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The Fed’s plan for 2020? Bring long-awaited innovation to kidney disease

On the sidelines of the JP Morgan Healthcare Conference this week, HHS top brass discussed plans for regulatory reform, an innovation accelerator and more.
By Jonah Comstock
11:48 am

As 2020 gets underway, the federal government has set its sights on bringing innovation to an area of health that affects one in seven Americans and costs the government more than NASA and the Department of Commerce combined, yet hasn’t seen major innovation since the 1970s.

That area is kidney disease. Both HHS Chief Technology Officer Ed Simcox and HHS Deputy Secretary Eric Hargan addressed the topic at separate events in San Francisco this week, and neither minced words when describing the enormity of the problem — or the lack of real movement on it.

Kidney disease: A $35 billion innovation black hole

“If you brought a patient on dialysis from 1978 forward in time 40 years, how different would that experience be?” Hargan asked a crowd of innovators at the Health 2.0 VentureConnect event on Monday night. “Not very different at all, in fact. There’d be a flat screen TV to watch. There’d be an iPhone to read instead of a pile of magazines. Probably you’d have a better Lay-Z-Boy to sit in. But there would probably be nothing fundamentally different about the experience.”

In 2019, as in 1972 when Richard Nixon signed the End-Stage Renal Disease Bill, kidney disease therapy mostly means two things: dialysis, an expensive, time-intensive and often lifelong in-patient procedure; and, for a lucky few, transplantation of a donated kidney. And thanks to Nixon’s signature, CMS remains obligated to pay for the former, to the tune of $35 billion a year.

“It was literally a two-paragraph, three-paragraph section in the Medicare Act that basically said we'll take care of people with dialysis and transplantation, all people forever,” Dr. John Sedor, chair of the KidneyX steering committee, told MobiHealthNews in an interview late last year. “And I think Congress at the time thought it was going to be 15,000 people and $100 million. Now it’s 600,000 people and $35 billion.”

There has been some innovation over the years, but it has been incremental rather than disruptive — a stark contrast to areas like cancer care or HIV, where treatment looks dramatically different than it did in 1978.

“Dialysis was a miracle therapy for its time, but it hasn’t changed in 60 years,” Simcox said, speaking onstage at the Startup Health Festival alongside Sara Holoubek, whose consultancy firm Luminary Labs is working with HHS on kidney innovation. “The technology is exactly the same. We’ve made the machines smaller, we’ve added filtration technology, but to get back to your question, why is it that we don’t hear more about kidney disease when it’s the ninth leading cause of death in the U.S.?”

Why, indeed? One reason, Simcox said, is that kidney disease is downstream of conditions such as cardiovascular disease and diabetes, which are sometimes seen as the more pressing public health crisis. 

Another, Sedor admitted, is that dialysis is big, guaranteed business for two companies that more or less comprise a duopoly in the U.S. — DaVita and Fresenius. And thanks to Nixon, it’s a monopsony (a market with only one buyer) as well. For DaVita and Fresenius, there’s little reason to invest in disruptive innovation when the government checks keep coming. And for would-be disruptors, a market with one payer and two powerful incumbents is intimidating — and not exactly a beacon for investment.

Other disincentives exist on the regulatory side. For instance, Simcox said, rules designed to protect organ donors and recipients have become far too strenuous.

“Dialysis is great for what it is. It’s a good therapy, but really the best therapy is a transplant,” he told Holoubek. “We have issues we need to address there. We’re wasting organs in the U.S.; the supply chain is broken. And a lot of this has to do with the government and rules. The way that we evaluate organizations that procure organs and deliver them to recipients, the rules are arcane and they create disincentives and they create a perceived risk for people who are procuring those organs.”

A new hope for kidney patients

Over the last year, the Trump administration has made it clear that the status quo of innovation stagnation needs to end. In July, President Donald Trump signed an executive order directing HHS to embark on a number of initiatives to stimulate innovation in this space. The non-binding order sets several priorities: creating an awareness campaign, changing payments for both preventive and interventional care, and pushing reform for organ procurement rules. 

“There have been 15,000 executive orders and there are 12 that are specific to healthcare, but this is the first executive order ever to take a comprehensive approach to solving a particular disease state or set of diseases,” Simcox said. “We realized we had a big issue to tackle and that we needed to take an ecosystem approach and look across the continuum of care, look at what patients go through, look at the state of the science and most importantly, for CMS and for HHS, look at how we pay for this care.”

Simcox said that CMS will soon roll out two new rules that will focus on the payment side, making it easier for the government to pay for therapies beyond traditional dialysis.

“We have basically two rules,” he said. “One is a mandatory rule and one is an opt-in rule model. And the opt-in has basically three streams of payments. I won’t get into the nitty gritty of how that works, but understand that a lot of people are working really hard to figure out how to shift from paying for a unit of care to shifting to value to really positively impact patients.”

Similarly, Hargan mentioned that CMS and the FDA are both looking at ways to use their respective regulatory levers to improve the situation.

“Some of the areas that we fed back into the department was how can we drive more technological progress using incentives that we have — reimbursement and regulatory, which are primarily the two levers we have within the department. Now the incentive system we tried to resolve with adding new technology, add-on payments, being able to raise the level of what we can pay for new technology, and then also creating new models like the primary care models, the kidney care models, and other things that allow us to act creatively in terms of paying for new technologies.”

Simcox said the department isn’t sleeping on the awareness campaign directive either.

“We have a real issue with primary caregivers that while they do understand Type 2 diabetes and they understand other well-known disease states, a lot of them don’t quite know how to address kidney disease in its earlier stages. And in fact, most of the time, people don’t learn that they have kidney disease until stage four of the disease or until they go into kidney failure,” he said. “We have a lot of work to do to educate primary care as well as educate patients so they can become better advocates for themselves and become more curious about what kidney disease means for them.”

Sedor believes the executive order will ultimately prove itself to be a real catalyst for long-awaited change.

“I think we're at a real tipping point,” he said. “There's a great deal of enthusiasm that we're going to have impact. I think we've underestimated the importance of policy, moving the needle to make patient lives better in our field, or we've had difficulty doing that. And I see a real change in that now. So I'm optimistic that things are going to come together and make lives better for people with kidney disease and for caregivers. And I think there's a lot of appetite out there for getting involved in this space.”

The X factor

All that regulatory reform is well and good, but for innovators and technologists, the most exciting aspect of the executive order might well be the section on “encouraging the development of an artificial kidney,” a goal that HHS has chosen to pursue by means of a public-private partnership with the American Society of Nephrology. 

While not expressly affiliated with the X Prize foundation, the project does unabashedly take inspiration from the Peter Diamandis-founded group, whom they worked with in an early stage of the project.

“I’m sure all of you know the X Prize Foundation,” Simcox said. “The idea is to raise money and give prizes out to drive solutions to addressing problems humanity faces. We thought that was an excellent model for us in this case.”

But KidneyX isn’t a one-and-done prize. The initiative has already given out substantial prize money and has a rollout plan to give away more. 

“We’re starting with ‘Redesigning Dialysis,’” Simcox said. “We’ve already given out 15 prizes of $75,000 apiece just for ideation, just surfacing ideas and beginning to build awareness and urgency. The next phase for that — and we’re in the middle of that one, that’s our proof of concept phase — that’s the bridge phase. We want to start to actuate these things, we want to see business models maturing and everything, so we’re going to be giving away three prizes of $500,000 apiece in the second phase.”

In the third and final phase of redesigning dialysis, the government will give out prizes for commercialization, while also connecting innovators with the teams at the FDA and CMS.

“One of the cool things about it is it's really got all the key players at the table on the steering committee, even though it's a federal agency, representatives are ex-officio,” Sedor said. “But you have people from, you know, CMS, you know, who funds dialysis. You have folks from the FDA, people from NIH. So you're dealing with that silo issue. You know, everybody's talking to each other. I think there's a great opportunity for innovation to have impact now because of that.”

The Redesigning Dialysis phase of the prize has a broad mandate, but is still focused on the treatment that drives most of the federal spending on kidney disease.

“I think the major pain point is that the treatment is dominated now by dialysis,” Sedor said. “And people have to go to dialysis three times a week, they’re dialyzed 12 hours a week. And our kidneys work 24-7. So I think, you know, the low-hanging fruit, at least, you know, an obvious thing is to promote innovation in renal replacement therapy and wearable, implantable, artificial, using, you know, tissue implantation, maybe xenographing in transplantation. I think that's where the early focus is going to be.”

But later phases of the prize will encourage innovators to think bigger.

“I think our aspirations are broader than that,” he said. “We would like to get into coming up with better therapies and ways to identify people that are really at risk for kidney disease or at risk for getting worsening kidney disease.”

The ultimate goal stated in the executive order is, after all, to create an artificial kidney.

“The executive order directly instructs us to go after an artificial kidney and that truly is our moonshot,” Simcox said. “We know it’s not going to happen overnight, we know we have a lot of work to do to get there, but we have a plan, we have persistence, and we’re pretty bullish about this. So what does success look like? What success looks like is creating a way to get people off dialysis using an artificial kidney. It could be an implantable kidney or a wearable kidney. It may not be either of those things. It may be a new therapeutic, it may be something digital. Nothing is off the table.”

Patients at the table

Throughout the prize process, HHS is making sure the voices of patients are heard, including the launch of an additional prize, the patient innovator challenge. 

“That’s something I feel very strongly about,” Simcox said. “We need to understand what patients go through. So my office is responsible for human-centered design and design thinking. Journey mapping, putting ourselves in the shoes of a user or a patient or a customer, we can’t be successful without doing that. So we kicked off another prize, and this one is to reward patient innovators. Many of them sit in dialysis chairs for many hours a week and they come up with hacks for their own care, they have thoughts.  Why does this device look like this? It’s painful and it’s awkward, I think I could design something better.”

Sedor mentioned that the KidneyX steering committee includes at least one patient and is looking for additional opportunities to incorporate patient voices.

“Speaking as a doc, you know what? What I want is not necessarily what’s important to my patients all of the time, and I've learned that in spades,” he said. “So more and more in a number of initiatives that I'm personally involved in, patients are there from the get-go and the patients are very important to helping us define what KidneyX should be focusing on.”

Ultimately, KidneyX is about collaboration, and the patient’s voice is one that has to be included.

“That’s what I like about this approach. It’s an ecosystem play,” Holoubek said. “When we started working  with HHS, I was surprised at how many people didn’t see themselves as part of the solution. It boggles the mind. Whether you’re a patient or a caregiver, a tissue engineer, a data scientist, you probably have a way of contributing to Kidney X and ultimately to the solution.”


Digital health developments in 2020 and beyond

The next decade is sure to be a test of digital health technologies — but it will also test traditional health systems. In January, MobiHealthNews will be looking at the possibilities for digital health in 2020 and beyond.

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