Top of the Funnel | Macro Data + Policy Position Monitor+ Earnings.
Mortality. ((DVA (-), FMS (-), CHE (-/+), AMED (+/-) I think (hope?) the CDC has finally worked through much of its backlog after taking down mortality data reporting for several weeks. There remain, almost everywhere you look, persistent excess deaths. The one bright spot, if you want to call it that, is deaths from Alzheimer’s Disease.
Sadly, deaths from Alzheimer’s Disease were elevated above the baseline throughout 2020, suggesting a pull forward effect from less access to physician and nursing care, abandonment and despair.
Deaths from Diabetes and Nephritis, including renal failure, remain elevated above the baseline. DVA reports on Monday afternoon and although mortality seems to have abated relative to 1Q 2022, it remains high.
FMS revised its FY 2022 revenue guidance to the low end of its low to mid-single digit range, citing labor and inflation. Expect something similar out of DVA next week.
No changes to the policy position monitor. Link here.
Mortality workbook is here.
Earnings.
PFE. As expected PFE had a good 2Q due mostly to its government contracts for Covid-19 vaccines and Paxlovid. The company plans to use its legendary marketing prowess the expand sales of Paxlovid beyond the immunocompromised by “educating” pharmacist about the full scope of the TAM.
Never mind the data on use of the drug in vaccinated/boosted is thin and tales of rebound infections persist, those pharmacists, are going to have to replace all that vaccination and testing revenue somehow.
Another pitch to Wall Street, was PFE’s M & A menu. The have gobs of cash, of course, but what can they buy? The drug price deal that is working its way into a reconciliation bill makes a small molecule manufacturer a bit more risky than a few years ago. The size of PFE and any other large target will invite regulatory interest.
So, what could they buy that would replace all that COVID revenue now that the federal money tree has dropped most of its leaves?
CONGRESS
ACA Plans Tax credits. ((HCA (+), THC (+), ACHC (+) ANTM (-), MOH (-), CNC (-)) Sen. Joe Manchin and Majority Leader Chuck Schumer reached agreement on a reconciliation bill that includes a three-year extension of the tax subsidies approved under the American Rescue Plan Act. We are still awaiting legislative language to understand the impacts, but thus far the enhanced tax credits have delivered a more positive case mix for providers. It has also meant a mild hit to MLRs.
Drug Prices. ((PFE (-), BMY (-), LLY (-)) Still waiting on legislative language for the agreed-to provisions as well. Reports suggest that Medicare would be able to negotiate prices for top ten drugs, by spend, in 2023. CMS has been terrified of the pharma lobby for decades so the idea they could negotiate anything is ironic.
Congress understands this and for that reason, if negotiations break down, the drug company will be assessed a 95% excise tax on sales of the relevant drug. It is hard to see such a framework passing constitutional muster. The point, however, is made. Pharma has lost a lot of its power on Capitol Hill, mostly as a result of the bad behavior of its members, like ABBV.
As expected, it appears that Medicare Part D reform is in the agreement, articulated by the press as a “cap on out-of-pocket expenses.”
COVID funding. ((PFE (-), MRNA (-)) If you had any doubts about the future of additional COVID funding, here is Sen. Richard Shelby’s response to a $21B emergency appropriation:
“Wasteful, off-budget spending that fuels inflation will be a non-starter.”
THE WHITE HOUSE.
Medicare Rule-A-Rama. (( CHE (+), AMED (+), ACHC (+), EHC (+)) FY 2023 payment updates were finalized for hospice (3.8%), Inpatient psychiatric Facilities (2.5%) and inpatient rehabilitation facilities (3.2%). These payment updates reflect improvements in the forecast in Medicare’s Prospective Payment Models. Not enough to accommodate high single digit YoY% labor cost increases, but better than a stick in the eye.
The rule to watch is the one for inpatient hospitals. The lobby is hard at work to get the multi-factor productivity adjustment reduced or eliminated. Since reconciliation appears to be moving forward and represents the last, great hope for legislation this year, that is where relief is most likely to land.
Medicare Advantage Getting an Uncomfortably Close Look. ((UNH (-), HUM (-), ANTM (-)) Yesterday, CMS issued an RFI seeking public comment on the Medicare Advantage program.
As noted, more times that I care to remember, progressives are not big fans of MA while more establishment Democrats are more forgiving. Everyone, including Republicans view the program as too fat, often at the expense of providers and patients.
More Pandemic Preparedness. The White House held a “Global Summit: Ending the Pandemic and Building Back Better” on Tuesday. As we noted last week, this summit comes on the heels of the WHO shifting its strategy away from near universal vaccination to the development of vaccines that are more durable and stop transmission.
Big dog and pony shows like this one, involving too many organizations and nations to reach any consensus, are usually designed as markers; to show leadership where there is nothing but confusion.
A global vaccination program against COVID has been overtaken by events; inflation, energy crises and civil unrest are the hot topics for most political leaders, or at least the ones that want to survive the next few years.
Executive from MRNA and PFE attended the event and used the opportunity to call from more use of real-world evidence, more flexibility in trial design, etc. As the safety profile of their COVID products continues to get scrutiny, those demands may be hard to meet.
Other Stuff
Another Drop in Childhood Vaccinations. Way to go global public health experts! According to a report from the Global Vaccine Alliance, childhood vaccinations drop 1% in 2021, following a 4% drop in 2020.
Nice work, global health.
Recent Events
PFE | Bad for America Part I, A look at the policy, politics, money and power that got us to an ineffective and potentially dangerous vaccine against COVID-19.
Searchable calendar of weekly events and notes can be found here.
Have a great weekend.
Emily Evans
Managing Director – Health Policy
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