Podcast interview with Medco CMO Robert Epstein and DNA Direct CEO Ryan Phelan (transcript)

This is the transcript of my recent podcast interview with Medco’s Chief Medical Officer Dr. Robert Epstein and DNA Direct’s CEO, Ryan Phelan.

David Williams: This is David E. Williams, co-founder of MedPharma Partners and author of the Health Business Blog. I’m speaking today with Dr. Robert Epstein, Chief Medical Officer of Medco Health Solutions and Ryan Phelan, founder and CEO of DNA Direct, which Medco has just acquired.  Thanks for speaking with me today.

Ryan Phelan: Our pleasure.

Williams: What is DNA Direct?

Phelan: DNA Direct is a company that started here in San Francisco in early 2005. The services we offer primarily evolve around interpretation, information and resources around genetic expertise.  So in some ways David, you could think about us a virtual medical genetic center.

We help people identify when a test is appropriate.  We help them identify –in some cases with the payer– whether or not it’s going to be covered under their benefits plan. And at the end of the day we help interpret it: What does that test result mean for patients and physicians? We also do it to some degree for health care plans regarding clinical policy around testing.  So from soup to nuts around genetics.

Williams: What’s the fit between Medco’s personalized strategy and DNA Direct?

Phelan: I’ll give you my perspective from DNA Direct and then Rob will weigh in on Medco’s perspective.  We’ve been watching Medco now for the last year and they’ve been the most innovative company in health care that I know of.  They started embracing personalized medicine several years ago and they’ve been running programs.  Most recently people know about their programs around tamoxifen and warfarin. From DNA Direct’s perspective, they’re actually working with large employers providing this as a covered service to their employees. That’s pretty innovative today in terms of the adoption of personalized medicine.

So from our perspective, Medco is really a frontrunner in translating pharmacogenetics into health care practice.  DNA Direct has been an innovator in bringing guidance and decision support services around genetics to the health care industry and I think the combination of the two allows DNA Direct to go broad and deep in this area and at the same time for Medco to move beyond pharmacogenetics into the underlying field of molecular diagnostics.

Dr. Robert Epstein: We have spent the last several years focusing on a small number of pharmacogenetic testing programs while DNA Direct has gone much broader and deeper on all of genetic testing. The good news is we’ve sold clinical programs –including the facilitation of testing– into our customer base of more than 200 paying clients.  The bad news has been that they’re anxious for a lot more, a lot faster. It’s been really exciting getting to know the folks at DNA Direct and now having the opportunity to help them gain access to payers.

We have a hungry group of payers waiting for more and they’ve got more waiting for payers.  So we’re in a really nice position now to make one plus one equal two.

Williams: When I heard about DNA Direct originally, I understood it was kind of a direct to consumer company that was working to promote the uptake of genetic tests to patients without necessarily involving the patient’s physician.  That may have changed, but I know that Medco is more focused on business-to-business and cost containment.

So I am wondering: do those two things go together in the new model? And is the consumer oriented approach something that will continue or will that be phased out over time with the acquisition?

Phelan: Well let me answer that a couple of different ways.  First of all, both companies are focused on business to business as a business model.  DNA Direct, for the last year, has been focused on the payer market and with our contract with Humana for preauthorization and utilization management services around genetics.

But I do want to correct one thing that’s so important to our integrity, which is that when we started DNA Direct you are absolutely correct that we marketed direct to the consumer. But our services were always provided through physician medical director oversight and we’re really the only company to provide clinically valid medical genetic tests.  So I need to distinguish that because it’s really that core architecture software and policy that DNA Direct created that is what, I think, makes us a valuable entity today to a company like Medco.

Epstein: We really want to be the go-to place for consumers, providers and payers in the genetic space and I think DNA Direct takes us there that much faster.

Phelan: At the end of the day, this is all about translating information around genetics and we have to be able to translate at all these different levels because they really are different stakeholders.  There is the patient, the consumer where nobody, I think, does it as well as we do. From the provider side, Medco and DNA Direct have been working on provider education. From the health care plan side DNA Direct has been helping health care plans gain visibility into this testing area.

We’re the only company that is URAC credentialed.  We really are leading the way here in developing a new way for the health care industry to integrate genomic medicine.

Williams: What impact do you think personalized medicine or genomic medicine will have on cost and quality over the next few years?

Epstein: At Medco we think this is serious and important.  It’s one of our top three strategic priorities in the next five years.  We believe that the science is popping.  New findings and discoveries are coming every day. It compels people to define what’s real and what’s not, what’s ready for prime time and what’s not, how to interpret what’s out there.

That’s the beauty of DNA Direct.  That’s the next step: filtering down to what’s real, what is ready for prime time and how do you interpret it once you’ve done it.  It’s an area of science that’s hopping.  It’s going to have more and more discoveries over the next few years and it’s an area that needs somebody to step in and provide some clarity. That’s really the opportunity that we have.

Phelan: And David, I think what’s interesting about Medco is they’re the one company that is actually looking at and evaluating this return on investment around health care outcomes and use of genetic testing.

Are you familiar with all that they are doing at their R&D center?

Williams: I don’t think I’m familiar with everything so I would be interested in the highlights.

Phelan: Let me speak a little bit about that because I think that people don’t realize that it’s one thing to translate the science and to get the science correct and make it medically viable while it’s another thing to actually help a health care plan or an employer understand the economics.

Epstein: A couple years ago, we heard from a lot stakeholders that while it’s all fascinating, they want to understand the return on investment.  Should we cover these tests and if we do, what’s the potential return?

So right around that time period we hired Felix Frueh (see my podcast with him) who was a chief architect of the genomic submissions at the FDA to open up a new research branch down in Bethesda, Maryland. We have about 15 people there today and we’re conducting collaborative research studies. We are not trying to discover new genetic findings but are trying to understand the return on investment or the payer payback for covering some of these tests.

That’s really the burning question these days.  People aren’t so concerned about analytics or clinical validity. They want to know what’s the clinical utility of these tests.  So we’re taking on a broader perspective here of not only having tools and information for providers and members but we’re taking part in the actual research and development of some of this technology. We put the payer hat on, though.

Williams: A lot of what you’ve done, at least in the initial stages, has focused on the relation between genetic tests and pharmaceuticals.  I’m wondering whether there is a broader approach that you’re taking as well that might fit in with some corporate wellness programs or if that’s beyond the scope of this.

Epstein: Without question we start started just with pharmacogenomics. But honestly, to your point, payers today are interested in the full spectrum of genetic testing including predisposition testing.  So whether it’s early intervention or prevention, clients have been asking questions about it. We’re so delighted to have DNA Direct as part of the family to help address those questions.

Williams: There’s obviously been a change in the outlook for health care reform, thanks partly to what’s happened here in Massachusetts. But is there a tight link between what might (or might not) occur in health care reform and a personalized medicine approach? What do you expect to see from your clients?

Epstein: Personalized medicine is part of a solution package no matter what happens, because we can’t go on having imprecise health care where it’s trial and error and it costs a lot of time and money that we don’t have any more.  So personalized medicine is really one of the solutions that we have to have. Thank goodness the science has come along at the right time.

Phelan: Not only that, I think there would be a greater call to action no matter what because of the electronic exchange of health information. What we know is that where genetics can impact patient care, the greater visibility providers have to that data the better patient care will be.

Williams: The HITECH part of ARRA included a number of e-health initiatives, including statewide health information exchanges, Regional Extension Centers, and Beacon Communities.  Do you expect to see an integration of some of the pharmacogenomic findings with the actual electronic health record information that should be available from the government initiatives?

Epstein: Well you know, we’ve actually done that today at Medco.  For a year now, we have been putting genomic information into our information warehouse. If a patient receives a prescription even three years from now that in some way would be informed by that genetic test, we’ve written a rule structure on top of it that warns the pharmacist and the physician about that gene drug interaction.  It’s automated.  So we’re already there.  We’re already starting there. We’re just looking forward to more pipes to hook into in this kind of idea.

Williams: And what about the personal health record?  Will that have an impact or is this mostly going to be driven from the physician side?

Epstein: I think that remains to be seen.  Not often are physicians directly getting their genetic test results to put into the personal health record. To the extent that they do, then I think that would be part of a PHR.  Not all physicians feel the same way about that and not all labs do either.

Phelan: Consumers –on another level– are certainly sharing their medical information with their physicians and with others through social networking, as we know.

Williams: I’ve been speaking today with Dr. Robert Epstein, Chief Medical Officer of Medco Health Solutions and with Ryan Phelan, she is Founder and CEO of DNA Direct.  Thanks so much.

February 12, 2010

One thought on “Podcast interview with Medco CMO Robert Epstein and DNA Direct CEO Ryan Phelan (transcript)”

  1. Had a problem with placing an online renewal of my meds. I called Customer Service (Ashley) I don’t know her last name, but I want to commend her for getting back to me within minutes of my leaving a voicemail message and she very efficiently solved my problem. Employees like that young lady are like “Diamonds in the Rough”. Many thanks, D. Exner

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