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DNA VENDORS, BLOCKCHAINS AND HEALTH

DNA VENDORS, BLOCKCHAINS AND HEALTH

From both individual patient and population health perspectives, blockchain technology offers, for the first time, the prospect of patients owning and controlling their own health data. A longitudinal blockchain heath record offers the patient immediate access to an encrypted, secure and portable health record. The health blockchain not only offers to support a lifetime of health records from encounters with primary care providers, specialists, urgent care, emergency rooms and hospitalizations but also, through the ability to control access, the option of contracting with third parties for monetization of selected data elements. These promises can only be ensured if the patient has unencumbered property rights. These rights, in turn, establish a marketplace for health data. Participation in that market is at the discretion of the patient. Unless a market contract is in place third parties who may wish to exploit the data for their own purposes are excluded.

Medical record data are a valuable commodity. Property rights, whether real or perceived, will not be surrendered. If this is the case, then we have the prospect of years of litigation by those attempting to defend the status quo. Well-funded K-street lobbyists will descend en mass on pliable members of congress to argue for the retention of property rights. The losers will be patients and health care providers (who will typically have waived property rights), not only in terms of a potential market for health records and monetization but, more significantly, limited access to data that may be critical to the process of care and health outcomes. Rent seeking trumps health.

The recent announcement by Companies, a leading DNA vendor, gives us a foretaste of actions likely to be undertaken to protect revenue streams. Rather than allowing individuals, who have purchased a DNA profile from Companies and who, presumably, have the property rights to that profile, to allow that profile to be accessed by third parties, Companies has imposed unilaterally arbitrary (and not particularly subtle) barriers to data access. There is no justification other than to inhibit the emergence of a DNA marketplace. If there are barriers to market entry, then just as a monopolist can protect its exorbitant pricing policies and resulting excess profits, the DNA vendor can effectively forestall competition.

Any DNA vendor who sells profiling and then turns round to sell the profiles to third parties will adopt a similar strategy; a strategy that will find favor for other assays and laboratory results if these have value to third parties. The prospect of a patient or patient groups, possibly in association with providers, enforcing property rights is anathema. Why? Because if property rights are assigned to the patient, the vendor will have to contract with the patient for access. If the market is competitive third parties will engage in a bidding war until a market clearing price is established (remember your Economics 101). Until a market is in place we will have no idea of the value of DNA data.

Once a blockchain market is established with blockchain companies acting as possible contracting agents, DNA and other vendors are put in a difficult position. The current market model is for a client to purchase a DNA profile – at the moment there are summer special sales. The DNA vendor is then in a position, subject to permission from the patient to waive property and monetization rights, to sell the DNA profiles of millions to third parties. The DNA vendor wins on two counts: (i) the profits from a DNA profile (which probably costs less than $20 but with a market price of, say, $100) and (ii) profits from selling the DNA profile to third parties. This must be the only market place where production costsare paid for by one party with the DNA vendor making a profit on the profile and at the same time on-selling the data and capturing almost pure rents as the vendor has (effectively) no costs of production. The DNA patient through purchasing a profile is subsidizing the profitability of third party sales. Needless to say, in asking patients to waive property rights the DNA vendor does not mention the possibility to patients of reimbursing them from sales of their DNA data to pharmaceutical manufacturers and others.

If there are sales to third parties of DNA profiles, then there is no reason to pay for a profile in the first place. The DNA vendor, in this case Companies, should pay clients for access to their DNA. These are costs of production and would then be recouped from sales to third parties. If DNA profiles have substantial value to third parties such as pharmaceutical manufacturers, then (remember again Economics 101) we would expect new DNA vendors to enter the market place to purchase DNA profiles. Rather than you buying a profile, you would search for vendors who are in the market to contract and purchase your profile and assign property rights. Manufacturers would compete to purchase profiles for target patient groups. Market clearing prices would be established. Profiles would be logged to the blockchain with the opportunity for further monetization under market prices. The pure rent that accrues to vendors would be eliminated.

Is this likely to occur? Quite probably. After all, if a DNA profile Companies is in the process of maximizing value from third party sales, then it is likely to be selective in its choice of client base and the sophistication of its assay. Additional information on clinical and other markers may be sought from potential DNA profile patients with their health records lodged on health blockchain. Blockchain owners would act as agents for the individual blockchain members to identify target patient groups and negotiate smart contracts. Once target populations for DNA profiling are identified through the blockchain  the net result will be a win for all parties – patients, providers and DNA vendors – with values established to claw back rents with market clearing monetization in third party sales.

 

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