The TTK Chitra Heart Valve: A High Quality Prosthesis for $350

A Successful Class III Medical Device From India

The TTK Chitra Heart Valve is a model disruptive medtech innovation for India and the world. Developed painstakingly over 12 years at the Sree Chitra Tirunal Institute for Medical Sciences and Technology (SCTIMST) in Trivandrum, India, the device is now licensed for manufacture and marketing to TTK Healthcare in Chennai. It has nearly 90,000 implantations to date, and sold over 10,000 in FY 2011-12 alone. Additionally, TTK now exports the device to all neighboring countries, as well as South Africa. Overall, about 250 medical centers and 300 surgeons were using the TTK Chitra Heart Valve as of 2014.

Importantly, the TTK Chitra Heart Valve is a Class III medical device, a status almost unique among indigenous Indian medtech. India still imports the majority of its medical devices across all classifications, but very nearly all Class III medical devices are still imported from abroad. The Chitra valve definitively shows that India has the technical capability to produce extremely high quality devices for even the most sensitive medical applications. 


The TTK Chitra Heart Valve Story

The Chitra story begins with a glaring clinical and social need in India, where the incidence of Rheumatic Fever and Rheumatic Heart Disease (RHD) remains high among children. An estimated 2-2.5 million patients suffer from RHD in India, and this is the leading cause of structural heart valve damage in the country. This is an important difference between India and the U.S., where the leading cause of cardiac valvular stenosis or regurgitation (the two symptoms indicating structural damage and the need for replacement surgery) is Degenerative Heart Disease, a potential condition of old age.

For decades, India relied on imports of expensive artificial valve replacements to meet domestic need, but many families whose children developed RHD were also among the poorest in India, and could not afford even the heavily discounted price tags of imported valves, which hovered around $1,200 each. And so their children died, or lived drastically shortened and unhealthy lives.

The Chitra Heart Valve

The Chitra valve project sought to address this significant public health challenge by creating an affordable, high quality artificial heart valve for India. The project succeeded. Not only does it feature genuine design and material science innovations around in-vitro noise reduction, blood flow resistance reduction, and durability, but the valve also uses the highest quality materials and manufacturing for the frame, occluder, and sewing ring components. One would think such quality and a 12-year product development cycle with extensive clinical trials would raise the price considerably, but TTK Healthcare sells each valve for just $315-$400, a price range it has maintained since 1995, even in the face of considerable inflation in India. Facing such disruption from an indigenous entrant, the MNCs all lowered their prices for replacement valves to parity with Chitra's as a way to stay in the market.

This cost reduction story is compelling, but there's an important caveat. The SCTIMST is a public institution, so the product development costs over 12 years were therefore likely funded by grants from the Biotechnology Industry Research Assistance Council of India and other public funds. Depending on the terms of investment and licensure to TTK, the Chitra valve's public genesis may have obviated the need to recoup any product development costs, potentially a major factor in its low price. From the perspective of the Indian public, the device may have fulfilled its purpose by crashing prices for most artificial heart valves. The fact that the Chitra valve continues to gain ground in India and around the world is a testament to its quality and adaptability.


Could the TTK Chitra Heart Valve Succeed in the U.S.?

The structural challenges facing the TTK Chitra Heart Valve in the U.S. are considerable. First, as a Class III medical device, price becomes less important relative to quality, and the bileaflet artificial valve models--though much more expensive--have marginally better performance in many use cases. Only serious cardiovascular surgery centers perform heart valve replacements, and these will likely opt for products that exhibit even marginal medical benefit over others, at least to protect themselves from unnecessary legal liabilities.

Second, there are homegrown disruptive medtech innovations for certain operations in this space. For example, the MitraClip is a device approved by the US FDA as a less invasive way to treat mitral regurgitation due to degenerative disease in patients with prohibitive risk for mitral valve surgery. This targets a substantial portion of the market for valve replacement as mitral valve regurgitation is the most common form of heart valve disease in the U.S., suggesting that there are even more Mitral Valve Replacement surgeries per year than the 20,000 or so Aortic Valve Replacement surgeries per year.

Third, biological valve replacements are often preferred for placement is elderly patients, who form the bulk of patients requiring heart valve replacement surgeries in the U.S.. While biological valves are not as durable as artificial valves like Chitra, they don't require additional blood-thinning medicines, and are associated with a lower risk for blood clots.

While the TTK Chitra Heart Valve's low price could be a major boon to certain U.S. patients shopping for low-cost heart valve replacement surgeries, these patients may need to content themselves with medical tourism for the time being. One good option may be Narayana Health's hospital in the Cayman Islands, which specifically targets medical tourists from the Americas.


Question for Discussion: 

• Is there demand for a low-cost heart valve like the TTK Chitra Heart Valve in the U.S.?  

Smartphones Enable Patients To Manage Early Diabetes for Under $100 Per Year

The IoT and the Changing Healthcare Environment

The world is filling up with internet-enabled sensors of all kinds, generating a huge amount of storable data about everything, including our health. This Internet of Things (IoT) in healthcare represents an array of wearables, phones, and specialty medical devices that are already producing, analyzing, and sharing medical grade data. 

In fact, the smartphone, with its numerous embedded sensors, plugin capabilities, and app development ecosystem, is very likely now the highest-utilized medical device in the world. Going far beyond basic physiology monitoring functions like step counting, certain device extensions are functioning as 'labs on a chip,' using biochemistry and microfluidics to do the same diagnostic work previously confined to large, expensive, time-intensive, and centralized laboratory testing facilities. All of the new data being generated is not only useful to individuals and their doctors, but can be aggregated to provide population-level insights about health. For example, Walgreens is now displaying patient-reported information on medication side effects from PatientsLikeMe on their pharmacy website. PatientsLikeMe is heavily involved in the new Health Data Exploration project, an effort to better define the parameters and methods of collecting and managing both passive and active personal health data. Much of this data will come directly from smartphones. 

The IoT has been slower to disrupt medicine than many other industries. On a macro level, healthcare is a sensitive area, requiring carefully coordinated regulatory, security, and safety measures. On a micro level, many specific policies and delivery models are outdated, and will eventually need to modify to take the new and emerging models of care into account. This is already happening; for example, the FDA has eased approval requirements for low-risk mobile medical apps. 

The emerging IoT, the lower time and cost barriers for regulatory approval, and the increasing demand for low-cost treatment methods is throwing fuel onto the fire of smartphone-enabled medtech growth. 


New Opportunities to Improve Chronic Care: The Case of Type II Diabetes

The case of diabetes is illustrative: In the U.S., about 50 million people have diabetes; in India, the number jumps to at least 65 million, a number growing quickly due to changes in diet, and because many Indians are at least 30% more genetically predisposed to developing diabetes than whites. Type II diabetes accounts for about 90% of total cases. 

In response, entrepreneurs in India have developed a range of intriguing, low-cost, user-friendly products bringing basic but effective diagnostic, monitoring, and management capabilities to people with diabetes. 

First, there are the multiple parameter testing devices, exemplified by our earlier-featured Swasthya Slate, which can conduct about 30 biochemical tests on body fluids, or the more focused BPL Lifephone Plus, which measures just ECG, blood glucose, heart rate, calories burnt, and steps taken. The former, largely developed for clinical screening use, may retail around $1,000, whereas the Lifephone retails for around $200, in-line with the comparable cue.me and Scanadu devices shortly hitting the U.S. market for $150 and $200, respectively. India-based Biosense's uCheck Universal kit runs over 10 urine-based tests in addition to blood glucose, and retails for about $80.

Low-cost Glucometers

While the same range of diabetes-specific devices is available in India, the high-end continuous glucose monitoring systems are not yet affordable for most people. On the low-end, J&J has developed the OneTouch glucometer for India, selling the device and a supply of strips anywhere from $10-$25. But standalone glucometers have become somewhat commoditized, with many local entrants undercutting branding efforts. This photo from the historical Cash Pharmacy in Bangalore shows a local Dr. Morepen's GlucoOne for $17 obviously outshining a duller ad for Bayer's Contour TS glucometer. These devices are sold as part of a BoP strategy favoring scale over unit margins, and they are often just a part of companies' product portfolios.

Other indigenous companies are taking a more integrated approach to diabetes care in India. One startup called Jana Care, operating in Bangalore with roots from Harvard & MIT, has developed a small device that plugs into smartphones to run a full 'diabetes panel' of tests: HbA1c, blood glucose, lipids, creatinine, and haemoglobin. They are in process of receiving international regulatory approval for all tests, positioning them as the only company offering smartphone-based HbA1c tests, and one of the only companies offering the full 'diabetes panel' at point of care using the same low-cost form factor. They've also closed the loop on the training side with their Habits Program app, a 3-month curriculum based on the Diabetes Prevention Program that includes weekly phone calls from a trained health worker to discuss personal progress. The cost to the patient varies by provider, but is only marginally higher than a standalone glucometer, and is affordable to most patients in India. 

Could Jana Care successfully commercialize in the U.S.? Low cost is not their only comparative advantage. Another is that their products have already been developed to target a large number of 'non-digital natives,' so that the training materials, notification processes, and general usability of the products is very friendly for users of all ages and backgrounds. This may be a marked advantage in serving people with Type II diabetes in the U.S., whose ranks skew heavily towards the middle-aged and elderly for whom complicated digital solutions will likely not be attractive. 


Question for Discussion:

Would the Jana Care package provide real value to people with diabetes, and to their care providers, in the U.S.?

ECG Tech from India Could Save U.S. $50 Million Today

Electrogardiography: A Brief Review

Electrocardiography (ECG) is a diagnostic method of recording the electrical activity of the heart. This is traditionally performed by attaching electrodes to the skin, which then pick up waveform electrical impulses generated by the polarization and depolarization of cardiac tissue. These are mapped on an electrocardiogram and interpreted to measure heart performance and health.

The use of ECGs is ubiquitous and popular among providers, and especially tertiary care hospitals. The Mayo Clinic, for example, performs about 240,000 ECG tests per year in their laboratory, and the global market for ECG machines is set to grow to over $5 billion by 2020. This growth is driven by the wide range of increasingly common conditions ECGs are able to effectively monitor, including heart arrhythmias, anginas, pericarditis, most symptoms of heart disease, the thickness of the heart's walls, the rate and regularity of heartbeats, the size and position of the chambers, and the presence of any changes to the heart's function in response to surgery, devices,  or medications.

The average cost of a provider-administered ECG test in the U.S., which is comprised of the test itself + the interpretation of results by a trained Cardiologist, is $1,750. As usual, the prices vary substantially from provider to provider, the lowest in the U.S. being $550, and the highest being $3,300.


The U.S. Market for ECG Machines

ECG machines vary in diagnostic ability, physical footprint, and price. The current market for these machines can be divided between the 'incumbent' products most of us associate with ECGs, and emerging 'disruptive' products that are portable and less expensive. The incumbents are made by about 16 manufacturers from the developed world, including Burdick, Welch Allyn, Schiller, GE, Bionet, Philips, and Nihon Kohden. They are often equipped for use with 12-leads, often include printing capabilitieg, and they are large enough to be wheeled around. They cost between $1,200 and $3,000 each.

By contrast, the disruptive class of ECGs are made by an (almost) entirely separate set of manufacturers, mostly from the developing world, including ReadMyHeart, InstantCheck, PC-80, AliveCor, ECG Check, Dimetek DiCare, MD100E, PC-80B Color, HeartCheck PEN, REKA E100, and Afib Alert; they often use 1 to 3 leads, rely solely on integrated digital displays, are handheld, and cost between $25 to $500. Dr. Grier at North Dakota State University has compiled an exceptional review of available 1-lead, handheld ECGs on his research page. Most of the 1-lead devices are from China, but some, like AliveCor, are U.S.-based companies. All of them have faced limited adoption among healthcare providers in the U.S., where the incumbent technologies are still used. As a group of physicians evaluating AliveCor stated,

". . . This device has significant limitations in the acute evaluation of chest pain associated with heart attacks. A single lead tracing will miss many real ischemic events, enough that even if it was stone cold normal it would not change our suspicion of myocardial ischemia. If there are significant elevations or depressions, it would probably raise our suspicion for myocardial ischemia, but we would still need a 12 lead ECG, begging the question of how it changes management."

Indeed most of the disruptive handheld ECGs above--at least in the U.S. context--have competed against non-consumption by offering patients and homecare nurses the ability to run ECG tests they could not run before. While additional monitoring increases the risks of false positives, the physicians above also concluded such portable testing could be useful for post-operative heart monitoring during convalescence.


A More Immediately Disruptive Class of ECG From India

India has produced a number of 12-lead handheld ECGs that may be more disruptively positioned than the 1-lead ECGs above, which begin to look like 'hobby devices' in comparison. One of the first major advances was GE's famous MAC India model released in 2007, which brought the price down to $500 from $2,000 - $10,000 for their other hospital-grade ECG machines.

GE's MAC India

In the past 8 years, other Indian companies have released 12-lead ECG devices that achieve greater portability, as well as allow for diverse methods of test data transmission, remote analysis, and storage.

Maestros Mediline launched the E UNO R-10 device in 2010 in partnership with Vodafone. The device relied heavily on Blackberry phones, and was designed mostly for remote consultation use, just as ECGs are in the U.S., except that ECG technicians in India will often travel to administer tests, the results of which are then transmitted to a centralized doctor at a hospital for interpretation. Developers have built applications allowing for use on the Android platform, but the device was not less expensive than GE's MAC India, costing about $500.

Maestro Mediline's E UNO R-10

Lifeplot CCD1 was another offering developed in Pune, India, that does not rely on any specific network or device for transmission of test results, making it potentially more versatile. Though the original model was more expensive at $2,000, LifePlot released a more advanced product just 2 years ago for only $700.

LifePlot UNIQ

The prices for these devices have likely come down, but there are less feature-rich ECG devices appearing in the Indian market from both indigenous and international sources. AliveCor has signed an exclusive agreement with the highly respected Apollo Hospitals chain to use its ECG technology for clinical tests, begging the question about whether the U.S. cardiologists' review of AliveCor's limitations above reflects incumbent biases more than solid clinical rejection, whether something is just better than nothing for India, or whether AliveCor's 1-lead technology has reached a point of relative parity with 12-lead testing. At a price point of $75, perhaps the tradeoff of some marginal performance is worth it.

AliveCor's ECG Device

The appearance of the indigenous Sanket PiE by Agatsa follows past patterns of the introduction of disruptive technology into the Indian market by foreign firms, followed by the release of indigenous versions which may or may not be better-suited for indigenous market conditions. Since Sanket is not yet available on the market, it's not clear what the price will be, but it will presumably be comparable to AliveCor.

Agatsa's Sanket PiE

One of the most immediate differences between the handheld ECGs being widely sold in India vs. those in the U.S. is that they are 12-lead ECGs, while those from Dr. Grier's page are all single-lead devices. This signals a serious disruptive position relative to traditional ECGs in the Indian market, which is a nice illustration of how the context of innovation shapes its ultimate shape. Many elements of the Indian market demand a fully functional, low-cost, handheld ECG: Sheer in-affordability of existing technology for huge numbers of needful patients, the necessity of portability for ambulatory community health workers, and a large supply of IT talent.

Would the U.S. Benefit from Adopting Indian ECG Technology? 

The U.S. market context is much different from that of India, which explains the strategies of handheld ECG devices like AliveCor, Scanadu, and Wello, which--so far--have not competed directly against incumbent technologies, preferring instead to position themselves mostly as patient-centric devices for self-use, providing only supplemental data to traditional provider-based ECG machines. This could still represent the beginnings of disruption, which often incubates in a foothold market that can sustain a nascent technology until it improves to the point of dominance across all or most of the dimensions of quality that matter to customers. At that point, the incumbent technologies quickly fade away. This is the story of transistor radios disrupting vacuum tube radios throughout the 1950s and early 1960s.

However, one of the biggest issues behind lack of serious medical adoption of handheld ECGs in the U.S. is that the alternative processes / delivery models are not yet in place for the use of these machines within provider settings, whereas in a market like India, the new devices are often competing against non-consumption, so in many cases they've had much more 'experience' in serious clinical use. What might the U.S. learn from the delivery models that have emerged around the use of these portable devices?

Adopting leaner delivery models and technology is likely where the real savings lie, but even if the U.S. were to switch over to the equivalent technology available in India today, substantial savings would immediately materialize. Just taking GE's MAC India at a $500 price point, if the average price of an incumbent machine is $2,000, and each of the 7,000 hospitals in the U.S. purchases 5 new ECG machines per year (as benchmarked against the yearly purchases of a UK hospital with 5 sites), this results in over $50 million in yearly savings on equipment costs alone, not including the lead replacement cost, which is also material judging from the UK hospital's spending.


Question for Discussion: 

• What barriers prohibit the U.S. from purchasing lower-cost ECGs for clinical use? 

India's New Health Tablet Performs 30+ PoC Diagnostic Tests

The Swasthya Slate ('Health Tablet') is a portable diagnostic device that enables users to conduct 33 diagnostics tests with a simple box, power source, test sensors, and a smart device using the Android OS. The videos on this page give an excellent view into how the testing, analysis, and reporting process works. Of the 120m or so smart phone users in India, about 80% are using an Android OS, so the technological infrastructure is already in place for Slate to quickly scale up.

Photo Credit: Swasthya Slate

Launched in March, 2014, the Slate is the work of the Public Health Foundation of India, which also manufactures the device. The project is led by Dr. Kanav Kahol, formerly a bioinformatics professor at Arizona State University. With all sensors included, the device is being manufactured in India for only $800, a price expected to drop by 20% as it further scales. At this price, the primary target customers are health ministries, agencies, and clinics who will purchase the devices for public health management, putting them into the hands of community health workers (CHWs) who canvas the country as frontline care providers. The new diagnostic processes enabled by the device show the real value it's created, described in the following steps, and enabled by the components illustrated in the photo below:

1. CHW visits village
2. CHW conducts PoC diagnostic tests within minutes per individual
3. Diagnostic box sends test results to smart device via Bluetooth
4. Smart device uploads patient EMR to secure cloud
5. Slate's data management software analyses data
6. Slate's software communicates results to stakeholders via multiple channels

Photo Credit: Forbes India

The time and cost savings resulting from this process are substantial. Not only do the patients avoid costly travel for multiple tests when needed, but Slate only charged $1.25 for a panel of 10 standard biometric tests during their pilot. Referencing the table below, this is nearly 1/20th the cost of what the government was charging before at subsidized prices for the same 10 tests. Theranos, a highly disruptive lab diagnostics company featured in an earlier post, charges in the range of the government prices, but does not appear to offer Urine Glucose tests or the more manual tests like blood pressure, temperature, ECG and Malaria. And standard laboratory diagnostic test prices are sky high in comparison, as the prices from anylabtestnow.com show. Slate's measurement accuracy performance is within 99.9% of the traditional path lab technologies, and they continue to publicly track their clinical evaluation data to improve the device's performance. 

How Transferable is the Slate Device to U.S. Healthcare? 

Theranos is valued at $9 billion because they are providing essentially the same laboratory diagnostics as traditional labs at a fraction of the cost (often 1/10th-1/20th), using less invasive methods, and at much faster speeds. Slate appears to provide PoC diagnostic test results even faster than Theranos using RDT strips, at another huge price discount (1/20th of Theranos's prices from the chart above), and in similarly non-invasive methods. They have also developed 18 apps so far to fulfill the true meaning of 'software as a service.' On the other hand, Slate only offers 33 tests, whereas Theranos is set to offer the full range of possible laboratory diagnostic tests, which number into the thousands. Convincing the medical establishment that the diagnostic results from Slate represent medical grade data would be difficult. EHRs have been slow to become truly personal due to hospital policies and HIPPA. Many of Slate's apps are culturally-bounded, and would need to be re-written.

Nevertheless, I am optimistic of Slate's potential to disrupt clinical laboratory diagnostic testing in the U.S. Here's why:

Firstly, there are encouraging signs that both the FDA and the medical establishment are beginning to approve diagnostic biometrics from wearables, and if from wearables, why not from Slate? At any rate, Theranos is operating as a CLIA-approved lab without FDA approval due to the unique classifications for laboratory diagnostics, and because Slate is already tracking their clinical evaluation data carefully and cheaply, this may not be such a large barrier even if their system does require approval. Secondly, apps are relatively easy to write. Thirdly, if Slate's battery of tests represent the most commonly ordered tests, then it could disrupt Theranos even as Theranos is disrupting Quest and LabCorp. After all, the device is affordable, portable, and modular enough for use by school nurses, the smallest retail clinics, and even by patients themselves. If a device like Slate becomes the go-to for routine diagnostic tests, how commonly will people need to level-up and go to a Walgreens to order a Theranos test that costs 10x the price, or to a hospital where the test will cost 200x the price? 

According to Dr. Kahol's Twitter feed, he has already received requests for the device from both emerging and developed health markets, such as Pakistan, South Africa, Malaysia, and the UK. Field workers from at least 8 different countries, representing both developed and emerging markets, are already using the device on a pilot basis, as this usage map shows.


Question for Comments: 

• What barriers prevent Swasthya Slate from transferring to U.S. healthcare markets, and how might you recommend they reduce these?  

$100 Stents from India in the Offing

Since the USFDA approved cardiac stents in 1994, there has been tremendous growth in their use, to where 700,000 are implanted in patients annually in the U.S. alone.  Manufacturers' sales of stents reached $5.5 billion in 2012.

In the U.S. about 50% of stent implants are for acute conditions, such as unstable angina, or chest pain caused by the buildup of plaque in the arteries surrounding the heart. The other half are for elective-use patients in stable condition. This video from the Mayo Clinic illustrates Percutaneous Coronary Intervention (PCI), the procedure for which the large majority of stents are used:

The price of stents has followed the broad pattern of decline typical among innovation life cycles. Bare Metal Stents (BMSs) were first priced wholesale around $1,600 in the early 90s, but today the average cost is around $700 each. Drug-eluting Stents (DESs) were a new model introduced in the early 2000s that have helped marginally reduce potentially fatal angioplasty complications, such as blood clotting. These were originally priced around $3,000, and now cost about $1,500 each. According to Bloomberg, "Hospitals receive an average payment of about $25,000 per stent case from private insurers . . . [and] Doctors who implant stents earn a separate fee that averages about $1,000." The stent cost, then, only comprises ~5% of the total price of implantation, not to mention the ongoing costs for the patient, including blood-thinning medications, which are prescribed as a matter of course to mitigate the risk of restenosis.

Until 2001, India imported nearly 100% of stents used, although there were successful early innovation efforts at lowering the cost of stents through indigenous innovation. A network of doctors and engineers at Care Hospitals, Mediciti Hospitals, and the Society for Biomedical Technology pioneered a low-cost coil stent patented as the Kalam-Raju in 1995, crashing the prices of imported stents by several factors, and remained about 50% less expensive, costing around $250. One of their main reasons for creating a low cost stent was that the reason for the "very low number of cardiac procedures carried out in India is poor affordability arising from the high cost of imported consumables." Depending on the report, there were about 2,000 Kalam-Raju stents implanted before mesh designs replaced the coil stents.

Kalam-Raju Coil Stent, 1995

Indian innovators have generally trailed the major OEMs in stent innovations, so the design shift from mesh to scaffolding, and the biochemical shift to drug-eluting stents have not been kind to the market for indigenous stents in India. There remains a general mistrust of locally manufactured products among large, urban hospital systems, who remain the largest buyers of stents. These developments have maintained a high import price for foreign stents in India, and some reports show patients paying up to three times the import price for stents! Needless to say, the penetration of angioplasty in the Indian market remains tragically low. Of course, the high price of consumables is not the only reason for this. Another is the very low number of cardiologists in the country.

Nevertheless, it's clear that any solution to providing stents when and where they're needed in India will require low cost, high quality stents as part of the solution. Efforts to create affordable indigenous stents have continued in India, such as Relisys' Corel+C in 2007, a collaboration between Dr. Balram Bhargava, Relisys, and Germany's CINVENTION to create a non-polymer-based DES that was both safer and 50% the cost of imported DESs. Ultra efficient cardiac care centers like Narayana continue to ensure foothold markets for indigenous stents that are 'good enough.' While some may scoff at the use of 'good enough' applied to Class 3 implantable devices where quality is at a premium, we should all keep in mind that some device features are luxuries, and that having the basic version of a device that's almost as good, but that costs multiple factors less is far more valuable to a patient whose alternative is nothing at all. And the benefits of the 'best-performing' stents are quite marginal. A recent study found the rates of late stent Thrombosis to vary only marginally from one stent type to another as follows:

• BMS stents: 1.5% 
• Old generation DES: 1.1% 
• New generation DES: .9%

Insured patients in the U.S. will pick the new generation DES every time for a .2% risk reduction, but the potential for disruptive innovation lives on in Indian healthcare, where only some 25% of the population even has access to some form of insurance, so that patients often haggle extensively with providers on costs for which they pay out of pocket. 

The implicit question of each globalhealth.care post is always, 'could this device disruptively transfer into the U.S. healthcare market?' Let's compare the prices first: 

• Avg cost of BMSs and DESs in the U.S.: $700 and $1,500
• Avg cost of BMSs and DESs in India: $200 and $500

$200 is a already a low price for a stent, but the Indian OEMs give a further 25% discount to hospitals who buy directly from them, bringing the cost to $150. Furthermore, the Indian Council of Medical Research is currently conducting a study comparing the quality of imported vs. indigenous stents made by companies like Opto Circuits India, Sahajanand, Translumina Therapeutics, Vascular Concepts, and Vasmed Technologies. If they find similar levels of clinical outcomes, this would help drive domestic uptake, and further decrease the price through economies of scale, perhaps to around $100 each. 

Hospitals using fee-for-service reimbursement may desire to purchase lower cost stents, where 'cathlabs' have become valuable sources of profit at fixed reimbursement rates. Just switching to a $500 Indian DES from a $1,500 U.S. DES would save a hospital performing 2,000 implants per year $2,000,000. In time, payers will reduce reimbursement rates as low-cost stents contribute to low-cost implant procedures, further enabled through remote surgery trends and other efficiency gains. In the meantime, it may already be the case that ACOs and other specialized surgery centers in the U.S. who are incentivized to reduce costs at or above average outcomes would be interested in offering patients a choice between a $100 BMS with a 1.5% chance of Thrombosis, or a DES for $1,500 with a .9% chance of Thrombosis.

Starter Question for Comments: 

• What's stopping low cost stents from being adopted in the U.S. today? 

How Mitra Industries Could Save Kidney Disease Patients in the U.S. over $1.7 Billion per Year

Nearly $3 billion per year is spent by U.S. patients on a form of kidney failure dialysis treatment whose cost the Indian firm Mitra Industries has decreased, with the potential to realize savings of nearly $1.9 Billion in dialysate solution alone.

Peritoneal Dialysis

End Stage Renal Disease (ESRD) is a condition requiring either a kidney transplant or an artificial process (mostly dialysis) to clean the blood as a replacement for healthy kidneys. Transplant is the best option, but of the half-million patients with ESRD in the U.S., nearly 4/5 require dialysis treatment, and nearly all of these undergo hemodialysis (HD), an extracorporeal process of removing, cleaning, and replacing the blood using machines. The remaining patients, currently ~40,000, opt for peritoneal dialysis (PD)* therapy, a process whereby a permanent catheter embedded through the abdominal cavity is used to exchange medicated dialysate with waste from the blood via the peritoneal membrane at least 3x per day. This is a process the patient manages herself. The outcomes for PD and HD are comparable, but the main advantages of PD over HD are increased patient empowerment, and cost savings. Several studies in recent years have argued convincingly for the general superiority of PD over HD on a number of relevant dimensions. 

With per patient costs of ~$72,000 per year in the U.S., PD does cost less than HD, which runs ~$88,000 per year. The main cost drivers for PD are the dialysate solution, requiring 1 bag per session, as well as the general management of anaemia, the latter being common to any dialysis treatment. A quick look at the prices of PD supplies on Baxter's product listings confirms their high price as each bag of solution costs ~$45, summing to a yearly cost of nearly $50,000 in solution alone for just thrice daily treatment. 

While improvements in home hemodialysis technology could change this, PD is currently the most disruptive form of dialysis. But could costs be even lower for ESRD patients opting for the low cost dialysis route? 

Mitra Industries, a manufacturing company in Transfusion Medicine & Renal Services based in New Delhi, India, has developed a novel one-bag solution (NOB) for PD that has decreased the monthly per patient cost to a shockingly low $235. Even assuming that all of this cost is attributable to solution, with thrice per day therapy, that's a per bag cost of $2.6 compared with $45 from Baxter. Other product benefits are named in their release video below. 

In my correspondence with Atul Rishi, the Country Manager for Mitra, he prefaced his introduction of the NOB by listing the environmental constraints that shaped Mitra's innovation efforts. These are: 

• India Is a Large Country: True both in terms of area & population
• Education: The majority of the population is not educated
• Limited Medical Resources: Main cities have excellent facilities but smaller towns are still lacking basics, and the majority of the population in India still resides in smaller towns. For example HD machines are only available in large cities
• No Medical Reimbursement: Only limited government employees get medical reimbursement and all private patients are self-paid, so they know the costs
• High Medical Costs: India still imports many medical devices and medications from abroad, and distribution costs are high to reach rural patients, e.g. consider the cost of transporting sufficient quantities of the standard 2 liter bags used in PD therapy
• High Non-Consumption: 80% to 85% of kidney failure patients go without renal therapy in India as a result of the factors above
• Emerging Manufacturing Capability: The first indigenous designer and manufacturer of PD products in India began work only in 2000, and started manufacturing supplies nearly identical to those India had been importing from Western countries. 

When Mitra began manufacturing PD products in 2006, they did so at the same price points as the competition, but as Atul says, "[We] were constantly thinking on how to reduce cost per bag so that it is not only more economical than existing PD company bags, but also equivalent to or lower than HD monthly cost" (HD, though generally more expensive than PD in developed countries, is sometimes cheaper in developing countries, likely due to much higher resource utilization).

Innovating to the market constraints above, Mitra reduced 2 bags to 1 by reusing the solution bag as the drain bag, and thereby also eliminated the Y connector & tube. This has decreased material cost and waste, and also reduced transportation cost of materials by 15%, leading to a price point not only 95% cheaper than PD bags in the USA, but also 33% cheaper than alternatives in India. 

Whether Mitra can make the leap into the U.S. healthcare market to disrupt existing offerings with its NOB depends on many factors outside the scope of this post's analysis; however, the need for innovations such as this is especially dire at this time. Baxter, which supplies about 90% of supplies for PD patients in the U.S., limited the number of PD referrals across their entire base of customers this year, as well as announced there will be an unexpected and large shortage in supplies of peritoneal dialysis solution for patients with kidney failure in the U.S. Other U.S. manufacturers have stated they cannot make up the shortfall. Given that PD has been rapidly growing as a viable form of low-cost, effective dialysis treatment in the U.S. in recent years, the FDA would do well to consider extending import and marketing approvals to companies such as Mitra, which not only have the capacity to serve patients at scale, but have also structurally innovated their products to decrease the cost of PD therapy. Baxter may well leave the game due to the loss of margins for provision of PD equipment, but they already seem to have lost interest in this market. Should we succeed in allowing entrance to laudable innovators such as Mitra, the real winners will be the patients and payers of America.

*All subsequent use of 'PD' in this post refers more specifically to continuous ambulatory PD, as opposed to automated PD

Photo Credit: http://upload.wikimedia.org/wikipedia/commons/4/4e/Peritoneal_dialysis.gif

Theranos: The World's Best Healthcare Company

Introduction to Theranos

Ever since their debut article in Fortune this June, in which Theranos unveiled its stature as a $9B-valued company poised to completely disrupt the $78B per year laboratory diagnostics industry, Theranos has been lavishly featured in the media as a herald of the new healthcare: Affordable, personal, transparent, and accessible. Theranos is built around a proprietary new high-complexity diagnostics lab that allows for a large range of tests (they currently list 229 on their website, but the Fortune article tells us they'll soon offer over 1,000) to be run on blood and other bodily fluids using much smaller sample sizes (70 separate tests can be run on a single sample of a few drops of blood: 1/1000th the amount of blood needed for traditional tests) for a very low cost (Theranos's prices are always 50-90% less than the Medicare reimbursement codes. For example, a standard metabolic panel would cost ~$46 at a standard lab, Medicare would reimburse $14.74, and Theranos charges only $7.27. The average price across their 229 tests is $12.92), and at exceptional speed (whereas traditional testing services would take days to return results, Theranos's labs take mere hours). The Theranos labs also require less footprint, allowing them to be housed in small corners of retail clinics, hospitals, and other existing healthcare outlets. They have signed a non-exclusive agreement with Walgreens (the pharmacy chain currently boasts over 8,200 brick-and-mortar pharmacy locations in the U.S.) to build Theranos Wellness Centers in each location as quickly as possible. They are already operating out of 39 Walgreens stores in Arizona, and 1 in Palo Alto, California. They have also inked agreements with several hospital systems, such as Intermountain Healthcare and Dignity.

Whence Theranos on Globalhealth.care? 

Before explaining why Theranos is the best healthcare company in the world, it's worth explaining why globalhealth.care is featuring Theranos in the first place; after all, the company maintains over 500 employees in a 111,000 square-ft. facility at Stanford University, and even manufacturers their labs at a 262,000 square-ft. factory in Newark, California. Their board is also unusually stacked with American civil heroes such as Henry Kissinger, William Perry, and James Mattis. Theranos is as American a company as they come, but there are good reasons to feature Theranos as the first innovation profile on a site dedicated to researching technologies originating from emerging markets. The first is that Holmes's (Elizabeth Holmes is the Founder and CEO of Theranos, a very focused and brilliant person who dropped out of Stanford's Chemistry program as a Sophomore to start this company) idea for Theranos seems to have originated from a 2003 summer internship (Holmes founded Theranos in the fall of 2003) at the Genome Institute of Singapore during their work with Roche Diagnostics to make highly affordable, accessible, and fast SARS testing kits available to the Asia-Pacific region using their nobel-prize-winning PCR technology. 

The second reason is that Theranos is such a complete example of a healthcare innovation, a standard by which all of the individual foreign technologies globalhealth.care will feature must aspire to within the transplanted context of the U.S. healthcare market. The fact is that any technological innovation in isolation is naked, and really not worth much until it is clothed in the appropriate vestments of an integrated market application and comprehensive business model that delights each of its stakeholders. Like Edison, true disruptors must invent more than just a lightbulb: They must also design and execute a workable electrical grid into which the lightbulb can integrate.

Why Theranos is the World's Best Healthcare Company

Reason 1: Theranos's Market Position in Diagnostics

Successfully designing their 'electrical grid' is the second-most important reason why Theranos is the world's best healthcare company. The first is that they may credibly become the 'gatekeeper of healthcare' by owning the market for laboratory diagnostics, the data of which already form the basis of 70-80% of clinical decisions. This number will only increase as the speed, reliability, accuracy, breadth, price, and accessibility of diagnostic information increases--all of which Theranos is accomplishing. Additionally, diagnostics is the nexus of healthcare most amenable to expanding the scope of practice of lower-cost providers for well-understood medical conditions. As another of our posts explores, this is one of the surest ways to decrease healthcare costs in the U.S. 

Reason 2: Theranos's Business Model
Every component of a good business model flows from, and seeks to balance and reconcile, the foundational stakeholder value propositions (VPs) upon which the success of the business depends. These VPs are responses to stakeholder jobs-to-be-done (JTBD). Below are some examples of the primary stakeholders, their JTBD related to lab diagnostics, and the resultant VPs that Theranos has so expertly constructed its offerings around:

• Patients
• Jobs-to-be-done (JTBD)
1. Feel less pain / fear around extracting samples
2. Pay less $$ for routine tests
3. Gain anytime access to personal health information 
• Value Propositions (VPs)
1. Proprietary, painless micro-stick technology to extract a few drops of blood
2. Pricing 50-90% less than Medicare reimbursement prices
3. Creation of theranos.me, mobile apps, and easy graphical displays to learn and track important data
• Providers
• JTBD
1. Fast, accurate test results
2. Easily place orders and follow-up orders
3. Easily consumable reporting
4. Not take up much space (hospitals)
• VPs
1. Results w/in hours instead of days; high illustrative accuracy 
2. Send samples using existing infrastructure OR send patient to Wellness Center
3. Alerts and easily consumable graphs via software
4. Theranos labs require 10x-100x less space than traditional labs 
• Payers
• JTBD
1. Pay less $ for procedures
• VP
1. Pricing 50-90% less than Medicare reimbursement prices, estimated to save Medicare / Medicaid $200B over next 10 years
• Regulators

• JTBD
1. Ensure safe, effective healthcare for the public
2. Not have to chase down irresponsible startups
• VPs
1. CLIA, FDA, WHO, and ICH certified 
2. Proactively sends FDA testing accuracy results
• Pharma
• JTBD
1. Easily track real-time results of drug trials in test patients 
• VPs
1. Creates a 'movie' of physiological reaction to drugs within patients (Glaxo-Smith Kline and Pfizer have been paying Theranos for this since 2005)
• Investors ('good' investors who are supportive of long-term returns)
• JTBD
1. Realize high return on investment
2. See cash from operations supporting increasing share of the business
• VPs
1. Has not accepted investors seeking short-term exit
2. Generating cash from operations since 2005

Challenges In Emerging Markets for Theranos

Theranos is a careful company. They were in stealth mode for 10 years making sure to nail each piece of their business model before starting to scale, and they are doing that very deliberately so far with Walgreens. Holmes has indicated that Theranos is systematically evaluating a global expansion strategy, which will probably not happen tomorrow. If it does happen, each new market will of course require an entirely new business model, or configuration among a separate set of stakeholders.

Research on the laboratory diagnostic market in India indicates that Theranos would today be a welcome innovation within this market since the vast majority of diagnostic labs in India are importing equipment from the same OEMs that supply the traditional diagnostic labs in the U.S., e.g. Siemens, Olympus, and Beckman Coulter. Because of this, even the Indian test prices are still higher than those of Theranos as the table below comparing the cost of a few Theranos and SRL Diagnostics tests shows:

But price is just one metric, and others may be just as important in emerging markets. For instance, Dr. Natarajan Sriram wrote a critical piece about existing IVDs in emerging markets, and while price was at the top of the list of criticisms, there are many additional reasons that make significant market penetration difficult for laboratory-based diagnostics. Dr. Sriram outlines important performance dimensions required for IVD products to succeed in emerging markets. While Theranos performs well on several cost and reliability metrics, there are a few that Theranos will find difficult to excel on in its current form:

1. Simple and minimum end-to-end procedure
2. Test results require no additional equipment or accessories from site of test
3. Small pack size of IVD
4. Minimal training required w/ no professional staff

Typical Rapid Diagnostic Device

Dr. Sriram's own company, the Tulip Group, oversees the R&D and production of Rapid Diagnostic Tests (RDTs), which are typically single-use applications meant to test for the presence of an infectious disease, exactly like that of Roche's PCR system for SARS in 2003. While incremental cost advantages to RDTs have been shown at high levels of a particular disease prevalence, their true advantage in emerging markets is that they satisfy the above criteria for success that Dr. Sriram outlines. 

The penetration of Theranos into emerging markets in its current form might rely on how widely held and acute the JTBD of 'help me watch a movie of my micro-biological health indicators over time' is in these markets since the OEMs already supplying the equipment will likely soon provide lower-cost lab diagnostics to achieve cost parity with Theranos. 

I wonder, might Theranos carry their genius of miniaturization a bit further to create portable laboratories, patches, or more versatile RDTs in order to succeed in emerging markets as they will succeed in the U.S.? 

RDT photo credit: http://p.globalsources.com/IMAGES/PDT/B1055265875/Diagnostic-Test-Cassette.jpg

A Brief Intellectual History of Globalhealth.care

The Inception

Excellent Ukrainian Bread

The idea for this project began to form during my time in Eastern Ukraine from 2003-2005. In many cases I discovered that Ukrainians' way of doing things was better than what I had known before. "Better" is always a word needing qualification, and the qualifier differs in each case. Take Ukrainian bread: It's better than the pre-sliced bread from grocery stores I was used to on dimensions of taste, nutrition, and texture; on the other hand, it was worse on dimensions of shelf life, tidiness (crumbs would fly upon slicing), and even PPP cost.

The insight for me was that societies have comparative strengths and weaknesses developed over time in response to conditions on the ground. This goes far beyond food, which after all is largely a matter of taste and habit, and into the ways in which societies organize themselves economically in general.


A Theory

The next piece of understanding was learning Clay Christensen's theories of innovation. I read all of his books and most of his articles as a consultant at Innosight from 2009-2011. Innosight, a firm co-founded by Christensen, helps mostly large corporate clients navigate the challenges and opportunities of disruption in their markets. Clay's theories deepened my interest in the mechanisms of successful innovations, which go far beyond isolated technological advances to encompass new systems and models for delivering value in more cost-effective, accessible, and targeted ways. Large scale disruptive innovations succeed over time and are often generated within tight resource constraints. For example, consider many of the disruptive innovations that Japan was exporting to the U.S. starting in the late 1950s:

• The Honda Super Cub motorcycle
• Sony's hand-held transistor radios
• Toyota and Honda cars

Each of these innovations eventually created a robust market in the United States by targeting consumers that had been over-served by incumbent technologies. Relative to the 'jobs to be done' of these consumers, the product characteristics of physical smallness, efficiency, and low cost were all attractive. Importantly, however, these products were not created in the United States: They were originally of, by, and for the Japanese market, where conditions on the ground differed markedly from those in the United States. Products initially created for obvious markets in Japan would eventually create much larger, though initially less obvious, markets in the United States. This happened dramatically and repeatedly from the 1950s through the 1980s.


Globalhealth.care

During my time at Harvard Business School I read Vijay Govindarajan's Reverse Innovation, which argues that innovations developed for consumers at the bottom of the global economic pyramid, i.e. the roughly 2.5 billion people living on less than $2 per day, share qualities similar to those that characterized Japanese disruptive products starting in the 1950s; namely, they are low-cost and low-performance relative to incumbent technologies, but they succeed because they're mostly targeting non-consumption and under-consumption. Here are just a few examples of these disruptive products from the Innovations Database page of this website:

• $2K heart surgery at Narayana Health
• $30 eye surgery at Aravind Eye Hospitals
• Portable, $500 ECG from General Electric

Many commentators on the healthcare industry in the United States have called for various avenues of disruption to the industry, which would broaden access, lower costs, and improve outcomes. Though the barriers to disrupting healthcare in the U.S. are many, I believe adopting new, disruptive models of delivery inspired directly by successful innovations from the highly constrained markets of the world is one route that will greatly help. Globalhealth.care, then, is a research project hoping to aid the transfer of these innovations, and thus aid the continuing betterment of the U.S. healthcare system.