Congress.
Drug Prices. As a 2022 reconciliation bill emerges as the best hope for major legislative moves, House Democrats have been pushing hard for the inclusion of changes to drug price policy and a reduction in the Medicare eligibility. Both are controversial and mostly non-starters in the Senate. The one exception is changes to the Medicare Part D benefit. There has been substantial work done on both side of the aisle and broad agreement the current program has some shortcoming with it comes to OOP. (CI, CVS)
S. 1260 United States Innovation and Competition Act. Sen. Chuck Schumer’s “counter China” bill is waiting on the House, whose members have a variety of notions. While the threats posed by China’s position on R & D seem to be bipartisan, the how is still being debated. It should all work out fine and yet more money will flow into the research machinery of the U.S. Government (ILMN)
Hearings Next Week.
Senate Committee on Health, Education, Labor and Pensions Vaccines: America’s Shot at Ending the COVID-19 Pandemic Tuesday, June 22nd, 2021 at 10:00 A.M.
House Committee on Oversight and Reform, Subcommittee on Economic and Consumer Policy Subcommittee An Epidemic Continues: Youth Vaping in America Wednesday June 23, 2021 at 10:00 A.M.
Hill Day. The Pharmacists were on the hill yesterday demanding legislation to ban pharmacy price concession to PBMs. They are pushing for passage of the Pharmacy DIR Reform to Reduce Senior Drug Costs Act. If they are successful, and given how the bill would not cost the federal government any money, has the support of PhaRMA and is generally good policy, chances should be better than 50-50. Your periodic reminder that a whole lot of the health care system rests on redirecting money from the pharma supply chain. (CVS, CI, GDRX)
The White House.
Regulatory Agenda. The White House published its Spring 2021 Unified Agenda and we picked a few highlights in a note this week. To provide greater access to health insurance, Medicaid is going to be a focus. Even in the wake of the SCOTUS decision on the ACA, Medicaid provides the best opportunity for the Biden administration to expand enrollment and offer more benefits. (CNC. ANTM, MOH)
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 Regulatory Items.
Patient Protection and Affordable Care Act; Updating Payment Parameters and Improving Health Insurance Markets for 2022 and Beyond Proposed Rule (CMS-9906)
Requirements Related to Surprise Billing; Part I (CMS-9909).
This rule in Surprise billing will be an Interim Final Rule, meaning it goes into effect in 30 days without a comment period. At least for this “Part I” the industry’s input is not welcomed.
The Department of Labor has submitted for White House approval a rule to implement an Executive Order requiring $15/hour minimum wage for employees of federal contractors. We will wait to see how broadly they define federal contractor and those associated with a federal contract but generally wage rates for these types of contracts in health care already exceed the $15/hour level.
Courts.
SCOTUS and the Affordable Care Act. It was an anti-climactic end to phase 3 of effort to defeat the ACA in court. As Hedgeye’s legal analyst Paul Glenchur predicted, the court avoided all analysis of the merits to the case and determined the states had no standing.
The decision takes a lot of the drama and urgency out of any efforts to amend it. It also perhaps allows those less vested in its partisan nature to examine the strengths and faults of the law.
Other Stuff.
ER Visits for Suicide Attempts. One of the more shocking and horrible end results of the politicized nature of the COVID-19 response has been the mental health impact, especially on children. We had heard anecdotally from hospital-based pediatricians that they were seeing unprecedent ER activity, but political leaders largely ignored them. Now the CDC has released data for Jan. 2019 – May 2021. It isn’t pretty, especially for young girls. Nor is it likely to recede as a problem any time soon.
Direct-to-Consumer Drug Advertising. The Government Accountability Office issued a report on DTC advertising of Medicare eligible drugs. The report found that in 2016-2018 Medicare spent $324B of the $560B total on the advertised drugs. The report calls out Eliquis, Keytruda, Lyrica, and Humira. The report is important as the Biden administration attempt to revise rules governing DTC advertisement of drugs and a push by Sen. Dick Durbin and Chuck Grassley to require price disclosure in drug ads.
SPAC and S-1 Corner.
SPAC Corner
Three new SPACs filed dedicated to health care: JATT, Northview and Avista.
UPH, QSI emerged from SPAC-land. I have a lot of questions about UPH. While behavior telehealth has a long ramp ahead of it, UPH is an amalgamation that I am having a little trouble understanding where exactly it is trying to go.
Looks like ME is getting there. That one will be interesting given all the federal policy scrutiny on genetic privacy, especially that which may make its way overseas.
You can access the updated SPAC spreadsheet here.
As a reminder, there is about $27B in health-related SPACs looking for a dance partner and the SEC is forming up new regulations. Never underestimate Wall Street's ability to spend any available money. Now that the whole warrant issue is clearing up, we will probably see more IBC showing up.
If you are investing in SPACs but not super familiar with health care, hit and we can help.
Recent Events.
The Health Care Gang. I had the pleasure this week of joining Matthew Holt, Ian Morrison, Mike McGee and Kim Bellard on the weekly THCG podcast. With such a smart group it wasn’t difficult to find great things to talk about including CLOV, ONEM’s acquisition of Iora and whether this time is different. Give it a listen here: https://open.spotify.com/episode/3E04noIV7YNOkNI0xDHLiL
Upcoming Events.
June 21st @ 10am ET PIVOT TO DIRECT CONTRACTING | DATA DEEP DIVE: CANO, CMAX, PRVA, AGL For background on the direct contracting model, watch replay of May 20th event, Roll-up, Blow-up or "This Time is Different."
July 14th @ 10am ET Brad Smith, former Director of the Innovation Center at CMS and I will be talking about the history and potential of direct contracting plus his new gig, Russell Street Ventures.
