Money pours into
healthcare ETFs spurred by new drugs
Money is flooding into exchange-traded funds focused on healthcare at the
fastest rate in at least six years, driven by booming biotechnology and
pharmaceutical sectors bringing new products to market.
In 2014, 51 percent of money flowing into U.S. sector-focused ETFs, or $4.06
billion through Feb. 28, was for health-care funds, according to data
compiled by Bloomberg. That‚Äôs more than two-thirds of the total deposits the
funds attracted in all of 2013, and a greater share of total ETF
contributions than any time since at least 2008.
‚ÄúPeople thought drug development was dead and all there was was a patent
cliff,‚ÄĚ Doug Foreman, chief investment officer at Kayne Anderson Rudnick
Investment Management in Los Angeles whose firm oversees about $9 billion,
said referring to the loss of exclusivity for top-selling brand-name
medicines. ‚ÄúThere isn‚Äôt a day that goes by that some company doesn‚Äôt report
positive results from a trial and the stock is up 100 percent.‚ÄĚ
Exchange-traded funds are securities that track an index or basket of stocks
or bonds in a given market or industry sector. They can be easily traded and
come with low costs. Inflows to U.S. ETFs more than tripled to $183 billion
last year from 2004, according to data compiled by Bloomberg.
This year also is the healthcare sector‚Äôs highest share of ETF inflows since
President Barack Obama took office and debate began in 2009 over the Patient
Protection and Affordable Care Act, Obama‚Äôs signature health-care overhaul.
After the law was signed in 2010, health-care ETFs saw $944.9 million leave,
and health was the worst performing of 12 ETF sectors.
Concern that the law known as Obamacare would damage the sector -- which
helped drive down health stocks in 2010 -- is largely over, said Les
Funtleyder, a longtime heath-sector investor and analyst who is a consulting
partner at Bluecloud Healthcare. The firm doesn‚Äôt have any healthcare ETF
‚ÄúThe ACA has kind of come and gone,‚ÄĚ Funtleyder said in a telephone
interview. ‚ÄúIt‚Äôs been implemented and nothing bad has happened to the
companies by and large.‚ÄĚ
The biggest healthcare ETFs are dominated by pharmaceutical and
biotechnology drug stocks, which are enjoying a boom. Of the three funds
with the biggest inflows this year, nine of the top 10 holdings in each fund
are drug and biotech companies, according to data compiled by Bloomberg.
The Standard & Poor‚Äôs 500 Biotechnology Index gained 74 percent last year
compared with a 30 percent increase in the entire S&P 500 Index.
Pharmaceuticals and biotechnology companies jumped 9.3 percent this year as
a group, beating all other 23 industries in the S&P. Institutional investors
who don‚Äôt specialize are using ETFs to get in on that rise, according to
Ravi Mehrotra, a New York-based analyst at Credit Suisse Group AG.
The funds offer an easy way into drug and biotechnology stocks. ‚ÄúIf you‚Äôre
an institutional investor, and you‚Äôre not a healthcare specialist, and the
sector is outperforming, the fastest way to get to an equal-weight or
over-weight exposure is through ETFs,‚ÄĚ Funtleyder said.
Biotechnology companies are bringing new medicines to market, while
pharmaceutical companies have managed to move past the loss of top drugs
from patent expirations.
Gilead Sciences Inc., a Foster City, CA-based biotechnology company that is
the world‚Äôs biggest maker of AIDS medicines, last year gained U.S. approval
of a liver disease drug that may become one of the biggest sellers in
history. The company more than doubled in value in 2013.
The Nasdaq Biotechnology Index has gained 18 percent this year as InterMune
Inc. more than doubled to lead the advance. The shares of the Brisbane,
California-based company soared 171 percent on Feb. 25 after its drug
pirfenidone for a fatal lung disease met goals of a study expected to
support U.S. approval.
Visit Bloomberg for the report.
2015 budget proposal threatens access to clinical laboratory services
The National Independent Laboratory Association (NILA), representing
independent community and regional laboratories throughout the United
States, is deeply troubled by the FY 2015 Budget Proposal to make additional
significant cuts to Medicare lab payments, particularly cuts that would
affect the most vulnerable Medicare beneficiaries.
The proposed cuts, totaling approximately $7.9 billion over ten years would
threaten access to testing services for millions of vulnerable Medicare
beneficiaries, including those who reside in skilled nursing facilities,
home health, and hospice and those that live in rural locations.
The proposed budget would lower Medicare Part B payment rates to clinical
laboratories by 1.75 percent per year from 2016-2023, for a cumulative cut
of 14%. The proposal doesn‚Äôt acknowledge that in November 2013 the
Administration announced its plan to move forward and have the Centers for
Medicare and Medicaid Services (CMS) independently propose and make Medicare
laboratory rate adjustments to begin in 2015.
‚ÄúCuts to Medicare laboratory payment rates do nothing to modernize payments.
They only succeed in eliminating market competition and the ability to
ensure seniors have access to laboratory services,‚ÄĚ states Dr. Mark
Birenbaum, NILA‚Äôs administrator. ‚ÄúCommunity laboratories that provide test
results that doctors rely on every day to make appropriate diagnoses and
treatment decisions do not survive in the face of double-digit payment
Clinical laboratories have received significant cuts in reimbursement over
the past several years, including a large cut to pay for the 2012 short-term
fix in Medicare physician payments (known as SGR) and another cut through
sequestration. These cuts are on top of a cumulative 20 percent cut to
Medicare laboratory services implemented through the Affordable Care
Act‚ÄĒfive direct fee cuts and a permanent provider productivity adjustment.
In the CY 2014 Physician Fee Schedule Final Rule, CMS states that it will
review laboratory test payment rates and make payment adjustments as soon as
2015. Though this process will begin in 2014, CMS has yet to outline how it
will conduct such an analysis, how it will attribute its analysis to payment
adjustments, and how deep those reductions will be.
Visit ACLA for the letter.
respondents recognize supply chain deficiencies keeping hospital operating
rooms in the ‚Äústone age‚ÄĚ
Despite the fact the healthcare industry is fueled by scientific
advancement, too many hospitals find themselves stalled at a crossroads,
struggling to embrace business-focused technologies and best practices that
will allow them to flourish in the decades to come. This is the troubling
picture painted by results of a new independent survey released today by GHX.
The GHX survey of hospital senior executives indicates that operating room
(OR) supply chain deficiencies have slowed organizational decision-making,
increased costs and inefficiency -- and ultimately impact the delivery of
Key research findings:
Too many hospitals stuck in the supply chain ‚Äústone age‚ÄĚ
Survey results showed that 79 percent of senior hospital executives say
keeping supply chain costs down is important to addressing key financial
challenges, such as a decline in profit margins and shrinking reimbursements
from government and private payers. Yet, 78 percent of respondents report
hospitals are playing catch-up in terms of implementing effective supply
chain technology solutions. And one-in-five (18 percent) say they‚Äôre still
stuck in the ‚ÄúStone Age‚ÄĚ‚Äď dramatically lagging behind where they could and
The lack of supply chain visibility in the OR comes at a high cost
Nearly two in three executives ‚Äústrongly agree/agree‚ÄĚ that their hospital
lacks real-time reports (62 percent) and advanced modeling techniques to
inform decision-making (65 percent) when it comes to their hospital‚Äôs
implantable medical device supply chain, making the streamlining of delivery
of care in their hospital an even more significant hurdle.
Seventy percent of respondents say excess clinical time spent on inventory
replenishment is a ‚Äúvery‚ÄĚ or ‚Äúsomewhat significant‚ÄĚ challenge to their
hospital‚Äôs operating room. Almost half of respondents (45 percent) ‚Äústrongly
agree/agree‚ÄĚ there is a lack of accurate implantable medical device supply
Especially alarming is the role the supply chain plays in potentially having
an adverse impact on efficiency and cost savings in the operating room:
-55 percent of respondents say that surgical procedure delays due to sales
reps ordering medical-surgical devices are a ‚Äúvery‚ÄĚ or ‚Äúsomewhat
-53 percent of respondents say staff ability to locate medical-surgical
supplies when needed is a ‚Äúvery‚ÄĚ or ‚Äúsomewhat significant‚ÄĚ challenge.
-And perhaps most concerning of all: despite the fact that 74 percent of
respondents report their hospital has a system that allows them to track
(and recall, if necessary) devices that are implanted in specific patients,
nearly half of all respondents (47 percent) admit it would be "very
difficult" or "somewhat difficult" to track patients with implantable
devices if there was a recall on a particular device.
The online survey was conducted December 4-13, 2013 by KRC Research. KRC
Research surveyed 75 senior executives within hospitals larger than 125
licensed beds who have decision-making authority or influence related to the
purchase and management of implantable medical devices in the operating
Visit GHX for the survey.
killer than we realize, study says
Alzheimer‚Äôs disease kills more Americans than we realize, researchers say.
Death certificates often do not list dementia as the underlying cause of
death. Instead, the immediate cause, like pneumonia, is listed, obscuring
Alzheimer‚Äôs-related deaths, according to Bryan D. James of Rush University
Medical Center in Chicago and lead author of a study published in the
The researchers followed 2,566 people between the ages 65 and older who had
yearly tests for dementia. After about eight years, 1,090 of the
participants died, and 559 of the participants who did not have dementia at
the start of the study developed Alzheimer‚Äôs disease. The death rate among
participants was four times higher after a diagnosis of Alzheimer‚Äôs in
people between 75 to 84, and almost three times higher in people over age
The researchers say this equates to an estimated 503,400 deaths from
Alzheimer‚Äôs in Americans over age 75 in 2010. This is six times greater than
the 83,494 deaths from Alzheimer‚Äôs disease the CDC reported. Currently,
Alzheimer‚Äôs is the sixth leading cause of death in the U.S., according to
the CDC. Heart disease and cancer are numbers one and two, at 597,689 and
574,743 deaths, respectively.
‚ÄúDetermining the true effects of dementia in this country is important for
raising public awareness and identifying research priorities regarding this
epidemic,‚ÄĚ said James in a statement.
Visit TIME for the report.
against sepsis reaches C.D.C.
There it was: an A to Z index on the website of the Centers for Disease
Control and Prevention. One morning, Ciaran and Orlaith Staunton of Queens
turned to the S page. Somewhere between seasonal flu and sexual health, they
were sure, they would find sepsis. It is among the leading causes of death
in the United States, taking far more lives than the best-known cancers or
heart attacks or criminal violence.
The interest of the Stauntons was not academic. Their son, Rory, 12, died in
April 2012 after he was sent home from the emergency room at NYU Langone
Medical Center with undiagnosed and untreated sepsis. Sepsis is what happens
when the body‚Äôs own responses to an infection spin out of control,
destroying cells and blood vessels. This leads to shock, organ failure and
death. The sooner treatment begins, the better the chances of survival. That
and many other aspects of sepsis remain poorly understood.
After a campaign by the Stauntons, the New York State Department of Health
issued new regulations, which went into effect at the end of 2013, requiring
hospitals to adopt techniques for early identification and treatment of
sepsis. They are among the most rigorous regulations in the country.
In January, the Stauntons wrote to Dr. Thomas Frieden, who as director of
the centers is one of the nation‚Äôs top public health officials. They
detailed the research on successful approaches to reducing sepsis deaths.
‚ÄúThe C.D.C. needs to demonstrate a leadership role in the education and
treatment of sepsis,‚ÄĚ they wrote, adding that the centers were ‚Äúnegligent in
their duty to inform the public and to insist on sepsis protocols being in
place at all medical facilities throughout the United States.‚ÄĚ
They met with Dr. Frieden. Traveling with them was Dr. Martin Doerfler, the
associate chief medical officer for the North Shore Long Island Jewish
Health System, which includes 16 hospitals in and around New York City, and
which has reduced its mortality rate from sepsis by 50 percent over the last
‚ÄúThe C.D.C. has a whole pamphlet on children with cancer and serious
infection,‚ÄĚ Dr. Doerfler said. ‚ÄúAnd they die of septic shock. The words
‚Äėseptic shock‚Äô aren‚Äôt used.‚ÄĚ
There is an especially vexing issue with sepsis treatment: When a person
shows certain symptoms suggesting the early stages of sepsis, the protocols
call for administering antibiotics before it is certain the person has a
bacterial infection. It can take up to 48 hours for a blood culture to
reveal a specific bacteria. The mortality rate from sepsis increases by 7
percent for every hour that antibiotic treatment is delayed.
But public health officials say that antibiotics are losing their
effectiveness because too many patients who don‚Äôt need them are getting
them, or are being given the wrong ones. Dr. Frieden released a report on
Tuesday saying that about one in three prescriptions for urinary tract
infections were erroneous, and that other mistaken antibiotic use was making
it harder to treat an infection that causes severe diarrhea.
Was the new guidance from the centers in conflict with protocols for
treating sepsis? Absolutely not, Dr. Frieden said, though he acknowledged
there could be confusion. What New York State was doing, he said, made
sense: Start the antibiotics, and then look at the results of the blood
tests to see if they should be adjusted or stopped.
‚ÄúAnytime someone has suspected sepsis, they should be evaluated promptly and
treated promptly,‚ÄĚ Dr. Frieden said. ‚ÄúAnd if you look at the very strong
sepsis protocols out of New York State, they have in their protocol get the
diagnostic work-up promptly, start treatment promptly, and have a systematic
re-evaluation. And that‚Äôs exactly what we‚Äôre calling for.‚ÄĚ
The agency is going to create a web page on sepsis, and consult with
research centers and with New York State on the results of regulations.
Visit the New York Times for the story.
Off-label use? FDA
has plan for spreading that word
The FDA has updated its guidance on ways in which drug and device
manufacturers can distribute peer-reviewed information about off-label uses
of medical products. The draft guidance was released Monday and offers a
checklist for manufacturers to meet before scientific or medical journals
can flow from sales representatives to physicians. It would soften the FDA's
stance on what companies can say about unapproved uses of already-marketed
drugs and devices.
"This draft guidance shows that the agency is getting the message that it
must conform its policies and practices to the First Amendment," Coalition
for Healthcare Communication Executive Director John Kamp said in a
statement. "Manufacturers should be able to distribute truthful information
‚Äď in the form of journal articles, medical textbooks and practice
In its draft guidance, the FDA said the information must:
Be published by an organization which has an editorial board with
Be an unabridged reprint
Be distributed with approved labeling
Be distributed separately from promotional information
Include opposing views -- when available -- regarding the unapproved use
The manufacturer must make clear -- with a "prominently displayed and
permanently affixed statement" -- that the uses described in the literature
are not approved by the FDA.
Letters to the editor, abstracts, reports of healthy volunteer studies, and
publications consisting of statements or conclusions without substantive
discussion are excluded from the FDA's guidance.
Other similar guidance exists for clinical practice guidelines that discuss
If a manufacturer distributes such information, the FDA won't read it as a
sign the manufacturer is promoting the product for off-label uses, the
agency said. The guidance updates a 2009 draft guidance that was criticized
by drug companies for limiting their ability to distribute certain
information about their products. Comments on the revised draft guidance are
due by May.
Visit MedPage Today for the guidance.
Suit says Pacific
Health Corp. hospital conspired to fill beds
A whistleblower lawsuit claims that a now-shuttered Los Angeles hospital
owned by Tustin-based Pacific Health Corp. bilked untold millions from
Medicare and Medi-Cal over nearly a decade through an illegal kickback
scheme in which it locked elderly and disabled people into a psychiatric
ward without medical or legal grounds and billed the government for their
The lawsuit, filed in federal court in Los Angeles by a nurse who was later
forced out by the company, says that the administrators of Los Angeles
Metropolitan Medical Center conspired with a group of doctors, an ambulance
company, a medical marketing firm and a number of nursing homes around the
Los Angeles area to keep its psychiatric beds full, because they paid better
than other types of care.
In numerous instances, elderly people ‚Äď many with dementia and no families
to defend them ‚Äď were taken from nursing homes against their will with the
use of emergency psychiatric holds that were unlawful because they did not
meet the state's stringent criteria for depriving a patient of his freedom,
according to the suit. In some cases, documents were allegedly falsified to
show the patient had consented.
‚ÄúOld, sick and mentally ill people were removed from numerous board and care
and skilled nursing facilities, strapped to gurneys (often in restraints),
transported to LAMMC and locked into a psychiatric unit for supposed
evaluation and treatment at the government's expense,‚ÄĚ according to the
complaint. They were ‚Äúnothing more than a ticket to bill the government.‚ÄĚ
One of the drivers for the ambulance company, Los Angeles-based ProCare
Mobile Response, posted a message on an internal social media site saying,
‚Äúwe are no longer EMTs; just two guys in a van kidnapping old people,‚ÄĚ the
Pacific Health's CEO, Gary Lewis, did not return numerous phone calls
seeking comment. Bernard Broermann, a German billionaire who founded Pacific
Health in 1984, said the complaint was groundless.
Federal authorities last May declined ‚Äúat this time‚ÄĚ to take over the case.
But they reserved the right to intervene in the future. The plaintiff in the
case is Julie Macias, a registered nurse who worked in the hospital's
psychiatric evaluation unit and says she was subjected to threats and
retaliation over several years because she refused to go along with the
operation and reported what she saw to the hospital's top management and to
outside authorities. Ultimately, Macias says, she was effectively terminated
when the hospital refused to send her out on evaluation calls.
Macias' lawsuit was originally filed in early 2012 but held under seal until
last week. The unsealing of her allegations comes 18 months after LAMMC
pleaded guilty to federal charges of defrauding Medicare and Medi-Cal in a
separate scheme. In that case, the hospital recruited homeless people from
L.A.'s Skid Row and admitted them with bogus diagnoses in order to bill the
two programs for unnecessary care. Pacific Health's two Orange County
hospitals ‚Äď Anaheim General and Newport Specialty Hospital in Tustin ‚Äď also
participated in that plan.
Pacific Health was criminally charged in the Skid Row case, but the
Department of Justice deferred the charges after the company agreed in
August 2012 to pay $16.5 million, sign a corporate integrity agreement and
abide by a long list of conditions for six years. One of the key conditions
was that Pacific Health not violate any state or federal laws.
The current complaint, which names Pacific Health as a co-defendant, says
that the plot to fill psych beds at L.A. Metropolitan continued until the
hospital closed in April 2013 ‚Äď eight months after the company had signed
the agreement with the government to settle the Skid Row case. Pacific
Health also closed down Anaheim General and another hospital, Bellflower
Medical Center, last April. It continues to operate a long-term wing for
children at the Newport Specialty hospital, but recently agreed to sell that
hospital, along with Bellflower and LAMMC, to Los Angeles-based Prospect
Visit OC Register for the story.
announces expansion, enhancement of endotracheal tube portfolio
Cardinal Health announced the expansion of its endotracheal tube (ETT)
portfolio and enhancements to its existing line of products, which play a
critical role in the administration of general anesthesia.
Cardinal Health has added opaque low profile tubes and uncuffed precut tubes
to its portfolio. The low profile tubes have a hooded tip, are
distinguishable by their smaller cuffs and ‚Äď when deflated ‚Äď help to provide
visibility of vocal chords during intubation. The uncuffed tubes also have a
hooded tip designed to help reduce trauma to the tracheal wall during
intubation. The additions round out the company‚Äôs general anesthesia
offering, which also includes airway management and ventilation products.
The company also enhanced its ETT portfolio to offer:
Large font on all tube markings to make them easy to read during intubation
A new connector design that is easy to grip
The addition of a hooded tip to help reduce potential trauma during
A more versatile cuff size to match the size of leading products already in
With these additions, Cardinal Health now offers a complete portfolio of
ETTs that includes high volume, low pressure tubes; low profile tubes;
uncuffed tubes; oral RAE tubes; nasal RAE tubes; reinforced tubes; and high
volume, low pressure preloaded tubes.
Visit Cardinal Health for more information.
resurrected after 30,000 years, scientists say
As climate change leads to rapidly melting permafrost in the Russian tundra,
a recent find has scientists worried that trouble may be lurking below. A
30,000 year old virus of unprecedented size has been found and reactivated.
The virus, dubbed Pithovirus Sibericum, appears to affect amoebas and
not human or mouse cells. Named after the Greek word, "pithos," meaning a
large earthenware jar, it was discovered by a group of researchers from
The virus, which is so large it can be seen under an optical microscope, was
found in a 98-foot-deep sample of permafrost near the East Siberia Sea,
where the average annual temperature is 7 degrees Fahrenheit, according to
the Agence France-Presse.
The group's new discovery raises the frightening possibility that more
harmful pathogens could potentially be revived. Perhaps, it could be
something no human has ever encountered before, researchers say.
"There is now a non-zero probability that the pathogenic microbes that
bothered [ancient human populations] could be revived, and most likely
infect us as well," study co-author Jean-Michel Claverie, a bioinformatics
researcher at Aix-Marseille University in France, told LiveScience in an
email. "Those pathogens could be banal bacteria (curable with antibiotics)
or resistant bacteria or nasty viruses. If they have been extinct for a long
time, then our immune system is no longer prepared to respond to them."
As oil and mining companies begin to drill in these now thawing areas, some
scientists -- like Claverie -- are worried that diseases that once plagued
both Neanderthals and humans could become active again and infect their
modern-day counterparts. Others are less concerned.
"We are inundated by millions of viruses as we move through our everyday
life," said Curtis Suttle, a marine virologist at the University of British
Columbia in Canada, who was not involved in the study told LiveScience.
"Every time we swim in the sea, we swallow about a billion viruses and
inhale many thousands every day. It is true that viruses will be archived in
permafrost and glacial ice, but the probability that viral pathogens of
humans are abundant enough, and would circulate extensively enough to affect
human health, stretches scientific rationality to the breaking point."
The article was published in the journal Proceedings of the National
Academy of Sciences.
Visit CBS News for the study.