Must-Read Healthcare Stories from the week — October 25, 2019 Edition: Last-Minute Opioid Settlement.
Welcome back to the Healthy Muse, where the top healthcare news gets covered from the best healthcare sources. We break down the complex healthcare system along with the latest trends in a not-stuffy, easy to read way.
Let’s get into this week’s stories.
1. Drug Companies Reach a Last-Minute Opioid Settlement for Upcoming Case, but Falls Short of a Broader Deal
McKesson, Cardinal Health, AmerisourceBergen, and Teva Pharmaceuticals reached a $260 million settlement (paywall — WSJ; here’s a non paywall write-up from Axios) today to sidestep their court appearance that would have started this week in Ohio.
Walgreens wasn’t able to reach a settlement with the other firms — their trial was delayed.
The reaction to the opioid settlement.
Investors weren’t really too thrilled with the news. They’re still holding out hope for a final, all-in-one settlement between drug companies and state attorneys that the NY Times reported was in the works this week.
That “final” settlement could be worth up to $50 billion, and would theoretically release the drug companies from all further liabilities connected to the opioid crisis.
What’s obvious is that states are trying to squeak out everything they can from the corporate giants in connection with the opioid crisis.
An interesting stat: the three drug distributors McKesson, Cardinal Health, and Amerisource controlled 95% of drug distribution in 2018.
The opioid crisis could cost the U.S. as much as $214 billion in 2019.
2. Johnson and Johnson has been in the News for all the Wrong Reasons — Recalls, Settlements, and Legal Woes.
Death by Litigation.
In addition to being a part of the opioid crisis, Johnson & Johnson has been in the news quite a bit lately…and not necessarily for good reasons. The drug giant faces 100,000+ lawsuits connected to its products and marketing, and things haven’t gone so well for JnJ in recent court hearings:
Back in August, JnJ was told to cough up $572 million in the first opioid crisis case in Oklahoma.
Don’t forget about the whole talc-in-baby-powder lawsuit unleashed by Reuters late last year — a $4.7 billion fine.
Now, JnJ is trying to settle its involvement (WSJ) in the opioid crisis for $4 billion. This week, JnJ was also ordered to pay $117 million over its marketing for a pelvic surgical device.
I could keep going, but you get the point — they’re under a lot of heat. Despite JnJ’s legal woes, they still managed to top earnings estimates for the third quarter on strong pharmaceutical sales.
During that call, executives mentioned that they were not saving any cash reserves related to the 100,000 lawsuits — meaning that they’re no real threat to the bottom line.
JnJ is appealing the exorbitant punitive damages awarded by juries in the above cases, too.
3. Amazon joins the trend of paying employees to travel for cancer care
Amazon lets employees travel for cancer care.
As employer health costs continue to rise for its employees, some companies have gotten pretty creative with how they reduce their costs. We’ve covered how Walmart and other large firms are very hands-on with controlling healthcare costs. Now, Amazon is joining the trend of allowing its employees to travel for cancer care (paywall — WSJ).
The partnership with City of Hope.
Whereas Walmart lets workers diagnosed with cancer to seek treatment at the Mayo Clinic, Amazon is partnering with City of Hope hospital in California. The e-commerce giant will cover all of the travel costs for its workers to seek opinions from City of Hope.
It’s a win-win: employees get access to coverage outside of just the local options, and Amazon aims to lower its healthcare costs when its workers receive arguably better, more effective care from a reputable provider.
4. UnitedHealthcare decides to implement site-neutral payments itself
A push away from hospital-based facilities.
Similar to Anthem’s outpatient imaging policy back in 2017, UnitedHealthcare is trying to shift its covered lives to ‘lower-cost’ settings by limiting who can receive outpatient surgeries and procedures at a hospital-based facility an “HOPD” (i.e., an outpatient clinic or surgery center that is actually a department of a hospital).
Beginning in November, UNH will cover the costs of a procedure at an HOPD it determines that the site of care at the hospital outpatient department was medically necessary.
The bigger picture — site neutral payments.
Earlier this year, HHS’ site-neutral payment policy — meaning that hospital outpatient departments and freestanding facilities would be paid the same — was shot down in court.
Insurers are always in favor of steering patients to lower-cost settings. In this case, freestanding ambulatory surgery centers should be the big winners — and hospitals are getting left out to dry.
Policy Corner, week of October 21, 2019
Medicaid work requirements are apparently costing states millions.
Requiring people to work in order to receive Medicaid was a contentious issue when first unveiled in states like Arkansas. In theory, it sounded like a solid proposal — contribute to your local economy, and get rewarded with Medicaid coverage / public welfare.
Then, questions arose about the implementation of the said proposal. How would the reporting work? Who would hold the individuals accountable? Not to mention scrutiny the policy received from court. No one really knew whether the work requirements were ‘working’ (haha) or not.
This week, we received the first data point: a federal report indicated that Medicaid work requirements are actually costing states millions based on the administrative costs required to run these programs.
Read the full federal report here.
Pelosi’s Plan passes a Key House committee.
A few more developments emerged from the Pelosi Drug Pricing camp this week (which still has no chance of passing the Senate as long as Mitch McConnell is around).
The drug pricing bill advanced through the House Energy and Commerce Committee, but still must pass through 2 more committees before it reaches the floor.
Pelosi’s Plan gets Vetted by the CBO, Others.
In other news, the Congressional Budget Office released an analysis of the drug pricing proposal, finding that the plan would potentially save Medicare around $370 billion over 6 years by imposing price controls.
Democrats were huge fans of this news, while Big Pharma and Republicans stressed that any proposal that reduced drug revenues this drastically — estimated between $500 billion and $1 trillion — would result in severely less innovation for new drugs entering the market.
While the bigger pharmaceutical companies would most likely survive, the smaller biotech incubators rely on a lot of early stage financing from investors willing to invest in risky assets.
If the reward were to become much more muted, would this investment in biotech small caps still happen? Of course, this is all hypothetical.
Other Policy Updates — 2019’s remaining agenda, Elizabeth Warren gets pressed on healthcare, and keep the looming ACA ruling in mind.
Here are Congress and the White House’s healthcare initiatives to keep an eye on as 2019 comes to a close (where does the time go??). In case you missed it, here’s ourtimeline of Surprise Billing updates for 2019.
Elizabeth Warren received some flack (paywall — WSJ) for her lack of detail with her Medicare for All proposal, including how the plan would be funded.
She’s expected to release some information soon after dodging questions about it in the debate this week. Read more background here.
Finally, keep in mind that the ACA ruling is expected to happen any day now (paywall — WSJ). Some states are scrambling to keep the ACA in place until a new health law is formed.
The White House also has indicated continual support for the ACA until a replacement takes shape (that is, if the law gets struck down).
- UnitedHealth announced earnings this week, and beat analyst revenue and earnings estimates for Q3 (what’s new).
- Following in Nobilis Health’s footsteps, Diversicare Healthcare Services was delisted from the NASDAQ today.
- Sutter Health in California agreed to a settlement this week before its antitrust lawsuit began
- Walgreens announced a partnership with Centene and RxRadvance this week to increase transparency through a cloud-based PBM platform.
- Meet the doctors who have licenses in all 50 states to treat patients in remote areas. #Telemedicine
- Read the letter that private equity managing directors sent to Congress re: Surprise Billing
- Fitbit announced a partnership with Bristol-Myers-Squibb and Pfizer to accelerate the detection and diagnosis of atrial fibrillation.
- Hospital M&A isn’t slowing down — it’s slightly above last year’s pace, according to Kaufman Hall
- Ancestry is taking on 23andme by rolling out its own genetic health test services.
- The infamous California bill to end excessive dialysis profits became law this week.
- California’s new drug transparency laws just revealed a steep rise in wholesale drug prices.
- Here’s a state by state update on Medicaid policy changes from Kaiser.
- Major Blue health insurers BCBS North Carolina and Cambia are dropping plans to combine after the BCBS CEO resigned.
- Poor People Are Still Sicker Than The Rich In Germany, Despite Universal Health Care
- From 46Brooklyn: drug price increases may have slowed, but new analysis shows that drug LAUNCH prices are increasing.
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Originally published at https://thehealthymuse.com on October 21, 2019.