January 2021 was a watershed month for U.S. healthcare: it sets the stage for what’s ahead for the rest of the year.
As 2020 ended, the pandemic and its economic impact dominated attention but the emergency-use approvals of vaccines by Pfizer and Moderna brought hope. Congress authorized a 5th relief package in December bringing total pandemic appropriations to $3.7 trillion in 2020 and federal debt to $27.8 trillion at year end. That’s how the year ended. Then January:
On January 5, Georgia voters elected two Democratic challengers to Republican incumbents creating a 50-50 split in the U.S. Senate wherein ties will be broken by Senate President Kamala Harris (D).
On January 6, rioters swarmed the Capital intent on reversing the Presidential election results.
On January 13, the U.S. House of Representatives passed articles of impeachment against former President Trump sparking already tense partisan divisions.
On January 20, President Biden was inaugurated followed by the issuance of 42 Executive Orders in 72 hours and a 60-day moratorium for most pending regulations from the Trump administration.
On January 21, President Biden submitted a sweeping $1.9 trillion economic stimulus plan that included $1400 Covid-19 relief for families and a $15/hour minimum wage increase.
On January 31, 10 moderate Republican senators offered a $600 million counter proposal to the President’s stimulus package that reduced family relief funding to $1000 and eliminated the minimum wage bump.
So, based on these events, the agenda for the rest of 2021 is set for healthcare.
1. Re-setting Covid-19 Expectations
While the FDA accelerates emergency use authorizations for vaccines by Janssen J&J and Novavax and the government authorizes vaccine purchases, the CDC will take the lead in re-setting public expectations about the pandemic. Its message will be cautionary: new variants coupled with the logistics of vaccine distribution and administration means 600,000 or more are likely to die before the end of the summer. According to the CDC, the U.S. must administer 2.4 million doses per day to vaccinate 70% of the population by July. To get there by Labor Day requires 1.9 million doses per day. The current rate is 1.1 million per day.
2. Stimulus Funding
Newly confirmed Treasury Secretary Janet Yellen has expressed support for the President’s package, the American Rescue Plan, on the premise that financial assistance for those hardest hits by the pandemic is urgently needed. Despite efforts by Senate Republican moderates to approve a less costly package, the Senate is likely to pass the President’s package by reconciliation—a tactic used 21 times since the 1980 to pass the 2001 Bush tax cuts, portions of the 2010 Affordable Care Act (ACA) and the 2017 Tax Cuts and Jobs Act (TCJA). Key provisions in the package include $400 billion targeted to improved testing and vaccinations among provisions directly impacting health providers and public health. But its passage will add to the federal debt and spark heated pushback by budget hawks. In response, the administration will float long-term deficit reduction policies likely to include tax increases and cuts in healthcare funding.
3. Drug Pricing Legislation
Reining in drug prices has bipartisan support: per RAND, the U.S. pays 256% higher prices for the same drugs bought in 32 developed systems of the world. Drug manufacturers, distributors and pharmacy benefits managers will be the target of hearings by the Senate Finance Committee focused on pricing strategies and business practices that add cost and limit transparency without documentation of added value. Legislation sponsored by Committee Chairman Ron Wyden (D-OR) and Charles Grassley (R-IA) “Prescription Drug Pricing Reduction and Health and Human Services Improvements Act” is likely the starting point. On the table will be manufacturer rebates and coupon programs, inducements and marketing practices, verification of actual R&D costs, pay-to-delay strategies to limit competition and much more.
4. Increased Coverage
A central theme in the Biden administration’s health policies is equity and diversity. Increased access to affordable health insurance coverage for underserved populations was a campaign promise linked directly to the President’s pledge to build on the Affordable Care Act. This year, these changes to coverage will occur in two steps: with Executive Orders, the administration will reverse Trump policies permitting the sale of non-compliant health plans and denial of coverage for pre-existing conditions and authorize changes to increase Medicaid eligibility. Then, as part of the administration’s FY2022 budget planning, it will advance initiatives through the House and Senate Appropriations Committees addressing a wider range of proposals including its favorite, a public option alternative for the under-insured and uninsured.
Other issues will also get attention: data security and the role of Big Tech in protecting personal health information will be scrutinized. The impact of private equity in healthcare consolidation will be a focus. And the sustainability and effectiveness of the public health system will be a prominent post-pandemic theme.
But January set the stage for healthcare changes this year with consequences for many years that follow.
Last week’s news cycle was interrupted by a surprise originating in the financial market: the overnight explosion of beleaguered video retailer GameStop’s stock starting the week at $76.79 reaching a high of $483.00 before settling at $325.00 Friday. It’s been covered as a David-Goliath standoff pitting day-traders against powerful hedge funds that had shorted GameStop, AMC, and other beleaguered companies. Today, the GameStop’s market capitalization is $22.7 billion, and the hedge funds that bet against the company have lost $20 billion.
The significance of the GameStop saga extends beyond how hedge funds bet against companies including many in healthcare. It’s about a grassroots campaign launched by a 34-year-old armed through social media to take down establishment investors. The lesson to be learned from this story is this: healthcare has its share of David’s. Be vigilant and prepared.
“International Prescription Drug Price Comparisons”; January 28,2021; RAND
“Biden has signed 42 executive actions since taking office. Here’s what each does”; January 29,2021; CNN
Kyle Daly “How Reddit explains the GameStop saga”; January 29, 2021; Axios
Matt Levine “GameStop Stock Game Got Stomped”; January 29,2021; Bloomberg
Amy Marcus “Covid-19 Patients Are Doing Their Own Research”; January 30, 2021; Wall Street Journal
“Virus will kill many more, WH projects as briefings resume”; January 27,2021; Associated Press
Vaccine Update: Novavax, J&J Trial Results Released
In addition to approved vaccines by Pfizer and Moderna, two new vaccines are moving toward regulatory approval:
Novavax, an American firm, announced its results on January 28th. In its British trial, the Novavax vaccine was nearly 90% effective against symptomatic covid-19 when given in two doses 21 days apart. In South Africa, however, the same regimen was only 60% effective (and down to 49% when people with HIV were included).
Janssen, which is part of Johnson and Johnson, announced Friday that its single-shot coronavirus vaccine was 66% effective in protecting against moderate to severe COVID-19 disease in Phase 3 trials, which was comprised of nearly 44,000 participants across eight countries: 72% effective in the U.S., 57% in South Africa, where a more contagious variant has been spreading. It prevented 85% of severe infections and 100% of hospitalizations and deaths, according to the company.
“J&J one-dose Covid vaccine is 66% effective, a weapon but not a knockout punch”; January 29, 2021; STAT
“More covid-19 vaccines pass clinical trials”; January 29, 2021; The Economist
Vaccine Development via Operation Warp Speed Slowed Development of Antivirals
The federal government invested $18.5 billion in Covid-19 vaccine development but its investment in drugs has been smaller ($8.2 billion), most of which went to just a few candidates, such as monoclonal antibodies. Studies of other drugs were poorly organized. There are believed to be 179 clinical trials ongoing globally for Covid-19 therapeutics but only 1 (remdesivir and monoclonal antibodies) has been approved and many of the studies have been halted due to funding.
Carl Zimmer “How the Search for Covid-19 Treatments Faltered While Vaccines Sped Ahead”; January 31, 2021; New York Times
OCR Waives HIPAA Risk for Vaccine Scheduling
Last week, the Office of Civil Rights (OCR) issued a notice stating that it will not impose penalties for HIPAA non-compliance in connection with a covered entity health care provider’s or business associate’s good faith use of online or web-based scheduling applications (WBSAs) for the scheduling of appointments for COVID-19 vaccinations during the public health emergency. The notice is retroactively effective to December 11, 2020.
Blue Shield of CA, Kaiser Permanente to Manage Vaccinations in State
Last week, California announced an agreement with Blue Shield of California and Kaiser Permanente to create a centralized system to streamline appointment sign-ups, notification, and eligibility for its 40 million residents, and to oversee vaccine distribution to counties, healthcare providers and pharmacies across the state. To date, California had only administered 49.5% of the doses it has received placing it among the slowest states in the country.
“Blue Shield of California And Kaiser Tapped to Speed Up State Vaccines” January 27, 2021; CBS
Medscape Survey: 2 of 5 Physicians Report Burnout
Medscape surveyed 12,339 physicians in more than 29 specialties from Aug. 30 to Nov. 5, 2020. Results:
42% of physicians are burned out—no change from prior year. The top 5: Critical care (51%), Rheumatology (50%), Infectious diseases (49%), Urology (49%), Pulmonary medicine (48%); lowest dermatology (29%)
Female physicians feel more burnout than male physicians (51% vs. 36%)
79% said they felt burnout prior to the pandemic vs. 21% since the pandemic began
To remedy their burnout, 45% said increased compensation to reduce their financial stress is needed—more than any other solution options.
“Death by 1000 Cuts’: Medscape National Physician Burnout & Suicide Report 2021”; January 22, 2021; Medscape
December 2020 Economic Update: Household Income, Savings Increase
Per the Commerce Department December Report last week:
The U.S. economy grew at 4% in the 4th quarter, 2020 resulting in a 3.5% economic contraction for the full fiscal year ($473 billion)—the worst year for the economy since 1946.
Consumer spending fell 0.2% in December, marking the second straight monthly decline. Households cut spending broadly on goods, particularly big-ticket items such as cars and household appliances, while spending on services rose only slightly.
Slower spending has left Americans with historically high savings: $1.4 trillion in first 9 months of 2020, the highest since 1975.The personal savings rate rose to 13.7% last month vs. pre-pandemic level of 8%.
The jobless rate of 6.7% in December is higher than the February level of 3.5%.
Year 3 Performance Report: Comprehensive Primary Care Plus Shows Limited Success
According to the Year 3 Performance Report for 2019 issued January 19 by CMS, the Comprehensive Primary Care Plus (CPC+) payment model increased Medicare spending instead of lowering costs, without notable impacts on improving quality.
“Comprehensive Primary Care Plus Year 3 Performance Reports”; January 19,2021; CMS
West Health-Gallup Poll: Lowering Health Costs Top Concern
Per the latest West Health-Gallup Healthcare Survey of 3100 U.S. adults conducted Dec. 14, 2020-Jan. 3, 2021:
70% of U.S. adults say lowering health insurance premiums should be a high priority for the Biden administration followed by lowering drug costs (66%), reducing the uninsured rate (63%), expanding care for older adults (58%), and expanding childcare for working parents (53%).
27% of Americans think the management of the pandemic is heading in the right direction: it tops all other areas including the economy (23%), immigration reform (18%), climate change (15%) and the cost of healthcare, which only 8% of people think is going the right way.
Americans are three times more likely to believe the COVID-19 pandemic is headed in the right direction than the cost of healthcare (27% vs. 8%).
“In U.S., Most Say Reducing Cost of Care High Priority for Biden”; January 28, 2021; Gallup
DOJ: In 2020, 80% of all False Claims Act Recoveries Came from the Health Care
On January 14, 2021, the U.S. Department of Justice (DOJ) reported its False Claims Act (FCA) statistics for fiscal year (FY) 2020:
$2.2 billion was recovered from both settlements and judgments in 2020, the lowest level since 2008 and almost $1 billion less than was recovered in 2019.
80% of all recoveries—amounting to almost $1.9 billion—came from the health care and life sciences industries. The biggest category: improper patient co-pay amounts and illegal kickbacks from drug companies.
The number of government-initiated cases against health care entities doubled from 2019 to 2020 and was at the highest level ever reported.
“Justice Department Recovers Over $2.2 Billion from False Claims Act Cases in Fiscal Year 2020”; January 14, 2021; DOJ
KFF: 15 Million Eligible for Special Enrollment
Nearly 15 million Americans who are currently uninsured are eligible for coverage on the Affordable Care Act marketplaces, and more than half of them would qualify for subsidies, according to Kaiser Family Foundation brief. Key findings:
Of the 15 million people eligible for ACA coverage, 4 million are eligible for a free high-deductible plan, 4.9 million qualify for a subsidized plan and 6 million do not qualify for any subsidy.
Marketplace eligible uninsured people are somewhat more likely to be male (56% vs. 50%), Hispanic (29% vs. 20%), young adults (38% vs. 25%), and/or working in the fields of arts, entertainment, recreation, or construction.
“Marketplace Eligibility Among the Uninsured: Implications for a Broadened Enrollment Period and ACA Outreach“; January 27, 2021; Kaiser Family Foundation
Study: Limiting Seniors’ out of Pocket Costs for Insulin Improved Adherence
One-third of Medicare beneficiaries had diabetes in 2016, up from 18% in 2000. More than 3 million were taking insulin at a cost of $13.3 billion to Medicare and beneficiaries. Beneficiaries’ mean out-of-pocket spending on insulin has doubled over the last decade, raising concerns about access to an essential medication. The Centers for Medicare & Medicaid Services (CMS) recently announced a voluntary program—the Senior Savings Model—to test the effect of limiting Part D beneficiaries’ out-of-pocket spending on insulin to no more than $35 per month starting in 2021. Findings:
“In this study, mean out-of-pocket spending on insulin increased considerably in the coverage gap for individual plan enrollees, which was associated with a substantial reduction in adherence for some beneficiaries. Capping out-of-pocket spending on insulin at $35 per month, as required by the Senior Savings Model, will substantially reduce cost sharing for people who use insulin in the coverage gap… improve insulin adherence for some beneficiaries.”
Erin Trish, Katrina Kaiser, Geoffrey Joyce “Association of Out-of-Pocket Spending With Insulin Adherence in Medicare Part D”; January 26, 2021; JAMA Network