The Health Care Investor : Healthcare Lawyers & Attorneys for Life Science Companies & Investors

In recent years there has been growing public awareness of end of life decisions and the importance of documenting advance healthcare decisions. In fact, April 16^th is National Healthcare Decisions Day, a nationwide educational event founded by McGuireWoods partner Nathan Kottkamp.   Advance directives are legal documents, prepared by patients in advance of the need for healthcare services, that directs the healthcare the patient does or does not want if he or she becomes unable to make decisions. Advance directives may include durable powers of attorney, living wills and organ donation directions.  Nathan recently discussed advance directives, including issues arising out of healthcare reform debates, on Countdown with Keith Olbermann. 

From the perspective of many healthcare providers, providing information about advance directives is required by law. The Conditions of Participation in the Medicare and Medicaid programs require hospitals, critical access hospitals, skilled nursing facilities, nursing facilities, home health agencies, providers of home healthcare (and for Medicaid purposes, providers of personal care services), hospices, ambulatory surgery centers, and dialysis facilities to inquire about and provide information to patients regarding advance directives. Further, the Conditions of Participation require all of these healthcare providers, except ASCs and dialysis providers, to provide public education about advance directives. Additionally, healthcare accreditation bodies Joint Commission and AAAHC have accreditation standards requiring facilities to honor advance directives.

In connection with the national focus on advanced healthcare decisions, new companies have emerged to assist patients and healthcare providers with the advance directives process. Embark Health, for example, has developed and is actively distributing Advance Directive Solution (ADS), a comprehensive online and telephonic resource with all the information and legally current forms to create an enforceable advance directive. Embark Health is also in the process of rolling out The Personal Legacy Solution (PLS), an electronic repository for tracking the location of assets, the location of other important items or documents, and for storing important messages to loved ones (all of which will be retrievable in accordance with the individual member’s specifications).  Embark Health markets these products directly to patients as well as to and through large systems such as health plans, hospitals and other providers. Burgeoning companies like Embark Health and others may provide an opportunity for investors interested in healthcare and healthcare IT services.  

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On April 6^th, US-based biopharmaceutical company Cephalon, Inc. (NASDAQ: CEPH) acquired all of the outstanding capital stock of Ception Therapeutics, Inc., also a US-based biopharmaceutical company focused on developing novel products to address areas of unmet medical need, for $250 million.  The transaction resulted from the January 2009 purchase by Cephalon of an option to acquire the Ception stock.  Cephalon heralds the merger as a unique opportunity to expand its biologics pipeline, including the anticipated introduction to the market of CINQUIL™ (reslizumab), which is currently in Phase III studies and is intended to treat eosinophilic asthma. 

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The Patient Protection and Affordable Healthcare Act (commonly known as the "healthcare reform" bill) includes significant new transparency and disclosure obligations that apply to physicians, hospitals, and medical device and pharmaceutical manufacturers. 

Some of these transparency and disclosure obligations are based on legislation introduced by Sens. Chuck Grassley (R-Iowa) and Herb Kohl (D-Wis.), which was previously entitled ‘‘the Physician Payments Sunshine Act of 2009.’’ The transparency and disclosure obligations have been included in the Act in an effort to reign in costs of expanded health care availability. The premise behind the obligations is that ‘‘sunshine’’ on physicians' financial relationships with industry will reduce conflicts of interest by deterring industry from spending excessive amounts of money on such relationships and consequently reduce the negative impact such relationships have on prescribing practices.  The transparency initiatives impact physicians, pharmaceutical and medical device manufacturers and PBMs.  For a full description of each new requirement, please read this article by Krist Werling and Holly Carnell published in BNA's Health Care Fraud Report.

These new initiatives will impact healthcare investors in two ways.  First, investors should be aware of added burdens on target investments.  For example, for medical device manufacturers, these disclosures will require added infrastructure to address tracking and reporting requirements.  Second, investors may find opportunities in these burdens.  Software, web services and consulting services have sprung up to assist physicians, pharmaceutical manufacturers and device manufacturers in remaining compliant with new obligations. 

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