Chart of the Week
Congress.
Pandemic Preparedness. EBS was under the metaphoric Klieg lights before the House Select Committee on Coronavirus on Wednesday. Retrospective scrutiny of contracts that went bad is as old as the Capitol Dome itself; a time-honored political opportunity to remind everyone why the voters were wise to dispatch the White House’s former occupants.
Notwithstanding the history EBS has fallen into a bit of a trap. Federal contracts rarely hold vendors to a high standard. The roll-out of healthcare.gov is one of the more brilliant examples. The other problem is that, with the crisis receding rapidly, it is easy to fault decision making in the fog of war, so to speak. The combination of those two things has landed EBS in front of the committee.
Patent Thickets. ABBV got similar treatment from the House Oversight and Reform Committee. It was nothing new. Richard Gonzalez, ABBV’s CEO has made multiple trips to Capitol Hill over the years. He knows all that matters is what the Senate is willing to do and thus far undertaking major changes to U.S. patent law is not one of them. Still, with the effects of biosimilar competition in the EU well known, Gonzalez’s position is getting weaker.
The White House.
ESG Mandates. The White House issued an Executive Order requiring federal regulators and lenders to consider ways in which disclosures on climate change can be incorporated into disclosures.
Texas Waiver. Texas has sued HHS to gets its 10-year Medicaid waiver reinstated. CMS had revoked the waiver, approved in the waning days of the Trump administration, in part many believe to encourage Medicaid expansion. The waiver permits certain supplemental payments to hospitals including THC and HCA and its termination in 2022 could be a headwind of sorts.
340B Wars. HRSA sent drug manufacturers a love letter explaining to them that they would be fined if they continue to limit sales of drugs through 340(b) contract pharmacies. LLY responded with their own nasty-gram to the court. The pressure on the 340(b) program - which offers discounts for drugs to certain not-for-profit providers to support uncompensated care - is a natural result of pharma taking most of the political heat from drug price increases. Stay-tuned.
Hearings Next Week
House Committee on Appropriations, Subcommittee on the Departments of Labor, Health and Human Services, Education, and Related Agencies. FY 2022 Budget Request for the National Institutes of Health | Tuesday, May 25th, 2021 at 10:00 A.M.
House Committee on Appropriations, Subcommittee on The Departments of Labor, Health and Human Services, Education, and Related Agencies FY 2022 Budget Request for the Centers for Disease Control and Prevention | Wednesday, May 26th, 2021 at 10:00 A.M.
Senate Committee on Appropriations, Subcommittee on Labor, Health and Human Services, Education and Related Agencies National Institutes of Health's FY22 Budget and the State of Medical Research | Wednesday, May 26th, 2021 at 10:00 A.M.
House Committee on Energy and Commerce, Subcommittee on Oversight and Investigations A Shot at Normalcy: Building COVID-19 Vaccine Confidence | Wednesday, May 26th, 2021 at 11:30 A.M.
Regulatory Agenda.
Medicare Rule-A-Rama. The second tranche of Medicare payment rules are pending at the White House’s Office of Management and Budget. These are:
- Physicians Fee Schedule for 2022 and “other revisions to Medicare Part B”
- CY 2022 Home Health annual payment update
- CY 2022 ESRD annual payment update
- CY 2022 Hospital Outpatient annual payment update
Other Stuff.
JPM Morgan Tries Again. JPM is going to try and transform health care without AMZN and BRK. The initial focus will be on primary care partnerships which supports our very long-range thesis that health insurance as we know it is slowing disappearing.
SPAC and S-1 Corner.
Bright Health Group filed their S-1 this week. Bright is another verse of the theme we explored this week in a call on Direct Contracting. JPM is on the book. We have known this company for a number of years so let us know what you think.
LifeStance Health Holdings. Filed S-1 with Morgan Stanley on the book. This might be the roll-up of mental health clinicians Marcus Whitney and I discussed a couple weeks ago. As we discussed then, the brick and mortal/inpatient mental health solution is much less viable post-COVID.
The most common SPAC filling this week was NT 10-Q as the lawyers got busy dealing with the SEC’s guidance on warrants. No doubt that wrench is slowing things down.
You can access the updated SPAC spreadsheet here.
If you are investing in SPACs but not super familiar with health care, hit and we can help.
Recent Events.
Direct Contracting: Roll-up, Blow-up or “This time is different” took a look at the how-to of direct contracting, how to follow it and what data tools can help. Replay here.
Tweet of the Week
Emily Evans
Managing Director – Health Policy
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