- CASE 1 – Where Does Business Strategy And Humanity Balance In Pharma?
Several months agoMylan Pharmaceuticals, a producer of life-saving autoinjectorEpiPen faced scrutiny over significant price hikes of their product. The scandal was taken at a national level, involving the public and politicians, including presidential candidate Hillary Clinton. From a reasonable price of $94 for a two-pack of injectable epinephrine (EpiPen), the price has gone up to shocking $600, in just 9 years. Mylan Pharmaceuticals is the second largest generic and specialitypharmaceuticals company in the world and EpiPens play a critical role in saving lives of those experiencing life-threatening allergic reactions.
The company earlier had set a precedent over price hikes in 2012, when Mylan agreed to pay $147 million to settle accusations for raising the price of their widely prescribed drugs by 3000%, according to the New York Times. This time, Mylan CEO, Heather Bersch was to answer what had caused a price hike for EpiPen. In her interview with CNBC, MsBresch said that: 'No one is more frustrated than me.' She argued that the device’s current price has nothing to do with Mylan, but with a health-care system in general, which often requires patients to pay not just insurance premiums, but also a full retail price for out-of-pocket medications.
The story, however, was taken further and has caught the attention of Hillary Clinton who tweeted: ‘EpiPens can be the difference between life and death. There is no justification for these price hikes.’ After Mrs Clinton's statement, shares of Mylan in the stock market dropped 5% and also dragged the NASDAQ Biotechnology ETF (IBB) down by 3%. Shares in the biotechnology sector were affected after Mrs Clinton added that she is going to tackle price gouging in the drug market.
In 2015, unofficially labelled as 'the most hated man in the world', Martin Shkreli, the founder and a former CEO of Turing Pharmaceuticals, faced a widespread criticism after his firm obtained the manufacturing licence for the antiparasitic drug Daraprim, and later raised its price by 5,556%. Daraprim is on the World Health Organization's List of Essential Medicines and is an important component in treatment of HIV-positive patients. The drug price went up from $13.50 per pill to $750, putting Shkreli under multiple investigations to examine his fraud activity.
Ironically, after Mylan and its CEO started to be heavily criticized, Shkreli was among the defenders of the company's selling approach. In his interview with CBS News, he stated: 'I think important medicine should be expensive because they're valuable,' and later supported his view on social media, comparing net margins of Altria Group (tobacco company) - 20.6% and Mylan's - 8.97%, suggesting that a tobacco company shouldn't earn more than a pharmaceutical one.
Indeed, unlike tobacco, Mylan'sEpiPen is of much greater importance. The value of an EpiPen doesn't lie in the epinephrine supply, but in the auto-injection device that automatically delivers the correct dose of the drug instantly. In cases with severe allergic reactions, timing is critical, and Mylan provides the ultimate solution that consequently creates high demand.
Looking at Mylan's position from a business point of view, the company rightly won its position in the market. Sanofi Pasteur tried to sell Auvi-Q devices but was later found to be providing improper doses of the drug. There was also Adamis, offering prefilled syringes, but they were proven to be harder to use than EpiPens, and the US Food and Drug Administration (FDA) required them to provide more data before launching the product. Each time, when Mylan'sEpiPens beat competitors, the company raised prices.
Due to the sensitive nature of the industry and tough regulations for product approval, it's incredibly hard for new entries to survive in the market, meaning there is a little competition. Mylan can hardly be blamed for enjoying an increasing demand and raising prices, if we were talking only about business strategy. However, there is also a big ethical question: How much does one's health cost and is it up to pharmaceutical companies to set the price?
CASE 2 – WILL TECHNOLOGY REPLACE DOCTORS? (ARTIFICIAL INTELLIGENCE, ROBOTS)
The question of whether computers could replace doctors has been around for some time, but prevailing views have generally remained skeptical, mainly because of the complex and intuitive nature of patient care that goes well beyond rapid processing of data. After all, how could computers interpret qualitative signals and personalized nuances that patients reveal to their doctors?
The role of the doctor could soon become redundant, overtaken by forms of Artificial Intelligence (AI) which will test, diagnose and treat disease just as well as any human medical professional could if not better, two doctors from New Zealand’s Whangarei Hospital predict.
This worldwide robotic vision of the future, estimated to be 10-to-20 years away, the editorial suggests doctors could be eradicated from the payroll with medical assistants, midwives and nurses filling the more human-based skill gaps that AI is unable to perform.An editorial, published in the New Zealand Medical Journal today, says the secret behind an AI takeover is a unique pattern-recognition algorithm that synthesises and compares a patient’s data to predefined disease categories.
Once a diagnosis is delivered, AI can then recommend an evidence-based treatment, specific to each patient.“Over the coming years, AI will challenge the traditional role of the doctor,” the paper reads.“Human doctors make errors simply because they are human, with an estimated 400,000 deaths associated with preventable harm in the US per year.
“Furthermore, the relentless growth of first world health care demands in an economically-constrained environment necessitates a new solution.“For a safe, sustainable healthcare system, we need to look beyond human potential towards innovative solutions such as AI.
The paper’s authors foresee that AI could start substituting for human diagnosis in ‘visual’ medical specialties, like radiology, in under a decade. This is because the field already relies heavily on computers to detect symptoms of disease. “AI can substitute any medical speciality that uses images, like radiology. Or pathology, and ophthalmology,” editorial co-author, Dr William Diprose, tells SBS.The process is mostly algorithmic. AI can scan an image and detect disease using an algorithm in the same way than a doctor would.”
Indeed, supermachine Watson by IBM analyzed 1,000 cancer diagnoses and in 99 percent of the cases, Watson was able to recommend treatment plans that matched actual suggestions from oncologists. Not only that, but because it can read and digest thousands of documents in minutes, Watson found treatment options human doctors missed in 30 percent of the cases. The AI’s processing power allowed it to take into account all of the research papers or clinical trials that the human oncologists might not have read at the time of diagnosis.
Moreover, there is are a lot of talks that It's only a matter of time before robots replace surgeons in the operating theatre, according to cancer specialist virtual reality surgery pioneer Shafi Ahmed.
Ahmed is a leading proponent of virtual and augmented reality within operating theatres. In April 2016 he became the first surgeon to live-stream a surgical procedure in virtual reality, with millions of people worldwide watching him remove a tumour from the colon of a patient in his 70s.But this isn't a new form of gory entertainment – Ahmed hopes that virtual reality can revolutionise the way surgeons are trained, especially in the developing world.
Over five billion people worldwide cannot access safe surgery, according to the Lancet Commission. To overcome this, and save seventeen million lives every year, "we need to train 2.2 million extra surgeons,"
All trainee surgeons need to take part in VR surgery is a 3G connection and an inexpensive Google Cardboard. Ahmed's virtual reality surgery put students from countries that usually suffer from poor access to training right in the middle of one of the world's leading hospitals, "Surgery is all about how in you are in the theatre," Ahmed said. "What do you do when things go wrong? How do you behave?"
The next step forward in medical training, Ahmed said, is more sophisticated, and cheaper, surgical simulation equipment. Haptic feedback technology is reaching the stage where a student surgeon will be able to pick up a virtual blade and feel the sensation of holding it – and operating – in real life. "This virtual simulation will be the most explicit yet, and the best immersion we can achieve," Ahmed said.
How long until trainee surgeons can virtually operate from the comfort of their own bedroom? Ahmed is optimistic about the future of medical of medical technology: "Within the next two to three years we'll see people do this," he said
CASE 3 – THE RISE AND FALL OF THERANOS: SO MANY LESSONS IN ONE DROP OF BLOOD (WHERE DO PASSION AND RESPONSIBILITY MEET SPEAKING ABOUT HEALTHCARE INNOVATION?)
Elizabeth Holmes – 19 year old Stanford dropout - founded Theranos, because she is afraid of needles. Theranos would provide cheap, quick tests of chemical levels in patients’ blood, to figure out dosing and effects of drugs in development.
She rented lab space and hired employees. And she kept raising money. In 2004, $6.9 million. 2005, $16 million. 2006, $28.5 million. By 2014 she had $400 million. On paper, investors valued the company at $9 billion.
Many people used to refer to Holmes as the next Jobes. And why not? Holmes was promising a health care revolution. Blood tests are a pain in the arm. Sharp. Inconvenient. Expensive. Theranos promised an antidote. Pain-free tests that could look for up to 70 different markers in a single drop of blood. Results delivered to your phone in hours. And every single test cost less than half the Medicare reimbursement rate, with prices listed plainly on its website.
Theranos hit the mainstream in 2014 with a cover feature in Fortune. In the months and seasons to come, Holmes and Theranos made a grand tour of Important American Media: Vanity Fair, Bloomberg, Forbes, Inc., Fast Company, CNBC, CNN, The Economist, The New Yorker, Time, Glamour, WIRED.
In their own way, each repeated similar points. Personalized blood tests would revolutionize medicine, Holmes was the next Steve Jobs (her black turtleneck uniform certainly helped perpetuate this), and Theranos’ technology was wonderful and mysterious. But none were able to get Holmes to discuss exactly how that technology worked. Proprietary information, trade secrets, okay, sure.
While Holmes was being adored by the media, her company was sopping up partnerships. Capital Blue Cross would make Theranos tests available to patients in Pennsylvania. The Cleveland Clinic signed on, too. And Walgreens and Safeway both agreed to set up testing centers.
Theranos had other wins. In spring 2015, the company co-authored an Arizona bill that became law, making it legal for patients to get their blood tested without a doctor’s note. That summer, the FDA announced that Theranos’ nanotainers—the company’s proprietary fingerprick blood collectors—were safe for testing for herpes simplex-1.
Blood tests do not require FDA approval. Rather, tests developed in clinical labs typically get approved through another regulatory framework called the Clinical Labs Improvement Amendments, or CLIA. Theranos used the FDA ruling to hush the murmuring skeptics, who complained that Theranos’ miracle technology had not been put through the peer review processes that are typical for consumer medicine.
John Carreyrou(Pulitzer Prize-winning Wall Street Journal reporter) was skeptical. He had read the New Yorker‘s profile of Holmes, and was bothered by her company’s absurd, obsessive secretiveness. So the started digging. Over the next several months, sources began trickling information to him.
The general gist: Theranos’ technology was not what it seemed. In fact, the company’s blood testing device, a machine called Edison, couldn’t accurately detect enough molecules in blood samples to provide accurate readouts. Blood behaves differently in small volumes, more like a pile of M&M’s coated in honey than a proper fluid. Edison couldn’t get things right, sources told Carreyrou, so Theranos had been diluting samples taken via the fingerstick and running them through blood testing devices manufactured by Siemens1—the same type of equipment used by every other blood testing company. And in fact, Theranos was using these off the shelf machines to run most of its tests.
October’s bad press impacted Theranos’ business. Walgreens announced it would not build any more Theranos Wellness Centers until the company proved its technology was sound.
In January Carreyrou and two other Journal reporters reported that inspectors from the Centers for Medicare and Medicaid Services had found serious problems in Theranos’ Newark, Ca lab. Enough so that the lab was at risk of losing its access to Medicare patients..
More bad news followed. Theranos had run a flawed blood-clotting test on over 80 patients for six months. Theranos’ tests were throwing off medical decisions. Theranos’s tests fail at least a third of all internal quality control checks.
The FDA and CMS weren’t the only federal agencies interested in Theranos. On April 18, the Journal reported that the Securities Exchange Commission—the agency charged with protecting investors—and the Department of Justice had issued subpeonas to Theranos and several of its business partners.
Just a few weeks before regulators proposed banning Holmes and Theranos President Sunny Balwani from the blood-testing industry, the company tried to remedy this by bulking up its medical advisor board with well-qualified experts in chemistry, pathology and clinical chemistry.
Later forbes announced today it has revised its estimate of the net worth of Theranos founder Elizabeth Holmes, from last year’s $4.5 billion to: absolutely nothing. Analysts cut the estimate of the company’s net worth to $800 million, a fraction of its previous estimated value of $9 billion.
Theranos' story reminds a lot of people of Apple. The company has a brilliant leader with a penchant for wearing the same color turtleneck every day. That leader theoretically came up with an elegant system that can leverage the most advanced technology and sell it to the world, though Holmes lacks the mercurial nature of Jobs. Theranos controls every aspect of its technology, just like Apple.
But here's where we also have to remember the key difference between healthcare and other consumer technology.
"I'm all for innovation and for revolution — that's what we need," "But it's very difficult to judge a lab that's very secretive … and unlike the Apple products, this is a product that affects people's lives. If an iPhone is faulty, we go buy something else." But if a blood test is wrong, it could endanger someone's life.
Holmes is aware of the questions people have. "Every time you create something new, there should be questions," she told CBS News. "To me that's a sign that you've actually done something that is transformative."
A health innovation has the potential to change people's lives and be transformative in a way that a phone never could, and that's precisely why, as excited as they are, scientists are still skeptical.