Express Scripts, InformInvestor.com, UroCor, Bio-Reference Laboratories

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PRESCRIPTION DRUG SPENDING HITS A RECORD INCREASE OF 17.4% IN 1999

Just-released data from Express Scripts, Inc. indicates that spending on prescription drugs increased by a record 17.4% during 1999. This compares to a 9.6% spending increase for drugs in 1998.

As most lab executives know, prescription drug pricing is a hot-button issue with Congress. The new data will support arguments that drug companies are aggressively raising prescription prices faster than the rate of inflation.

The coming battle over how to manage prescription drug costs in the Medicare and Medicaid health programs will eventually impact clinical laboratories. As HCFA and Congress establish new policies for dealing with existing and yet-to-be approved pharmaceuticals, those same policies will affect reimbursement for future diagnostic tests which are directly linked to specific prescription drugs.

Under the emerging science of pharmacogenomics, drug companies will use genetic data to determine whether an individual’s genetic make-up will: 1) benefit from a specific therapeutic drug; and 2) whether or not that same individual’s genetic make-up predicts negative side effects from that drug. (See TDR, September 8, 1998).

The study by Express Scripts indicates that prices for such widely-used drugs as Premarin (hormone replacement), Glucophage (diabetes management), and Serevent (anti-asthmatic) increased by 12.1%, 14.5%, and 14.5%, respectively.

A more significant finding was that, of the top ten categories of drugs used by elderly people to treat such chronic disorders as diabetes, respiratory illness, heart disease, and others, the average annual cost exceeded $400 in six of the ten categories and $500 in five of the top ten.

Given the widespread prevalence of these chronic conditions, new diagnostic testing with the capability of identifying individuals who may or may benefit from specific drug therapies would be seen as a cost-effective, valuable clinical resource. This would greatly benefit the clinical laboratory industry.

It is predicted that rapid increases in spending on prescription drugs will continue to accelerate in coming years. From the 1999 figure of $387.09 per person, Express Scripts predicts a doubling of prescription spending to $758.81 per person in 2004. That rate of spending growth will definitely encourage both payers and drug companies to support development of laboratory tests which better identify individuals who can benefit from specific therapeutic drugs.

DOES WALL STREET REALLY BELIEVE ITS OWN HYPE ABOUT LABS?

THIS ITEM RECENTLY CROSSED our editor’s desk. It will bring a smile to laboratory executives and pathologists who have a different memory of recent years.

“Medical advances evolve each day in labs, hospitals, and universities throughout the world with all eyes on the next potential blockbuster drug or therapy. But underneath the glitter of highly publicized medical miracles, the test and diagnostics suppliers inexorably generate ever larger revenue and profit streams [our italics]. Recently those companies have been Wall Street’s darlings.”

This excerpt is from a press release issued by InformedInvestors.com. It was touting a show called “Biotalk From the Beltway,” which, on June 14, interviewed representatives from DIANON Systems, Inc., Laboratory Corporation of America, and Quest Diagnostics Incorporated. Stock from each of these three companies had hit new highs during the previous month.

Executives and managers of clinical laboratories would probably take issue with the characterization of the lab industry as one which “inexorably generates ever larger revenue and profit streams.” Although the financial condition of most laboratory organizations is improving, the financial condition of the lab industry industry as whole remains unstable and fraught with uncertainty.

But for the investment community, any run of good news is a reason for excitement. The proof of a financial turnaround in the lab industry will be if a wider range of clinical laboratory organizations demonstrate sustained growth in revenues and net profits during the next three years.

UROCOR SELLS ACCESS TO ITS PROSTATE CANCER GENE DATA BASE

LABORATORY TEST DATA is the value-added product in a licensing agreement signed last week by UroCor, Inc. and Immunex Corporation.

Immunex will have access to the library of cancer-derived proteins developed by UroCor. UroCor has patented 23 genes that could be linked to prostate cancer. Immunex hopes to develop antibodies against prostate cancer, using antigens or drug targets that UroCor has identified.

When THE DARK REPORT visited UroCor’s headquarters in 1997, it was shown an interesting research project. UroCor was searching the DNA of prostate cancer patients. It was identifying genes that appeared in prostate cancer patients that did not appear in healthy patients. (See TDR, June 23, 1997.)

It was this research that led to UroCor’s library of gene patents. The Immunex licensing agreement shows how UroCor intends to package and sell laboratory data. It is a market indicator that shows there is demand for clinical laboratory data in other forms besides lab test results when such data is properly packaged.

ON-LINE CME’S AVAILABLE AT BRLI’S CAREINVOLVE PHYSICIAN’S WEB PORTAL

THINGS ARE MOVING SWIFTLY at Bio-Reference Laboratories, Inc. (BRLI) in Elmwood Park, New Jersey. Last week the company announced a contract that adds immediate, on-demand physician CME credits (continuing medical education) to its CareInvolve.com Web portal.

HealthStream, Inc. will provide online CME credits, along with updated healthcare training and educational materials. CareInvolve.com is a physician Web portal that BRLI developed. It is designed to strengthen BRLI’s business relationship with its physician-clients.

CareInvolve.com already provides member physicians with lab test ordering, lab test reporting, electronic payer enrollment, claims submission, remittance advice, eligibility verification, secure messaging, prescription services, and other features.

BRLI is selling this Web portal to physicians in the New York, New Jersey, and Connecticut markets. It wants to partner with regional labs to offer this service in other areas throughout the United States.

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