Everyone’s favorite Silicon Valley blood-loving, gutteral-voiced con artist is….getting married? There truly is someone for everyone.
5 Big Healthcare Stories
Week of April 15, 2019
1. Uber and Lyft’s Plans for Healthcare
Enter…Uber and Lyft.
As Uber and Lyft enter the publicly traded markets, the ridesharing duopoly has plans to expand their platforms into diversified services. Surprise! That includes our favorite industry – healthcare. Recently, Uber unveiled Uber Health, which allows healthcare providers to arrange scheduled and on-demand rides for patients with and without smartphones. Not to be outdone, Lyft announced Lyft Concierge, which partnered with providers, payors, and health tech companies to likewise expand ridesharing services into healthcare. It seems as if Lyft is taking a more serious approach to healthcare, identifying the industry as a key driver of revenue growth, whereas Uber sees the opportunity as another potential revenue stream. Both are shoe-ins to be large players in the home care rides market.
2. PBMs take center stage, grilled by Congress
The drug blame game continues.
In the March 4th edition, lawmakers invited drugmakers (AKA Big Pharma) to Capitol Hill to ask why drug costs were so high. Those companies placed 100% of the blame onto pharmacy benefit managers (PBMs). This week, the Senate held a hearing with the PBM companies (think CVS, Humana, Express Scripts, United Health) to hear the other side and drill down on the drug pricing issue some more. During the hearing, PBM executives gave a few potential solutions to the drug pricing problem, and, of course, shifted the blame back to Big Pharma.
So what do the PBMs think causes the problem?
PBM executives called for the end of ‘Evergreening,’ arguing that the tactic by which drug makers can impede the approval of generic drugs and biosimilars, and even extend their patents beyond the legal limits is anti-competitive. PBMs also argued that the current proposal to ban drug rebates would not result in lower drug costs, but rather take away one of the ways that drug prices are controlled, in addition to raising premiums (which consumers apparently hated). Ironically, Big Pharma stated in their hearing that PBMs benefited from higher drug costs too because when PBMs negotiate a rebate, they take a cut for themselves. Well…the PBMs stated that wasn’t entirely true, saying that around 7 – 8% of total prescriptions are actually subject to negotiation. It’s no wonder that nobody really knows what the actual problem is.
So where does this leave us now?
Long story short, the PBM executives seemed to get off pretty easily given all the scrutiny and blame coming their way. Some lawmakers even seemed to be swayed by the end of the hearing. To further prove its point against Big Pharma, CVS clapped back this week with a press release of its own, stating that its PBM solutions helped to lower drug inflation for its constituents, and 44% of its commercial clients saw a decline in net prescription drug pricing.
Any current proposals I should know about?
Good question. Currently, Congress appears to be targeting a few different aspects of drug pricing, with a focus on increasing transparency. One, lawmakers want to equip Medicare Part D (that’s the drug part of Medicare) with more tools and ability to negotiate discounts for patients directly. Two, the Trump Administration wants to push through required price disclosure on TV ads. We’re already about to see the beginning of that practice with Johnson and Johnson’s drug, Xarelto. After the hearing on the 9th, PBMs may have saved their precious drug rebate practices from annihilation, but the jury’s still out on whether rebates will actually survive long-term. Finally, Congress may look to end Evergreening practices by making things easier for generic drug manufacturers and easing patent laws.
3. Digital Health IPOs Hit Wall Street
More Healthcare IPOs!
Keep an eye out for digital health IPOs coming to Wall Street soon. There is a ton of private money investing into healthcare startups right now, so there are bound to be some more IPOs coming our way. Livongo, a provider of services and tools that assist people with managing medical conditions, and Change Healthcare, which specializes in bringing down the costs of care, both have plans to IPO this year. Look for potentially major disruptors to enter the public eye soon, along with the speculative money that will fuel their endeavors.
4. The Administrative Burden of Healthcare
Who likes report writing?
Not me. This week, the Center for American Progress (CAP) released a study detailing the estimated administrative burden that healthcare providers face on a day-to-day basis. While the CAP made a lot of estimates in its calculations, the report found that U.S. payors and providers could spend almost half a trillion dollars on administrative tasks this year alone, which is much higher than that of other countries. The whole point of the CAP study aimed to prove that excessive administrative costs (e.g., billing and insurance sort of expenses) exist in the healthcare industry, and that the first steps to cut costs in the industry could be addressing the administrative problems that payors and providers face.
5. Texas Tech Medical School Ends Use of Race in Admissions
No more race.
After a 14 year probe from the Education Department’s Office on Civil Rights, Texas Tech’s medical school will discontinue the utilization of race as a factor in the school’s admissions policy. Civil rights groups, of course, were not fans of the decision in an area that has seen a higher proportion of legal activity lately.
Is a doctor’s race important?
The college admissions ‘affirmative action’ debate has now expanded into medical schools and healthcare. Of course, this story begs the question: what role, if any, does race play in practicing medicine? Do physicians who treat their own race administer better care to that race, and build more trust?
Quick Hits
Morgan Stanley thinks that Apple has up to a $313 billion (yes, billion) opportunity in healthcare. On that note, Community Health Systems announced that many of its affiliated hospitals now support Health Records on the iPhone. Walgreens is playing copycat to CVS (are they really even different companies at this point?) by expanding its stores’ primary care capabilities. Speaking of CVS, that pesky judge Richard Leon is STILL keeping their Aetna acquisition tied up in court. And Teladoc announced its partnership with Cincinnati Children’s Hospital, one of the best children’s hospitals around.
A Florida man (what’s new) was caught defrauding Medicare for over $1 billion. Healthcare M&A transactions grew 19% in 2018, but overall transaction values were 31% lower (i.e., less mega-deals). Starboard, the same company that opposed the Bristol-Myers-Squibb and Celgene deal, is now working to turn around Cerner (paywall – WSJ). Hospital employees are fighting to solve a different problem – violence within their walls. And are Skilled Nursing Facilities in trouble?
Also, shout out to Zoe, who reached out to me this week to let me know about her firm, HealthSherpa. HealthSherpa makes it easier for people enroll in ACA plans and even provides the tax documentation for doing so. Feel free to check them out!