Stanford Hospital Patients’ Private Data Was Posted Online - NYTimes.com

A medical privacy breach led to the public posting on a commercial Web site of data for 20,000 emergency room patients at Stanford Hospital in Palo Alto, Calif., including names and diagnosis codes, the hospital has confirmed. The information stayed online for nearly a year.

Since discovering the breach last month, the hospital has been investigating how a detailed spreadsheet made its way from one of its vendors, a billing contractor identified as Multi-Specialty Collection Services, to a Web site called Student of Fortune, which allows students to solicit paid assistance with their schoolwork.

Gary Migdol, a spokesman for Stanford Hospital and Clinics, said the spreadsheet first appeared on the site on Sept. 9, 2010, as an attachment to a question about how to convert the data into a bar graph.

Although medical security breaches are not uncommon, the Stanford breach was notable for the length of time that the data remained publicly available without detection.

Even as government regulators strengthen oversight by requiring public reporting of breaches and imposing heavy fines, experts on medical security said the Stanford breach spotlighted the persistent vulnerability posed by legions of outside contractors that gain access to private data.

The spreadsheet included names, diagnosis codes, account numbers, admission and discharge dates, and billing charges for patients seen at Stanford Hospital's emergency room during a six-month period in 2009, Mr. Migdol said. It did not include Social Security numbers, birth dates, credit-card numbers or other information used to perpetrate identity theft, he said, but the hospital is offering free identity protection services to affected patients.

The breach was discovered by a patient and reported to the hospital on Aug. 22, according to a letter written four days later to affected patients by Diane Meyer, Stanford Hospital's chief privacy officer. The hospital took "aggressive steps," and the Web site removed the post the next day, Ms. Meyer wrote. It also notified state and federal agencies, Mr. Migdol said.

"It is clearly disturbing when this information gets public," he said. "It is our intent 100 percent of the time to keep this information confidential and private, and we work hard every day to ensure that."

Diane Dobson, of Santa Clara, Calif., said her "jaw dropped" on Saturday when she intercepted the letter from Ms. Meyer addressed to her 21-year-old son, who she said had received emergency psychiatric treatment at Stanford in 2009. Ms. Dobson said it could have been disastrous if her son, who lives at home, had learned that his name was linked to a mental health diagnosis.

"My son, I can tell you, is fragile and confused enough that this would have sent him over the edge," Ms. Dobson said, saying she decided to speak publicly now because of her frustration with the breach. "Everyone with an electronic medical record is at risk, and that means everyone."

Records compiled by the Department of Health and Human Services reveal that personal medical data for more than 11 million people have been improperly exposed during the past two years alone.

Since passage of the federal stimulus package, which includes provisions requiring prompt public reporting of breaches, the government has received notice of 306 cases from September 2009 to June 2011 that affected at least 500 people apiece. A recent report to Congress tallied 30,000 smaller breaches from September 2009 to December 2010, affecting more than 72,000 people.

The major breaches — a disconcerting log of stolen laptops, hacked networks, unencrypted records, misdirected mailings, missing files and wayward e-mails — took place in 44 states.

One occurred at the Lucile Packard Children's Hospital at Stanford in January 2010, when a desktop computer holding the medical records of 532 patients was stolen from the heart center by an employee. Hospital officials said at the time that no patient information was compromised.

But the California Department of Public Health fined the hospital $250,000, the maximum allowed, for failing to report the breach within five days of discovery, as is required under state law. The hospital appealed the fine, and a settlement has been reached but not yet disclosed, a department spokesman said.

The Stanford episode reinforces the fear that even the most prestigious medical centers are not immune to risk.

Massachusetts General Hospital in Boston, which trains Harvard medical students, agreed this year to pay a $1 million federal fine after an employee left paper medical records on a subway while commuting to work. The pages included the names of 192 patients, and diagnoses for about a third of them, including diagnoses for H.I.V./AIDS. They were never recovered.

The Department of Health and Human Services viewed the breach as a potential violation of the Health Insurance Portability and Accountability Act, the 1996 law that requires protection of medical records.

Mr. Migdol, the hospital spokesman, said Stanford had concluded that "there is no employee from Stanford Hospital who has done anything impermissible." He said he expected the federal Department of Health and Human Services to conduct its own investigation. Susan McAndrew, a deputy director in the department's Office for Civil Rights, said she could not discuss whether an investigation was in progress.

The vendor, identified by Mr. Migdol as Multi-Specialty Collection Services L.L.C., based in Los Angeles, is described on its Web site as a subsidiary of Texican Inc. Joe Anthony Reyna, who is listed in state and commercial records as Texican's principal, did not respond to messages left at his office and home.

Mr. Migdol said the company created the spreadsheet as part of a billing-and-payment analysis for the hospital. He said the hospital immediately suspended its relationship with the contractor and received written certification that previous files would be destroyed or returned securely.

Tina Warner, a vice president at Chegg, an online company that bought Student of Fortune in August, said the site's principals were unaware the data had been posted until informed by the hospital. They then "took it down within 30 seconds," she said. Ms. Warner said the identity of the person who posted the Stanford data could not be determined from the user name.

Bryan Cline, a vice president with the Health Information Trust Alliance, a nonprofit company that establishes privacy guidelines for health providers, said nearly 20 percent of breaches involved outside contractors, accounting for more than half of all the records exposed.

Dr. Cline said health care providers depend unjustifiably on legal contracts with vendors to protect medical records. "That just doesn't work, as we can see," he said. "You have to do due diligence, something to assure yourself that the people you're giving your data to can be trusted."

http://www.nytimes.com/2011/09/09/us/09breach.html?ref=general&src=me&pagewanted=print

Doctor Fees Major Factor in Health Costs, Study Says - NYTimes.com

Doctors are paid higher fees in the United States than in several other countries, and this is a major factor in the nation's higher overall cost of health care, says a new study by two Columbia University professors, one of whom is now a top health official in the Obama administration.

"American primary care and orthopedic physicians are paid more for each service than are their counterparts in Australia, Canada, France, Germany and the United Kingdom," said the study, by Sherry A. Glied, an assistant secretary of health and human services, and Miriam J. Laugesen, an assistant professor of health policy at Columbia.

The study, being published Thursday in the journal Health Affairs, found that the incomes of primary care doctors and orthopedic surgeons were substantially higher in the United States than in other countries. Moreover, it said, the difference results mainly from higher fees, not from higher costs of the doctors' medical practice, a larger number or volume of services or higher medical school tuition.

Such higher fees are driving the higher spending on doctors' services, the study concluded.

Ms. Glied, an economist, was a Columbia professor before President Obama named her assistant health secretary for planning and evaluation in June 2010. She said the paper, based on academic research, did not reflect the official views of the administration or the White House.

But the journal said the findings suggested that, as policymakers struggle to find ways to restrain health spending, they might consider doctors' fees. Doctors have generally been excluded from recent cost-cutting proposals because under existing law, Medicare, the federal insurance program for older people, will reduce their fees by 29.5 percent on Jan. 1. In addition, many states have frozen or reduced fees paid to doctors treating poor people under Medicaid.

The study examined fees paid by public programs and private insurers for basic office visits and for hip replacement surgery, and found that Americans were "very low users of office visits and relatively high users of hip replacement surgery."

"Fees paid by public payers to orthopedic surgeons for hip replacements in the United States are considerably higher than comparable fees for hip replacements in other countries," the authors found, "and fees paid by private insurers in the United States for this service are double the fees paid in the private sector elsewhere."

For primary care office visits, the gap between fees paid by Medicare and by public programs in other countries was smaller. But the study found that private insurers paid more for such services here than in other countries.

"U.S. primary care physicians earn about one-third more than do their counterparts elsewhere," mainly "because a much larger share of their incomes is derived from private insurance," the study said.

Ms. Laugesen and Ms. Glied said that among primary care doctors, those in the United States had the highest annual pretax earnings after expenses — an average of $186,582 in 2008 — while those in Australia and France had the lowest earnings, $92,844 and $95,585.

"Among orthopedic surgeons, those who had the highest annual pretax incomes, net of expenses, were in the United States," with an average of $442,450, the study said. In Britain, which ranked second, the comparable figure was $324,138. Annual pretax earnings of orthopedic surgeons in the other countries were less than $210,000.

Medical students often cite higher pay as a reason for choosing to become specialists, and the researchers said the income gap between primary care doctors and orthopedic surgeons was larger here than elsewhere.

"In the United States, primary care doctors earned only about 42 percent as much as orthopedic surgeons earned," the study said. "In Canada, France and Germany, in contrast, primary care doctors earned at least 60 percent as much as orthopedic surgeons earned."

"High physician fees in the United States may reflect the cost of attracting skilled candidates to medicine in a society with a relatively more skewed income distribution," the study said.

http://www.nytimes.com/2011/09/08/us/08docs.html?ref=general&src=me&pagewanted=print

Medical Practices Keep Eye on the Business Side - NYTimes.com

They do not teach business in medical school. When doctors go into private practice, they learn about profits and losses on the job, in a complex industry that is subject to large-scale forces beyond the control of most individuals.

"Overhead continues to go up, but your ability to raise prices is very limited," said Dr. J. Fred Ralston Jr., past president of the American College of Physicians and an internist with Fayetteville Medical Associates, a group practice in Tennessee that recently marked its 100th anniversary. "Never in that time — which included the 1918 flu epidemic, two world wars and at least one depression — have we been as challenged as we are now in the changing world of health care."

Given fixed Medicare payments and nonnegotiable managed care contracts, it is difficult to move the dial on revenue. So physicians looking to maintain profits often turn to controlling costs. Based on interviews with business-minded doctors, a medical practice can become a cost-efficient machine if managers control human resource expenses, spread out fixed costs as much as possible, exploit information technology and carefully track business metrics.

LIMIT STAFF COSTS "Personnel is clearly the biggest place you can save," said Dr. Jack Flyer, a physician with CardioCare in Chevy Chase, Md. In two years, the practice of 10 cardiologists cut its support staff in half, to 20 workers, by cross-training employees and working more efficiently. At the same time, patient encounters, or visits, actually climbed 20 percent.

"The days of having multiple medical assistants help you with every task is over. I do almost everything myself," said Dr. Flyer, who prescribes and takes notes electronically and greets his waiting patients before personally escorting them to an examination room.

When the practice's echocardiographers or nuclear technologists are done with their technical duties, they phone patients with reminders or to set up appointments. This also pays off when a staff member calls in sick or takes vacation. "We don't have to hire a temp to be a medical assistant or secretary," he said. "We can just take one of our billers or medical records people and slide them into a different position. Everyone in the office has a list of things to do if they're not busy doing their primary job."

Some medical practices rely heavily on part-time personnel to avoid paying benefits. But Dr. Ralston advised against getting too cheap with loyal employees whose expertise enables doctors to do their jobs. "We have low office turnover," he said, "and we really feel that is helpful in running an office efficiently."

SPREAD OUT FIXED EXPENSES Another quick fix for bloated budgets is to stretch your fixed costs across more physicians or expanded office hours. Practices with multiple doctors enjoy efficiencies that solo practitioners cannot obtain, as well as greater power in negotiating discounts with insurance companies, paper suppliers, vaccine makers and even credit card processors.

At Hopewell Dental Care outside Columbus, Ohio, for instance, the four partners see patients most evenings until 7 p.m. and on Saturdays, to spread the cost of office space over as much time as possible. "We make the most out of our physical building," said Dr. Steve Krendl. "Compared with the single practitioner who's only able to use his building clinically 36 hours a week, we're using it 60 hours."

The practice recently bought equipment to mill crowns while patients wait, which cut costs to about $45 for materials, not including staff time; the nonmaterials cost to mill a crown off site had been $190. The $150,000 price tag for the equipment is affordable because it is spread over four dentists.

"Once that equipment is paid for, that's a pretty dramatic financial benefit for us and the patient as well, if they don't have to come back a second time," Dr. Krendl said.

Big is better for Shady Grove Fertility, one of the largest fertility practices in the United States, with 13 locations around the Washington-Baltimore area, more than 400 employees and 24 physicians. "The administration is more centralized, and you're spreading it over a larger base," said Mark Segal, the practice's chief executive. "You're able to get volume purchasing discounts on supplies. That makes it very difficult for a small, one- or two-physician practice to compete. We're seeing more and more practices consolidating."

GO ELECTRONIC The 2009 federal stimulus package included incentives of up to $44,000 for each physician for adopting electronic medical records. Moreover, effective information technology systems can save physicians valuable hours in prescribing, note-taking and communicating with staff or patients.

"My time is used far more efficiently than it was in the past," said Dr. Thomas F. Long, senior partner at the San Ramon Valley Primary Care Medical Group in California. Electronic prescribing eliminates phone calls to pharmacists or patients. "With that work-flow improvement, it gives me time for an extra patient or two in the day."

Electronic records also make it feasible to win pay-for-performance bonuses from insurance companies. For instance, when all of the San Ramon Valley practice's diabetic patients with Blue Cross insurance complete a recommended blood test, the group gets a financial bonus. The practice needs software to track the eligible patient population and document that the benchmark has been met.

MONITOR AND TWEAK AS NEEDED Given the rapidly changing landscape in medicine, it is important to keep tabs on your business metrics and adjust your procedures if necessary.

Shady Grove Fertility holds monthly business meetings to track retention, yield and other metrics against past performance and industry benchmarks, on top of an annual planning retreat. New physicians are trained through a seminar on the practice's procedures, including emphasis on first appointments to establish trust and lay the groundwork for a long-term relationship with patients. "The more hand-holding you do, the more retention you get," Mr. Segal said. "Eighty percent of physicians out there don't understand that concept."

Two years ago, the credit crisis caused an enormous drop-off in patients as people were unable to tap credit cards or equity lines to pay the $13,500 to $25,000 cost of infertility treatment. Shady Grove worked with an outside company to secure financing for some patients. The practice also offers a program to let patients share eggs from a single donor, cutting the cost by as much as $6,000.

Hopewell Dental relies on a consultant for information about industry benchmarks and trends, like a decline in company-provided dental insurance. The practice monitors its patient population to ensure that everyone comes in for regular appointments as soon as they are due.

No matter how effectively they cut costs, physicians in all specialties face uncertainty over the future of group insurance and Medicare, given the continuing debate in Washington. "It's hard to do a traditional practice analysis," Dr. Ralston said. "Having a good relationship with the patients and doing the right thing for them gives you an opportunity to weather what's a difficult storm currently."

http://www.nytimes.com/2011/09/08/business/smallbusiness/medical-practices-keep-eye-on-the-business-side.html?src=recg&pagewanted=print

Why Patients Can't Sleep at the Hospital - NYTimes.com

During nursing school, I remember my first clinical instructor initiating us into one of the paradoxical truths of health care: "You don't come to the hospital to sleep."

Patients need to sleep — for emotional health, for wound healing, to maintain a strong immune system — and yet the drama of fractured and broken sleep plays out night after night in hospitals around the country.

For practical reasons, it made sense. But the patient didn't see it that way.Recently, a patient was set to be discharged the next day. But he needed a transfusion of platelets before we could remove the intravenous line that had been used to deliver chemotherapy. Thinking through the timing, the physician's assistant realized that to get everything done, and to get the patient discharged on time, his treatment would have to start early in the morning. She scheduled the transfusion for 4 a.m, which meant the patient had to be woken at 3:30 a.m. to take the medications required before a transfusion.

"Can't it be later so that I can sleep?" he asked.

I started explaining why the transfusion had to be at 4 in the morning, but the patient wasn't buying it. A kind and gentle man, he had had enough of being woken in the middle of the night. After several weeks in the hospital, he was tired. He wanted to sleep.

And there was no way for him to doze through this particular procedure. For starters, we would turn on the lights in his darkened room, and two nurses would begin reading the medical record number on his wristband. We would take a set of vital signs, connect the platelets to his intravenous line and take another set of vitals in 15 minutes. In roughly an hour the transfusion would be over, at which time the pump would start to beep annoyingly. The nurse would disconnect the I.V. line and get another set of vitals.

But the timing of the process was dictated by the need to discharge the patient early in the morning. Delaying the platelets until 8 a.m. would mean the line couldn't be pulled until 10 a.m. or later, delaying the discharge until at least noon.

Delaying a treatment for a few hours in exchange for needed sleep may not sound like a big tradeoff, but hospitals depend on "flow" and limiting a patient's "length of stay." They do this not only to accommodate new patients but also to make money. If a room that could empty at 10 a.m. does not empty until 2 p.m., that's four extra hours a patient has to wait in the emergency department or a lengthy wait time for a patient with a scheduled admission. Perhaps more important to the hospital, a room that could be generating payment from a new patient isn't earning anything from a patient who is simply waiting to leave.

There are other reasons nurses are continually required to wake patients in the dead of night. Doctors make rounds early in the morning, so we need to have the results of daily laboratory tests available by the time they get there. As a result, we start our "morning labs" at 4 a.m. Sometimes vital signs need to be taken every four hours to make sure a patient is stable. Antibiotics may be scheduled every six or eight hours, so we have to go into the patient's room in the middle of the night, scan the wristband and sign on to the computer in the room before we can hang the bags that feed the I.V. line.

We try to bundle nighttime patient care, so we disturb the patient only once, but it's not always possible. We try to be quiet, but some patients startle easily and can't get back to sleep. Most of the time, we have no choice but to turn on a light. The alarm on the I.V. pump can wake a patient who then will need pain medication to fall asleep again.

And sometimes, even the best-laid plans for sleep can go awry. One of my patients had chronic insomnia and asked for an intravenous sleep drug at 4 a.m., hoping it would help him get four solid hours of sleep. No problem, I thought. But on my way to get the drug, another patient, who was physically big and unsteady on his feet, needed to go to the bathroom and wouldn't use a bedpan. He also wanted his damp bed completely remade because he had been sweating during the night. I changed his linens, cleaned him up after he used the commode, and got him safely back into bed.

I was on my way to retrieve the sleep drug when a patient in another room, who was growing increasingly delirious, called out that she was going to be sick. I ran into the room, grabbed a basin and held it while I patted her back. In time the feeling passed, and she settled back into bed.

All that took 45 minutes, delaying my return to the bedside of the patient with insomnia. He was unhappy and complained to the aide, who was busily taking nighttime vitals, that I was very late, and that sleep still eluded him.

Nurses are taught to always think in terms of priorities. A patient who could fall going to the bathroom is a very high priority. Monitoring and comforting a delirious patient who is nauseated is a high priority, too. Sleep, unfortunately, has fallen far down on the list of priorities.

Is there a way to meet the many demands of the hospital system, while still giving our patients a good night's sleep? If there is, I haven't found it.

"Macbeth does murder sleep,'' laments Shakespeare's title character, realizing that killing his king did real violence to his own ability to get a good night's rest. "Methought I heard a voice cry 'Sleep no more!' " he imagines after killing King Duncan.

For hospital patients, the nurse is often the dreaded voice crying "Sleep no more!" That was certainly the case for the poor man who needed the 4 a.m. transfusion.

But at least, when it was over, he could finally leave the hospital and get some sleep.

http://well.blogs.nytimes.com/2011/09/07/need-sleep-stay-out-of-the-hospital/?pagemode=print

Mogul Using Own $100 Million in Race to Cure Daughter Prompts Novartis Aid - Bloomberg

Goldman Sachs Group Inc. (GS) partner Dinakar Singh discovered in 2001 that his 19-month-old daughter, Arya, had a crippling genetic disease called spinal muscular atrophy.

The malady makes the nerve cells that control muscles gradually deteriorate. There are no treatments, let alone a cure, Bloomberg Markets magazine reports in its October issue. Worse still, while the gene causing the ailment had recently been discovered, nobody in the drug industry was doing much about it, he says.

"I was fearful and anxious that treatments would be developed, but far too late to save Arya," says Singh, 42, who founded and runs New York hedge fund TPG-Axon Capital Management LP, which has $8.1 billion in assets. "We didn't want to find out 25 years later that the science was really there but there isn't a drug because nobody focused on it."

Singh, who left Goldman in 2004, has spent almost $100 million of his own money to create and fund the Spinal Muscular Atrophy Foundation. He wants to discover and develop a drug that he hopes will help his daughter, who is one of 25,000 SMA patients in the U.S. Children with severe forms often die within a few years, while those with mild cases can live a normal life span with supportive care. Arya, 11, and starting sixth grade, uses a wheelchair.

'High-Speed Initiative'

Singh's foundation is making progress. It's collaborating with Novartis AG (NOVN), which may bring a drug into human tests as soon as 2013, says Mark Fishman, research chief for the Basel, Switzerland-based drugmaker.

The foundation has pumped $13 million into PTC Therapeutics Inc. in South Plainfield, New Jersey, which has produced a pill that increases the life span of mice with SMA. It also has funded a scientist whose research has led to an injectable drug developed by Isis Pharmaceuticals Inc. (ISIS) of Carlsbad, California. That treatment may enter human trials before year's end. Singh says he'll enroll Arya if that drug gets to the testing phase before others.

"The SMA Foundation has converted this from a slow-moving exercise to a high-speed initiative," says Darryl De Vivo, a pediatric neurologist at Columbia University Medical Center in New York, who has overseen Arya's care since her diagnosis.

Frustrated with the sluggishness, or nonexistence, of medical research, Singh and a small band of wealthy parents whose children have serious illnesses are spending millions of dollars to fund drug development.

'Change the System'

These benefactors include hedge-fund managers, private- equity investors and entrepreneurs, many of whom have made their fortunes onWall Street. The principles they apply in their jobs -- managing complicated tasks, making investments and expecting positive results -- translate to their new endeavors, says Stacy Palmer, editor of the Chronicle of Philanthropy.

"Business executives have a better understanding of how markets work and have started to ask tougher questions," Palmer says. Their goal: "Change the system and whatever is slowing it down."

The new philanthropists are building on a foundation laid by well-known predecessors. John D. Rockefeller in 1901 formed the medical research institute that would become New York's Rockefeller University after his grandson died of scarlet fever. Billionaire Michael Milken, who pioneered junk bonds, founded the Prostate Cancer Foundation and FasterCures, a think tank to speed progress toward cures in all medical fields.

'Lots of Shovels'

Microsoft Corp. co-founder Bill Gates and his Bill & Melinda Gates Foundation have focused on malaria, polio and other global health threats. James Simons, founder of hedge fund Renaissance Technologies LLC, and his wife, Marilyn, started the Simons Foundation. It's the second-biggest funder of autism research, after the U.S. National Institutes of Health, according to recent data.

Benefactors such as Singh are taking a direct role in early drug research. They want to make it easier for companies to produce a medicine or venture firms to fund it. They begin with basic research discoveries, often in obscure illnesses, and advance the work. Instead of handing money to scientists and getting out of the way, they stay involved, hire experts and push researchers to work together rather than compete.

"We have focused on having lots of shovels ready and having the maps ready and having all the supplies ready, so companies are willing to prospect for SMA drugs," Singh says. His idea: "Make it easy for companies, take the risk down for them so they can get a sense cheaply and easily whether there is something there."

Arya's Efforts

Even Arya is doing her bit. In her family's 11th-floor condominium that looks north over New York's Central Park, she says she's excited about holding a bake sale to raise money for SMA research. She has just returned from precautionary tests to make sure a respiratory infection didn't become serious. Her mother pats her back when she coughs weakly. Then Arya scoots off in her wheelchair to play with her younger brother and sister.

James O'Sullivan, director of foundation services for Rockefeller Philanthropy Advisors, says about half of his 25 medical philanthropy clients at any time are interested in the hands-on approach Singh's foundation is taking, up from a handful 15 years ago.

"There is a world of difference between 10 years ago and now," says O'Sullivan, whose New York-based organization advises wealthy patrons. "Today's donors are much more interested in seeing how their dollars make a difference in a disease."

New Breed

Victoria Jackson, a cosmetics entrepreneur whose husband, Bill Guthy, co-founded direct marketer Guthy-Renker LLC, is among the new breed. Her daughter, Ali, came down with a central nervous system disorder at age 14 called neuromyelitis optica, which can cause blindness.

Since then, Jackson has spent more than $15 million on her foundation to develop treatments. Ali, now 18, has avoided severe complications by taking immunosuppressants.

Jackson says scientists often work independently with their own agendas, wasting money.

"I manage where every dime goes and make sure there is complete disclosure and collaboration among the researchers," she says.

Private Investors

Private investors may become crucial as drugmakers cut research and close labs, O'Sullivan says. Pfizer Inc. (PFE), the world's largest drugmaker, will spend $6.5 billion to $7 billion on research in 2012, down from $9.4 billion in 2010. That makes working with a foundation that already has done some of the grunt work attractive.

"Drug companies want to come in later in the R&D process and provide backing for potential therapies that have more evidence behind them than in the past," O'Sullivan says.

Singh says his foundation can focus on the science because it doesn't have to invest huge amounts of time raising money. And with no need to impress donors, the organization can spend on the business of developing lab tests and building the pieces that make it easier for companies to discover SMA drugs.

The foundation's $16 million in research spending last year almost equals the $19 million the NIH spent on spinal muscular atrophy.

Novartis saved years by taking advantage of advances made by foundation-backed scientists and the laboratory techniques they developed to test compounds for SMA. The company was able to focus on screening for drugs rather than diverting staff to basic research, says Daniel Curtis, a research manager at Novartis.

Rich Donors

The SMA Foundation and its academic partners may reap a benefit if a Novartis drug reaches the market and sells well. Singh's foundation could get back a multiple of its spending on the collaboration, says Karen Chen, the organization's chief scientific officer, who declined to give specifics. Any money would allow the foundation to reinvest in science, she says.

As an incentive for Novartis to work quickly, an agreement allows the company to repay nothing if it completes clinical trials fast enough.

Rich donors with a personal stake in a disease, while well- meaning, can divert resources from illnesses that may be closer to a cure or afflict more people, says Arthur Caplan, a bioethicist at the University of Pennsylvania in Philadelphia.

"There can be some kind of distortion of emphasis," he says.

SMA affects 25,000 Americans versus 5.4 million for Alzheimer's disease, according to the SMA Foundation and the Alzheimer's Association.

Head Start

Singh says spinal muscular atrophy is more likely to be treatable than common neurological diseases such as Alzheimer's, whose origin is uncertain. He says he wouldn't have spent as much money if he thought an SMA treatment was a long shot. Scientists already know what causes SMA, giving researchers a head start, he says.

Garen Staglin, a senior adviser at San Francisco-based private-equity firm FTV Capital, is tackling diseases that are more widespread, including schizophrenia. Staglin's International Mental Health Research Organization has raised $135 million for brain research during the past 17 years. It hosts an annual music concert at his Napa Valley, California, vineyard. Dionne Warwick was scheduled to headline a concert in September.

Staglin's son, Brandon, now 39, was diagnosed with schizophrenia in 1990. Staglin was in France on business and got a call that police had pulled Brandon over as he drove erratically.

"He told me he felt like he had lost half his brain," Staglin recalls. "He just lost his ability to think coherently."

'Run Toward It'

Rather than hide Brandon's situation, Staglin acted.

"We decided we had two choices: We could either run away from the problem like too many families with these illnesses," he says. "We wanted to run toward it."

Another effort, Staglin's One Mind for Research, is working with former Rhode Island Congressman Patrick Kennedy to get drug companies and brain researchers to collaborate on treatments for Alzheimer's, autism, schizophrenia and other conditions. This effort is based on the joint-research approach that has long been used in the semiconductor industry.

For Alexander Silver, the motivation is his 4-year-old son, Jackson. Silver, a partner at New York-based private-investment firm P2 Capital Partners, LLC, started the Jackson Gabriel Silver Foundation in 2010 to find a treatment for a rare genetic condition called epidermolysis bullosa. In the disease, a protein that holds skin layers together is missing, and the skin blisters and shears off with any friction. Half of Jackson's body is covered in high-tech bandages that cost $6,000 a month.

Cutting Red Tape

Silver, 34, who has raised more than $400,000 since 2008 and aims for $10 million or more, predicts a good treatment will come if money flows without red tape to the right projects. His foundation -- along with one run by Paul Joseph, a private- wealth broker at Morgan Stanley Smith Barney LLC whose 7-year- old son has the condition -- has backed work at the University of Southern California in Los Angeles. The research has produced a potential drug.

The approach has garnered $26 million in venture capital from Boston-based Third Rock Ventures to form a company and move the therapy in human trials.

No Budget on Life

"The skills I developed professionally matter a lot for this," Silver says. "Just like investing, you are allocating capital to the projects that have the highest probability of success and the lowest probability of failure in the quickest time frame."

For Singh, the effort to save Arya is a family affair, and he promises to spend as much money as necessary. Singh's wife, Loren Eng, has a Master of Business Administration from Stanford University and works fulltime leading the foundation.

The eight-member staff includes former researchers from Roche Holding AG (ROG) and Pfizer.

While Arya has a mild form of SMA, she has gotten weaker. She has trouble lifting her arms above her head and needs fulltime nursing. Every cold is a threat because her frail lung muscles put her at risk for pneumonia.

"I don't think there is a budget on your daughter's life," Singh says. "As long as there is a chance of doing something and we have the ability to do it, we will do it."

'In Tears'

Singh, who won't disclose his compensation, says his fund returned 60 percent in the six-and-a-half years since he started it on Feb. 1, 2005. That's more than double the Standard & Poor's 500 Index's 25 percent return during the period.

Arya, the oldest of Singh and Eng's three children, was born in March 2000 and developed normally at first. She was slow to walk, however, taking her first wobbly steps at 15 months. Within months, she began regressing. A doctor friend saw Arya's stiff gait at a party in August 2001 and told them to get it checked out right away.

Eng had become pregnant again, and two days before her delivery date, she got an abrupt call from the neurologist confirming the worst about Arya.

"Loren called me in tears," Singh remembers. "I was saying: 'What does it mean? What does it mean?' She said the doctor didn't say anything. She has SMA. That's it." Singh and Eng spent the next days in a frantic race to figure out the prognosis -- and to discover whether their second child, Kiran, also had SMA. He didn't.

'Untreatable, Incurable, Fatal'

"When we found out about it, we were told it was untreatable, incurable and fatal," Singh says.

De Vivo, the Columbia University neurologist, met the couple and explained that children like Arya have defects in or are missing a gene called SMN, discovered only in 1995. It directs cells to make a protein necessary for neurons that control muscles.

He introduced them to Columbia colleague Thomas Jessell, a motor neuron biology expert. They also met Gerald Fischbach, a neuroscientist and then dean of Columbia's health sciences and medicine faculty. All three became key advisers to the SMA Foundation.

"I met them and decided that SMA was a perfect disorder to mount a major attack on," says Fischbach, who's now scientific director for theSimons Foundation Autism Research Initiative. "The science was ripe."

'Truly Solve It'

At first Singh and Eng had planned to back existing charities, such as Families of Spinal Muscular Atrophy. They gave $750,000 in May 2002 to fund a clinic at Columbia. In 2006, they agreed to give as much as $15 million to help fund a motor neuron research center at the university.

The more they learned, the more they became convinced that, unlike most neurological diseases, SMA might be conquered.

"What struck us as different about SMA was that there really seemed to be a chance to truly solve it -- and perhaps even in a time frame that could really help Arya," Singh says.

A quirk in the genetics of SMA increased their hope. In many inherited diseases, a crucial gene is missing or defective and the protein it makes is absent or doesn't work. In SMA, the body has a backup gene that produces small amounts of the SMN protein. That's why children with the disease live at all.

By the time Singh and Eng became involved, an idea with potential to help SMA sufferers was already being discussed in the medical literature: If someone could find a chemical that could safely boost the availability of the backup protein, that discovery could form the basis of a drug. Yet as far as they could tell, no large drug or biotech company was focused on SMA.

'Terrible Gap'

"You had this terrible gap," Singh says. "There was no one saying, let us take these interesting discoveries and come up with something that could be a drug."

The couple started the foundation in 2003. Equipped with PowerPoint presentations that showed why SMA was a lower research risk than most genetic diseases that could yield a drug with $1 billion in annual sales, they approached more than a dozen companies. It was a hard sell.

At the American Academy of Neurology conference in 2004, only three of seven biotech companies they invited showed up.

"There was never an outright no," Eng says. Instead, "polite conversations went nowhere or calls were not returned."

To her, it seemed drugmakers were focused on heart disease, cancer or diabetes and their significant commercial markets. The NIH alone spends $5.8 billion a year on cancer research.

'A Buzz'

Singh and Eng started paying small biotech companies to screen for chemicals that might increase the supply of the SMN protein. They, along with other SMA charities, also funded Adrian Krainer, a researcher at Cold Spring Harbor Laboratory on Long Island in New York. He was working on a technology that had shown some promise, even though the foundation's scientific advisers said the approach was a long shot.

"There was a buzz; there was this new couple, they are very wealthy, people thought they were in a position to make a difference," says Krainer, who met Arya in 2002 when she could still walk.

For the next few years, the foundation backed research testing dozens of existing drugs to see if any of them increased the SMN protein. The scientific advisers got together in 2008 for a meeting at the Ritz-Carlton hotel in Half Moon Bay, California.

"It was the most-depressing meeting ever," Eng recalls. "It was clear we had nothing."

'Huge Implications'

By then, Arya was in a wheelchair. At this point, the SMA Foundation had captivated Novartis. In 2002, the company had appointed Fishman, a scientist and former Harvard Medical School professor, to direct research operations.

He says one idea was that success in treating rare genetic diseases might pave the way for dealing with more-common ones. Columbia's Jessell and Fischbach pitched him on SMA in 2005.

"It seemed tractable from a scientific point of view, with potentially huge implications on health," Fishman says. "Others weren't working on it, which is another good reason to do it."

Still, it wasn't until November 2007 that Novartis began its effort. It started with neurobiologist Rajeev Sivasankaran and a few assistants. Sivasankaran, 41, designed a quick way to test the more than 1 million compounds in Novartis's collection of chemicals to see if any had potential for SMA. A compound with some modest effect could become a starting point for a safe and effective medicine.

'Full-Court Press'

Novartis was lucky. By December 2009, the researchers had found a drug that improved motor function in mice with SMA.

"That got the whole group excited," Sivasankaran says. The SMA Foundation and Novartis scientists get together every three months to review progress. At a June 1 meeting, researchers from the foundation, Novartis, Columbia and Harvard crowded into a conference room to hear the latest results.

"It is a full-court press," Fishman says. "We are pushing as hard as we can."

Still, Novartis human trials are two years off at best, Fishman says.

Meantime, Repligen Corp. (RGEN), a Waltham, Massachusetts-based biotechnology company, in July began an initial safety test of its SMA drug on people. It licensed this drug from the charity Families of SMA, based in Elk Grove Village, Illinois.

More Efforts

Singh's foundation is closing in with two more efforts. PTC Therapeutics last year found compounds that boost the life span of mice with the disease. The company could begin human trials in late 2012, Chief Executive Officer Stuart Peltz says.

"It is absolutely incredible," he says. Mice that would otherwise barely be able to move look normal with PTC's drug, he says.

Singh and Eng say they're particularly excited by Isis Pharmaceuticals' progress, based on work by Krainer at Cold Spring Harbor. Isis published data in March showing that its drug could boost motor neuron levels -- and survival -- in mice with SMA. The medicine, which is injected into spaces around the spine, corrects the defect that causes the backup gene to produce too little protein.

"I have been doing drug development half of my life," says Roy Vagelos, former Merck & Co. CEO, who has followed the SMA Foundation's research. "This will be the first time if it works that a family had gotten behind a problem, a genetic defect in their own family, and come up with a solution."

Arya is very aware of her illness and the battles to conquer it, even though she doesn't like to talk about it, Singh says. She often asks her parents what her adult life will be like and why she has to be sick.

"Trying to understand what this all means is a big deal now," Singh says.

Arya's Homework

For a homework assignment last year on Egyptian mythology, Arya imagined a goddess of illness.

"She thinks of cures for sicknesses and puts hints for these cures in people's minds," Arya wrote. "She has a puppy face, puppy paws, human body and is always thinking of cures." Eng sent a copy of her daughter's essay to Novartis's Fishman.

"It hits you right where you live," he says. "That kind of innocent gratitude is the most wonderful reward you can get."

http://www.bloomberg.com/news/2011-09-07/mogul-using-own-100-million-in-race-to-cure-daughter-prompts-novartis-aid.html