DAILY UPDATE

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’s 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.

“People thought drug development was dead and all there was was a patent cliff,” 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. “There isn’t a day that goes by that some company doesn’t report positive results from a trial and the stock is up 100 percent.”

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’s 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’s 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’t have any healthcare ETF investments.

“The ACA has kind of come and gone,” Funtleyder said in a telephone interview. “It’s been implemented and nothing bad has happened to the companies by and large.”

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’s 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’t 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. “If you’re an institutional investor, and you’re 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,” 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’s 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.

President’s FY 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’t 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.

“Cuts 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,” states Dr. Mark Birenbaum, NILA’s administrator. “Community 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 cuts.”

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—five 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.

GHX research respondents recognize supply chain deficiencies keeping hospital operating rooms in the “stone age”

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 patient care.

Key research findings:

Too many hospitals stuck in the supply chain “stone age”

·         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’re still stuck in the “Stone Age”– dramatically lagging behind where they could and should be.

The lack of supply chain visibility in the OR comes at a high cost

·         Nearly two in three executives “strongly agree/agree” 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’s 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 “very” or “somewhat significant” challenge to their hospital’s operating room. Almost half of respondents (45 percent) “strongly agree/agree” there is a lack of accurate implantable medical device supply chain reports.

·         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 “very” or “somewhat significant” challenge.

-53 percent of respondents say staff ability to locate medical-surgical supplies when needed is a “very” or “somewhat significant” 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 room. Visit GHX for the survey.

Alzheimer’s bigger killer than we realize, study says

Alzheimer’s 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’s-related deaths, according to Bryan D. James of Rush University Medical Center in Chicago and lead author of a study published in the journal Neurology.

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’s disease. The death rate among participants was four times higher after a diagnosis of Alzheimer’s in people between 75 to 84, and almost three times higher in people over age 85.

The researchers say this equates to an estimated 503,400 deaths from Alzheimer’s in Americans over age 75 in 2010. This is six times greater than the 83,494 deaths from Alzheimer’s disease the CDC reported. Currently, Alzheimer’s 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.

“Determining the true effects of dementia in this country is important for raising public awareness and identifying research priorities regarding this epidemic,” said James in a statement. Visit TIME for the report.

Parents’ fight 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’s 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’s top public health officials. They detailed the research on successful approaches to reducing sepsis deaths. “The C.D.C. needs to demonstrate a leadership role in the education and treatment of sepsis,” they wrote, adding that the centers were “negligent in their duty to inform the public and to insist on sepsis protocols being in place at all medical facilities throughout the United States.”

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 five years.

“The C.D.C. has a whole pamphlet on children with cancer and serious infection,” Dr. Doerfler said. “And they die of septic shock. The words ‘septic shock’ aren’t used.”

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’t 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.

“Anytime someone has suspected sepsis, they should be evaluated promptly and treated promptly,” Dr. Frieden said. “And 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’s exactly what we’re calling for.”

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 – in the form of journal articles, medical textbooks and practice guidelines."

In its draft guidance, the FDA said the information must:

·         Be published by an organization which has an editorial board with independent expert

·         Be peer-reviewed

·         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 unapproved uses.

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 unnecessary care.

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 – many with dementia and no families to defend them – 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.

“Old, 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,” according to the complaint. They were “nothing more than a ticket to bill the government.”

One of the drivers for the ambulance company, Los Angeles-based ProCare Mobile Response, posted a message on an internal social media site saying, “we are no longer EMTs; just two guys in a van kidnapping old people,” the lawsuit says.

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 “at this time” 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 – Anaheim General and Newport Specialty Hospital in Tustin – 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 – 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 Medical Holdings. Visit OC Register for the story.

Cardinal Health 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 – when deflated – 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’s 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 intubation

·         A more versatile cuff size to match the size of leading products already in the market

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.

Ancient virus 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 Aix-Marseille University.

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.