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Bridging the Gap between MDx Testing and Point-of-care by EOS Intelligence
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Bridging the Gap between MDx Testing and Point-of-care

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The COVID-19 pandemic brought innovation and investment to the in vitro diagnostics (IVD) market, opening new pathways to simplify and expand testing. The previously complicated and time-consuming molecular testing gradually started moving towards rapid testing, changing how we manage healthcare. The growing popularity of rapid testing gave way to self-sampling and at-home sampling, which is set to bring molecular testing closer to patients. Another noticeable transformation the industry witnessed post-pandemic was the rise of molecular testing at point-of-care (POC), which is set to disrupt the way clinicians deliver accurate diagnoses in record time.

The latest generation of IVD devices is focused on providing quick diagnosis and being cost-effective. This has led to IVD companies focusing on developing simpler and less invasive sample collection methods, such as self-sampling tests.

IVD innovation is also transforming molecular testing to make healthcare more accessible. To a certain extent, dependence on laboratories is gradually decreasing with molecular testing available at POC. A key development in this area is the use of multiplex assay, which allows to test for multiple pathogens simultaneously, allowing for early diagnosis.

Molecular testing moving near-patient

After using antigen tests during COVID-19, demand for molecular testing for a variety of diseases at POC has risen drastically. In 2023, the industry faced an acute shortage of skilled laboratory staff, further increasing the need for molecular testing to move near-patient. This has resulted in physicians and patients preferring molecular tests at POC (MPOC). Some prominent industry players, such as Cepheid, Abbott, and BioFire, offer CLIA-waived PCR instruments and multiplex assay tests for the POC setting. A CLIA-waived certification allows tests to be performed at a doctor’s office by a non-technician instead of other more complex MDx tests requiring specialized technicians.

Moving these multiplex molecular tests near-patient is revamping the IVD landscape, positively impacting both the patients and payers. Early diagnosis with POC diagnostics empowers physicians with evidence-based decision-making at an early stage. Moreover, with multiplex assays increasingly being used for MPOC and delivering results within 10-25 minutes (in the case of respiratory assays), the wait time for patients to receive the correct diagnosis has reduced substantially. This results in clinicians being able to start with proper treatment on the patient’s first visit, thus reducing the total number of patient visits. Consequently, physicians are also able to accommodate a higher number of patients.

In fact, MPOC could become a critical element of the value-based care model in the USA. The value-based program incentivizes healthcare providers/physicians to provide quality healthcare. With MPOC offering quicker turnaround time and lower testing costs, physicians/payers will likely be better incentivized and motivated to deliver high-quality services.

Growing demand for self-sampling/at-home sampling

The pandemic raised public awareness regarding the use of self-sampling kits and increased demand for them. Further, the FDA granted Emergency Use Authorization to multiple assays during the pandemic to quickly onboard self-test kits and penetrate the US households with this novel testing method.

Driven by the convenience, cost-effectiveness, and accessibility offered by self-sampling kits, they are becoming increasingly popular, particularly amongst the aging population that needs tools and technologies to manage health at home. It is also proving to be a sustainable testing method, as it can be used for preventative screening as well as allows for discretion for patients who may not prefer to get tested in a laboratory or by a physician, particularly in case of sexually transmitted infections (STIs).

Additionally, unlike OTC tests, molecular diagnostic tests allow for better accuracy in results and are recognized by the FDA for clinical diagnosis use. This has given confidence to healthcare providers to advocate self-sampling, as they stand to benefit from bringing care to patients’ homes, eventually reducing healthcare expenses. In a value-based setting, at-home testing proves to particularly benefit physicians who are able to eliminate unnecessary patient visits.

For the prominent industry players, at-home testing represents a key opportunity area to grow in the niche direct-to-consumer testing segment. Companies are also using these tests as an opportunity to target the rural population who do not have easy access to laboratories. Besides infectious and respiratory diseases, companies are now trying to foray into other treatment areas, such as human papillomavirus (HPV). Self-sample collection for HPV has begun in Europe with BD’s Onclarity HPV assay.

EOS Perspective

Establishing a strong foothold in both self-sampling and MPOC segments is seen as a sizeable business opportunity for stakeholders of the IVD market. In the near term, it is likely for the IVD players to continue launching new assays and technologies to expand offerings.

For self-sampling, MDx players have been focusing on infectious diseases, and there still is a vast untapped market for self-sampling at home, specifically when testing for STIs. In November 2023, LetsGetChecked became the first company to secure FDA approval for chlamydia and gonorrhea at-home sample collection. This has opened doors for other players to enter this niche market, and they are likely to jump on the bandwagon by seeking FDA approvals for their STIs self-sampling kits. Major players, such as Hologic, are already gathering data to launch a self-collection device for STIs. Hologic’s Aptima Swab for STIs multi-testing is approved in the EU, and the company is now conducting trials to get approval in the USA.

In the near term, a noticeable trend in the MPOC segment is expected to be the focus of MDx players on developing multiplex assays that follow the ‘one-size-fits-all’ approach. There is a growing demand from physicians for multiplex assays that allow them to test for multiple viruses and deliver results in under four hours. Companies have already started to take matters into their own hands by focusing their R&D efforts on developing panels and preparing them for FDA approval and CLIA waiver. Becton Dickinson announced the launch of its first molecular diagnostics POC instrument, BD Elience, by 2025. The device is expected to allow panel testing for respiratory and sexually transmitted diseases.

Although the self-sampling and MPOC segments present many opportunities for the IVD stakeholders, some roadblocks may hinder their development and adoption. For instance, multiplex assay reimbursement schemes may hamper their widespread adoption in the POC setting. Per the latest guidelines, reimbursement schemes for multiplex assays are less favorable than those for singleplex assays. Furthermore, at present, there are no reimbursement schemes in place to reimburse for self-sampling at home, so patients are required to pay out-of-pocket.

Several players face a crucial challenge for at-home collection: proving to the FDA that the self-sample collected is not contaminated or poorly taken. FDA requirements for approval of these tests are very stringent and demand that companies prove the adequacy of the sample collected by patients to match that of laboratory collection.

Despite these challenges, self-sampling and MPOC present untapped opportunities for many IVD players seeking to expand their capabilities and offerings to position themselves better in the MDx market.

Vaccines in Africa Pursuit of Reducing Over-Dependence on Imports by EOS Intelligence
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Vaccines in Africa: Pursuit of Reducing Over-Dependence on Imports

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Pandemics such as COVID-19, Ebola, and the 2009 influenza instilled the need for a well-equipped domestic vaccine manufacturing industry in the minds of African leaders. Currently, due to insufficient local production, the continent depends heavily on imports from other countries, with the imports satisfying about 99% of vaccine demand in the continent. However, thanks to recent significant FDI, the vaccine industry in Africa had a market potential of around US$1.3 billion as of 2021 and is expected to range between US$2.3 billion and US$5.4 billion by 2030, as per McKinsey estimates.

Vaccine sovereignty is the need of the hour for the African continent

One of the most important lessons the COVID-19 pandemic has given to Africa is the pressing need to ramp up vaccine production locally. Biotech firms, such as Moderna and Pfizer, developed COVID-19 vaccines faster than any other producers. However, these vaccines were not easily accessible to most African countries.

Africans, in general, lack access to affordable and quality healthcare. Preventable diseases, such as pneumonia, malaria, and typhoid fever, have high fatality rates across the continent. This calls for localized production of pharmaceuticals and vaccines to lower the economic burden of these diseases and facilitate better access to affordable healthcare.

Currently, Africa relies heavily on other countries, such as China and India, for its pharmaceutical needs. The paucity of localized pharma production aggravates healthcare and vaccine inequity across the continent. To substantiate this, the COVID-19 vaccination rate at the beginning of 2022 in 16 African countries was less than 5% on average.

Currently, Africa consumes around 25% of the global vaccine production, whereas it produces less than 1% of its vaccine needs locally, as per the African Union (AU). Therefore, a lot remains to be done to materialize the goal of achieving 60% of vaccine needs to be satisfied locally by 2040, the vision of the Partnerships for African Vaccine Manufacturing (PAVM) under Africa CDC.

Increasing the vaccine production capacity from 1% to 60% in 15-16 years is not an easy task. Considering this, PAVM designed a continental plan for creating a vaccine production ecosystem capable of achieving the 60% target. This plan, called the PAVM Framework for Action (PAVM FFA), assessed that the African vaccine manufacturing industry would be expected to have increased the number of their vaccine production factories from 13 in 2023 to 23 (11 form, fill, finish, or F&F factories and 12 end-to-end factories) by 2040 providing a total of 22 priority products by 2040. It will require dedicated efforts from all involved stakeholders, such as producers, biopharma companies, industry associations, regulatory bodies, and academia.

Vaccines in Africa Pursuit of Reducing Over-Dependence on Imports by EOS Intelligence

Vaccines in Africa Pursuit of Reducing Over-Dependence on Imports by EOS Intelligence

Significant FDI will aid in driving localized vaccine production in Africa

The continent is attracting considerable FDI from the USA and Europe for vaccine development. Several foreign biotechnology firms are partnering with African governments to venture into localized vaccine production.

In March 2023, US-based biotechnology company Moderna partnered with the Kenyan government to set up a production facility for making messenger RNA (mRNA). The proposed annual capacity of Moderna’s first-ever facility in Africa is around 500 million doses of vaccines. The facility is expected to produce drug substances or active pharmaceutical ingredients and the final product for the entire continent.

In another example, a Germany-based biotechnology company, BioNTech, is contemplating commencing production of mRNA-based vaccines in its Rwanda facility in 2025. The construction of the facility began in 2022. With an investment of around US$150 million, this is Africa’s first mRNA manufacturing facility built by a foreign company. The proposed annual capacity of BioNTech’s mRNA facility is about 50 million vaccine doses. BioNTech also plans to set up mRNA factories in other African countries, such as South Africa and Senegal, and plans to produce vaccines for malaria, tuberculosis, HSV-2, and HIV in the future.

In September 2023, the South African government partnered with the KfW Development Bank of Germany. As per the agreement, South Africa will receive €20 million from Germany’s KfW Development Bank over five years for developing and manufacturing mRNA vaccines. The fund will be utilized for equipment procurement and API certification for vaccine production in South Africa.

A consortium of the Global Alliance for Vaccines and Immunizations (GAVI), AU, and Africa CDC established the African Vaccine Manufacturing Accelerator (AVMA) with the intent of fostering a sustainable vaccine industry. The formation of AVMA involved donors, partners, industry stakeholders, and non-governmental and not-for-profit organizations. GAVI planned to expand its supplier base, mainly in Africa, in 2021. Furthermore, the global alliance announced the commencement of around 30 vaccine manufacturing projects across 14 African countries.

Moreover, as of December 2023, over US$1.8 billion is planned for investment by a collaboration between the French government, Africa CDC, and other European and international investors to streamline the development and production of vaccines across the continent.

Desire to ensure vaccine effectiveness is seen as a biased vaccine preference

African governments are not only proactively putting in dedicated efforts to attract considerable FDI to build and strengthen the continent’s vaccine manufacturing industry, but they also focus on good quality, effective vaccine types. However, some perceive this as a lack of interest from the African governments to buy non-mRNA vaccines made by local companies.

For example, Aspen Pharmacare, a South Africa-based biotechnology company, put significant investments in ramping up the capacity of its manufacturing facility to produce viral vector vaccines against COVID-19. The company announced in November 2020 that it would be formulating, filling, and packaging the COVID-19 vector vaccine made by J&J. It also received €1.56 million investment from Belgian investors, BIO, the Belgian Investment Company for Developing Countries, which is a JV between the European Investment Bank (EIB) and several European DFIs.

However, millions of J&J COVID-19 vaccine doses made in South Africa were exported to Europe by J&J without the knowledge of the South African government, to support Europe’s domestic vaccine demand in August 2021, not complying with the initial agreement of vaccine distribution within the African continent. This created a political impasse between European and African governments over the distribution of the vaccines, which, in turn, delayed their production as the standoff resulted in a long waiting time for Aspen Pharmacare to produce the COVID-19 vaccine.

Ultimately, by September 2021, the European countries agreed to return 90% of the J&J vaccines to Africa. In March 2022, J&J gave Aspen Pharmacare the license to manufacture and distribute the vaccine under its brand name, Aspenovax. The expected production capacity of Aspenovax was around 400 million doses. However, not a single order came from African governments.

According to Health Policy Watch News, the reason for this was the rising production of Pfizer and Moderna’s mRNA COVID-19 vaccine distributed by COVAX that was being opted for by most African governments. Thus, in August 2022, Aspen Pharmacare had to close its production line, stating non-existent demand in Africa, partly due to the subsidence of the pandemic and partly due to African governments’ lack of interest in non-mRNA vaccines. The company could not sell a single dose of the vaccine, owing to multiple factors, starting from what was perceived as the lack of government’s intent to purchase home-grown vaccines to delayed production due to the Europe-Africa political clash and the rising inclination of the world towards mRNA vaccines.

It is interesting to note that of the total Covid-19 vaccines Africa administered to its residents, 36% were J&J vector vaccines, shipped directly from the USA.

Technology transfer hub and know-how development initiatives are set

To strengthen vaccine production capacity in low- and middle-income countries (LMICs), the WHO declared the establishment of a technology transfer hub in Cape Town, South Africa, in June 2021. In February 2022, WHO said that Nigeria, Kenya, Senegal, Tunisia, and South Africa will be among the first African countries to get the necessary technical expertise and training from the technology transfer hub to make mRNA vaccines in Africa.

Afrigen Biologics, a South Africa-based biotech firm, is leading this initiative. As Moderna did not enforce patents on its mRNA COVID-19 vaccine, Afrigen Biologics could successfully reproduce the former company’s vaccine, capitalizing on the data available in the public domain. As per an article published in October 2023, Afrigen Biologics reached a stage where its vaccine production capabilities are appropriate for “phase 1/2 clinical trial material production”. Additionally, in collaboration with a Denmark-based biotech firm, Evaxion, Afrigen is developing a new mRNA gonorrhea vaccine.

Besides setting up a technology transfer hub in South Africa, academic institutions are partnering with non-profits as well as companies to reinforce the development of necessary technical know-how and training required for vaccine manufacturing. One such example is the development of vaccines in Africa under the partnership of Dakar, Senegal-based Pasteur Institute (IPD), and Mastercard Foundation. Approved in June 2023, the goal of MADIBA (Manufacturing in Africa for Disease Immunization and Building Autonomy) includes improving biomanufacturing in the continent by training a dedicated staff for MADIBA and other vaccine producers from Africa, partnering with African universities, and fostering science education amongst African students.

Read our related Perspective:
Inflated COVID-19 Tests Prices in Africa

Although significant initiatives are underway, challenges exist

With 13 vaccine manufacturing companies and academic organizations across eight African countries, the continent’s vaccine industry is in its infancy. However, the current vaccine manufacturing landscape includes a mix of facilities with capabilities in F&F (10 facilities), R&D (3 facilities), and drug substance (DS) or active pharmaceutical ingredients (API) development (5 facilities).

One of the challenges African vaccine producers face is not being able to become profitable in the long run. In 2023, a global consulting firm, BCG, in collaboration with BioVac, a South Africa-based biopharmaceutical company, and Wellcome, a UK-based charitable trust that focuses on research in the healthcare sector, conducted a detailed survey exploring stakeholder perspectives on challenges and feasible solutions. The respondent pool consisted of a diverse set of stakeholders spanning across Africa (43%), LMICs (11%), and global (46%). A total of 63 respondents from various backgrounds, such as manufacturers, industry associations, health organizations, regulators, and academic organizations, were interviewed across the regions above. According to this research, most vaccine producers in Africa who were interviewed said that profitability is one of their key concerns. This leads to a lack of foreign investments required for scaling up, which in turn creates insufficient production capacity, thereby increasing the prices of vaccines. Therefore, these producers are unable to meet considerable demand for their products, and their business model becomes unsustainable.

Continued commitment and support from all stakeholders are necessary for achieving a sustainable business model for vaccine producers in Africa and, consequently, for the industry at large. However, it has been observed that the support from global, continental, and national levels of governments and other non-government stakeholders, such as investors, donors, partners, etc., tend to diminish with the declining rampage caused by epidemics in Africa. Therefore, this poses a severe challenge to strengthening the vaccine production industry in Africa.

In another 2023 study, by a collaboration between the African CDC, the Clinton Health Access Initiative (CHAI), a global non-profit health organization, and PATH, formerly known as the Program for Appropriate Technology in Health, involving 19 vaccine manufacturers in Africa, it was suggested that the current vaccine production capacity including current orders to form/fill/ finish using imported antigens is nearly 2 billion doses. In contrast, the current average vaccine demand is 1.3 billion doses annually. In addition, there is a proposed F&F capacity of over 2 billion doses. Thus, if Africa can materialize both current and proposed plans of producing F&F capacity vaccines from imported antigens, the study concludes that the continent will reach a capacity of more than double the forecasted vaccine demand in 2030. Overcapacity will lead to losses due to wastage. Thus, not all vaccine producers will be profitable in the long term. This may challenge the African vaccine manufacturing industry to be profitable.

Moreover, Africa’s current domestic antigen production capacity is lower than what is required to meet PAVM’s vaccine production target of 60% by 2040. In addition, a large part of the existing antigen capacity is being utilized to make non-vaccine products. Although antigen production plans are underway, these will not suffice to narrow the gap between demand and production of antigens domestically in Africa.

EOS Perspective

To create a local, financially sustainable vaccine manufacturing industry with output adequate to support the continent’s needs, it is necessary to create an environment in which producers can achieve profitability.

Initiatives such as technology transfers and funding will only be fruitful when their on-the-ground implementation is successful. This will require the involvement of all stakeholders, from the state governments to bodies that approve the market entry of vaccines. All stakeholders need to be steadfast in their actions to achieve the ambitious target of 60% of vaccine needs to be met from local production by 2040 without compromising on the accuracy and quality of the vaccines.

One of the most vital aspects of the necessary planning is for stakeholders to ensure that even after the pandemic and its aftermath are entirely gone, the effort towards establishing facilities, creating know-how, and training a workforce skilled in vaccine development and production does not stop.

The focus should extend beyond COVID-19, as there are many other preventable diseases in Africa, such as malaria, pneumonia, tuberculosis, and STDs, against which vaccines are not yet produced locally. These areas provide a great opportunity for vaccine producers and associated stakeholders to continue being interested and involved in vaccine production and development in Africa.

Opioid Epidemic in the USA – Is the War to Curb the Crisis Turning Futile? by EOS Intelligence
by EOS Intelligence EOS Intelligence No Comments

Opioid Epidemic in the USA – Is the War to Curb the Crisis Turning Futile?

The opioid crisis in the USA is believed to have begun in the 1990s with the overprescription of pain-relieving medicines. However, the epidemic gained steam recently with the availability of cheap heroin, fentanyl, and other synthetic opioids in the USA that foreign drug cartels from Mexico and China predominantly provide. According to a report by the US Congress Joint Economic Committee (JEC), the economic burden caused by the opioid crisis in the USA is to the tune of US$ 1.5 trillion in 2020, a 37% increase from 2017 when the CDC last reported it. This translates to 7% of the country’s GDP in 2020, indicating that the problem cannot be ignored.

The death toll owing to the opioid epidemic has tripled from 2016 to 2021, as per research by Yale University. In terms of human deaths, over 1,500 Americans die per week from taking some form of opioid. The overall death toll owing to opioid overdose was 80,411 in 2021.

Although the US government has taken initiatives to curb the crisis, such as increasing the federal, state, and local governments’ investments in drug treatment and prevention programs, a lot more needs to be done in the field of foreign policy and drug approval control, among others.

Federal action to control the opioid epidemic is underway, but more efforts are needed

From funding treatment programs and addiction prevention tools to focusing on a harm-reduction approach that lays importance on life-saving drugs and tools that could reverse opioid overdose, the US government has recently taken significant measures to curb the opioid crisis in the country.

Government grants and monetary aid

To begin with, the federal, state, and local governments have increased funding for the treatment and prevention programs for opioid use disorder. The Comprehensive Addiction and Recovery Act was passed in 2016 to combat the opioid crisis in the USA. It was a six-pronged strategy with pillars: prevention, treatment, recovery, law enforcement, criminal justice reform, and overdose reversal.

In monetary grants provided by the federal government, a sum of US$1.8 billion was given to states to combat the opioid crisis in 2019. Grants of US$900 million were given to the CDC over three years to facilitate the monitoring of overdose data and subsequently design strategies for treatment in states and counties/localities.

In addition, US$932 million was given to all 50 states in State Opioid Response grants in 2019. In 2021, the Biden government and the American Rescue Plan Act (ARP) provided US$5.5 billion for mental health and substance abuse prevention. In 2022, the sum was increased to US$1.5 billion for the State Opioid Response grants.

Apart from grants given by the federal government, some states and counties/localities utilized the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) from the ARP for developing programs to improve behavioral health, prevent opioid addiction, and treatment strategies for opioid use disorder. The SLFRF was to the tune of US$350 billion that was given to the state, territorial, local, and tribal governments across the USA to help them respond to and recover from COVID-19.

Drug control policies

In addition to monetary aid, the federal government brought about changes in drug control policies. For example, in April 2022, the Biden government introduced the National Drug Control Strategy that focused on a harm reduction approach that advocates using life-saving tools such as naloxone, drug test strips, and syringe services programs. It also promotes evidence-based treatment for those who are at a high risk of an overdose and improvement of the data and research systems for seamless development of drug policies.

With the FDA approval of the naloxone nasal spray Narcan in March 2023, it became the first OTC drug in the USA to reverse fentanyl overdoses. Narcan began to be sold to the public by September 2023.

Foreign policies

The US federal government has worked together with the government of Mexico for decades to curb the flow of illicit drugs entering the USA. To cite an example, through the Merida Initiative, the USA gave Mexico monetary aid of US$3.5 billion between 2008 and 2021 to counter the smuggling of illegal drugs across borders.

In the second half of 2021, the Biden government announced synthetic-opioid peddling a national emergency. The federal government also signed two executive orders that allowed the Biden administration to sanction individuals and bodies involved in the creation and distribution of fentanyl.

The 2022 National Drug Control Strategy also laid down policies to minimize the supply of illegal drugs through domestic and international collaboration.

In the second half of 2023, the federal government sanctioned 25 companies and individuals based in China who were suspected to be associated with the production of fentanyl precursor chemicals. Furthermore, the Biden government added China to the US list of countries involved in the creation and distribution of illegal drugs. This list comprises 22 other countries, such as Colombia, Mexico, and India.

In addition to this, the Biden government has continued to put pressure on Mexico to seize fentanyl precursor chemicals obtained from China and eradicate secret laboratories in Mexico. In November 2023, president Biden agreed with the Chinese and Mexican presidents separately to improve bilateral cooperation to prevent the production and dissemination of illegal fentanyl.

Domestic control measures

Apart from international efforts, federal action is being taken to control illegal opioid dissemination domestically. For instance, regulations have been put in place to revise the limits on opioid prescriptions, to prioritize seizing fentanyl, and to create widespread awareness of fentanyl’s lethality. Compared to 2021, the Drug Enforcement Administration of the USA seized double the quantity of fentanyl in 2022, and it announced that 60% of fake prescription drugs possess a lethal dose of fentanyl.

EOS Perspective

The JEC estimates of the US opioid crisis cost of US$1.5 trillion in 2020 speak volumes about the scope and size of the federal action needed to combat the epidemic. The magnitude of the opioid crisis in the USA calls for concrete action from the federal, state, and local governments to decrease both the death toll and the economic burden.

The federal government should promote the increase of access to evidence-based treatment by eradicating the barriers to healthcare and continue to embrace the “treatment over punishment” approach, focusing on medical attention and support instead of imprisonment. Another step is to enable the Medicaid expansion of the 12 states that have yet to expand Medicaid under the Affordable Care Act. This will lead to higher access to treatment, thereby minimizing the fatality rate.

Furthermore, the federal government should fund the Overdose Data to Action program for the expanded opioid data collection on overdose deaths in all US states. This will aid researchers and policymakers in arriving at the socioeconomic cost and aftermath of the opioid epidemic to understand better and resolve the problem. The federal government should also take initiatives to reduce the societal stigma around substance abuse for higher enrollment in treatment services.

Moreover, the federal government needs to address Narcan’s cost and accessibility challenges in the USA for better reach and impact. More R&D, increased border inspection, better overdose prevention, and employee assistance programs are instrumental in controlling the opioid epidemic in a better way.

Allocation of funds, increasing access to treatment, and enhancing the understanding of the scale of the epidemic are crucial steps in decreasing the human and economic toll of the opioid crisis in the USA.

Genetic Testing Fraud – The Next Big Concern for the US Healthcare Industry by EOS Intelligence
by EOS Intelligence EOS Intelligence No Comments

Genetic Testing Fraud – The Next Big Concern for the US Healthcare?

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Over the past few years, lab fraud has become a concern in the USA with the increase in financial gains obtainable through fraudulent billing practices, unnecessary testing, bundling of expensive tests (such as tests for rare respiratory pathogens or genetic tests) with COVID-19 tests, and increase in the number of genetic testing labs. A recent update in the compliance and regulatory requirements and increased focus on analyzing fraud testing schemes are expected to help curb lab fraud in the country.

Genetic testing, due to its increased use in the healthcare industry, is a particularly lucrative fraud target. Despite the presence of various compliance programs and regulations, several laboratories, together with patient brokers, telemedicine companies, and call centers, commit fraud and defraud Medicare. This strains the healthcare system as it increases healthcare costs and influences the patients’ trust in testing, labs, and other stakeholders.

Clinical labs face less scrutiny than full-service health centers. Thus, they are more frequently involved in lab fraud activities. Some of the most commonly noticed lab fraud cases in the USA include kickback schemes, fraudulent billing, and unnecessary testing, among others. Labs team up with parties such as patient brokers to get patients, doctors to refer patients or prescribe unnecessary tests, telemedicine companies to order tests, and call centers to target Medicare beneficiaries and then defraud Medicare by submitting claims.

Lab fraud in genetic testing has emerged in the USA over the past few years due to sprouting genetic testing labs across the country and the increasing use of such tests in health practices to assist disease diagnosis and predict disease risk. Genetic testing enables healthcare providers to offer personalized medicine based on the individual’s genetic makeup and helps identify how the patient will respond to treatments. Genetic testing fraud, mainly targeting cancer screening, pharmacogenetics, and cardiovascular diseases, is on the rise.

One of many such fraud cases was noted in August 2023, when LabSolutions LLC, based in Georgia, USA, submitted over US$463 million worth of unnecessary genetic and other laboratory tests to Medicare, the national health insurance program, of which Medicare paid over US$187 million. These tests were obtained through kickbacks and bribes. The scale of similar fraud is evident from the fact that in July 2022, the Department of Justice announced criminal charges against 36 defendants in 13 federal districts for more than US$1.2 billion in fraudulent telemedicine, cardiovascular and genetic testing, and durable medical equipment purchases.

The COVID-19 outbreak in 2020 further spiked fraud cases, as it gave an opportunity to bundle COVID-19 testing with other forms of expensive testing that patients did not need, including genetic testing for various diseases and tests for rare respiratory pathogens. Financial incentives offered by the federal government to encourage participation in COVID-19 control-related businesses also attracted fraudsters in the laboratory business. According to the US Department of Health and Human Services report, in May 2023, around 378 labs billed Medicare Part B for add-on COVID-19 tests at high volume and payment amounts. Of these, around 276 labs billed for more add-on tests, such as billing Medicaid for COVID-19 tests alongside respiratory pathogen panels (RPPs), individual respiratory tests (IRTs), allergy tests, and genetic testing. An additional 161 of these 378 labs also reported higher costs than usual for add-on testing.

Lab fraud behind money loss, erosion of trust, and increased insurance premiums

Lab fraud causes a significant adverse effect on the integrity and quality of the healthcare system as unnecessary testing and fraudulent billing practices increase healthcare costs, compromise the accuracy and reliability of diagnostic tests, and erode trust in healthcare providers, including doctors and hospitals, among others. Healthcare providers who unknowingly refer patients to fraudulent labs are also likely to face a reputation hit.

Above all, healthcare fraud can cause tens of billions of dollars in yearly losses. According to the National Health Care Anti-Fraud Association, taxpayers are losing over US$100 billion annually to Medicare and Medicaid fraud, including billing for unapproved COVID-19 tests, genetic testing fraud, home healthcare billing, and fraud billing for medical equipment.

Companies manufacturing genetic testing kits may face reputational damage if their products are used in the genetic testing fraud scheme. This is expected to negatively impact their market presence as customers/patients will lose confidence and will likely move to reputed competitors. Also, healthcare providers may stop referring the company products to their patients.

Increasing fraud will likely drive the need for more stringent regulations for genetic companies manufacturing genetic testing kits (requiring compliance in conducting in-depth clinical studies, providing extensive data, maintaining necessary documentation, labeling and packaging requirements, etc.). This is expected to increase the operational costs for genetic testing companies and, thus, the price of genetic testing services. Ever-increasing genetic testing fraud is expected to potentially disrupt the market’s growth trajectory as patients become more cautious. Individuals are likely to receive tests that are not appropriate or required and may become skeptical about the necessity and accuracy of the test result.

Read our related Perspective:
Commentary: The Promise of Comprehensive Genomic Profiling in the USA

Lab fraud also increases insurance premiums as fraudulent activities increase the cost of claims, which in turn increases insurance companies’ expenses. The insurance companies are bound to raise premiums to cover additional costs. Additionally, individuals receiving genetic testing through fraud schemes will likely be denied future coverage. This is because many genetic tests for inherited diseases are offered as a one-time payment for a lifetime of coverage, and fraud schemes can compromise the individual’s access to this benefit.

Regulatory updates and strategies aimed at combating lab fraud

Preventing lab fraud is crucial to maintaining the integrity of scientific research and the functioning of healthcare systems. Lab fraud can be prevented, or at least significantly diminished, by establishing comprehensive compliance programs, stringent licensing and certification requirements for labs and healthcare providers, encouraging employees and stakeholders in labs and healthcare organizations to report any suspected fraud incidences, education, secured data handling, continuous monitoring, improved medical billing processes, and enforcing penalties and legal consequences.

In January 2023, the US government updated compliance and regulatory requirements for laboratories to prevent lab fraud. As per the updates, the laboratories must submit a medical necessity document supporting the ordered test, progress note, and the treating doctor’s signature to support a claim.

Also, providing incentives to physicians to encourage them to refer patients for lab services will be considered a violation of the federal Anti-Kickback Statute, and both laboratory and healthcare professionals will face legal consequences.

Laboratories that fail to adhere to lab billing guidelines published through National Coverage Determinations (NCDs) or Local Coverage Determinations (LCDs) will face civil liability and triple damages under the False Claims Act.

The government also continued its scrutiny of medically unnecessary genetic testing schemes, audited genetic labs, and tried to recoup funds where the medical necessity requirement was unmet. Also, the Office of Inspector General (OIG) issued a fraud alert warning the public about the proliferation of COVID-19 testing and genetic testing scams.

Moreover, in June 2023, the US Food and Drug Administration (FDA) took a crucial measure to regulate an extensive array of laboratory tests, including prenatal genetic screenings, to ensure test result accuracy and prevent unreliable outcomes. The US FDA ensures that the lab test delivers results as claimed by the lab test developer by analyzing the device’s accuracy, specificity, clinical characteristics, and analytical sensitivity. Regulating these laboratory tests will likely reduce the chances of fraud, as laboratories will not be allowed to run specific tests if they are not cleared or approved by the FDA.

EOS Perspective

Increased awareness about genetic testing and its easy accessibility have made it more vulnerable to lab fraud in the country. Genetic testing scams are evolving significantly wherein the scammers (a lab owner or a genetic testing company’s representative) are offering free screening, cheek swabs, or testing kits for genetic testing to get the individual’s Medicare information and submit claims. An increase in the number of genetic testing companies manufacturing direct-to-consumer genetic testing kits is expected to further contribute to genetic testing fraud as it will become easier for lab owners to get access to genetic testing kits and scam Medicare beneficiaries.

Also, the introduction of new tests creates potential opportunities for lab fraud as the lack of proper oversight and safeguards makes it easier for lab fraudsters to exploit gaps while appropriate regulatory norms for those tests are being developed. Thus, there is an increased need to set the regulatory norms for any new tests being developed before they are put to use.

While various compliance and regulatory measures are in place to prevent lab fraud, ethical practices, education, and training for lab employees will likely play a significant role in preventing lab fraud in the country. Many healthcare professionals are often involved between doctors prescribing the test and the persons administering the test. Thus, it becomes challenging to determine whether the referrals are conducted efficiently.

In addition, strong collaboration among healthcare insurers, healthcare providers, and the government can also help prevent this kind of fraud. The government plays a vital role here, as it has the tools to lay more emphasis on continuous monitoring and auditing of genetic testing labs to keep track of lab activities and prevent fraud cases.

The Promise of Comprehensive Genomic Profiling in the USA by EOS Intelligence
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The Promise of Comprehensive Genomic Profiling in the USA

Comprehensive Genomic Profiling (CGP) is a diagnostic tool that sequences a patient’s tumor DNA to identify genetic mutations that drive cancer growth. Insurance coverage for CGP varies widely depending on the type of cancer, the patient’s stage of disease, and the specific test being used.  Despite CGP’s tremendous potential to transform cancer care and diagnosis, its implementation is hindered by inconsistent insurance coverage policies.

Comprehensive genomic profiling is a cutting-edge technology that is revolutionizing cancer diagnosis and treatment. Unlike standard gene testing, which looks at a small number of genes, CGP analyzes thousands of genes across the entire genome. This provides a much more comprehensive picture of genetic mutations that may be driving a patient’s cancer, thereby leading to more personalized and effective treatment options. Despite the benefits of CGP, access to this technology remains limited due to a variety of factors, which include high costs, limited insurance coverage, and regulatory hurdles.

One of the biggest challenges for CGP has been payer acceptability. Payers tend to be cautious about covering CGP because it is a relatively new technology, and there is still some debate about its clinical value and cost-effectiveness.

Private payers in the USA are more likely to cover CGP for patients with rare or complex cancers or for patients who have failed standard therapies, such as chemotherapy or radiation therapy.

In contrast, public payers, such as Medicare, may have more restrictive criteria for coverage and only cover CGP for certain types of cancer or for patients who meet specific clinical criteria. These criteria could include a requirement that CGP tests be performed in Medicare-accredited labs. Other major public payers in the USA, such as Medicaid and Veterans Affairs (VA) health plans, also cover CGP, but each payer has different criteria for coverage. Generally, they require that the test is ordered by a physician and is deemed medically necessary for the patient’s treatment plan.

The lack of coverage makes it financially inaccessible for many patients, which limits the ability of healthcare providers to consistently offer CGP testing. This presents a significant obstacle to the widespread adoption of this promising diagnostic tool. Some payers are hesitant to reimburse CGP due to concerns about the cost-effectiveness of the test and the lack of long-term data on clinical outcomes. However, major public and private payers such as Medicare, UnitedHealth (UHC), Aetna, and Cigna, among others, have included CGP tests in their health policies in recent years, nonetheless, the coverage remains uneven.

Cost and regulatory hurdles are stifling the growth of CGP

Payers have historically covered traditional testing, such as immunohistochemistry (IHC), fluorescent in situ hybridization (FISH), and single gene tests, but have been hesitant to provide coverage for CGP. This is mainly because these tests have been around for longer than CGP, so payers are more familiar with them and are more comfortable covering them.

Another reason is that CGP is more expensive than traditional tests. While the exact cost varies depending on the specific test and lab performing it, the cost of CGP tests can range from a few hundred dollars to several thousand dollars, while traditional tests are typically in the range of a few hundred dollars. This is due to the fact that CGP tests are more complex as they analyze a large number of genes, whereas traditional tests focus on analyzing one specific gene at a time, making them less expensive.

According to a study published in 2021 by the Journal of Clinical Oncology, CGP could improve overall survival by about 6% (0.06 years, a relatively small but meaningful amount of time for cancer patients and their families) for US$9,000 per patient, compared with traditional testing strategies. On the other hand, as per a 2022 article by the American Journal of Managed Care, although the cost of CGP tests is high, these tests can help identify the most effective treatment options for each patient, which can lead to better outcomes and fewer unnecessary treatments, which in turn can lower overall healthcare costs.

Read our related Perspective:
 Commentary: Genetic Testing Fraud – The Next Big Concern for the US Healthcare?

 

To further educate the industry about the benefits associated with CGP, Illumina, a California-based biotechnology company, established Access to Comprehensive Genomic Profiling (ACGP) in 2020, which is an alliance of seven members, including leading molecular diagnostics companies, pharmaceutical manufacturers, and laboratories. ACGP aims to educate about CGP for advanced cancer patients by engaging directly with the US payers.

Additionally, a few strategies are being adopted by the healthcare industry, such as bundling CGP tests with other diagnostic tests to reduce the overall cost per test. This way, instead of running a CGP test and a separate test for a specific genetic mutation, both tests could be combined into one-panel tests. This could reduce the overall cost per test by eliminating the need to run two separate tests, as well as reducing the need for multiple lab visits and samples. However, it’s important to note that the savings may vary depending on the specific tests and the laboratory.

The ambiguity surrounding reimbursement for CGP tests among the insurers also stems from the FDA’s ongoing debate over proper classification and regulatory framework for these tests. While the FDA recognizes the potential benefits of CGP, concerns linger about its quality, accuracy, and cost-effectiveness. To address these concerns, the FDA has been working with stakeholders to establish reimbursement policies that make CGP tests accessible to patients. These stakeholders range from academic institutions (such as Mayo Clinic and Memorial Sloan Kettering) to health insurance companies (such as UnitedHealthcare and Aetna) to CGP test developers (such as Guardant Health and Foundation Medicine).

Payers’ coverage for CGP is expanding but is highly uneven

Payers, such as Aetna and Cigna, have included CGP tests in their health plans but do not cover all types of cancers. While an increasing number of payers is expanding coverage for CGP, there is a lot of variation in terms of what is covered and for which types or stages of cancer.

For instance, Aetna announced in 2020 that it would cover CGP testing for certain types of breast and colorectal cancer. However, the coverage for each type of cancer gene mutation is different.

While Aetna’s policies for CGP coverage are very nuanced, Cigna’s are complicated. Cigna‘s coverage varies depending on the type of CGP test being ordered, whether the test is considered medically necessary for the patient’s condition, and the patient’s location. Sometimes, the patient needs to meet certain criteria to be eligible for coverage (e.g., only the advanced stage of cancer is considered under coverage).

Similarly, UHC, one of the leading private health plan providers in the USA, also limited its CGP coverage to patients with advanced cancers, such as lung, breast, or colorectal cancer. However, in early 2023, UHC issued a new policy expanding coverage for CGP tests from Foundation Medicine and Guardant Health. The new policy covers CGP tests for a wider range of cancers, including early-stage cancers and other types of tumors. The goal of this policy change is to increase access to CGP testing and to help catch cancer earlier when it is more treatable.

Aetna and Cigna are not far behind in expanding their coverage for CGP tests. In 2023, both companies included additional benefits for members receiving CGP testing, such as on-site care in some facilities and counseling services.

There’s an increasing recognition that CGP can help identify patients who may benefit from targeted therapies. Overall, payers are becoming more open to covering CGP, but there is still variability in their policies and coverage levels.

EOS Perspective

The adoption of CGP is creating a ripple effect throughout the healthcare industry. Payers are increasingly recognizing the value of CGP tests and expanding their coverage. By providing broader coverage for CGP tests, payers can position themselves as offering more cutting-edge care options. This can give them a competitive edge over other insurers who may not provide coverage for these tests. In addition, by broadening the coverage of tests for early-stage cancer, payers can help to identify and treat cancers earlier, which can lead to better outcomes for patients and potentially lower costs in the long run.

Further, the growing adoption of CGP has an impact on healthcare industry stakeholders beyond payers. It is likely to fuel a shift towards precision medicine, where treatments are tailored to the individual patient based on genetic information.

Diagnostic companies are likely to invest in CGP technology to stay competitive and offer more comprehensive tests. For healthcare providers, offering CGP tests allows them to differentiate themselves, improve patient outcomes, and attract more patients. However, it can also add complexity to the treatment process and increase costs if not managed correctly (e.g., wrong interpretation of genetic information due to the large amount of data for individual patients).

For test kit producers and labs, CGP is creating new opportunities for growth and market share but also increased competition and pressure to lower costs and improve accuracy.

Overall, while still not fully embraced by the industry, CGP is shaking up the healthcare landscape, creating both great opportunities and new challenges for all stakeholders.

CVS Moves to Home-based Care with Acquisition of Signify Health by EOS Intelligence
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Commentary: CVS Moves to Home-based Care with Acquisition of Signify Health

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Retail health companies increasingly invest in primary care, particularly home-based care, with patients demanding low-cost and convenient care delivery. The recent acquisition of home healthcare company Signify Health by retail health giant CVS Health highlights the industry’s growing interest in home-based care.

There is an increased demand for at-home healthcare services and health assessments, especially after the COVID-19 pandemic changed customer preferences towards access to convenient at-home services.

At-home care can bring down expenses by reducing hospital visits and detecting health problems in advance. A study published by the US Agency for Healthcare Research and Quality in April 2021 indicated that at-home patient care could reduce hospital expenses by 32% and hospital readmission rate (within six months after discharge) by 52%. The study claimed that patients receiving at-home care were less exposed to other illnesses, and this kind of care provided consistent attention, which resulted in better management of chronic diseases and prevention of health problems, reducing hospital readmissions. Apart from lowering the overall cost of care, healthcare providers are also incentivized to lower readmission rates under Medicare incentive programs, and hence, many healthcare companies have realized the potential of investing in at-home services.

One example of this was CVS Health’s acquisition of home health company Signify Health, completed in March 2023, for a total value of US$8 billion. Signify’s network of 10,000 clinicians, nationwide healthcare providers, and proprietary analytics and technology platforms is expected to help CVS extend its at-home health business. Adding Signify’s capabilities, such as at-home healthcare services, health assessments, patient data analytics, Accountable Care Organization (ACO) management, and provider enablement solutions, is likely to strengthen CVS’s abilities to offer better accessibility to services, improved patient-provider connectivity, better coordination of services, and improved quality of services.

CVS increases focus on the Medicare population with at-home health offerings

Looking at the recent acquisitions in the healthcare industry, it can be seen that major players in the retail health space, such as CVS Health, Amazon, Walgreens, Walmart, Dollar General, and Best Buy, are acquiring companies to strengthen their capabilities in offering primary care. These retail health companies are trying to tap into the growing demand for consumer-centric care. In particular, there is an increased focus on senior citizens and patients with chronic diseases.

Almost 19% of the US population is covered under Medicare plans, making it one of the most lucrative segments. In 2022, McKinsey estimated that, by 2025, up to US$265 billion worth of healthcare services provided to traditional Medicare and Medicare Advantage beneficiaries by traditional primary care facilities could potentially navigate to at-home healthcare providers offering at-home health services and virtual primary care services. Retail health companies view primary care services offered at home, traditionally dominated by independent clinics, as an opportunity to enter the healthcare delivery segment. CVS is also heading in the same direction.

CVS Health began expanding beyond its pharmacy services by acquiring health insurance company Aetna in 2018. Aetna is the fourth-largest Medicare Advantage plan, with 3.3 million enrollees in 2023.

In recent years, CVS Health has made significant efforts in building value-based care capabilities. Apart from acquiring Signify Health, which also includes Signify’s Caravan ACO business, the company acquired Medicare-focused primary care provider Oak Street Health in May 2023. These acquisitions indicate CVS’s increasing focus on enhancing healthcare services for the Medicare population.

Read our related Perspective:
Retail Health Clinics Eye a Larger Piece of the US Primary Care Market 

Signify’s acquisition brings CVS closer to its aim to become a full-service health provider

With the acquisition of Signify Health, CVS should be able to enter the at-home healthcare space in addition to its existing 9,900 retail drugstores and 1,100 MinuteClinics. CVS now has the capabilities to fulfill patient needs across the entire care spectrum, operating as a payer, a pharmacy benefit manager, an ACO manager, a chain of medical clinics, a network of primary care centers, and a home-based care provider, becoming a full-service healthcare provider.

This means CVS can make it simpler for patients and providers to navigate the complex healthcare system by centralizing services, as all these healthcare activities are performed under the same company. For instance, CVS can offer Medicare Advantage programs to patients, provide home visits, prescribe medicines, which can be delivered by CVS pharmacy, and track patients’ medication intake, which helps in making pharmacy reconciliations and offering follow-up care by primary care centers if needed. CVS can be able to access accurate and real-time data updates from all patient activities, which would improve care coordination and navigation of healthcare services for patients with real-time data sharing with providers.

CVS-Signify synergies can amplify companies’ growth and capabilities

CVS is enhancing digital capabilities to improve interoperability of electronic health records (EHRs) and enable remote patient monitoring. The company has already developed digital capabilities such as automated messaging on prescriptions, appointments, and vaccinations. CVS can integrate these digital capabilities into Signify’s systems to streamline communication between providers and patients.

CVS is expected to make use of Signify’s home care services to introduce at-home health assessments, which is a highly-demanded service by customers. Signify provided over 2.3 million unique at-home health assessments in 2022 and has witnessed a 16% year-on-year increase in the number of at-home assessments in Q2 2023. Using CVS’s nationwide primary care capabilities, Signify Health is likely to be able to expand its reach in the at-home health assessment space.

Signify’s technological capabilities are likely to strengthen CVS’s position in the market as customers appreciate increased convenience, such as remote patient monitoring, data-driven health predictions, and better navigation through the health systems. CVS can also benefit from Signify’s technological capabilities, such as provider enablement tools that would help manage population health, turnkey analytics, and practice improvement solutions to help providers transition to a value-based reimbursement model and improve the quality of care.

Furthermore, CVS also offers payer-agnostic solutions such as virtual primary care and pharmacy benefits management (CVS Caremark). CVS Caremark has the largest market share in the US pharmacy benefits manager market, with a 33% share in 2022. Signify’s client network of 50 health plan clients, including government, other payers, and private employers, can help CVS expand its payer-agnostic solutions to a diverse set of health plan and employer clients.

EOS Perspective

CVS outbid its rivals, such as Amazon, UnitedHealth Group, and Option Care Health to acquire Signify. Having acquired one of the most sought-after home healthcare companies, CVS has strengthened its position in terms of its expanded capabilities, such as primary care, home health, at-home health assessments, and provider enablement solutions. The company has the benefit of a large customer base, being the largest pharmacy chain in the US in 2022, which will help it expand its primary care and at-home services quickly. It will be interesting to see how CVS would be able to direct 8 million senior citizens who walk into CVS pharmacy stores annually to Oak Street clinics for a wellness visit or encourage them to schedule a home visit via Signify.

However, the competitors, especially the Medicare Advantage competitors, are not lagging behind. The largest Medicare Advantage Plan, UnitedHealth Group, boasting 8.9 million Medicare Advantage enrollees in 2023, announced the acquisition of two home health companies, LHC Group and Amedisys, this year. Humana, the second largest Medicare Advantage Plan with 5.5 million enrollees in 2023, acquired a stake in Kindred at Home in 2021.

Similar to CVS, UnitedHealth Group and Humana also own pharmacy and provider capabilities (including clinic-based, at-home, and telehealth). All three companies are on the task of deriving synergies among the different businesses they own with the aim to improve patient outcomes and reduce overall costs. To outperform the strong competition, the winning company needs to keep focusing on improving healthcare accessibility and patient experience, as well as catering to the evolving consumer needs.

Inflated COVID-19 Tests Prices in Africa Why and What Now by EOS Intelligence
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Inflated COVID-19 Test Prices in Africa: Why and What Now?

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With the subsidence of COVID-19 and the announcement of the ending of the Global Health Emergency by WHO in May 2023, the world has started to move on and embark on its path back to pre-COVID normalcy. However, some of the lessons the pandemic has brought are hard to forget. One such lesson, and more importantly, an issue that demands attention and action, is the prevalent price disparity of COVID-19 tests in low-income regions of the world, such as Africa, compared to some more affluent countries, such as the USA.

High test prices across Africa, in comparison with prices in more developed parts of the world, such as the USA, have become evident after the onslaught of COVID-19 on the African continent. To illustrate this with an example, the average selling price of SD Biosensor’s STANDARD M nCoV Real-Time Detection kit comprising 96 tests per kit in the USA is US$576 compared to US$950 in African countries. This translates to a unit price of US$6 in the USA compared to US$9.9 in African countries, amounting to a 65% difference between the price points in the two regions. The price disparity in Africa vis-à-vis the USA ranges from +30% to over +60% in the case of PCR-based COVID-19 tests in our sample when compared to the prices of the same products that are being sold in the USA. This leads to the crucial question of why these tests are so costly in a place where they should be sold at a lower price, if not donated, owing to the continent’s less fortunate economic standing.

The Why: Reasons for inflated price in Africa

Several factors, such as Africa’s heavy dependence on medical goods imports, a limited number of source countries exporting medical goods to the continent, paucity of local pharma producers, higher bargaining power of foreign producers enabling them to set extortionate prices, shipping and storage costs, and bureaucratic factors drive the inflated prices of COVID-19 test kits in African countries.

Africa is heavily dependent on imports for its diagnostic, medicinal, and pharma products. To elucidate this, all African countries are net importers of pharma products. Additionally, the imports of medicines and medical goods, such as medical equipment, increased by around 19% average annual growth rate during the span of 20 years, from US$4.2 billion in 1998 to US$20 billion in 2018.

In 2019, medical goods accounted for 6.8% of total imports in Sub-Saharan Africa (SSA), whereas they accounted for only 1.1% of exports. The SSA region experiences a varied dependence on the imports of medical goods. This is evident from the fact that Togo and Liberia’s share of imports of medical goods was around 2%, while that of Burundi was about 18% in 2019.

The 2020 UNECA (United Nations Economic Commission of Africa) estimates suggest that around 94% of the continent’s pharma supplies are imported from outside of Africa, and the annual cost is around US$16 billion, with EU-27 accounting for around 51% of the imports, followed by India (19%), and Switzerland (8%). This means that only 6% of the medicinal and pharma products are produced locally in the African continent, creating a situation where foreign producers and suppliers have drastically higher bargaining power.

This became particularly evident during the 2020-2022 COVID-19 pandemic, when the demand for COVID-19 tests was extremely high compared to the supply of these tests, making it easier for foreign suppliers to set an exploitative price for their products in the African continent.

The lack of competition and differentiation in the region aggravated the situation further. There are only a handful of suppliers and producers in the continent that provide COVID-19 tests. To elucidate this further, there were only 375 pharmaceutical producers in the continent as of 2019 for a population of over 1.4 billion people. When compared with countries with similar populations, such as India and China, which have around 10,500 and 5,000 pharmaceutical companies, respectively, the scarcity in the African continent starts to manifest itself more conspicuously. To illustrate this further, only 37 countries in Africa were capable of producing medicines as of 2017, with only South Africa among these 37 nations able to produce active pharmaceutical ingredients (APIs) to some extent, whereas the rest of the countries had to depend on API imports.

Furthermore, the SSA region gets medical goods supplies from a small number of regions, such as the EU, China, India, the USA, and the UK. As of 2019, over 85% of the medical goods that were exported to SSA were sourced from these five regions. It is interesting to note that the source countries slightly differ for the SSA region and the African continent as a whole, with the EU and India being the common source regions for both. With a 36% share in all medical goods imports to the African continent in 2019, the EU is the top exporting region of medical goods to SSA, albeit with a declining share over the last few years. India and China share the second spot with a 17-18% share each in all medical goods imports supplied to SSA in 2019. Considerable concentration is observed in the import of COVID-19 test kits to SSA, with a 55% share in all medical goods imports supplied by the EU and a 10% share by the USA in 2019.

To provide a gist of how the above-mentioned factors attributed to the inflated prices of COVID-19 tests in the region, Africa’s medical goods industry, being import-driven, is heavily dependent on five regions that supply the majority of the medical goods needs of SSA. In addition to this, the scarcity of local pharma producers across the continent aggravated the situation further. This, in turn, gave an opportunity for foreign producers to charge a higher price for these COVID-19 tests in Africa.

Additionally, storage and shipping costs of COVID-19 tests also play a significant role in the pricing of these tests. The actual share of shipping and storage costs is difficult to gauge owing to the fact that there is not enough transparency in disclosing such pieces of information by test producers and suppliers.

Another aspect contributing to the inflated prices of these tests in African countries is bureaucratic factors. According to Folakunmi Pinheiro, a competition law writer based in Cambridge, UK, some African state governments (such as in Lagos) take exorbitantly high cuts on the sale of COVID-19 tests, allowing labs to keep no more than 19-20% of the profits per test after covering their overhead costs such as electricity, IT, logistics, internet, salary, and consumables costs including PPE, gloves, face masks, etc.

Since labs in Africa must purchase these tests from foreign producers, they have limited room for maneuvering with their profit margin, given the high test price and the cuts imposed by the local governments. Pinheiro further simplifies the profits in absolute terms. The cost of a PCR-based COVID-19 test, analyzed in laboratories (not at-home tests), in Lagos in February 2022 was around NGN45,250 (~US$57.38), and the labs selling and performing these tests on patients would make a profit of around NGN9000 (~US$11.41) per test which translates to 19.89% of the total cost of the single test. It is believed that this profit is after the overhead costs are covered, implying that the majority of the profits go to the state government of Lagos.

Inflated COVID-19 Tests Prices in Africa Why and What Now by EOS Intelligence

Inflated COVID-19 Tests Prices in Africa Why and What Now by EOS Intelligence

The What Now: Reactions

To combat the inflated prices of COVID-19 tests developed by foreign producers, many African price and competition regulatory organizations undertook efforts to reduce the prices of these tests to a significantly lower level in their respective countries. While R&D was ongoing for the making of groundbreaking low-priced alternative testing technologies that were ideal for African climate and economic conditions, many academic institutes tied up with foreign companies to launch these tests in the African markets. Additionally, the African Union (AU) and Africa CDC had set new goals to meet 60% of the vaccine needs of the continent domestically by fostering local production by 2040. Lastly, many African countries were able to eliminate or reduce import tariffs on medical goods during the pandemic for a considerable amount of time.

  • From price or competition regulatory bodies

As a response to the high PCR-based COVID-19 test prices in South Africa, the country’s Competition Commission (CCSA) was successful in reducing the prices for COVID-19 testing in three private laboratories, namely Pathcare, Ampath, and Lancet by around 41%, from R850 (~US$54.43) to R500 (~US$31.97) in January 2022. The CCSA asked these private clinical laboratory companies for financial statements and costs of COVID-19 testing as part of the investigation that started in October 2021. CCSA further insisted on removing the potential cost padding (an additional cost included in an estimated cost due to lack of sufficient information) and unrelated costs and thus arrived at the R500 (~US$31.97) price. Furthermore, the CCSA could significantly reduce the price of rapid antigen tests by around 57% from R350 (~US$18.96) to R150 (~US$8.12). However, it is believed that there was still room for further reduction in rapid antigen test price because the cost of rapid antigen tests in South Africa was around R50 (US$2.71). Although the magnitude to which this price reduction was possible is hard to analyze owing to the fact that there was not enough transparency in revealing the cost elements by these test producers.

  • From local producers, labs, and academia-corporate consortia

The fact that Africa is a low-income region with lower disposable income compared with affluent countries, in addition to its unfavorable climate, has driven local scientists to develop alternative, low-cost testing solutions with faster TAT and minimal storage needs.

African scientists were believed to have the potential to develop such cheaper COVID-19 tests, having had the necessary know-how gained through the development of tests for diseases such as Ebola and Marburg before. The high prices of COVID-19 tests in the African markets have compelled local universities to tie up with some foreign in-vitro diagnostic (IVD) producers to develop new, innovative, low-cost, alternative technologies.

To cite an example, the Senegal-based Pasteur Institute developed a US$1 finger-prick at-home antigen test for COVID-19 in partnership with Mologic, a UK-based biotech company. This test does not require laboratory analysis or electricity and produces results in around 10 minutes. This test was launched in Senegal as per a December 2022 publication in the Journal of Global Health. Although this test’s accuracy cannot match the high-throughput tests developed by foreign producers, the low-cost COVID-19 tests proved to be useful in African conditions where large-scale testing was the need of the hour and high-temperature climate was not conducive to cold storage of other types of tests.

Countries such as Nigeria, Senegal, and Uganda tried to increase their testing capacity with their homegrown low-cost alternatives as the prices of the tests developed by foreign manufacturers were exorbitantly high. Senegal and Uganda stepped up to produce their own rapid tests, while in remote areas of Nigeria, field labs with home-grown tests were set up to address the need for COVID testing that remained unaddressed because of the high prices of the foreign tests.

Dr. Misaki Wayengera, the pioneer behind the revolutionary, low-cost paper strip test for rapid detection of filoviruses including Ebola and Marburg with a TAT of five minutes, believes that a low-cost, easy-to-use, point-of-care (POC) diagnostic test for detecting COVID-19 is ideal for equatorial settings in Africa providing test results within a shorter time span while the patient waits. He spearheaded the development of a low-cost COVID-19 testing kit with a TAT of one to two minutes, along with other Ugandan researchers and scientists.

  • From the African Union and CDC Africa

As an aftermath of the adversities caused by the COVID-19 pandemic, the African Union (AU) and African Centers for Disease Control and Prevention (CDC Africa) put forth a goal of producing 60% of Africa’s vaccine needs locally by 2040. A US$ 45 million worth of investment was approved in June 2023 for the development of vaccines in Africa under the partnership of Dakar, Senegal-based Pasteur Institute (IPD), and Mastercard Foundation. The goal of MADIBA (Manufacturing in Africa for Disease Immunization and Building Autonomy) includes improving biomanufacturing in the continent by training a dedicated staff for MADIBA and other vaccine producers from Africa, partnering with African universities, and fostering science education amongst students in Africa.

Additionally, the US International Development Finance Corporation (DFC), in partnership with the World Bank Group, Germany, and France, announced in June 2021 a joint investment to scale up vaccine production capacity in Africa. The investment was expected to empower an undisclosed South African vaccine producer to ramp up production of the Johnson & Johnson vaccine to over 500 million doses (planned by the end of 2022).

  • From FTAs such as the Africa Continental Free Trade Agreement

Intra-regional trade within Africa (as opposed to overseas trade) from 2015 to 2017 was only 15.2% of total trade, compared to 67% within Europe, 61% within Asia, and 47% within the Americas. While supply chain disruptions hampered the availability of COVID-19 testing kits, many African nations could develop home-grown solutions locally to address the issue. Africa Continental Free Trade Agreement (AfCFTA) was set up on January 1, 2021, with the intention of improving intra-regional trade of goods, including medical supplies. AfCFTA, the largest FTA after WTO, impacts 55 countries constituting a 1.3 billion population in an economy of US$3.4 trillion. Inadequate intercontinental collaboration is one of the primary restraints for medical supply chains. In order for health systems to fully capitalize on AfCFTA, partnerships with the African Union’s (AU) five Regional Collaborating Centers and current global healthcare organizations need to be increased.

  • From state governments

Sub-Saharan African countries have the highest MFN (most favored nation) tariff rate (9.2%) on medical goods, compared to developed nations’ tariffs (1.9%) as well as emerging economies’ tariffs (6.6%). However, out of 45 countries in Sub-Saharan Africa, only eight countries could remove or decrease import tariffs and value-added taxes on medical goods on a temporary basis to aid the public health situation during the pandemic in 2020, as per Global Trade Alert. These eight countries include Angola, Chad, Malawi, Mauritius, Niger, Nigeria, South Africa, and Zambia. In three of these eight countries, these measures had already expired as of April 2021. Furthermore, to promote intra-regional trade, 33 Sub-Saharan African countries provide preferential tariff rates of around 0.2% on average on some medical products. At the same time, the average MFN tariff rate for the same medical goods is around 15% for these Sub-Saharan African countries.

EOS Perspective

Since the demand for COVID-19 test kits was significantly higher compared to their supply, producers and suppliers had a higher bargaining power, because of which they set an extortionate price. However, that being said, African competition authorities did their best to curb the prices, although there was still room for more.

Secondly, policy changes need to be brought about at the state level to allow increased competition in the African markets, which in turn would lower the price of the tests. African governments need to consider a more patient-centric and consumer-protective approach wherein competition is likely to facilitate the launch and consequent market uptake of better-quality products available at lower prices.

Additionally, prices and costs of COVID-19 tests should be monitored on a regular basis. The underlying problem of inflated COVID-19 test prices is likely to cease only when competition in the PCR testing sector is encouraged, and government policies of pricing the tests are more patient-oriented.

Moreover, robust intra-regional trade coupled with strong local manufacturing and lower trade barriers is expected to help build Africa’s more sustainable health system.

Retail Health Clinics Eye a Larger Piece of the US Primary Care Market by EOS Intelligence
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Retail Health Clinics Eye a Larger Piece of the US Primary Care Market

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The utilization of retail health clinics (RHCs), also known as convenience care clinics, peaked during the coronavirus outbreak, with people rushing to get COVID-19 vaccinations or treatment for minor ailments when access to other care settings was restricted. FAIR Health (a non-profit organization managing a repository of 40 billion claim records) indicated that the utilization of RHCs increased by 51% from 2020 to 2021. Accordingly, the US retail health clinic market grew from US$1.78 billion in 2020 to US$3.49 billion in 2021 (as per estimates by Fortune Business Insights). With increasing familiarity and utilization, are RHCs set out to play a bigger role in the nation’s healthcare system?

RHCs move beyond low-acuity care

RHCs began with the concept of providing low-acuity care, spanning from minor illnesses and injuries to occasional visits for vaccinations or wellness screening. Increasingly, retailers are eyeing a larger share of the primary care market by making inroads into chronic disease management. Several are even expanding into mental and behavioral health.

  • Vaccinations

In 2022, nearly 40% of the patients at the RHCs came in for vaccinations. Much of this footfall can be attributed to the public health advisory recommending booster shots for COVID-19 vaccination. Even though the need for COVID-19 vaccinations is gradually expected to decline, the pandemic has established RHCs as a convenient venue for vaccinations. Before the coronavirus outbreak, about 50,000 adults died every year from ailments that could be prevented by vaccines, highlighting the value offered by RHCs in immunization delivery.

  • Diagnostics

During the pandemic, RHCs became a key provider of COVID-19 testing. Almost all the RHCs today have point-of-care testing capabilities. Flu and strep tests, lipid tests, pregnancy tests, glucose tests, etc., are among the diagnostics tests commonly offered at the RHCs. As RHCs aim to expand their services to penetrate deeper into the primary care market, the scope of diagnostic services is likely to widen. For instance, Walmart, which opened its first RHC in 2019, provides EKG tests and X-ray imagining services on-site as well.

  • Chronic disease management

In 2022, the Centers for Disease Control and Prevention (CDC) estimated that six in ten adults live with a chronic disease. This data indicates the vast opportunity this segment has to offer, and RHCs are vying for a piece of it. Analysis by Definitive Healthcare suggests that, in 2022, about one in ten diagnoses at the RHCs was related to a chronic condition. Nearly 6% of the claims were with the diagnosis of diabetes (Type 2 diabetes mellitus without complications and Type 2 diabetes mellitus with hyperglycemia).

As the opportunity for RHCs to contribute more to chronic disease management is vast, retailers are focusing on evolving the clinic offerings to provide treatment for chronic conditions such as diabetes, hypertension, chronic obstructive pulmonary disease, kidney disease, etc. For instance, in 2020, CVS launched HealthHubs, an enhanced RHC format, offering a larger suite of services including chronic disease management.

RHCs are able to provide chronic disease management at a lower cost. For instance, in 2022, the average charge per claim for Type 2 diabetes mellitus without complications was US$160 at an RHC compared with US$367 at a physician’s office, whereas for Type 2 diabetes mellitus with hyperglycemia, the average charge per claim was US$255 at RHC vs. US$639 at a physician’s office. Given that a chronic disease requires continuous long-term care, patients see RHC as a cost-effective and viable option for chronic disease management.

  • Mental and behavioral health

In early 2022, the Harris Poll data (based on a monthly survey among 3,400 people over the age of 18, physicians, and pharmacists) indicated that 41% of Gen Z and younger millennials were suffering from anxiety or depression conditions. However, the same study found that only 16% of those struggling with these mental conditions were comfortable seeking treatment from a therapist or mental health professional. A mystery shopper study (conducted in 2022) investigating 864 psychiatrists across five US states indicated that only 18.5% of psychiatrists were taking appointments for new patients with a significant wait time (median = 67 days). A person going through a breakdown or depression needs immediate attention. Thus, the low availability of psychiatry outpatient new appointments is concerning and one of the main reasons why mental health issues remain under-treated. With walk-in appointments and easy accessibility, RHCs are well-positioned to fill this gap.

Leading RHC chains have forayed into mental and behavioral health services. In 2020, MinuteClinic (an RHC chain owned by CVS) started offering mental and behavioral health counseling services. The company also added Licensed Mental Health Providers to its staff at select locations. In the same year, Walmart announced counseling services for US$1 a minute in partnership with Beacon Care Services, a subsidiary of Carelon Behavioral Health (formerly Beacon Health Options).

Retail Health Clinics Eye a Larger Piece of the US Primary Care Market by EOS Intelligence

Retail Health Clinics Eye a Larger Piece of the US Primary Care Market by EOS Intelligence

Patient-centric approach differentiates RHCs from traditional providers

Definitive Healthcare estimates that as of March 2023, there were 1,800+ RHCs, of which 90% were owned by retail and pharmacy giants CVS (63%), Kroger (12%), Walgreens (8%), and Walmart (2%). Noticeably, the consumer-centric concepts and learnings from the retail segment have helped RHCs improve patient experience and satisfaction. Implementation of proven retail strategies is, in turn, defining and shaping the convenient care model and setting apart the RHCs from traditional healthcare providers.

  • Omnichannel engagement

Omnichannel engagement is a key retail concept enabling companies to offer a seamless consumer experience across various touchpoints. Health Care Insights Study 2022, based on a survey of 1,000 US-based respondents, indicated that four in ten people had a virtual consultation in the past year. The same study suggested that ~70% of the respondents think that the virtual consultation is better or about the same as the in-person visit. RHCs, owned by big-box retailers and pharmacy giants, are seizing the omnichannel opportunity by complementing their in-person visits with virtual care services.

MinuteClinic (owned by CVS) started piloting telehealth services in 2015. In 2021, the company provided 19 million virtual consultations, of which ~10 million were for mental and behavioral health. The Little Clinic (owned by Kroger) stepped into telehealth services following the country-wide shutdown due to the coronavirus outbreak in March 2020. In 2021, with the aim to extend virtual care, Walmart Health acquired MeMD, a 24/7 telehealth company providing on-demand care for common illnesses, minor injuries, and mental health issues.

  • Walk-in appointments

The average wait time for a primary care physician appointment in the 15 largest cities of the US was 26 days, as per Merritt Hawkins survey data (2022). RHCs typically accept walk-in patients. Moreover, RHCs are open for extended evening hours and over weekends when primary care physicians are not available. This allows the patients to visit an RHC at their convenience.

  • Geographic proximity

RHCs benefit from the wide footprint across the country established by their owners, the big-box retailers. For instance, CVS, operating 1,100 retail clinics across 33 states, indicated that more than half of the US population lives within 10 miles of a MinuteClinic as of March 2022.

However, currently, there is a geographic disparity as the majority of the RHCs are located in urban areas, with only 2% serving the rural population. From the business perspective, it makes sense to concentrate on the metropolitan areas targeting high-income populations. Moreover, just like traditional healthcare providers, RHCs also find it challenging to hire qualified staff to work at remote locations. However, as the popularity and utilization of RHCs increase, expansion to rural areas may come as a natural progression. For instance, Walmart is uniquely positioned to capture the rural market opportunity by leveraging the presence of its 4,000 stores located in medically underserved areas as designated by the Health Resources and Service Administration.

Dollar General is the first retailer to step up and penetrate this unserved market. In January 2023, Dollar General, in partnership with DocGo (a telehealth and medical transportation company), piloted mobile clinics set up at the parking lots at three of its stores in Tennessee. This initiative is Dollar General’s first step into retail healthcare, and there is no clarity yet on whether the company is looking at the in-store clinics model.

  • Fixed and transparent pricing

RHCs have fixed pricing for different types of treatments offered, and the treatment costs are communicated up-front to the patient. The Annual Consumer Sentiment Benchmark report based on a survey conducted in January 2022 indicated that 44% of the 1,006 respondents avoided care because of unknown costs. It is evident that besides the concern over affordability, the anxiety and fear around uncertain costs are making patients avoid healthcare services. RHCs help patients to evade this anxiety through cost transparency.

  • Multiple payment options

At RHCs, patients receive a more retail-like experience at the time of the payment. Besides the common mode of payment such as cash and cards, the RHCs also allow for contactless payments, including digital wallets, tap-to-pay platforms, touchless terminals and, thus making the payment process faster, simpler, and more convenient. This aligns with the growing popularity of contactless transactions. 80% of US consumers used some form of contactless payment mode in 2021, as per a survey of 1,000 US consumers conducted by Raydiant (an in-location experience management platform).

  • Technology and automation

Technology and automation have been an integral part of modern retail. A reflection of this is seen in an RHC setup. For instance, at CVS MinuteClinic, the reception is a form of self-service kiosk. The patient is notified of the wait time (if any) and directed to fill out the electronic forms to share important personal and health-related data. The information submitted by the patient is directly shared with the healthcare professional on-site, who then confirms the details and proceeds with the diagnosis and course of treatment. Details of the diagnosis and treatment, along with the bill payment receipt, are automatically shared with the patient at the end of the visit. The communication for follow-up consultations or other reminders is automated. The process is highly streamlined and backed by automation.

Moreover, in the RHC model, the application of technology can be seen not only to improve patient experience but also to support clinical decision-making. For instance, in 2019, CarePortMD RHCs (owned by Albertsons grocery stores) started using the autonomous AI diagnostic system called LumineticsCore to detect a leading cause of blindness in diabetic patients. Such technological additions reduce the chances of human error, thus eliminating potential liability issues as well as increasing patient confidence. Walgreens, leveraging Inovalon’s Converged Patient Assessment decision support platform that provides insights into possible diagnoses using predictive analytics, is another case in point.

EOS Perspective

With all the growth and progress, RHCs are penetrating the underserved population and strengthening the current primary care delivery model. A report released by the National Association of Community Health Centers in February 2023 indicated that about a third of the US population does not have access to primary care. RHCs are well-positioned to fill this gap. Moreover, according to the data published by the Association of American Medical Colleges in 2021, the USA could struggle with a shortage of up to 124,000 physicians (across all specialties) by 2034. In the face of physician shortage, RHCs providing non-emergency care can help to alleviate the burden on the primary care providers.

To what extent the RHCs would be able to carve out a space for themselves in the primary care segment is still an ongoing debate. However, the owners of RHCs are determined to compete head-on with the traditional providers for the primary care market share and are rapidly foraying into alternative primary care models.

In May 2023, CVS completed the acquisition of Oak Street Health providing primary care to Medicare patients through its network of 169 medical centers across 21 states.

Walgreens holds a majority stake in VillageMD, offering value-based primary care to patients at 680 practice locations (including independent practices, Summit Health, CityMD, and Village Medical clinics at Walgreens, as well as at-home and virtual visits) across 26 states. In October 2021, Walgreens acquired a 55% stake in CareCentrix, an at-home care provider serving post-acute patients. The company has plans to acquire the remaining stake by the end of this year.

Amazon is another prominent retailer that made inroads in the primary care space this year with its acquisition of One Medical, a primary care provider with a network of 200+ medical offices in 27 markets across the USA.

It is foreseeable that at some point in time, the retailers will try to bring in the synergies between the RHC business and other alternative primary care service offerings with the aim to become a one-stop shop for all healthcare needs. As retailers take on a larger role in primary care delivery, the retailization of healthcare is certainly on the way.

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