Top of the Funnel: Macro + Earnings
GLP-1 Drugs – The Road to Reimbursement… or Not. We will be discussing the various competing arguments and policy pathways for Medicare reimbursement for GLP-1 drugs on an obesity indication. Invite here. (Add to Outlook Calendar.)
Employment. While not as bad as 2010 – yet – employment in biotech continues to erode to -0.7% on a YoY% basis. Notwithstanding the rally of late the issue for this sector will be the funding environment. It is overly dependent on NIH and other federal agencies and, pending conclusion of oversight of the Public Health Emergency, that flow of funds is unlikely to improve.
Overall, employment in health care returns to its employer of last resort in tough economic times role. Overall, health care employment increased 4.05% YoY. The major components, ambulatory services, nursing facilities and hospitals increased 3.95%, 5.05% and 3.63% YoY, respectively.
CONGRESS.
Now Turning to Group Purchasing Organizations. PINC (-) Pharmacy Benefit Managers have gotten all the love recently. That ends with Sen. Ron Wyden’s inquiry this week into the Group Purchasing Organizations.
Wyden believes, and not without reasons, that the GPO’s purchasing practices and the industry’s concentration among a few players has resulted in prices so low the drugs can only be made overseas which has presented issues of oversight and quality.
He plans to offer some legislation and additional hearings. Think of it as the second wave for the drug channel.
WHITE HOUSE.
The Silly Season Arrives. IBB (-), XBI (-) KKR (-), If you had any doubts that the unique behavioral changes wrought by election season were not upon us, I point to yesterday’s announcement from the White House regarding march-in rights.
The substantive announcement is from the Department of Commerce which is asking for information/response to a framework it developed for applying the Bayh-Dole Act’s march-in rights provision.
The law has four criteria, only one of which the government must meet. The first criteria requires, in effect, that a federally funded owner of a patent must have failed to commercialize it. The Commerce Department is making the argument that a high drug price that renders a drug inaccessible or partially inaccessible meets that criteria.
Well, alrighty then.
The announcement also included some direction to the Department of Justice, Health and Human Services and the Federal Trade Commission for tracking, enforcing and regulating public equity owned health care companies.
I do not know of a way to regulate purely on ownership type (unless Congress has instructed so as is the case for non-profits) so I expect the real world impact is going to be for single provider-type roll-ups that dominate a local market. Anesthesiology springs to mind.
Another angle could be vertical or horizontal consolidation by stealth so that a PE firm controls labor price and availability across provider types.
Coincident with the White House’s announcement is an investigation by Senators Grassley and Whitehouse to examine public equity ownership in health care.
OTHER STUFF.
Pile On. PFE (-), MRNA (-), BNTX (-) Now that Texas has broken the seal and sued PFE under its consumer protection law, research on the cost and benefits of mRNA vaccines against Covid, or otherwise, assume a little more weight.
Published in Nature this week is a study that analyzes how ModRNA affects the fidelity of mRNA translation, highlighting the potential for off-target effects for future therapeutics.
Another study, a pre-print of a systemic review of phase 3 trials concluded that mRNA vaccines were associated with a higher risk of sever adverse events in children five and older. In children younger than five, mRNA vaccines were associated with a three-fold increase of lower respiratory tract infections.
At some point, and you would think we were already past it, mRNA vaccines will need to be removed from the market. The problem there, of course, is that it will only add fury to the legal cases being developed.
Have a great weekend.
Emily Evans
Managing Director – Health Policy
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