Daily Industry Report - March 8

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)

Change's temporary funding program 'not even a Band-Aid,' AHA president says, as White House reportedly mulls financial relief

By Anastassia Gliadkovskaya - Provider groups have come out swinging amid the fallout from the Change Healthcare cyberattack, which happened nearly two weeks ago. Read Full Article…

VBA Article Summary

  1. Urgent Calls for Action on Cyberattack Fallout: The American Hospital Association (AHA) and the American Medical Association (AMA) have issued urgent appeals to Congress, the Department of Health and Human Services (HHS), and UnitedHealth Group following a cyberattack described by the AHA as the "most significant cyberattack" on healthcare in American history. The AHA's communication emphasized the dire need for expedited Medicare payments and guidance for interim payments to providers, criticizing the federal response and calling for a comprehensive government action. The AMA highlighted the severe impact on physician practices, stressing the crisis's immediacy and its threat to patient access and the viability of medical practices, especially in underserved areas.

  2. Critique of UnitedHealth Group's Response: Both AHA and AMA criticized UnitedHealth Group for its inadequate response to the crisis. AHA's president, Richard Pollack, specifically condemned the temporary funding assistance program offered by UnitedHealth Group as insufficient, highlighting its limited accessibility, stringent repayment terms, and the overall failure to address the core issues faced by healthcare providers. Pollack underscored the significant revenues and profits of UnitedHealth Group, arguing that the corporation has the capacity to offer more substantial support to the healthcare sector during this critical time.

  3. Federal Consideration of Financial Relief and Cybersecurity Measures: In response to the growing pressure from healthcare organizations and amidst the ongoing disruptions caused by the cyberattack, the White House and various federal agencies are reportedly exploring options for short-term financial relief to support affected healthcare providers. Discussions at the National Security Council have considered tapping into existing funding programs without the need for congressional support and possibly declaring the incident a "significant cyber incident" to activate a specialized crisis management response. This move reflects the administration's recognition of the cyberattack's profound impact on the healthcare industry and its commitment to mitigating the fallout.

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!

Does Federally Funded Research Justify A Piece Of Pharma’s Profits?

By John LaMattina - An unfortunate criticism of Big Pharma is that it really doesn’t discover drugs. Rather, it licenses drugs that originated in labs that utilized government funding and manufactures and sells these medicines for outrageous prices. Read Full Article…

VBA Article Summary

  1. Public Investment Without Direct Returns: Representative Alexandra Ocasio-Cortez (AOC) and Professor Aaron Kesselheim highlighted during a Congressional hearing that the public, through NIH funding, acts as an early investor in the development of pharmaceuticals but does not receive a direct return on these investments when the drugs become highly profitable and privatized. This has led to public outrage over the perceived unfair benefit to the biopharma industry from government-funded research.

  2. Government Intervention through March-In Rights: The Biden Administration's Department of Commerce’s National Institute of Standards and Technology (NIST) released a draft guidance on "March-In Rights" for public comment. This initiative aims to develop policies that would allow the government to intervene in the pricing and distribution of drugs developed from government-funded research. However, a study by Vital Transformations indicates that very few drugs (less than 2% of FDA-approved pharmaceutical products between 2011 and 2020) would qualify for such intervention, suggesting minimal impact on drug prices.

  3. Concerns Over Innovation and Broad Application: A bipartisan group of 28 Senators and Congressmen have expressed concerns that the proposed march-in rights could disincentivize innovation across various sectors, not just pharmaceuticals. They argue that the threat of government intervention might deter private investment necessary for commercializing federally-funded research, potentially affecting a wide range of industries including green technology, agriculture, computing, and semiconductors.

The Miracle Weight-Loss Drug Is Also a Major Budgetary Threat

By Brian Deese, Jonathan Gruber and Ryan Cummings - The U.S. health care system has struggled for decades with the tension between providing incentives for pharmaceutical innovation and keeping breakthroughs affordable for those who would most benefit from them. Read Full Article…

VBA Article Summary

  1. The Economic Impact of New Weight-Loss Drugs: The United States faces a significant fiscal dilemma due to the high costs of new weight-loss drugs, like Ozempic and Wegovy, produced by Novo Nordisk. These drugs, effective in treating obesity and preventing diabetes, have potential annual costs of roughly $15,000 per person, leading to a potential annual expense exceeding $1 trillion if made broadly available. This cost far surpasses the savings from reduced health care expenses related to obesity, posing a substantial risk to U.S. taxpayers and highlighting the need for policy intervention to manage drug prices.

  2. Disparity in Drug Pricing and the Case for Negotiation: The disparity in drug pricing between the U.S. and other countries is stark, with Americans paying significantly more for medications such as Ozempic. The article suggests leveraging the federal government's purchasing power, particularly through Medicare, to negotiate lower prices. The recent Inflation Reduction Act's provision for Medicare to negotiate drug prices is seen as a step in the right direction, but its impact is limited by the selection of drugs and the time they have been on the market. Expanding this negotiating authority could potentially save hundreds of billions of dollars annually and ensure broader access to these crucial medications.

  3. The Balance Between Cost, Access, and Innovation: The dilemma surrounding the cost of new weight-loss drugs underscores the broader challenge of balancing pharmaceutical innovation with affordability and access. The article argues that reducing drug prices through negotiation does not necessarily stifle innovation but could redistribute resources towards basic science and more equitable health outcomes. By setting prices that align with the social benefits of drugs and employing creative solutions like research prizes, policymakers can foster innovation while preventing an unsustainable fiscal burden on the healthcare system and ensuring equitable access to groundbreaking treatments.

Physicians grow louder on noncompetes

By Ashleigh Hollowell - Amid a nationwide shortage of physicians, contractual noncompete clauses are making it more challenging for patients to receive the care they need, particularly in more rural regions, and physicians are pushing back, NBC News reported March 3. Read Full Article…

VBA Article Summary

  1. Prevalence and Impact on Rural Care: The American Medical Association estimates that between 35% and 45% of U.S. physicians are subject to noncompete clauses, which restrict their ability to practice within a certain area after leaving a hospital. This practice significantly affects rural healthcare by preventing specialized physicians from offering their services locally, often forcing patients to travel long distances for care, exacerbating healthcare disparities in these areas.

  2. Legal and Economic Concerns: Noncompete agreements are under scrutiny for reducing wages, harming competition, and contributing to healthcare disparities. The Federal Trade Commission (FTC) has criticized such agreements across all professions, including medicine, estimating that abolishing them could boost workers' earnings by $250 billion to $296 billion annually. Currently, only three states (California, North Dakota, Oklahoma) outright ban noncompete clauses for all employees.

  3. Arguments For and Against: Advocates for eliminating noncompete clauses argue that allowing physicians to work for multiple hospitals could enhance specialist coverage, improve patient access to care, and reduce healthcare disparities. However, hospitals argue that noncompete clauses are crucial for protecting their investments in recruiting and training physicians, particularly in rural areas where such investments are significant. The FTC's decision on the matter is anticipated by April 2024, with the potential to significantly impact healthcare practices and competition.

Novo kidney trial finds Ozempic cuts cardiac deaths in diabetics

By Stine Jacobsen and Maggie Fick - Novo Nordisk's widely used diabetes drug Ozempic delayed progression of chronic kidney disease in diabetes patients, a large late-stage study found, cutting the risk of death from that and major cardiac events by 24%. Read Full Article…

VBA Article Summary

  1. Significant Medical Breakthrough: The trial results for Novo Nordisk's GLP-1 class drug, semaglutide, demonstrated a statistically significant reduction in the progression of kidney disease and a decrease in cardiovascular and kidney death by 24% among those treated, compared to placebo. This represents a pivotal step in the application of GLP-1 class drugs beyond their initial uses for type 2 diabetes and weight loss, indicating potential benefits for managing chronic kidney disease (CKD) in diabetic patients.

  2. Impact on Novo Nordisk and the Market: Following the announcement of the trial results, Novo Nordisk's shares, which had been experiencing a surge due to the high demand for its diabetes and weight-loss medications, encountered a minor drop despite reaching record highs. This outcome slightly fell short of some investors' expectations but underscored the drugmaker's leading position in Europe's pharmaceutical market. The findings also affected the stock performance of companies in the dialysis and obesity treatment sectors, highlighting the broader market implications of semaglutide's success.

  3. Broader Implications and Future Prospects: The FLOW trial, which began in 2019 and involved approximately 3,500 patients with type 2 diabetes and moderate to severe CKD, aims to position semaglutide as the first GLP-1 treatment option for this patient group. The results have not only stirred the pharmaceutical industry but also set the stage for Novo Nordisk to seek regulatory approval for label expansion. Furthermore, the trial's success has prompted other pharmaceutical companies, like Eli Lilly, to explore GLP-1 class drugs for additional health conditions, indicating a growing interest in the therapeutic potential of this drug class beyond its original scope.

Health care cyberattack spawns threat of patient lawsuits

By Tina Reed - The cyber attack on Change Healthcare that's reverberated across the medical system is now spawning threats of litigation from patients. Read Full Article…

VBA Article Summary

  1. Legal Action Against UnitedHealth Group Subsidiary: Patients impacted by the UnitedHealth Group subsidiary's payment network outage, which processes 15 billion transactions annually, may seek damages. This comes as the network, crucial for hospitals, pharmacies, and physician offices, faced a cyberattack causing patients to either pay out of pocket for expensive medications or delay their refills. Gibbs Law Group is spearheading this effort by looking for affected patients, citing that some medications cost thousands of dollars and aiming to recover costs for those forced to pay due to the cyberattack.

  2. Increased Risks for Medicare Part D Plan Members: The cyberattack's aftermath has significantly affected patients under Medicare Part D plans, posing a higher risk of unexpected bills. With the benefits verification process compromised, providers like the Pontchartrain Cancer Center in Louisiana are dispensing drugs to Part D beneficiaries without clear information on eligibility or copays, thereby "flying blind." This situation highlights the critical dependency on the stricken payment network for verifying patient coverage and benefits.

  3. Potential for Widespread Litigation and Government Response: The cyberattack on the UnitedHealth Group subsidiary's network is expected to trigger extensive litigation, with law firms already mobilizing to represent affected individuals. While the full extent of the data breach and its impact are yet to be determined, the Department of Health and Human Services has announced measures to support providers facing cash flow issues due to the outage. However, these efforts have been criticized by industry leaders like the American Hospital Association for lacking urgency and adequacy in response to the crisis, indicating a significant challenge in addressing the repercussions of the cyberattack.

Employer-Provided Health Plans Generate Major ROI for Companies, Employees

By AHIP - More than half of all Americans – over 180 million hardworking individuals and their families – receive their health coverage through their jobs. Employer-provided coverage delivers affordable access to care, effective ways to improve health, and peace-of-mind. A study from Avalere Health found that employers with 100 or more workers saw a 47% return on investment (ROI) for offering health coverage in 2022. That ROI came in the form of increased recruitment and retention, better employee productivity, reductions in medical costs and disability claims, and tax benefits. That ROI is expected to jump to 52% by 2026, according to estimates from Avalere. Read Full Article…

VBA Article Summary

  1. Financial Returns and Cost Savings: The Avalere study forecasts a significant financial return for employers who offer quality health benefits, with an estimated return of $346.6 billion in 2026. This includes $108 billion in direct medical cost reductions and $139.70 billion in tax benefits, illustrating the tangible financial benefits of investing in employee health coverage.

  2. Enhanced Employee Well-being and Business Performance: Offering quality, affordable health benefits is highlighted as a strategic move that benefits both employees and employers. By ensuring the health and well-being of employees, companies not only fulfill a moral obligation but also enjoy a healthier, more productive workforce. This investment leads to increased loyalty, employee retention, and positions companies as competitive entities in the job market, according to Ray McCarty and Alabama State Senator Lance Bell.

  3. Positive Impact on Small Businesses and Employee Perception: The provision of health coverage is crucial for small businesses striving to maintain a healthy workforce and remain competitive, especially in the face of challenges like inflation and workforce shortages. The AHIP Coverage@Work survey underlines the value employees place on employer-provided health coverage, noting its importance in their financial peace of mind, recruitment, and retention. This sentiment is echoed by small business owners and professionals like Dwayne K. and Josselin Castillo, who acknowledge the positive impact of such benefits on team longevity and overall business success.

Insurers report significant reduction in claims data following Change Healthcare hack

By Noah Tong - Humana and Elevance Health said they are seeing a 15% to 20% reduction in data from providers after the Change Healthcare hack, company execs said during an industry conference March 5. Read Full Article…

VBA Article Summary

  1. Breach and Impact: Change Healthcare, owned by UnitedHealth Group, experienced a significant cyberattack nearly two weeks ago, affecting payers, providers, and patients alike. The American Hospital Association has deemed it the "most significant cyberattack" on healthcare in American history. The incident has disrupted operations, with insurers like Humana and Elevance Health reporting missing claims data from providers. Humana's CFO, Susan Diamond, mentioned that up to 20% of claims are dependent on Change Healthcare, with a higher percentage in dental claims, indicating a substantial impact on claim processing and member services.

  2. Response and Adaptation: In the wake of the cyberattack, Humana and Elevance Health have been exploring alternatives to mitigate the impact. Humana's CEO, Bruce Broussard, mentioned a shift in business from Change Healthcare to Availity, another clearinghouse, indicating an industry adaptation to the crisis. Elevance's Executive Vice President and CFO, Mark Kaye, observed that providers have been adapting post-attack, with a noted decrease in the reduction of normal daily claim volumes to about 10% and an increase in direct submissions to Availity or switching clearinghouses, signaling a recovery effort and resilience among providers.

  3. Future Precautions and Industry Implications: The cyberattack on Change Healthcare has prompted insurers to adopt a cautious financial approach, with plans to reserve estimates for claims in the first quarter as they assess the full extent of the impact. This incident underscores the vulnerability of the healthcare industry to cyber threats and the critical need for robust cybersecurity measures to protect sensitive data and maintain continuity of operations. It also highlights the importance of having contingency plans and the ability of the industry to adapt to unforeseen challenges, ensuring patient safety and service continuity.

Federal agencies put healthcare deals in spotlight

By Kelly Gooch - Several federal agencies are teaming up to launch a cross-government public inquiry into the effects of private equity and other corporations on healthcare. Read Full Article…

VBA Article Summary

  1. Scope and Purpose of the Inquiry: The Federal Trade Commission, the Justice Department, and the Department of Health and Human Services have announced a joint inquiry into healthcare transactions, including those not reportable under the Hart-Scott-Rodino Antitrust Improvements Act. This initiative aims to investigate the increasing involvement of private equity firms and corporate owners in healthcare systems. The focus is on understanding how these transactions may lead to consolidation, profit maximization at the expense of quality care, and potential threats to patient health, worker safety, and affordable healthcare.

  2. Concerns over Market Dynamics: The inquiry addresses growing concerns that transactions driven by private equity firms and other corporate entities in healthcare can prioritize profits over patient care quality. This trend is observed amidst a backdrop of a significant increase in private equity-backed physician groups, which grew by 600% over a decade. The inquiry's motivation is further supported by a forecast from a Grant Thornton report, predicting a vigorous season for mergers and acquisitions (M&A) activity in healthcare in 2024.

  3. Call for Public Engagement: The agencies involved are actively seeking public comment on healthcare transactions involving health systems, private payers, private equity funds, and other alternative asset managers. They are particularly interested in details about transactions that fall outside the mandatory reporting requirements for antitrust review. Stakeholders, including patients, healthcare professionals, consumer advocates, employers, insurers, and other members of the public, are encouraged to submit their comments and observations on these issues through Regulations.gov by May 6.

Surgeons warn of 'overutilization' of spinal fusion

By Carly Behm - Spinal fusions are a common option for addressing back pain and spine conditions. But some spine surgeons worry that the procedure could be overdone. Read Full Article…

VBA Article Summary

  1. Overutilization of Surgical Procedures: Ernest Braxton, MD, highlights a concerning trend in spine and orthopedics: the overuse of surgeries like spinal fusion, which may not always be necessary or beneficial for the patient. This overutilization can lead to avoidable risks, complications, and increased healthcare costs, partly driven by the concept of moral hazard—where the availability of insurance or financial incentives might prompt surgeons to recommend surgeries that aren't medically necessary.

  2. Unnecessary Spinal Surgeries: A significant amount of spinal surgeries, especially lumbar spine surgeries, are deemed unnecessary, with estimates suggesting that up to 50% of these procedures might not be needed, indicated, or in the patient's best interest. During the first year of the COVID-19 pandemic, over 30,000 spine surgeries were performed that were considered unnecessary, including 13,541 spinal fusions for back pain labeled as "unnecessary" by the Lown Institute.

  3. Shift Towards Evidence-based Medicine and Shared Decision-making: To counteract the trend of unnecessary surgeries, there's a growing push among spine surgeons for evidence-based medicine, shared decision-making, and adherence to professional guidelines. Dr. Braxton advocates for a more conservative and selective approach to surgery, aiming to reduce the risks of overutilization and ensure patients receive the most appropriate and effective treatment for their conditions.