Thursday, October 27, 2022

Axios Vitals: Drug deals

Plus, more states extend postpartum coverage | Thursday, October 27, 2022
 
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Axios Vitals
By Tina Reed · Oct 27, 2022

Happy Thursday, Vitals readers. Today's newsletter is 938 words or a 3½-minute read.

🎮 1 fun thing: Your kids have a new argument for playing more video games.

  • A new study out of the University of Vermont's department of psychiatry. found children who game frequently outperformed non-gamers at tasks involving impulse control and memory, Axios' Stephen Totilo writes.
 
 
1 big thing: The trouble with fixing drug prices

Mark Cuban and Axios' Hope King at the Axios BFD event in New York Wednesday. Photo: Courtesy of Beatrice Moritz

 

If you want to understand why lowering retail drug prices can be so difficult, look no further than billionaire investor Mark Cuban's online pharmacy.

What's happening: Cost Plus Drugs launched in January in a bid to offer transparent, and thus, lower drug prices. Cost Plus' direct-to-consumer model marks up drugs from cost by 15%, plus a $3 pharmacy fee, cutting wholesalers, PBMs, pharmacies and insurers out of the equation.

  • It's already gained 1.2 million customers and sells more than 1,000 generic drugs, Cuban said.

What he's saying: "I put my name on it because what we're really selling is not medication, what we're selling is trust," Cuban said at the Axios BFD event in New York City on Wednesday.

  • The question is whether it can fundamentally change the pricing model.

The big picture: Congress and the Biden administration recently have taken their own cut at the drug pricing puzzle, targeting what manufacturers charge Medicare via the Inflation Reduction Act and possible follow-on actions.

  • The nonprofit Civica Rx also is trying to reshape the economics of drug development, making generics and partnering with certain pharmacy benefit managers and insurers.
  • And a growing number of online pharmacy platforms are "opting out" of working with middlemen, seeking to find ways to cut generic prices by essentially running cash-only businesses, NBC News reported.

Yes, but: So far, these efforts haven't extended to brand-name drugs, which accounted for about 84% of U.S. pharmaceutical spending in 2021.

  • Cuban said breaking into branded drugs is "complicated," but noted he'd been able to secure a purchasing agreement with Roche.
  • The problem, he said, is a handful of PBMs that dominate the industry. PBMs are go-betweens linking drug manufacturers and insurers, negotiating rebates with drugmakers and securing the details of their plan coverage.
  • Drugmakers have been reluctant to sell to other players including Cost Plus, lest they be cast out of those PBMs' enormous networks, Cuban has said.
  • Cuban recently struck a deal with the PBM Rightway, and is planning to open a drug manufacturing facility in Dallas by next month.

What to watch: Whether Cuban or other challengers will be able to break into the branded-drug market in a meaningful way to challenge the incumbents.

Go deeper.

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2. Walgreens' makes new workforce pitch

Photo: Joe Raedle/Getty Images

 

Walgreens, struggling with the national pharmacy staffing shortage amid a push into patient care delivery, announced Thursday it plans to further streamline its pharmacy staff's jobs.

Why it matters: You already know workforce retention and burnout have been a huge problem across every segment of health care — particularly amid the great resignation and the stressors of the pandemic.

  • And, as major retail brands and tech-enabled primary care startups jockey for market share in the care delivery space, competition for talent is fierce.

The details: Walgreens' struggles with labor shortages have forced some of its pharmacies to limit hours or close in some cases. It recently enlisted the help of "robots," rolling out a network of automated facilities to fill prescriptions.

  • On Wednesday, Walgreens announced it's also eliminating "task-based metrics" from retail pharmacy staff members' performance reviews to improve the working environment. The company said it's in response to feedback from their workforce and will allow employees to work at the top of their licenses.
  • "We've taken on new services," Brad Ulrich, group vice president of pharmacy operations and services told Axios. "As a result we're really trying to elevate their role."
  • This comes just a few months after Walgreens reportedly started offering $75,000 signing bonuses.
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3. Insurance premiums stable in 2022, study finds
Data: Kaiser Family Foundation; Chart: Erin Davis/Axios Visuals

It cost an average of $22,463 to cover a family through employer-sponsored health insurance in 2022, according to an annual benefits survey from the Kaiser Family Foundation, Axios' Arielle Dreher writes.

Yes, but: The survey also found premiums remained relatively flat year-to-year while wages and inflation surged.

Why it matters: Nearly 159 million Americans get health coverage through work, and coverage costs and benefits have become a critical factor in a tight labor market.

  • While families and individuals paid similar amounts for coverage in 2022 and 2021, premiums have increased by 20% over the past five years, KFF said.
  • And because many premiums for 2022 were finalized in the fall of 2021, before the effects of inflation were clear, KFF expects a higher increase in average premiums for 2023 than what's been observed in recent years.
  • A single person paid $7,911 on premiums in a year for their employer health plan in 2022.

Between the lines: Employers are making tough choices in a competitive labor market and in some instances, absorbing rising costs of coverage instead of passing them on to workers.

  • An October survey of 1,200 small businesses found that nearly half of them have increased the cost of their goods or services to offset rising costs of health care.
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A message from PhRMA

Americans want policy reforms that improve their insurance
 
 

Did you know 39% of insured Americans say they don't understand what's covered by their insurance? Health insurance coverage should be predictable and transparent, and insured Americans agree.

Learn more from PhRMA's latest Patient Experience Survey report.

 
 
4. Data du jour: Extended postpartum coverage
Data: U.S. Department of Health and Human Services; Map: Madison Dong

More than half of the states have now expanded their Medicaid postpartum coverage from the federally mandated 60 days to one year, Axios' Oriana Gonzalez reports.

Why it matters: U.S. maternal mortality rates outpace those in other developed nations, and expanded eligibility for benefits is seen as an increasingly important tool to improving maternal and child health.

Driving the news: HHS officials first confirmed to Axios that Georgia and Pennsylvania's waivers to expand postpartum coverage have been approved, bringing the total to 26 states and the District of Columbia.

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5. Catch up quick

📆 The FDA on Wednesday indefinitely postponed a meeting of outside experts to help decide whether to allow over-the-counter sales of birth control pills. (Axios)

💰 It cost $38,398 for a single shot of a very old cancer drug. (NPR)

👟 A new study from researchers at the University of Minnesota suggests "digital nudges" meant to encourage users to exercise actually work. (Axios)

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A message from PhRMA

How insured Americans navigate unclear insurance coverage
 
 

According to new findings, insured Americans favor policy solutions that improve their ability to navigate and access their care while lowering their out-of-pocket costs.

An example: Tackling the barriers introduced by insurers and middlemen like pharmacy benefit managers.

Read more.

 

Thanks for reading, and thanks to senior editor Adriel Bettelheim and senior copy editor Bryan McBournie for the edits. Please ask your friends and colleagues to sign up.

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