Daily Industry Report - March 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)

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Biden Drug Price Negotiation Policy Survives Key Legal Fight (2)

By Nyah Phengsitthy - The Biden administration secured another major win Friday in its battle to defend a government drug price-setting program after a federal judge struck down administrative and constitutional claims brought by AstraZeneca. Read Full Article…

VBA Article Summary

  1. Ruling on Legal Standing and Property Interest: Chief Judge Colm F. Connolly of the US District Court for the District of Delaware ruled that AstraZeneca PLC does not have Article III standing to challenge the Medicare Drug Price Negotiation Program authorized by the 2022 Inflation Reduction Act. This decision was based on the determination that AstraZeneca does not have a protected property interest in selling drugs to the government at non-agreed prices, thereby rendering its due process claim invalid. This ruling stems from AstraZeneca's challenge to the program, which includes its drug Farxiga in the pricing negotiation, citing concerns over constitutional protections and the lawfulness of the government's pricing scheme.

  2. Analysis of AstraZeneca's Claims and Court's Jurisdiction: The court dismissed AstraZeneca's Administrative Procedure Act claims and due process claims, highlighting that the company's participation in the Medicare program is voluntary. The judge referenced previous cases to emphasize that there is no federal requirement for AstraZeneca to sell its drugs to Medicare beneficiaries. Additionally, the opinion critiqued the company's arguments as based on flawed legal premises and hypothetical scenarios that do not constitute a cognizable injury, thus failing to meet the threshold for Article III standing.

  3. Implications and Responses to the Decision: The ruling has been interpreted as a significant setback for AstraZeneca and potentially for the pharmaceutical industry's broader challenges against the Medicare Drug Price Negotiation Program. Advocacy groups and legal experts have commented on the decision, highlighting its implications for the future of drug pricing and access to medications. AstraZeneca expressed disappointment, citing concerns over patient access to future medicines, while advocacy groups like Patients For Affordable Drugs welcomed the decision as a step toward curbing pharmaceutical companies' pricing practices. The outcome also aligns with similar judicial dismissals of challenges to the program, underscoring the judiciary's stance on the government's authority to negotiate drug prices under the Inflation Reduction Act.

HVBA Poll Question - Please share your insights

What do you believe is the primary factor contributing to the average 20% increase in pharmacy costs as a percentage of total medical spending for businesses:

Login or Subscribe to participate in polls.

Our last poll results are in!


of Daily Industry Report readers who responded to our last polling question “absolutely believe and would engage in the legal importation of specialty medications” when asked if they would advise clients to import speciality 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.

26.83% of respondents have no opinion on the matter or are neutral, neutral or uncertain, 25.25% would consider it, but not too familiar with the process, while 20.41% do not believe or have trust in medications being sourced outside of the U.S. pharmacies.

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

'Cybersecurity is patient safety': What the ransomware attack on Change Healthcare should teach the industry

By Paige Minemyer - As the disruption caused by the cyberattack at Change Healthcare stretches beyond its tenth day, cybersecurity experts say the incident could spur greater emphasis on enhancing protocols—and greater oversight from the feds. Read Full Article…

VBA Article Summary

  1. Cyberattack on Change Healthcare: On February 21, Change Healthcare experienced a system outage due to a cybersecurity issue later attributed to BlackCat, a known cybercriminal gang also referred to as ALPHV or Noberus. UnitedHealth Group, the parent company, initially blamed a "nation-state" affiliated actor before acknowledging BlackCat's involvement. The breach, which the hackers claimed responsibility for in a short-lived post on their dark web site, highlights the growing threat of ransomware attacks in the healthcare sector, where over 114 threat actors target the valuable data and technology systems.

  2. Rising Threat of Ransomware in Healthcare: The healthcare industry is increasingly becoming a target for ransomware attacks, where critical data or technology is encrypted and held for ransom. A study published in January 2023 indicated that ransomware attacks in healthcare have doubled in the past five years. In 2023 alone, over 630 ransomware incidents impacted the global healthcare sector, with 460 occurring in the U.S. BlackCat has been identified as a primary hacking group behind these attacks, demonstrating the shift from rogue individual hackers to well-funded, professional cyber actors often supported by adversarial nation-states.

  3. Strategies for Healthcare Cybersecurity: In response to the growing threat, the Health Sector Coordinating Council's Cybersecurity Working Group released a strategic plan outlining 10 goals for improving cybersecurity readiness in healthcare. Recommendations include making cybersecurity requirements accessible and actionable for all healthcare segments, ensuring technologies are secure by design, and treating cybersecurity with the same urgency as other organizational priorities. Additionally, voluntary guidelines released by HHS aim to bolster cybersecurity practices, with the potential for future mandatory measures and incentive payments to encourage compliance. The breach at Change Healthcare serves as a wake-up call for the industry to prioritize cybersecurity to safeguard patient safety and data integrity.

Obamacare Case Threatens Sweeping Loss of Preventative Care (1)

By Mary Anne Pazanowski - About 150 million Americans, including 37 million children, may be cut off from potentially life-saving health care depending on the outcome of an Obamacare case set for oral arguments in a federal appeals court March 4. Read Full Article…

VBA Article Summary

  1. Legal Challenge and Public Health Implications: The US Court of Appeals for the Fifth Circuit is reviewing a decision that struck down aspects of the Affordable Care Act's mandate requiring private insurers to fully cover certain preventive care services. This case is significant as it targets one of the Affordable Care Act's core provisions aimed at expanding healthcare access and reducing costs. The mandate's reduction could lead to increased health risks by making individuals less likely to seek preventive care due to cost barriers.

  2. Specifics of the Judicial Ruling: The controversy arose from a ruling by Judge Reed O’Connor, who limited the scope of no-cost coverage for preventive services, affecting screenings for serious health conditions and access to preventive drugs. This decision is being challenged by patient advocacy groups and supported by government appeals, emphasizing the mandate's role in promoting health equity and access to essential healthcare services.

  3. Broader Legal and Policy Questions: The case raises critical questions about the role of advisory committees in the government, the balance of legislative and executive powers, and the principles of government accountability and nondelegation doctrine. With potential implications for the structure of health law and the Affordable Care Act's future, this legal battle could also attract the attention of the US Supreme Court, especially on issues related to administrative law and the delegation of legislative authority.

Digital Engagement with RPM Boosts Post-Discharge Care Coordination

By Anuja Vaidya - Digital engagement post-discharge with an RPM system helped increase touch points between patients and healthcare providers but did not impact the rate of readmission, recent research shows. Read Full Article…

VBA Article Summary

  1. Assessment of Post-Discharge Digital Engagement Program: A study published in the American Journal of Managed Care explored the impact of a post-discharge digital engagement program on care coordination and readmission rates. Conducted by researchers from the Medical College of Wisconsin and Froedtert & Medical College of Wisconsin Health Network, the study focused on patients discharged between March 2020 and November 2020, examining how leveraging a remote patient monitoring system through the GetWell Loop solution affected post-discharge care for low, medium, and high-risk patients.

  2. Program Implementation and Findings: The digital engagement program provided varying lengths of check-ins and educational guidance based on patient risk levels, with a care coordination team monitoring responses to intervene when necessary. Despite the innovative approach, the study found that the program did not significantly reduce readmission rates among any risk groups. Interestingly, the program was more likely to be activated by younger, White patients with private insurance, indicating a potential barrier in technological literacy and accessibility among diverse patient populations.

  3. Broader Context and Implications for Digital Health: This study sheds light on the challenges and potential limitations of digital health strategies in reducing hospital readmissions. While digital engagement offers more patient-provider touchpoints, its effectiveness may be hindered by factors such as technological literacy and patient engagement levels. The findings underscore the need for health systems to address these barriers to improve the efficacy of post-discharge digital engagement programs and other digital health initiatives aimed at enhancing patient care and outcomes.

PBM Contracts: The Need for Increased Transparency, Scrutiny, and Reform

By Mason Walker - Recent developments in the healthcare sector point towards an imminent increase in scrutiny around Pharmacy Benefit Managers (PBMs) contracts. Although not given the widespread attention it deserves, these developments carry significant implications for healthcare stakeholders, particularly in the context of drug pricing and transparency. Read Full Article…

VBA Article Summary

  1. Bipartisan Coalition for PBM Reform: Ohio Attorney General Dave Yost, alongside a bipartisan coalition of 39 attorneys general, is calling on Congress to enact reforms targeting Pharmacy Benefit Managers (PBMs). The coalition aims to enhance transparency and prevent unjustifiable drug price increases through legislative action, indicating a significant shift in the PBM landscape. This move is supported by figures like Michigan Attorney General Dana Nessel, underscoring a nationwide push for increased transparency and accountability within the PBM industry.

  2. New York's Regulatory Approach: The New York State Department of Financial Services (DFS) has proposed draft regulations aimed at tightening control over PBMs' business practices. These regulations are designed to limit certain practices of PBMs, including imposing stricter notification requirements and contract limitations. This approach represents a move towards a more regulated PBM sector in New York, potentially setting a precedent for other states.

  3. Wider Legislative and Regulatory Context: The article also highlights the broader context of health care reform, including the impact of the Inflation Reduction Act of 2022 on PBMs and the healthcare industry at large. Additionally, recent developments emphasize the importance of fiduciary oversight of health plan fees, sparked by transparency requirements and legal actions such as the class action lawsuit against Johnson & Johnson's medical plan. These developments underscore the evolving regulatory landscape and the need for stakeholders to adapt to new transparency, scrutiny, and reform measures to ensure better health outcomes and affordability.

Hacking at UnitedHealth Unit Cripples a Swath of the US Health System: What to Know

By Darius Tahir - Early in the morning of Feb. 21, Change Healthcare, a company unknown to most Americans that plays a huge role in the U.S. health system, issued a brief statement saying some of its applications were “currently unavailable.” Read Full Article…

VBA Article Summary

  1. Widespread Impact of the Cyberattack: Change Healthcare, recently acquired by UnitedHealth Group, suffered a significant cyberattack that disrupted its operations. This company is crucial in the healthcare industry, facilitating 14 billion transactions annually, including payments and insurance authorizations. The attack has affected various aspects of healthcare, from pharmacies to hospitals, with the American Hospital Association reporting payment delays and coverage verification issues. CommonWell, a key institution for sharing medical records, also had to disable its network, impacting records of 208 million individuals.

  2. Origins and Prevalence of Cybersecurity Threats: The cyberattack on Change Healthcare is attributed to the ransomware group ALPHV, also known as Blackcat. Despite UnitedHealth Group suggesting a nation-state association, the true origin remains debated. This incident is part of a growing trend of ransomware attacks on the healthcare sector, which have been doubling annually. These attacks disrupt healthcare operations, forcing a revert to paper systems, and are considered regional disasters due to their wide-reaching impacts, including increased mortality rates in affected hospitals.

  3. Federal Response and Future Concerns: The federal government's involvement in addressing the cybersecurity crisis in healthcare has been criticized as insufficient. While agencies like the FBI and the Department of Health and Human Services have been involved in briefings, there's a call for more robust federal action and funding, especially for vulnerable rural hospitals. The lack of mandatory cybersecurity standards and the need for more aggressive protection measures against cyber threats are highlighted as areas needing improvement.

Walgreens’ VillageMD to exit Illinois

By Emily Olsen - Walgreens is shutting down dozens of clinics as it works to trim expenses and speed its healthcare unit’s drive toward profitability. In the fall, the Deerfield, Illinois-based retail and pharmacy giant said it planned to close 60 underperforming VillageMD clinics this year. Read Full Article…

VBA Article Summary

  1. Closure of VillageMD Locations in Illinois: Walgreens-backed VillageMD is set to exit its home market in Illinois by April 19, as confirmed by a company spokesperson. The primary care provider will close all six of its locations in the state, which are situated in the Chicago area. This move follows a recent decision to shut down VillageMD locations in Florida, highlighting a broader strategy of cost-cutting and restructuring within the company.

  2. Strategic Shifts Amid Financial Struggles: As part of Walgreens' U.S. Healthcare unit, VillageMD's exit from Illinois reflects the company's ongoing efforts to focus on strategic priorities and address financial challenges. Despite growth in the healthcare segment's revenue, Walgreens reported a $96 million adjusted operating loss in the first quarter. The company is also in the process of implementing layoffs and store closures across the U.S. and U.K. to streamline operations.

  3. Leadership and Structural Changes: In response to structural challenges and the need for operational efficiency, Walgreens has undergone several leadership changes. Tim Wentworth, a former Cigna executive who became CEO of Walgreens last year, acknowledged the difficulties facing the company's core pharmacy business and its healthcare segment. Furthermore, in early February, Walgreens announced new appointments, including a new leader for its U.S. Healthcare unit, a permanent chief financial officer, and a new chief human resources officer, aiming to bolster its strategic direction and financial health.

Weight loss drugs wrinkle economies worldwide

By Melanie Evans - GLP-1s, such as Type 2 diabetes therapies Ozempic and Mounjaro and weight loss drug Wegovy, are expected to bulk up the U.S. economy as more Americans shed pounds. Read Full Article…

VBA Article Summary

  1. Economic Impact of GLP-1s: Goldman Sachs analysts predict that GLP-1 medications, a class of anti-obesity drugs, will significantly impact the U.S. economy over the next four years, potentially boosting it by $1 trillion. By 2030, the anti-obesity drug market is expected to reach $100 billion, which is 16 times its current value. These medications could add between 0.4% and 1% to the U.S. GDP, with the higher percentage achievable if 60 million Americans regularly use these drugs. This forecast aligns with broader economic shifts observed, such as changes in consumer behavior and potential operational savings for industries like airlines.

  2. Market and Pricing Dynamics: The growing interest in GLP-1s has been reflected in Wall Street's focus, influencing sectors from food industries to retail. The price of popular GLP-1 drugs, Ozempic and Mounjaro, has seen significant increases, with their list prices for a four-week supply reaching $969 and $1,069, respectively, as of January. These developments highlight the drugs' pivotal role in both the healthcare sector and broader market dynamics.

  3. Global Influence and Denmark's Economy: The success of GLP-1 drugs, particularly Ozempic and Wegovy, has propelled Denmark's economy, where their manufacturer Novo Nordisk is based, to become Europe's third-most prosperous. This surge has notably impacted Denmark's financial landscape, contributing to a GDP rise of 1.7% in the first half of 2023, and elevating Novo Nordisk to the status of Denmark's top business. Denmark's economic achievements underscore the global economic and health implications of the GLP-1 drug class.

Three-quarters of health professionals project widespread AI adoption: survey

By Sydney Halleman - Generative AI has been a target of healthcare investment as companies say the technology, which can generate content like text and images, has the potential to improve diagnostic screenings and decrease the administrative load on clinicians. Read Full Article…

VBA Article Summary

  1. Widespread Adoption Anticipated: According to a survey by Berkeley Research Group, 75% of healthcare providers and pharmaceutical professionals predict that AI technologies will become widespread in healthcare within the next three years. Yet, only 40% of these professionals report that their organizations have reviewed or plan to review AI regulatory guidance.

  2. Regulatory Optimism and Concerns: Healthcare providers are more optimistic than pharmaceutical professionals regarding the potential of regulation to set necessary boundaries for AI usage in healthcare. This optimism comes amidst industry concerns about rapid AI adoption risking data privacy and worsening health inequities. Despite steady AI investment in the healthcare sector, with its market size expected to grow from $28 billion in 2024 to over $180 billion in 2030, there's mounting pressure on the federal government to devise appropriate regulations.

  3. Data Privacy and Compliance Confidence: Data privacy and cybersecurity emerge as primary concerns among healthcare professionals, with over 50% highlighting them as their top worries amidst rising healthcare breaches. However, a significant portion of provider respondents (over 80%) expressed confidence in their organization's ability to comply with potential AI regulations, citing accuracy, safety, data privacy, and HIPAA violations as major concerns. The survey also highlighted the current and potential applications of AI in healthcare, including diagnostics, imaging, preventative screenings, and administrative tasks.