Quick Brian Reid Scheduling Note: I’ve only missed a couple of J.P. Morgan Healthcare Conferences since 2010 (with the exception of the pandemic years, which we don’t talk about).
But I won’t be making the trek this year. I have family commitments on the second day of the confab. Even if I could find a way to get the 2,700 miles between Point A and Point B, the chance of a low-grade travel catastrophe is high enough that I’m best served staying put.
That doesn’t mean I won’t be paying attention. If you have something that I should be looking at, or if you hear something cool — either from the dias or over drinks at the Clift — please shout.
And I still want to make sure January is a month for networking, so if you are in or around Boston after the New Year, drop me a line so we can connect.
I mean, it won’t be the same as trying to find a place to sit in some overcrowded hotel lobby, but I’ll show up massively overdressed if you really want the JPM vibe.
Yesterday afternoon, I drafted a sober and thoughtful reflection on the PBM reform provisions in the end-of-year spending bill that went beyond my initial recitation of the details.
But by the time I went to dinner, that bill — a meticulous compromise — had been blown up for political reasons that I really don’t want to understand.
I have no idea if we’ll get PBM reform before the government is due to shut down tomorrow night, though the prospects seems dim.
And no one else seems to have any idea what comes next, either.
Do I have a rosy take on this? No, I do not.
But I don’t want to be a downer, so here’s some good news: murder hornets are no longer a threat here in the United States. I’ll take my dubs where I can get them.
The National Health Expenditure numbers for 2023 dropped late yesterday. This is a foundational dataset that is essentially the authoritative description of health care spending in the United States. It has a lot of really big numbers in it.
The topline number is $4,900,000,000,000. That’s $4.9 trillion, which is the size of all health spending. That’s 17.6% of the economy. Spending is up 7.5%, driven largely by a $140 billion increase in spending on hospital services. At $1.5 trillion, hospital spending remains the biggest chunk of the health care economy.
And what of prescription drugs?
Retail meds** clocked in at $449 billion, or 9.2% of the overall health care bill. That’s up 11.4%. The increase is mostly about more use of medicines (a good thing!) and a move from lower-price to higher-priced medicines (mostly a good thing!).
The buried lede, though, is that prices for pharmaceuticals only went up 2.3%. That’s below inflation, and it follows a 0.5% increase last year. And, for the four years before that, drug prices went down.
That’s a pretty good six-year record.
** CMS considers hospital- and provider-administered drugs within the “hospital” and “provider” categories. When the NHE data talks about drugs, it’s retail pharma. Adjust your expectations accordingly.
Let’s say that Donald Trump calls you down to Mar-a-Lago early next month.
He has a job for you. He’s heard that U.S. hospitals are struggling. He wants you to fix the problem.
“Gee, Mr. Trump,” you’d probably say. “That’s a tall order. This is a huge part of the economy. What kind of resources would I have?”
And Trump would look you in the eye and say: “I’ll give you a quarter-trillion dollars. You have four years.”
So what would you do?
I mean, the first thing you should do is read this great new report from KFF. It makes clear that hospitals, on average, are doing kind of OK, but there are some notable gaps. Rural hospitals are indeed struggling. Community health centers could use some resources. Providers serving a lot of Medicaid patients are often in the red.
I imagine — because you’re thoughtful Cost Curve readers — that you’d work to create a program that could inject huge sums of money into those places to make the most dramatic impact.
Remember, you have $250,000,000,000** to work with. But because that’s a lot of money, you’d probably include a lot of oversight to reduce the temptation for folks to game the system.
I’m not quite sure what system you all would come up with, but it wouldn’t look anything like the 340B drug discount program, which is poorly targeted to the actual needs and has a Lord-of-the-Flies-style oversight system.
Over the next four years, that program is on pace to generate way more than a quarter-trillion in profits (hence the basis for today’s hypothetical Trump meeting) for the nation’s hospitals, and yet I have very little confidence that it will solve the problems we have today.
And that’s the real issue with 340B: Even if you strip out the lawsuits and the contract pharmacy disputes and the patient definition and the duplicative discount concerns***, even if you accept that the program should be about helping hospitals and not patients,**** you’re left with a program isn’t remotely doing a good job of helping the hospitals that are underwater.
That makes it hard to take broad hospital-industry concerns about 340B seriously.
If the point of the program is to subsidize struggling facilities that are providing critical services to vulnerable patients, then the gaming of the system by big hospitals should be a way bigger scandal. Especially for other hospitals.
** I had to triple-check the number of zeroes here. It’s a big number.
*** Let me be clear: these are all big, legitimate issues. I’m just trying to make a broader point!
**** Again: this is a rhetorical flourish. I don’t accept that premise! IMHO, a drug-discount program should help deliver discounted meds to those who need them the most.
The ICER “Fair Access” report is out. This is a noble effort to see if insurance plans throw up obstacles to the (generally very few) medicines that ICER deems a good deal. The general conclusion seems to be that, yup, payer policies matched ICER recommendations, though the sample set is small enough that I’m not prepared to draw any broad conclusions. STAT wrote it up. For a thoughtful critique, NPC has posted their thoughts, too.
A federal judge has blocked West Virginia’s 340B contract pharmacy bill until legal action brought by PhRMA and two drug companies against the state is resolved. It’s a reprieve in an area where manufacturers have struggled in the courts.
Cost Curve is produced by Reid Strategic, a consultancy that helps companies and organizations in life sciences communicate more clearly and more loudly about issues of value, access, and pricing. We offer a range of services, from strategic planning to tactical execution, designed to shatter the complexity that hampers constructive conversations.
To learn more about how Reid Strategic can help you, email Brian Reid at brian@reidstrategic.com.
