Top of the Funnel | Macro + Earnings
PMI. The Hospital PMI dropped from 57% to 52.5% in January, reflecting what the ISM reported as “steady state” for COVID cases. Hospitals are burning off PPE and other (over) stockpiled supplies. The case-mix index, however, increased to 56.5% up from 52% in December.
The PMI Technology spend registered a 2.5-point decline in January to 53%. We are going to watch this number carefully in light of an expert discussion this week on uses of Artificial Intelligence in the health care setting.
The future state crowd out west will have to curb their enthusiasm. The near-term prospects look to be more about transformation of non-clinical functions like scheduling and billing than robot nurses.
Ardent Health recently announced a partnership with Nashville-based Switchpoint Ventures. Let’s keep an eye on that.
Earnings. CNC. With 15M general population Medicaid members, CNC has a daunting task before it as redeterminations get underway. As they reiterated their EPS guide of $6.25-6.40 they argue that they will be able to convert some of that ineligible Medicaid membership to ACA Exchange plans. As you know by now, I am not sure I agree.
CONGRESS.
The Senate Judiciary once again approved a handful of bills aimed at reforming drug patent practices. Ironically – or perhaps intentionally – after Humira finally gets some competition. These bills have been festering in the legislative process and include:
- The Interagency Patent Coordination and Improvement Act, establishes a task force that coordinates efforts between USPTO and FDA, including information on patent-application evaluations, training and FDA approvals.
- The Stop STALLING Act would penalize brand drug makers for filing “sham” citizen petitions with FDA that interfere with the approval of competing generics and biosimilars.
- The Preserve Access to Affordable Generics and Biosimilars Act aims to limit the use of “pay-for-delay” agreements by making them presumptively anticompetitive.
- The Prescription Pricing for the People Act, would require the Federal Trade Commission to examine price consolidations and other potentially abusive practices by pharmacy benefit managers.
- The Affordable Prescriptions for Patients Act, aims to stop abuse of patents via product hopping and other tactics used by brand-name drug makers to prevent generics and biosimilars from entering the market.
Most of what is in this legislation can already be done under the FTC’s existing authority. It is more important what they symbolize about the drug industry’s political influence. Although all five bills have been reported out of Committee previously, this time it looks like they have a shot at a vote.
For years, reforms and enforcement actions have been stymied by the industry’s unalloyed power in Washington. That included the warm relationship with former Sen. Orin Hatch whose retirement in 2019, marked the beginning of the end.
It is open season on the industry. They are going to have to find another path to glory than thru Congress. Perhaps some original ideas will be under consideration.
THE WHITE HOUSE.
SOTU + Aftermath. Sen. Rick Scott, former HCA executive, is known for running it up the middle. His 12-point plan to make Social Security and Medicare subject to five-year authorizations is an easy target for the White House.
Democrats and many Republicans are setting themselves up as protectors of the programs as Scott and a handful of others hope to apply some discipline to the programs. The fiscal hawks found a surprising counter-argument in the Medicare Advantage advance notice. The proposed paltry increase of about 1% is being framed as the administration’s own Medicare cuts.
Not sure it sticks but if it does it might have CMS rethinking their math. Something to watch.
In the State of the Union address President Biden also urged states to expand Medicaid. In a small preview of Election ’24, Biden pointed out that Florida had not expanded.
FDA Testimony. FDA Commissioner Robert Califf testified on the House side this week and pushed for adoption of the VALID Act which would regulate Laboratory Developed Tests. He also suggested the agency was considering revamping the AdComm structure. Under consideration, apparently is a loosening of Conflict of Interest rules, among other things.
Drug Price Reform. COM issued some initial guidance on the inflation rebate program for Medicare Part B and D and indicated that pharmaceutical manufacturers will not receive invoices until 2025. The program, however, went into effect in October. We will need to hear from the companies on this, but accounting treatment will be worth knowing.
We will need to hear from the companies on how the accounting will work.
Other Stuff.
Mask Mandates No More. New York City has dropped its mask mandates for health care workers. Is it connected to the release of the Cochrane Review’s report on physical interventions to stop respiratory viruses? Unknown, but the gold standard of evidence-based medicine research leaves little room to require masks beyond what might be considered a best medical practice (e.g., in the surgical suite.)
If you are into evidence-based medicine described by someone who sounds a little fed up with the last three years, this interview with the lead author of the Cochrane article is for you.
Upcoming Events
Venture View with Marcus Whitney: Is AI the Answer to Health Care’s Labor Problem.
Recent Events.
HUM | Only the Strong Survive. Replay here.
Have a great weekend.
Emily Evans
Managing Director – Health Policy
Twitter
LinkedIn
