Welcome back to the Weekly Muse – the latest trending healthcare stories and news articles from the last 7 days. Today’s edition covers the week of January 4, 2019. If you’re interested in getting these delivered straight to your inbox, go here.
Happen to miss last week’s stories? Get caught up here.
5 Big Stories
1. “Show me the Money”
That’s what the White House is saying to Big Pharma. The current administration wants pharmaceutical companies to disclose drug prices on TV ads. Drug companies responded to the proposal this week, generally agreeing that more transparent pricing would help consumers, but commenting that disclosing prices through TV ads might be misleading to patients. Still, the proposal has gained steam and has a lot of popularity among providers.
In no way adding fuel to the fire, drug co’s announced their annual price hikes for 2019. Most prices are expected to increase at higher rates than inflation, which is actually…typical and expected. In fact, payors expect drug prices to rise between 3 and 5 percent over the next few years.
But biotech as a whole is under the spotlight and in a sticky situation, as the firms struggle keeping investors happy and profit margins consistent (i.e., price hikes), while also balancing the regulatory wishes of the current administration (i.e., price regulation). The whole pricing system can be pretty confusing and shrouded in trade secrets, especially inexplicable when a bottle of Nexium costs $20 in one state and $130 in another.
Keep in mind that these prices are what companies charge, but not necessarily what patients pay, as insurers and pharmacy benefit management (think CVS) companies negotiate rebates. But would you be surprised if I told you that PBMs were under fire for keeping extra payments from Medicare?
2. A Biotech Mega Merger. Ironic.
Not to be outdone by the tumultuous drug pricing headlines, biotech kraken Bristol-Myers Squibb is buying biotech giant Celgene for a hefty $74 million. Maybe they can finally change their name to something that rolls off the tongue a bit easier…
Both of the companies are particularly focused on the development of cancer drugs, and, if approved, the new biotech behemoth (do you see what I’m doing here) would be in position to bring specialized cancer drugs to market AND would have significant leverage to negotiate for better rates for their new drugs. The deal is expected to close in Q3 2019.
3. The Mecca of Healthcare
Okay, not quite. But the 37th annual JP Morgan Healthcare Conference takes place next week, featuring a plethora of for-profit and not for profit healthcare companies from all sub-industries. Luckily, Bloomberg did us the pleasure of creating a great outline of companies presenting, and what to look out for. First up on Monday? Celgene.
4. Democrats Come in Swinging
In case you missed it, Democrats took back control of the House during the midterm elections, and they’re taking their new years resolutions to heart. Top of the agenda includes (ding-ding) drug pricing regulation, appealing the rule that invalidated Obamacare, and musing over various Medicare-for-all strategies, including reducing the Medicare eligibility age to 55.
Since it’s a divided government, 2019 could be a stalemate-type year for healthcare (and legislation in general). Still, it’s a peek into what could be coming in a 2020 push, so keep an eye on what’s going on in the House.
5. Private Equity Flex
Private equity did not have a quiet year in 2018, as firms continue to look for investment opportunities and consolidation in healthcare. It makes sense as to why capital is pouring into the industry: healthcare is huge, stable, and a perceived problem in the U.S.
Notable deals this year included the buyout of Envision Healthcare for basically $10 billion (sheesh), Athena Healthcare for $5.7 billion, LifePoint Health for $5.6 billion, and Kindred Healthcare for $4.1 billion.
Honorable Mentions
Our other favorite stories from the week
- The amount of fraud in the U.S. health system is staggering.
- Since the individual mandate disappeared, Bloomberg wrote a piece about those who opted out of health insurance.
- Actually a pretty significant event. After being tied up in court, hospitals scored big when the court rejected payment cuts to the 340B program, a program that subsidizes drug costs in disproportionate share hospitals.
- HIPAA data scares continue, making us question the stringent regulations in the first place
- Although job growth is a trailing indicator in the economy (i.e., economy demand grows > companies hire in response to growth > labor shortage > wage growth > inflation), I thought this data point was highly notable given the calls for sluggish growth in 2019.
- A huge merger in the nonprofit space, with combined annual revenues of over $5 billion
- Centene has plans to expand
- Pretty cool article about the compounding effect of small habits (or anything, really).
- Another drug article, this time from the Commonwealth Fund