Big Beef with Big Pharma, Rural hospitals are struggling, & the latest on Medicaid work requirements | The Healthy Muse
For the love of everything, stop injecting yourselves with blood, people.
In other news, Martha Stewart is going in on weed. Her ace in the hole? Snoop. Dogg.
5 Big Healthcare Stories
Week of March 4, 2019
1. Congress’ Big Beef with Big Pharma
Go see the Principal.
Some of Big Pharma’s largest drug companies received a good ole’ talking to from Uncle Sam this week. Congressional leaders heard testimonies from top executives from AbbVie, AstraZeneca, Bristol-Meyers-Squibb, Johnson & Johnson, Merck, and Sanofi as they discussed and dissected the problem of rampant, belligerent drug prices.
So what happened?
Congress asked Big Pharma about drug prices and even shot some flack at the industry’s practices. Their concerns (putting it mildly) included rapid drug price hikes (in the order of thousands of percentages), patent-protecting strategies to try and extend drug monopolies (therefore delaying competition/supply for these drugs), and scapegoating other parts of the healthcare industry rather than taking any of the blame themselves (namely, insurers and PBMs).
Drugmakers responded by — you guessed it — deflecting. Essentially, the executives blamed the system as a whole for the drug pricing problem and explained that there were various incentives implicit within the healthcare system to price drugs higher. When asked why other countries paid less than the U.S. for drugs, the execs claimed that America foots the bill for other countries and that the world would have much less drug innovation if this were not the case. They pointed out that the costs of research and development, along with bringing drugs to market, can be quite high, and quite risky. The drugmakers also made clear that any over-regulation of U.S. prices could potentially threaten patient access to drugs, along with future breakthrough drug innovations.
Good question. Not sure. Right now there are a few proposals being floated around in Capitol Hill. The first would force PBMs (think CVS, Walgreens) to return 100% of the rebates that they negotiate to the patient. Drug makers LOVE this idea. A second proposal — one that Big Pharma doesn’t like nearly as much — would tie drug payments to a ‘basket’ of international country drug payments. Another idea being floated around would involve Medicare directly negotiating with drugmakers on price. The bottom line is that everyone simply wants more transparency when it comes to healthcare prices in general.
2. The BMY Investors Strike Back
Anyone else hot in here?
Remember when biotech giant Bristol-Myers-Squibb (jeez, that’s a mouthful — let’s abbreviate that bad boy to $BMY) announced that they were acquiring fellow brother-biotech giant Celgene? Well, apparently Starboard, who is a big shareholder in BMY, is NOT on board with the $74 billion decision. They think the deal is super risky, and told BMY management so. Citing expiring patents (especially on Celgene’s biggest moneymaker, Revlimid), a risky drug pipeline, a large debt load, and historically poor management execution on BMY’s operations (talk about a kick to the pants), Starboard claimed that BMY doesn’t have the right or the track record to close the biggest biotech acquisition of all time.
They’re not the only ones, either. Other activist investors with large stakes are now hopping on the ‘no-go’ train. Wellington Management, who owns 8% of BMY, thinks they’re getting a raw deal. BMY responded to the pushback, claiming that they’re paying a fair price for Celgene, which includes the access to very specialized cancer drugs and new experimental gene therapies. Now, they’re trying to smooth out the wrinkles with their investors to make sure the deal still gets done.
3 Medicaid work requirements gain steam
A Separate Path.
Wyoming is the latest state to consider Medicaid work requirements, a program where individuals must prove a certain threshold of hours worked per week in order to be covered under the state’s Medicaid program. States like Kentucky have already passed similar-type bills.
Speaking of Medicaid…,
The American College of Physicians came out in support of the Medicaid Buy-In program this week, something that has gained quite a bit of traction at the state level — somewhat at odds with the Medicare for All proposals that have shaped at the national level.
4 Rural hospitals are hurting
In dire straits.
There are 2,000 rural hospitals nationwide, and, according to new data, about 430 of those are considered at risk of closing/bankruptcy in 43 different states. For our math majors out here (thanks for following a healthcare newsletter) that’s about a fifth of all rural hospitals, which is a pretty big deal.
According to the study, 64% of these at-risk rural hospitals are considered highly essential to the health and economic well-being of their communities. The risk of closure is expected to increase if there’s any sort of economic downturn, too. There are some options available for improvement, though! Some potential solutions include expanded access to tele-health, and further optimization of existing hospital operations in various areas (I won’t bore you with the specifics).
5 Earnings SZN
Lots of big healthcare companies released their full 2018 earnings reports and outlooks for 2019. Here are some major highlights from the week:
So much growth…yet coming up short on expectations was Teladoc. The company reported virtual visits growth of 80%, yet the stock sold off 10% after Teladoc issued soft expectations for 2019, which includes lower revenue growth and a steeper expected loss as the company focuses on strategic investments in 2019.
Against all odds and a DOJ investigation, Universal Health Services killed it last year. The co. had 2.6% same facility admissions growth to boot, but they had a tough fourth quarter — still, despite the strong disadvantages facing the company, the stock is up 5%.
Amedisys came in hot, announcing a strong 2018. Same-store admissions grew 4% in 2018. The stock is up 4% as of this writing.
LHC Group fared just as well as its counterpart, Amedisys, in 2018. The company announced basically in-line revenue and EPS figures for the quarter, and expects a strong 2019 to boot. Stock is up 6% after the stellar print. They’re also feeling pretty good about their JV and M&A model. Well done, fam.
Tenet Healthcare wowed investors too, delivering a strong year end performance. Same-facility net revenue grew 3.6% in 2018, and their outpatient (ambulatory) providers posted a strong year. The company’s stock has popped 16% since its earnings on Tuesday.
Finally, the University of Pittsburgh Medical Center saw its operating revenue grow a whopping 20% — to $19 billion in 2018. Not bad.
Roche Group is DISHING it out to buy Spark Therapeutics (seriously, they paid an over 100% premium), a gene therapy biotech company. General Electric sold its biopharma business to Danaher for a smooth $21.4 billion, and that probably means that an IPO for their healthcare business is off the table for now. Ever done an at-home DNA test? Congrats on knowing your family history! Oh, and the FBI probably has your DNA now.
Apparently physicians are worth $2.4 million each to their affiliated hospitals. Go ahead and welcome Uber and Lyft to the healthcare industry! Maybe they’ll help improve the wait and travel times for healthcare appointments, which apparently haven’t improved in 11 years. That’s one thing the smartphone can’t do. Also, here are 8 interesting healthcare startups.
Apple may have an edge in healthcare based on their privacy-friendly practices. African-American enrollment in medical school lags others. CMS updates its hospital star ratings for the first time since 2017, but now they might scrap the ratings altogether? Skilled Nursing Facilities have major changes coming to their payment model, which could shake up the post-acute industry.
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Originally published at maddenmusings.com on March 5, 2019.