Hello, and welcome to this week’s edition of the Gist Weekly. As always, we appreciate your continued readership and invite you to forward this email to friends and colleagues—please encourage them to subscribe as well!
In the News
What happened in healthcare recently—and what we think about it.
- FTC sues PBMs over insulin pricing tactics. Last Friday, the Federal Trade Commission (FTC) announced it was bringing legal action against the three largest pharmacy benefit managers (PBMs)—CVS Health’s Caremark, Cigna’s Express Scripts, and UnitedHealth Group’s OptumRx—as well as their respective group purchasing organizations. The administrative complaint alleges that these companies have engaged in anticompetitive practices around insulin pricing. Alleged examples of these practices include artificially inflating list prices through rebates, steering patients toward more expensive products, and exposing vulnerable populations, such as the uninsured, to these high prices. The FTC points to the size of these PBMs, which collectively administer about 80% of prescriptions in the US, as a key factor that enables their pricing tactics. These allegations will be brought to an administrative law judge in a formal hearing.
- The Gist: The Biden administration’s FTC has established an aggressive posture against many industries it deems to be behaving anticompetitively, and PBMs have emerged as a key target. PBMs are pushing back, with Express Scripts suing the FTC for defamation after the agency published a report criticizing PBMs. These legal battles add pressure for Congress to act, as it is considering various legislative reforms to rein in PBMs. Insulin pricing often serves as a focal point for broader issues around the high costs of prescription drugs. However, PBMs were quick to protest that they have recently lowered the price of insulin for many of their members, opting in coordination with several large drugmakers to extend Medicare’s $35 per month price cap to patients with commercial insurance.
- House committee advances bill extending Medicare telehealth and hospital-at-home flexibilities. Late last week, the House Energy & Commerce Committee advanced H.R. 7623, the Telehealth Modernization Act of 2024, to the full House with a unanimous vote. The bill would extend pandemic-era Medicare telehealth policies by two years and the Acute Hospital Care at Home (AHCAH) waiver program by five years, both of which are set to expire on Dec. 31. The House Ways & Means Committee advanced a similar bill in May, and lawmakers are expected to incorporate these policy items into negotiations around the year-end omnibus legislative packages. Earlier this week, Congress also passed a stopgap spending bill that will fund the government through Dec. 20.
- The Gist: Although this is a promising sign, providers must still wait and see whether these provisions ultimately become law, and they may be disappointed that (for now) neither extension is permanent. The share of Medicare beneficiaries using telehealth has hovered between 10% and 15% in recent quarters—up from pre-pandemic levels but well below its 2020 peak—but providers’ lack of certainty around telehealth’s future in Medicare has likely hindered adoption. The AHCAH waiver, in which over 300 hospitals have participated, has likewise been left in limbo. Even temporary extensions would allow participating providers to take fuller advantage of these flexibilities by investing more resources into their programs.
- HRSA awards contracts for new organ transplant system. Last week, the Health Resources and Services Administration (HRSA), a division of the Department of Health & Human Services, announced the first-ever multi-vendor contract awards for the Organ Procurement and Transplantation Network (OPTN), after Congress authorized an overhaul of the system last year. For almost 40 years, the OPTN contract was held by a single not-for-profit organization, the United Network for Organ Sharing, until it drew intense scrutiny for mismanagement characterized by unacceptable errors and inefficiencies. Instead, HRSA granted 14 awards to a variety of government contractors and consulting groups to handle different aspects of the OPTN. Their responsibilities have been divided into categories such as improving safety, supporting modernization, increasing transparency, improving communications, strengthening financial management, and overseeing transitional operations.
- The Gist: With more than 100K Americans currently on organ transplant waiting lists, and 6K dying annually while waiting, the US organ transplant system has vast room for improvement. The government’s efforts to increase competition to solve operational and distribution challenges are welcome, but other aspects of the transplant process, including performance evaluation, deserve reassessment as well. For example, providers are scored on the survival rates of patients who receive transplants, but not those who die on waiting lists. Thus, they are disincentivized to operate on higher-risk patients or utilize organs that are potentially transplantable but have imperfections. Now that the contracts have been granted, hospitals and transplant specialists should be active participants in the implementation of these reform efforts, ensuring patient needs are put first.
Plus—what we’ve been reading.
- A new dawn for sickle cell disease treatment. Published last week in the New York Times, this piece details the experiences of one of the first patients to use a new gene therapy to treat sickle cell disease. In late 2023, the Food and Drug Administration (FDA) approved two revolutionary gene therapies that offer patients a first-ever cure for the disease. However, in addition to the arduous treatment process, there are also substantial logistical hurdles to overcome before most patients can begin treatment. Relatively few medical facilities have been approved by the drug manufacturers to administer the treatment, and, even once approved, they have found arranging payments from insurers to be “unbelievably frustrating.” These complex negotiations may dissuade hospitals from offering these procedures, restricting patients’ access to this life-changing care.
- The Gist: These novel sickle cell treatments illustrate both the revolutionary potential of pharmaceutical innovations and their practical limits when administered in hospital settings without reliable reimbursement support. Hospitals, bearing the financial risk of a multimillion-dollar drug without a clear and guaranteed reimbursement plan, are opting to only treat a few patients at a time, if they are able to offer these treatments at all. Patients are counting on hospitals, payers, and pharmaceutical companies to reach agreements that ensure timely access to these treatments.
Graphic of the Week
A key insight illustrated in infographic form.
Health policy in a non-healthcare-centric election
With Election Day less than six weeks away, this week’s graphic compares the positions of Vice President Harris and former President Trump on three of this cycle’s most important healthcare policy issues: competition, Medicare, and the cost of coverage. The candidates are more aligned on these issues than in many recent elections, with each framing much of their healthcare agenda around affordability, a top concern for voters. Both Harris and Trump have a history of opposing consolidation in healthcare and believe that increased competition will lower healthcare costs. They are also opposed to cutting Medicare benefits, and each have voiced support for Medicare negotiating the price of drugs, with Harris advocating for this program’s expansion. However, some Republican legislators have been skeptical of this policy and may try to repeal it. Both candidates would also likely further efforts to stop surprise billing and reduce prescription drug prices. Although they share a surprising consensus on certain issues, the candidates have sharply divergent attitudes toward reproductive rights and the Affordable Care Act, which may be decisive factors in the election. Action on these and other important health policies, such as Medicare outpatient payment levels, will be largely affected by which party controls Congress, and that too is looking like a toss-up.
The Week at Kaufman Hall
What our experts are saying about key issues in healthcare.
With the Medicare Advantage annual enrollment period just around the corner, Kaufman Hall Managing Director Joyjit Saha Choudhury’s new blog explores three “modes” in which health plans could employ AI technology to meet the evolving needs of consumers during the sales process.
In the piece, Choudhury argues that “plans need to leverage AI in the context of a thoughtful distribution and enterprise strategy, so that their efforts are tailored to their business and stakeholder context and their initiatives are addressing real opportunities, rather than getting caught up in the hype cycle.”
On Our Podcast
The Gist Healthcare Podcast—all the headlines in healthcare policy, business, and more, in ten minutes or less every other weekday morning.
In addition to the news discussed above, our Gist Healthcare Podcast covered many of the week’s other big stories, including:
- Cigna scales back MA offerings for 2025
- Democrats introduce bill to make ACA subsidies permanent
- Mercer projects employee benefit costs will rise in 2025
To stay up to date, be sure to tune in every Monday, Wednesday, and Friday. Subscribe on Apple, Spotify, Google, or wherever fine podcasts are available.
Thanks for reading! We’ll see you next Friday with a new edition. In the meantime, check out our Gist Weekly archive if you’d like to peruse past editions. We also have all of our recent “Graphics of the Week” available here.
Best regards,
The Gist Weekly team at Kaufman Hall
