Daily Industry Report - February 5

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)

US government sends initial offers for Medicare drug price cuts

By Reuters - The Biden administration is sending drugmakers opening offers for the U.S. Medicare program's first ever price negotiations on Thursday, the White House said in a statement. Read Full Article…

VBA Article Summary

  1. Medicare's Negotiation Power under IRA: The Inflation Reduction Act, signed by President Joe Biden, grants Medicare the ability to negotiate prices for some of its most expensive drugs. This is a significant shift, as Medicare covers around 66 million Americans, primarily those aged 65 and above.

  2. Negotiation Process and Timeline: The U.S. Department of Health and Human Services (HHS) has announced that negotiations with pharmaceutical companies will continue over the coming months, concluding by August. The new drug prices, derived from these negotiations, are slated to be implemented in 2026. Initial negotiation offers have been made for 10 high-cost medications, including those from major pharmaceutical companies like Bristol Myers Squibb, Pfizer, Merck & Co, and Johnson & Johnson.

  3. Expected Price Reductions: Financial experts, including five Wall Street analysts and two investors, anticipate that the negotiation outcomes, which will be finalized in September, could lead to substantial price reductions for these drugs. The expected cuts could range from a statutory minimum of 25% to as high as 60%. However, the HHS and White House have not released specific details regarding the initial offers made to the drug manufacturers.

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!

FDA Increasingly Active in ‘Off-Label’ Space Despite Patchwork Regulatory Scheme

By Chia-Feng Lu and Caroline K. Abbott - The U.S. Food and Drug Administration (FDA) has demonstrated increased interest in “off-label” communications in recent years. Together with uncertainty following recent FDA guidance changes and the agency’s increasingly broad discretion, this growing interest means greater regulatory risk for firms. Read Full Article…

VBA Article Summary

  1. FDA's Expanding Discretion and Regulatory Risks: The FDA's growing interest in off-label communications, combined with an expansive definition of "intended use" and recent guidance developments, has significantly increased regulatory risks for firms. The FDA's revised draft guidance released in October 2023 introduces uncertainties regarding the communication of scientific information on unapproved uses of approved or cleared medical products. This is compounded by the FDA's more assertive enforcement posture concerning off-label communications, particularly following the 2018 CFL Guidance. The agency's broad discretion in determining "intended use" and considering various evidence types poses heightened scrutiny and potential challenges for industry stakeholders.

  2. Evolving Standards and Enforcement in SIUU Communications: The FDA's revised draft SIUU Communications Guidance marks a notable shift in the agency's approach to regulating communications about off-label uses. The guidance introduces a new standard for communications to be based on scientifically sound and clinically relevant information, differing from the prior "adequate and well-controlled studies" standard. This new standard, while potentially more flexible, remains ambiguous and grants the FDA considerable discretion, leading to uncertainty for firms. The guidance also expands communication categories and outlines appropriate channels for disseminating information to healthcare professionals. However, it imposes significant new disclosure requirements and cautions against persuasive marketing techniques, adding layers of complexity and potential risk for firms engaging in these communications.

  3. Implications of Recent Judicial Rulings and Ongoing FDA Focus: The FDA's increased focus on enforcing the CFL Guidance, coupled with recent judicial rulings, underscores the complex regulatory landscape for off-label communications. Industry challenges based on constitutional grounds may become more difficult following the First Circuit's ruling against former company executives, which upheld the FDA's use of truthful, non-misleading speech as evidence of an off-label intended use. As the FDA continues to enforce existing guidance and potentially releases final SIUU Communications Guidance, firms must navigate this evolving environment carefully. This involves reviewing compliance programs, determining the role of firm-generated presentations, considering the delivery personnel for SIUU communications, and ensuring robust support for information provided in these communications to meet the new and somewhat ambiguous SSCR standard.

Immunotherapy changed the cancer treatment landscape. Is the gut microbiome the next frontier?

By Michael Gibney - Statistics released this month from the American Cancer Society present a double-edged sword: Deaths have declined steadily for three decades due to better treatments, lifestyle choices and detection. But on the flipside, cancer incidence is on the rise. Read Full Article…

VBA Article Summary

  1. Innovations in Oncology and the Role of the Microbiome: Dr. Marcel van den Brink, with extensive experience at Memorial Sloan Kettering and now at City of Hope Cancer Center, discusses significant advancements in oncology, particularly immuno-oncology and checkpoint inhibitors. He highlights the impact of these innovations in extending patients' lives but acknowledges the need for continued improvement. Van den Brink emphasizes the often-overlooked importance of the gut microbiome in oncology, explaining how it influences the immune system's ability to fight cancer and respond to treatments. He suggests the potential of dietary changes as an intervention, given the microbiome's rapid response to such modifications.

  2. Fecal Transplants and Dietary Approaches in Cancer Treatment: Expanding on the role of the gut microbiome, van den Brink discusses the use of fecal transplants to introduce healthy microbiota in patients, particularly those undergoing bone marrow transplantation. He sees the microbiome as an organ that requires serious consideration in cancer treatment and research. His perspective includes viewing diet as a potential therapeutic tool, offering a simpler and more accessible approach compared to developing new drugs. The goal is to define beneficial bacterial compositions and leverage dietary interventions as part of the treatment paradigm.

  3. The Need for Early Detection, Prevention, and Inclusivity in Cancer Care: Van den Brink advocates for a shift in focus towards early detection and prevention in cancer care, pointing out the healthcare system's current emphasis on treatment over prevention. He emphasizes the importance of incorporating the gut microbiome into this approach. Additionally, he stresses the necessity of addressing the rising incidence of cancers like colorectal cancer among younger populations and minority groups. Van den Brink, along with his colleagues at City of Hope, aims to develop more inclusive clinical trials and screening methods, recognizing the disparities in cancer incidence and outcomes among different demographic groups.

Weight-loss Drug Maker Novo Nordisk's Profit Soars 51%

By AFP - Danish pharmaceutical giant Novo Nordisk said Wednesday its net profit soared by 51 percent last year, driven by sales of popular diabetes and obesity treatments that helped it become Europe's most valuable company. Read Full Article…

VBA Article Summary

  1. Strong Financial Performance: Novo Nordisk, a century-old company, reported a higher-than-expected net profit of 83.7 billion kroner ($12.1 billion) for the year, surpassing the analyst forecast of 82.07 billion kroner by FactSet. This financial success is attributed to a significant surge in sales, particularly for its diabetes and obesity treatments.

  2. Sales Growth and Strategic Focus: The company experienced a 42% increase in sales of its diabetes and obesity treatments, totaling 215.1 billion kroner, and an overall sales growth of 36%, reaching 232.3 billion kroner in 2023. CEO Lars Fruergaard Jorgensen expressed satisfaction with these results, highlighting that over 40 million people are benefiting from their treatments. Looking ahead, the company's focus for 2024 is on expanding patient reach, progressing its pipeline, and significantly increasing production capacity.

  3. Popular Drug Offerings and Market Impact: Novo Nordisk produces Ozempic, an injectable anti-diabetic treatment popularized on social networks for its slimming effects, and Wegovy, a treatment for obesity with the same active ingredient as Ozempic but in a different dose. The success of these drugs has not only contributed to the company's financial growth but also elevated its status among investors, making it Europe's largest group by market capitalization last year.

Why Everyone Needs Their Own Emergency Medicine Doctor

By Jesse M. Pines, MD and Robert D. Glatter, MD - As emergency medicine doctors, we regularly give medical advice to family and close friends when they get sick or are injured and don't know what to do. In a matter of moments, we triage, diagnose, and assemble a logical plan, whatever the issue may be. Read Full Article…

VBA Article Summary

  1. Emerging Alternatives in Emergency Medical Care: The article discusses the value of having access to emergency care and routine medical matters through trained professionals. Traditional emergency department (ED) visits often lead to overtriage and undertriage, resulting in inefficient use of resources and potential health risks. The current healthcare system primarily supports ED visits within hospitals, which are costly and may not always be necessary. However, the good news is that access to emergency care is evolving with new models like telemedicine and AI-powered kiosks, offering more immediate and potentially cost-effective options.

  2. Telemedicine and AI-Powered Kiosks: The article highlights the growing use of telemedicine, especially since the pandemic, as insurance companies now cover such services. This includes direct-to-consumer options like Teladoc and Doctor On Demand, which connect patients with random doctors. However, there are concerns about the varying levels of training and specialization of these doctors. Additionally, AI-powered kiosks, like those introduced by Forward, offer innovative healthcare services including biometric scans and mental health screenings, though their effectiveness in emergency situations is yet to be established.

  3. Challenges and Future Directions: The article acknowledges the challenges in current emergency care models, such as the limited effectiveness of nurse-only triage lines and the high cost and exclusivity of concierge medicine. Integrated systems like Kaiser Permanente offer more comprehensive care by accessing personal health histories, but often limit provider choices. The future of emergency medical care is leaning towards innovations that provide personalized care while reducing costs, but currently, no alternative fully matches the advantages of having a personal emergency medicine doctor available in real time.

Self-funded plans on the rise

By Rylee Wilson - The share of U.S. employees in healthcare plans funded by their employer rose from 2015 to 2021, a study published in the January issue of Health Affairs found. Read Full Article…

VBA Article Summary

  1. Increase in Self-Funded Plan Enrollment: Between 2015 and 2021, there was a significant increase in the number of employees enrolled in self-funded plans, rising from 55% to 60%. This growth was predominantly observed in states and counties where self-funded enrollment was previously lower.

  2. Geographical Concentration and Market Leaders: The surge in self-funded plan enrollments was particularly notable in specific regions such as Arkansas, New York, Northern California, Pennsylvania, and Utah. Elevance Health emerged as the largest administrator of these plans, holding about 19% of the market share. Meanwhile, CVS Health experienced the fastest growth in self-funded enrollment during this period.

  3. Implications for Policy and Further Research: Self-funded plans, which are exempt from state-imposed private insurance regulations, present challenges for policymakers as a growing segment of health plans escape these regulations. The study highlights the need for further research to understand the factors driving this trend in self-funded plan enrollments.

By Claire Wilkinson - Artificial intelligence can be leveraged by doctors to treat patients faster and improve patient outcomes, but its use raises numerous legal and insurance concerns, experts say. Read Full Article…

VBA Article Summary

  1. Enhancing Stroke Care through AI: Amanda Avila from TeleSpecialists LLC highlighted the significant benefits of AI in acute stroke care. AI technology allows physicians to quickly reach patients using remote camera technology, reducing the response time to under three minutes. Additionally, AI medical imaging software can identify the location and severity of a stroke within 90 seconds, vastly improving diagnosis accuracy compared to traditional methods.

  2. Legal and Ethical Concerns of AI in Medicine: The panel also discussed the evolving legal landscape surrounding AI in healthcare. Noelle Sheehan from Wilson Elser Moskowitz Edelman & Dicker LLP and Lainie Dorneker from Bowhead Specialty Underwriters Inc. raised concerns about data biases, errors from inaccurate data, potential discrimination, and the liability issues associated with medical advice provided by AI. They emphasized the importance of understanding and mitigating these risks, especially considering the different theories of liability that could apply, such as vicarious liability, products liability, and cyber liability.

  3. AI's Role in Future Healthcare Standards and Insurance: The panelists agreed on the significant role AI will play in shaping future healthcare standards. Tim Folk from Lockton Cos. LLC acknowledged AI as a "fantastic" tool, but not infallible, particularly highlighting concerns in cyber liability. Moreover, the importance of understanding AI's application in healthcare from an underwriting perspective was discussed, with an emphasis on the necessity of integrating AI into healthcare practices to stay ahead in the evolving standard of care.

Latest cyberattacks target revenue cycle, financial employees

By Jasmine Ray - The American Hospital Association released a statement about a social engineering scheme where hackers pose as IT help desk personnel to steal information from revenue cycle workers or those in “sensitive financial roles.” Read Full Article…

VBA Article Summary

  1. Social Engineering Tactics in Cyberattacks: The American Hospital Association (AHA) highlights a sophisticated method used by cyber attackers, where they call IT help desks impersonating employees using stolen personal information. They answer security questions correctly, leading to a password reset and the enrollment of a new device, usually a cell phone with a local area code, into the multi-factor authentication system. This strategy allows them to bypass existing security measures and gain access to the targeted employee's emails and applications.

  2. Impact of Ransomware Attacks on Healthcare Systems: The article emphasizes the prevalence and danger of ransomware attacks in healthcare settings, which pose significant risks to patient care. An example cited is the 2020 incident at Oregon’s Sky Lakes Medical Center, where a ransomware attack, initiated through a malicious link in an email, forced the facility to shut down operations completely. The rebuilding of the network was a complex and cautious process, as described by John Gaede, the center's director of information systems. It involved thorough testing of backups and main systems to prevent further disruptions.

  3. Preventive Measures and Recommendations: In response to these threats, the AHA advises healthcare organizations to implement stringent IT security protocols. John Riggi, AHA’s national advisor for cybersecurity and risk, recommends that IT help desks should confirm password reset and device enrollment requests by calling back the employee's registered phone number. He also suggests involving the employee's supervisor in such requests. One health system, after falling victim to a social engineering scheme, now mandates in-person requests for password changes and multi-factor authentication enrollments.

Cigna inks deal to sell Medicare business to HCSC for $3.7B

By Paige Minemyer - Cigna will sell off its Medicare business to Health Care Service Corporation in a deal valued at $3.7 billion, the company announced Wednesday. Read Full Article…

VBA Article Summary

  1. Acquisition and Partnership Details: Health Care Service Corporation (HCSC) plans to acquire Cigna's Medicare Advantage, Part D, supplemental benefits, and CareAllies businesses, with an expected closure in the first quarter of 2025. Alongside this, HCSC has entered a four-year agreement with Cigna's Evernorth subsidiary, ensuring continued pharmacy services to the Medicare plans post-sale. Prior to this agreement, HCSC and Cigna were in exclusive discussions, with other potential buyers including Elevance Health.

  2. Cigna's Strategic Focus and Growth: Cigna CEO David Cordani emphasized that the sale aligns with the company's disciplined approach to managing its portfolio, focusing on growth opportunities in its Evernorth Health Services and Cigna Healthcare portfolios. Cordani noted that while the Medicare segment remains attractive, the required investment for Medicare businesses is disproportionate to their size in Cigna's portfolio. The company sees more growth potential in Medicare through Evernorth, which encompasses services like Express Scripts and MDLive.

  3. HCSC's Expansion and Cigna's Financial Outlook: HCSC CEO Maurice Smith stated that acquiring Cigna's Medicare Advantage plans aligns with HCSC's goal to expand and evolve its product offerings, enhance access to affordable care, and increase its geographical reach. Meanwhile, Cigna expects the transaction to positively impact its 2024 earnings and has reaffirmed its financial guidance, with Q4 results to be reported shortly. This deal comes amid a busy period for Cigna, including explorations of a merger with Humana and the sale of its Medicare Advantage business.