By Jim Poggi
If you need any proof that the lab business is robust, clinically relevant and a powerful element of the value proposition of manufacturers and distributors alike, look no further than its technical and clinical performance over the past 30 years. Despite recessions, increasing levels of government regulation, reductions in reimbursement and the COVID pandemic, lab remains a cornerstone of healthcare in the United States. Its resilience is testament to how intertwined lab data is to diagnosis, treatment and monitoring for patients with both acute and chronic conditions.
Over the past 30 years, lab data has helped improve outcomes from virtually all of the leading causes of death, with the promise of further reductions based upon new diagnostic and metabolic markers, technology, and the application of large-scale data analysis. Join me to review some of the highlights of the past 30 years, and how the lab has played into this amazing history.
The 1990s
The back story
Presidents: George H.W. Bush and Bill Clinton. Top rock bands included Nirvana, Red Hot Chili Peppers and Pearl Jam. Top hip hop artists included Tupac Shakur, Dr. Dre and Snoop Dogg. Hit movies included the Lion King and the Big Lebowski. A new home averaged under $150,000. The average new car cost $15,000 in 1990 and $17,300 in 1999. Inflation ranged from 1.6% to 3.4%.
In the news
The Hubble telescope was launched in 1990. The Gulf War ended in 1991. The Soviet Union ended in 1991. In 1991, the world wide web entered the commercial market. In 1992, the European Union was formed. In 1994, Nelson Mandela was elected the first black president of South Africa. The first hints of the coming opioid crisis emerged in 1995 as new, more potent opioid pain medication entered the market. Google was founded in 1998.
Lab news
Prequel. In 1983, the first widely accepted laboratory molecular tests were introduced by Gen-Probe. They included chlamydia and gonorrhea and presaged a massive flood of exciting and innovative molecular tests to come in later years.
Labs by the numbers. In 1993, there were 154,000 U.S. labs. By 1999, the number was 169,000. Despite its dreaded advanced billing, CLIA ’88 did not dramatically damage the lab business.
CLIA ’88 was first officially implemented in 1992. Written into law in 1988, a variety of challenges by the lab industry and lab professional organizations resulted in multiple delays as well as changes to the original law. The big news on CLIA ’88 was two-fold. First and foremost, EVERY lab performing tests for human diagnostic purposes was to be held to the same personnel and performance standards. Secondly, lab tests were grouped into three cohorts: waived, moderate and high complexity, with personnel and testing standards escalating based on the level of complexity. Previously available tests for pregnancy, urinalysis, group A strep and home glucose monitoring were the first waived tests and represented the vanguard of the flood of waived tests to come.
Lateral flow takes hold. A large number of lateral flow test companies emerged and sold an increasingly broad range of fast, easy to use lateral flow diagnostic products. Beginning with pregnancy and strep, H. pylori antigen, influenza, RSV and other assays for pathogens emerged. Drug abuse tests also emerged. CLIA waiver and clinician demand for easy-to-use lab diagnostic tests in point-of-care settings fueled the development of lateral flow tests, with readers to improve performance on the horizon for later years. The intellectual property landscape for lateral flow had issues which will become a matter of importance a decade later.
Changing face of lab companies due to consolidation: Bayer bought the lab business of Ames and Technicon in 1990. Beckman bought Coulter in 1998. Both Quest and LabCorp acquired smaller lab companies as consolidation also was embraced by the reference laboratory business.
Going against the grain. PSS World Medical (PSS) celebrated 10 years of operations in 1993. Under the direction of John Sasen, PSS built a strong physician lab business as others withdrew or reduced focus in this area. The strategy included not only focus on the physician office space abandoned by its competitors, but also successfully courting “direct sale” lab companies, including Abbott Diagnostics, to partner exclusively with PSS outside the hospital laboratory market.
Ending the ’90s with a bang. In November 1999, the FDA issued a consent decree against Abbott Diagnostics for quality system issues dating back to 1993. Only medically necessary products for HIV and blood supply testing were permitted to be sold. Abbott pulled more than 175 products off the market.
The 2000s
The back story
Presidents: George W. Bush and Barack Obama, the first African American U.S. president. Top rock bands included Linkin Park and The White Stripes. Top hip hop artists included Nelly, 50 Cent and Jay-Z. Hit movies included Gladiator and The Dark Knight. A new home averaged $221,000 after the housing bubble burst in 2008, halting a rapid rise in home prices over the decade. The average new car cost $21,000 in 2000 and $25,300 in 2010. Inflation ranged from 3.4% in 2000 to under 2% in 2010.
In the news
The Sept. 11, 2001, attack on the World Trade Center brought terrorism home to Americans for the first time. The war on terrorism began shortly thereafter and the hunt for Al-Qaeda principals began in earnest. The EU adopted the Euro in 2002. Twenty-five percent of the world’s population had access to the internet. Ronald Reagan passed away in 2004. A global financial crisis hit between 2007 and 2008, bringing a recession to the U.S. and halting the booming U.S. housing market as home prices retreated in most markets. Concerns about climate change captured worldwide attention. Concerns about obesity, especially among the younger population in the U.S., raised interest in healthy living trends and early diagnosis of type 2 diabetes.
Lab news
Labs by the numbers. The number of labs continued to increase from 169,000 in 2000 to 221,000 in 2010.
A little scandal anyone? Theranos was founded in 2003 with the promise of cheaper, more widely available lab tests for a wide range of assays in virtually any location using its “proprietary” technology. In 2015 the technology and business model of Theranos were debunked and company principals brought under indictment. The Theranos value proposition seesawed between portable testing systems widely available at the point of care and low-cost reference lab testing using Theranos’ technology. It was learned that its technology was unreliable, not groundbreaking and many of the patient results Theranos reported from their reference lab were performed on lab instruments made by established lab companies using their technology.
Tox screening grew. As the opioid crisis took further hold, the clinical and laboratory community embraced lateral flow drug screening assays, with confirmation by more sensitive and specific means. A good news/bad news scenario unfolded. Screening for abused drugs took hold in the general workplace and transportation industry. But the opioid crisis continued to grow and some labs tested from a financial viewpoint and dodged medical necessity requirements. Ultimately new regulations regarding how often screening can be performed, which technologies can be used for confirmation and stricter guidelines for reimbursement were enacted.
We’re back… with more than 10 years of experience with CLIA during the decade, manufacturers and distributors became more comfortable with investing time and resources in the physician office laboratory market. All major distributors sought out quality manufacturing partners to re-enter or grow their presence in this market. McKesson Medical-Surgical deployed a modest new lab program in 2005 to test the waters with five specialists, one category manager and a part-time vice president of sales.
Microbiology began to undergo change. Antibiotic stewardship initiatives coupled with new technologies began to reshape traditional microbiology and led to advances in identification of organisms, as well as identification of appropriate antibiotics. On the tertiary care/hospital side of the business, increased automation, especially in microbiology where automated instrument-based methods made inroads against culture plate methods improved time to result and decreased expertise level in result interpretation. PCR, time of flight assays (MALDI/TOF MS), and others created a revolution of sorts that ultimately trickled down to the point of care market.
CLIA-waived assays on the move. Waived hemoglobin A1c assays were initially launched a decade earlier but took firm hold in the point-of-care market as greater emphasis was placed on diagnosis and management of type 2 diabetes. Waived quantitative cardiac assays including D-dimer and BNP entered the primary care market. The range of respiratory assays and their adoption grew rapidly as influenza, group A strep and RSV became commonly performed respiratory tests in both the hospital and point-of-care market. The first reader-based lateral flow testing systems from the major manufacturers improved variability by removing visual reading and also increased sensitivity.
EMR and Meaningful Use. In 2009, The Health Information Technology For Economic And Clinical Health (HITECH) Act was passed. It provided financial incentives for the changeover from paper patient records to electronic records. An initially large number of EMR companies whittled down to a smaller number as the decade moved on. Connectivity between the patient record and lab results from laboratory information systems (LIS) became a reality.
New diseases, new concerns. The SARS outbreak (SARS is also a coronavirus, similar to COVID) in 2003 was largely confined to Asia, never reaching feared pandemic status, but foreshadowed COVID a decade later. The big questions were: which pathogen would break out next? How deadly would it be? How would it be diagnosed and treated? These questions persist as some experts point to the possibility of an avian influenza pandemic in the future.
Buy the numbers. Inverness (later known as Alere) acquired lateral flow intellectual property from multiple sources as well as a number of lateral flow companies and began actions to assess royalty payments against several lateral flow companies. Abbott, Quidel, OraSure, BD and others stayed independent through royalty settlements. In 2006, Inverness acquired Acon, a major producer of lateral flow assays. Acon was divested later on. In 2006, Siemens bought the lab diagnostic business of Bayer, except its home glucose testing business.
Mapping the human genome was declared complete in April 2003. This seminal work was completed under the Human Genome Project funded by the National Institutes of Health and involved scientists from the U.S., United Kingdom, Japan, France, Germany, and China. The impact of sequencing human, bacterial and viral genomes has had widespread impacts on human health, including mRNA vaccines for COVID, cell free DNA assays and human tumor cell genotyping for cancer diagnosis and treatment. Disease states benefiting from gene sequencing technologies include cancer, heart disease, diabetes, and others.
The 2010s
The back story
The world gradually recovered from the recession begun in 2008. Baraka Obama was president followed by Donald Trump in 2016. Top rock bands included Queens of the Stone Age, Arctic Monkeys and Foo Fighters. Top hip hop artists included Drake, Future and Kendrick Lamar. Hit movies of the 2020s included Avengers: Endgame, Mad Max: Fury Road and Black Panther. The average cost of a new home was $292,700. A new car cost $24,300 in 2010, and $29,700 in 2019. Inflation averaged 1.4% during this decade.
In the news
Overall, this decade was marked by turbulence and economic and political divisiveness. Occupy Wall Street took place in 2011 protesting economic inequality. Black Lives Matter protests began in 2015 protesting police brutality and the death of Freddie Gray. Donald Trump became president in 2016. Great Britian made plans to exit the European Union in 2016. Osama Bin Laden was killed in 2011. Mass shootings in the U.S., including a school shooting in Sandy Hook, Connecticut and concert shooting in Las Vegas, increased in frequency. In 2011, New York state became the first state to recognize same sex marriage. Xi Jinping took power in China in 2013. NASA captured the first black hole images in 2019. Donald Trump was the first U.S. president to be impeached twice. The COVID pandemic appeared in late 2019, affecting over 44% of the world’s population and over 77% of the U.S. population.
Lab news
Labs by the numbers. In 2011 there were 225,700 labs in the U.S. In 2019, there were 265,700. While the number of labs continued to grow, the Protecting Access to Medicare Act (PAMA), passed in 2014 and implemented in 2018 threatened to disrupt this trend by reducing reimbursement for lab tests.
Readers changed rapid diagnostics tests/molecular became waived. In 2014, Quidel launched Sofia and BD launched Veritor readers, improving sensitivity and creating more objective test results for common respiratory infections. Alere I became the first CLIA-waived molecular respiratory testing system. System connectivity to EMR was a noted feature of these systems. Multiple molecular platforms followed, some CLIA waived, broadening the range of respiratory and infectious disease tests available.
PAMA squeezed the wrong end of the balloon. Despite lab being only 3% of Medicare spending, Congress passed legislation requiring reductions in lab payments under the Clinical Lab Fee Schedule to align Medicare lab costs with the lower fees paid by private insurance. Fee reductions were capped at 10% in years 1 through 3, and 15% in years 4 through 6. Fees were cut in the first two years, but the CARES Act followed by the Protecting Medicare and American Farmers from Sequester Cuts Act halted further cuts.
COVID beats PAMA. According to the Office of the Inspector General, Medicare Part B spending on laboratory tests increased by $1.3 billion in 2021, from $8.0 billion in 2020 to $9.3 billion in 2021. The 17% increase was the biggest change in spending since OIG began monitoring payments in 2014. Emergency Use Authorization of COVID antigen, antibody and viral RNA detection tests created over 300 new tests from a variety of manufacturers. In addition to COVID, the growth of new non-COVID genomic tests also fueled this growth in lab spending under the CLFS.
What’s in a name? Inverness changed its name to Alere, capping a decade of organic growth and growth by acquisition. Key Alere brands included Cholestech, Biosite, Binax, Wampole and HemoSense.
First CLIA waived hematology system. A waived hematology system was launched by Sysmex in 2017.
Consolidation continues in distribution. McKesson Corporation acquired PSS in 2013, creating the largest primary care distributor in the U.S. Cardinal Health sold its physician office lab business to Henry Schein in 2014.
Manufacturers make consolidation moves. Abbott buys Alere in 2016, and sells off the Triage business to Quidel and the Epoc business to Siemens in 2017 due to antitrust concerns. Abbott continues to be the largest lab manufacturer in the U.S.
The 2020s
The back story
Joe Biden was elected president in 2020 as the country found itself polarized regarding election integrity and focus on politics over legislative progress in Congress. Rock bands are surpassed in popularity by pop artists including Taylor Swift, Justin Bieber and Harry Styles. Nonetheless, the Rolling Stones launch their “60” tour in 2022 beginning in Madrid, Spain and concluding in Berlin, Germany.
Top hip hop artists included Drake, Lil Baby and Future. Movies of the 2020s included The Creator, Saw X and Reptile. The average cost of a new home was $430,000. A new car cost $48,000. Inflation began the decade at 1.4%, hit 6.5% in 2022 and currently stands at 3.7%.
In the news
The COVID pandemic resulted in widespread infection, severe disruption of the supply chain, social isolation intended to reduce the spread of infection and a rapid increase in inflation. Mental and emotional health issues rose in part due to social isolation. George Floyd was killed in 2020, leading to protests against police brutality. The first ever mRNA vaccines were developed at unprecedented speed and deployed against COVID in 2021. Russia invaded Ukraine in 2022. The James Webb telescope was launched into space with the objective of seeking out the first stars and galaxies formed following the big bang. The U.S. Capitol was attacked by rioters protesting the election of Joe Biden on Jan. 6, 2021. Political polarization impacted legislation, local and national elections and contributed to focus on social and political issues that divide the nation. Elon Musk bought Twitter for $44 billion in 2022. Hamas attacked Israel killing more than 1,000 civilians in 2023. Inflation, especially in food and housing, rose to levels not seen in the U.S. for 30 years.
Lab news
Labs by the numbers. There are 323,000 U.S. labs in 2021. While concerns continued about access to lab services in rural areas, the number of U.S. labs hit a record high.
Expanding its testing footprint dramatically. Quidel bought Ortho Clinical Diagnostics in 2022. Quidel expanded its offerings into high volume chemistry and immunoassay to complement its molecular and rapid test kit offerings.
More name games. AACC announced that it is changing its name to the Association for Diagnostics & Laboratory Medicine (ADLM) aligning its name with the expanded variety of test methodologies it supports.
AI matey. Artificial intelligence interprets linkages in complex data sets, especially in the rapidly expanding portfolio of cancer tests. Tumor genotyping predicts cancer outcomes based on large scale data sets.
Go home and test. Respiratory, pregnancy, glucose, fertility and abused drug test home testing surges following the COVID pandemic. Remote office visits increase in popularity during this same time frame.
What’s next? A few predictions emerge. Point-of-care and home testing will continue to grow. Their value will be determined by availability of test results to the patient and healthcare provider, increasing the importance of EMR and large data solutions. Population data will be mined to understand large scale health trends. Diabetes and cancer will continue to see major advances in both diagnosis and treatment. A clearer understanding of the relationship between inflammation and disease will emerge. The biggest prediction: changes will come that we cannot imagine or foresee!