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Pet Wearables – Are Companies Barking up the Right Technology by EOS Intelligence
by EOS Intelligence EOS Intelligence No Comments

Pet Wearables – Are Companies Barking Up the Right Technology?

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As the human wearables market begins to mature, a lot of interest and developments are also happening in the pet wearables space. An increasing number of pet owners becoming more technologically savvy has fueled product innovations in this segment, which traditionally was limited to GPS tracking. While location tracking continues to be the largest piece of the pie, other solutions, such as health monitoring devices, have been gaining prominence. However, this segment is still in its infancy and is toying with several technologies, such as biometrics, radar, and acoustic technology, to develop functional, accurate, and price-effective devices.

The last decade has witnessed exponential growth and advancements in human wearables. However, recent years have also seen the trend of wearables permeating the pet market. With upcoming technological advancements, the industry is expected to witness double-digit growth over the next six years and expand into new territories.

Read our related Perspective

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ID tracking is the largest category, health monitoring is growing the fastest

The pet wearables market is primarily bifurcated into four applications: ID tracking, behavior control, safety, and health monitoring. At the moment, the largest category within the market is ID tracking solutions, which comprise GPS—and RFID-based trackers that help identify and locate pets. One of the leading players in this space is US-based Tractive, which provides a GPS collar that allows pet owners to know the exact location of their pets at all times.

The fastest-growing category is health monitoring. This segment encompasses devices that monitor a pet’s vitals and general health and raise an alarm in case of any irregularities. Growing pet obesity cases have resulted in pet owners choosing health monitoring devices for their pets. A popular product in this space is the PetPace Smart Collar by US-based pet wearable company, PetPace, which tracks physiological metrics such as pulse, respiration, temperature, heart rate variability (HRV), activity level, and posture. Along with GPS tracking and emergency alerts, it helps in early symptom detection and disease management.

The behavior control segment, which is still relatively small, covers products that help teach pets appropriate behavior, such as bark collars, which deter dogs from barking continuously. An innovative and popular product in this category includes the PetSafe Treat & Train Remote Reward Dog Trainer by US-based pet-tech company PetSafe. The product allows pet owners to dispense treats remotely through an electronic trainer to induce calm behavior in case of distracting situations, as well as allows owners to reward their pets in case of good behavior.

The smallest category is safety, which is largely an extension of ID tracking and comprises pet cameras that capture a pet’s movement. Mr. Petcam is a US-based company that provides collar-mounted HD video cameras for dogs or cats, allowing pet owners to see what their pets see in the yard, at home, or during walks.

Pet Wearables – Are Companies Barking up the Right Technology by EOS Intelligence

Pet Wearables – Are Companies Barking Up the Right Technology? by EOS Intelligence

The industry is undergoing both organic and inorganic growth

Pet adoption increased significantly during the COVID-19 pandemic as people were confined to their homes and lacked social and emotional connection. As per the American Society for the Prevention of Cruelty to Animals, one in five Americans purchased or adopted a pet during COVID-19.

Many of these pet owners are adept in technology and spend vast sums of money on their pets. As pets are increasingly considered family members and with growing concerns for their health and well-being, pet wearables are experiencing a surge in popularity. The success of wearable technology for humans further fuels this trend. Moreover, increasing costs of veterinary services and treatments have propelled pet owners to invest in health and prevention-based wearables. Therefore, the industry is expected to grow significantly, especially in Europe and North America, in the coming years.

However, that being said, the industry is in its nascence and is highly fragmented at the moment. There is a large number of players fueled by several start-ups and new entrants. The industry is seeing a surge in acquisitions as players in the pet care and tech space are looking to expand their offerings to include pet wearables. Moreover, growing interest from venture capital firms is also resulting in large investments in companies showing promise in this space.

One of the leading players in the pet market, Mars Petcare, launched Companion Fund in 2018 and Companion Fund II in October 2023. The US$100 million and US$300 million venture capital funds, respectively, have been created to invest in start-ups in the pet care space, including pet wearables. Earlier, in 2016, Mars Petcare acquired the Whistle pet monitor and GPS tracker, similar to a Fitbit for dogs, for about US$117 million. This provided Mars Petcare an entry into the pet wearables space.

Several other players in the technology space have also acquired companies to expand their business to cover pet wearables. In 2019, Florida-based IoT company Smart Tracking Technologies acquired Link AKC for an undisclosed amount. This wearable pet technology company developed GPS-enabled dog collars and won the Best Innovation award at CES 2017 in the wearable technology category.

In April 2023, Ultrack, a leading global GPS tracking solutions provider, signed a contractual agreement to acquire and market Supreme Product’s wearable GPS-based Pet Tracker. The device is expected to have multiple features, such as health monitoring, behavior modification, predictive analytics, social media integration, and virtual fences.

Similarly, in May 2023, Datamars, a global data solutions company, acquired Kippy, an Italy-based GPS tracking and activity monitoring solution provider. Kippy collar’s main features include GPS tracking, customized activity monitoring and analysis, reminders and access to vet records, temperature alerts, tone and vibration training controls, a built-in flashlight, and the ability to create safe places for the pet.

While several companies are adopting the inorganic growth strategy, there is also a lot of venture capital interest, especially in ID tracking, which is the largest product category and acts as an entry point device for many customers in the pet wearables space. In 2021, Austria-based leading pet tracking company Tractive raised US$35 million Series A round (led by Guidepost Growth Equity) to expand its offerings in the USA. Similarly, in 2021, Fi, a US-based pet wearable start-up, received US$30 million in Series B funding (following a Series A funding of US$ 7 million in 2019) for its smart pet collars to expand its footprint across the USA.

Pet wearables companies seek the right tech for pet health monitoring

While most technologies used in pet wearables are fairly similar to those used in human wearables (such as GPS), one of the key differentiators is the effectiveness of biometric sensors for health monitoring. Biometric sensors are widely used in human wearables, although given the fur presence in animals, they are somewhat ineffective in the case of pets. Thus, pet wearables depend on other contactless sensors such as radar and acoustic. However, these have their own functional and developmental challenges.

Among these, acoustic sensors are some of the oldest and are used by one of the market leaders, PetPace. Acoustic technology uses sound waves to monitor a pet’s heart rate, heart rate variability (HRV), and respiratory rate. Players such as PetPace and Inupathy use this technology in their smart collars. Moreover, in 2020, the Bioengineering Department at Imperial College also developed wearable technology for sniffer dogs based on acoustic sensors.

While this technology is fairly widely used for clinically monitoring health for both humans and pets, there are certain challenges when it is translated into wearables for pets. Given external factors, such as background noise and motion artifacts, the PetPace collar is said to have only 53% heart rate detection sensitivity (i.e., in 53% of the cases, the standard deviation from measurements by PetPace and ECG was within 10%) based on a study conducted in 2020. However, based on another 2017 study, the device’s pulse monitoring accuracy levels can be much higher at 94.3%.

That being said, Tokyo-based Inupathy also uses acoustic sensors to capture a dog’s heart rate and HRV and displays colors and patterns on its pet collar to depict emotional state and heartbeat ranges. For instance, the calmest state is depicted with deep blue, whereas the most excited state is bright red. While the company claims to have 90% accuracy when compared with ECG monitors, the collar is marketed as a device to broadly understand the mental and physical state of the pet instead of accurately monitoring and projecting heart rate readings.

Thus, while acoustic technology can be used in pet wearables, it has limitations, especially regarding accuracy. With the PetPace collar being priced at about US$150 (with a monthly subscription of US$15) and Inupathy at US$200, the customer must be able to find value in the readings. One of the initial companies using acoustic sensors, Voyce, went out of business in 2016 due to slower-than-expected acceptability.

Acoustic sensors-based solutions by themselves may not be a sound product offering, however, when clubbed with other technologies and solutions, they can offer a wholesome solution to the pet owner. This can be seen in the case of PetPace Smart Collar, which, along with acoustic-based health monitoring, has additional offerings such as thermometers for temperature detection, 6-D accelerometers for activity, calories, and posture calculation, and GPS for location tracking.

A more promising and upcoming technology for health monitoring in pets is radar technology. The technology uses radio waves to enable continuous and contactless heart and respiration rate monitoring. While it is relatively new, it is expected to have better accuracy when compared with acoustic sensors. Two companies, France-based Invoxia, and Taiwan-based ITRI, launched smart collars with radar technology in 2022. Invoxia’s smart collar is priced competitively at US$99 (with a monthly subscription of US$13). It uses embedded artificial intelligence and miniaturized radar sensors to track a dog’s health. In addition, it monitors a dog’s daily activity, such as walking, running, scratching, eating or drinking, barking, and resting. The device has an accuracy of 98% for heart rate detection.

Similarly, ITRI also launched its smart wearable device, iPetWear, in 2022. The device uses contactless micro-physiological radar sensing technology to monitor a pet’s health. The sensor can monitor a pet’s heart rate, respiratory rate, sleep cycle, and activity levels through the detection of pulse and chest motion through its lower-power Doppler radar technology. The device claims to have an error rate of under 10% for heart and respiration rate and under 5% for activity monitoring. The device is priced at US$80.

Given the improved accuracies and competitive pricing of these products, it is safe to say that radar technology-based sensors can disrupt pet health monitoring wearables. However, this technology is difficult to develop, and at the moment, only a limited number of companies have managed to commercialize it.

Companies are also exploring ways to make biometric sensors effective for pets, even though furry pets present a challenge for such sensors. This is seen in the case of Invoxia, which had previously launched the radar-based Smart Collar. At CES 2024, Invoxia launched another pet wearable device, the Invoxia Minitailz Smart Pet Tracker. The tracker uses advanced miniaturized biometric sensors along with AI to track respiratory and heart vitals and detect anomalies in the behavior of both dogs and cats. In addition, it tracks a pet’s location and daily activities and can differentiate between types of movement. It also claims to be the first pet collar in the market to detect atrial fibrillation (AFib). The device also seems to have high accuracy (similar to radar technology) as it claims to have 97-99% accuracy rates for monitoring respiratory and heart vitals. The product, priced at US$99 with a monthly subscription cost of US$8.30, is relatively new in the market, and its effectiveness is yet to be established.

If Invoxia Minitailz Smart Pet Tracker is successful and delivers on its promise (with regard to accuracy and functionality), several other players will likely also explore biometric sensors for pet health monitoring.

Other technologies, such as LiDAR and infrared, are also being explored as potential alternatives. However, there are not many commercially successful solutions based on them yet.

Potential risk of data breach is one of the biggest threats to pet wearables

Given the expanding scope of all these technologies, the pet wearable market is booming. However, it comes with its own set of challenges. While companies claim to have high accuracy rates, no FDA approvals are required for pet wearables at the moment. Thus, there is no way to verify the actual effectiveness of these devices. Moreover, since they deal with critical health conditions, a missed reading or a misdiagnosis can have dire consequences. Pet owners can also not consider these devices to be a replacement for their vet visits at large, and the devices can only act as information gatherers that can help vets make quicker diagnoses.

The industry is also facing a significant obstacle in the form of substandard battery technology. Given the number of features on each device (such as GPS tracking, health monitoring, two-way communication, etc.), its continuous and real-time work requirement, and the limited lifespan of lithium-ion batteries, companies have difficulty providing sufficient battery life for their devices. In several cases, pet owners find that the battery gets discharged sooner than they can recharge it. Therefore, the device loses its purpose since it is meant to provide continuous real-time data to be effective. To mitigate this, companies are looking into other battery options, such as lead acid (less efficient than lithium-ion) and silicon carbide (a more expensive option).

Another issue with these devices is the potential risk of data breaches. Wearables collect large amounts of data about pets and pet owners. In a 2019 study by Bristol University, pet wearable devices collected four times more data about the pet owner than about the pet itself. If this data is not properly secured, it could result in data leaks and cyberattacks and put the owner at risk.

EOS Perspective

With pet ownership increasing, the market for pet wearables will undoubtedly grow. Moreover, as human wearables continue to permeate our daily lives, it is natural that pet owners are looking for a similar advanced level of monitoring for their beloved companions.

The market, which started with single functionality tracking devices, is now moving towards more complex and technologically advanced solutions. While tracking and GPS-based devices continue to form a significant portion of the market at the moment, several leading players in the space (such as Tractive) are now integrating other functionalities with their location-tracking offerings.

Thus, the market is expected to move towards multi-functional solutions that offer basic features such as tracking along with advanced features such as activity and health monitoring. Also, within health monitoring, offerings will continue to differ based on complexity. For instance, some devices offer insights only into weight and temperature changes, while more advanced devices offer heart and pulse rate monitoring. As seen in the case of human wearables, the market is likely to move towards the latter as continuous advanced health monitoring becomes a standard way of managing well-being for both humans and pets.

Given the industry’s nascence, fragmented market, lack of big established brands, and low brand loyalty, the products’ key differentiating factors are likely to remain competitive pricing, advanced offerings, and effective technology.

For this, it becomes essential for companies to stay ahead of the curve and to explore possible technologies, beyond what is effective in human wearables. Therefore, companies that are investing in exploring suitable technologies, such as radar and biometrics, for advanced features, such as heart rate monitoring, are likely to emerge as market leaders in the long run.

Moreover, the pet wearables market is likely to also benefit from integration with pet insurance in the future. Both industries have synergies as the insurance sector can gain from health-based data derived from pet wearables. On the other hand, increasing demand for pet insurance is expected to provide a push to the pet wearables market, as pet owners who track and monitor their pet’s health can negotiate better and more competitive insurance rates.

Undoubtedly, the industry is poised for steady and strong growth. The market will likely consolidate, while players offering technologically advanced wearables focused on health monitoring and priced at around US$100-150 will emerge as leaders.

The Rise and Fall of Cue Health Market Lessons and Implications by EOS Intelligence
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The Rise and Fall of Cue Health: Market Lessons and Implications

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Cue Health, the portable COVID-19 test maker, reached its zenith during the pandemic’s peak, securing investments and contracts from both government and private sectors. The company was lauded for its user-friendly, rapid-response COVID-testing kits. At its peak, Cue Health’s products were seen as game-changers, with the potential to revamp the healthcare sector by providing accurate at-home diagnostic results within minutes. However, sales of these testing kits plummeted before Cue Health could diversify and establish other revenue streams, leading to a series of layoffs and, ultimately, the shutdown of its operations.

As the public focus shifted away from the pandemic, so did the demand for testing. For Cue Health, the COVID-19 test was essentially their sole product, and this decline in demand marked the onset of turbulent times.

In the past few years, Cue Health struggled to maintain its market position and technological edge, focusing on restructuring and streamlining its operations. The company engaged in talks with potential investors and stakeholders, which did not materialize. It also implemented several cost-cutting measures to remain afloat amid financial turbulence, but these were insufficient to counter the broader economic challenges that Cue Health faced. Its share prices declined steadily, and several rounds of layoffs followed.

The final blow came when the FDA issued a warning letter and a safety alert on May 10, 2024, asking users and healthcare providers to discard Cue Health’s product. The FDA discovered unauthorized changes made to Cue Health’s COVID-19 testing kits. This ultimately led to Cue Health’s winding down operations and filing for bankruptcy in May 2024 after laying off all its employees.

Cue Health’s business failures: A look at three critical oversights

Absence of recurring revenue streams: The company’s COVID-19 testing device was a one-time purchase, and it did not need any consumables or refills. This prevented the development of a recurring revenue model, such as subscription-based services or ongoing product sales, which is essential for financial stability and sustained revenue stream. Dependence on the one-time test kit sales implied that once its demand subsided, there was no consistent income to support operations.

Top-heavy business model: Cue Health employed many individuals in leadership positions, a common mistake that start-ups tend to make. This resulted in high salary costs, even amidst financial turbulence, eventually leading to several layoffs.

Moreover, the company struggled with financial management and strategic planning. Efforts to engage with investors and stakeholders did not yield results, further compounding the company’s financial crisis.

Narrow focus: Cue Health’s business model heavily depended on a single product, the COVID-19 testing kit, which nearly constituted its complete product portfolio. This singular focus left the company vulnerable to the declining demand for COVID-19 testing kits, and it was not able to pivot quickly to diversify product offerings. Moreover, the company was also unprepared for post-pandemic market realities, which led to its decline.

Cue Health’s wind down: Repercussions for diagnostics sector and investors

Regulatory and compliance implications: Cue Health’s regulatory challenges highlight the critical need for compliance and transparency in product modifications. Consequently, other companies in the diagnostics and medical devices sector may now encounter heightened regulatory scrutiny by the FDA. To stay afloat and avoid similar pitfalls, these companies must invest more in compliance, ensuring all products meet regulatory and quality standards. This could result in better overall product quality and safety across the industry, although at a higher cost to the device makers.

Industry lesson: Cue Health’s trajectory – from swift growth to sudden downfall – serves as a case study for industry players to understand the risks associated with over-reliance on a single product and the importance of portfolio diversification. Companies operating in the diagnostics sector should leverage the company’s experience to reevaluate business strategies and enhance risk management practices.

Investor sentiment: Cue Health’s downfall, despite the substantial funding and a successful IPO, could lead to more cautious investor behavior and diminished confidence in healthcare start-ups, particularly those with a singular product focus. For future investments, investors may demand more scrutiny and rigorous due diligence. Consequently, companies may be pressured to build diversified product portfolios and more sustainable business models to mitigate risks associated with market fluctuations and regulatory challenges.

EOS Perspective

Cue Health’s shutdown highlights the volatility and unpredictability of the MedTech sector, underlining the importance of regulatory compliance, portfolio diversification, and market adaptability. While innovation and growth are imperative for staying competitive in the diagnostics sector, striking a balance with robust financial planning and risk management practices is equally important.

For other diagnostics companies, Cue Health’s downfall serves as a cautionary tale, emphasizing the importance of building sustainable business models that can withstand market fluctuations and external pressure. For investors and stakeholders, it accentuates the requirement of stringent due diligence and risk assessment for high-stakes investments in emerging health technologies.

Despite Cue Health’s closure, its journey is important. The company leaves behind a legacy of innovations, diagnostic tools, and resourceful healthcare delivery models. Other diagnostics companies can build on Cue Health’s technological foundation, learning from its experiences to navigate the complex healthcare technology landscape.

FemTech A Game-Changer in Womens Healthcare by EOS Intelligence
by EOS Intelligence EOS Intelligence No Comments

FemTech: A Game-Changer in Women’s Healthcare

Women’s healthcare is one of the most neglected and understudied fields in the healthcare sector. Despite substantial advances in medical sciences in recent years, there still exists a huge gap in the treatment of diseases that are specific to women. FemTech focuses on addressing some of these gaps and offers the potential to help tackle the longstanding issues of women’s health.

FemTech developed as an answer to inadequate healthcare for women

According to a 2018 article published in Our World in Data, a UK-based online scientific publication, human life expectancy has increased tremendously from 30 to 73 years during the last two centuries (1800–2018). But this leap has not been reflected in women’s life quality. A 2024 report published by the World Economic Forum and the McKinsey Health Institute indicated that women live 25% longer in poor health than men, although they typically outlive males.

FemTech, a group of technology-enabled solutions such as diagnostic tools, wearables, products, software, and services, aims to tackle women’s health issues, such as maternal, reproductive, menstrual, and sexual health, as well as menopause. An example is the UK-based Flo Health app that tracks ovulation and the menstrual cycle, offers customized health insights and tips, and a closed community for sharing concerns and queries. US-based Natural Cycles is another example. This application provides personalized insights based on each user’s menstrual cycle patterns. This novel approach to improving women’s health and well-being has been gaining more importance in recent years.

Several challenges slow down progress and widespread acceptance

While FemTech offers promising solutions to help diagnose and manage many health issues affecting women that were previously overlooked, several challenges are awaiting interested players.

One major bottleneck players face is the scarcity of investments. Many investors still consider FemTech a niche sector and shy away from investing compared to other healthcare fields. This situation is slightly improving, as the industry has seen an increase in investment in recent years. Data from Dealroom, an Amsterdam-based provider of data and insights on start-ups and tech ecosystems, indicated that the venture capital (VC) funding into FemTech startups reached US$2.1 billion in 2021, an all-time high.

Despite this increase in investment in FemTech, the total funding for this sector still trails other sectors, especially if it is female-led. The CEO of a leading US-based fertility tracker Mira, said in an interview with Forbes that though 70% of FemTech startups are female-founded, male-owned businesses tend to raise more capital.

Investors and lenders often have unconscious biases against female entrepreneurs, affecting their willingness to invest in female-led businesses, according to a 2020 study published in the Journal of Financial Economics, a peer-reviewed financial journal. Also, women might only have restricted access to male-dominated fundraising sources, including crowdfunding websites, angel investors, and VC firms. Similarly, the traditional male dominance in some areas, such as technology and finance, can also lead to power imbalances in fundraising and limit the options available to women.

Insufficient R&D support is another major challenge faced by players in the FemTech sector. This can be seen from the fact that a significant proportion of the funding allocated to healthcare R&D is not focused on issues that directly impact women’s health and well-being, with a meager 4% dedicated to this area according to a 2018 article published in Forbes. This insufficient funding can cause innovation stagnation, set back product development, and reduce market opportunities.

The inadequate representation of women in clinical trials is another difficulty faced by FemTech companies. This lack of representation has created a knowledge gap in understanding important facets of women’s health, such as female anatomy, physiology, health issues, etc. A 2022 study published in Contemporary Clinical Trials, a peer-reviewed journal, showed that though women constitute 50.8% of the US population, just 41.2% of those involved in clinical trials were female. This creates a certain lack of awareness of how women’s bodies work, making it challenging for FemTech businesses to develop effective solutions.

Cybersecurity issues are also creating challenges in the development of FemTech. A joint study by Newcastle University, Royal Holloway, University of London, and ETH Zurich found serious privacy, security, and safety concerns that could put users at risk. The research indicated the danger of leaking sensitive information, such as fertility, medical data, etc., to third parties.

Cultural and social taboos are another bottleneck faced by FemTech companies. Female-specific issues such as postpartum depression and premenstrual syndrome are rarely openly discussed. This makes bringing societal focus to FemTech products a difficult task.

FemTech A Game-Changer in Women's Healthcare by EOS Intelligence

FemTech A Game-Changer in Women’s Healthcare by EOS Intelligence

FemTech industry is seeing significant development in some segments

Though confronting numerous challenges, FemTech remains a promising industry for interested players with its projected market growth. The FemTech market, estimated at US$40.2 billion in 2020, is expected to reach US$75.1 billion in 2025, according to a 2021 report by the US-based market research agency Arizton Advisory & Intelligence.

General health and wellness is the fastest-growing segment

FemTech offers several solutions for improving women’s health across various segments, with general health and wellness companies attracting the most VC investment, followed by reproductive health and contraception.

The general health and wellness segment combines digital health clinics, mental health services, and direct-to-consumer products. Since companies in this segment focus on broad-ranging solutions that address multiple issues, demand for them is expected to rise.

An example is Maven, a New York-based company offering a holistic solution encompassing pre- and post-pregnancy care. This virtual clinic provides 24/7 access to healthcare professionals, including mental health therapists, relationship consultants, and sleep coaches. In 2022, Maven attracted US$300 million in funding from prominent investors and individual strategic partners.

Another example is Stockholm-based Grace Health, acquired by Penda Health, a Kenyan medical care chain in 2023. It uses an automated health assistant called Grace to monitor and understand women’s sexual and reproductive well-being and receive timely reminders and notifications. The company is also expanding its local footprint in key African markets, including Nigeria, Kenya, and Ghana, to solidify its position as a market leader in these regions.

Reproductive health segment is also seeing strong demand

The reproductive health segment and menstruation care are also expected to continue holding the interest of investors and customers alike. According to the NIH, in the USA, 20% of women are now having their first child after turning 35, owing to a greater emphasis on education and career. With increasing age, some women may experience difficulty before, during, or after pregnancy. Women will also need to effectively and accurately track their fertility to make informed reproductive choices. This is likely to greatly contribute to in increased demand for FemTech reproductive health solutions.

An example is the Clue App, a Germany-based fertility tracker that leverages user data to compute and predict individuals’ periods and PMS. In 2023, the company raised US$7.6 million in funding and partnered with global universities such as the University of Exeter to bridge the diagnosis gap for women’s health conditions. This collaboration is expected to create new trends in managing female health issues.

Oncology products are now aimed at individuals and medical professionals

Development is also underway in the oncology segment. An example is Nevada-based Cyrcadia Health developing a breast monitor that tracks changes in breast tissue temperature over time to aid in the detection and risk management of breast cancer. The monitor consists of two patches that track temperature changes and send the data anonymously to the Cyrcadia Health core lab. This data is analyzed using machine learning (ML) algorithms and predictive analytics software to identify and categorize abnormal circadian patterns in healthy breast tissue. The results are then delivered to healthcare providers. This solution, when it becomes available in the market, is expected to enable women to take more proactive control of their breast health.

Cancer continues to be a leading cause of women’s death both in middle-income and high-income countries, according to a 2017 article published in Cancer Epidemiology, Biomarkers & Prevention, a peer-reviewed journal. Therefore, the focus on FemTech oriented at breast cancer and cancer in general is expected to gain momentum in the future.

Stigmatized conditions and marginalized subpopulations are increasingly addressed

Many FemTech companies are now exploring areas beyond menstrual and reproductive care and addressing stigmatized and unmet conditions such as preterm birth, endometriosis, pelvic care, and sexual health.

An example is London-based Elvie, a company that addresses pelvic floor dysfunction, a common and often overlooked health issue affecting many women. According to the NIH, 27% of women aged 40-59 and 37% of women aged 60-79 experience some form of pelvic floor dysfunction. Elvie has developed a Kegel trainer that uses biofeedback technology to improve pelvic and sexual health through five-minute workouts. The development of these solutions is expected to persuade more women to seek treatment and improve the diagnosis of these health conditions.

Similarly, apps are also being introduced for different sections of the population such as LGBTQ+, black women, and women from low and middle-income societies. US-based InovCares, an app designed to address the crisis of maternal mortality affecting Black women, is an example. This virtual OB-GYN platform connects users with culturally sensitive healthcare professionals who cater to various health needs, including fertility, childbirth, and breastfeeding.

Solutions are being developed in various geographies

While FemTech solutions development is concentrated in the USA and Europe, it is also visible in developing geographies such as Africa and Southeast Asia. An example is Indonesia’s BukuBumil which provides information on various aspects of pregnancy, including fertility, maternal health, baby immunizations, family planning, and post-pregnancy care in the Indonesian language. The platform also allows users to track a baby’s development and milestones.

Another one is Ethiopia-based YeneHealth, a multilingual and culturally responsive platform with AI-powered trackers for menstrual cycle, pregnancy, and medication management.

AI and ML are expected to shape the future of FemTech

Technological advancements are creating waves in the FemTech industry. Many companies are developing smart wearables and AI-powered solutions. Zurich-based Ava Women has developed a wearable, the Ava bracelet (available without prescription), to track hormonal changes. It allows users to monitor their ovulation and detect potential health issues. Ava’s technology uses big data and AI to provide accurate and personalized insights.

Similarly, Ovum, an Australia-based health management app, currently in its pilot phase, offers an AI health assistant designed for women to generate a dataset to improve treatments and diagnostics of various conditions. The app integrates and stores medical records, allowing users to track their health and receive personalized recommendations. This comprehensive data repository is crucial for complex or chronic conditions such as endometriosis, where a diagnosis can take years.

Experts believe the widespread use of AI and ML in FemTech apps will help players provide more accurate and data-driven solutions to users. AI can also analyze large datasets and use predictive analytics to anticipate health risks, such as gestational diabetes or pre-eclampsia.

EOS Perspective

The FemTech landscape, though still developing, is expected to expand more and grow quickly, especially with the increasing discussion around female health, Amazon CTO Werner Vogels commented at the 2023 AWS re:Invent conference, the largest conference in the cloud computing community. He has highlighted the significant potential of FemTech to transform the female healthcare system, specifically considering that women make up 50% of the population and account for 80% of consumer healthcare decisions.

FemTech has also the potential to significantly impact the healthcare sector and the global economy as a whole in the coming years. A 2024 report by the McKinsey Health Institute indicated that improving women’s health could boost the world economy by at least US$1 trillion annually.

The market is expected to see FemTech players widen their business scope, offer multiple services, and address a broader set of health issues. An example of this trend is UK-based Peppy, which initially helped organizations better support their women staff members after they had a baby, but now also deals with menopausal issues. This shift demonstrates a broader approach to women’s health under a single solution and reflects a development towards more comprehensive and inclusive offerings within FemTech.

Since FemTech is still developing, extensive R&D can be expected in the coming years. Experts believe health issues affecting older women also offer interested parties a research investment opportunity. Even now, in discussions and debates regarding FemTech, the diseases suffered by older women get overlooked. This makes it a promising area for future developments.

As the FemTech market expands, it is likely to attract collaborations from players operating outside the healthcare sector. One of the first examples of this was seen in August 2021, when the French cosmetic giant L’Oréal partnered with Clue to research the connection between the menstrual cycle and skin health to improve its skincare products. Such collaborations, whether just publicity stunts for cosmetic companies or not, can help put FemTech solutions on the map of legitimate tools close to women’s health. Considering that FemTech is still considered a niche sector, this can draw attention to the relevance of this market and its players and, consequently, stimulate investment.

Over the long term, women-led companies are expected to create more effective FemTech solutions that identify and cater to women’s unique healthcare requirements. The key factor behind it is that women are better placed to understand the health issues affecting women. A 2022 study published in Harvard Business School’s digital research publication Working Knowledge has also indicated that female-led research teams are more likely to study conditions that impact both genders than male-led ones. With more women stepping into STEM (science, technology, engineering, and mathematics) roles and female-led FemTech start-ups emerging, there is a promise of a more comprehensive scope of FemTech solutions.

A 2023 article published in Harvard Business Review noted an important trend that may positively affect the FemTech market: female investors are more likely to invest in and support female entrepreneurs. This suggests the potential for more capital flowing into women-led businesses, including in FemTech. As more women take on senior leadership roles in both FemTech startups and VC firms, this could substantially propel the industry growth.

Gut Matter - Will FMT Change How We Look at Disease Treatments by EOS Intelligence
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Gut Matter: Will FMT Change How We Look at Disease Treatments?

Converting poop to pills was something unimaginable a few years ago, but now Fecal Microbiota Transplant (FMT) is taking the medical world by storm. This revolutionary technique, which promises to treat a wide range of diseases, from GI disorders to mental health issues, is becoming popular due to its success in treating recurrent clostridioides difficile infection (CDI), a serious infection that can damage the colon. FMT offers tremendous opportunities but also has challenges that players should consider if they want to thrive in this industry.

FMT is a procedure in which feces from a screened, healthy donor are transplanted into a recipient to balance the gut microbiota. This procedure can help treat certain infections and lessen the severity of some gut health issues.

Gut infections are usually treated using antibiotics, which can occasionally destroy beneficial bacteria. A 2000 study published in the Journal of Microbiology, a delayed open-access journal of the American Society for Microbiology, indicated that CDI recurring in around 15% to 35% of people is caused by antibiotics disrupting the gut microbiota and its balance (gut dysbiosis). Dysbiosis has been linked to several chronic illnesses, such as cardiovascular disease, inflammatory bowel disease (IBD), diabetes, and colorectal cancer (CRC).

FMT is highly efficient in treating recurrent CDI, with a cure rate of 90%, according to a 2015 study published in the American Journal of Gastroenterology. Numerous trials to understand the efficacy of FMT in treating conditions such as obesity, liver disease, ulcerative colitis, Crohn’s disease, Parkinson’s disease (PD), and IBS are underway. There are also some pre-clinical studies in progress to understand the potential of FMT in treating illnesses such as diabetes, skin issues, lung diseases, and autism.

This article is the second in EOS Perspectives' coverage 
of Fecal Microbiota Transplantation in animals and humans.

Read our related Perspective:
 Poop to Pills: Is FMT the Future of Veterinary Medicine?

FMT is showing promising growth

The human FMT sector is expected to grow at a CAGR of 5.1% and reach US$3.15 billion by 2031, according to a 2023 report published by India-based market research company The Brainy Insights.

The key factor influencing this growth is the rising incidence of GI disorders. According to the GI Alliance, a US-based network of gastroenterology providers, around 20 million Americans have chronic digestive disorders. Similarly, the CDC estimates that there are around 500,000 cases of CDI reported annually in the USA, and about 9% of elderly patients die within a month of contracting healthcare-associated CDI. All these have influenced the growth of FMT, which offers a promising solution to several conditions.

Other factors influencing the FMT sector growth are the rising patient awareness and interest in preventive healthcare and the emergence of effective probiotic strains.

There are several biotechnology companies currently involved in R&D and product development. Australia-based BiomeBank became the first company to get approval from a competent authority to market its FMT-based CDI solution called Biomictra Faecal Microbiota (colonoscopic, enema, and upper GI delivery) in November 2022. This was followed by the FDA approval of US-based Rebiotix-Ferring Pharmaceuticals’ REBYOTA (rectally administered) in the same month. Seres Therapeutics, a US-based company, has also received FDA approval for its orally delivered product Vowst (SER-109) for treating CDI in April 2023. Following Seres’ footsteps, Rebiotix-Ferring is now conducting trials to develop an oral alternative, RVX7455.

US-based Finch Therapeutics is another major company developing solutions presently undergoing phase-3 studies for diseases such as chronic hepatitis B and autism. Its solution, CP101, for treating CDI, has been discontinued.

Gut Matter Will FMT Change How We Look at Disease Treatments by EOS Intelligence

Gut Matter Will FMT Change How We Look at Disease Treatments by EOS Intelligence

The FMT sector is grappling with a multitude of pressing challenges

The FMT sector has the potential to treat numerous GI and other related disorders effectively. However, the business landscape is still marred by several challenges that players must consider.

Lack of consensus about policies is making development challenging

Regulatory hurdles are one major roadblock players face. The FDA currently regulates FMT as an unapproved biologic medicine. There is a lack of uniform guidelines for FMT, causing variations in processes, such as donor screening and processing.

The FDA took its first step toward FMT regulation in 2013. It released a set of guidelines removing the need for investigational new drug (IND) applications when FMT is used for treating CDI unresponsive to standard treatments if medical practitioners secure informed consent. However, this application is needed when FMT is used for other reasons, including safety studies.

The FDA drafted new guidance in 2016, which was finalized in November 2022. In this guidance, the FMTs acquired from stool banks are exempt from regulatory discretion. Also, the IND requirements will be waived if some conditions are fulfilled, such as getting informed consent from patients or authorized representatives and screening and testing stool under the supervision of competent healthcare professionals. There should also be no known potentially serious safety concerns, such as issues with improper handling or storage, or issues with administering product collection without the proper testing or screening. All these increase the procedural burden for healthcare practitioners. However, the FDA has indicated no regulatory policies for stool banks to reduce the administrative burden of private practice settings without the support of research staff.

Due to the significant variation in gut microbial composition among samples, FMT fails to satisfy EU drug classification requirements. Also, since human cells are not an active component of fecal matter, FMT is not covered by EU Directive 2004/23, which deals with the safety and quality of human tissues and cells. Therefore, the European Medicines Agency (EMA) has authorized the member states to regulate FMT however they see fit.

This lack of consensus has led to diverging regulatory policies, causing uncertainties for interested players and making developmental activities challenging, particularly in Europe. But despite this, many companies, such as Rebiotix-Ferring Pharmaceuticals, are making leaps in R&D.

Donor selection has social, ethical, and financial challenges

Another bottleneck that needs to be addressed is the availability and selection of suitable donors. There is a debate regarding whether the patient should know the donor or not. Also, the ideal donor should be free from chronic illnesses or infections and willing to donate. The donor is screened for obesity, antibiotic resistance, microbiome diversity, oncogenic potential, a history of antibiotic use, and risky behaviors such as drug abuse.

Stool banks require donors to follow several restrictions, such as maintaining BMI, abstaining from unhealthy eating habits such as spicy foods or saturated fatty acids, and avoiding travel to infection-prone tropical regions for an extended period. With that, donor dropout is high due to the considerable commitment needed, according to a 2019 study published in Gastroenterology, the official journal of the American Gastroenterological Association (AGA).

FMT implementation is also facing several social and ethical challenges with questions such as donor compensation, gender of the donor, donor and patient vulnerability, and commercial use of fecal matter.

Companies can launch educational drives targeted at patients and ideal donors to raise their awareness about FMT, tackle social resistance towards the procedure, and build trust with prospective donor candidates and patients. This can help reduce people’s reluctance to participate in FMT procedures.

The procedure remains risky, especially for vulnerable population

FMT is associated with an increased risk of transmitting infections such as Shiga toxin-producing E. coli (STEC) and enteropathogenic E. coli (EPEC) from the donor to the receiver. Immunocompromised patients are at a higher risk of developing side effects, according to a 2020 study published in Digestive Diseases and Sciences, a peer-reviewed journal. Similarly, a 2019 case study published in the New England Journal of Medicine, a journal of the Massachusetts Medical Society, showed a fatal infection contracted by an elderly immunocompromised individual following an FMT procedure.

Another challenge is the very few pediatric clinical trials, which makes it difficult for physicians to make the best judgments for when to initiate FMT therapy in children.

To tackle safety-related challenges, the FDA released safety advice in 2019 and 2020 regarding the possible risk of severe, potentially fatal infections associated with the procedure. Companies such as Boston-based OpenBiome have promptly modified their sample screening methodology to identify such infections.

Lack of studies on long-term effects

The lack of understanding of the long-term changes FMT can cause in a patient’s microbiota is another challenge. Several studies reveal that liver diseases, cancer, cardiovascular diseases, etc., can develop due to microbiota dysbiosis. Investment in R&D by interested and capable players can help medical professionals understand the long-term implications and complications of FMT and identify feasible solutions, which can pave the way for widespread treatment acceptance.

The sector’s future appears bright, underpinned by extensive development

FMT is a highly effective treatment for recurrent CDI. New developments have been taking place in many areas, such as administration modes, stool collection, and storage, and interested players can find opportunities in these areas. The FDA is also becoming more accepting of FMT-based treatments that show good results. This is shown by the approval of Rebyota and Vowst, both of which were more effective in reducing recurrent CDI compared to placebo in randomized controlled trials.

Stool banking and processing is another area ripe with opportunities for interested players. Conventionally, fresh stool is used for FMT, but this can increase the cost of the procedure. Stool banks are being developed to facilitate cost-effective and safe treatment. An example is OpenBiome, the USA’s first and biggest public stool bank. Stool banks can also make the standardization of stool processing and donor selection easier, according to a 2019 report published by the European Helicobacter and Microbiota Study Group.

Players can also form collaborations with healthcare professionals and research institutions to offer FMT treatments and support microbiome research. Many government organizations are also showing interest in the development of FMT therapies. The GBP500,000 grant awarded by the Biotechnology and Biological Sciences Research Council (BBSRC), a part of UK Research and Innovation, in 2022 to Norwich-based Quadram Institute (QI) to build and equip a new FMT research facility is an indication of this.

Investing in the development of FMT treatments can revolutionize the treatment of several diseases, and companies that can invest in research can gain a head start in the competition. Rigorous R&D is going on to develop FMT solutions for conditions such as obesity, depression, cancer, pediatric diseases, and autoimmune disorders such as Crohn’s disease.

A 2023 trial conducted by the US-based Emory University School of Medicine also showed that FMT can reduce the colonization of multidrug-resistant organisms in kidney transplant patients. Investigators believe more research in this field can help improve transplant success rates and decrease the chances of infection. Individual case studies have shown great improvement in cure rates for certain diseases, including mental health conditions, but more research is needed to present a solid case for product development.

EOS Perspective

FMT is gradually establishing itself as a promising solution for recurrent CDI and is expected to create waves in the treatment of numerous physical and mental health conditions despite facing several challenges.

Improvements in donor selection, early identification of certain conditions with better risk assessment, and increased treatment efficiency can be expected with ongoing research expanding the knowledge base of the medical community.

Experts are also looking into FMT’s potential as an adjunct therapy in treating diseases such as tuberculosis, and it is expected to open the door to interested players to create personalized and targeted FMT-based treatments for various diseases.

Studies are also being done to understand and substantiate the potential of gut microbiota to anticipate diseases such as IBD and CRC using AI (Artificial Intelligence) and ML (Machine Learning). ML can be used to identify biomarkers in the gut microbiota to aid in the early detection of CRC. These studies, when extended to FMT, are expected to help medical professionals identify ideal donors and improve treatment efficiency.

The Brainy Insights, in its 2023 report, predicts a growth in the probiotic infusion segment owing to the increasing studies on diabetes management. Therefore, competitive players interested in FMT can also diversify their portfolios by including consortia (multi-population systems with a broad spectrum of microbial species) and probiotic products that have the potential to offer regulated, standardized treatments. This can help them get an edge over their competitors.

Several oral FMT solutions are currently in phase-1 and phase-2 clinical trials, and many are geared toward treating conditions other than recurrent CDI. For example, US-based Vedanta Biosciences is developing FMT therapeutics for IBD, food allergies, solid tumors, etc. As research continues, it is expected that investigators will be able to identify the bacterial strains that can treat different diseases and isolate and mass-produce them, leading to a decrease in stool collection and processing and a reduction in stool transplant-related infections, but this development is expected to occur very far in the future.

Although marred by several challenges, FMT is well-positioned in the microbiome industry to obtain FDA approval and (with time) widespread acceptance. Right now, interested players can expect good returns by investing in oral FMT development, stool banking, and R&D.

Poop to Pills Is FMT the Future of Veterinary Medicine by EOS Intelligence
by EOS Intelligence EOS Intelligence No Comments

Poop to Pills: Is FMT the Future of Veterinary Medicine?

Fecal Microbiota Transplant (FMT), the transfer of healthy gut bacteria from a donor to a recipient to treat a myriad of conditions, has been gaining traction rapidly in recent years. Though the human FMT market has stolen the spotlight, the animal segment is also quietly blooming as a niche area, presenting a unique business opportunity for enterprising players.

The global human FMT market, estimated at US$2.11 billion in 2023, is projected to reach US$3.15 billion by 2031 with a CAGR of 5.1% between 2023 and 2031, according to a 2023 report published by India-based market research company The Brainy Insights. The animal FMT market is undoubtedly smaller, but it is difficult to determine its exact size due to a lack of consistent data on exact use. Also, while the human segment has many players, such as UK-based Microbiotica, US-based Finch Therapeutics, and US-based Rebiotix, Inc., the animal segment has a few competitors, such as Amend Pet and AnimalBiome, both US-based companies.

This article is the first in EOS Perspectives' coverage 
of Fecal Microbiota Transplantation in animals and humans. 

Read our related Perspective: 
Gut Matter: Will FMT Change How We Look at Disease Treatments?

Veterinary FMT is slowly but steadily growing

Increasing pet ownership is one of the most important factors influencing the growth seen in the veterinarian FMT sector. The American Pet Products Association (APPA), a Connecticut-based NPO, conducted a 2021–2022 National Pet Owners Survey, which found that 70% of US households own a pet, an increase from 56% in 1988 and 67% in 2019. A 2022 report published by HealthforAnimals, a Belgium-based global animal health association, indicated that owners are becoming more aware of their pets’ health needs. Similarly, a 2012 State of Pet Health Report released by Banfield Pet Hospital, a US-based veterinary hospital chain, has shown an increase in chronic diseases in cats and dogs.

The high incidence of diarrhea in pets also affects the FMT adoption rate. A 2008 report published in The Veterinary Record, a UK-based peer-reviewed journal, states that one of the most frequent causes of pet owners seeking veterinary care is acute diarrhea (AD).

Antibiotics are frequently used in the treatment of AD in dogs, 45% to 70%. The use of antibiotics in dogs can cause imbalances in the gut microbiota, leading to other diseases. This makes it essential to have a more holistic approach to managing pet diseases without disrupting their gut health.

The FMT sector is marred with several challenges

Though the FMT procedure offers many benefits, large-scale adoption still faces numerous challenges.

Empirical and scientific evidence is still lacking

A 2021 article published in Gut Microbes, a journal from the UK-based publishing company Taylor & Francis, indicated that the experimental information provided in preclinical FMT protocols is extremely uneven and/or lacking. The study suggested the reason for this is the lack of reliable guidelines for reporting requirements that would support efforts to replicate the study and, eventually, yield reproducible research. Many papers considered in the study lacked information on core aspects; for example, 92% had no reliable data about anaerobic conditions needed for FMT prep, and 49% had no information on efficient fecal material storage.

There is also currently minimal scientific information available in the field of veterinary FMT. Moreover, there is very little information on the therapeutic effectiveness of FMT in small animals such as dogs and cats, according to a 2016 article published in Veterinary Medicine (Auckland, N.Z.), a peer-reviewed journal. The article suggests that though adverse effects are limited in human patients, assessing whether the procedure is safe in animals is difficult.

Regulatory framework is in its infancy

Regulation is a bit complex in veterinary FMT. While there are not many specific regulations for veterinary FMT, the FDA considers FMT treatments used to prevent or treat diseases in animals as a new drug. Marketing new veterinary drugs in the USA without an approved or abbreviated new drug application is illegal. These require the manufacturer to submit information proving that a proposed generic medication is equivalent to an approved reference-listed drug (RLD) in terms of quality, safety, and efficacy. The lack of detailed clinical studies in the veterinary segment can slow down regulatory clearance. The Center of Veterinary Medicine, the US department approving drugs for pet animals, does not have any specific regulatory policy regarding the use of FMT either.

Veterinarians lack experience

Lack of technical expertise and procedural experience can also hinder FMT adoption. A 2022 study published in Topics in Companion Animal Medicine indicated that 71% of veterinarians had never performed FMT. These results were based on 155 responses from 13 different countries.

Risk of transmitting disease phenotypes is high

FMT can transmit disease phenotypes, including obesity and metabolic disorders such as diabetes, according to a 2020 study published in Medicine in Microecology, a peer-reviewed journal. Similarly, changes to the gut microbiota, such as exposure to antibiotics or the transfer of cecal material (fecal material from the bottom right quadrant of the cecum, a part of the large intestine), can affect disease phenotypes, such as an elevated risk of colitis.

Donor selection is difficult and pricey

The selection of an ideal donor is another challenge. The donor animal should be free from all kinds of parasites and pathogens and without any history of gastrointestinal diseases. Similarly, the donor should have no history of behavioral issues and should be of ideal weight. There should also be no history of antibiotic use within six months before the sample collection. Stool banks must thoroughly test the samples used for FMT, increasing procedural costs and hindering widespread acceptance and adoption of the technique among pet owners and veterinarians.

Poop to Pills Is FMT the Future of Veterinary Medicine by EOS Intelligence

Poop to Pills Is FMT the Future of Veterinary Medicine by EOS Intelligence

Numerous investment opportunities are available for interested players

Though veterinary FMT is still in its infancy, businesses still have several investment opportunities in this sector.

Focusing on extensive R&D

Veterinary FMT is a promising sector, but more research is needed to support product and service development. Since the current competition is concentrated on rigorous R&D, interested players capable of making risky research investments will likely gain an upper hand over their competitors.

The research so far has been promising, and the extensive R&D helps drive the market and build the necessary base for FMT to be recognized as a separate category for approvals. A 2022 study published in Frontiers in Immunology, a journal of the International Union of Immunological Societies, has indicated that several studies were conducted in the field of FMT from 2001 to 2021. This study analyzed key aspects such as donor selection, efficacy, and adverse effects. The incidence of minor and serious adverse effects after an FMT procedure was found to be 11.63% and 1.59%, respectively, while the overall efficacy was 76.88%.

The results from this study are promising, but they also indicate that more research is needed to understand and confirm the efficacy, safety, and quality of FMT treatments in animals. The FDA is more likely to approve these therapies with more robust evidence from newer studies, giving market players more opportunities.

Even though there is currently a lack of consensus or evidence-based standards regarding FMT dosage or donor screening for animals, a recently established international expert organization, the Companion Animal Fecal Bank Consortium, is developing guidelines in these domains. This can also be considered as a first step towards prompting FDA approval.

Developing the oral delivery route

Market players can find opportunities in developing FMT treatments administered through oral rather than nasoesophageal or rectal routes. Currently, the FMT delivery route is one of the critical bottlenecks in the more widespread adoption of the therapy.

Both nasoesophageal and rectal delivery routes are considered more efficacious but are associated with considerable risks. Nasoesophageal treatments use endoscopes that cause discomfort and aspiration and make it difficult to assess the colon mucosa or get mucosa tissue samples. In rectal FMTs, colonoscopes and anesthesia are involved, the latter often being a significant risk to the pet patient, deterring pet owners from choosing FMT. Both rectal and nasoesophageal routes are also associated with a risk of perforation, bleeding, infection, etc.

Conversely, the oral delivery route is generally preferred due to non-invasiveness and ease of use. However, oral FMT takes longer to reach the large intestine and has been perceived as less effective.

Market players can attempt to meet the preference for the oral route by building on a few research studies showing the good efficacy of oral FMT in pets. While research on animals is still limited, research in humans can be extended to identify approaches to improved efficacy of oral FMTs in treating animal GI infections. One such research was a 2017 study published in JAMA Network Open, an open-access journal by the American Medical Association, which indicated that in humans, oral FMT had efficacy in the treatment of C. difficile infection similar to that of rectal FMT.

One of the pioneers in this area is AnimalBiome, which developed an oral Gut Restore Supplement in an enteric-coated capsule (a coating that protects the medicine from the stomach’s acidic environment before it reaches the intestine and reduces side effects). The company conducted a pilot study in 2019 to observe the impact of the capsule on 40 dogs and 72 cats suffering from IBD. The study found that symptoms improved in 83% of the cats and 80% of the dogs. As the availability of such FMT solutions is still meager, there is plenty of room in the market for businesses to follow AnimalBiome’s footsteps and invest in creating oral FMT solutions.

Driving adoption through at-home administration kits

Another growth area for players is the development of user-friendly oral at-home administration kits for more straightforward treatment requirements. There is a demand for such easy-to-administer at-home solutions in the animal FMT space, as getting the pet to a vet is typically stressful for both the animal and the owner.

A 2011 survey published in the American Veterinary Medical Association (AVMA) journal indicated that out of 2,188 dog and cat owners polled, 38% of dog owners and 58% of cat owners said their pet “hates” visiting the vet. If FMT has to be repeated or spread over multiple visits, the treatment process is also time-consuming, further decreasing the likelihood of completing the therapy.

At-home application solutions can help make significant inroads into FMT acceptance, as pet owners are more likely to opt for such treatments rather than in-hospital procedures whenever possible.

Increasing specialization and targeted treatments

Developing more target FMT treatments (specific to animal breeds or conditions) appears to be a good area of opportunity. Currently, studies are being carried out to develop farm-specific FMT to treat various conditions in cattle.

A 2022 article published in PLOS One, a peer-reviewed journal, investigated the effects of farm-specific FMT on pre-weaned calves. The study indicated that FMT-treated calves’ alpha-diversity (indicating microbiota richness) had increased. It also suggested that the success of FMT will improve with proper criteria for donor selection. This offers scope for further investigation for market players to develop such targeted therapies.

Expanding through complementary products

Players can grow their FMT business by building a range of products to complement FMT therapies, such as specialized probiotics or microbiome health supplements.

A 2015 study published in BMJ Open, an open-access medical journal, has indicated that the gut microbiome can be strengthened and balanced in humans with the help of proper diet, probiotics, prebiotics, and FMT. Researchers are now looking into the positive impact of probiotics on animal health, such as improvement in digestion, lowered risk of gastrointestinal diseases, etc. With support from such research studies, players can work to offer comprehensive treatment and maintenance product lines.

Working on awareness through educational initiatives

Apart from immediate business opportunities, players might also have to get involved in activities that inform, educate, and help build the FMT market. Though it is a promising emerging therapy, very little information is available on veterinary FMT. In order to reap long-term rewards, businesses should spotlight and promote FMT and its positive effects on animal health to the vet community and the public by launching educational drives, conferences, and other similar initiatives. Existing players already recognize this need. For instance, Amend Pet, a major company in the veterinary FMT segment, has free educational courses in the form of RACE (Registry of Approved Continuing Education)-approved videos for veterinarians.

Increasing adoption through collaborations

Further, players in the FMT space should collaborate with veterinary hospitals and other organizations dealing with animal health to work with them and increase FMT adoption.

An example of this is the strategic collaboration between Amend Pet and the Association of Shelter Veterinarians (ASV) that started in May 2023. With this partnership, Amend Pet plans to offer easy-to-use and affordable FMT treatments to shelter dogs. The ASV has over 2000 veterinary professionals and 23 student chapters worldwide. Partnerships such as this can be expected to raise awareness about FMT among the public and veterinary sector, leading to improved adoption rates.

EOS Perspective

While veterinary FMT still has a long way to go before becoming a mainstream therapy, it is already an exciting field with many expected developments.

The spectrum of animal health conditions that can be treated or managed with FMT will continue to expand to include immune system disorders, metabolic conditions, and behavioral issues. Progress in the animal FMT space will likely be linked to research done in human FMT, as these studies can be extended to animal healthcare or at least be a starting point for animal FMT-specific research, revolutionizing veterinary treatments.

Improvements in donor selection processes, such as more stringent and advanced inspection of the donor’s gut microbial diversity and behavior evaluation, can be expected as many studies are now being done to understand the connection between behavior and gut microbes.

Rapid technological development, especially in AI, is expected to influence veterinary FMT as well. AI-powered equipment might be used for guided rectal FMT treatments to improve the procedures’ accuracy. This is likely to be safer for the animal and can prompt pet owners to choose FMT to treat their pet’s gastrointestinal issues. Companies investing in research can expect growth in this field.

All these developments, if accompanied by simultaneous partnerships between industry players and veterinary clinics, offer a promising future for the animal health FMT. The return on investment in this sector might not be immediate. For now, the industry needs to prioritize driving adoption, educating and disseminating knowledge, and gathering scientific data and empirical evidence to build a sound understanding of FMT in veterinarians, pet owners, and regulatory bodies. Nonetheless, the industry prospects are promising, and the players can expect the long-term benefits to be substantial.

Soaring Healthcare Costs in the USA Is Greed Winning Over Welfare by EOS Intelligence
by EOS Intelligence EOS Intelligence No Comments

Soaring Healthcare Costs in the USA: Is Greed Winning Over Welfare?

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Americans have been struggling with access to affordable healthcare for years, with thousands of stories of an unexpected illness driving a patient to bankruptcy. Meanwhile, the USA spends much more than European nations on healthcare but covers the smallest percentage of the healthcare costs. Wasteful spending, excessive administrative costs, no limit to medicines prices, lack of a single unified interface system, and passive attitude by the government are all building blocks of a wall separating Americans from the quality and affordable healthcare system expected from any developed country.

According to a 2020 article published by Harvard, the annual cost of healthcare in the USA was around US$3.5 trillion, of which around 33% is believed to have been squandered. Simultaneously, healthcare costs are soaring, contributing significantly to several issues around the delivery and affordability of healthcare in the USA. The same Harvard article revealed that about 40-44% of Americans decided to omit or postpone medical treatment, tests, or care owing to their high costs. Although the USA has the highest national healthcare expenditure, the country registers one of the lowest life expectancies among the developed economies. Additionally, around 10% of the population does not have health insurance.

This problem is so deep-rooted and widespread that the issue of healthcare costs was referred to as the “tapeworm of American economic competitiveness” by investor Warren Buffet. Almost 67% of the US population wishes the federal government to regulate healthcare prices in the country. Yet, despite it being such a grave problem, the US government does not seem to be taking any (visibly) constructive measures to resolve it. While significant political aspects are certainly at play, a deep dive into the cost drivers of the US healthcare system might shed some light on the complexity of this issue.

Soaring Healthcare Costs in the USA - Is Greed Winning Over Welfare by EOS Intelligence

Soaring Healthcare Costs in the USA – Is Greed Winning Over Welfare by EOS Intelligence

Healthcare administrative costs hold the lion’s share of total healthcare expenditure

One of the major components of healthcare costs in the USA is the annual cost of healthcare administration at US$1,055 per capita, according to a 2021 estimation by the Peterson Foundation. The US spending on healthcare administrative purposes is by far the highest globally. Compared with Germany, the second-highest spender on healthcare administration at US$306 per capita, the stark difference of US$749 per capita speaks volumes about the current situation in the USA. The country also registers the world’s highest share of administrative costs in total healthcare costs, at around 15-30% annually. Wasteful administrative spending is estimated to contribute about half of that share (7.5% to 15% of the country’s total healthcare spending), translating to anywhere from US$285 billion to US$570 billion in 2019.

The USA spent around US$950 billion in 2019 on healthcare administration, which translates to 25% of the national healthcare expenditure (NHE) that year. A significant part of the excessive administrative expenditure is billing and insurance-related costs (BIR), including overhead costs for medical billing and services such as claim submission, claim reconciliation, and payment processing. Profits made by the insurance companies account for the highest share of BIR costs. Healthcare providers also get part of these administrative costs for note-taking and record-keeping during the medical billing process. According to an article published by Harvard in 2020, there are occupations in US healthcare that do not exist elsewhere, such as medical-record coding to claim-submission specialists. Further, the article claims that in other countries, such as Germany and Switzerland, where multiple payers and private providers exist, healthcare administration costs less than 50% of the USA equivalent.

As per 2019 McKinsey research, the USA could decrease healthcare administrative expenditure by 30% through automation and streamlining of the BIR processes. Claims processing software enables automation of BIR processes, however, only 15% of US hospitals employ such software, as per Definitive Healthcare tech data.

Healthcare services costs, including physicians’ salaries, empty patients’ pockets

A 2018 JAMA study revealed that physician salaries in the USA were higher than in other developed countries. A survey by Medscape in 2021 revealed that physicians earned the most in the USA compared to other developed countries. On average, the annual income of physicians in the USA was US$316,000, followed by Germany (US$183,000) and the UK (US$138,000).

As per 2019 Commonwealth Fund research, Americans are much less likely to consult a doctor in case of a health issue, at half the rate compared to other developed countries. This can be attributed to the fact that the cost of healthcare services is considerably higher in the USA vis-à-vis other developed nations. According to a 2017 report, the average cost of a coronary artery bypass graft (CABG) surgery in the USA was US$78,100, whereas the same procedure cost only US$11,700 in the Netherlands. While the procedure cost is already far lower, in the Netherlands, patients will likely have the procedure cost fully covered by insurance without any co-payment. The USA also reported higher costs for outpatient procedures such as MRI scans and colonoscopies compared with other developed countries.

Skyrocketing prescription drug prices further inflate healthcare costs

As per OECD, in 2019, the average spending on prescription drugs by an American was about US$1,126 per capita, which was over double that in other developed nations. As per CMS, prescription drug spending in the USA by the federal government is expected to grow by 6.1% through 2027.

The growth in prescription drug spending could be attributed to increased focus on specialty pharmaceuticals and precision medicine. Specialty medicines are experimental therapies for treating cancers, autoimmune diseases, or chronic conditions. Some specialty medicines employ genetic data to provide highly targeted, personalized therapy. Owing to the complex nature of these drugs, they are generally expensive to develop and distribute.

For instance, a novel specialty drug called Hemgenix to treat hemophilia B is the most expensive drug ever approved by the FDA. The price of a single infusion of this gene therapy is around US$3.5 million. No healthcare providers have submitted a claim for Hemgenix so far in 2023.

Apart from specialty medicines, pricing strategies for drugs in general play a significant role in soaring healthcare costs in the USA. Drug producers set a list price based on their product’s estimated value, and the price list can be increased by the producers as they see fit. In the USA, there are few regulations to curb producers from increasing drug prices in this way.

Chronic diseases add fuel to the fire of escalating healthcare costs

As per the CDC, six out of ten adults in the USA have a chronic disease or condition. The most common chronic diseases or conditions in the USA include heart disease, stroke, cancer, diabetes, chronic kidney disease, and chronic obstructive pulmonary disease (COPD). Furthermore, according to 2022 research published in the National Library of Medicine, of the population 50 years and older, the number with at least one chronic disease is estimated to increase by 99.5% from 71.522 million in 2020 to 142.66 million by 2050.

There is a robust correlation between the prevalence of chronic diseases and rising healthcare costs. As per a report from the American Action Forum, the USA spends about US$3.7 trillion annually for the treatment of chronic health diseases and the consequent loss of economic productivity. Routine office visits, prescriptions, outpatient treatments, or emergency care account for most of this healthcare spending in the USA.

Expanding geriatric population contributes to rising healthcare costs

According to the US Census Bureau, 21% of the US population is expected to be 65 years or older by 2030. The growing aging population is expected to drive healthcare costs in the USA in two ways: through Medicare enrollment growth and the increase in the prevalence of more complex and chronic conditions. Medicare had over 65 million beneficiaries as of March 2023, a number that is expected to increase by 2030 dramatically. This enrollment growth will impact NHE since Medicare is a publicly funded program. As per the CMS, in 2020, the USA spent US$900.8 billion on Medicare, and the CMS expects that Medicare spending will surge by 7.6% annually through 2028.

The elderly population is vulnerable to chronic conditions such as hypertension, high cholesterol, diabetes, coronary heart disease, and Alzheimer’s disease, among others. According to the National Council on Aging, 80% of older Americans have a chronic condition, and 77% of older adults have two or more chronic conditions. These chronic conditions will require ongoing treatment or long-term care at a nursing home or assisted living facility. These outcomes will account for increasing healthcare costs and overall national healthcare expenditure in the USA.

Greed over welfare

Corporate avarice is another factor said to be responsible for the rising healthcare costs in the USA. Insulin list price in the USA is 10 times higher than that in Canada. Not only pharma companies but also renowned hospitals charge more for the same service compared with less renowned hospitals. This applies to various services, from complex surgeries to simple X-rays.

Price regulation is the only solution to this problem that could be implemented with enough political will. The US state of Maryland has introduced this regulation for hospital services, while most European countries have regulated the prices of pharmaceuticals. However, implementing price regulation would mean that the compensation of the top management executives or the CXOs would decline, or the budget for R&D would reduce. This causes much resistance among top management executives to arrive at a constructive decision of choosing between self or service. However, the fact that patients delay treatment because of rising prices speaks strongly in favor of introducing at least some level of price regulation.

EOS Perspective

Standardization is one of the key ways to decrease administrative costs. Just for comparison purposes, checking out of a grocery store is easy because all products possess bar codes, and all credit card machines are the same or uniform. Similarly, mobile banking and inter-banking are straightforward since the Federal Reserve has set standards for how banks should interface with each other.

However, the American healthcare system has been immune to such a standardization. Every health insurer needs a different bar-code-equivalent and payment-systems submission. In addition, it is tough to send electronic medical records (EMRs) from one hospital to another because there is no mandate by the federal government for them to be in compatible formats. Additionally, this lack of standardization benefits many healthcare providers, as they strive to avoid the interchange of EMRs to prevent patients from switching doctors.

Standardization is possible only when prominent stakeholders are involved in it, agree to it, and decide they need it. The largest stakeholder in the US healthcare system is the federal government. Buying capacity and administrative control to compel payers and providers to adopt billing and interface rules to standardize the process lies within the federal government’s responsibilities.

Similarly, a price cap regulation needs to be brought about in the pharmaceutical sector. Price regulation is the only way to lower the prices of prescription drugs. Apart from this, the federal government needs to implement price cap regulation in healthcare services such as X-rays, MRIs, CT scans, etc.

It is the government that should introduce regulations that put caps on drugs and services prices, at least in certain product and service groups. It is the government that should establish the infrastructure to materialize standardization and introduce a deadline by which all interactions must be standardized.

However, to date, the federal government only considers providing insurance – particularly Medicare and Medicaid – to people as its role rather than looking out for the entire healthcare system as a unit. This mentality needs to change if healthcare costs are to be brought down.

Bridging the Gap between MDx Testing and Point-of-care by EOS Intelligence
by EOS Intelligence EOS Intelligence No Comments

Bridging the Gap between MDx Testing and Point-of-care

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The COVID-19 pandemic brought innovation and investment to the in vitro diagnostics (IVD) market, opening new pathways to simplify and expand testing. The previously complicated and time-consuming molecular testing gradually started moving towards rapid testing, changing how we manage healthcare. The growing popularity of rapid testing gave way to self-sampling and at-home sampling, which is set to bring molecular testing closer to patients. Another noticeable transformation the industry witnessed post-pandemic was the rise of molecular testing at point-of-care (POC), which is set to disrupt the way clinicians deliver accurate diagnoses in record time.

The latest generation of IVD devices is focused on providing quick diagnosis and being cost-effective. This has led to IVD companies focusing on developing simpler and less invasive sample collection methods, such as self-sampling tests.

IVD innovation is also transforming molecular testing to make healthcare more accessible. To a certain extent, dependence on laboratories is gradually decreasing with molecular testing available at POC. A key development in this area is the use of multiplex assay, which allows to test for multiple pathogens simultaneously, allowing for early diagnosis.

Molecular testing moving near-patient

After using antigen tests during COVID-19, demand for molecular testing for a variety of diseases at POC has risen drastically. In 2023, the industry faced an acute shortage of skilled laboratory staff, further increasing the need for molecular testing to move near-patient. This has resulted in physicians and patients preferring molecular tests at POC (MPOC). Some prominent industry players, such as Cepheid, Abbott, and BioFire, offer CLIA-waived PCR instruments and multiplex assay tests for the POC setting. A CLIA-waived certification allows tests to be performed at a doctor’s office by a non-technician instead of other more complex MDx tests requiring specialized technicians.

Moving these multiplex molecular tests near-patient is revamping the IVD landscape, positively impacting both the patients and payers. Early diagnosis with POC diagnostics empowers physicians with evidence-based decision-making at an early stage. Moreover, with multiplex assays increasingly being used for MPOC and delivering results within 10-25 minutes (in the case of respiratory assays), the wait time for patients to receive the correct diagnosis has reduced substantially. This results in clinicians being able to start with proper treatment on the patient’s first visit, thus reducing the total number of patient visits. Consequently, physicians are also able to accommodate a higher number of patients.

In fact, MPOC could become a critical element of the value-based care model in the USA. The value-based program incentivizes healthcare providers/physicians to provide quality healthcare. With MPOC offering quicker turnaround time and lower testing costs, physicians/payers will likely be better incentivized and motivated to deliver high-quality services.

Growing demand for self-sampling/at-home sampling

The pandemic raised public awareness regarding the use of self-sampling kits and increased demand for them. Further, the FDA granted Emergency Use Authorization to multiple assays during the pandemic to quickly onboard self-test kits and penetrate the US households with this novel testing method.

Driven by the convenience, cost-effectiveness, and accessibility offered by self-sampling kits, they are becoming increasingly popular, particularly amongst the aging population that needs tools and technologies to manage health at home. It is also proving to be a sustainable testing method, as it can be used for preventative screening as well as allows for discretion for patients who may not prefer to get tested in a laboratory or by a physician, particularly in case of sexually transmitted infections (STIs).

Additionally, unlike OTC tests, molecular diagnostic tests allow for better accuracy in results and are recognized by the FDA for clinical diagnosis use. This has given confidence to healthcare providers to advocate self-sampling, as they stand to benefit from bringing care to patients’ homes, eventually reducing healthcare expenses. In a value-based setting, at-home testing proves to particularly benefit physicians who are able to eliminate unnecessary patient visits.

For the prominent industry players, at-home testing represents a key opportunity area to grow in the niche direct-to-consumer testing segment. Companies are also using these tests as an opportunity to target the rural population who do not have easy access to laboratories. Besides infectious and respiratory diseases, companies are now trying to foray into other treatment areas, such as human papillomavirus (HPV). Self-sample collection for HPV has begun in Europe with BD’s Onclarity HPV assay.

EOS Perspective

Establishing a strong foothold in both self-sampling and MPOC segments is seen as a sizeable business opportunity for stakeholders of the IVD market. In the near term, it is likely for the IVD players to continue launching new assays and technologies to expand offerings.

For self-sampling, MDx players have been focusing on infectious diseases, and there still is a vast untapped market for self-sampling at home, specifically when testing for STIs. In November 2023, LetsGetChecked became the first company to secure FDA approval for chlamydia and gonorrhea at-home sample collection. This has opened doors for other players to enter this niche market, and they are likely to jump on the bandwagon by seeking FDA approvals for their STIs self-sampling kits. Major players, such as Hologic, are already gathering data to launch a self-collection device for STIs. Hologic’s Aptima Swab for STIs multi-testing is approved in the EU, and the company is now conducting trials to get approval in the USA.

In the near term, a noticeable trend in the MPOC segment is expected to be the focus of MDx players on developing multiplex assays that follow the ‘one-size-fits-all’ approach. There is a growing demand from physicians for multiplex assays that allow them to test for multiple viruses and deliver results in under four hours. Companies have already started to take matters into their own hands by focusing their R&D efforts on developing panels and preparing them for FDA approval and CLIA waiver. Becton Dickinson announced the launch of its first molecular diagnostics POC instrument, BD Elience, by 2025. The device is expected to allow panel testing for respiratory and sexually transmitted diseases.

Although the self-sampling and MPOC segments present many opportunities for the IVD stakeholders, some roadblocks may hinder their development and adoption. For instance, multiplex assay reimbursement schemes may hamper their widespread adoption in the POC setting. Per the latest guidelines, reimbursement schemes for multiplex assays are less favorable than those for singleplex assays. Furthermore, at present, there are no reimbursement schemes in place to reimburse for self-sampling at home, so patients are required to pay out-of-pocket.

Several players face a crucial challenge for at-home collection: proving to the FDA that the self-sample collected is not contaminated or poorly taken. FDA requirements for approval of these tests are very stringent and demand that companies prove the adequacy of the sample collected by patients to match that of laboratory collection.

Despite these challenges, self-sampling and MPOC present untapped opportunities for many IVD players seeking to expand their capabilities and offerings to position themselves better in the MDx market.

Genetic Testing Fraud – The Next Big Concern for the US Healthcare Industry by EOS Intelligence
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Genetic Testing Fraud – The Next Big Concern for the US Healthcare?

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Over the past few years, lab fraud has become a concern in the USA with the increase in financial gains obtainable through fraudulent billing practices, unnecessary testing, bundling of expensive tests (such as tests for rare respiratory pathogens or genetic tests) with COVID-19 tests, and increase in the number of genetic testing labs. A recent update in the compliance and regulatory requirements and increased focus on analyzing fraud testing schemes are expected to help curb lab fraud in the country.

Genetic testing, due to its increased use in the healthcare industry, is a particularly lucrative fraud target. Despite the presence of various compliance programs and regulations, several laboratories, together with patient brokers, telemedicine companies, and call centers, commit fraud and defraud Medicare. This strains the healthcare system as it increases healthcare costs and influences the patients’ trust in testing, labs, and other stakeholders.

Clinical labs face less scrutiny than full-service health centers. Thus, they are more frequently involved in lab fraud activities. Some of the most commonly noticed lab fraud cases in the USA include kickback schemes, fraudulent billing, and unnecessary testing, among others. Labs team up with parties such as patient brokers to get patients, doctors to refer patients or prescribe unnecessary tests, telemedicine companies to order tests, and call centers to target Medicare beneficiaries and then defraud Medicare by submitting claims.

Lab fraud in genetic testing has emerged in the USA over the past few years due to sprouting genetic testing labs across the country and the increasing use of such tests in health practices to assist disease diagnosis and predict disease risk. Genetic testing enables healthcare providers to offer personalized medicine based on the individual’s genetic makeup and helps identify how the patient will respond to treatments. Genetic testing fraud, mainly targeting cancer screening, pharmacogenetics, and cardiovascular diseases, is on the rise.

One of many such fraud cases was noted in August 2023, when LabSolutions LLC, based in Georgia, USA, submitted over US$463 million worth of unnecessary genetic and other laboratory tests to Medicare, the national health insurance program, of which Medicare paid over US$187 million. These tests were obtained through kickbacks and bribes. The scale of similar fraud is evident from the fact that in July 2022, the Department of Justice announced criminal charges against 36 defendants in 13 federal districts for more than US$1.2 billion in fraudulent telemedicine, cardiovascular and genetic testing, and durable medical equipment purchases.

The COVID-19 outbreak in 2020 further spiked fraud cases, as it gave an opportunity to bundle COVID-19 testing with other forms of expensive testing that patients did not need, including genetic testing for various diseases and tests for rare respiratory pathogens. Financial incentives offered by the federal government to encourage participation in COVID-19 control-related businesses also attracted fraudsters in the laboratory business. According to the US Department of Health and Human Services report, in May 2023, around 378 labs billed Medicare Part B for add-on COVID-19 tests at high volume and payment amounts. Of these, around 276 labs billed for more add-on tests, such as billing Medicaid for COVID-19 tests alongside respiratory pathogen panels (RPPs), individual respiratory tests (IRTs), allergy tests, and genetic testing. An additional 161 of these 378 labs also reported higher costs than usual for add-on testing.

Lab fraud behind money loss, erosion of trust, and increased insurance premiums

Lab fraud causes a significant adverse effect on the integrity and quality of the healthcare system as unnecessary testing and fraudulent billing practices increase healthcare costs, compromise the accuracy and reliability of diagnostic tests, and erode trust in healthcare providers, including doctors and hospitals, among others. Healthcare providers who unknowingly refer patients to fraudulent labs are also likely to face a reputation hit.

Above all, healthcare fraud can cause tens of billions of dollars in yearly losses. According to the National Health Care Anti-Fraud Association, taxpayers are losing over US$100 billion annually to Medicare and Medicaid fraud, including billing for unapproved COVID-19 tests, genetic testing fraud, home healthcare billing, and fraud billing for medical equipment.

Companies manufacturing genetic testing kits may face reputational damage if their products are used in the genetic testing fraud scheme. This is expected to negatively impact their market presence as customers/patients will lose confidence and will likely move to reputed competitors. Also, healthcare providers may stop referring the company products to their patients.

Increasing fraud will likely drive the need for more stringent regulations for genetic companies manufacturing genetic testing kits (requiring compliance in conducting in-depth clinical studies, providing extensive data, maintaining necessary documentation, labeling and packaging requirements, etc.). This is expected to increase the operational costs for genetic testing companies and, thus, the price of genetic testing services. Ever-increasing genetic testing fraud is expected to potentially disrupt the market’s growth trajectory as patients become more cautious. Individuals are likely to receive tests that are not appropriate or required and may become skeptical about the necessity and accuracy of the test result.

Read our related Perspective:
Commentary: The Promise of Comprehensive Genomic Profiling in the USA

Lab fraud also increases insurance premiums as fraudulent activities increase the cost of claims, which in turn increases insurance companies’ expenses. The insurance companies are bound to raise premiums to cover additional costs. Additionally, individuals receiving genetic testing through fraud schemes will likely be denied future coverage. This is because many genetic tests for inherited diseases are offered as a one-time payment for a lifetime of coverage, and fraud schemes can compromise the individual’s access to this benefit.

Regulatory updates and strategies aimed at combating lab fraud

Preventing lab fraud is crucial to maintaining the integrity of scientific research and the functioning of healthcare systems. Lab fraud can be prevented, or at least significantly diminished, by establishing comprehensive compliance programs, stringent licensing and certification requirements for labs and healthcare providers, encouraging employees and stakeholders in labs and healthcare organizations to report any suspected fraud incidences, education, secured data handling, continuous monitoring, improved medical billing processes, and enforcing penalties and legal consequences.

In January 2023, the US government updated compliance and regulatory requirements for laboratories to prevent lab fraud. As per the updates, the laboratories must submit a medical necessity document supporting the ordered test, progress note, and the treating doctor’s signature to support a claim.

Also, providing incentives to physicians to encourage them to refer patients for lab services will be considered a violation of the federal Anti-Kickback Statute, and both laboratory and healthcare professionals will face legal consequences.

Laboratories that fail to adhere to lab billing guidelines published through National Coverage Determinations (NCDs) or Local Coverage Determinations (LCDs) will face civil liability and triple damages under the False Claims Act.

The government also continued its scrutiny of medically unnecessary genetic testing schemes, audited genetic labs, and tried to recoup funds where the medical necessity requirement was unmet. Also, the Office of Inspector General (OIG) issued a fraud alert warning the public about the proliferation of COVID-19 testing and genetic testing scams.

Moreover, in June 2023, the US Food and Drug Administration (FDA) took a crucial measure to regulate an extensive array of laboratory tests, including prenatal genetic screenings, to ensure test result accuracy and prevent unreliable outcomes. The US FDA ensures that the lab test delivers results as claimed by the lab test developer by analyzing the device’s accuracy, specificity, clinical characteristics, and analytical sensitivity. Regulating these laboratory tests will likely reduce the chances of fraud, as laboratories will not be allowed to run specific tests if they are not cleared or approved by the FDA.

EOS Perspective

Increased awareness about genetic testing and its easy accessibility have made it more vulnerable to lab fraud in the country. Genetic testing scams are evolving significantly wherein the scammers (a lab owner or a genetic testing company’s representative) are offering free screening, cheek swabs, or testing kits for genetic testing to get the individual’s Medicare information and submit claims. An increase in the number of genetic testing companies manufacturing direct-to-consumer genetic testing kits is expected to further contribute to genetic testing fraud as it will become easier for lab owners to get access to genetic testing kits and scam Medicare beneficiaries.

Also, the introduction of new tests creates potential opportunities for lab fraud as the lack of proper oversight and safeguards makes it easier for lab fraudsters to exploit gaps while appropriate regulatory norms for those tests are being developed. Thus, there is an increased need to set the regulatory norms for any new tests being developed before they are put to use.

While various compliance and regulatory measures are in place to prevent lab fraud, ethical practices, education, and training for lab employees will likely play a significant role in preventing lab fraud in the country. Many healthcare professionals are often involved between doctors prescribing the test and the persons administering the test. Thus, it becomes challenging to determine whether the referrals are conducted efficiently.

In addition, strong collaboration among healthcare insurers, healthcare providers, and the government can also help prevent this kind of fraud. The government plays a vital role here, as it has the tools to lay more emphasis on continuous monitoring and auditing of genetic testing labs to keep track of lab activities and prevent fraud cases.

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