Daily Industry Report - February 7

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)

Senate passes bill to regulate how health insurance companies decide what procedures, drugs to cover

By Taylor Vance - The Mississippi Senate this week unanimously passed a bill to regulate how insurance companies decide which medical procedures or prescription drugs to cover for a consumer — a process called “prior authorization.” Read Full Article…

VBA Article Summary

  1. Legislation Origins and Aims: Senate Insurance Committee Chairman Walter Michel stated that the new legislation was initiated in response to complaints from both physicians and insurance companies about the current prior authorization process, which requires physicians to obtain advance approval from insurance companies for non-emergency procedures, services, or medications. The aim is to prevent adversarial relationships between doctors and patients by ensuring procedures are pre-approved for coverage, thereby avoiding out-of-pocket expenses for consumers if a claim is denied.

  2. Requirements and Processing Times: The Senate's proposal mandates insurance companies to establish an online portal by January 2025 for doctors to submit prior authorization applications, aiming to streamline the process. The legislation specifies different processing times based on the urgency of the service: immediate approval for emergencies, within 24 hours for urgent services, and within five days for non-urgent services. The state Insurance Commission, overseen by Republican Insurance Commissioner Mike Chaney, is tasked with regulating this program, including the imposition of fines up to $10,000 for violations.

  3. Political and Legislative Progress: The bill received unanimous support in the Senate and has moved to the House for further consideration, following a similar measure passed by the House Public Health Committee. Despite Governor Tate Reeves' previous veto of a similar bill, citing concerns over potential increases in healthcare costs, his office has engaged with stakeholders to address these issues in the current proposal. The legislation, which reflects compromises among stakeholders, aims to address the governor's concerns and has the support of Commissioner Chaney, who seeks additional funding for enforcement.

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.

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Georgia sues Biden administration to extend Medicaid program with work requirement

By Sudhin Thanawala - Georgia sued the Biden administration Friday to try to keep the state’s new health plan for low-income residents, which is the only Medicaid program in the country with a work requirement, running until 2028. Read Full Article…

VBA Article Summary

  1. Launch and Expiration of Georgia Pathways: The Georgia Pathways program, which offers healthcare coverage to able-bodied adults under specific conditions, was launched in July and is scheduled to expire at the end of September 2025. However, due to the Biden administration's decision to revoke a work requirement and another program aspect, its implementation was delayed, effectively reducing its originally approved duration from five years to just over two years.

  2. Legal Challenge and Requests for Extension: After a judge deemed the revocation of the program's aspects illegal, Georgia filed a lawsuit seeking to extend the Pathways program until September 30, 2028. This move came in response to the U.S. Centers for Medicare and Medicaid Services (CMS)'s rejection of the extension request, citing Georgia's failure to meet certain requirements for seeking an extension, including a public notice and comment period.

  3. Political and Administrative Dynamics: Georgia Governor Brian Kemp has criticized the Biden administration for interfering with the state's healthcare plan and for playing politics, particularly by hindering the program's extension. The program, which requires participants to document 80 monthly hours of work, study, rehabilitation, or volunteering, is seen by Republicans as a financially responsible alternative to a full Medicaid expansion under the Affordable Care Act. Despite this, enrollment has been slow, with fewer than 2,350 people enrolled as of mid-December.

How to Teach Fiduciary Responsibility to Plan Committees

By Noah Zuss and Andrea D’Aquino - Sponsors of retirement plans, especially those covered by the Employee Retirement Income Security Act, must ensure their retirement plan committee members are trained to understand and execute their fiduciary duties. Read Full Article…

VBA Article Summary

  1. Committees' Fiduciary Responsibility and Education Needs: Retirement plan committees are charged with the significant fiduciary responsibility of operating plans in strict accordance with the Employee Retirement Income Security Act (ERISA) of 1974. This act mandates that committees must act solely in the interests of participants and beneficiaries, emphasizing the need for thorough education and training on fiduciary duties. Companies like Ingevity Corp. and MRIGlobal underscore the importance of providing committee members with the necessary tools and training to fulfill their roles, highlighting the potential personal liability for committee members in case of ERISA violations.

  2. Sources and Methods for Effective Committee Education: The approach to fiduciary education involves consulting a variety of sources, including the Department of Labor, ERISA counsel, and professional human resource management associations. Ingevity and MRIGlobal exemplify this by engaging with different education and training providers to ensure committee members are well-versed in their responsibilities. These efforts include regular meetings focused on fiduciary compliance, proactive training programs, and the use of external advisors and consultants like CBIZ to enhance oversight and educate on minimizing plan risks and ensuring competitive plan fees.

  3. Implementing Education and Training Strategies: Effective fiduciary education extends beyond mere knowledge acquisition to include practical training and evaluation mechanisms. Retirement plan committees are advised to meet regularly, with at least one session dedicated to fiduciary training annually. The utilization of tools such as the DOL's guidance booklet, "Meeting Your Fiduciary Responsibilities," and conducting tests or quizzes to assess understanding and retention of fiduciary duties are critical. These measures help ensure that committee members make informed, prudent decisions regarding plan management, highlighting the ongoing nature of fiduciary education and the need for continuous improvement and adherence to legislative changes, such as the SECURE 2.0 Act of 2022.

J&J faces class action over employees' prescription drug costs

By Daniel Wiessner - Johnson & Johnson was hit with a proposed class action on Monday accusing the company's employee health plans of failing to negotiate lower prices for prescription drugs, which cost workers millions of dollars in overpayments for generic drugs. Read Full Article…

VBA Article Summary

  1. Ann Lewandowski, a healthcare policy and advocacy director, filed a lawsuit against Johnson & Johnson in New Jersey federal court, accusing the company of violating the Employee Retirement Income Security Act of 1974 (ERISA) by failing to manage employee benefit plans prudently. This mismanagement allegedly led to inflated prices paid to pharmacy benefit managers for generic drugs, subsequently increasing out-of-pocket costs for employees.

  2. The lawsuit details significant price disparities between what Johnson & Johnson's self-funded health plans pay for certain medications and their actual cost to pharmacies, highlighting examples such as a 90-pill prescription of the HIV antiviral drug abacavir-lamivudine and the multiple sclerosis treatment teriflunomide. These examples illustrate payments significantly higher than the drugs' market costs, alleging imprudent fiduciary decisions that harm plan beneficiaries.

  3. The complaint seeks to establish a nationwide class of participants and beneficiaries of Johnson & Johnson health plans, demanding unspecified damages and statutory penalties under ERISA. Lewandowski, who joined the company in 2021 and is currently on leave due to a medical condition dispute, is represented by attorneys from Wheeler, Diulio & Barnabei and Fairmark Partners. The case underscores a critical legal challenge to corporate practices in managing employee health benefits.

Medicare now negotiating price of drug that costs $7,100 in US vs. $900 in Canada

By Tami Luhby - Sen. Bernie Sanders is once again taking the pharmaceutical industry to task, issuing a report Tuesday that highlights the cost of three blockbuster drugs that are far pricier in the US than in other countries. Read Full Article…

VBA Article Summary

  1. Significant Price Discrepancies Across Countries: The article highlights the stark differences in the annual list prices of pharmaceuticals in the United States compared to other countries. For instance, the blood thinner Eliquis costs $7,100 in the U.S. but is significantly cheaper in countries like France ($650) and the United Kingdom ($760). Similarly, the arthritis drug Stelara is listed at $79,000 in the U.S. but is available for much less in France ($12,000) and Canada ($20,000). The cancer drug Keytruda shows a similar pattern, with a U.S. price of $191,000 versus $44,000 in Japan.

  2. Legislative and Regulatory Responses to Pricing: In response to these pricing disparities, Senator Bernie Sanders has spotlighted the issue ahead of a Senate Committee hearing with the CEOs of the involved drugmakers, Bristol Myers Squibb, Johnson & Johnson, and Merck. The article also mentions the initiation of Medicare's first-ever drug price negotiations for expensive medications, including Eliquis and Stelara. This move, along with previous attempts by the Trump administration to introduce a “most-favored-nation price” policy, signals efforts to address the high cost of drugs in the U.S. by potentially aligning prices more closely with those in other countries.

  3. Impact on Profits, Research and Development, and Public Outcry: The article outlines the financial implications of the current drug pricing system, noting that the three pharmaceutical companies have generated more revenue from sales in the U.S. than in the rest of the world combined. It contrasts the companies' expenditures on research and development with their spending on stock buybacks, dividends, and executive compensation, suggesting a potential misalignment in priorities. Furthermore, it raises concerns about the effect of Medicare's price negotiations on the future of pharmaceutical research and development, highlighting the industry's argument that such measures could dampen innovation.

Florida challenges federal requirement to keep kids on health insurance

By Maya Goldman - Florida is suing the Biden administration over a new policy limiting when states can remove children from public health insurance programs. Read Full Article…

VBA Article Summary

  1. Legal Challenge Against Continuous Enrollment Requirement: The lawsuit addresses a significant policy change mandating states to maintain children's eligibility for Medicaid and the Children's Health Insurance Program (CHIP) for 12 consecutive months before reassessment, irrespective of any life changes that could disqualify them. This legal action questions the enforcement of a rule designed to provide stable healthcare coverage for children, highlighting the tension between ensuring continuous access to healthcare and the potential for ineligible individuals to remain on the program.

  2. Impact on Florida's Medicaid and CHIP Enrollees: Since the resumption of eligibility checks paused during the COVID-19 pandemic, approximately 420,000 children have been removed from Medicaid and CHIP in Florida. The state's policy of requiring CHIP enrollees to pay monthly premiums and its desire to disenroll non-paying families clashes with the new law, which lacks exceptions for non-payment of premiums. This scenario underscores the challenges of balancing fiscal responsibility with the need to provide uninterrupted healthcare coverage to vulnerable populations.

  3. Diverging Views on Policy Interpretation and Impacts: The debate is framed by contrasting opinions: Florida Governor Ron DeSantis' administration criticizes the Biden administration's interpretation of the continuous enrollment law as overly permissive, arguing it threatens the financial sustainability and stability of CHIP. Conversely, children's health advocates, like Joan Alker of the Georgetown Center for Children and Families, argue that preventing the state from disenrolling children for non-payment of premiums will reduce health insurance churn and protect children's health and educational outcomes, thus emphasizing the law's role in safeguarding children's well-being against administrative and financial barriers.

Lilly sales surge on obesity, diabetes drug demand

By Jonathan Gardner - Sales of Eli Lilly’s diabetes drug Mounjaro exceeded $5 billion in 2023, its first full year on the market, the company said Tuesday, in the latest sign of surging demand for the therapy and other medicines of its kind. Read Full Article…

VBA Article Summary

  1. Rapid Growth Driven by Mounjaro: Lilly's revenue surged to $34 billion last year, marking a 20% increase over 2023, significantly propelled by the fast launch of Mounjaro. This drug alone accounted for 27% of all U.S. prescriptions for injectable incretins, a group of drugs that regulate insulin production hormones. Despite the decline in sales of an older incretin drug, Trulicity, by 4% to $7 billion, it remained a leading product for Lilly.

  2. New Product Launches and Competitive Landscape: The introduction of Zepbound, an obesity drug sharing Mounjaro's active ingredient, in the fourth quarter, quickly generated $176 million in sales. However, it faces stiff competition from Novo Nordisk's Wegovy, which has potential insurance coverage advantages due to its demonstrated heart health benefits. Lilly's revenue outlook remains positive, with projections ranging between $40.4 billion and $41.6 billion for 2024, albeit contingent on overcoming Trulicity's declining sales and supply challenges for incretin drugs.

  3. Incretin Demand and Future Prospects: Despite manufacturing expansions, Lilly anticipates incretin demand to outstrip supply in 2024. This supply constraint issue is not unique to Lilly, as Novo Nordisk also faced difficulties meeting Wegovy's demand. Additionally, Lilly's Mounjaro showed promising results in treating metabolic dysfunction-associated steatohepatitis (NASH) in a Phase 2 trial, potentially opening new therapeutic areas. Furthermore, Lilly awaits FDA decision on its Alzheimer’s treatment donanemab, aiming to compete in a market where rivals have seen slow starts.

AI in healthcare: Buckle up for change, but read this before takeoff

By Gianrico Farrugia, Roy Jakobs, and Bakul Patel - Imagine you’re tasked with urgently improving healthcare for people everywhere, and artificial intelligence (AI) promises to make a significant difference on a scale not seen in our lifetime. Read Full Article…

VBA Article Summary

  1. Embrace AI with Caution and Strategy: The article advocates for a balanced approach towards integrating Artificial Intelligence (AI) in healthcare by emphasizing the importance of embracing AI to unlock its immediate benefits while also taking considered steps to mitigate risks. This involves the responsible, equitable, and ethical use of AI, ensuring that its deployment improves healthcare delivery, accelerates drug discovery, enhances patient engagement, and contributes to groundbreaking advances in health research.

  2. Develop an Industry-wide Framework for Responsible AI Use: There's a call for establishing an industry-wide framework that guides the ethical and effective use of AI in healthcare. Such a framework aims to ensure AI applications are accurate, safe, reliable, equitable, and ethical. The framework would align with the goals of harmonizing existing AI principles, frameworks, and blueprints, advancing their broad adoption, and identifying stakeholder roles throughout the AI lifecycle to support responsible AI in healthcare.

  3. Address Challenges and Leverage AI's Potential Responsibly: The article underscores the urgency of addressing both the opportunities AI presents and the challenges it poses to healthcare. It highlights AI's potential to revolutionize healthcare through earlier diagnoses, better treatments, and efficiency improvements, while also cautioning against risks like data biases and privacy concerns. The proposed path forward includes fostering cross-sector collaboration to develop and implement a comprehensive AI Code of Conduct, which is aimed at maximizing benefits and minimizing harms, ensuring better health outcomes for all.

Refresh Mental Health Shutters Eating Disorder Treatment Division

By Chris Larson - Refresh Mental Health, a subsidiary of Optum, will shutter its eating disorder treatment service line. The health care and related services behemoth confirmed Refresh will close its four eating disorder treatment brands. Evolve Healing Eating Disorders was the first center to close, shutting its doors permanently on Dec. 1. Read Full Article…

VBA Article Summary

  1. Closure of Eating Disorder Treatment Services by Optum: Optum, a division of UnitedHealth Group Inc., has announced the closure of its eating disorder treatment services at locations including Fairhaven Treatment Center in Tennessee, Cielo House in California, and Turning Tides Eating Disorder Treatment Center in Florida. The decision, attributed to "local market conditions," will affect at least 16 locations and is part of a broader trend where high-profile behavioral health providers, such as Odyssey Behavioral Health and Discovery Behavioral Health, are scaling back on such services amid operational challenges.

  2. Impact on Behavioral Health and Industry Trends: These closures occur against the backdrop of an increasing need for eating disorder treatments, especially post-pandemic, with behavioral health visits for youth eating disorders rising by over 90% compared to pre-pandemic levels. The move by Optum and similar organizations reflects the growing operational difficulties within the eating disorder treatment industry, despite the apparent rising demand for these essential services.

  3. Broader Behavioral Health Consolidation and Future Outlook: The acquisition of Refresh Mental Health by Optum in March 2022 was seen as indicative of ongoing consolidation in the behavioral health sector, signaling potential investment opportunities. However, a slowdown in dealmaking activity has been observed in the latter part of 2022 and 2023, attributed to factors such as increased interest rates and market adjustments. Despite current challenges, some experts anticipate a resurgence in dealmaking within the behavioral health space, driven by the need for recapitalizations or sales due to deteriorating business pressures.