Slowly but surely, the pace of change in healthcare is starting to accelerate, and 2019 will be a dynamic year for the industry with major regulatory, technological, and business innovation. There will be false hype, breakthroughs, the failure of traditional business models, and plenty of cross-pollination both within healthcare (payers, providers, life sciences) and between industries (healthcare and technology).
Below are five trends impacting the year ahead, and specific predictions related to each trend. I’ve tried to skip the obvious trends/predictions (political battles over drug prices, legal battles over the Affordable Care Act, explosion of data in the industry, gradual movement to the cloud, etc.), and focus on the more subtle changes shaping the industry.
Trend #1: Major data breaches and further data misuse will put privacy and control of data center stage, prompting new regulation.
In December, the Department of Health and Human Services’ (HHS) Office of Civil Rights circulated a Request for Information to the public, seeking input on how the Health Insurance Portability and Accountability Act (HIPAA) might be modified to further enable coordinated, value-based care.
Separately, 2018’s privacy scandals and the implementation of GDPR in Europe have led to a surge in interest in a general federal privacy law, which — though not specific to healthcare — would have consequences for health data that is not already covered by HIPAA. Several states seem prepared to follow in the footsteps of the California Consumer Privacy Act and pursue their own legislation, and federal privacy legislation is a real possibility for the first time in decades.
Any regulatory changes will take place against the backdrop of frequent health (and other) data breaches. There will be many contributing factors, from insecure legacy systems to employee error; from the rapid proliferation of consumer-facing health devices to bad actors. At the same time, inquisitive journalists are likely to find many instances of the improper monetization and use of health data. These incidents will put a spotlight on patient privacy, and will heighten the debate around new regulation.
- There will be at least five major health data breaches in 2019, including at least one major insurer impacted.
- Changes to HIPAA will be implemented that focus on sharing data with non-covered entities (those subject to more stringent patient data sharing requirements) and allowing broad patient authorizations for unanticipated (but beneficial) use cases.
- In the absence of federal action, several states (including Massachusetts, New York, Vermont and Florida) will pursue their own privacy legislation (setting up federal action in 2020).
Trend #2: Life sciences companies will race to build real-world evidence (RWE) competence as the FDA pilots initiatives to integrate RWE into its approval process.
While the FDA has a long-track record of using RWE for post-marketing drug safety surveillance (Sentinel; NEST), and — to a lesser extent — measuring efficacy (historical comparators in single-arm studies), the framework that the FDA released in December lays out an initial roadmap for new ways that real world data could be used in conjunction with traditional clinical trials for drug approvals.
The FDA has already reviewed applications for oncology treatments that incorporate real-world evidence; is funding the replication of 30 randomized controlled trials to better understand RWE methods and trial designs; and has indicated that it is prepared to consider RWE when adding or modifying drug indications.
As RWE becomes increasingly accepted, sponsors and contract research organizations (CROs) are racing to build up competence in collecting real-world data at the point of care, incorporating lab and genomic data in their trials, and performing the analytics necessary to convert the data into RWE.
- FDA will rely on RWE to approve a New Drug Application (or at least expand a label).
- Leading EHRs will begin to leverage their real-world data to offer predictive analytics to providers, focusing on adverse events and patient outcomes.
Trend #3: Life sciences companies continue to invest heavily in and acquire health technology and health data companies.
I’ve already written about how Roche’s acquisition of Flatiron marked the loudest shot yet in healthcare’s platform wars as life sciences companies evolve into modern data companies. GSK’s investment in 23andMe gave them exclusive access to the company’s DNA database, while sequencing and diagnostics company GRAIL drew new investment from Merck and Johnson & Johnson (as well as Google and Amazon).
Meanwhile, in the broader life sciences market, CROs are also making aggressive moves related to data, responding to IQVIA’s acquisition of IMS and PRA’s acquisition of Symphony Health in the last few years. New business models are emerging that are more focused on effective data sharing between entities than aggregating and reselling data.
These acquisitions fit into a broader data strategy that enables the acquiring companies to set up flywheels where they can use data to discover, develop and get drugs to market more quickly than competitors (all while generating additional data in the process).
- At least three major acquisitions of health data companies by big pharma and CROs.
- By end of 2019, there will be a decline of the traditional fixed fee-for-data business model, and we will see the first of many at-risk partnerships between life sciences and health data companies (tied to the insights derived from such health data).
Trend #4: In shadow of Amazon entering the insurance market, value-based care will drive payers to integrate vertically.
As more companies pursue vertical integration in 2019, large, stand-alone health insurance companies will find themselves at a disadvantage competing with integrated health delivery systems. The combination of CVS Health and Aetna now functions as a retail pharmacy (CVS), a provider (MinuteClinics), a pharmacy benefits manager (Caremark), and an insurer (Aetna). If the integration is successful, the consolidated company will be uniquely positioned to support medication adherence, offer additional services for chronic care management, and — as a result — offer more competitive premiums than traditional insurance companies.
In addition to the traditional players consolidating into vertically integrated firms, there are new but well-heeled healthcare entrants. While there are still more questions than answers when it comes to Amazon, Berkshire, and JPM’s flashy joint health venture, Amazon raised eyebrows when it acquired PillPack, an online pharmacy; and again when it recruited a Head of Measurement to the project from Blue Cross Blue Shield in November. Others have already speculated that Amazon will enter the insurance market in 2019. And who better to transform the consumer health experience than the customer-obsessed technology giant that completely transformed retail (and recently announced that it has over 100 million Prime members)?
- While there will be a chill in mega-mergers as others wait to see whether the combined CVS Health and Aetna (as well as Cigna and Express Scripts) can successfully integrate, there will be at least three smaller-scale mergers in the insurance space.
- Amazon will continue to expand its healthcare presence building on its PillPack acquisition with more consumer-facing services — an insurance shopper and a virtual pharmacy network.
- As Amazon breaks aggressively into healthcare, Google, Microsoft, and Apple pick up their investments to not fall behind (Google and Microsoft focused on cloud investments, and Apple focused on consumer tools). In 2019, expect a major product launch from every major tech company.
Trend #5: Direct-to-patient health applications and devices will lead health data fragmentation to outpace interoperability, prompting renewed focus on the development of patient portals.
One of the biggest health tech announcements in 2018 was that the Apple Series 4 watch would feature an FDA-cleared ECG that would notify users of heart arrhythmias (there are already over 800,000 in circulation). Clinicians and patient advocacy groups are racing to keep up to validate the potential benefit of these devices; the Health eHeart study aims to better understand the benefits of heart rate monitoring through wearables, including early detection of atrial fibrillation. The Apple watch is only one of many direct-to-patient offerings: from omic tests to glucometers to blood pressure cuffs.
As health applications and devices proliferate and give patients access to more of their health data than ever before, there are two primary challenges. The first is validating the accuracy and potential benefit of these devices. The second is ensuring that all of this data is interoperable, allowing patients to share data with relevant providers (already a challenge just with electronic health records).
Today, patient portals have limited functionality and physicians report that few patients meaningfully interact with these systems. However, increasing patient engagement is leading to significant demand for a simple way to navigate all of one’s relevant health data, and to better understand how to act on that data.
- While interoperability efforts will make major advances, they will not keep pace with the growth of health data and we will see more — rather than fewer — health data silos at the end of 2019.
- Major technology companies will introduce competitors to Apple Health Records built on existing and emerging healthcare data interoperability standards (e.g., FHIR) and we will see hundreds of health system participants opt into one of these solutions.
It should be an exciting year ahead!
Thanks to Bob Borek, Shahir Kassam-Adams, Jason LaBonte, Patsy Bailin, and Sam Roosz for their help in drafting and conceptualizing this article.