Are Laboratory Tests Commodities? By: Mark S. Birenbaum, Ph.D. Administrator National Independent Laboratory Association (NILA) CCLA Annual Conference San Diego, California November 8, 2013 . © 2013 National Independent Laboratory Association 906 Olive Street, Suite 1200, St. Louis, Missouri 63101-1448 Telephone: 314-241-1445, Fax: 314-241-1449 Email: nila@nila-usa.com, Web Site: www.nila-usa.com

Are Laboratory Tests Commodities? Definition of a Commodity: A class of goods for which there is demand, but which is supplied without qualitative differentiation across a market A commodity is fungible, i.e., the market treats instances as equivalent, or nearly so, with no regard to who produced them. Examples: Wheat Corn Oil/Gasoline Gold © 2013 National Independent Laboratory Association, 906 Olive Street, Suite 1200, St. Louis, Missouri 63101-1448 Telephone: 314-241-1445, Fax: 314-241-1449, Email: nila@nila-usa.com, Web Site: www.nila-usa.com

Are Laboratory Tests Commodities? Laboratory Tests Are Services, Not Goods Actually, Laboratory Test RESULTS Are Services, Not Goods © 2013 National Independent Laboratory Association, 906 Olive Street, Suite 1200, St. Louis, Missouri 63101-1448 Telephone: 314-241-1445, Fax: 314-241-1449, Email: nila@nila-usa.com, Web Site: www.nila-usa.com

Are Laboratory Tests Commodities? The Production of Lab Test Results Is a Process, with All the Variability of Process Delivery: Specimen collection/storage/processing/labeling Personnel Equipment Materials/reagents Measurement methods Recording/reporting of results Environmental factors © 2013 National Independent Laboratory Association, 906 Olive Street, Suite 1200, St. Louis, Missouri 63101-1448 Telephone: 314-241-1445, Fax: 314-241-1449, Email: nila@nila-usa.com, Web Site: www.nila-usa.com

Are Laboratory Tests Commodities? For an Intangible Service to be a Commodity, It Must: Be widely available Be essentially uniform across providers, i.e., indistinguishable from a result provided by another laboratory Be sold primarily on the basis of price rather than quality © 2013 National Independent Laboratory Association, 906 Olive Street, Suite 1200, St. Louis, Missouri 63101-1448 Telephone: 314-241-1445, Fax: 314-241-1449, Email: nila@nila-usa.com, Web Site: www.nila-usa.com

Are Laboratory Tests Commodities? Question #1 Are clinical laboratory tests widely available? Answer: Some are, some aren’t © 2013 National Independent Laboratory Association, 906 Olive Street, Suite 1200, St. Louis, Missouri 63101-1448 Telephone: 314-241-1445, Fax: 314-241-1449, Email: nila@nila-usa.com, Web Site: www.nila-usa.com

Are Laboratory Tests Commodities? Question #2 Are laboratory test results uniform across providers with little to no differentiation in quality? © 2013 National Independent Laboratory Association, 906 Olive Street, Suite 1200, St. Louis, Missouri 63101-1448 Telephone: 314-241-1445, Fax: 314-241-1449, Email: nila@nila-usa.com, Web Site: www.nila-usa.com

Are Laboratory Tests Commodities? CLIA’s Test Categories: Highly complex Moderately complex Provider performed microscopy Waived* © 2013 National Independent Laboratory Association, 906 Olive Street, Suite 1200, St. Louis, Missouri 63101-1448 Telephone: 314-241-1445, Fax: 314-241-1449, Email: nila@nila-usa.com, Web Site: www.nila-usa.com

Are Laboratory Tests Commodities? Waived Tests Employ methodologies that are so simple and accurate as to render the likelihood of erroneous results negligible © 2013 National Independent Laboratory Association, 906 Olive Street, Suite 1200, St. Louis, Missouri 63101-1448 Telephone: 314-241-1445, Fax: 314-241-1449, Email: nila@nila-usa.com, Web Site: www.nila-usa.com

Are Laboratory Tests Commodities? Example of a Waived Test: Blood glucose from a whole blood specimen Millions performed daily Widely available Almost all systems “waived” since 1992 How uniform are blood glucose test results across providers? © 2013 National Independent Laboratory Association, 906 Olive Street, Suite 1200, St. Louis, Missouri 63101-1448 Telephone: 314-241-1445, Fax: 314-241-1449, Email: nila@nila-usa.com, Web Site: www.nila-usa.com

Are Laboratory Tests Commodities? Allowable Error Criteria American Diabetes Association Total Analytic Error <5% (all values) College of American Pathologists Greater of 20% or 12 mg/dL Whole Blood Glucose (WGB) Survey Clinical Laboratory Standards Institute 20% (>75 mg/dL) 15 mg/dL (CLSI) ISO 15197 (<75 mg/dL) (95% of Values) FDA 20% (>100 mg/dL) 12 mg/dL (<100 mg.dL) (95% of Values) © 2013 National Independent Laboratory Association, 906 Olive Street, Suite 1200, St. Louis, Missouri 63101-1448 Telephone: 314-241-1445, Fax: 314-241-1449, Email: nila@nila-usa.com, Web Site: www.nila-usa.com

Are Laboratory Tests Commodities? 2003 Table 5. Number (%) of specimens falling outside various criteria for the four meters Criteria Meter A Meter B Meter C Meter D NCCLS (C30-A)53 122 (26%) 11 (2.4%) 7 (1.5%) 28 (6.1%) ADA (1987)18 247 (54%) 23 (5.0%) 15 (3.3%) 71 (15%) ADA (1996)54 423 (92%) 233 (51%) 194 (42%) 299 (65%) FDA (1998)21 116 (25%) 4 (0.9%) 6 (1.3%) ISO 15197 (2001)22 112 (26%) 25 (5.4%) Table 6. Number (%) of specimens falling into each of the categories of clarke glucose error grid analysis Zone Categories Meter A Meter B Meter C Meter D A Accurate 339 (74%) 450 (97.6%) 454 (98%) 435 (94%) B No error in treatment 117 (25% 5 (1.1%) 5 (1%) 22 (5%) C Overtreat 1 (0%) D Failure to detect 6 (1.3%) 2 (0%) 4 (1%) E Wrong treatment 0 (0%) E Chen, Diab Tech Ther 2003;5:749 © 2013 National Independent Laboratory Association, 906 Olive Street, Suite 1200, St. Louis, Missouri 63101-1448 Telephone: 314-241-1445, Fax: 314-241-1449, Email: nila@nila-usa.com, Web Site: www.nila-usa.com

Are Laboratory Tests Commodities? 2006 CDC Study of 5 Common Meters Single Med Tech Operator 93 subjects, 12 samples obtained (2 each meter and for reference method) “Aged” and “fresh” strips used for total %CV Total CVs = 6.3 – 11.3% Difference Between Meters Varied with Concentration and Meter Pairs 1 – 32% average differences observed Kimberly, Clin Chim Acta 2006;364:292. © 2013 National Independent Laboratory Association, 906 Olive Street, Suite 1200, St. Louis, Missouri 63101-1448 Telephone: 314-241-1445, Fax: 314-241-1449, Email: nila@nila-usa.com, Web Site: www.nila-usa.com

Are Laboratory Tests Commodities? 2009 Comparison of Blood Glucose Meter Results at Barnes Jewish Hospital (St. Louis) One sample performed on 40 meters Mean value = 167 Range: 153 – 210 %CV = 8.4% 95% C.I. = 139 - 195 © 2013 National Independent Laboratory Association, 906 Olive Street, Suite 1200, St. Louis, Missouri 63101-1448 Telephone: 314-241-1445, Fax: 314-241-1449, Email: nila@nila-usa.com, Web Site: www.nila-usa.com

Are Laboratory Tests Commodities? 2012 Study by a European Multicenter Healthcare Organization 453 subjects 5 blood glucose meters tested The Mean Absolute Relative Differences (MARD) ranged from 4.9%-9.7% Only 3 meters met the ISO 15197 requirements © 2013 National Independent Laboratory Association, 906 Olive Street, Suite 1200, St. Louis, Missouri 63101-1448 Telephone: 314-241-1445, Fax: 314-241-1449, Email: nila@nila-usa.com, Web Site: www.nila-usa.com

Are Laboratory Tests Commodities? Other Problems with Blood Glucose Meters Over 12,000 adverse events reported annually to FDA Over 12,672 serious injuries reported from 2004-2008 100 deaths due to blood glucose meter errors reported from 1992 to 2009 © 2013 National Independent Laboratory Association, 906 Olive Street, Suite 1200, St. Louis, Missouri 63101-1448 Telephone: 314-241-1445, Fax: 314-241-1449, Email: nila@nila-usa.com, Web Site: www.nila-usa.com

Are Laboratory Tests Commodities? Other Problems with Blood Glucose Meters, continued March 26, 2013, Johnson & Johnson recalls 1.9 million blood glucose meters after a death of a patient in Europe April 15, 2013, Abbott Laboratories recalls its FreeStyle InsuLinx blood glucose meters after finding they display and store incorrect test results © 2013 National Independent Laboratory Association, 906 Olive Street, Suite 1200, St. Louis, Missouri 63101-1448 Telephone: 314-241-1445, Fax: 314-241-1449, Email: nila@nila-usa.com, Web Site: www.nila-usa.com

Are Laboratory Tests Commodities? Summary Blood glucose meters differ in composition technical methodology software styling instructions on use Newer blood glucose meters are getting better and more accurate. But results still vary Results are NOT uniform in quality across providers © 2013 National Independent Laboratory Association, 906 Olive Street, Suite 1200, St. Louis, Missouri 63101-1448 Telephone: 314-241-1445, Fax: 314-241-1449, Email: nila@nila-usa.com, Web Site: www.nila-usa.com

Are Laboratory Tests Commodities? Answer to Question #2: Blood glucose meter test results are NOT uniform across providers It is even highly questionable that blood glucose meters meet CLIA’s classical definition of a waived test: Waived test systems are simple laboratory examinations and procedures that Employ methodologies that are so simple and accurate as to render the likelihood of erroneous results negligible, or Pose no reasonable risk of harm to the patient if the test is performed incorrectly © 2013 National Independent Laboratory Association, 906 Olive Street, Suite 1200, St. Louis, Missouri 63101-1448 Telephone: 314-241-1445, Fax: 314-241-1449, Email: nila@nila-usa.com, Web Site: www.nila-usa.com

Are Laboratory Tests Commodities? Answer to Question #2, continued Blood glucose meters are being used in clinical settings (hospitals and physician offices) for uses that are NOT approved by the FDA For example: “Glucose meters are NOT FDA approved for use in tight glycemic control protocols in ICUs. But having said that, people (in ICUs) are using them and they are used very, very, very widely…” Dr. David Sachs, Associate Professor of Pathology, Harvard University Director, Clinical Chemistry Division, Brigham and Women’s Hospital FDA Symposium March 2010 © 2013 National Independent Laboratory Association, 906 Olive Street, Suite 1200, St. Louis, Missouri 63101-1448 Telephone: 314-241-1445, Fax: 314-241-1449, Email: nila@nila-usa.com, Web Site: www.nila-usa.com

Are Laboratory Tests Commodities? Question #3: Are laboratory tests sold primarily on the basis of price rather than quality? Answer Yes, many healthcare insurers insist that laboratory test results be sold on price, not quality © 2013 National Independent Laboratory Association, 906 Olive Street, Suite 1200, St. Louis, Missouri 63101-1448 Telephone: 314-241-1445, Fax: 314-241-1449, Email: nila@nila-usa.com, Web Site: www.nila-usa.com

Are Laboratory Tests Commodities? Conclusion Whole Blood Glucose Determination by a Blood Glucose Meter Does NOT Meet the Definition of a Commodity But Many Payers Treat It as a Commodity © 2013 National Independent Laboratory Association, 906 Olive Street, Suite 1200, St. Louis, Missouri 63101-1448 Telephone: 314-241-1445, Fax: 314-241-1449, Email: nila@nila-usa.com, Web Site: www.nila-usa.com

Are Laboratory Tests Commodities? Final Question If a Whole Blood Glucose Determination by a Blood Glucose Meter is Not a Commodity, Are the Majority of Other Laboratory Test Results (70-80%) Commodities? © 2013 National Independent Laboratory Association, 906 Olive Street, Suite 1200, St. Louis, Missouri 63101-1448 Telephone: 314-241-1445, Fax: 314-241-1449, Email: nila@nila-usa.com, Web Site: www.nila-usa.com