David 0:00

What effect would it have on patients and also on pharmacy spend if we could find the absolute right drug for somebody from day one? We'll find out on this episode of Shift Shapers.

Announcer 0:16

Change either paralyzes or energizes. The choice is yours. You're listening to the Shift Shapers podcast. You're about to learn firsthand from businesses and entrepreneurs who have successfully shaped the shifts in their industries. Get ready to become the change you want to see.

David 0:38

This episode is brought to you by Triune Technologies, creator of the market-leading benefits connector Ben Admin software. Now with special pricing for smaller groups. To learn more, call Carol Motznick at 336-253-5722. That's 336-253-5722. Let Triune help you get out of the admin business and back into the selling business.

Announcer 1:07

And now, here's your host, Story Brand Certified Guide and Chief Transformation Strategist at Shift Shaper Strategies, David Saltzman.

David 1:18

And to help us answer today's question, we have Lena Chahorsky. Lena is Vice President of Payer Innovation at Alva 10. Welcome, Lena. Thanks for joining us.

SPEAKER_01 1:28

Thank you for having me, David. I'm excited to be here.

David 1:30

It's our pleasure. Talk a little bit about your background. How'd you end up doing what you're doing today?

SPEAKER_01 1:35

Sure. So academically, I'm a mathematician and I studied biology in college, but I've really spent my career in healthcare and more specifically in diagnostic reimbursement. Honestly, I got into this line of work because I thought reimbursement, meaning the amount of money insurance companies pay doctors for the things that the doctors do to you, was kind of like a math problem I wanted to solve for a company I was working for. It was a small woman health company. They had a fantastic diagnostic that was going to save the health system millions of dollars, but it was only being valued at $11 if you kind of did nothing and put it out into the healthcare system. And that made no sense to me. So I created a value-based reimbursement strategy for that diagnostic. It was actually one of the first value-based reimbursement strategies in diagnostics. And a couple of years later, we exited the company to a large global health company called Kyogen. And I led global reimbursement and health economics strategy at that company for a few years. Wonderful experience there before I left that company to co-found Alva 10 with my business partner and our CEO. And I think really what my journey, my career is, is it's a numeric approach to healthcare. It's trying to understand these perverse financial incentives that drive so much of how we experience healthcare and understanding where we can change the financial incentives to enable healthcare to work entirely differently. And so that's really what I do today.

David 3:06

So what is the problem that Alvaten's working on solving?

SPEAKER_01 3:09

You know, the problem we solve, we jokingly say this is a company that began out of frustration. I also sometimes think like this is a company that should not have to exist, to be honest with you, because the problem that we're solving is we are creating the first constructive relationship between the healthcare purchaser industry. Traditionally, that was health insurance companies, but that's also providers, that's also employers, that's PBMs, right? That's anybody that can write a check and pay for healthcare. And we're creating a constructive relationship between the purchaser industry and the diagnostic industry. And the reason this is critical is because the diagnostic industry has all of the technology and all of the capability to help us use healthcare resources wisely. Diagnostics can tell us things like do we need to do this really expensive thing or do we need to do this other cheaper thing? Or do we really need to do this expensive thing now, or can we do it later? And we did this expensive thing in the past. Did it work? Is it going to keep working? Should we keep doing it? Should we do something else? Right. You can imagine these are questions that direct the economics of healthcare, right? This is the difference between a person being treated for five years or 10 years and that costing 50 grand or a million dollars. And so these diagnostic tests in this industry is a lot smaller than pharma. It's a lab industry. And that industry, the diagnostic industry, did not have a relationship with healthcare purchasers. And that's really important because the insurance companies, the purchasers of the world, need to be able to stand up and say, these are our problems, and we would like solutions to these problems. And so we started this company as the FDA once called us an honest broker. I told them I was taking that term. We really are an honest broker. We are a totally privately funded company. We bootstrapped our company ourselves. We are owned by nobody. And we sit in the middle between the purchaser industry and the diagnostic industry. And we identify and qualify and quantify the problems of the healthcare purchaser industry, the payers, the PBMs, et cetera. And we translate those problem statements into diagnostic solutions that we then pull up from the pre-commercial diagnostic industry. So we are in the business of making sure that the things, the tools that need to exist in healthcare get built. We are not in the business of just arbitrating healthcare on the basis of what exists today. That's a critical difference because in the same way that someone needs to be thinking about how to solve the climate crisis, someone needs to be thinking about how to make tools exist that enable doctors to do the really valuable things I just said, right? Figure out if someone's gonna respond to the drug, like you mentioned. Figure out if somebody's gonna respond, you know, if the surgery is required for them, so on and so forth.

David 6:02

Can you give us a real world example?

SPEAKER_01 6:05

Absolutely. So one of the first things that we worked on when we first started our company, we went around all of the payers that we knew and were networked with, and we said, look, we're starting a new company. We're gonna be in the business of building the things that need to exist. Give us your problems, we're gonna go build diagnostic solutions. And all the payers said, You want to know our problem? Our problem is specialty spending and autoimmune disease. In autoimmune disease, you can think of rheumatoid arthritis, you can think of things like psoriasis, right? This is what happens when the immune system turns on itself. It shows up in various different ways. And so when we looked into that problem, what we found was that one of the biggest areas of specialty spending was in rheumatoid arthritis. And one of the biggest areas of drug spending there was the anti-TNF class, Humera, Embrel. I'm sure you've seen the commercials. You can go on a hundred different vacations if you take Humera and everything in your life will get better. And these commercials play on a loop. I mean, you can't watch an hour of television without seeing at least one Humera commercial. And so we became really interested in this drug class. We did a ton of research and we realized what's really interesting about the anti-TNF drug class in rheumatoid arthritis. You can think of it as like autoimmune disease is the payer problem. And within that payer problem, RA is like culprit number one, right? And when you look at that culprit, you look closely, what you see is humera, $20 billion a year, anti-TNF drugs. So we looked at that drug class and we realized that anti-TNFs are prescribed 90% of the time first line to RA patients, meaning you're a rheumatoid arthritis patient, you've tried to go on steroids, steroids don't work for you. It's time to put you on a biologic, what does your doctor do? Boom, they put you on an anti-TNF. But that drug class only works in 36% of rheumatoid arthritis patients. 90% of them get the drug, works on a third. That's where the healthcare wasted spend is coming from, right? It's coming from the fact that this drug is going to everybody, but only a third of patients are responding to it. So we worked with a small company that had phenomenal science, cipher medicine, and they were going to be developing a diagnostic test in the space. We worked with them, we found them early, we explained what we were doing, we partnered them with payers, they saw what we were doing, they wanted to be a part of it. We worked together for years and they took their phenomenal science and they developed it into what is now called the Prism RA blood test. That is a blood test that will determine with a 95% accuracy rate all the patients that cannot respond to anti-TNF drug classes in RA. And why is it so important that we made a test that said you cannot respond? Because think about it from the insurance company perspective, right? You're gonna give Humera 90% of the time. If I tell you you're 45% likely to respond to Humera, that's not gonna change what you're gonna do, right? You're gonna put the patient on Humera. What you really need to know is you need this big red flag that says, stop, this patient is 95% likely not to respond to Humera. Do not give this patient Humera. And that's why that test was designed the way it was. So these decisions were incredibly thoughtfully made, and they were made as a result of countless conversations that happened between the insurance industry and us and this company, Cypher Medicine. So this process of working with payers to figure out their problems and then finding those solutions in the diagnostic industry is a totally new way of developing diagnostic tests. And we need that. Employers need that, patients need that, because in the absence of those tests, your only option for healthcare is what happens today, which is trial and error medicine. We know things work, let's see if they work on you. If they don't work on you, we'll try something else. We'll try something else, we'll try something until it works. Well, that sounds like dogged persistence, right? This is what I want to see from my healthcare providers. They're trying and trying and trying. But as a patient, you know, you could think about this from the consumer perspective. You wouldn't even treat your car that way. If you took your car into a mechanic and they did not run a diagnostic test and they told you, well, it might be this. Why don't you pay $600 and let's see if that fixes the problem? If not, why don't you pay a thousand? You would be out of that mechanic in a second. And yet we agree to this with our bodies in healthcare. So that's where diagnostics can absolutely change the paradigm because they force the question of why are you doing on this on me? Is it going to work?

David 10:27

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SPEAKER_01 12:00

That particular blood test doesn't tell you if you're going to get adverse events. The prismari test doesn't, but this is where the area of pharmacogenomics is thriving. And the other thing I'll say about that is actually the pharmacogenomics industry is getting very, very smart about figuring out who they need to test. So they're now using a variety of algorithms and tools to basically say, look, we don't want to test everybody to see who may have one particular type of adverse event. We want to look at the drugs that the patient is on, and we want to understand if they're at risk for something, and then we will test them.

David 12:34

For those folks who don't know, Lena, would you define pharmacogenomics?

SPEAKER_01 12:37

Yes, absolutely. So what you just said about adverse events is kind of like in healthcare, it's like a direct line what you just said of adverse events to a drug to this world of pharmacogenomics. Pharmacogenomics is essentially the practice of determining whether or not the drugs that you're on are going to have an effect with your genes. For example, you may have a variant of a gene that makes you a very slow metabolizer of a very toxic drug. Well, if we're dosing you at a regular dose of that drug, that drug is going to build up in your liver. I'm I'm being a little bit, I'm just doing broad strokes here, but that can create a whole variety of poor events for you, adverse events, because you are not a regular metabolizer of that drug. You are a slow metabolizer of that drug, as per your particular gene variant. And so pharmacogenomics is the field of science that attempts to figure all this out and not only get people on the right drug for them, but also get people on the right dose for them. And what we know, of course, is that when we put patients on these drugs that can in some the pharma industry has made incredible gains in the last 40 years. I don't want to take that away. They're creating life-saving drugs. I'm just focused on the fact that those drugs don't work on everybody. And that's what we're trying to fix. But if you take those drugs and you give them to the wrong person, you can end up with very serious side effects. You can end up with fatal side effects. You can end up with paralysis, right? These are things that change the courses of patients' lives. And so to answer your question in full, there are tests that will tell you whether or not the drug is going to work on you. And then there are other tests that will tell you whether or not you should be on that drug. The Prism RA test, just to give you a little bit of like, there's technically pharmacokinetics, which is how are you metabolizing the drug? That's the metabolic explanation I just gave. And the Prism RA diagnostic, which is that blood test I was talking about in rheumatoid arthritis, that test is doing something very different. That test is saying rheumatoid arthritis works in the body along a series of highways. And you can imagine that if your rheumatoid arthritis is driven along the anti-TNF highway and you take an anti-TNF drug, perfect match, right? The drug is going to inhibit that highway. That inflammation will no longer flow along that highway, you will get better. But if your rheumatoid arthritis is driven along another highway, you can take an anti-TNF drug all you want. It's like trains passing in the night. And it has nothing to do with your liver. It has nothing to do with metabolism. It has to do with what are the pathways and the cascades through which disease is moving through the body. So these are the big questions that the diagnostic industry wrestles with. And you can see that they kind of move into different thought bubbles, right? Like, how do we metabolize drugs? You know, how does the disease work in the body? But all of this is combining into the school of diagnostic knowledge, which is designed to make sure that the person gets on the right drug at the right dose and at the right time in their disease progression.

David 15:44

So beyond patient quality, obviously this has to have a huge effect on payers and on spend. Do you have any idea, broadly speaking, what kind of an impact these tests and the ability to ascertain the answers to these questions in advance is going to make on spend?

SPEAKER_01 16:00

So I can tell you, I would say there are two main things to keep in mind. We spend $3 trillion a year in healthcare. We now know that a trillion of that is wasted. We now know that 30% of healthcare spend is wasted. This has been proven through multiple avenues. The second number I'll give that's wasted spend. I think it's about between $500 and $600 billion a year has been allocated to the consequences of non-optimized medications. And that number is a number that takes into account the cost of the drug, the cost of someone going to the ER because they're having an adverse event, the cost of switching drugs, so on and so forth. This is a massive problem. And actually, pharmacogenomics, I was just reading an article on this in terms of the effects of adverse events on people, the number of Americans that have adverse events from drugs each year and die from those adverse events, this is like a full 747 falling out of the sky every six minutes. That's this is what we're talking about. You know, these are like silent healthcare epidemics. This is what's happening to people when they're getting drugs that are not being thoroughly vetted and drug combinations that are not being thoroughly vetted as being appropriate for them.

David 17:26

Did some of the impetus for this come from cancer drugs because they're toxic to start with? And if you make the wrong choice, the complications are almost immediate and sometimes fatal?

SPEAKER_01 17:36

It's a great question. I think in general, when we think about everything we're talking about today, you can kind of label under precision medicine. And a lot of what we hear and learn about precision medicine comes from cancer. You're absolutely right, because the stakes are very high in cancer. We've been taught as a society, though, that the only drugs that are personalized are the cancer ones and all the other ones are not personalized. And the truth is every drug that's been developed for the last 40 years is a personalized medicine. And so what we should be thinking about is, for example, when you give a biologic drug to somebody with ulcerative colitis and that drug doesn't work on them, they're in the emergency room. That is just as acute an event as something like that happening to somebody with cancer. So I think we need to change our definition of risk to include the severity of the drug, not just the severity of the disease that the drug is being treated for.

David 18:37

Well, and if you end up in the emergency room, arguably the most expensive point of service in the entire medical universe, then you're talking about cost on top of cost on top of cost. Again, we're putting aside the patient for the moment and just looking at the spend issue. Obviously, the quality of life issue is a whole other deal, which I think to most people is self-evident, but the cost part of it may not be. And so there's this anti-TNF stuff that you mentioned before that you that's being worked on. What are the other top two or three drug classes that are being worked on or diseases with drug classes associated with them that are being worked on right now?

SPEAKER_01 19:13

That's a great question. There is a lot in autoimmune. We're also looking at things in cardiovascular. We're looking at things in metabolic. And when I say that, for example, can give you an example of where we're trying to get out ahead of the curve. So the big disease that nobody knows about is non-alcoholic steatohepatitis, Nash. Nash is the silent liver disease. It basically is what happens when your liver starts to look like foie gras. And essentially, this is a disease that can progress for years without people knowing about it. There are no drugs on the market today. Pharma has a 50 drug pipeline for Nash. And it would be great if we got some drugs on the market to help with this problem. Nash is now the number one reason for liver transplants in the US. It has surpassed hepatitis C as the number one reason for liver transplants. So we are in an epidemic, but it's a silent one. And unfortunately, because of our lifestyle choices in the US, we've got about 12% of the US population that is in a pre-diabetic, diabetic phase that is sliding toward Nash. Well, you can look at that and you can think, well, I really hope we can figure out who's got Nash and who doesn't. But the problem is the only way today to figure out if you have Nash is a big needle to your side. It's a biopsy. So this is a classic situation where pharma's got a big pipeline. There's no way to figure out who's got the disease, and there's a whole bunch of Americans who could have the disease. How do you think that this is going to go? So what you want is you want to stem this flow with a diagnostic strategy that says, let's figure out non-invasively who's got NASH, who doesn't, who's got late stage, who's got early stage. Let's figure out who can respond to these drugs, who can't. This is where you want diagnostics to come in and take this from a potentially massive US market to a manageable US market and not put patients on these extremely expensive drugs for life. So that's an area where we're also looking. Cardiovascular, in general, when you talk to payers, when you talk to healthcare purchasers, you realize that it's the chronic diseases in the US that are killing us from a cost perspective. Yes, we spend a lot of time talking about cancer and we should, but we don't spend nearly enough time talking about cardiac disease, metabolic diseases, musculoskeletal diseases. These are areas where there are virtually no diagnostics on the market today to figure out whether or not patients will respond to drugs. Behavioral health, also one of those areas, can take patients years to get on the right drug. In pediatric cases, this is particularly tragic. So those are areas where we need diagnostics and we need them now.

David 21:59

And that's a great place to end our conversation for today. But Lena, as things progress, we do hope you'll come back and enlighten us some more on some of the newer things that are happening. Lena Chahorsky, Vice President of Payer Innovation at Alva 10. Lena, thanks so much for a great conversation.

Announcer 22:14

Thank you so much for having me, David. The Shift Shapers Podcast is a production of Shift Shaper strategies and may not be reproduced or quoted in whole or in part without our express written permission. Copyright 2020, all rights reserved.