Quest Diagnostics, CVS Pharmacies, Premier, Novation, Luminex, Careside.


PATHOLOGISTS CONCERNED about pharmacists moving into the lab testing arena should closely watch the newly-announced relationship between Quest Diagnostics Incorporated and CVS Corporation.

Starting this month, CVS pharmacies in Columbus, Ohio and Tampa/St. Petersburg, Florida now sell lab tests. Participating pharmacies have a card display for 12 different types of laboratory tests. The customer purchases the card, then goes to one of Quest’s patient service centers to have blood drawn.

Quest Diagnostics will perform the test at one of its regional laboratories. Results can either be accessed on-line within 48 hours, or mailed directly to the patient within a week. This program involves 80 CVS pharmacies in two states which permit direct patient access to ordering and receiving laboratory test results.

It should be no surprise that CVS, which operates 4,191 pharmacies in 33 states, wants to evaluate consumer demand for laboratory testing offered through its stores. Many pharmacists are keenly interested in exploring how diagnostic testing can be incorporated into a retail pharmacy operation.

Pharmacists understand that the rapidly-evolving field of pharmacogenomics will soon deliver an ever-growing number of prescription drugs that require a diagnostic test before the prescription can be filled. The lab test will determine if the patient will respond favorably to the therapy and whether an individual patient may have negative side effects to that particular drug.

An early example of this pharmacogenomics model is breast cancer. Before a patient gets Herceptin therapy, she undergoes a test for the her2neu mutation. It is this concept of the diagnostic test married to a prescription drug that has caught the attention of forward-looking pharmacists.

Pharmacogenomics is one reason why bills that would allow drug stores to perform laboratory tests have been introduced into a number of state legislatures in recent years. The pharmacy industry wants to position itself to benefit from the coming need for lab tests to be done before a prescription is filled.

Plenty will be written in the laboratory press about the Quest/CVS deal. But it is important for pathologists to recognize that pharmacy involvement in laboratory testing represents both a threat and an opportunity. It will require active leadership by the pathology profession to insure that it is the opportunity side which prevails.


TWO OF THE NATION’S BIGGEST group purchasing organizations (GPOs) are bending under pressure from the Senate Judiciary Committee’s antitrust subcommittee.

Earlier this month, Premier, Inc. and Novation, facing serious criticisms of their business practices, individually agreed to change the way they operate. Lab directors and pathologists can expect to see several key differences in how these two GPOs negotiate contracts with diagnostics manufacturing companies.

Among the nation’s largest GPOs, Premier and Novation were singled out for the most criticism by a tag team consisting of the New York Times and the Senate’s antitrust subcommittee.

This winter, the New York Times wrote several in-depth articles about how the business practices of the GPO industry held back innovation, favored large medical device manufacturers at the expense of smaller companies, and didn’t always deliver the lowest prices to their hospital members.

During hearings in the Senate this spring, Senator Herb Kohl (D-Wisconsin) identified three areas of concern. Conflicts of interest was the first concern, as both Premier and Novant tie some contracts to participation in arrangements where executives of the GPOs hold a financial stake.

Second is the concern that contracting practices of GPOs stifle competition and impede innovation. Sole source contracts and high commitment levels restrict the physician’s ability to choose the best products for his patient.

Third, GPOs “don’t always get the best deal.” Many laboratorians would concur, since their hospital laboratory frequently negotiates a lower price on its purchase than that offered under the GPO’s national contract.

Premier’s agreement specifies that “contracts for physician preference items will be made on a multi-source, unbundled, no commitment-level basis;” vendor payments to the GPO will be capped at 3% per year; products from different vendors will not be bundled; and contract terms will be limited to three years to the maximum extent possible.

Days later, Novation agreed to a similar range of reforms. Among other things, it “will not award sole source contracts for clinical preference items when alternative products exist that offer patient care or safety benefits; a commitment to reduce administrative fees that exceed 3% to the 3% level; no bundling of clinical preference items with commodities or other unrelated clinical preference items; no commitment requirements to be a member of the GPO or gain a base level discount; and, contract terms will be limited to three years.

There may be more to this story. The HHS Inspector General has subpoenaed Premier in a probe on executive compensation. The Federal Trade Commission (FTC) and the General Accounting Office (GAO) are also investigating Premier and Novation to determine whether the business practices of these GPOs have limited competition in the hospital supply industry.


HERE’S AN UPDATE on two companies which have promising technology, but are definitely ahead of the market.

Luminex Corporation, based in Austin, Texas, announced the resignation of Mark B. Chandler, Ph.D., company founder, Chairman, and CEO. Thomas W. Erickson will be interim CEO. Luminex offers a multiplex bioassay technology which is capable of performing 100 tests on a single specimen. Revenues are lagging because its licensees have not developed applications as fast as projected.

Meanwhile, Careside, Inc. of Culver City, California still has its CEO, but recently underwent a major downsizing. It laid off a sizeable number of its employees and outsourced the manufacture of its instruments, designed to do routine chemistry and hematology at the point-of-care (POC).

Careside’s strategy was to sell its POC system to physicians’ offices. One observer speculates that Careside’s sales are slow because lab test reimbursement is so low in California, physicians can’t make much money performing routine lab tests in their office.


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