Top of the Funnel | Macro Data + Policy Position Monitor
Mortality. as the 2022 data continues to mature, the driver of excess deaths in the previous two years - COVID - has dissipated. As the most likely to die, no matter, what the season, are the frail, the data seems to be pointing toward fewer patients for the Medicare-centric players like AMED, DVA and CHE. The next 12 weeks will tell.
Mortality workbook is here.
Policy Position Monitor. The possibility of the Senate passing the VALID Act (see below) means adding a warning to the labs in the Policy Position Monitor. We will wait to see how real a threat it is before making any moves. Policy Position Monitor is here.
CONGRESS
LDT Regulation? ((ILMN (-) PACB (-)) When House Energy and Commerce reported out its FDA User Fee bill it did not contain specific language for regulating Laboratory Developed Tests. Members of the committee, however, noted the need to address the issue.
A discussion draft of a companion FDA user fee bill was released by the Senate HELP committee on Wednesday. Embedded in the legislation is Senator Richard Burr’s VALID Act which provides the FDA with regulatory authority over Laboratory Developed Tests.
The draft legislation addresses two problems that have vexed the FDA and CMS for years. Hospitals had opposed previous regulatory initiatives because they believed it might impose FDA oversight on internally developed and applied in-vitro tests. Another concern was a potential conflict with CLIA regulations to which they were subject.
The discussion draft deals with those issues by limiting FDA authority to design and manufacturing of only those tests that use interstate commerce. All test on the market on day of enactment of the bill would be grandfathered.
Section-by-section breakdown here.
There will still be opposition. Industry groups have expressed concern about the implementation of user fees to support review of in vitro tests. The experience of user fees in the drug industry suggests a disproportionate impact on small labs/new technologies.
Had the FDA not completely trashed its own reputation over the last several years, their imprimatur on an IV test might have been a good thing. Replacing the all-skate of Local Coverage Determinations, weak or absent clinical or analytical validity, and less that comforting marketing practices, with some regulatory structure would have provided some comfort and clarity to the market.
Hard to know how much it will matter now.
What we can say is if the VALID Act passes as part of the user fee legislation, the number of tests making their way to commercial use or even internal use at hospitals will slow as rules are developed. Of particular concern will be how new FDA regulations will intersect with CLIA.
Add to that NIH will be the object of a LOT of oversight and investigation if power changes in Congress this fall. There are likely to be demands for reforms in exchange for budget increases/status quo.
The days of unrestrained growth and utilization of genetic testing could be over.
Baby Formula. ((ABT (-), PRGO (-)) Regardless of who is to blame (industry, FDA, Trump, Biden) the handling of the crisis has been abysmal. The FDA failed to anticipate the shortages when ABT’s plant closed and act immediately.
The House is proposing emergency funding, the FDA is going to exercise enforcement discretion for imports and the White House is invoking the Defense Production Act to force the manufacture of more baby formula. All good moves about three months too late.
Yet another problem with FDA operations that is certain to become a focus if power changes in November.
The White House
COVID Boosters. ((PFE (+), MRNA (+)) The FDA has forgone the benefit of an expert advisory panel and approved a COVID-19 booster shot for children 5-11. Stuck between the political hard place of science and the rock of politics, the FDA has concluded the less debate the better.
As before, the FDA is analyzing antibody responses to the vaccine. Of the 67 study participants whose data the agency reviewed; antibodies increased. Clinical outcomes were not a consideration.
The uptake in vaccinations for children has been less than 30%. A booster is probably going to find an even smaller audience so harm, if there is any, will likely be contained. However, having such a low bar of evidence for something that may present risk, however low, is something that will haunt the FDA’s reputation.
End of PHE. ((ANTM (+), CNC (+), MOH (+)) May 16th came and went with no announcement the Public Health Emergency will end in July. As we anticipated, no one is quite ready. The Biden administration has made developing the Medicaid enrollment offramp as priority and at times appears a little frustrated with states’ progress.
CMS will begin hosting monthly webinars next week in preparation of the restart of redeterminations. At the same time, they are warning states not to violate law and kick eligible people off Medicaid, it is also offering some flexibility on processes that can slow things down like fair hearing rules.
Re-determining the eligibility for 87 million people is daunting to say the least. Expect a rocky and unpredictable road for the MCOs. The silver lining is most company guidance anticipate re-determinations to begin this summer. They are not likely to begin until fall.
If you are interested in one state’s approach, here is what California published this week.
Other Stuff
Workforce Development. Last week we shared a report from the Office of the Assistant Secretary of Planning and Evaluation at HHS. This week, the Bipartisan Policy Center held panel discussions on ways to alleviate nurse shortages.
In the upside-down world that is Washington health policy, one solution is to set mandatory staffing levels to address burnout and stress that is contributing to the departure of nurses under 50. The Biden administration has run into opposition for its proposal to establish minimum nurse staffing ratios for nursing homes.
Expect this issue to be hot for a while. Expect also, some friction between the unions and the for-profit providers which tend to permit nurses to operate at the top of their license and are actively working on other workforce solutions that reject traditional staffing and care models in favor of a more data and technology supported approach.
Kaufman Hall, ((HCA (+), THC (+)) one of the myriad of health care consulting firms, released two reports here and here on hospital utilization and provides a nice retrospective overview of 1Q. Their value is that for most hospital operating metrics they demonstrate a positive rate-of change in March that, based on PMI, PPI and employment, appears to have carried into April.
Florida Man. Florida’s Surgeon General has become the most outspoken public health official in the U.S. This week he took aim at approval of COVID-19 boosters for 5-11 year old children. According to press reports, Dr. Ladapo’s spokesmen has this to say:
“Dr. Ladapo finds the lack of supporting data disappointing. The question should be whether or not the booster improves clinical outcomes, and there is no evidence that it does in this population,” Florida Department of Health Spokesperson Jeremy Redfern said.
Past Events.
Replay | DVA: Fewer Patients, Even Less Innovation & A Precarious Future
Calendar. You can find 2022 here with searchable ticker list.
Have a great weekend.
Emily Evans
Managing Director – Health Policy
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