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Brainstorm Health Daily: April 12, 2017

O United flight 3411, I can’t quit you. Like millions of other news- and video-obsessed consumers, I have been held captive by the image of an airline passenger being wrenched and dragged like a sandbag off an overbooked United flight from Chicago to Louisville. I have replayed United CEO Oscar Munoz’s tin-eared and breathtakingly inadequate (initial) apology many times in my head—searching for a hidden sign of meaning as though I were that fill-in-the-blank Tom Hanks character in that fill-in-the-blank Dan Brown book-turned-movie. Munoz’s Take 2 apology also fell short, it seems to me—especially given that it arrived only after a cratering UAL stock price and widespread condemnation on global media and the Interwebs.

A small part of my obsession may be a pang of guilt: We put Munoz on Fortune’s 2016 Businessperson of the Year list (at No. 20)—though, if you read my colleague Shawn Tully’s striking profile on Fortune.com, you’ll understand why we did. And yes, good people can and do make dumb mistakes. We all do. I certainly do. (It’s one of my core specialties.)

But the larger part of my obsession, I suspect, is that there IS a hint of meaning to the Outrage at O’Hare, after all—Thank you, Tom Hanks!—and it reveals something important about many of the industries and institutions we deal with in our daily lives, including healthcare. And that is, when consumers don’t have a choice, they lose. Simple as that.

It may not look like it at first, but healthcare—just like the commercial airline business—is a hub-and-spoke industry. We’re often locked into a handful of hospitals (or fewer) by where we live and by the insurance coverage limitations we have. Our healthcare “networks” frequently send us to specific providers (for things like imaging, blood tests, surgical procedures)—and those providers call the shots when it comes to whether we can get an appointment and when, how long we’ll wait, and what the cost is.

Think airlines are the only ones that overbook and bump us with regularity? Or that slip in hidden fees for who knows what? Or that treat customers as captive prey? Not hardly.

So what’s the solution? Well, fellow healthcare revolutionaries, I would submit that the answer, in part, is to break up the oligopolies. And one way to do that may be to truly open up telemedicine and let providers and insurers trade freely across state lines. If we improve the mobility of care, we’ll drive down the price of care—and level the playing field a bit more between healthcare consumers and providers.

Honestly, I can’t quite imagine a situation where an elderly patient is dragged out of a hospital waiting room because his appointment is suddenly “bumped.” But then, I would have said the same about the airline industry before seeing the video of UA flight 3411.

Here’s the day’s news.

Clifton Leaf, Editor in Chief, FORTUNE
@CliftonLeaf
clifton.leaf@fortune.com

DIGITAL HEALTH

The FDA is exploring the promise of “organs on chips” for clinical trials. The Food and Drug Administration (FDA) is testing out Boston-based upstart Emulate’s “organ-on-a-chip” technology to see if there’s a better way to test drugs, cosmetics, and other products for toxicity than using petri dishes and animals—like actual human cells that are put on to little chips and mimic real organs. The research partnership will focus on food and cosmetics at first. But, as Emulate president and chief scientific officer Geraldine Hamilton tells Xconomy, the eventual goal is to use the tech for drug development. That could be a serious game-changer considering that animals don’t necessarily have the same sort of toxicology-related reactions to foods and drugs as humans do, and the process of animal testing is expensive. (Xconomy)

Merck and Amazon want you to create Alexa apps for diabetes management. Earlier this week, Amazon Web Services and pharma giant Merck launched a new developer competition where participants must create apps to assist recently-diagnosed diabetes patients using artificial intelligence and Amazon’s Alexa digital assistant platform. The competition is in its earliest stages, so it’s unclear exactly what kinds of programs may emerge. “As voice technology transforms the way we live, could it shift from helping manage playlists to helping manage disease?” reads the challenge’s website. “The Alexa Diabetes Challenge invites you to be among the first to explore how Alexa and the ecosystem of supporting cloud technologies can improve the experience of those newly diagnosed with type 2 diabetes.” (MobiHealthNews)

INDICATIONS

Yet another FDA warning letter for Mylan over India plant. Regulators have warned generic drug giant Mylan about quality control concerns at a manufacturing plant in India that is a hub for making antiretroviral therapies for HIV. The problems center on lost and potentially manipulated data, and the letter signifies that the FDA isn’t satisfied with the steps Mylan has taken to address the issue to date. Since the plant can continue to operate while Mylan works with regulators, the firm doesn’t expect any disruption in production of these generic HIV drugs, which supply patients in many developing nations. (Reuters)

First drug approved for neurological disorder tardive dyskenesia, Neurocrine shares soar. The first-ever treatment for tardive dyskenesia, a neurological disorder that can cause patients to involuntarily make repetitive movements such as jaw-clenching, smacking their lips together, or sticking out their tongues, won an FDA green light on Tuesday. “Tardive dyskinesia can be disabling and can further stigmatize patients with mental illness,” said Dr. Mitchell Mathis, director of the Division of Psychiatry Products in the FDA’s Center for Drug Evaluation and Research, in a statement. “Approving the first drug for the treatment of tardive dyskinesia is an important advance for patients suffering with this condition.” The drug (Ingrezza) was created by Neurocrine Biosciences, whose shares shot up more than 23% in early Wednesday trading. And it could become a significant option for mental health patients 5% to 8% of people taking antipsychotic therapies can develop the condition. What’s unclear right now is its price. Neurocrine has said the treatment will be priced “competitively,” likely in the $20,000 to $60,000 per year list price range depending on the required dosage. (FDA) 

THE BIG PICTURE

New Venrock report provides 2017 U.S. health care prognosis. Financial consulting firm Venrock is out with a new survey about the state of Obamacare, health care IT, and various health sub-sectors under the new administration and Congress. Venrock says it asked “a few hundred of the smartest people we know in health care” for their predictions. So what did they think? For one, 28% of respondents said they thought Obamacare would be either repealed or repealed and replaced; on the other hand, 72% believe the health law will be “repaired or renamed.” As for the health industries that the experts believe will face the most challenges in the coming years, Accountable Care Organizations (ACOs) and insurance companies top the list, while telemedicine and wearable fitness trackers are expected to be the least challenged. Finally, the respondents were asked if they would personally invest money in various high-profile digital health startups at their current valuations and if they would want to be a Series A investor in those companies if they had to hold on to the equity for 15 years. There were some clear winners on those fronts: 42% said they’d invest in Doctor on Demand at its current $250 million valuation, and 60% said they’d be Series A investors in the hospital concierge service One Medical. Nuna and Oscar Health were at the bottom of the list on both counts. The report spans a number of other important questions, including predictions on what will happen to drug prices over the next several years. Check out the full survey here. (Venrock)

Trump pushes health care reform before tax reform. President Donald Trump said upending Obamacare continues to be his legislative priority before tax reform can take center stage in Congress during an interview with Fox Business’ Maria Bartiromo. “I have to do healthcare first, I want to do it first to really do it right,” he said. Trump pointed out that tax reform would be heavily influenced by repealing various Obamacare taxes and spending. “We’re saving tremendous amounts of money on health care when we get this done, number one, and most importantly … we’re going to have great health care, and all of that savings goes into the tax,” he said. “If you don’t do that you can’t put any of the savings into the tax cuts and the tax reform.” Congressional Republicans have yet to settle on a contingency strategy following the American Health Care Act’s collapse in March. (Fox Business)

REQUIRED READING

The 30 Best Workplaces in Health Careby Fortune Editors

This Deal Would Create the World’s Largest Bike Companyby Geoffrey Smith

Need an Organ Transplant? This Pork Company Will Be Happy to Obligeby Reuters

Here’s Who Invested in Lyft’s $600 Million Funding Roundby Kirsten Korosec

Produced by Sy Mukherjee
@the_sy_guy
sayak.mukherjee@fortune.com

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