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.

 

 

 

How the psychology of a $4.99 price tag might influence who undergoes heart surgery

How the psychology of a $4.99 price tag might influence who undergoes heart surgery

Balloon heart

Health economists aren’t generally known for their humor. There’s something about Medicaid that’s just deeply unfunny. Make a joke, and the punch line may well be deadly. As one quip goes: What do affordable health care and sarcasm have in common? Most Americans just don’t get it.

So it might come as a surprise that, over the last few years, a team of economists in Boston, New York, and Porto Alegre, Brazil, began to ponder a wisecrack of a research question: How is a hospital like a used car lot?

Predictably, they weren’t kidding. They knew, from a 2012 study of 22 million transactions, that a slight shift in an old clunker’s mileage could significantly change how much a buyer is willing to pay for it. An odometer just above 10,000 miles entailed an irrational reduction in price.

“A car with 9,999 miles is basically the same as a car with 10,001 miles, but the mind may perceive that the 9,999-mile car is in the nine thousands,” explained Dr. Anupam Bapu Jena, an associate professor of health care policy and medicine at Harvard Medical School.

Now, he and his colleagues wanted to see whether that sort of thinking — a big decision based on a single piddling digit — might be taking place in the hospital, when doctors figure out whether an older heart attack patient should get bypass surgery.

The results, published Wednesday in the New England Journal of Medicine, aren’t funny. Among thousands of Medicare recipients admitted to the hospital with heart attacks, 7% of those who would turn 80 in a few weeks got the operation, while 5.3% of those who were just past that milestone birthday did, even though their conditions were similar. Meanwhile, the researchers didn’t see that sort of discrepancy between patients just shy of their 77th, 78th, 79th, 81st, 82nd, or 83rd birthdays and those just past them.

To the researchers, it’s a sign that the fallacy seen in the used car market is also at play in the clinic. In both cases, people are often right to be wary of higher numbers. More miles entail more wear and tear. The older you get, the likelier it is that an operation’s risks outweigh the benefits. Yet to arbitrarily — and perhaps, unknowingly — fixate on the threshold at which patients pass from their 70s into their 80s seems like an example of what’s called the “left-digit bias” — our tendency to pay more attention to the digit we read first, which explains why a corner store might shave a price down from $5 to $4.99.

“Studies like this are really to show physicians, ‘Here’s a common mistake or error that people make,’” said Andrew Olenski, an economics Ph.D. student at Columbia and the paper’s first author. “This is not to say, ‘You should now be giving a lot more bypass surgeries to 80-year-olds than you would have.”

Yet Dr. Ruth Benson, a vascular surgeon at the University of Birmingham, in England, who was not involved in the study, cautioned that this sort of correlational research can’t tell us what causes such disparities or what the implications are. To her, it’s “a snapshot that raises more questions than answers.”

It’s hardly surprising that doctors might make choices shaped by unconscious bias. We all do. We think memorable anecdotes are representative. We give too much credence to evidence that fits our beliefs and discount everything else. Those same fallacies, famously described by economist Daniel Kahneman and psychologist Amos Tversky, creep into the highly trained thinking of physicians, too.

As Dr. Silvia Mamede, associate professor at the Institute of Medical Education Research in Rotterdam, put it, it’s easy enough for a physician’s mind to snag on some salient feature in a patient’s case — a mother who had tuberculosis, say — and allow that to shape the ensuing thoughts and questions, or to let a supervisor’s hypothesis influence the interpretation of a suite of symptoms.

In 2017, for instance, one of the authors of the new study, Columbia University’s Stephen Coussens, had found that people arriving at the emergency room were much more likely to get certain blood tests to look for heart disease if they’d just turned 40 then if they were enjoying the last weeks of being 39.

To Mamede, that earlier study fit the general pattern of medical decision-making research. “Most studies are on bias in diagnosis,” she said. It’s an easier situation in which to understand potential fallacies because there’s often a right answer that can be confirmed in the lab. “But with treatment,” Mamede went on, “it’s difficult to say.” Even with guidelines, the variables are often so complex that the correct treatment is a matter of debate.

That makes the new study stand out — but also raises questions.

It’s unclear what the findings mean for heart attack patients who are about to turn or have just turned 80. As Dr. Donald Redelmeier, a professor of medicine at the University of Toronto, explained, “The study does not answer the question about which rate is right, i.e. whether there’s too much surgery going on beforehand or too little afterward.”

The researchers did find that 17.7% of those who were about to turn 80 died within 30 days of being hospitalized, while the rate was 19.8% for those who’d just passed their birthdays — but that difference can’t necessarily be explained by the discrepancies in the percentage of patients getting surgery. To Jena, unconscious biases are more likely to come into play not for the healthiest or the most frail — not for the 65-year-old at death’s door or for the healthy-as-an-ox 82-year-old marathon runner — but for those borderline cases in which it’s hard to make a call.

The procedure is deeply invasive. It involves putting a patient on a machine that acts as an external heart and lungs. A surgeon slits the skin of the chest and breaks through the flat of the sternum with a motorized saw, allowing the operating team to take a snip of a vessel from elsewhere in the body and sew it in as a detour around a blocked artery so that blood can keep flowing normally. For some patients, medications might be a better option; for others, it might be advisable to try threading in a little balloon to break up the blockage through a tiny keyhole incision in the arm or the groin, and then to put in a metal stent to prop open the vessel.

Even among cardiac surgeons at Jena’s own hospital, who weren’t involved in the research, the reaction to these findings changed from person to person. To Dr. George Tolis Jr., surgical director of coronary bypass surgery at Massachusetts General Hospital, the analysis didn’t seem detailed enough to say whether this was something he needed to worry about. He wondered, for example, whether those patients who didn’t get surgery had even been referred to a surgeon.

“A surgeon, in order to turn down a patient, needs to know about the patient. Did these surgeons know about these patients and either unconsciously or consciously turn them down? That’s a key missing element here,” he said, adding: “Before raising flags of concern, we have to understand what the source of the initial decision is.”

Meanwhile, Dr. Thoralf Sundt, chief of cardiac surgery at the same hospital, saw the research as a useful reminder — even if to him the findings do not show an act of age discrimination. “We need to understand ourselves better and understand these subtle biases so we can control for them,” he said. “It’s not sinister. It’s human. We’re all built this way.”

 

 

 

PENNSYLVANIA HOSPITALS MADE $136.1B IMPACT IN FY 2018

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The Hospital and Healthsystem Association of Pennsylvania report found that hospitals also supported more than one in every 10 jobs.

Hospitals in Pennsylvania made a total economic impact of $136.1 billion in Fiscal Year (FY) 2018, according to a Hospital and Healthsystem Association of Pennsylvania (HAP) report released Tuesday.

Of the total economic impact, $60.5 billion were the result of “direct impact,” such as employee salaries, benefits, as well as goods and services for hospital operations. Another $75.6 billion were the result of “ripple impact,” such as additional economic effects of a hospital in a community.

HHAP also found that hospitals supported more than 650,000 jobs, accounting for more than one in every 10 jobs in the state and providing $32.3 billion in total wages. Nearly 300,000 jobs were directly associated with hospitals while 363,000 jobs were associated with “ripple effects” of health systems.

The study’s findings point to the significant economic impact provider organizations have in the Keystone State and the need to promote policies that foster continued growth, according to Sari Siegel, PhD, vice president of healthcare research at HAP.

“While overall growth projections are strong, some hospitals remain financially stressed. Our work illustrates that hospitals often are the backbones of their communities and closure could cause devastating economic ripples throughout a region,” Siegel said in a statement. “The findings of this report underscore the need for policies that bolster hospitals’ long-term sustainability.”

Pennsylvania hospitals have contributed significantly to the state’s economy in recent years and have also made headlines throughout 2019.

Hahnemann University Hospital, a Pennsylvania-based hospital, filed for bankruptcy and closed over the summer. A group of six Philadelphia-based health systems won the hospital at auction for $55 million in early August. 

The report was also released days after two Pennsylvania-based health systems, Tower Health and Drexel University, finalized a $50 million acquisition of St. Christopher’s Hospital for Children, a 188-bed pediatric medical center in Philadelphia.

There are 253 hospitals in Pennsylvania, according to HAP, with more than 37,600 staffed beds. The report also found that hospitals are among the 10 largest employers in 85% of counties across the state.

The total economic impact of Pennsylvania hospitals in FY 2018 grew by nearly $50 billion over the past decade, according to a HAP analysis of data collected from the Department of Health and Human Services (HHS).

Additionally, Pennsylvania hospitals received nearly $2 billion in research allocations from HHS and Patient-Centered Outcomes Research Institute in FY 2018.

 

 

 

Moffitt Cancer Center CEO, center director step down; conflicts of interest cited

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Tampa, Fla.-based H. Lee Moffitt Cancer Center & Research Institute on Dec. 18 accepted the resignations of President and CEO Alan F. List, MD, and Thomas Sellers, an executive vice president and center director at Moffitt, the cancer center announced.

In a news release, Moffitt said the resignations were due to violations of conflict-of-interest rules through the work the center director and CEO did in China. An internal compliance review led up to the resignations.

“Moffitt initiated an internal review of team members’ collaborations with research institutions in China after the National Institutes of Health warned all its grant recipients of foreign efforts to influence or compromise U.S. researchers,” Moffitt said. “Moffitt found several compliance violations that also prompted separation of four additional researchers.”

Timothy Adams, Moffitt’s board chairman, will become interim CEO and president.

The Tampa Bay Times reports that the compliance violations were primarily associated with cancer center employees’ personal involvement in China’s “Thousand Talents” program, which aims to recruit global researchers and academics. 

Mr. Adams said in the news release: “At Moffitt, we pride ourselves not only on our lifesaving research and world-class patient care, but also on transparency and integrity among all our employees. This was an unfortunate but necessary decision.”

“Going forward, this will not damage the future of our research or the care of our patients. We will continue to be careful stewards of the public money entrusted to us for cancer research. Moffitt is proud to have 7,000 of the finest medical professionals in the world fighting every day to treat and cure cancer. That is what mattered yesterday, and that is what will matter tomorrow,” he added.

Former Florida House Speaker H. Lee Moffitt, the cancer center’s namesake, also addressed the matter, saying in the news release: “This great institution did its job. We listened to the warnings from NIH, conducted a proactive review, and took strong action when it was needed.”

Dr. List, who previously was Moffitt’s executive vice president and physician-in-chief as well as chief of the malignant hematology division, could not immediately be reached by the Times for comment.

Moffitt continues to conduct a review, including examining its research and education partnership with China’s Tianjin Medical University Cancer Institute and Hospital. Moffitt said nothing indicates that the cancer center’s research was compromised or patient care affected.

 

Trump administration adds new restrictions for fetal tissue research

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The Trump administration eliminated funding for fetal tissue medical research by government scientists on Wednesday.

Why it matters: The decision is considered a win for anti-abortion rights supporters and a major blow to scientists who rely on the tissue from elective abortions for research into diseases like cancer, HIV and Zika, the Washington Post reports.

The administration also revoked a multimillion-dollar contract for a University of California at San Francisco lab that uses the tissue to test HIV treatments, per the Post.

  • UCSF’s multiyear government contract was terminated on Wednesday without further detail.

Context: The debate over the federal use of fetal tissue — obtained from abortions — got off the ground in 2015, when an anti-abortion rights group released videos alleging Planned Parenthood profited from selling the material. Planned Parenthood claimed the footage had been doctored to mislead, and after several state and congressional inquiries, the health care provider was cleared of misconduct.

  • Trump’s health department conducted a several-month audit of fetal tissue research “in light of the serious regulatory, moral, and ethical considerations involved,” per the Department of Health and Human Services.

The National Institutes of Health funds about 200 external research products that use fetal tissue, which will be unaffected. There are only 3 NIH-run projects that will be impacted.

  • Future grant applicants will be reviewed by an ethics advisory board.

What they’re saying: While the move is supported by anti-abortion advocates, scientists say it’s an impediment to finding new medical treatments.

  • The new rules “further erode the unique potential fetal tissue research holds for addressing such critical objectives as fighting blindness, ending Parkinson’s Disease, and advancing maternal and child health,” Research!America said in a statement.
  • “Valuable research that is directed at helping to develop therapies for terrible diseases will be stopped,” Larry Goldstein, a distinguished professor in the University of California, San Diego, told the Washington Post.

While scientists say that there is no equally effective alternative to fetal tissue in research, opponents of its use say that some newer methods show potential, the Post reports.