Posted by: Audrey Erbes | January 20, 2010

More Notes from JP Morgan Conference and Prospects for Health Care Reform

While developing my promised remarks on JP Morgan’s third day, I ran into the Senate returns in Massachusetts…so here goes.

More Notes from JP Morgan Healthcare Conference, Jan. 13, 2010

Tom Daschle’s luncheon keynote gave a different perspective on health care reform legislation versus the previous day’s talk by Tom Scully, former administrator at Centers for Medicare and Medicaid and General Partner, Welsh, Carson, Anderson & Stowe. The fact that Daschle, Former Senate Majority Leader, is a Democrat provided another viewpoint with different view of the landscape of the debate underway. Where Scully summarized Health Care Reform from his perspective as focused on expanded coverage legislation, Daschle informed the audience that the bills had nothing to do with a Health Care System but rather a Health Care Market reform. He sees the landscape of one of 50%/50% private for-profit and government players, respectively.

As a result of being a “health care market” instead of a health care delivery system, he views the U.S. stakeholders holding difference goals. While U.S. players place emphasis on spending from the top of the pyramid down to bottom, other countries put emphasis on meeting needs at bottom of pyramid and working way up until the money runs out. While universal coverage of citizens is at the “bottom” in the U.S. health care arena, it’s of first order priority in European single-payer system countries. So it’s not surprising that U.S. politicians focus on costs as reason to not provide universal coverage—it’s all about costs not mandate.

As with Scully, Daschle thinks the changes that are needed will take a long time because of the heavy involvement of for-profit motivations in the “market” but that the reforms will eventually occur. He outlined the issues: access, cost, lack of transparency, unnecessary defensive care, insufficient health information technology, etc. and distinguished three components of reform: insurance, payment and delivery reform before speaking to the differences in reaching agreement. Daschle’s quote of Churchill with reference to how Americans will eventually solve the problem of health care had the audience laughing—“Americans can always be counted on to do the right thing…after they have exhausted all other possibilities.”

Endo Pharmaceutics, a specialty pharma company, sounded like they have joined the big pharma chorus in reassuring investors they are transforming themselves. Endo surprised me with their mentioning a focus on specialty generics with interest in in-licensing products and API for planned usage with their implant technology. The company originated as a pain generics company spun out from Dupont Pharmaceuticals with some fantastic good fortune in licensing the patented Lidoderm patch which is a blockbuster dermal pain product for them but, unfortunately, has placed them at risk of too much exposure when that patent runs out. They also indicated a shift to global business—“Endo is transforming to deliver the right treatment solutions focused on consumer-driven medical decisions.”

Myriad Genetics, a public company, along with several other private companies did have positive stories to tell. With a global molecular diagnostics market projected to exceed $6 billion in 2015, Myriad had good news of a 47% growth in revenues in 2009, 87% gross profit margin, plans to increase their current sales force of 300 with another 100 representatives and positioned to launch one new product per year. Theirs is the story of “predictive, personalized and prognostic medicine.”

Complete Genomics, a private company located in Silicon Valley, offered an exciting new business model—a new kind of company with a new big model based on IP-protected DNA sequencing technology. Their unique selling proposition is the highest quality data at lowest cost. They want to be a data rather than services business—meeting the need for sequencing 100s of thousands of human genomes for researchers. Unlike competitors who sell instruments to researchers, they sell data. DNA is sent via Fedex for analysis and human genome report is shipped as output to customer via Internet. They foresee positioning company for IPO in 2010.

Status of Health Care Reform Now

What is health care reform legislation’s future now after the loss of the 60th filibuster- proofing Democratic vote in Senate from Massachusetts? Democrats fear not passing the legislation at all enough that they just might convince the House to accept the Senate version despite some differences that they don’t like to avoid need for passage of different bill there.

Stay tuned as politics play out. It is clear that Massachusetts voters’ minds were more focused on the state of the economy or anger at failure to curb bankers’ greed than the need for maintaining 60 votes in the Senate for the passage of legislation they otherwise philosophically might support. Even the new Republican Senator Scott Brown voted for the 2006 health care reform legislation in Massachusetts. Perhaps voters wanted a change in Congressional representation that has been all Democratic for so long. They traditionally balance the field with Republican governors like Mitt Romney who fostered the healthcare reforms when as one-term governor there. Or was it low turnout in the urban areas where support for state Attorney General Martha Coakley, the Democratic candidate, was strong.

Audrey

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