Delivered by Tim Vasko, Jan 24, 2004

I was asked to be here to talk to you about technology—which I will—but what is on the tops of most of our minds is where will this industry be in the next year.

For the last two decades my career has been to build technology and business Strategy—and for the last decade as a business man and as a University Professor I have focused on industries driven by massive changes in technology.

Today is the greatest entrepreneurial evolution in history. We have seen how technology has rapidly transformed old business models. Our industry is being driven by a massive grass roots movement in the United States for fair and affordable health care. A grass roots movement lead by people exactly like many of yours and my parents—and I don’t now about yours, but parents mine are still a force to be reconed with!

In the face of recent events that seemingly are threatening this industry out of existence with all due respect to the the politics, opinions and headlines, I feel I must reiterate what I said last year. This industry is here to stay—we all know it, big Pharma knows it, the State Governments know it, major chain pharmacies know it, and most importantly, the public who need medications know it and yes, my MOTHER knows it!

The “cats out of the bag … and it’s not going back in” not if my Mom has anything to say about it—and she does. By the way, she doesn’t even know how to turn on a computer, but she does know that there is a better way to get medications and to provide health care.

I call this the fundamental market powers behind this transition driven by technology. She calls this common sense. Either way you say it, we are NOT going to go backward and neither is this industry or technology.

What we need to ask, then, is what is this business. It is really about cheap medications? The answer is no. It’s about how technology provides access to health care and can distribute health care and products more efficiently. There is an overall shift in the paradigm of the health industry globally. And that is driven by technology

In the UK, they have moved to a mandatory e-Health system of care. In Canada, in my province, BC, each and every medication dispensed goes through an e-Health system. In Europe and around the globe, and even in the US, the e-Health record is emerging. And along side these governmental plans, are the realities of today. People are driving the demand for more affordable health care and they are using the Internet, getting their sons, daughters and friends to use the internet, telephones and fax machines, in record numbers, to get their meds.

Technology will continue to break down barriers and build new access to health care globally. Traditional barriers to entry like the geography of the corner drug store which, according to some, should have kept the young wild west entrepreneurs behind the counter in white coats, have disappeared and a new reality has captured the globe.

The business we are in is e-Health at the most fundamental level.

This is the way health care products and services are, can be, and should be distributed. Anyone, in any part of this business, on either side of the fence, that thinks this business is about the price difference of medications between Canada and the United Sates is wrong.

Look at these Headlines:

• Canada Signals Crackdown on Internet Pharmacies—Reuters, Dec 16, 2004
• Canada may shut down Internet drug trade
• Health officials draft proposal to halt Web pharmacy sales - Associated Press—Jan, 5, 2005
  

The fodder of the of the media, the opinions and the politics are abundant, but the bottom line is that consumers have access to a global pharmacy market place due to technology and this is the beginning of a Pharmocracy.

Read further headlines and discover that this is a global fact:

• States look to Europe for prescription drugs Canadian government considers shutting down follow to the U.S.—Friday, January 14, 2005
  

And this fact will continue to be driven by technology and consumer demand.

This “industry” is E-health products and services—and the “E” stands for Everywhere, Everyone getting medications and E-fficiently—it is about getting health products and services to the people who need them

Like so many other industries, this industry is rapidly moving into an irreversible and largely beneficial stage to society as a whole—beneficial to all parties, not just the entrepreneurs or the consumers driving the system. I will talk about this big picture later. But many points in fact exist for those who figure it out—Music, Movies, Stocks and Bonds history has already been made..

A year ago I spoke about technology shaping the future of this industry. I told you that in 18 months we would be a technology based industry. I’ve met some wonderful people in the last year since this conference was held in sunny Winnipeg—Mark, good choice of venue for this years event. Bill told me it was minus 57C in Winnipeg last night! Technology hasn’t fixed that yet!

But since that chilly day last year, we’ve installed many technology solutions and faced challenges in doing so, in some organizations, and I’ve seen these people keep pushing the limits of how they build their core business and make our technology do amazing things for their businesses.

I’ve seen these change leaders, within their own organizations, within this core industry drive for more efficient, safer and better service and record keeping for their patients. Despite all of the media about shutting down, I’ve seen these pioneers push forward and we’ve pushed to deliver technology solutions to solidify this business and support its future.

In the last year, I’ve had conversations with large multinational pharmacy chains that operate thousands of pharmacies globally who are looking for technology solutions.

The conclusion for this industry is simple, we started with technology and opened the doors, that momentum will remain strong through technology.

The Internet is not a shrinking communication or transaction medium, it is growing by leaps and bounds (even STEVE Jobs is BACK—how about that iPod? Now there’s a brilliant way to address music on the internet with nearly a quarter billion in sales this last Christmas alone)—has anyone looked into music regulations lately?!.

I made another prediction a year ago, that the Pharmaceutical companies would try to get “closer” to the customer - last Tuesday, this prediction took hold.

Companies launch new program for drug discounts

Card offers savings for uninsured on medicines—Associated Press, Jan 11, 2005

A consortium of ten companies that are now offering cards to some 47million qualifying Americans for discounts up to 40%. While, in my opinion, the initial project is fraught with issues that will rapidly force a vastly different approach, it does provide evidence of that “grudging acceptance” that the global Pharmocracy has begun to take hold.

This business, this work we all do from different specialties and perspectives, is very important-customers count on and are driving this evolution to get their medications, The simple facts are that it has become too costly under the old paradigm to move forward and run the business model that has traditionally provided health services and products to the people who need healthcare.

So the “E” of E-Health means that Everyone, Everywhere, is looking for the Efficiency and Access, that technology offers.

We are creating important innovations thorough technology that benefit the global healthcare system.

As always in transitioning industries we do the dance between two worlds: the one where dreams and plans about the world-beating products that will make us bigger than Bill Gates meet the much less glamorous world where we sweat and worry about drug supplies, government regulations, and of course getting orders out the door, or as consumers worry,,simply getting the health care and medicines they need to survive.

In that spirit I’d to divide my talk into two parts.

First I want to deal with he business of your companies’ importance to this evolution and growth in a changing market and how Technology can help; So you can not just survive in business but provide this important service and generate profits from doing so and capture the next transitional wave of opportunity,

Which is the second part of my talk the big picture stuff—where I tell you how we have developed technology because of this industry and we are already well down the road (well, a little way down the road) to saving the healthcare system in America while we all become Gates like zillionaires as the global pharmacy and the E healthcare system emerges.

The recent headlines probably have a lot of us living more in the “sweat and worry” world than in the bigger-than-Bill world right now.

I’ll be blunt. The survival of this industry and your businesses depends on your ability to be agile, efficient and accountable and that will take technology.

Agility + Efficiency + Accountability = E-Volution)

Now, I am going to risk being the first conference speaker in the history of business to perhaps, maybe, be just a little self-serving in the content of my speech—but only because I feel I am duty bound to give you the best possible information that I can. Yes, I, (surprise, surprise) the head of a technology company thinks that technology is the main answer to each of these demands.

So there is my disclosure. Mark, (conference organizer) you can take back my enormous fee if you think that’s fair.

Over the last decade man kind has invented more technology than in all of human history combined. In the last three years, the technology that is available on a mass distributed base, known as the “Internet”, has become a more than an information and communication medium. Technology today enables complex processing power that was, heretofore, only possible on individual computers.

Today, and seriously, this is within the last few years, technology software engineering, has enabled multiple processes that before just we’re not possible, across the web. While it is not on topic how this works, it is on topic to state that this innovative approach to process power has enable the complex oriented transaction—such as the transactions involved in medical services and pharmacy to take place across the web.

With this Technology, we can now collect the health records, store them for access from anywhere on the planet, process records, verify identity, verify and track products and create a complete and irrefutable audit trail, better than paper, better than fax machines and telephones and a a much faster and more reliable and yes safer than ever before. And the technology doesn’t cost a gazillion dollars, it is affordable for the small pharmacy, and it provides the consumer access. This is CORE in understanding that the barriers are rapidly breaking down.

So, Let’s talk about E-fficiency

• E-fficiency = A web enabled technology for the Global Pharmacy

From the market perspective, efficiency demands are present and growing:

Health care costs and medication costs are too high. This is an understatement—The United States will spend 1.5 Trillion dollars on Health Care this year, that’s 15% of the US GDP.

There are more people demanding service and less and less dollars available to pay for those services.

From your business perspective, there is the dropping US dollar (or is it the rising Canadian dollar, Euro and Pound?) that is cutting into your margins? . This coupled with the Political and regulatory threats keep chasing the pharmacy operations to off shore locations. Now in reality, does this curb the evolution, or drive the global pharmacy?

The need for ever more efficient global distribution channels is driving the use of technology at all levels, small and large suppliers are now emerging. The paper, fax and phone system that started the Canadian and US cross border pharmacy, now must become more efficient to provide for the growing demand of a better educated public. So chasing exchange rates and supply around the globe demands better technology systems. And it adds fuel to the evolution of the industry, it drives more effecincey which is good for any business model and for profitability.

That brings us to Accountability:

• Accountability = Safety—Audit Trail - Privacy

So what is at the core driving this change? Technology that just keeps getting better, more efficient. This means that safety, privacy and an audit trial is available anywhere in the world as the proper, standards based, technology systems are employed.

Business owners have got to get lean and efficient. And there is a lot of fat to be cut and inefficiency to be addressed in the industry as a whole, as well as in the individual business processes at the pharmacy level.

Administration, filling procedures and paper work are better handled through technology. And the major side benefit of a technology approach, as I’ve already stated, is that the Accountability is built in. Every transaction, every person involved in the process, at every level, is recorded - the accuracy and security of information, are for the first time in history available, quantifiable and measurable, all which provide the foundation for standards for a health industry (and Canadian Ministers) that mandates standards for Privacy, Safety and Accuracy .

I began my involvement with the online pharmacy in 2002.  At that time we were surprised to discover that the level of technology employed by some of the players in the industry consisted of fax machines, printers and word processors and simple filling software—and those were the advanced operations. .

A word of caution to some of you: having a collating electric stapler/fax machine/ scanner/ printer to attach paper prescriptions to orders does NOT make you hi-tech.

It is this “mom & pop” approach to the industry that has contributed to the reservations held by various regulators about internet pharmacies.  

What about Agility:

• Agility = Internet enabled technology adjusting to market demands, adapting to regulations

The solutions that incorporate the technologies to process this new way of providing prescriptions not only across the border, but across the Internet, has never existed before. Now, this technology enables companies to adjust to market changes across the globe and to new regulations across the borders.

A few pharmacy chains in the States have tried to become more web enabled, and some of the HMO’s have built impressive in-house proprietary systems at great expense. But two years ago, and even still today, these were multi-million dollar systems that did not address the grass roots nature of where the market for this industry was being created. Right on the open Internet.

At our organization we saw this and decided to commit the time and resources to building a technology platform for those independent pharmacies and customers that would most benefit from the technology. We believe that standards will continue to be a mandate demanded by the industry—we are prepared to help deliver on those standards, as are the Clients we have who process thousands of prescriptions through this technology system daily,- but that’s another long story.

The point is that this industry started because of a new Agile and Innovative technology and distribution model called E-Bay and a guy who grabbed hold of that technology named Andrew.

The regulations, the efficiencies, the safety and the opportunity are the future that will stem from this beginning and will continue to grow and prosper with and because of technology.

Historically in business, two groups emerge in industry transitions that are predictable and consistent:

The first group will not be satisfied to just survive. They will create the next wave. They have paid and continue to pay their dues. They are the pioneers of this industry and this technology transformation. They have suffered some of the difficulties but in the long run their investments are paying off for them and will for their customers. These are the innovators.

The second group will consolidate their operations, collect what they can, maintain and or sell out and close up shop.

The first will make new profits and drive new markets. The second will be doing something else this time next year.

If you are here to be in business, then you must decide, what your core function is in this massive industry and how you will prosper by focusing on your core and deploying technology that fits with the industry transition.

Remember, this is not “simple” technology to be done on an excel spread sheet. This is process technology. One of our senior engineers was a programmer on the Space Arm in Canada (she has her picture with the astronauts to prove it). When we refer to Polly we like to say, “yes it IS Rocket Science, but she makes it easy for you”!

Whether you run an internet pharmacy filling operation, or you are running an affiliate marketing organization, or you are a doctors group, or yes, even a pharmaceutical manufacturer, the course and decision is exactly the same. What is at your core? How do you get and use technology to make your organization successful at that Core business and how does that profit you and the end user who is shaping this market place?

So how does all this fit with technology in the industry as a whole?:

I certainly don’twant to come across as if Canadian pharmacies’ being shut down is a foregone conclusion. It is far from that.

At the very least, though, the various colleges of pharmacists, medical boards and government regulators have clearly stated their intention to demand more stringent regulations. And for good reason.

It’s ironic that a technology driven internet pharmacy system contains far more checks and balances than a conventional pharmacy system; yet the practices of this home grown excel, fax machine and paper-based industry do not provide the obvious and auditable nature of the expectations of regulators.

Again, technology provides the easily adoptable systems to provide complete audit trails of every interaction in the prescription transaction - all instantly accessible, and independently available to address these valid regulatory concerns.

And you should ask this about your business: When a concern about privacy, information security or safety arises, do you have a system to audit secure backup, and guarantee accuracy?

Therefore the answer is not better fax machines and paper files. You will need a web enabled and data warehouse electronic health record keeping system that meets ever-stricter guidelines, one that helps build industry standards, and one that integrates with the other growing areas of the E-Health market transition.   Technology has always followed the old adage GIGO (Garbage in Garbage Out). And if you have an ad-hoc hoe-grown system, it is very likely that any regulator will view it as a GIGO system, unless the proper audit procedures and standards are incorporated.   So, you’ll need to invest in and deploy MEANINGFUL standards based technology that operates not only your company but a dozen other or a hundred other companies like yours.   This model of technology in industry transitions is not new. It has a very important and telling precedent. Last year I spoke about E Trade being similar to the E-Pharamcy industry. Who here knows what NASDAQ stands for?   National Association of Securities Dealers (Automated Quotes) The NASD is the “self regulatory” body that stemmed from the fear that regulators would take control of the industry and severely limit the securities industry under the Securities and Exchange Commission (SEC) regulations in the 1930’s and 1940’s. So the independent securities dealers agreed on standards, and yes technology, to direct their industry. And voila you have the largest stock market in the world, NASDAQ! Sound familiar? Sound like a better plan for this industry than to live under the whim of health ministers and the like? Are you ready for it? Agility

This is the big one. This is the one where we put our Plan B’s into effect because if Dossanj, Canadas Health Minister, finally ACTS ON HIS ‘WHIM” AND does what those terrible headlines have been warning us about: No more filling form Canadian Pharmacies. No more signing by Canadian doctors. This industry will continue elsewhere.

Well, I know pharmacists who are most definitely NOT panicking. They’re not panicking because if and when that dark day comes they will just click a mouse and their customer orders will go to a pharmacy in England, Australia, Panama, Mexico or YES, even the good old USA, wherever the prices and security of supply and information provide the best standards and safe distribution to supply the demand.

And let’s not forget the most important part of these transactions: the patients. This industry is ultimately about them, their needs and their demands—. A properly organized set of business solutions, supply chain management and safety—need not cost the patient their right to affordable medications, nor cause them safety concerns or any shipment delays.

Your patients are your most valuable assets. You must do everything in your power to protect their safety and that investment.

I hate to pound the technology and standards drum, but that is clearly where things are headed.

Now let’s me conclude with the long term stuff—the “big picture” stuff.

Consider these statistics:

The amount spent on health care in the United States is almost twice the GDP of Canada, Greater than the GDP of Great Brittan and Greater than the GDP of China and growing at the same pace.

Nearly as,many people die in the US from medical mistakes annually as died in the recent Tusnami tragedy in Asia.

There is a $1.5 Trillion Crisis in the United States that has not been addressed.

All that of course is very bad news but there is the good news.

….the good news is that we, as an industry, have perhaps the most innovative solutions to help deal with some of these problems. And we have the technology that is driving the e-health record and e-health processing for patients—and we are helping chip away at that epic 1.5Trillion growing mountain of demand.

For a long time I have held that the internet pharmacy as it is known today (one whose raison d'etre is  price differentials created by government-imposed price controls and/or currency arbitrage) Is a mere stepping stone on the way to the much-fabled "e-health revolution" (briefly, the state when all - okay , most of - our health care interactions and records are integrated through technology to deliver not just better care but also the cost-savings that our over-burdened  health care systems will demand.). 

When I spoke at the COPHARM conference in Winnipeg in the spring I called this The really good news (this is the stuff that isn’t just going to help you pay next month’s overhead, this is the business that if you don’t like to think big and even dream big, even a little, then you should get out of the business)

I said that the really good news was that internet pharmacies have positioned themselves to become major players in the “e-health Revolution”. I said then that the people in the industry today are MUCH more than just players in this revolution. .

I stand by this assessment. We are among the prime movers

Our stature as trailblazers was reinforced for me last November when I attended the “Health Information Technology Summit” in Washington DC. The brochure described the summit as (I quote): “A Leading Forum on the Electronic Health Record and Rapidly Emerging Health Information Technology Policy...both Globally and Nationally.” Seriously. And I went anyway. Seriously. These are the things I do to bring you folks the most complete information. You think these COPHARM Conferences are crazy whoop-ups? You should see those Health Information Technology guys cut loose.

And if you think that some of the sessions in this conference sound a little dry, imagine getting up at 7 in the morning to attend “An Overview of the Deliverables of Connecting for Health...A Public-Private Collaborative”

Even Starbucks doesn’t make a cup of coffee big enough to get you through that. But I digress.

Now these fine HIT folks are devoting a lot of time and effort to theorizing and abstract thinking and even planning about the day in the future when we will all have an electronic health record or EHR (the EHR will be a very important part of the e-health revolution.)

And they talked about it a lot. And I sat in that conference listening to them talking about it. For two days. Seriously.

And then, of course, I realized that what they were theorizing about. I/we had already built—partly anyway.

When patients use internet pharmacies the result isn’t just greater savings and convenience; they establish an electronic health record that their pharmacists, doctors and other caregivers could access anytime, anywhere. That’s huge.

Yes, perhaps the most vibrant and integrated Electronic Health Record system in North America operates in the “rogue” community of health care services and clients that make up the internet pharmacy sector.

And this grassroots movement developed under very difficult circumstances: the internet pharmacy system is one where a typical transaction involves a network of interactions across diffuse and geographically separated individuals and organizations.

Working outside the mainstream, we are the e-health record technology innovators, in this sector of health. We have developed advanced technology and systems. Orders are placed, tasks are delegated, inventory is maintained, Doctors view and sign prescriptions—with barely a single sheet of paper in sight.

Interesting that a patient/customer of a, supposedly, “outside the mainstream” internet pharmacy is more likely to have established an EHR than one who patronizes mainstream institutions.

All this tells us we’re on the right track.

Many of you deal with state governments or other large institutions who have come on board with internet pharmacies. “Mainstream” pharmacies will follow—on both sides of the border.

Even with all the gloom and doom in Canada, I still have one of Canada’s, if not the worlds, largest Drug chains asking us how to use our technology to set up an internet operation

In Summary:

All of this was achieved without an overarching plan - though with a great deal of ”vision”. The technological solutions that will keep this industry not only alive, but growing, were an organic means to overcome regulatory, geographic and systemic impediments to fairly priced medications for an underserved and overcharged American public. And all the players (customers, pharmacies, doctors), motivated by self interest and market forces, have enthusiastically adopted this new market and now the technology that started it with an simple E-Bay transaction is becoming the co-trailblazer in establishing a vibrant and realistic EHR system and e-health system.

True, the current headlines are not good. We all wish that the gravy train would roll along endlessly…. But better days are ahead …

We have the technology tools and spirit to help us weather the current storm of politics and media, and better still we have the systems, the know how and the public on our side. These are the true forces of our industry. Technology that will position us to be a big part of vast improvements in patient care and efficiency of the healthcare system—and our own prosperity.

Last Year I told you that in 18 months, September 2005, this industry would be completely based on technology, we are right on track, in fact, we are ahead of schedule!