Daily Industry Report - February 6

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)

Department of Labor Issues New Rule Regarding Classification of Independent Contractors

By Mitch Boyarksy, Robert O. Sheridan, Matthew T. Brown and Rachael Chen - Recently, the U.S. Department of Labor (DOL) issued a new rule redefining how workers are classified under the Fair Labor Standards Act (FLSA). The final rule, which will make it more challenging to classify workers as independent contractors, is set to take effect on March 11, and can be found here. Read Full Article…

VBA Article Summary

  1. Rescinding of 2021 Rule: The new rule by the Department of Labor (DOL) revokes the previous 2021 independent contractor rule and its guidance. The 2021 Rule emphasized two core factors - the nature and degree of control over work and the opportunity for profit or loss - in determining worker status as employees or independent contractors. The DOL rescinded this rule due to its confusion, disruption to workers and businesses, and deviation from long-established judicial precedents.

  2. Introduction of a Comprehensive Economic Reality Test: The DOL's new rule reintroduces a detailed 'totality-of-the-circumstances' approach, known as the economic reality test, for assessing proper worker classification. This test includes six factors: opportunity for profit or loss; worker and potential employer investments; permanence of the working relationship; degree of control; whether the work is integral to the employer's business; and the worker's skill and initiative. These factors do not have fixed importance and should be evaluated in the context of the overall economic reality.

  3. Implications and Recommendations for Employers: The new rule does not assign predetermined weights to the economic reality factors and includes broader criteria under the control factor, such as work scheduling and the ability to work for multiple employers. This change is likely to make classifying workers as independent contractors more challenging, especially in sectors like construction, trucking, healthcare, and the gig economy. Legal challenges are anticipated, which could delay the rule's implementation. Employers are advised to acquaint themselves with the new regulations and proactively adapt to the stricter classification standards.

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!

2024: A Pivotal Year in Curbing Pharmacy Costs

By Jason Quillin - 2024 stands at a critical juncture in the battle against soaring pharmacy costs. In 2023, prescription drug costs rose by 8.4%, a 31% increase from the prior year. Stopping this cost escalation requires restructuring the role of pharmacy benefit managers (PBMs) from multiple fronts. Read Full Article…

VBA Article Summary

  1. Congressional Reforms Targeting PBMs: Current proposals in Congress aim to reform Pharmacy Benefit Managers (PBMs) by enhancing transparency, reporting, and antitrust regulations. These reforms include revealing drug acquisition costs and rebate data, outlawing unethical practices like spread pricing and rebate retention, and addressing potential antitrust issues due to vertical consolidation of PBMs with carriers. The goal is to halt profiteering practices and ensure PBMs disclose comprehensive data, giving employers a clearer understanding of their operations and profit generation.

  2. Employer-Led Initiatives for PBM Transparency: While awaiting legislative changes, employers are taking proactive steps to challenge opaque PBM practices and control pharmacy spending. This includes demanding full transparency from PBMs, carving out PBM benefits to explore alternative partnerships, and adopting flexible PBM models that allow tailored plan designs. These efforts focus on gaining detailed insight into PBM revenue streams and contract terms, and exploring innovative market options that optimize pharmacy spending.

  3. Convergence of Legislative and Employer Actions for PBM Reform: The intersection of congressional reform efforts and proactive employer strategies is key to dismantling legacy PBM practices. As employers become more aware of PBMs' tactics, they play a crucial role in driving change. This combined approach aims to eliminate non-transparent practices and establish a new norm in PBM operations, potentially leading to significant reductions in prescription drug costs for American patients by the year 2024.

With cancer expected to surge 77% worldwide by 2050, an oncologist weighs in on global disparities

By Elizabeth Cooney - The prediction is dire: Cancer cases around the world are expected to surge 77% by 2050, a new report from the World Health Organization estimates. That attention-grabbing statistic, based on an analysis of 185 countries, cites a growing, aging population and factors including tobacco, alcohol, obesity, and pollution. Read Full Article…

VBA Article Summary

  1. Disparities in Breast Cancer Outcomes Based on Geography and Income: The report highlights significant disparities in breast cancer outcomes based on geographic location and income levels. Women in low-income countries have a lower incidence of breast cancer (1 in 27) compared to those in wealthier nations (1 in 12). However, their mortality rate is higher (1 in 48) compared to women in high-income countries (1 in 71), primarily due to limited access to screening and treatment options.

  2. Screening and Treatment Disparities: Aparna Parikh, an oncologist and director of the Global Cancer Care Center, emphasizes the importance of equal access to cancer diagnosis and treatment, irrespective of where one lives. The report underlines the need for investment in both screening and treatment, especially in less developed countries where the burden of mortality is disproportionately high. Parikh suggests strengthening health systems for screening and early detection, arguing against the viewpoint that screening is pointless without subsequent treatment facilities.

  3. Innovative Approaches and International Collaboration: Parikh discusses her involvement in global cancer care, including education initiatives and clinical trials in low- and middle-income countries. She highlights a collaboration with Karkinos Healthcare in India, using digital platforms for patient screening and care navigation. This includes exploring cost-effective treatments like reduced doses of immunotherapy, which could be particularly beneficial in resource-limited settings. Additionally, she draws on lessons from Partners In Health, emphasizing the use of technology and community health workers to improve patient care and retention in large-scale settings like India.

Why Delaware is eying a 27% premium hike on state employees' health insurance

By Amanda Fries - 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. Increased Insurance Premiums and Budget Allocations: The State Employee Benefits Committee is considering a proposal to address the deficit in health benefits by increasing insurance premiums by 27% for both employers and employees. Governor John Carney's fiscal year 2025 budget includes $200 million to cover the state's share of this hike. The proposal aims to fully fund the anticipated benefits deficit of $232.1 million, with Carney's budget already allocating $93.9 million. The state is also addressing a current $41.1 million deficit in the health benefits fund, planning to use unspent funds from other departments.

  2. Employee Compensation Amid Rising Costs: Despite the proposed significant premium hike, state employee salaries have increased by 31% since 2017, which may help mitigate the impact of increased insurance costs. State leaders, acknowledging the burden of these hikes, aim to balance salary increases with the rising costs of health care. The actual cost increase for employees will vary depending on their chosen plans, potentially leading to an increase of $4.46 to $43.73 per paycheck.

  3. Long-Term Solutions and Legal Challenges: State lawmakers and officials are exploring various strategies to manage escalating health care costs, including adjusting the state health plan to negotiate better pricing and covering new treatments and procedures. Committees and task forces have been providing recommendations for reforming the system. Additionally, the state faces a lawsuit from RISE Delaware, a group of state retirees, over the transition to a Medicare Advantage plan, which has been temporarily blocked by court orders. Lawmakers are also proposing bills to reform the operation of the employee benefits committee for greater transparency and public involvement.

Preparing Your Organization for AI in 2024: 10 Essential Elements of an Enterprise-Wide Strategy

By Aaron Neinstein - Healthcare leaders are undoubtedly facing an onslaught of questions from their boards and other executives on the topic of, what else, AI. The enthusiasm that I and many others feel for the opportunity to leverage AI in healthcare stems from a shared feeling that we need to do better and that now we can. Read Full Article…

VBA Article Summary

  1. Opportunity in AI for Healthcare: The article emphasizes the transformative potential of artificial intelligence (AI) in healthcare, particularly following the widespread adoption of Electronic Health Records (EHRs). With 2023 marking significant advancements in AI technologies like generative AI and large language models, healthcare executives see AI as a key tool for improving operational efficiency and addressing challenges like documentation burdens, personalized patient communication, and automating tedious tasks.

  2. Strategic AI Implementation: The author highlights the importance of a comprehensive, enterprise-wide AI strategy for healthcare organizations. Key elements of this strategy include having a clear vision, developing guiding principles to navigate the massive potential and risks of AI, focusing AI initiatives on core business objectives, emphasizing process improvement, workforce reimagining, risk management, technical infrastructure, value-aligned partnerships, agility, and celebrating early wins to build confidence and capability.

  3. Urgency for Change Over Status Quo: The concluding message challenges the healthcare industry's hesitation towards AI risks, suggesting that the greater risk lies in maintaining the current unsustainable system. The author advocates for a proactive approach, learning and building capabilities through practical implementation of AI strategies rather than excessive planning, to revolutionize healthcare delivery and meet patient and organizational needs effectively.

Where Are the Nation’s Primary Care Providers? It’s Not an Easy Answer

By Rae Ellen Bichell - “If someone’s in labor, they’ll show up. If someone has a laceration, they’ll show up,” said nurse practitioner Emelin Martinez, the chief medical officer for the health care system serving 13 rural Colorado counties. Read Full Article…

VBA Article Summary

  1. Persistent Shortage Despite Efforts: Costilla County, a federally designated primary care shortage area, struggles to attract medical providers despite various incentives like federal loan repayments and Medicare bonuses. The county, with a population less than one physician per 3,500 residents, remained without a full-time medical provider for over a year, highlighting a nationwide challenge in primary care. Despite policies and funding increases by the Biden administration and efforts by policymakers like Sen. Bernie Sanders, many areas in the U.S. continue to face similar shortages.

  2. Flawed Data and Ineffective Policies: The federal government's data collection on primary care shortages is criticized for being outdated and incomplete, only counting physicians and overlooking other healthcare professionals who now provide much of the primary care. Studies, including one from Health Affairs, suggest that the current federal designations and the estimated $1 billion in annual funding through various programs have had limited impact on improving primary care capacity. Over 180 areas have been on the primary care shortage list for at least 40 years, despite a doubling of licensed U.S. physicians since 1990.

  3. Need for Improved Measurement and Inclusion of Non-Physician Providers: The challenge of addressing primary care shortages is compounded by inadequate measurement methods and the exclusion of non-physician providers like nurse practitioners and physician assistants in the data. Efforts to update the 1970s-era rules and include these providers have been unsuccessful. Some states, like Colorado, have developed their own health professional shortage area designations that factor in these providers. Accurate data is crucial for targeting resources effectively and managing patient-to-clinician ratios equitably across states.

Novo resumes supplying starter doses of obesity drug Wegovy

By Jonathan Gardner - Novo Nordisk has resumed shipping starter doses of its weight-loss drug Wegovy, nearly nine months after manufacturing problems forced it to restrict distribution to maintenance shots in order to ensure that people who had already started taking it could continue, the company said Wednesday. Read Full Article…

VBA Article Summary

  1. Resumption of Starter Doses and Market Competition: Novo Nordisk has resumed the starter doses of 0.25 milligrams per week for its weight-loss drug Wegovy, two months after its competitor Eli Lilly received U.S. approval for Zepbound. This move is seen as a response to potential market competition, as Zepbound could challenge Novo's lead in the weight-loss treatment sector.

  2. Clinical Trials and Insurance Coverage Expectations: Novo executives are anticipating increased demand for Wegovy, following positive results from the SELECT trial, which showed a significant reduction in cardiovascular risks for overweight individuals with heart disease. The company is hopeful that these results will encourage insurance companies, including Medicare, to cover the drug, recognizing its long-term medical benefits.

  3. Financial Performance and Sales Forecast: Alongside the announcement of the starter dose resumption, Novo Nordisk reported a substantial increase in sales, with total sales reaching 232.3 billion Danish kroner ($33.7 billion), a 36% increase at constant exchange rates. Sales from its obesity business doubled, with notable growth in its GLP-1 drugs portfolio, including Wegovy and Ozempic. Despite facing competition and pricing pressures, especially in the insulin and rare disease sectors, Novo projects a sales growth of 18 to 26% for 2024.

US receives thousands of reports of AI-generated child abuse content in growing risk

By Sheila Dang - The U.S. National Center for Missing and Exploited Children (NCMEC) said it had received 4,700 reports last year about content generated by artificial intelligence that depicted child sexual exploitation. Read Full Article…

VBA Article Summary

  1. Rising Concerns about AI and Child Safety: The National Center for Missing & Exploited Children (NCMEC) has expressed growing concerns about the potential misuse of generative AI technology in exacerbating online child exploitation. Child safety experts and researchers, including those at the Stanford Internet Observatory, have warned that AI can be used to create realistic images or texts, posing risks of further harm to children and challenges in identifying victims.

  2. Increasing Reports and Industry Response: In 2022, NCMEC received approximately 88.3 million reports of child abuse content, and the number of AI-generated content reports is on the rise. Notable tech companies, including Meta Platforms, TikTok, Snap, and Discord, have been questioned by lawmakers in a Senate hearing about their efforts in safeguarding children online. The NCMEC is receiving reports from AI companies, online platforms, and the public, indicating a significant and growing problem.

  3. Efforts to Combat AI-Generated Exploitation: NCMEC is actively engaging with AI technology companies to address this issue. For instance, OpenAI, the creator of ChatGPT, has established a process for reporting potential child abuse content to NCMEC. The challenge lies in the increasing photorealism of AI-generated content, which makes it difficult to discern if victims are real, as noted by Fallon McNulty, director of NCMEC's CyberTipline. This calls for ongoing collaboration between technology companies and child safety organizations.

Philips to stop selling sleep apnea machines in U.S. under tentative agreement with FDA, DOJ

By Associated Press - The company behind a global recall of sleep apnea machines said Monday it will stop selling the devices in the U.S., under a tentative agreement with regulators that could cost the manufacturer nearly $400 million. Read Full Article…

VBA Article Summary

  1. Massive Recall of Philips Breathing Machines: Philips has recalled over 5 million pressurized breathing machines, including CPAP devices and ventilators, due to the risk of internal foam breakdown. This issue, first announced in mid-2021, poses a health hazard as users might inhale tiny particles and fumes while sleeping. Efforts to repair or replace the affected machines have been slow, leading to frustration among patients globally.

  2. Consent Decree with FDA and DOJ: Philips is in the process of finalizing a consent decree with the U.S. Food and Drug Administration (FDA) and the Department of Justice. The agreement, pending approval by a U.S. judge, stipulates that Philips will continue servicing machines sold in the U.S. but cannot sell new ones until it fulfills corrective actions as per FDA requirements. Philips CEO Roy Jakobs emphasized the company's commitment to prioritizing safety and quality with increased accountability, and the company has allocated $393 million for necessary operational changes and upgrades.

  3. Health Risks and Legal Challenges: The FDA has warned of health risks associated with ingesting sound-dampening foam from these machines, including headaches, asthma, allergic reactions, and even more severe problems like overheating that can lead to fires. Following an FDA order in 2022 for Philips to enhance customer outreach about these risks, it was found that only about half of the U.S. users were aware of the recall. Philips faces numerous legal challenges, including 675 personal injury lawsuits in the U.S., and similar cases in Canada, Australia, Israel, and Chile. Despite company-commissioned studies suggesting minimal harm from foam inhalation, the issue remains unresolved and continues to affect numerous patients.