Affordability Through Sustainability
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Affordability Through Sustainability

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This presentation was given by Bala S Manian at the American Association of Clinical Chemistry Meeting 2008

This presentation was given by Bala S Manian at the American Association of Clinical Chemistry Meeting 2008

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    Affordability Through Sustainability Affordability Through Sustainability Presentation Transcript

    • Changing the Design Paradigm. Affordability and Access through sustainability. Bala Manian, PhD. ReaMetrix Inc. San Carlos, CA
    • What is the context of my talk?
      • “You can only be as objective as your subjectivity will permit you to be objective”.
      • We are all but a prisoner in our thought process and to our own perceptions of the world.
      • Why is this relevant here? Why is it necessary to “think” differently?
      • Defining local unmet need requires feet on the “local” ground.
      • Forget my successful experiences of 35 years in “silicon valley”. This talk covers my experiences over the last five years from Bangalore, India.
    • Why & how do we need to look at this differently?
      • Past approaches have not succeeded in addressing unmet needs of the resource poor settings.
      • For every isolated local success story, there are many more unmitigated disasters.
        • Too many false expectations.
        • Wasted valuable resources.
      • Addressing Global public health in resource poor settings is also about tackling local economic activity.
      • Solution rendered has to be at economically sustainable. Or else it will remain forever a charitable endeavor.
    • Diagnostics – A case study
      • Hypothesis - Manufacturing locally reagents used in diagnostics can help reduce the cost.
      • Focus on labor cost arbitrage or to use that advantage and create sustainable value.
      • In the US, the cost of labor is high.
        • Less incentive to optimize material yield
        • No IRR for expenditure of labor resources .
      • When labor cost arbitrage is used to increase material yield significantly, it can create sustainable value.
    • Example - CD4/CD8 Reagents
      • For the measurement of immune system T-Cells
      • The assay is composed of detection antibodies whose specificities are workshop approved.
      • The assay runs any open flow cytometer
      • Reference beads provide absolute counts from single platform.
      • Versions of kits report Abs CD4, %CD4, Abs CD3, Abs CD8, CD4/CD8 ratio, Tot LYM and WBC
      • Results using these reagents are accurate and reproducible.
      • Test results have demonstrated equivalence to FDA cleared commercial assays.
      • Focus on process improvements has increased material yield by an average of 400%.
    • Measurement of Absolute CD4+ and CD8+ T cell counts using Tri T-STAT 1. Identification of CD3+ T-Cells 2. Enumeration of volume metering beads 3. CD4+ & CD8+ T-Cell counts derived from the CD3+ T-Cell population  CD8 + T-Cells  CD4+ T-Cells
    • Correlation of Tri T STAT with accepted standards
    • Tri T-STAT Proven Reproducibility Cell Type Level Mean SD CV (%) CD4+CD3+ T cells High 936 18 1.9 Medium 461 19 4.1 Low 168 7 4.3 CD8+CD3+ T cells High 721 14 2.0 Medium 486 14 2.8 Low 243 11 4.5
    • How do we define resource poor setting?
      • Is it on the basis of economics or on the basis of the availability of infra-structure?
      • Or we designing for the lowest common denominator?
      • Are we designing assay measurement protocols on the availability of trained personnel or personnel who can be easily trained?
      • Can we really assume one solution fits all resource poor settings?
    • Does India represent Resource poor setting?
    • What is the existing paradigm?
      • The most of the solutions conceived today are habitually western model centric.
      • Often the emphasis is on technology as the key driver.
      • The “modus operanda”:
        • Engineer solution in resource rich settings.
        • Deliver to the resource poor settings.
        • Like giving the “fish to fisherman”.
      • Local macroeconomics where design is done do influence design decisions.
      • These often lead to unpleasant surprises when and where the solutions are deployed.
    • What is wrong in this picture?
      • There is no focus on local economic participation as a key component in design criteria.
      • This is difficult to internalize, in an environment of a “third party reimbursement” culture.
      • Seldom, there is an awareness of tailoring of technology development to favor local economic value addition.
      • There is also an absence of an understanding of the influence of local economic constraints during design or in deployment.
      • Incorporating a local economic stake is the only way to build “successful” and economically sustainable solutions.
    • How to frame the big picture?
      • Diagnostics is an important component in disease management.
      • Diagnostics is not just about diagnosing “illness” but it has to be also about maintaining “wellness”.
      • It is all about “information” and diagnostics is an information business.
      • Information is generated to help the physician (and in some cases the patients) make better clinical decisions.
      • What matters is the cost per unit of information and the local macro-economic environment to support that cost sustainably.
    • Anatomy of the Cost of Goods Sold (COGS)
      • Many components contribute to the costs per unit of information generated.
        • Cost of patient transport to blood collection center.
        • Cost of the acquisition of the sample.
        • Cost of the transportation of the sample.
        • Cost of processing of the sample – Tech labor + assay reagent costs.
        • Amortization Cost of the capital equipment investment.
        • Laboratory infra-structure overhead cost.
        • Distribution, field service & support, etc, etc.
    • How the costs are influenced?
      • In most developed countries, because of the infra-structure advantages, there is a natural and organic aggregation of samples.
      • During development, macroeconomic factors prevailing in those countries such as labor costs, transportation costs etc do influence key design decisions.
      • Macroeconomic impact on product design decisions and process developments can be subtle and indirect.
      • Design criteria optimized for one environment may not be the right solution for another.
    • Different priorities in different environments
      • In the developed countries:
        • Labor costs dominate the COGS.
        • The emphasis is on reduction of labor both in manufacturing and in process.
        • Material conservation is not often a priority because it takes high labor cost for realization.
      • In the resource-poor countries:
        • Material costs dominate the COGS.
        • The Labor cost is low but how does use that cost arbitrage to impact high material costs?
        • The priority has to be on material cost reduction – more of the raw material has to end up in finished goods – this is sustainable in the long run.
        • Reliance on the utilization of labor demands innovation.
        • It is required to minimize human “error” which is by-passed in the developed countries by eliminating or minimizing labor.
    • How to change the paradigm?
      • Import the science but the implementation of that science locally has to be started from a clean slate.
      • Define “the affordability index” in the context of local macroeconomic environment. Affordability index does not necessarily mean always lowest cost solutions.
      • Affordability index drives the appropriate technology that can deliver the good and services within the affordability index.
      • The demand at the “bottom of the pyramid” then drives the cost economics.
      • However, local economic participation is what assures long term economic sustainability.
    • Dry Reagents
      • In places like India, cold chain transportation costs can be higher than the cost of reagents.
      • Dried reagents stable at room temperature (up to 45deg C) can have huge impact.
      • Such a development can:
        • Drive transportation and storage costs down.
        • Opportunities to explore new business models for local economic value add.
    • Sample collection & centralized processing
      • There is a huge problem in timely and temperate transportation of blood samples from remote areas to centralized testing centers.
      • Because of poor infra-structures and long distances, this results in “aged” blood samples (> 48 hrs) that are unusable.
      • To solve this problem, enormous effort & resources have been spent of ways to stabilize the blood sample.
      • However, with dry reagents, it became possible that blood can be collected, stained and fixed at the point of collection before being shipped to a central testing facility to add value at the local level.
      • Through serendipity, it was discovered that after processing and fixing the blood sample, it can be stored for up to 8 days without any significant difference in CD4/CD8 counts.
    • Post fixation stability of blood sample
    • Unintended benefits derived from dry reagents
      • Unitized test – reduces human error.
      • Distributed value addition in sample processing – creating local economic activity.
      • With the sample coming into the central lab ready to be run, the throughput per machine increases dramatically.
      • Capital investment tied up on the expensive flow system amortizes much faster – lower cost to patient.
      • Longer shelf life of the reagent (>12 months at room temperature).
      • Thinking differently does offer its rewards
    • What lessons are to be learned?
      • As stated before, ReaMetrix as a company, has been able to translate these concepts to diagnostic solution development in India.
      • Five fold cost reduction in COGS by focusing on improving material yield of Antibody used in assay KIT formulation.
      • Elimination of cold chain for transportation & storage – allowing the development new business models in distribution.
      • Development of multi-purpose hardware platforms designed for easy deployment and local service & support.
      • It is all about creating the ethos and the ecosystem to drive entrepreneurial solutions that are economically sustainable.
    • Thinking differently about Healthcare Delivery ( Work being carried out by HAP (http://www.hapindia.org/))
    • Saantwanam A health screening project Kerala (India)
      • Fighting life style diseases – A novel project by HAP, Kumbashree & State Bank of India.
      • Objectives - Screening for Diabetes mellitus, obesity, hypertension and growth retardation.
      • Referral to physician & health education.
      • Strategy – rely on locally recruited and trained young women with high school education but from poor families and deploy them in an entrepreneurial business model to accomplish the objective.
    • A Training Session
    • The first batch
    •  
    • The Investment
      • Measuring equipment 15000
      • Motor Cycle 29000
      • Mobile phone 2500
      • Preliminary expenses 3500
      • Total 50000
      • Rs 7500/- is given as subsidy by the government
      Item Cost [Rs]
      • EMI against loan 1800
      • Fuel charges 750
      • Telephone charges 500
      • Consumables 3000
      • Total 6050
      10 glucose estimations 250 15 blood pressure 150 10 BMI 50 Average income/day 450 Total per month 1250 Net income anticipated - over Rs 5000 per month Over 150 care givers servicing 200K screens/ year 20% earning over Rs. 10,000 per month. Expense Income
    • What questions that arise from this observation?
      • What more can be done using this model of healthcare delivery?
      • How to empower these young women to move up the value chain?
      • How to bring other parts of healthy living as an economic part of this healthcare delivery?
      • If one believe that compelling self interest is the biggest factor in compliance enforcement, how to bring about financial incentives to shift the focus from illness to maintenance of wellness?
    • In summary…
      • One has to look at “diagnostic information generation” holistically, not just as a set of assay reagents and hardware platforms.
      • Addressing “the economics” problem innovatively, will lead to sustainable solutions.
      • “ Import the science” but not the implementation of the science – great to think globally but sustainable innovation is all local.
      • Rather than just focusing on cost arbitrage, use cost arbitrage to generate sustainable value arbitrage.
      • Using this model, one can not only address the unmet needs in resource-poor settings but change the way diagnostic information is delivered globally.