Pharma is on a stock buyback spree

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Pharmaceutical companies spending on R&D and buybacks.

In 2018, the year the Republican tax law went into full effect, 12 of the largest pharmaceutical companies spent more money buying back their stock than they spent on drug research and development, Axios’ Bob Herman reports.

The big picture: When billions of dollars became available to the biggest drug companies, their main priority was to juice earnings, along with the paydays of their executives and investors — not investments in new treatments or relief for patients who can’t afford their drugs.

By the numbers: Axios analyzed the stock buybacks and R&D expenses of the 12 largest American pharmaceutical companies, by revenue, between 2016 and 2019.

  • These companies repurchased $69.1 billion of their stock in 2018, while spending $65.9 billion on researching new medicines.
  • Over the entire four-year period, stock buybacks for these 12 companies totaled $183 billion, and research expenses were $251 billion. They’re sitting on another $47 billion that has been earmarked for stock buybacks.
  • Two drugmakers — Amgen and Biogen — spent more on stock buybacks for the entire period than they spent on R&D. Amgen’s stock repurchases ($31.6 billion) were more than twice as much as research ($15.3 billion).

What they’re saying: Amgen said in a statement that it repurchased large quantities of stock because the tax law allowed the company to bring home cash that was parked overseas. Biogen submitted a statement saying it has a “deep commitment to R&D,” but did not address questions about its stock buybacks.

 

 

Congress releases $8.3B coronavirus funding package. Here’s what’s in it

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Congress is expected to pass a major $8.3 billion spending package to help providers and local governments handle the spread of the coronavirus and to boost the development of vaccines and tests of the virus.

Here are key parts of the spending package released Wednesday:

  • $500 million for an emergency telehealth waiver. The bill would waive certain Medicare restrictions for telehealth, including that a Medicare beneficiary can use telehealth services even if they aren’t in a rural community. “This provision would also allow beneficiaries to receive care from physicians and other practitioners in their homes,” a summary of the package said;
  • $2.2 billion to the Centers for Disease Control and Prevention to help state and local health agencies. The funding would include a provision to reimburse state or local costs for coronavirus response and preparedness activities from Jan. 20 to the end of this supplemental;
  • Nearly $1 billion to buy drugs and medical supplies. This procurement will include $500 million for drugs, masks and personal protective equipment that can be distributed to state and local health agencies in areas that are in shortage. It also includes funding for increasing the supply of biocontainment beds, which are secured areas used for patients with highly contagious diseases; and
  • More than $3 billion to support the research and development of vaccines, diagnostics and other treatments for the coronavirus. Any vaccine or diagnostic developed via taxpayer funds must also “be available for purchase by the federal government at a fair and reasonable price,” the summary said. The bill also enables the Department of Health and Human Services to ensure any vaccine or diagnostic can be affordable in the commercial market, but doesn’t elaborate on how.

The package sailed through the House on Wednesday and could be taken up quickly by the Senate.

Provider groups bracing for a coronavirus outbreak praised the spending package.

“This bill will provide essential assistance to caregivers and communities on the front lines of this battle,” said Chip Kahn, president and CEO of the Federation of American Hospitals, in a statement.

 

 

 

Supreme Court Will Hear First Major Abortion Case Since Two Trump Appointees Joined

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Case will test new conservative makeup’s approach to precedent.

The Supreme Court hears its first major abortion case Wednesday since two Trump nominees joined the bench, potentially signalling whether—and how much——reproductive rights may change under a bolstered conservative majority.

“There’s a lot on the line in this case, and more than most people realize,” said Mary Ziegler, a law professor at Florida State University and author of the forthcoming book “Abortion and the Law in America.”

Most prominently, the case involves the Supreme Court’s approach to precedent, since it largely is a replay of an issue the court decided in 2016, when by a 5-3 vote it struck down a Texas law requiring that abortion providers obtain admitting privileges at a nearby hospital.

The case also tests the strategy for antiabortion forces, who have been divided over the best way to roll back court precedents recognizing women’s constitutional right to end pregnancy. While some advocates seek to reverse outright Roe v. Wade, the 1973 decision recognizing abortion rights, others believe a more prudent approach is to carve away at the precedent through increasingly restrictive regulations that would spare the Supreme Court the controversy of directly overruling a landmark case.

The law in question, known as the Louisiana Unsafe Abortion Protection Act, isn’t based on a state policy to protect potential life, an interest that the Supreme Court has recognized as valid justification for some abortion restrictions.

Instead, it is based on the argument that abortion itself can be harmful to women, and that restricting access to the procedure therefore is beneficial to women. For that reason, the state’s brief contends that abortion providers shouldn’t be permitted to challenge the law on behalf of their patients, arguing that “a serious conflict of interest” exists between them and Louisiana’s women.

In striking down the Texas law in 2016, the court found the admitting-privilege requirement provided no health benefits to women while forcing many of the state’s abortion clinics to close.

The opinion, by Justice Stephen Breyer, cited evidence that admitting privileges do little to ensure continuity of care, as the state maintained, because when abortion has complications, they generally arise not at the clinic but days after the procedure, when the patient would visit her regular physician or local hospital. The court also observed that hospital admitting privileges aren’t a general credential but are granted for other purposes, such a doctor’s ability to bring in patients for treatment.

Statistically, however, only a tiny number of women require hospitalization after abortion, the court said. “In a word, doctors would be unable to maintain admitting privileges or obtain those privileges for the future, because the fact that abortions are so safe meant that providers were unlikely to have any patients to admit,” Justice Breyer wrote.

But that decision, Whole Woman’s Health v. Hellerstedt, hinged on since-retired Justice Anthony Kennedy, a maverick conservative who joined more liberal justices in the majority. With the late Justice Antonin Scalia’s seat vacant, three conservatives dissented, contending that the majority skirted procedural rules to throw out the Texas law.

President Trump, who appointed Justice Brett Kavanaugh to the vacancy, had as a candidate predicted his Supreme Court picks would vote to overrule Roe v. Wade.

In September 2018, three months after Justice Kennedy’s retirement, the Fifth U.S. Circuit Court of Appeals, in New Orleans, upheld a Louisiana admitting-privileges law that critics argue is identical to the Texas measure struck down two years earlier. The appellate court found the Louisiana Unsafe Abortion Protection Act wouldn’t burden abortion rights in Louisiana to the degree the Texas law did in its state.

An abortion clinic in Shreveport, La., June Medical Services LLC, and three doctors who perform the procedure appealed to the Supreme Court.

That puts the spotlight particularly on Justice Kavanaugh, whose remarks and writings, which have praised the dissent in Roe and supported a Trump administration policy to prevent an underage illegal immigrant from obtaining an abortion, have given hope to abortion opponents.

However, the focus may equally fall on Chief Justice John Roberts, who typically has voted against abortion-rights positions in Supreme Court cases—but he also has stressed an institutional interest in distinguishing the courts from political bodies, where outcomes on legislation can swing wildly based on the latest election results. For that reason, he may be hesitant to overrule even a decision he opposed simply because Justice Kennedy’s retirement presents an opportunity.

In February 2019, he joined the court’s liberal wing to block implementation of the Louisiana law while the appeal proceeded; four other conservatives dissented, although Justice Kavanaugh appended a statement suggesting he was taking a middle ground. He said he wasn’t persuaded that the Louisiana doctors had fully explored opportunities to obtain hospital-admitting privileges.

Should a frontal assault on recent precedent alienate the chief justice or another conservative justice, it probably would end prospects for similar admitting-privilege laws.

But the door could remain open for other abortion restrictions that aren’t covered by existing precedent, particularly if the court signals a readiness to pare back the ability of abortion providers to challenge regulations, or suggests it is more inclined to defer to legislative judgments regarding the safety of abortions rather than evidence, such as scientific research or the views of the medical profession, presented at trial court.

 

Senators demand Cigna, Optum turn over documents on insulin prices

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Chuck Grassley

Sen. Chuck Grassley, R-Iowa, and Ron Wyden, D-Ore., are demanding Optum and Express Scripts turn over documents on how they determine insulin prices.

Leaders of the Senate Finance Committee demanded Cigna and Optum produce critical documents over the pricing of insulin, with a subpoena threat looming.

Cigna failed to produce any documents related to the committee’s request back in April 2019 and Optum didn’t produce essential documents, according to letters to both companies sent earlier this week by committee leaders. The documents would relate to the actions of pharmacy benefit managers such as Cigna’s Express Scripts on the rising costs of insulin.

“Cigna’s unwillingness to provide the documents we requested fits an industry-wide pattern of fighting efforts to shed light on PBMs’ practices,” the letter (PDF) to the insurer read.

Sens. Chuck Grassley, R-Iowa, and Ron Wyden, D-Ore., the committee’s chairman and ranking member respectively, wrote that Cigna’s failure to comply has “reached an endpoint.” The insurer has until March 10 to provide more information or face a subpoena.

UnitedHealth Group’s Optum did produce thousands of pages for the committee, but a majority of them were irrelevant, already publicly available or duplicative.

“For example, Optum has produced more than 4,000 pages of publicly available formulary information guides and internal formulary drug lists that contain virtually no information related to the insulin therapeutic class,” the senators’ letter (PDF) to Optum said.

The original request for documentation had called for internal communications that would help the committee understand how Optum made decisions on “the out-of-pocket price patients pay for their insulin,” the letter said.

Grassley and Wyden launched the investigation last February into the price of insulin, which has increased up to 500%. The senators sent letters to leading insulin manufacturers Eli Lilly, Novo Nordisk and Sanofi regarding the spike.

The senators also wanted to learn the process used for negotiations and agreements between PBMs and large plans on patient cost-sharing.

Cigna-Express Scripts said that it takes the committee’s inquiry “very seriously and have been engaged with them on this request. We are committed to being cooperative.”

Optum said that it share’s the committee’s concens regarding the high prices for insulin set by manufacturers.

“We have provided thousands of pages of documents in response to the committee’s request, and will continue to work with them on this important issue,” the company said.

 

 

 

Majority of hospitals not meeting minimum volumes for high-risk surgeries, Leapfrog says

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The majority of hospitals are electively performing high-risk surgical procedures without sufficient ongoing experience to safely do so, according to a new report.

The report from The Leapfrog Group, an independent hospital safety watchdog group, looked specifically at surgical volumes. The report, which relied on final hospital data from the 2019 Leapfrog Hospital Survey that had responses from more than 2,100 hospitals, also looked at the minimum standards those hospitals require surgeons to meet in order to gain privileges.

They were looking specifically at the safety of eight high-risk procedures identified by an expert panel as having a “strong volume-outcome relationship.” The report also looks at whether hospitals are working to make sure every surgery is necessary. 

According to the report, an increasing number of hospitals are meeting minimum volume standards if they perform high-risk hospitals. The majority of rural hospitals opt out of performing the high-risk surgeries because they can’t meet the volume standards. Further, more hospitals are implementing protocols to monitor for appropriateness of surgeries.

“The good news is we are seeing progress on surgical safety. The bad news is the vast majority of hospitals performing these high-risk procedures are not meeting clear volume standards for safety,” said Leah Binder, president and CEO of The Leapfrog Group, in a statement. “This is very disturbing, as a mountain of studies show us that patient risk of complications or death is dramatically higher in low-volume operating rooms.”

For instance, the report suggested hospitals should be performing a minimum of 20 esophageal resections for cancer and a minimum of 20 pancreatic resections for cancer to improve the odds of a safer surgery for their patients. Surgeons should perform at least seven and 10 of those procedures a year, respectively, to gain privileges.

But for those two procedures, only 3% and 8% of hospitals met the volume standards for patient safety, the report found.

Hospitals were most likely to meet the safety standard of a minimum of 50 procedures a year for the hospital and 20 procedures a year for bariatric surgery for weight loss. More than 48% reported meeting that standard in 2019, up from 38% in 2018.

The survey found more than 70% of reporting hospitals have protocols to ensure appropriateness for cancer procedures.

But for other high-risk procedures evaluated such as open-heart surgeries or mitral valve repair and replacement, hospital compliance with ensuring appropriateness dropped to a range of 32% to 60%, depending on the procedure.