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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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  • 1. Changing the Design Paradigm. Affordability and Access through sustainability. Bala Manian, PhD. ReaMetrix Inc. San Carlos, CA
  • 2. 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.
  • 3. 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.
  • 4. 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.
  • 5. 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%.
  • 6. 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
  • 7. Correlation of Tri T STAT with accepted standards
  • 8. 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
  • 9. 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?
  • 10. Does India represent Resource poor setting?
  • 11. 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.
  • 12. 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.
  • 13. 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.
  • 14. 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.
  • 15. 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.
  • 16. 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.
  • 17. 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.
  • 18. 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.
  • 19. 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.
  • 20. Post fixation stability of blood sample
  • 21. 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
  • 22. 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.
  • 23. Thinking differently about Healthcare Delivery ( Work being carried out by HAP (http://www.hapindia.org/))
  • 24. 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.
  • 25. A Training Session
  • 26. The first batch
  • 27.  
  • 28. 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]
  • 29.
    • 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
  • 30. 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?
  • 31. 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.

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