Category Archives: Pharmaceutical Industry

Not for Profit Hospitals: Are they the Problem?

Posted on by • Posted in CEO, Community Benefit, Elevance Health Policy Institute, Executive Compensation, Health Insurance Industry, Health Policy, Health System, High Deductible Health Plans, Hospital, Hospital Industry, Lobbyist, Market Consolidation, Market Power, Medical Debt, Non-Profit Healthcare Industry, Out of Pocket Expenses, Pharmaceutical Industry, Public Perception, Tax Exempt Status • Leave a comment
Not for Profit Hospitals: Are they the Problem?

Last Monday, four U.S. Senators took aim at the tax exemption enjoyed by not-for-profit (NFP) hospitals in a letter to the IRS demanding detailed accounting for community benefits and increased agency oversight of NFP hospitals that fall short.

Last Tuesday, the Elevance Health Policy Institute released a study concluding that the consolidation of hospitals into multi-hospital systems (for-profit/not-for-profit) results in higher prices without commensurate improvement in patient care quality. “

Friday, Kaiser Health News Editor in Chief Elizabeth Rosenthal took aim at Ballad Health which operates in TN and VA “…which has generously contributed to performing arts and athletic centers as well as school bands. But…skimped on health care — closing intensive care units and reducing the number of nurses per ward — and demanded higher prices from insurers and patients.”

And also last week, the Pharmaceuticals’ Manufacturers Association released its annual study of hospital mark-ups for the top 20 prescription drugs used on hospitals asserting a direct connection between hospital mark-ups (which ranged from 234% to 724%) and increasing medical debt hitting households.

(Excerpts from these are included in the “Quotables” section that follows).

It was not a good week for hospitals, especially not-for-profit hospitals.

In reality, the storm cloud that has gathered over not-for-profit health hospitals in recent months has been buoyed in large measure by well-funded critiques by Arnold Ventures, Lown Institute, West Health, Patient Rights Advocate and others. Providence, Ascension, Bon Secours and now Ballad have been criticized for inadequate community benefits, excessive CEO compensation, aggressive patient debt collection policies and price gauging attributed to hospital consolidation.

This cloud has drawn attention from lawmakers: in NC, the State Treasurer Dale Folwell has called out the state’s 8 major NFP systems for inadequate community benefit and excess CEO compensation.

In Indiana, State Senator Travis Holdman is accusing the state’s NFP hospitals of “hoarding cash” and threatening that “if not-for-profit hospitals aren’t willing to use their tax-exempt status for the benefit of our communities, public policy on this matter can always be changed.” And now an influential quartet of U.S. Senators is pledging action to complement with anti-hospital consolidation efforts in the FTC leveraging its a team of 40 hospital deal investigators.

In response last week, the American Hospital Association called out health insurer consolidation as a major contributor to high prices and,

in a US News and World Report Op Ed August 8, challenged that “Health insurance should be a bridge to medical care, not a barrier.

Yet too many commercial health insurance policies often delay, disrupt and deny medically necessary care to patients,” noting that consumer medical debt is directly linked to insurer’ benefits that increase consumer exposure to out of pocket costs.

My take:

It’s clear that not-for-profit hospitals pose a unique target for detractors: they operate more than half of all U.S. hospitals and directly employ more than a third of U.S. physicians.

But ownership status (private not-for-profit, for-profit investor owned or government-owned) per se seems to matter less than the availability of facilities and services when they’re needed.

And the public’s opinion about the business of running hospitals is relatively uninformed beyond their anecdotal use experiences that shape their perceptions. Thus, claims by not-for-profit hospital officials that their finances are teetering on insolvency fall on deaf ears, especially in communities where cranes hover above their patient towers and their brands are ubiquitous.

Demand for hospital services is increasing and shifting, wage and supply costs (including prescription drugs) are soaring, and resources are limited for most.

The size, scale and CEO compensation for the biggest not-for-profit health systems pale in comparison to their counterparts in health insurance and prescription drug manufacturing or even the biggest investor-owned health system, HCA…but that’s not the point.

NFPs are being challenged to demonstrate they merit the tax-exempt treatment they enjoy unlike their investor-owned and public hospital competitors and that’s been a moving target.

In 2009, the Internal Revenue Service (IRS) updated the Form 990 Schedule H to require more detailed reporting of community benefit expenditures across seven different categories including charity care, unreimbursed costs from means-tested government programs, community health spending, research, and others. The Affordable Care Act added requirements that non-profit hospitals complete community health needs assessments (CHNAs) every three years to identify the most pressing community health priorities and create detailed implementation strategies explaining how the identified needs will be addressed.

But currently, there are no federal community benefit requirements that ensure hospitals use the most accurate accounting standards for charity care and unreimbursed Medicaid services; set a minimum level of community benefit spending; require hospitals to spend on community benefit dollars on identified needs; or describe in detail the type of activities that quality as community benefit spending.

Thus, the methodology for consistently defining and accounting for community benefits needs attention. That would be a good start but alone it will not solve the more fundamental issue: what’s the future for the U.S. health system, what role do players including hospitals and others need to play, and how should it be structured and funded?

The issues facing the U.S. health industry are complex. The role hospitals will play is also uncertain. If, as polls indicate, the majority of Americans prefer a private health system that features competition, transparency, affordability and equitable access, the remedy will require input from every major healthcare sector including employers, public health, private capital and regulators alongside others.

It will require less from DC policy wonks and sanctimonious talking heads and more from frontline efforts and privately-backed innovators in communities, companies and in not-for-profit health systems that take community benefit seriously.

No sector owns the franchise for certainty about the future of U.S. healthcare nor its moral high ground. That includes not-for-profit hospitals.

The darkening cloud that hovers over not-for-profit health systems needs attention, but not alone, despite efforts to suggest otherwise.

Clarifying the community-benefit standard is a start, but not enough.

Are NFP hospitals a problem? Some are, most aren’t but all are impacted by the darkening cloud.

Federal drug discount program faces renewed scrutiny

Posted on by • Posted in Center for Medicare and Medicaid Services (CMS), Health System, Hospital, Hospital Industry, Medicare 340B Drug Discount Program, Pharmaceutical Industry, Supreme Court • Leave a comment
https://www.axios.com/2023/08/11/340b-federal-drug-discount-scrutiny?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

A federal drug discount program for safety-net providers that’s been a perennial source of fierce disputes among health care industry powerhouses is back in the spotlight, with billions of dollars at stake.

The big picture: 

Separate but coinciding issues are generating renewed focus on the decades-old 340B program, which requires that drugmakers give large discounts on outpatient drugs to health care providers serving low-income patients.

  • A Biden administration proposal to issue hefty back payments due to 340B providers, drugmakers’ efforts to limit discounts, and rebooted congressional interest in broader reforms are again igniting debate about the program’s scope.

Context: 

The Supreme Court last year unanimously sided with hospitals who challenged a nearly 30% reduction to their 340B payments by the Centers for Medicare and Medicaid Services that began under the Trump administration.

  • In response to the court decision, CMS last month announced a $9 billion plan to repay 340B providers that’s generated some controversy. While 340B hospitals are happy they’re getting paid back, industry groups are upset that the payments are funded by clawing back money to other hospitals.
  • Meanwhile, the Biden administration is battling drugmakers in court over restrictions they’ve placed on where hospitals can use their 340B discounts.
  • A bipartisan group of senators this summer also released a request for information on how to improve stability and oversight within the program.
  • Hospitals could face further cutbacks if Congress or the courts place new limits on 340B.

Flashback: 

The 340B program began in 1992 to help providers serving patient populations who struggled to afford their prescription drugs. It allows hospitals and other safety-net providers like community health clinics to save an average of 25% to 50% on drug purchases, according to the federal government.

  • When hospitals partner with off-site pharmacies to dispense drugs, the pharmacies also benefit financially from 340B savings.
  • The program has grown significantly since its inception, increasing from 8,100 participating safety-net providers in 2000 to 50,000 in 2020.

Between the lines: 

The expansive program growth has drawn lawmakers’ scrutiny and complaints from pharmaceutical companies, who accuse providers of using the program to pad their profits rather than help vulnerable patients. Providers dispute those accusations and say the program helps them stretch limited federal resources.

  • More than 20 drug companies have placed restrictions on when providers can use 340B discounts at off-site pharmacies. Drug companies say the limits help prevent them from having to give duplicate discounts, which occurs when both the provider and state Medicaid agency receive a discount on the same drug.
  • The Biden administration asked several drugmakers to lift their 340B restrictions and threatened fines if they don’t comply.
  • Several drugmakers have sued the administration, arguing federal officials didn’t have the right to stop them from limiting discounts. One appellate judge ruled in favor of drugmakers earlier this year, and two other cases are pending in federal appellate courts. Experts say the cases could go all the way to the Supreme Court.
  • As the legal fight plays out, 340B providers are urging Congress to approve new measures to prevent drugmakers from restricting access to discounts.
  • The other side: Drugmakers, meanwhile, want lawmakers to tighten hospital eligibility standards and place stronger limits on how 340B pharmacies can profit from the program.
  • Of note: Rural hospitals, some of which were spared from the 340B cuts made years ago, are especially concerned about the hit they would take from CMS’ proposed funding clawbacks.
  • Rural facilities today rely heavily on 340B to offset other financial losses, Brock Slabach, chief operations officer at the National Rural Health Association, told Axios.
  • “You can’t get out of this problem without harming those who were helped,” Slabach said.
  • What we’re watching: Expect to keep hearing about 340B in the coming months.
  • CMS still needs to finalize the 340B repayment plan after the public comment ends Sept. 5.
  • The D.C. Circuit Court of Appeals and the 7th Circuit Court of Appeals will issue rulings on whether the Biden administration can reverse drugmakers’ 340B restrictions.
  • Congress could take up a serious reform effort following the Senate’s information request, though that would take time.

Johnson & Johnson is latest drugmaker to sue to stop Medicare drug price negotiations

Posted on by • Posted in Delay Tactic, Health Policy, Healthcare Reform, High Drug Prices, Lawsuit, Medicare Drug Price Negotiation, Out of Pocket Expenses, Pharmaceutical Industry, Supreme Court • Leave a comment

https://mailchi.mp/c02a553c7cf6/the-weekly-gist-july-28-2023?e=d1e747d2d8

Last week Johnson & Johnson followed Merck, Bristol Myers Squibb, and Astellas Pharma by filing a lawsuit against the Biden administration in federal court over the Medicare Drug Price Negotiation Program, established through the 2022 Inflation Reduction Act. PhRMA, the industry trade group, and the US Chamber of Commerce have also filed suits.

The lawsuits claim that the program violates the First and Fifth Amendments by compelling speech, and taking private property for public use without just compensation. The US Chamber of Commerce also filed a motion earlier this month requesting a preliminary injunction.

This flurry of legal activity comes just a month before the Centers for Medicare & Medicaid Services is due to publish its list of the first ten drugs selected for negotiations. The makers of those drugs will then have a month to decide if they will participate in negotiations, risking significant financial penalties if they do not. Any negotiated prices would take effect in 2026.

The Gist: The ability for Medicare to negotiate drug prices is a key pillar of the Biden administration’s healthcare agenda, one the President plans to tout in his upcoming reelection campaign. But the pharmaceutical industry’s legal challenges—multiple, separate suits in different federal courts nationwide—are destined for the Supreme Court if these cases generate conflicting rulings, which is likely. A protracted legal fight will delay or potentially alter the program before it is fully implemented.

Why the Pentagon is concerned about our generic drug supply

Posted on by • Posted in Dept of Defense (DOD), Food and Drug Administration (FDA), Generic Drug Supply, Generic Drugs, Pharmaceutical Industry, Quality, Quality Control, Quality Testing • Leave a comment

https://mailchi.mp/a93cd0b56a21/the-weekly-gist-june-9-2023?e=d1e747d2d8

Published this week in Bloomberg, this article explores the Department of Defense (DOD)’s rationale for reportedly piloting a partnership with Valisure, an independent laboratory, to test the quality of the generic drugs it purchases for military members, veterans, and their families. 

The DOD’s current plan is to follow the example of Kaiser Permanente, which contracted with the same drug testing company to ensure quality standards for generic drugs that exceed Food and Drug Administration (FDA) requirements. While the FDA has discouraged the use of third-party testing programs, recent stories of toothless enforcement for troubled manufacturing facilities have weakened the agency’s credibility.

The Gist: Amid the current backdrop of drug shortages and cost concerns, this article shines a light on the lesser-known issue of quality oversight of generic drugs. This is especially important as generic medications make up around 90 percent of all prescriptions dispensed in the US. 

With generic drug production, largely a low-margin business, moving overseas, the FDA has increasingly struggled to perform oversight and quality control—though Valisure’s scientific methods have been criticized both in court and by the FDA itself. 

While Pentagon officials have labeled the vulnerabilities in our drug supply chain a threat to national security, the problems the DOD is hoping to resolve are the same ones faced by all purchasers of generic drugs in the US.

Mark Cuban’s drug company to sell name-brand diabetes drugs

Posted on by • Posted in Competition, Generic Drugs, Generic Insulin, High Drug Prices, Pharmaceutical Industry, Pharmacy Benefits Management • Leave a comment

https://mailchi.mp/c9e26ad7702a/the-weekly-gist-april-7-2023?e=d1e747d2d8

On Monday, the Mark Cuban Cost Plus Drugs Company (MCCPDC) announced via Twitter that it will begin to offer two branded diabetes drugs, Invokana and Invokamet, produced by Janssen, a Johnson & Johnson subsidiary. A month’s supply of these drugs, the first non-generics it has offered, will cost patients around $244, over 60 percent less than average retail prices. Prescriptions for these diabetes drugs fell from nearly 2M in 2020 to under 1M in 2022, and a key Invokama patent will expire next year, both factors that may have influenced Janssen’s decision to partner with MCCPDC.

The Gist: MCCPDC estimates that as many as 1M people who use these or similar drugs could benefit from the lower prices—not only the uninsured but also those considered “underinsured” due to high deductibles. 

Even though the deal is for two drugs with declining revenues, selling brand-name drugs from a pharmaceutical heavyweight is a notable step for the company.

As Congress continues to investigate PBMs for driving up drug spending through their pricing tactics, MCCPDC’s move offers a path to PBM disruption through direct competition. By cutting out the rebates retained by health plans and PBMs, MCCDPC can potentially offer better net payments to pharmaceutical companies, as well as reduced cost-sharing for patients—an arrangement that benefits both parties at the expense of traditional PBMs.

California partners with Civica Rx to produce generic insulin

Posted on by • Posted in Generic Drugs, Generic Insulin, Health Policy, Healthcare Reform, High Drug Prices, Insulin, Pharmaceutical Industry, Prescription Drugs • Leave a comment

https://mailchi.mp/6f4bb5a2183a/the-weekly-gist-march-24-2023?e=d1e747d2d8

This week, California Governor Gavin Newsom announced the state has struck a 10-year, $50M partnership with nonprofit drugmaker Civica Rx to produce three versions of generic insulin.

These are intended to be made available nationwide for list prices of no more than $30 a vial.

Production is slated to begin in late 2023 at Civica’s Petersburg, VA plant, and Food and Drug Administration approval will be required. This deal advances California’s CalRx initiative to produce and distribute generic drugs at low costs; according to a Newsom administration official, the low-cost insulin will be available to state residents through mail-order and retail pharmacies. This is the first state-level partnership for Civica, a health system collaborative whose members now cover a third of all US hospital capacity.

The Gist: Since Congress capped insulin copays for Medicare beneficiaries at $35 per month, there’s been a remarkable sea change in the pricing of the drug. Last week, Sanofi joined Eli Lilly and Novo Nordisk, the three of which together control 90 percent of the US insulin market, in dramatically reducing insulin list prices and capping out-of-pocket costs (including for the uninsured), bringing them in line with the costs now paid by Medicare beneficiaries. 

Given that most Americans needing insulin are already covered by these policies, the impact of California’s initiative may be muted. However, it sets an important precedent for state partnership in pharmaceutical production that will surely expand to other drugs (Newsom stated generic naloxone could be next)—and works to position Newsom as an advocate for lower drug costs, should he seek higher office. 

Eli Lilly cuts prices on its insulin products

Posted on by • Posted in High Drug Prices, Insulin, Out of Pocket Expenses, Pharmaceutical Industry • Leave a comment

https://mailchi.mp/175f8e6507d2/the-weekly-gist-march-3-2023?e=d1e747d2d8

On Wednesday, Indianapolis, IN-based pharmaceutical giant Eli Lilly announced that it will cut its list price for both Humalog and Humulin, its two most commonly prescribed insulin products, by 70 percent. While these changes will go into effect later this year, the company is also immediately expanding its Insulin Value Program, available at participating pharmacies for the commercially insured and upon program enrollment for the uninsured, to match Medicare Part D’s $35 per month out-of-pocket insulin cap. Eli Lilly shared that 30 percent of the US’s 8M insulin users rely on its products, though the company is only cutting prices for its older insulin products.

The Gist: Nearly 30 percent of uninsured and 20 percent of commercially insured insulin users in the US report having to ration their doses due to cost concerns.While it still won’t be providing its insulin for free, as some have demanded, Lilly’s move should help the company gain market share, in addition to generating some good PR—and it’s expected that other large insulin manufacturers will be pressured to follow suit. 

But even if a $35 out-of-pocket cap was adopted nationally, Americans would still be paying three times more for their insulin than people in comparable countries. 

A battle of (growing) titans in healthcare  

Posted on by • Posted in Health Industry Distributors, Health Insurance Industry, Health System, Hospital, Hospital Industry, Market Consolidation, Market Power, Market Share, Market Trends, Pharmaceutical Industry, Retail Pharmacy • Leave a comment

https://mailchi.mp/12e6f7d010e1/the-weekly-gist-february-24-2023?e=d1e747d2d8

We’ve updated our annual comparison of the relative size of the largest healthcare companies, with the graphic below comparing 2022 revenues to 2019 for a sense of how different companies and industry sectors weathered the pandemic. 

The annual revenues of the five largest health systems in 2022 pale in comparison to the industry’s true giants—and the gap only widened over the pandemic. The largest health systems averaged just 5 percent annual growth since 2019, while the largest companies in each other healthcare subsector have grown revenues by over 10 percent annually.

Unsurprisingly, the pandemic drove Pfizer’s revenue to a record $100B in 2022—over half of that was driven by the company’s COVID vaccine and antiviral treatment, Paxlovid. Amazon’s 2022 revenue was nearly double its pre-COVID level. While very little of that growth came from healthcare, it enabled the company to fund investments like its all-cash $3.9B purchase of One Medical, which closed this week.

Even the nation’s largest health systems cannot compete with that kind of firepower, and looking beyond revenue paints an even more difficult picture. According to Kaufman Hall, although the median hospital has grown its revenue by 15 percent, it has seen expenses climb 20 percent, and lost 26 percent of margin since 2019. 

Four Insights from Healthcare Reimagined: BDO’s J.P. Morgan Conference Event

Posted on by • Posted in Business Valuation, Health Equity, Health System, Hospital, Hospital Industry, Labor Spend Management, Leadership, Overburdening Clinicians, Pharmaceutical Industry, Thought Leaders • Leave a comment

https://www.linkedin.com/pulse/four-insights-from-healthcare-reimagined-bdos-jp-morgan-steven-shill/

This January, BDO hosted healthcare and life sciences leaders on the sidelines of JP Morgan’s Healthcare Conference to glean insights from those at the forefront of these rapidly evolving industries. 

In a series of intimate breakout discussions, these leaders discussed the challenges they’re seeing and what they anticipate the near future will hold. Here are four of their biggest takeaways that industry stakeholders need to know:  

·        Healthcare labor needs a makeover

One of the biggest issues we’re seeing in healthcare today is the overburdening of clinicians and other healthcare staff. This year, healthcare leaders need to prioritize enabling clinicians to practice at the top of their licenses. That means reducing their administrative burden so they can spend more time doing what they do best: working with patients and dispensing care. 

·        Healthcare valuations are moderating

In the past year, healthcare company valuations have been very high. We’re now seeing valuations moderate, which could mean a major shift in the deal landscape, with deal opportunities opening up as the price is right. 

·        Health equity is about choice

The reality is that each individual patient has unique needs that require tailored solutions. One important tool for improving health equity is technology that enables patients to choose what is right for them and their situation. That’s why capabilities like self-scheduling are so important, despite the fact that they are currently a missed opportunity for many providers. 

·        Life sciences leaders are looking at drug timelines differently

COVID-19 showed how quickly a drug can be safely developed when the right resources are in place. Moving forward, life sciences leaders are likely to pressure test drug timelines, which could lead to a shift in how the industry looks at drug development as a whole. 

·        While it’s impossible to know exactly what the future holds, we’re thankful that we were able to hear from industry leaders with on-the-ground knowledge of what’s happening now and what’s likely ahead. In the months and years ahead, we’ll continue to look to these leaders for their insights. 

Inflation slowing as Wall Street looks bullish on healthcare sector

Posted on by • Posted in Biotech, Health Insurance Industry, Healthcare Sector, Inflation, Interest Rates, Market Outlook, Market Trends, Net Income, Pharmaceutical Industry, Wall Street • Leave a comment
https://www.beckershospitalreview.com/finance/inflation-slowing-as-wall-street-looks-bullish-on-healthcare-sector.html?utm_medium=email&utm_content=newsletter

Wall Street’s roil has stabilized somewhat in recent days, with the S&P 500 brushing up against its 200-day moving average and rising more than 10 percent since its October lows, as of publication time.

The index’s 50-day moving average is trending up, according to financial data firm Refinitiv. But it still must climb another 7.4 percent to form a “golden cross,” which is when a stock or index’s short-term moving average rises above one of its longer-term moving averages. The S&P 500’s 20-day and 100-day moving averages are closer to the milestone, only needing increases of 5 percent and 1.2 percent, respectively.

The Dow Jones Industrial Average has already formed a small golden cross: its 20-day moving average is 1.2 percent higher than its 200-day moving average.

Investors Optimistic about Healthcare Sector

– Investors are most optimistic about the Healthcare sector, which is trading close to its 3-year average “price to earnings-per-share” ratio of 48.1x, according to Simply Wall Street.

– Analysts are expecting an annual earnings growth of 13.4 percent, higher than the sector’s past year earnings growth of 5 percent.

– Merck and Johnson & Johnson were among last week’s top gainers driving the market.

Inflation Appears to be Slowing

– The recent lower-than-expected inflation figures could indicate it is slowing.

– The Fed may continue raising rates, considering the strength in recent labor market and retail sales data.