Daily Industry Report - February 1

Your summary of the Voluntary and Healthcare Industry’s most relevant and breaking news; brought to you by the Health & Voluntary Benefits Association®

Jake Velie, CPT
Vice Chairman, President & COO
Health & Voluntary Benefits Association® (HVBA)
Daily Industry Report (DIR)

Robert S. Shestack, CCSS, CVBS, CFF
Chairman & CEO
Health & Voluntary Benefits Association® (HVBA)
Daily Industry Report (DIR)

‘We are using all the tools we have’: Lina Khan’s FTC takes aim at Big Pharma’s ‘patent thickets’, arguing they keep old drugs too pricey

By Elisabeth Rosenthal - The Federal Trade Commission has challenged the validity of over 100 drug product patents, focusing on devices used to deliver medicines, like inhalers and autoinjectors, in an effort to increase competition and potentially lower some prices. Read Full Article…

VBA Article Summary

  1. FTC Challenges Drug Patent Practices: The Federal Trade Commission (FTC) accuses pharmaceutical companies of using patents illegitimately, particularly for drug delivery methods, to prevent cheaper generic alternatives from entering the market. This approach, a first for the FTC, aims to dismantle "patent thickets" where multiple patents protect a single drug, creating barriers for generics. The FTC's actions follow President Joe Biden's directive for a more aggressive stance against the pharmaceutical industry, with the agency under Chairperson Lina Khan actively testing its authority to reduce drug prices and enhance generic competition.

  2. Targeting Delivery Device Patents: The FTC's focus is on patents covering delivery devices for medicines such as asthma and emphysema treatments, and epinephrine autoinjectors for severe allergic reactions. These patents are often listed in the FDA’s “Orange Book,” offering extended protection from generics. Drugmakers frequently tweak delivery methods, like changing an inhaler's propellant or adding dose counters, to patent these modifications. However, the FTC argues that patent law protects active ingredients, not delivery methods. The pharmaceutical industry seeks clarity on what can be patented, expressing disappointment at the FTC's approach.

  3. FTC's Enforcement and Industry Response: After an FTC challenge, companies have 30 days to withdraw, amend, or validate their patents. Some, like GSK with its asthma inhalers and Amneal Pharmaceuticals with its epinephrine injector, have already withdrawn patents. With a 30% response rate to the FTC's initial warning letters, the agency contemplates further actions, including potential court cases to enforce compliance. Garden-Monheit, director of the FTC’s Office of Policy Planning, indicates the agency's readiness to scrutinize other potentially invalid patents, warning companies not yet challenged to not feel complacent.

HVBA Poll Question - Please share your insights

Would you advise clients to import specialty or high cost brand drugs like Ozempic, Mounjaro, Wegovy from abroad to save 35-50% off U.S. prices of $850, $1,070, $1,670 per month respectively?

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Our last poll results are in!


of Daily Industry Report readers who responded to our last polling question think Eli Lilly’s direct-to-consumer website for Telehealth prescriptions and drug delivery, feel this will somewhat positively affect patient access and disrupt the traditional drug supply chain.

24.03% of respondents are neutral or uncertain, 22.79% feel it will negatively affect patient access and have minimal or adverse effects on the supply chain while 16.61% are highly positive this will affect and and improve patient access and disrupt the traditional supply chain.

Have a poll question you’d like to suggest? Let us know!

“Hungry gut” vs. “hungry brain”: Test could help decide who gets obesity drugs

By Tina Reed - As everyone in health care is trying to figure out which patients should get pricey new weight-loss drugs, a biotech company spun out of the Mayo Clinic is betting the genetics-based approach it's pioneering may hold the answer. Read Full Article…

VBA Article Summary

  1. Precision Medicine in Obesity Treatment: Phenomix Sciences emphasizes the importance of precision medicine in treating obesity, arguing that understanding the genetic underpinnings of obesity can lead to more cost-effective weight loss solutions. This approach challenges the widespread use of expensive GLP-1 drugs, like Wegovy, which may not be suitable for all patients. Phenomix's CEO, Mark Bagnall, stresses that alternative interventions are available and more prudent than treating millions with costly drugs.

  2. Individualized Treatment Based on Biological Mechanisms: Phenomix, founded by Mayo physician-researchers Andres Acosta and Michael Camilleri, proposes that obesity stems from at least four different biological mechanisms, each requiring a distinct treatment approach. Their research categorizes patients into groups such as "hungry gut" and "hungry brain," determining their suitability for specific treatments. For example, "hungry gut" patients respond better to GLP-1s, while "hungry brain" patients achieve better results with older, cheaper drugs like Qsymia.

  3. The Future of Obesity Treatment and Cost Considerations: Phenomix's approach includes genomic tests to identify patient categories, aiding in targeted treatment and potentially reducing costs. While these tests are not covered by insurance and cost about $500, they offer a promising alternative to indiscriminate and expensive drug prescriptions. The company is in discussions with drug companies to incorporate these tests into drug development programs. Additionally, the rising costs of obesity drugs have prompted health plans and employers to consider covering these tests, highlighting the urgent need for more effective and sustainable obesity treatment strategies.

New CMS pilot to test payment scheme for pricey sickle cell gene therapies

By Ned Pagliarulo - The U.S. government will test whether centrally coordinating insurance coverage can help people with sickle cell disease access expensive new gene therapies for the inherited blood condition. Read Full Article…

VBA Article Summary

  1. High Cost of Sickle Cell Treatments and Medicaid's Role: Two new treatments for severe sickle cell disease, costing $2.2 million and $3.1 million respectively, were recently approved by the FDA. These high costs have raised concerns about affordability and the impact on state Medicaid budgets, which cover 50% to 60% of U.S. sickle cell patients. In response, the Centers for Medicare & Medicaid Services (CMS) proposed a pilot "access model" to negotiate outcome-based agreements with drug manufacturers, focusing initially on sickle cell therapies.

  2. CMS' Outcomes-Based Model and Nationwide Implementation: The CMS plans to negotiate outcomes-based agreements, linking payment for a drug to the health benefits it delivers, such as the continued elimination of pain crises in sickle cell patients. This approach aims to unify negotiations across states, providing a consistent framework and addressing disparities in access and payment for treatments. This model also seeks to reduce the administrative burden on state Medicaid programs and improve access to these expensive gene therapies.

  3. Implementation Challenges and Future Plans: The CMS intends to launch the pilot program in 2025, with states and drugmakers currently being invited to participate. However, the timeline presents challenges as the approved therapies, Casgevy and Lyfgenia, are already available. The plan also includes addressing additional barriers like the risk of infertility from preconditioning chemotherapy, requiring manufacturers to cover fertility preservation services. Furthermore, the CMS aims to support comprehensive sickle cell treatment, including behavioral health and care management services.

Medicare to kick off first drug price negotiations, and it could get heated

By Berkeley Lovelace Jr. - The government is set to begin negotiating prices on the 10 costliest prescription drugs covered by Medicare this week, setting the stage for a fierce tug of war between U.S. officials and drugmakers as the Biden administration attempts to lower soaring prescription drug costs for older adults. Read Full Article…

VBA Article Summary

  1. Medicare Drug Price Negotiations Underway: As part of the Inflation Reduction Act, Medicare is entering uncharted territory by directly negotiating drug prices with pharmaceutical companies. The negotiations focus on 10 specific drugs, including treatments for diabetes, heart failure, and blood cancers. These drugs currently have U.S. retail prices significantly higher than in other comparable countries. The negotiations, which involve intense back-and-forth between Medicare and drugmakers, are expected to lead to substantial price cuts, potentially up to 60% for older drugs. This initiative aims to reduce the financial burden on the more than 65 million people covered by Medicare in the U.S.

  2. Impact on Drug Prices and Medicare Beneficiaries: The price reductions from these negotiations are expected to take effect in 2026. Early estimates suggest that even a 25% discount on these drugs could result in significant savings for the federal government and Medicare recipients. For example, a 25% discount on the blood cancer drug Imbruvica could save about $560 million. These savings are anticipated to lower out-of-pocket costs and monthly premiums for Medicare beneficiaries, with further price negotiations planned to cover more drugs in subsequent years.

  3. Legal Challenges and Concerns: The drug price negotiations, while potentially beneficial for Medicare recipients, are facing legal challenges from pharmaceutical companies. Several drugmakers, including Merck, Johnson & Johnson, and AstraZeneca, have filed lawsuits seeking to dismantle the Inflation Reduction Act's negotiation provision. These legal battles, along with concerns raised by industry groups about the lack of transparency and potential negative impact on patient interests, indicate a potentially difficult path ahead for the Biden administration's efforts to control drug prices.

How Artificial Intelligence Could Be the Ultimate Weapon Against Cancer

By Rajive Keshup - Even just a year ago, we couldn’t fathom a cure for cancer. Now, we can. Artificial intelligence (AI) is rapidly transforming the healthcare industry, with its ability to process and analyze vast amounts of data. Cancer treatment is one area that could benefit significantly from AI, as it can aid in early detection, precise diagnosis, and personalized treatment plans. Read Full Article…

VBA Article Summary

  1. Advancements in Early Detection and Diagnosis: AI technologies significantly enhance early cancer detection and precision diagnosis. Advanced algorithms, like Google’s DeepMind Health's AI for breast cancer detection, demonstrate higher accuracy than human radiologists. Similarly, MIT's AI algorithm can detect lung cancer with up to 94% accuracy, analyzing CT scans to identify specific cancer types. These advancements in AI not only improve early detection rates but also assist in precise diagnosis, crucial for effective treatment planning.

  2. Personalized Treatment and Efficient Drug Development: AI's role in personalizing cancer treatment and expediting drug development is noteworthy. AI algorithms analyze genomic data to tailor treatments to individual genetic profiles, improving patient outcomes and reducing side effects. The University of Pittsburgh Medical Center's AI algorithm, predicting responses to immunotherapy, exemplifies this. Additionally, AI aids in identifying potential new cancer drugs, reducing the time and cost of drug development, as demonstrated by MIT researchers using AI to analyze chemical compounds for potential cancer treatments.

  3. Challenges and Limitations in AI Application: Despite its potential, AI in cancer treatment faces significant challenges. Issues include the need for large, diverse datasets that accurately represent the population, the complexity of both the disease and AI algorithms, and the risk of over-reliance on technology. Regulatory oversight, cost, and accessibility also pose challenges. To fully leverage AI in combatting cancer, a collaborative effort among researchers, clinicians, and policymakers is required to ensure responsible, ethical, and transparent use, addressing these challenges to improve patient outcomes and move towards a future where cancer is less of a public health threat.

Alternative Therapies for Pain Management in Senior Care

By Bent Philipson - Senior care services are a critical component of the senior care industry. While these services have always been available, they haven’t always been as readily accessible. And while these services have always addressed a number of health concerns in older adults, they need to evolve simultaneously with new innovations to be more effective. Read Full Article…

VBA Article Summary

  1. Prevalence and Challenges of Chronic Pain in Senior Care: Chronic pain affects a significant proportion of seniors, with data from the NIH indicating that 75-85% of residents in skilled nursing facilities and 50% of older adults living independently experience it. Traditional pain management methods, often involving prescription painkillers, have led to issues like adverse side effects, addiction, and reduced cognitive function. This has necessitated a shift towards alternative, safer, and more holistic pain management strategies in senior care.

  2. Alternative Therapies as Holistic Pain Management Solutions: Alternative therapies offer a comprehensive approach to pain management by addressing both physical and emotional aspects of pain. Examples include acupuncture, which is recognized for its effectiveness in treating pain related to conditions like lower back pain and osteoarthritis; massage therapy, which aids in improving blood circulation, reducing muscle tension, and providing emotional comfort; and music therapy, which utilizes the therapeutic qualities of music for both physical and emotional pain relief.

  3. Implementation Strategies for Alternative Therapies in Senior Care: Successfully integrating alternative therapies in senior care facilities requires several key steps. These include staff training in alternative therapies and understanding the unique needs of seniors, creating individualized treatment plans, maintaining strict safety and hygiene protocols, monitoring and evaluating the effectiveness of these therapies, fostering communication and education about these methods with seniors and their families, and collaborating with healthcare professionals to ensure these therapies complement overall care plans. These measures aim to enhance the quality of life for seniors by providing a more holistic and compassionate approach to pain management.

Pharma price cut proposals from US government could be steep, analysts say

By Michael Erman - Pharmaceutical companies are due to receive by Thursday the U.S. government's opening proposal for what are expected to be significant discounts on 10 of its high-cost medicines, an important step in the Medicare health program's first ever price negotiations. Read Full Article…

VBA Article Summary

  1. Expected Price Cuts under the Inflation Reduction Act: Wall Street analysts and investors anticipate significant price reductions, ranging from 25% to 60%, for certain drugs under President Joe Biden's Inflation Reduction Act. This legislation permits Medicare to negotiate prices for some of its most expensive medications, potentially saving the government and consumers substantial amounts. The first 10 drugs targeted for negotiation include those from major pharmaceutical companies like Bristol Myers Squibb and Pfizer. These price negotiations are crucial, as they aim to save the government approximately $25 million annually by 2031.

  2. Industry Response and Legal Challenges: Pharmaceutical companies and business groups are actively opposing the price negotiation provisions, arguing that they are unlawful and could negatively impact drug development and patient care. More than half a dozen lawsuits have been filed to stop these negotiations. Despite these legal challenges, the government's timeline for implementation remains unaffected, with initial offers to drug companies due by February 1. However, some analysts believe the impact on company revenues might be limited, as many of these drugs will soon face generic competition, which would likely reduce prices anyway.

  3. Political and Transparency Concerns: The ongoing negotiations and the future of the Inflation Reduction Act are influenced by political factors, including the possibility of changes in presidential administration or legislative challenges. Industry lobby groups like PhRMA have criticized the negotiation program as politically motivated and lacking transparency. Analysts and fund managers are concerned about the potential impact on drug prices and company valuations, with expectations varying widely among investors regarding the extent of the price cuts. The talks are not confidential, but details remain undisclosed, adding to the uncertainty surrounding the final outcomes.

Your Money or Your Life

By Marshall Allen - An insured cancer patient showed up for chemo and was told she would have to pony up $14,000 before they’d administer her life-saving medication. An insured heart surgery patient got turned away when he couldn’t pay the entire cost in cash up front. Read Full Article…

VBA Article Summary

  1. Rising Trend of Upfront Medical Payments: The article highlights a worrying trend where patients with health insurance are increasingly being asked to pay the full cost of their treatment upfront, including the portion that should be covered by insurance. This practice has been observed in various medical services, ranging from regular doctor visits to surgeries, with costs varying from hundreds to thousands of dollars. The article includes a personal anecdote where the author's wife was asked to pay the entire estimated cost of a dental treatment before the service was provided.

  2. Moral and Ethical Concerns: The practice of demanding full upfront payments is criticized for its ethical implications. It is seen as exploiting patients' health needs for profit, particularly egregious when patients are made to pay the insurance company's share. The article also discusses the possible reasons behind this trend, such as difficulties faced by clinicians in getting paid by patients and insurance companies, high premiums, and deductibles making healthcare unaffordable for many.

  3. Advice for Patients and Legal Aspects: The article offers guidance for patients facing such demands, including understanding their insurance plans, consulting healthcare navigators, and being prepared with alternative treatment options. It also advises patients on how to handle situations where payment is demanded upfront, such as walking away if possible, standing firm against billing representatives, and being cautious about entering payment plans or loan arrangements. Legally, while clinicians are required to provide emergency treatment regardless of payment, there are no laws prohibiting the demand for upfront payment for scheduled or elective appointments.

Why Are We Letting Insurers Dictate Patient Care?

By Barbara Jung, MD, and Deborah Dyett Desir, MD - When patients are suffering from life-threatening illnesses or debilitating health conditions, the only thing that should matter is delivering appropriate evidence-based treatments in a timely manner. Read Full Article…

VBA Article Summary

  1. Interference of Insurers in Patient Care: Patients often seek guidance from their trusted physicians, but insurers frequently intervene in the decision-making process. Prior authorization policies, initially designed to control healthcare costs, have evolved into mechanisms for insurers to overrule physician recommendations and deny routine, evidence-based care. This leads to delayed or denied treatments, negatively impacting patient health and well-being, as exemplified by the experiences of patients with Crohn's disease and systemic lupus erythematosus in gastroenterology and rheumatology practices.

  2. Impact of Prior Authorization on Patient Safety and Treatment: Prior authorization is a major challenge in medicine, causing significant delays in necessary care. According to a 2022 American Medical Association survey, nearly all physicians report delays due to prior authorization, with many patients abandoning prescribed treatments. This process often results in serious adverse health events, underscoring the threat to patient outcomes. Furthermore, about 60% of insured adults encounter issues with their insurance coverage, including problems with prior authorization, especially among high-needs patients and those with chronic conditions like diabetes and mental health issues.

  3. Need for Reform in Prior Authorization Practices: Prior authorization should be limited to its original purpose of assessing insurance utilization for statistical outliers. True reform requires reducing the scope of services needing prior authorization, improving transparency between insurers and physicians, and ensuring continuity of care. Electronic prior authorization should be standardized to enhance efficiency. Legislative efforts, such as the CMS final rule and the Improving Seniors' Timely Access to Care Act, aim to streamline prior authorization processes, particularly for government-sponsored healthcare programs. However, more needs to be done to protect patients, especially those with commercial insurance, from overreaching insurer policies.