma profits. It does show, however, that pharma is paying closer attention to appearances of undue influence on prescribing habits.

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If you missed any earlier issues of HOC , email duncan.dibble@rxcomms.com for a copy. Just a few of our previous articles are Getting drugs accepted , Healthcare blogs and How to make the most of conferences . A full list is available at http://www.rxcomms.com/hocezine.asp

HOC is available for print in pdf format – free

You can of course print this e-newsletter straight from your inbox (for best results select landscape in your printer’s print set up), but HOC is also available as a professional 4-page A4 newsletter in pdf format for you to print and keep for reference. Simply email duncan.dibble@rxcomms.com for past copies. If you would like to be sent a pdf version each month let us know and we’ll send one as soon as it is available.

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Healthcare Outcomes Communicator is designed to help you explain and enhance your role and value as healthcare economists and outcomes researchers. But we need input from you – the professionals working "in the trenches". So we encourage you to give us your feedback about how we're doing – to communicate with us so that we can better communicate with you.

Yours sincerely
David Woods and the Rx Communications team

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