Top of the Funnel: Macro
Personal Consumption Expenditures. HCA (+), THC (+) The PCE price index increased 0.20% MoM and 2.7% YoY. PCE Expenditures increased 9.5% YoY and 0.36% MoM.
Prescription drug expenditures are showing no signs of slowing down. MoM and YoY Americans spent 1.1% and 10.9% more, respectively, on pharmaceuticals. The price index, however, increased only 0.08% MoM and 3.10% YoY.
Gross domestic product. This week’s revision of GDP up to 2.0% was applauded by The Street. Unfortunately, about 0.61% can be attributed to health care and social assistance, followed by retail. (In 1Q 2022, third estimate, the figure was 0.12%.) In other words, the 2% GDP print was, what we might call low quality because health care largely runs on transfers, primarily from the government.
The dominance of the health care industry in the American economy is certainly good for our long ideas but it presents us with a policy issue of just how much of the U.S. economy will Congress allow health care to eat?
CONGRESS.
Sanders Impasse. CI (+) Last week, Sen. Sanders re-upped his demand that the Biden administration put forward a more comprehensive plan to lower drug prices. Unless and until the administration does so, Sanders is blocking the White House’s health agency nominees, including Monia Bertagnolli to head the National Institutes of Health.
Perhaps recognizing the legal risk presented by court challenges to the Inflation Reduction Act’s Medicare drug price negotiations, Sanders is reviving a Trump-era policy that would limit prices paid by Medicare to those charged in Canada, Britain, Germany, France and Japan.
Another bill, filed by Sanders and Sen. Amy Klobuchar would limit prices paid by Medicare to those paid by the Veterans Affairs.
Finally, Sanders has made some noise about extending drug price controls to employer-sponsored insurance.
Blocking your party’s nominees (Sanders almost always caucuses with Democrats) is unusual, even for Sanders. However, as power, like nature, abhors a vacuum. As the president’s approval ratings continue to underperform and questions about his health persist, filling that vacuum is tempting.
Recent black book on role of drug prices in employer-sponsored insurance here.
Pandemic and All-Hazard Preparedness Act. The PAHPA expires at the end of Sept. and as such is a vehicle for other health-related legislation. Or should be.
The 2006 law is intended to improve preparedness and response capabilities for emergencies, including pandemics. It funds response programs, foreign and domestic, surveillance and research at BARDA.
Rep. Frank Pallone has been pressuring his committee to tack on provisions to address drug shortages. So, far no go. As time runs out, a clean bill is the most likely scenario.
THE WHITE HOUSE.
Medicaid March Enrollment. CNC (+), MOH (+), UNH (+), ELV (+) CMS released March enrollment data demonstrating our predictive model continues to work well. In March Medicaid had 86.7M enrollees versus 86.4M in Feb. or an increase of 0.34% MoM. Our model currently suggests a Medicaid enrollment of about 90M in May – although we are a bit skittish about the cadence of payments around debt ceiling deadlines.
CHIP enrollment remains stable at 7.1M, having shown little change during the Public Health Emergency. We anticipate it will increase as children on Medicaid that do not meet age or income requirements are transferred to CHIP.
ESRD Payment Update. DVA (-), FMS (-) CMS proposed a 1.6% increase in payments to dialysis facilities for 2024, not quite half of the amount finalized for 2023. The good news is that the Employment Cost Index for hospital works to which ECI is linked is baking in the worst quarters of 2022 in terms of labor costs. The bad news is the rate update is not really addressing the facts on the ground. The worse news is that, while the rate of growth has slowed a return to previous wage level seems unlikely anytime soon.
Drug Negotiation Guidance. CMS released updated guidance on the drug price negotiation process that begins in Sept. . Fact sheet here.
OTHER STUFF.
Batch-dependent variation in COVID Vaccines. A study leased in March but more recently updated looks at batch-dependent suspected adverse events in Denmark. The authors conclude there is some variation in the incidence of adverse events that could be connected to the manufacturing process.
It is not a crazy idea – though with out a doubt needs more research – because Jared Kushner makes note in his memoir of some manufacturing difficulties at PFE in Dec. 20. It is also a good working hypothesis to explain the variation across regions of adverse events.
It also makes a lot of sense given the scale and the speed of the vaccine roll-out. PFE is well known for their marketing and sale prowess but their manufacturing history is spotty.
Read it here.
COVID Gets a Sense of Humor. It is an eternal truth of comedy that it must run a little ahead of consensus. Good comedians break it to us gently as George Carlin did on race.
Dana Carvey and David Spade, two talented men we hear too little of, had this to say about COVID vaccines and Dr. Anthony Fauci. The implications are obviously not good for the doctor but you probably already knew that even if you did not want to say so.
Have a great weekend.
Emily Evans
Managing Director – Health Policy
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