Top of the Funnel: Macro
Insured Medical Consumer Model. The Bureau of Labor Statistics released its April state-level employment data allowing us to update the Insured Medical Consumer Model. The usual concerns about adequate insurance coverage ahead of a recession are exacerbated this year by the implementation of Medicaid unwinding its pandemic over-enrollment. Disenrollment for "procedural" reasons in coming in hot.
The health policy community has raised concerns about Florida and Arkansas in which a majority of eligibility determinations are ending with disenrollment for procedural reasons. The presumption is that the disenrolled will lose coverage. However, that conclusion tends to ignore the persistently low unemployment rate and, commensurately, the higher employer-sponsored insurance enrollment. It also ignores - and this is a theme running through health policy for decades - that most people act rationally to protect themselves and their families. If a note from the State Medicaid agency is not deemed important it might end up in the trash.
Mistakes will happen and problems will arise. State Medicaid agencies have never tried to redetermine the eligibility of so many people in such a short span of time. However, our operating thesis, somewhat confirmed by the unwinding data, is that Medicaid is over-enrolled. That means Medicaid, as the payer of last resort, has been sending PMPMs to the MCOs who in turn were not obligated to cover care for an elsewhere insured individual.
More data to come which will help firm up that view.
CONGRESS.
Site Neutral Payments. SGRY (+), THC (+), CI (-), CVS (-) #muniland The Energy and Commerce Committee Health subcommittee reported out a bill that would impose site-neutral payment policies on drug administration. Hospitals are generally paid more for administering infusion drugs as part of the Part B benefit relative to a physician’s office or freestanding infusion center.
Committee Chairman, Cathy McMorris-Rogers plans more hearings on other aspects of site-neutral payments. She mostly has the support of the minority ranking member, Frank Pallone. Predictably the hospitals are resisting.
This issue will get more interesting if/when the Senate gets involved.
The Energy and Commerce Committee also passed their version of Pharmacy Benefit Reforms. The House version, like the Senate’s would ban spread pricing. The bill would also require PBMs to provide reports to employers on utilization, pricing and formulary construction.
Finally, the Committee approved a bill requiring better reporting and transparency in the 340B program. Unlike other bills, this one was approved on party lines. The 340B program has been a gold mine for hospitals, particularly academic and research medical centers which tend to be concentrated in Democratically controlled states.
Adderall Shortages. TALK (-), GDRX (-), TDOC (-) The Commissioner of the Food and Drug Administration testified on Adderall shortages citing “incentive payments” to telehealth companies based on scripts written.
In an ominous moment, Dr. Califf indicated, “As much as I’m in favor of telehealth and very excited about continuing it, there’s been a misuse of telehealth by companies giving bonuses for the number of prescriptions written. So, I think the Adderall situation is a very different, complex set of issues,”
In other words, the bad behavior of some telehealth companies – those needing to make revenue a priority – can threaten the modality. The Drug Enforcement Agency has issued a proposed rule that would limit the number of prescriptions written without a in-person visit with a clinician. They have since extended telehealth flexibilities for prescribing controlled substances for up to 18 month as they develop the rule.
The policy concern is that telehealth has developed as a stand-alone enterprise rather than a modality of care integrated into a physicians’ practice.
THE WHITE HOUSE.
The FTC Dials it Up on Pharma. AMGN (-), PFE (-) Two moves this week tell you the FTC is serious about the anti-competitive practices in the drug business. First, the agency decided to intervene in AMGN’s acquisition of Horizon Pharmaceuticals. Their theory there is that AMGN, and presumably others, use their relationships with Pharmacy Benefit Managers to protect certain drugs through a combination of rebates and favorable formulary placement.
That theory might work, or it might not. What it does do is make the lawyers in Biopharma ask if they should rework the PBM strategy or just avoid M & A. Betting the PBM strategy takes the bullet but it will take a while for the FTC to figure that one out.
The FTC also announced an expansion of their inquiry into Group Purchasing Organizations Zinc Health Services, associated with CVS, and Ascent Health Services, associated with CI and HUM. Consumer advocates have been pressuring the FTC to explore this line if investigation since last year.
FDA WTF? PFE (-) The FDA’s vaccine adcom met and approved, with some concerns about safety, PFE’s maternal vaccine designed to prevent RSV in newborns. A similar product was previously withdrawn by GSK over safety concerns, including the risk of pre-term birth.
The CDC claims that 58-80k hospitalizations of young children occur each year due to RSV. Death from RSV is estimated at between 100 and 500 per year, also according to the CDC. Research to date suggests the risk is heavily concentrated in low-income communities and those with limited health care access.
Not normally PFE’s target audience.
Meanwhile, all JNJ COVID vaccines have expired and they have been withdrawn from the market along with the original monovalent mRNA vaccines. The current recommendation for COIVD vaccination is one updated bivalent shot, bringing that schedule in line with the flu shot.
Other Stuff.
The Supreme Song. This week, the Supreme Court dismissed a case brought by several southern states over the White House’s use of Title 42 for border control. With the public health emergency over, the issue is moot.
However, Justice Neil Gorsuch took the opportunity to pen his critique of the use of emergency powers long after an emergency ended and for unrelated issues like border control and rent forbearance. Many will dismiss his memorandum because he is a Republican appointment, but they should not.
My reading is as an invitation. Since 2018, the Court has rejected, orbiter dictum (“other things said”), the World War II precedent of Korematsu v. U.S., a case that upheld President Franklin D. Roosevelt’s decision to inter American citizens of Japanese descent during World War II.
The 2018 decision in Trump v. Hawaii is not binding and thus was cited in a number of cases challenging school, church and business closures. Could Justice Gorsuch be looking for that case that could end the Korematsu v. U.S. once and for all?
Unknown,, of course but it sure looked like he is hankering to return the balance between civil rights and emergency demands that has so deteriorated in the last few years.. It is well worth your time to read what he wrote here.
Have a great weekend.
Emily Evans
Managing Director – Health Policy
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