AI-driven, digital-first models could capture $1T in healthcare spend by 2035: PwC

By Heather Landi – Growing demand for care and a rapidly aging population could drive U.S. healthcare spending to $8.6 trillion by 2035, more than 20% of forecast total U.S. gross domestic product. With more than $5 trillion in annual spending and costs rising at unsustainable rates, healthcare executives need to rethink long-held assumptions about how care is delivered, funded and experienced, according to PwC analysts in a new report. Read Full Article... ^{_{(Subscription required)}}

HVBA Article Summary

1. Massive Increase in Healthcare Spending and Need for Transformation: By 2035, U.S. healthcare spending may reach $8.6 trillion due to growing demand and an aging population, prompting healthcare leaders to reconsider traditional models of care delivery, funding, and patient experience. Rising costs and demographic trends are challenging the sustainability of the current system.

2. Shift Toward AI-Enabled, Digital-First Care Models: PwC predicts that $1 trillion of annual healthcare spending could shift to AI-driven, digital-first, personalized care systems that enhance quality, reduce costs, and alleviate provider burnout. This involves moving resources from outdated, fragmented infrastructure toward next-generation technologies like AI intake systems and in-home care.

3. Strategic Industry Changes and Opportunities by 2035: Payors, providers, and medtech firms must adopt new strategies emphasizing consumer-first approaches, digital-native architectures, virtual care, and data intelligence to thrive. Innovations such as robotics, drones, wearables, and AI will reshape care delivery from hospitals to the home, requiring agile adaptation to disruptors and new entrants in the healthcare market.

HSA Balances Went Up in 2024, but Participant Spend Ticked Down

By Emily Boyle – Participant contributions to and asset investments in health savings accounts increased for the third consecutive year, boosting average account balances, according to the Plan Sponsor Council of America’s 2025 HSA Survey. Meanwhile, plan sponsors cited employee education as their most common HSA concern—with most employers only providing education once per year: at open enrollment. A recent Lively Inc. study found HSA holders are withdrawing more than they are saving, citing rising health care costs. Read Full Article...

HVBA Article Summary

1. HSA Growth Accelerates Across Assets, Participation, and Investments: Health Savings Accounts (HSAs) saw robust growth in 2024, with total assets reaching $146.64 billion, a 16% increasefrom $123 billion at the end of 2023. Participation also rose, with 57% of employees selecting HSA-qualifying high-deductible health plans (HDHPs) when given the option. Three-quarters of employees contributed to their HSAs, averaging $2,802 per contributor—up from $2,609 in 2023 and $2,323 in 2022. The average account balance grew to $6,489, continuing an upward trend from $6,165 in 2023. Meanwhile, 20% of participants invested their HSA funds in 2024, a slight increase from 18% in 2023, while two-thirds of employers offered investment options—up 12% from two years ago.

2. Policy Changes Expand HSA Usability Starting in 2026: The One Big Beautiful Budget Act, signed into law on July 4, 2024, aims to further enhance HSA flexibility. Starting January 1, 2026, individuals enrolled in HDHPs will be permitted to use their HSAs to pay for direct primary care fees—capped at $150/month for individuals and $300/month for families. This change is expected to increase HSA adoption and align them more closely with everyday healthcare needs.

3. Usage Patterns Highlight Need for Better Education and Communication: Despite growing adoption, 13% more HSA withdrawals were made in 2024 than in 2023, and on average, users spent 80% of their HSA assets, indicating high usage for short-term expenses. Additionally, one-third of HSA holders withdrew more than they contributed, according to a study by the Employee Benefit Research Institute. On the employer side, 73% identified educating employees on HSA tax benefits as a top priority, while only 29% positioned HSAs as part of retirement planning. Furthermore, 43% of employers automatically enrolled employees into HSAs when they selected an HDHP, a slight increase from the previous year, signaling a push toward improving engagement but with persistent knowledge gaps.

Merck’s Injectable Version of Blockbuster Cancer Drug Keytruda Wins FDA Approval

By Frank Vinluan – A subcutaneously injected version of Merck cancer immunotherapy Keytruda is now FDA approved, a regulatory decision that gives patients a less burdensome dosing option and provides the pharmaceutical giant a way to retain some market share as the original intravenously infused formulation — its top-selling product — faces patent expirations. Read Full Article...

HVBA Article Summary

1. FDA Approves Keytruda Qlex for Broad Use in Solid Tumors: The FDA has approved Merck's Keytruda Qlex, a new injectable formulation of the checkpoint inhibitor Keytruda, for use in adults and children aged 12 and older across 38 solid tumor indications—covering nearly all the same indications as the original infused version. The product, developed using Alteogen’s enzyme technology, will be marketed under the brand name Keytruda Qlex and is expected to launch in late September 2025.

2. Phase 3 Trial Shows Comparable Efficacy and Safety: Approval was based on a six-week, open-label Phase 3 trial involving 377 patients, comparing Keytruda Qlex with the original infused Keytruda, both administered alongside chemotherapy. The study met its main goal of comparable drug exposure, with a confirmed overall response rate of 45% for Keytruda Qlex versus 42% for infused Keytruda. There were no significant differences in progression-free survival or overall survival between the two groups. Common side effects included nausea, fatigue, and muscle pain.

3. Faster Administration and Market Impact: Unlike the infused version, which requires a 30-minute administration, Keytruda Qlex can be delivered in just one minute every three weeks or two minutes every six weeks, though it must still be administered by a healthcare professional. Merck's original Keytruda is its top-selling drug, generating $15.1 billion in revenue in the first half of 2025, a 6.6% increase over the same period in 2024. Keytruda Qlex joins a growing market of injectable checkpoint inhibitors, following recent FDA approvals of injectable Tecentriq (Roche) and Opdivo (Bristol Myers Squibb), ahead of Keytruda’s 2028 patent expiration.

As costs soar, employers plan 'disruptive' changes to health plans

By Michael Popke – As the cost of health care in the United States rises to the highest point in more than two decades, companies are preparing for disruptive changes to their health care plans, according to a new survey by global advisory, broking, and solutions company WTW. WTW’s “2025 Best Practices in Healthcare Survey” finds that U.S. employers project their health care costs, before plan changes, will increase by 9.1% in 2026, compared with 8.1% in 2025 and 7.0% in 2024. Read Full Article... ^{_{(Subscription required)}}

HVBA Article Summary

1. Primary Cost Drivers in Employer Health Plans: Employers identified pharmacy costs—particularly due to specialty pharmaceuticals and GLP-1 medications—along with high-cost claimants and chronic conditions (notably musculoskeletal issues and cancer) as the top contributors to rising health care expenses. These factors are central to the financial pressure facing employer-sponsored health plans.

2. Strategic Priorities for Managing Costs and Employee Wellbeing: To address these challenges, employers’ top three priorities over the next three years are controlling company medical costs, company pharmacy costs, and improving affordability for employees. Notably, 59% of employers plan to implement broader cost-saving actions (up from 46% over the past three years), including adjustments to subsidies, alternative plan designs, operational efficiency, and expansion of clinical programs targeting cardiovascular, musculoskeletal, digestive, obesity, and oncology care.

3. Adoption of Innovative Tools and Plan Designs: Employers are turning to more proactive strategies: 41% currently use alternative plan designs emphasizing select providers, transparency, and tech-enabled navigation. Nearly 46% are evaluating vendor performance, 36% have taken medical plans out to bid, and 33% have conducted medical claims audits—with an additional 44% planning to do so. While 15% have removed or are considering removing GLP-1 coverage for obesity, 21% already use AI in benefits management, and 80% believe AI will fundamentally transform benefits delivery within three years.

Stopgap bill with hospital funding, telehealth extensions stalls in Senate

By Dave Muoio, Emma Beavins – Republicans' stopgap funding package passed through the House but failed in the Senate, triggering in earnest a political standoff over healthcare policies like Affordable Care Act (ACA) subsidies and Medicaid cuts passed over the summer. The bill introduced earlier this week (see that story below) would keep the lights on through Nov. 21 and included extensions less contentious health industry priorities surrounding hospital funding and virtual care flexibilities. Read Full Article...

HVBA Article Summary

1. Legislative Stalemate on Stopgap Funding Package: The Republicans' stopgap funding package aimed at maintaining government operations through November 21 passed the House but failed to meet the 60-vote threshold in the Senate. The bill included extensions for hospital funding and telehealth flexibilities but excluded Affordable Care Act premium tax credit extensions, a key Democratic demand, leading to a partisan impasse.

2. Healthcare Funding Priorities and Extensions: The bill contains extensions for programs supporting rural hospitals and Medicare telehealth, including the Low-volume Adjustment, Medicare-dependent Hospital programs, and the Medicare hospital-at-home program. However, it did not include extensions for ACA premium subsidies or Medicaid funding rollbacks, which Democrats insisted upon, citing the importance of these for vulnerable populations and affordability.

3. Political Implications and Reactions: Senate leaders framed the stalemate as a partisan contest, with Republicans urging Democrats to support a 'clean, nonpartisan' funding extension and Democrats accusing Republicans of ignoring their input and pushing a partisan agenda. This deadlock increases the risk of a government shutdown and intensifies the debate over healthcare funding priorities amid broader political negotiations.

Primary care shortages worsen as U.S. spending on it drops

By Alan Goforth – Primary care has been shown to improve health outcomes and population health; reduce health disparities; and save money. Despite these benefits, however, accessing primary care has become more difficult. “In 2025, there were 7,901 primary care health professional shortage areas,” according to a new report from the Health Care Cost Institute. “A recent report found that primary care physicians per capita declined between 2012 and 2021, and fewer trainees chose to pursue primary care than specialty care over the same period.” Read Full Article... ^{_{(Subscription required)}}

HVBA Article Summary

1. Low National Spending on Primary Care: In 2022, only about 4% of total U.S. health care spending was dedicated to primary care services—a modest share considering its foundational role in preventive and continuous care. Specifically, among individuals with employer-sponsored insurance, 4.4% of medical and prescription spending went to primary care, while Medicare fee-for-service populations saw an even lower allocation of 3.9%. There was notable variation across states, ranging from just 1.5% in Alaska to 7.2% in Nebraska, indicating inconsistent prioritization of primary care investment.

2. Higher Primary Care Spending in Rural Areas: The data showed that rural areas consistently allocated a greater proportion of health spending to primary care compared to urban areas. For individuals with employer-sponsored insurance in rural regions, primary care accounted for 4.6% of total spending versus 4.4% in urban areas. Among the Medicare fee-for-service population, the difference was even more pronounced, with 6.7% of rural spending going to primary care compared to only 3.4% in urban locations. This suggests that rural systems may place a relatively higher emphasis on primary care, possibly due to fewer available specialist services.

3. Need for Increased Investment and Strategy: Between 2018 and 2022, the share of health spending directed toward primary care declined across both national and state levels, despite evidence that higher primary care physician availability correlates with better population health outcomes. The U.S. continues to lag behind other developed countries in primary care spending, prompting growing recognition of the need for coordinated policy strategies. The report emphasizes that reversing this trend will require focused investment and expansion of the primary care workforce to strengthen the overall health system.

FDA takes on GLP-1 compounding boom with warnings about misleading marketing

By Katie Palmer – Hundreds of telehealth companies, concierge medical practices, and medical spas have over the last few years built huge businesses offering compounded versions of popular GLP-1 obesity drugs while branded versions were in shortage. In more than 50 warning letters sent last week and published on Tuesday, the FDA took these health providers and companies to task for false and misleading claims about the compounded products they market. Read Full Article... ^{_{(Subscription required)}}

HVBA Article Summary

1. FDA Targets Misleading Marketing of Compounded Drugs: The FDA has issued warning letters primarily to companies and providers promoting compounded versions of popular drugs like semaglutide and tirzepatide. These letters focus on claims that such compounded drugs are equivalent to FDA-approved products, which the agency considers false and misleading due to the lack of proven safety, efficacy, and quality.

2. Regulatory Ambiguity and Enforcement Limitations: The FDA’s actions highlight regulatory gray areas in direct-to-consumer marketing by telehealth firms and online pharmacies. Unlike pharmaceutical companies, these entities fall outside the jurisdiction of the Office of Prescription Drug Promotion, raising concerns about the FDA’s authority to enforce advertising standards in this space.

3. Questionable Impact of Warning Letters: Experts express skepticism about the effectiveness of the FDA’s crackdown. While the letters may prompt superficial compliance, such as adding disclaimers or tweaking website language, they may not substantially change how consumers perceive or access compounded drugs, especially given the widespread promotion via social media and influencers.