Healthcare’s biggest weekly stories — Is a $2.1 million drug price ethical? The latest managed care news, VA gets privatized, & more. | The Healthy Muse

Managed Care’s big week

Over the past few weeks, the largest managed care players have provided us with insights into the healthcare industry from a payor’s perspective. Anthem, UnitedHealth, Humana, CVS, and Cigna all had interesting things to say.

Here’s what you need to know:

UnitedHealth wants to grow OptumCare to $100 billion in revenue by 2028, but they’re not planning on building any hospitals. The growth strategy banks on Medicare Advantage growth, increased local care delivery, expanding into areas of healthcare with increasing intensity of services (like ambulatory surgery centers), and increasing medical efficacy.

Anthem touted its investments in AI during the conference, giving mention to predictive analytics, adjusting for social determinants of health, and health risk assessments with the ultimate goal of driving down costs. The payor also wants to continue its Medicaid joint ventures with the Blues and likewise continue the integration of its newly established PBM Ingenio Rx.

In other Anthem news, the payor is making a push into behavioral and mental health with its recently announced acquisition of Beacon Health Options, a behavioral health management organization.

Humana’s Chief Medical Officer made it clear that the payor’s strategy revolves around the home. He continued by saying that Humana differentiated itself from UnitedHealth and CVS/Aetna by focusing on the home, whereas UnitedHealth is focused on a primary care physician acquisition strategy, and CVS is honed in on retail settings.

CVS/Aetna’s investor day was chocked full of growth details surrounding its new “HealthHUB” in-store plan. I touched on the HealthHUB plan previously while covering the JP Morgan investor conference at the beginning of the year. Anyway, CVS is expanding the “health and wellness” store concept to1,500 locations by 2021. Ambitious af.

Cigna brushed off any challenges involved in the changing healthcare regulatory landscape, touting their ability to work through tough policy environments. The firm shrugged off any possible effect of drug rebate reform and reiterated its approach to partnering with physicians (rather than buying them) to separate themselves from the healthcare delivery system for the purpose of the enhanced patient support.

Several insurers were asked about the return of the health insurance tax, and how the tax might affect the industry in 2020 and beyond. As you could imagine, they responded with some distaste, stating that the health insurance tax would cause instability in the insurance market and probably result in higher premiums.

Interestingly, some think that the health insurance tax wouldn’t affect insurers on the ACA exchanges — meaning that they could simply raise the price of premiums to exactly counteract any taxation.

Stunting Medicare Advantage growth to Tyrion’s level.

On the other hand, insurers might not get away with that tactic in the rapidly growing Medicare Advantage market due to the current competitive nature of that exchange (insurers want the Baby Boomer Biz — duh). Instead of passing on the tax via higher premiums, insurers might opt to provide less coverage through these plans, or compete in other ways.

Either way, insurers definitely do not want to lose any MA enrollees, since MA is the major driver of their growth story on quarterly conference calls. In fact, the health insurance tax might deter would-be enrollees from even signing up for Medicare Advantage, instead opting for traditional Medicare.

Veterans Affairs shifts to private model

VA gets privatized.

Enough about managed care companies. Veterans are about to be given the green light to receive care at any hospital — beyond just VA-designated hospitals. The policy appears to be a somewhat unprecedented move — according to the NY Times, the VA has about 9 million enrollees, which would mean that this shift would be the largest change in healthcare since the ACA.

Essentially, this move is more or less privatizing VA healthcare with the intention of “greatly opening” medical care to veterans.

Congress gets fed up with health data breaches

Whipped into shape.

An EVER growing number of healthcare companies continue to get hacked. This time, though, Congress had some things to say to Quest and LabCorp, who got in trouble from some reps after using a third party agency called American Medical Collection Agency.

Representatives thought that the companies were acting pretty lazy with the precious data by outsourcing. It’s also worth noting that while the companies won’t be fined or financially punished by the hack, the data breach is a credit-negative event.

Is a $2.1 million drug price ethical?

A price tag on life. Sort of.

Novartis drew raised eyebrows over the weekend when it priced its spinal muscular atrophy treatment Zolgensma at $2.1 million. Yep, you read that right. But is that a good or bad thing? Is the price ethical when it’s saving lives? Some of my (somewhat ignorant) thoughts are below. Interested to hear others’ opinions as well.

In this specific case, here’s the perspective of Novartis: drugs in general are extremely costly to research, develop, and bring to market. The disease that the drug treats, spinal muscular atrophy, is extremely rare. If the disease is NOT treated, then the infant may die and/or struggle long-term with expensive treatment and machinery for the rest of its life.

But if the drug is effective — which it appears to be in most instances — it could save quite a bit of time, money, and healthcare utilization by stopping the disease in its tracks.

In my mind, it seems as if Novartis more or less attempted to estimate the cost to the healthcare system of that patient WITHOUT the new drug, then priced their drug within — or, as they claim, well below — that range. Still, the distinct possibility exists that the drug might not work in all patients, and the final list price was $2.1 million, after all.

It remains to be seen whether insurance covers any of that price, but Novartis is guaranteed to have a payment installation plan in lieu of insurance.

Since Novartis developed the drug, the biotech firm gets ‘rewarded’ for taking on the high, high risk of developing a cure for SMA. If Novartis hadn’t found a cure for the disease, the company would have pumped billions of dollars into R&D and received…nothing. Which happens decently often.

Despite these factors, many experts still consider the list price excessive. The final question I would ask on the ethics, though, is would you rather have the drug at an excessively steep price or no drug at all? It’s a tough one, huh…

Read some perspectives from parents and individuals who actually have, or have seen, the disease firsthand:

Is $2.1 million too much for a drug? For affected parents, there is no debate

I have spinal muscular atrophy. Critics of the $2 million new gene therapy are missing the point

Quick Hits

Business Highlights:

LabCorp has its new CEO — the former Merck President. The firm also just boughtEnvigo. CVS and Walgreens are thought to be the same exact company, but they’re taking very different strategies when it comes to healthcare. Oh, yeah…that whole CVS/Aetna merger?STILL tied up in court. Someone let me know why that didn’t happen to Cigna/Express Scripts. Pfizer isn’t very happy with Johnson & Johnson over anticompetitive issues with its drug, Remicade. Medical device companies might get screwed by Trump’s Mexico tariff.

Could patenting actual genes become a thing? Not the Onion: a group of Senators just asked Big Pharma’s lobbying group for ways to reform drug pricing. Apple’s Watch can now track menstrual cycles and tell you when an area is too loud. And tech companies seem to be hitting the same wall in the attempted disruption of healthcare. In fact, there could be a big Medical AI Data problem brewing.

State Highlights:

Here’s a comprehensive list of all the big managed care players by state. Beckers did us a big favor by publishing the largest commercial insurance health plans by state, too.

Apparently, 16 hospitals in Massachusetts are storing a smooth $1.6 billion in offshore accounts.

Louisiana just officially banned freestanding Emergency Rooms in a ploy to save rural hospitals.

And a Kentucky hospital lost its Medicare licensure and had to cut half of its staff as a result.

Policy/Other Highlights:

Big news from the Supreme Court: the DSH changes enacted were ruled to be illegal, meaning the cuts to the program won’t go into effect yet.

There are plenty of headaches and complications behind full price transparency in healthcare. CMS is trying to get rid of some of those headaches by asking for ideas to cut down on the red tape in healthcare.

The Medicare Advantage growth hype might not live up this year. And what might happen in the event of an international pricing index model for Part B drugs?

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Originally published at on June 11, 2019.



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