Daily Industry Report - January 24

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)

FDA looks to execute ‘largest reorganization in history’ this year

By Alexandra Pecci - A proposed FDA reorganization might have food safety in mind first and foremost, but stakeholders across industries will feel the effects of what associate commissioner for regulatory affairs Michael Rogers called “the largest reorganization in FDA’s history.” Read Full Article…

VBA Article Summary

  1. FDA Structural Reorganization: The FDA plans a wide-ranging reorganization, proposing to replace the Office of Regulatory Affairs (ORA) with the FDA Office of Inspections and Investigations (OII), potentially affecting around 8,000 employees. This initiative, sparked by the agency’s sluggish response to the 2022 infant formula crisis, aims to enhance efficiency, reduce duplication of efforts, and streamline decision-making processes. The reorganization, currently under federal review, seeks to adopt a more holistic, enterprise-system approach, addressing not only the Human Foods Program but also broader FDA functions.

  2. New Office and Operational Changes: The proposed OII will manage the FDA’s field operations, including inspections, investigations, and import operations, aiming to improve communication by facilitating more direct contact between industries and inspectors. The reorganization introduces specialized offices like the Human and Animal Drug Inspectorate and the Bioresearch Monitoring Inspectorate, aiming for uniformity across various programs. The new structure promises greater budget transparency and a product-agnostic inspection platform, potentially leading to more cohesive and efficient regulatory processes.

  3. Anticipated Benefits and Future Prospects: The restructuring is expected to make the FDA more efficient by eliminating redundant tasks and streamlining decision-making. It's designed to change how regulated industries interact with the FDA, creating new points of contact and simplifying the engagement process in regulatory meetings and discussions. While details about the single, product-agnostic inspection platform are still forthcoming, the anticipated outcome is a more integrated approach to regulatory programs, enhancing overall efficiency. The FDA hopes to implement these changes within the year, pending review and approval.

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What is your opinion on Eli Lilly's direct-to-consumer website for telehealth prescriptions and drug delivery, such as Zepbound? Do you think it will positively affect patient access and disrupt the traditional drug supply chain?

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of Daily Industry Report readers who responded to our last polling question on how prepared they felt they were for the implementation of the Consolidated Appropriations Act (CAA) and its requirements said “What is the Consolidated Appropriations Act?

37.78% of respondents stated they were “Somewhat prepared, 12.59% shared they were “Not prepared”while only 8.15% felt “Very preparedfor the implementation of the CAA and its 2024 requirements. 

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Unlikely political allies take on drugmakers’ patent tactics

By Peter Sullivan - An unusual bipartisan coalition of lawmakers is teaming up on drug pricing legislation, proving the issue may defy election-year partisanship as health care costs remain a top voter concern. Read Full Article…

VBA Article Summary

  1. Bipartisan Support and Scrutiny: The article highlights a bipartisan effort, involving key figures such as Rep. Jodey Arrington (R-Texas) and Rep. Lloyd Doggett (D-Texas), to address the pharmaceutical industry's practice of creating "patent thickets". These thickets involve securing multiple overlapping patents on a single drug, a strategy accused of stifling competition and delaying the entry of cheaper, generic drugs. This bipartisan approach marks a significant shift in the political landscape, especially given the traditional alignment between the Republican Party and the pharmaceutical industry.

  2. Industry Response and Tensions: While the proposed legislation aims to combat the manipulation of the patent system and protect consumers and taxpayers, it has prompted apprehension within the pharmaceutical sector. Industry representatives argue that such measures could hamper innovation and hinder the development of new drugs. The involvement of prominent figures like Arrington, who emphasizes that the bill targets fraud and abuse rather than innovation, underscores the potential for significant policy shifts. However, overcoming the pharmaceutical industry's opposition remains a substantial obstacle.

  3. Future Prospects and Political Implications: The article suggests cautious optimism about the potential for these legislative efforts to gain traction, given the support from notable Republicans and the expressed frustration with the current state of competition in the drug market. However, it remains uncertain whether these measures will be incorporated into critical legislation this year. The convergence of conservative Republicans and liberal Democrats on this issue signals a growing consensus on the need for reform, reflecting broader public sentiment and potentially reshaping the political discourse around pharmaceutical policies.

How AI could revolutionize direct-to-consumer insurance in the wake of DOL proposal

By Lloyd Lofton - The proposed Department of Labor fiduciary regulations regarding commissions add a layer of complexity that challenges the conventional model. Amidst this transformation, artificial intelligence emerges as a disruptive force, presenting a compelling opportunity for distributions to rethink their distribution strategies. Read Full Article…

VBA Article Summary

  1. Viability of Direct-to-Consumer Model in Insurance Distribution: The shift towards a direct-to-consumer approach is gaining traction due to its potential to revolutionize the insurance industry. The model offers cost efficiency by eliminating agent commissions, supports digital transformation aligning with consumers' growing preference for online transactions, and leverages data analytics for enhanced customer interaction and risk assessment.

  2. Pros of AI-Driven Direct-to-Consumer Insurance: AI integration in direct-to-consumer insurance models promises significant benefits. It ensures cost savings by removing intermediary expenses, fosters direct customer relationships, and offers the flexibility to swiftly adapt to changing market trends. Additionally, direct access to customer data provides valuable insights, enabling personalized services and convenient online purchasing options.

  3. Implementation Strategies for Success: To capitalize on the direct-to-consumer model, distributors must invest in robust technology for seamless online transactions and customer interactions. Providing educational content online empowers customers to make informed decisions. Effective digital marketing strategies and efficient customer support channels are crucial for attracting and retaining customers. However, the success of this model hinges on maintaining a balance between cost savings, customer experience, and regulatory compliance, necessitating continuous adaptation and refinement based on market dynamics and customer feedback.

New CMS innovation model targets mental health integration

By Eric Wicklund - The Centers for Medicare & Medicaid Services is launching a new model to test the integration of mental health and primary care services, giving healthcare organization an opportunity to leverage new strategies and technologies in a team-based care approach. Read Full Article…

VBA Article Summary

  1. Nationwide Integration of Behavioral and Physical Health Services: The Centers for Medicare & Medicaid Services (CMS) is set to launch the Innovation in Behavioral Health (IBH) Model, a program designed to integrate behavioral and physical health services. This initiative, led by the CMS Innovation Center (CMI), aims to address the prevalent mental health issues among Medicare and Medicaid beneficiaries by coordinating care and improving clinical outcomes. It is a response to the recognition that mental health conditions or substance use disorders are closely linked to physical health, with the new model promoting a unified approach to healthcare. The program will be piloted in up to eight states starting this fall, following a Notice of Funding Opportunity to be issued in spring.

  2. Comprehensive Care through Team-Based Approaches: The IBH Model encourages a shift towards team-based care, allowing healthcare providers to craft a more inclusive care plan that covers both behavioral health issues and physical ailments. This approach is particularly focused on patients with behavioral health challenges, who have traditionally faced a shortage of resources and support. The model acknowledges the complex interplay between behavioral issues and physical health, such as chronic conditions, and seeks to address them collectively. Furthermore, it incorporates services that tackle social determinants of health (SDOH), like housing, food, and transportation, recognizing their significant impact on health management, especially for underserved populations in Medicare and Medicaid programs.

  3. Advancing Integrated Care and Technology Utilization: The IBH Model not only promotes integrated care but also incentivizes providers to enhance coordination between the physical and behavioral health needs of individuals. This integration is seen as a strategic move to prevent health issues from escalating to emergency situations, ensuring better management and coordination of care. Additionally, the model opens avenues for providers to leverage virtual and digital health technologies, aiming to broaden access to treatment and support services. This initiative also builds on previous CMI programs that focused on value-based care, indicating a continued commitment to evolving healthcare models to meet the complex needs of patients more effectively.

NYC joins a growing wave of local governments erasing residents' medical debt

By Yuki Noguchi - Self-insured employers are set to face plenty of challenges this year, ranging from addressing the mental health needs of their workforces to developing strategies for on-site clinics amid a pivot to larger volumes of remote work. Read Full Article…

VBA Article Summary

  1. Innovative Debt Relief Initiative: Cook County, Illinois, led by Toni Preckwinkle, initiated a groundbreaking approach to tackle medical debt by allocating a portion of its federal pandemic rescue funds to work with RIP Medical Debt. This non-profit organization purchases healthcare debts for those earning up to four times the federal poverty level at a fraction of the original cost and forgives them, effectively erasing the debt. This initiative aligns with Cook County's longstanding commitment to providing healthcare regardless of income, dedicating nearly half of its $9.3 billion annual budget to this cause. The program's success has inspired other local governments to adopt similar measures, leveraging the efficacy of RIP's model to address the widespread issue of medical debt.

  2. Impact and Expansion: The collaboration with RIP Medical Debt has proven to be a cost-effective solution, enabling the retirement of substantial amounts of medical debt with relatively small investments from local governments. For example, every $1 of government funds can retire at least $100 worth of debt. This initiative not only relieves individual financial burdens but also addresses broader socio-economic disparities, as medical debt disproportionately affects people of color and those with lower incomes. The program's success and its ability to provide immediate relief have led to its adoption by multiple local governments, with discussions underway to expand further, aiming to significantly reduce the medical debt crisis across the nation.

  3. Broader Implications and Future Directions: While the debt forgiveness approach offers immediate relief, stakeholders recognize it as a temporary solution to a systemic issue. The persisting creation of medical debt underscores the need for more comprehensive policies focusing on healthcare affordability, consumer protection, and insurance coverage. Local governments are now increasingly discussing medical debt, leading to innovative solutions like Milwaukee County's initiative to automatically enroll eligible patients in financial assistance programs. These efforts not only alleviate immediate financial stress but also aim to address the root causes of medical debt, promoting preventive care and ensuring a more equitable healthcare system.

'The system was broken' | More physicians leave hospitals for non-traditional practices

By Julie Koharik - Sitting in a waiting room at the doctor's office can sometimes feel endless, only for the appointment itself to feel rushed. Dr. Laurie Birkholz says doctors feel that way too. "The frustration was building amongst my patients. I was starting to feel the classic burnout type symptoms," she said. That's why so many doctors are leaving traditional hospitals for a new kind of practice. Read Full Article…

VBA Article Summary

  1. Innovative Approach to Healthcare: Dr. Birkholz embraced concierge medicine and direct primary care as a solution to the broken healthcare system. This approach allowed her to establish the first practice of its kind on the lakeshore, providing personalized care by maintaining low patient numbers. This model offers advantages such as 24/7 access to doctors, same-day appointments, and extended visit times, primarily operating under a membership fee while still accommodating insurance.

  2. Growing Trend and Practice Success: Concierge medicine is a growing trend across the country, with an estimated 10,000 to 25,000 physicians adopting this model. Laurie Birkholz MD and Associates, which opened in 2020 during the pandemic, exemplifies this trend with remarkable growth, surpassing a significant milestone of 500 patients and nearly doubling its patient panel in 2023. The practice's success is attributed to the high-quality, patient-centric care and the positive word-of-mouth recommendations from those who have experienced this innovative healthcare model.

  3. Broad and Inclusive Patient Care: Despite Dr. Birkholz's specialized training in women's health, her practice is inclusive, accepting a diverse range of patients. This inclusivity, coupled with a strong emphasis on the doctor-patient relationship and personalized care, contributes to the practice's growing success and popularity among patients seeking a more attentive and accessible healthcare experience.

Exclusive: US FDA finds new manufacturing lapses at Eli Lilly plant

By Marisa Taylor and Maggie Fick - U.S. inspectors recently uncovered new manufacturing problems at an Eli Lilly (LLY.N), opens new tab plant that has been under scrutiny by federal investigators, according to government records obtained by Reuters. Read Full Article…

VBA Article Summary

  1. FDA Inspection Findings at Lilly's Branchburg Plant: The U.S. FDA inspection in July at Eli Lilly's Branchburg, New Jersey facility identified eight deficiencies. Key issues included inadequate tracking of manufacturing processes, insufficient quality controls, improper calibration of equipment, and failure to maintain facilities and equipment properly. The report, obtained by Reuters via a Freedom of Information Act request, was partially redacted to conceal affected products. Despite these findings, Lilly stated that the quality, safety, or supply of its products, including migraine treatment Emgality, were not compromised.

  2. Lilly's Market Performance and Regulatory Scrutiny: Lilly, now the world's most valuable healthcare company by market capitalization, saw its shares surge by 59% last year, driven by high demand for Mounjaro (also known as Zepbound for weight loss). Despite this success, the Branchburg plant has been under the lens, with a history of manufacturing issues and a Department of Justice probe into allegations of poor manufacturing practices and data falsification. While the active ingredient in Mounjaro and Zepbound is not produced at this plant, repeated issues at Lilly’s U.S. facilities have attracted regulatory attention.

  3. Serious Lapses and Potential Implications: Regulatory experts reviewing the inspection report expressed serious concerns, likening the recurring issues at the Branchburg facility to a game of "whack-a-mole." Key worries included inadequate protection of electronic records, potentially leading to data manipulation, insufficient staff training, missing drug samples, and neglect of equipment and facility maintenance. These lapses could potentially lead the FDA to classify the situation as "Official Action Indicated," its most severe level of regulatory response, although Lilly's ongoing corrective actions might mitigate the final rating. Additionally, Lilly recently settled a lawsuit with a former employee who claimed wrongful termination after reporting poor manufacturing practices, which the company denied.

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Are health orgs delivering on price transparency?

By Jasmyne Ray - Price transparency has become an issue for both patients and providers post-Covid — for patients in particular, the lack thereof. In a survey by the Marist Poll for Patient’s Rights Advocate, 93% of respondents said hospitals should be required to post their prices, not estimates, for planned care in advance. Read Full Article…

VBA Article Summary

  1. Legislation for Transparency in Healthcare Costs: The No Surprises Act and the Lower Costs, More Transparency Act were passed by the House of Representatives in December with the objective of enhancing price transparency among hospitals and healthcare providers. However, adherence to these regulations has been challenging for many organizations.

  2. Enforcement Measures by CMS: The Centers for Medicare and Medicaid Services (CMS) is actively enforcing compliance with these transparency regulations. In April 2023, CMS announced stringent measures against noncompliant hospitals, including mandatory corrective action plans, the imposition of civil monetary penalties, and the simplification of the compliance process to ensure adherence.

  3. Strategies for Compliance: Hospitals and healthcare organizations are advised to collaborate with other providers to navigate the complexities of complying with the transparency regulations. Tina Barsallo, the vice president of revenue cycle operations at Lifepoint Health, recommends forming teams to foster joint ownership and partnership in developing compliance tools, as well as reaching out to peers for brainstorming and sharing strategies to achieve compliance efficiently.

Generic drugs in the US are too cheap to be sustainable, experts say

By Jessica Glenza - Generic drugs are the singularity of American healthcare – they are too cheap. And it’s driving some manufacturers out of business altogether. Drug prices regularly spark recrimination and outrage on Capitol Hill, such as a recently announced investigation by Senate Democrats and Bernie Sanders into the price of albuterol inhalers. Read Full Article…

VBA Article Summary

  1. Price Disparities and the Cost of Drugs: The article highlights the stark disparity in drug pricing between the United States and other countries, with a specific example of GlaxoSmithKline charging significantly more for Advair HFA in the U.S. compared to the U.K. While Americans pay, on average, 2.5 times more for prescription drugs, this average obscures the significant difference in costs between brand-name, patent-protected drugs and generic drugs. The latter are actually cheaper in the U.S. but are priced so low that they may not provide sustainable incentives for manufacturers.

  2. Supply Chain Vulnerabilities and Drug Shortages: The text discusses the fragile nature of the drug supply chain in the U.S., exacerbated by a limited number of manufacturers, leading to drug shortages in crucial medications like Methotrexate and Fludarabine. These shortages are attributed to various factors, including increased demand, manufacturing delays, and insufficient profit margins that dissuade manufacturers from continuing production. The article points out the paradox in the healthcare market dynamics where increased demand does not necessarily lead to an increase in supply, mainly due to the business-first approach of drug manufacturing companies.

  3. Regulatory Impact and Market Pressures on Generic Drugs: The Hatch-Waxman Act of 1984, aimed at expanding the generic drug market, inadvertently created a scenario where price became the sole competitive metric, ignoring other factors like quality and reliability. This situation led to a "race to the bottom," with manufacturers continuously lowering prices to gain market share. Additionally, the consolidation of drug buyers and the influence of pharmacy benefit managers further intensified the pressure on prices. The combined effect of these market and regulatory forces has been a reduction in the number of manufacturers for less profitable drugs, particularly generic sterile injectables, heightening the risk of drug shortages and raising concerns about the sustainability of the generic drug market in the U.S.