Top of the Funnel: Macro + Earnings
GLP-1 Path to Reimbursement ... or Not. On Wednesday we reviewed the most likely pathways for Medicare reimbursement for drugs with a weight loss indication. Link to replay and slides here.
CPI. It is hard to take CPI in health care too seriously given the lazy methodologies employed for categories like health insurance. Nonetheless it was a significant enough decline YoY (-30.30%) in November to affect the headline number.
As a reminder the CPI for health insurance attempts to measure that portion of the consumer’s premium that is used for the administration of health insurance. It is not a measure of health insurance premiums overall.
The most reliable CPI category is for commodities which is heavily influenced by drug prices. The CPI for Medical Commodities continued its acceleration in November to 4.98% YoY versus 4.70% in October. CPI for medical commodities is not at a multi year high with 5.00% increases last seen in 2016, in the wake of the Affordable Care Act.
PPI. The Producer Price Index for hospitals which attempts to measure the cost of treating patients accelerated in November to 3.00% versus 2.83% in October, largely reflecting the Medicare payment update that went into effect in October.
At the same time, the PPI for pharmaceutical manufacturing remained unchanged at 2.61% YoY.
CONGRESS.
Sen. Elizabeth Warren Learns About MLR Burn. UNH (-), CVS (-), CI (-) ELV (-) We are late for this but apparently Sen. Warren and Sen. Mike Braun sent a letter to the Health and Human Services’ Office of the Inspector General asking about the effects of vertical integration on evading Medical Loss ratios.
Well, duh.
Lower Costs, More Transparency Act. The House passed its effort to regulate Pharmacy Benefit Managers, improve price transparency and apply site-neutral payment policies to hospital drug administration.
Craftily, bill sponsors have also added the must-pass Medicare extenders making the package more appealing in the Senate and sets it up for passage if added to the January budget deal.
WHITE HOUSE.
2024 Regulation. Health and Human Services released their Statement of Regulatory Priorities for 2024. Highlights, for us anyway, are:
- Enhancing coverage and access in marketplace plans, Medicaid, CHIP and Medicare plans. The administration is looking t simplify and streamline enrollment processes to maintain continuous coverage.
- Pandemic preparedness. CMS plans to propose rulemaking that would impose national emergency preparedness requirements on Medicare and Medicaid providers.
The list spends a lot of time on improving health equity in non-specific terms. It does not mention treatments for obesity explicitly, something we are watching for in the context of GLP-1 drug coverage.
FTC Influence. Despite the FTC’s weak record on several high-profile cases, they remain a chill in the M & A air. CI-HUM ended before it began, and the narrative is that the regulatory review would be daunting.
Possibly true but both companies have flotilla’s of regulatory lawyers to tell them that before the conversation was leaked to the Wall Street Journal. More likely, the hit CI’s stock took was the cold water on that idea.
SNY has terminated its acquisition of Maze Therapeutics’ Pompe disease drug after the FTC announced it would sue to block the deal because it would thwart the development of competing alternatives.
We hear many M & A ideas are stalled in the C-suite unless and until there is a change in direction at the FTC.
OTHER STUFF.
Dodging Accelerated Approval Bullet. The Supreme Court has agreed to take up the government’s appeal in response to a Fifth Circuit Court of appeals decision that the FDA acted illegally in making changes to the Risk Evaluation and Mitigation Strategy for mifepristone.
The court is not going to consider the original approval under the accelerated pathway which would have had broad implications for phrama.
The issue for the government has been improved access to the drug via telehealth prescribing and mail order delivery. This change in prescribing patterns makes compliance with REMS reporting difficult and often impossible.
#Muniland Budget Woes. California is expecting a 68B budget gap across the FY 2023-24 period. These initial budget gaps are historically not as big a deal as you might think as reserves can be exhausted, one-time items can be reduced and some cost shifting achieved.
It is subsequent years when options narrow when you have to worry. At this point there does not appear to be a threat to Medi-Cal payments but hey, it is early.
Have a great weekend.
