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A Conversation With Sermo, Inc. CEO Daniel Palestrant, MD
A few weeks ago, I wrote an article focusing on, a physician social network that taps into the collective wisdom of doctors to identify trends in medicine before they become widely known.

In my post, I said that illustrates the best and worst aspects of the “wisdom of crowds.”  What’s great about Sermo is that it provides often-isolated physicians with an opportunity to share ideas and information.  What’s not so good is the possibility that inaccurate information can be highlighted and passed along by people, resulting in a giant game of "telephone" that has the potential to be very harmful. 

However, as the recent news about Tamiflu indicates, it is always good to gather data on adverse events.  If corroborated, this information can prompt regulators to take action, which ultimately benefits the public’s health. 

The issue of accuracy came to the fore when the Boston Globe reported that Pfizer was concerned about information gathered on about one of its products.  Sermo reported that physicians were saying that the cholesterol fighter Lipitor induces “vivid and repeated nightmares in some patients.”  Pfizer responded that Sermo’s data is not "scientifically . . . [and] clinically based."

After my post appeared, a representative from Sermo’s PR firm, Perkett PR, offered me the opportunity to speak with Sermo, Inc.. CEO Dr. Daniel Palestrant.  I sent him a number of questions about, the company’s business model and the validity of information it gathers from physicians. The result of our virtual e-mail conversation appears below.   

Daniel Palestrant, MD Interview


Q:'s physician user base appears to be growing quite rapidly.  What is prompting doctors to participate in this online community?

A: Soon after Sermo launched, we started seeing a surge in physician activity in the discussion areas of the community.  This was our first clue that something unique was going on.  Our next clue was that our heaviest users were not the younger physicians, but actually tended to be older physicians.  In fact, our “power users” were almost invariably older still. As we spoke with more and more of these physicians, they described something very similar, albeit in very different ways; a desire for a sense of community. In retrospect, we should have recognized this in advance.
There have been some very powerful forces at work in the US healthcare system, especially in the past 5-10 years.  Among those has been a move to outpatient medicine. Whether it is the introduction of dedicated hospitalists, increased time and performance pressures, or more outpatient procedures, physicians rarely, if ever go into the hospital. The doctor’s lounge is essentially a thing of the past, and nobody really plays golf anymore.  Add to that the fact that most physicians practice in small group settings of 2-3 physicians, it is quite understandable why physicians are increasingly feeling isolated. Sermo, which literally means “conversation” in Latin, is that place.  
We have some interesting twists, including a business model that keeps us free of advertising, and some interesting data presentation tools, but the key to our current growth is providing a sense of community where doctors nationwide can instantly exchange ideas and corroborate or challenge opinions. & Public Health

Q: The content physicians contribute to may be of great value to public health officials.  Are you collaborating with the CDC or other government agencies to provide them with information that will serve the public good?

A: Once you are in Sermo, you’ll see that the conversations sound more like what you once heard in the doctors lounge . . . opinions about treatments, questions about specific clinical scenarios, observations about changing trends rather than what you might see on a Raging Bull or Yahoo Stocks chat room.  This creates a powerful opportunity for Sermo to also collaborate with organizations whose mission is based on patient safety, public health, or scientific inquiry.  In fact, we have a full time vice president for Government and Research affairs, Alex Frost. Through Alex’s efforts, we have recently announced a collaboration with the University of Pennsylvania Center for Bioethics, and we’ll be announcing a relationship with a research partner at Northwestern School of Medicine next week.  Government agencies classically take a bit longer to set up relationships, but I think it is safe to say we are reasonably far along in these negotiations and you’ll be hearing quite a few announcements in the next few months. It is our intent that Sermo contribute to public health in the following ways:

- Help forecast potential problems or new uses for commercially significant medical products and therapies

- Gain early insight into outbreaks and other changes in disease states and conditions that can affect the public health

- Perform epidemiologic research investigations

- Perform real-time surveys of the opinion of practicing physicians on topics related to medical care

- Assess the success and adoption of best practice recommendations

- Find opportunities to improve medical practice, and protect and promote patient safety and the public health

One of the most elegant aspects of the Sermo business model is the diversity of information that the system generates and consequently the diversity of potential clients that would like access to that information.  Among our clients in the financial services industry, this is early insight into potentially market moving information.  However, this is a very small proportion of the information that the system is generating.
Information Arbitrage &

Q: What is information arbitrage and why is it valuable for physicians and's clients?

A: Sermo had its origins 14 months ago while I was still a surgical resident here in Boston.  While recovering from some back problems, I was reflecting on several conversations I’d had with colleagues, where we’d all observed that we’d seen something or had an “inkling” about it long before it showed up in the mainstream press.  That started me wondering if a mechanism could be created that could capture those insights.

Having worked with several other IT companies that aimed to bring technology to physicians, I knew the real issue is the business model.  For the most part, physicians won’t pay for things.  Likewise, I didn’t think physicians wanted yet another resource that was underwritten by the pharmaceutical industry or advertising.  Then I realized that the community could be designed in such a way that it generated actionable information.

After filing several patents, Sermo was born and we built a business model based on “information arbitrage.” In this model, the community generates ”heat maps” around different subject areas or ideas.  This is valuable information to our clients.  We are able to sell this information, without compromising physician anonymity in way shape or form, while providing an environment that is free from outside influence and advertising. This business model is accepted by physicians and appears to be legitimizing Sermo in that information arbitrage is a real business model and physicians don’t fear a “bait and switch” looming in their future.

Q: Will compensating physicians for their opinions compromise the integrity of the information they submit to

A: No.  In fact, less that 1% of the activity on the Sermo site has any remuneration associated with it.  As your question implies, paying people for information makes for a miserable community spirit and has the potential to compromise the motives of the contributors.  One only has to consider the pharma industry’s long-standing policy around giving honorariums to physicians to recognize the potential pitfalls of this approach.  In the Sermo system, we avoid this by only paying for information that one of our clients deems valuable.  This is what makes our business model a true arbitrage.  It also means that of the vast, vast majority of submissions, votes, comments, etc, 99% have no money associated with them.  When there is a financial incentive, the physicians only find out after the submission and after the voting has closed. 
The other critical thing to understand the Sermo model is that the act of submission is not the critical event.  Indeed, so long as the member is a licensed US physician they can submit whatever they want.  The critical event is how many of their colleagues corroborate their position. This is the part of Sermo that is both awesomely powerful, but also scary for the establishment.  It is the essence of a grass roots movement.

“Off Label” Conversation

Q: Physicians are talking about off label uses for medications on  Is this conversation appropriate?  How is it mediated? How is ensuring that people with commercial interests are not exploiting the site to increase drug sales? 
A: Indeed, off label use is among the many, many topics discussed on Sermo.  Today as in the past, insights on off label use are shared among physicians and discussed in journals or clinical trials, both of which are often facilitated by the drug’s manufacturer. This is legal, but it is certainly a gray area.  In the Sermo model, there is no editorial oversight.  Furthermore, we have to assume that there are legitimate physicians on the site who might have conflicts of interest that could give them a biased view on a subject. Having said this, the key of the Sermo system is the degree of corroboration that the posting receives among other physicians.  This allows the signal to be distinguished from the noise. Sermo facilitates this through a unique survey and voting model.  Similarly, online communities have proven remarkably effective at determining which members make the valuable contributions, and which appear to be biased.
Accuracy, Clinical Trials & Pfizer’s Lipitor

Q: While you have systems in place to allow users to vet content, there are still concerns that the information provided by's users is not accurate.  How are you addressing this issue?
A: Sermo does no editorializing, at all.  There is no question of accurate or inaccurate. There is only corroborated or uncorroborated. Just as in event reporting systems or published case reports, anecdotal reports in Sermo function primarily to draw attention to issues that might deserve more research or consideration. We let our users and clients make these decisions themselves, and help inform their decisions by allowing all content to be rated and reviewed by scores of other licensed, practicing physicians.    

Q: Pfizer contends that the Lipitor side effect highlighted by's users is not "clinically based."  Why should Pfizer or the FDA believe that's information is superior to data collected during Lipitor's major pre- and post-approval clinical trials?

A: Clinical trials are designed to detect specific outcomes, both in terms of the questions they ask (the endpoints of the trial), and how rare an outcome or side effect they are designed to detect (the so called “power” of the trial).  In other words, trials can only answer the questions they are designed to ask.  As a society, we do these clinical trials incredibly well.  For variety of reasons, what we do poorly is knowing what to ask and when.  Consider the trial that led to the “revelations” about Vioxx.  That was a trial designed to detect the efficacy of COX-2 inhibitors in preventing colonic polyps.  The findings of increased cardiac morbidity and mortality were a surprise.
As a medical establishment, we are realizing that we do these trials very, very effectively. However, we don’t as good of a job deciding where and when to do the trials, especially when there isn’t a strong financial incentive to do the trial (like expanding the indications for use of the drug). 

The key is to recognize that social media technologies, such as Sermo, do not replace conventional scientific inquiry in any shape or form.  Nor do they negate the need for placebo-controlled trials.  However, they can provide a potent early warning tool to know when and where to trigger further investigation.  In the case of the agencies whose job it is to monitor drug safety and usage, Sermo has had an overwhelming amount of interest. Indeed, we’ll be making some significant announcements about relationships in this arena very soon.
For pharmaceutical manufacturers, Sermo can be very scary and very exciting.  As you previously pointed out on your blog HealthCareVox, companies that learn to embrace social media will find new opportunities to thrive, those that fight it jeopardize their own futures.

The scary part is that manufacturers will no longer be able to control and “manage” what is being written and said about them.  However, the “wrath of pharma” and controversy around Sermo and pharma has existed only in the imagination of the press. 

Sermo has had extremely productive, open discussions with pharma about how best to use the Sermo system for almost a year now. Here’s why.  The informed people within these organizations have already vetted the legal issues and know that they cannot legally block a site like Sermo, but that’s not what is motivating them.  If you browse around the Sermo community you will quickly realize the vast, vast majority of the material does not concern pharma or industry for that matter.  Of those items that do pertain to pharma, the majority of them aren’t negative.  In fact, there is an incredible amount of discussion, insight, and data on physicians that have had great success with currently approved treatments.  These discussions include interpretation of recent trial results, alternative uses of drugs to treat previously unmet medical needs, and physicians sharing their own experiences.
Now, here’s the interesting thing . . . many, many of the drugs on the market today are known for treatments that they were not originally intended for.  It was the skill and resilience of the pharma industry that allowed these agents to be repurposed to new applications. Viagra was a cardiac drug, minoxidil an anti-hypertensive, Gleevec, Remicaid . . . the list goes on.  On Sermo, there is a nationwide, 24 hour a day discussion, increasingly representing the collective insights of the medical community.  Any drug manufacturer that does not want access to that insight clearly is doomed.

3 Comments/Trackbacks

here is some video from an interview i didn with daniel palestrant, ceo of sermo:

You should also consider interviewing Tony Russo, CEO of pharma industry ad firm Euro RSCG Life PR. He said back in May 9, 2005, agreeing with Richard Edelman, that "Companies should take blogs seriously

Checkout - A Friendship and Social Networking site for Doctors & Medical Students Worldwide.

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