CEO Tim Vasko's COPHARM Speech
Nov 29 2005, San Jose, Costa Rica
CAFTA, NAFTA, HL7, ASP and VOIP:
The top five evolutions behind these acronyms are driving the Global Pharmacy Business and ensuring a robust future in our industry. Professor Timothy Vasko, Chief Strategy Officer of Convergent Media Network’s E-Health Division, E-Health Online, discusses the "Must Know" issues and trends for the global pharmacy industry. Mr. Vasko will reveal how technology, trade unions, and regulations are driving the global marketplace for pharmaceuticals and ensuring a vibrant future for the smart pharmacy business leaders of today.
There are three FORCES that continue to drive our industry forward, these Forces are growing our businesses, yet, at the same time, are providing mandates to challenge the businesses in this industry to establish and follow standards of compliance, competition and connections.
The three forces are:
Forces of Change: Technological change that is driving both our ability to connect, and the ability to standardize how we communicate and connect the information between pharmacies, doctors and patients.
Forces of Compliance: Nearly every developed nation has some mandatory, government driven project for the Electronic Health Record, sometimes called the Electronic Patient Record. And Pharmacy is a huge part of those mandates. Be assured that compliant standards will be established, and each organization in this industry that is to succeed, will be held to task, for the records on patients, doctors’ interactions and proper reporting on the prescriptions we are filling.
Forces of Competition: Trade Unions have been forming for over three decades. This is NOT a new phenomenon; and within borders, competition from Government programs, such as Medicare Part D, continue to evolve. The forces of competition, combined with the other two forces, change and compliance, create the environment that we all will face in the growing competition of our market.
Let’s explore each of these areas in depth:
1. Forces of Change
Technology’s evolution continues to ensure the drive toward new possibilities for finding information, gathering, and sharing that information. While this ensures our market, it also encourages new standards:
i. Search
“…geeks have coined a word, “Goolearchy”, for the way in which search engines encourage web traffic towards the most popular sites….” (Source: Economist.com)
Search is the second most prolific tool on the web; lagging only slightly behind E-Mail.
On Google alone there are 4 – 5 billion searches a month. It is estimated that 85% of all internet users search - in the US that is 107 million people. And the US is outpaced by search internationally at a rate of 5 to 1.
Information and connections globally are growing, and thus, it is not only unlikely that the world will stop looking for answers outside geographic borders, it is incomprehensible.
Search engines are powerful, but also giant databases of information for regulation. Under the US Patriot Act, the US Government can demand information from these giant databases, and can do so secretly!
ii. VOIP
Peer to peer voice service. Users may call landlines and cell phones for a fee; users may call each other for free. If Search is not powerful enough, now consider that every phone call made can be made nearly for free, anywhere in the world – but these digital conversations, too, are data. And they are data that can be tracked, and used and measured along side search.
iii. Information
“Search as a problem is about 5% solved” Udi Manber of Amazons A9.com. (Source: “The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture”)
Information is a two way street. Every time a search is performed, the “Database of Intentions” is created that leaves a bread crumb trail directly to what is being done with that information – and if that is a transaction, like buying medications, the bread crumbs become the trail to compliant or non-compliant businesses.
So, again, while information and connections are ever more available, so too is the traceability of that information.
Author John Battell points out that Search is a collection of societies’ database of intentions.
Thus, it is how we adopt those intentions, how technology evolves and solves the problems of this intelligence between human issues, such as health care and data ineligence that will continue to drive our industry.
Transaction processing – Along side all this ability to channel and, ultimately, regulate and enforce the use of information, the exponential, multi-billion dollar potential of transaction processing can not be overlooked. It is after all why we are all here. Look at the giant in transaction processing worldwide: Ebay
Tying Connections and transactions together is part of the evolving web of communications being woven:
Online auction site eBay has agreed to buy internet Telephone Company Skype Technologies in a $2.6bn deal (Source: BBC News, UK Edition)
"Communications is at the heart of e-commerce and community," said eBay chief executive Meg Whitman.
ACNielsen International Research, a leading research firm reveals that more than 724,000 Americans report that eBay is their primary or secondary source of income. In addition to these professional eBay sellers, another 1.5 million individuals say they supplement their income by selling on eBay, according to the July 2005 survey.
2. Forces of Compliance
So, the question should now be as clear as the path we leave every time we transact business. We must run businesses that have software, technologies, and connections that evolve with standards. As clear as the electronic trail is, anyone serious about business, in a high potential, high profit industry such as ours, would choose to conduct business with focus on the obvious: compliant technologies and processes that keep them competitive and succeeding. Compliance is here, is expanding its reach, and is attainable if business is done properly. It is equally as possible to do it the right way, as opposed to the wrong way. It is our GPS, our industry road map to doing things properly that will enable smart companies to use technology platforms that are evolving as well.
It’s kind of like trying to win a road race using a paper map, doing things in your own way, against a sophisticated GPS enabled computer system. You not only won’t win, you won’t even stay in the race - so what are the forces of technology compliance that your business must adhere to in order to succeed?
i. The Mandate of the E.H.R. or TEPR is driving standards
Senate Majority Leader Bill Frist (R-Tenn.):
"Widespread adoption of the electronic health record will do a number of things," Frist said. "It absolutely will reduce medical errors. It will improve quality. It will eliminate unnecessary paperwork. It will improve efficiency." (Source: iHealth Beat – Reporting the Internet’s Impact on Health Care).
So Global Pharmacy needs to be established to be compliant with the inevitable sharing of information.
ii. E-Health Care rides alongside banking, financial markets
- Organizations in the world of standards and regulations are not new in most industries. Again, there are maps that indicate exactly what is happening and how it will happen in our industry
- The IMF, the WTO, the United Nations
We’re not dealing with anything all that new here.
Nearly a century ago;
The forerunner of the United Nations was the League of Nations, an organization conceived in similar circumstances during the first World War, and established in 1919 under the Treaty of Versailles "to promote international cooperation and to achieve peace and security."
Half a century ago:
- The WTO's predecessor, the GATT, was established on a provisional basis after the Second World War, around 50 years ago.
- The International Monetary Fund was established by international treaty, in 1945, to help promote the health of the world economy. Headquartered in Washington, D.C., it is governed by its almost global membership of 184 countries.
As our industry becomes more global, it is not a much of stretch to see cooperative efforts, based on history, to emerge quickly, just from long established organizations. On a more granular level, then consider what you should know about your business, or have access to, in order to capitalize on these emerging trends.
Again, it’s not difficult to define the analogical
- Organizations that regulate in the financial world of practices are predecessors to the worlds we face today in Health Informatics regulations:
- GAAP = HL7
- FASBI = HIPPA; PIPA; ISO 17799
- NASD/SEC = FDA / DEA
If you don’t know HL7, HIPPA, PIPA, ISO 17799, find someone that does, and use their knowledge to run your business.
iii. Where bad practices exist, experience leads to tighter restrictions
- Sarbanes Oxley Law in the US (SOX)
“Sparked by dramatic corporate and accounting scandals, the Act represents the most important securities legislation since the original federal securities laws …. The Act effects dramatic change across the corporate landscape”
- Driven by corrupt practices like
- DEA
- Controlled Substance Abuse
- FDA
- Counterfeit or copy infringement medications
In our industry, where the effort to put in place practices of compliance is made a first hand priority, there will be a long term business opportunity. But practices focused solely on short term profits will inevitably lead to a shut down.
“Two federal agencies, the Food and Drug Administration and the Drug Enforcement Administration, have formed a special task force to crack down on the growing tide of illicit sales of narcotics on the Internet.
"Like anyone else, I'm inundated with spam for hydrocodone, Valium and Ambien," said Elizabeth Willis, chief of the drug operation section of the D.E.A.'s office of diversion control. But determining who is sending the e-mail takes a lot of work, Ms. Willis said. "Some are registered in Europe, but the drugs are sent from Africa," she said. "This problem will probably grow as people see an opportunity to make money," Ms. Willis added.
The task force may close Internet pharmacies in the United States that have operated in a legal gray area for years by hiring physicians who write prescriptions based solely on the results of an e-mail questionnaire. "If a prescription is written by a doctor based solely on information from an online questionnaire, it's not valid, so the distribution is illegal," Ms. Willis said. However, with compliance, standards based processing, due to the forces we’ve already discussed; there will be no reason, and no way, to shut down the businesses in our industry.
The answer is simple. The technology you employ must have the resources for you to deal in Health Informatics and Standards, HL7, ISO 17799.
And the obvious, comply with Patent & Copyright Laws.
- Would you rather be – Napster or the multi-billion dollar innovator of iTunes?
- Counterfeit Drugs - Generic Knockoff’s are sure to drive the concerns of Major Producers.
Pharmaceutical Companies, like the record labels, are not only concerned with their profits, they are concerned with their Intellectual Property
Parallel Trade: A Global Pharma Worry:
“Few issues reveal the fissure in regulatory approaches to controlling pharmaceutical drug prices as much as the issue of parallel trade. In the free market stance of the United States, parallel trade is anathema, both to pharmaceutical companies and the federal government. In the European Union (EU), however, re-importation of drugs across country borders is encouraged as part of “the free movement of goods” principle.” (Source: IMS, Intelligence Applied)
So be sure that it is not the re-importation that is the major driver of slowing down or shutting down the industry. In the long term pharmaceutical companies understand this; it is the risk to their IP.
As parallel trade continues to expand in the physical trade of medications across borders, that trade will extend into the E-Health Information arena as the E.H.R. research and standards based information.
And for good reason: There are many:
Stake Holders in Compliance:
- Patients - Concerns for Safety
- Insurance Companies - Concerns for costs associated with unsafe practices and concerns for liability
- Medical Boards - Concerns for ethics of professionals
- Pharmacy Boards - Concerns for ethics of professionals
- Governments
- FDA - Concerns for safety and lobbies in Washington
- DEA - Concerns for illegal “street value” of narcotics
- Health Canada - Concerns for costs in country to Govt., concerns for illegal “street value” of narcotics, and concerns for safety / costs associated with unsafe practices
We’ve discussed the Forces of Change, Forces of Compliance. Now turn to what drives an increasingly competitive environment that will see larger and larger players on a global scale; governments, multi-national organizations and even the producers themselves:
3. Forces of Competition
Trade Unions are the driving force that allows this industry to exist at all; but if Trade Unions are an evolving Matrix for the industry, consider the impact on this market overall:
The World is no longer based on countries, but on trading blocks that have formed and that drive technology. Over the last 3 decades the formation of trade unions has been the driving force carrying technology forward. As unions have formed, and trade blocks have emerged to create fewer and fewer government based central powers with greater and greater impact across governments; technology has evolved in response to bridge the information on a global basis that empowers trade.
Technology has not been a leader but rather a link in this evolution; in our industry. The outcome, e-Pharmacy, will see an increasing number of “compliant” competitors. This, too, is obvious on basic review of the stated objectives of trade unions and organizations. Note the mission of the International Labor Organization (ILO):
“Eight ILO Conventions have been identified by the ILO's Governing Body as being fundamental to the rights of human beings at work, irrespective of levels of development of individual member States. These rights are a precondition for all the others in that they provide for the necessary implements to strive freely for the improvement of individual and collective conditions…..”
“Global Trade and Global Social Issues”, Routledge Research.
“It is widely accepted … that the codes should contain the [eight] core ILO conventions and may contain additional provisions related to living wages, health and safety, security of employment and working hours depending on the situation.”
In the America’s we fist saw:
- NAFTA
- On August 3, 2005, we saw the signing of CAFTA
Again, the mission?
Congress has a genuine opportunity to help solidify the fragile foundations of democracy and the rule of law, both of which have sprouted throughout Central America and the Caribbean in recent years following decades of tumult, revolution and civil war. Congressional approval of the Central American Free Trade Agreement (CAFTA) would be in the best economic and political interests of the regions’ evolving democracies. (Source: Washington Times)
The EU:
Look at Europe, a powerful central bank, central force in the world. 1992 was the year the EU banned trade barriers in Europe - just one year after the wall fell.
Independent Governments have gathered data for centuries. Multi-National giants have spun on the wheels of computing powers for decades; they will play on the international global pharmacy scene in ever increasing numbers. Yet, as can be seen in our industry, only in recent history have these bureaucratic monoliths been surpassed by small startups.
But then, in the technology industry, we’ve seen born billion dollar businesses that, in just a matter of a few years, through the creation of information networks, have created technology pipes that flow more smoothly than oil globally, and continue to reshape our culture and business.
And this is the real challenge of competition for the entrepreneurs in our industry - other entrepreneurs who continue drive toward the rules of the game and play hard. On the matter of Entrepreneurs we see mainstream awareness of what it takes to get into this industry:
Example: An article from Monster: “Eight Tips for Aspiring Healthcare Entrepreneurs” by Megan Malugani, Monster Contributing Writer.
Success in the growing competitive environment for the long term will be had by the companies that employ the standards, use the technology, and can integrate their businesses with the key forces behind success.
Consider the Evolution of Health Informatics:
Universities have already developed full faculties where Health Informatics will drive the collection and collaboration on Health Information globally.
SUMMARY:
The Three Mandates you will have to follow to succeed:
Compliance – This is not an option. If you follow the trends and get on the systems that drive compliance, then you will be here next year. If you don’t, you won’t.
Connections – connections and data tracking that enable your business to quantify your business process, using VOIP, Process Flow technology, that complies with the established standards, health informatics, will ensure your market share long term success.
Competition – In order to compete, first, play the game. Be part of a growing community driving the rules and standards, and deliver information on a 1to1 sophisticated basis to your customers.
Systems that connect, define practices and processes. Technologies that comply, and ensure that your business is operating in cooperation, rather than covertly under the radar. And in today’s Electronic Health Record, Connected, Health Informatics based environment, you can drive forward for the long term, in a very profitable, very important Global Pharmacy market.
Albert Einstein once said, “I never think of the future. It comes soon enough.”
The Future is here and now, if you wisely employ its resources, your business future will be secure.
Thank you. |
