I don’t have anything insightful or novel to say about the HHS firings today, but I can’t let the moment go unacknowledged. None of this is good, as evidenced by Rob Califf’s dark assessment of the consequences.
BENDING YOUR EAR/ The Future of Cost Curve
So, some news.
I’m launching a paid version of Cost Curve, to be called Cost Curve Apex. It will launch on May 1.
Cost Curve has grown far beyond its origins as a brief wrapup of the news of the day, and Cost Curve Apex will provide the opportunity to deliver more.
The goal is to give paid subscribers …
… more original research on pricing and policy topics
… more Launch Price Communications Reports
… more exclusive interviews with those shaping policy
… more litigation trackers
… more data on Cost Curve’s most-viewed content
… faster delivery
… complete access to the Cost Curve archives
It will also give me more freedom to explore other approaches to content and education where I’m currently constrained.
There will remain a free version of Cost Curve, delivering a must-read summary of the day’s news, along with value-add commentary, each day. But the best stuff — the content that I’m spending hours working through — will be reserved for Apex.
I’m finalizing the cost structure and will share that with you as soon as everything is buttoned up. I’ll offer individual subscriptions and an enterprise option for larger companies that already have dozens of subscribers.
As important as this transition will be, I don’t intend to spend the next month shilling nonstop. Instead, I’d be grateful if you could just make a quick click to express your interest.
INFLECTION POINT/ 340B Costs Employers $36 Billion in Inflated Hospital Bills
One of the harder elements of 340B to explain is the way that the program warps the health care system by providing an incentive for higher prices across the board.
This happens in a number of indirect ways. 340B hospitals benefit most from the most expensive medicines, so drug prices creep up. Non-340B provider groups are at a disadvantage to their 340B competitors, fueling consolidation as more profitable 340B entities absorb their competition.
None of this is particularly controversial, but there’s been limited research on the impact on employers. That’s beginning to change, and this new Health Capital Group analysis, underwritten by the National Alliance, is likely to become required reading.
At its root, the methodology is simple: compare actual negotiated prices across 2,000+ hospitals — stratified by size, inpatient/outpatient prices, and 340B status — and see what patterns emerge.
And patterns do emerge.
340B hospitals are consistently more expensive, with the effect more pronounced at larger hospitals. Add it all up, and employers are paying about 7.5% more for hospital services because of the 340B markup. In aggregate, that means $36 billion in extra spending.
That’s $36 billion in spending that is either eaten by employers or passed along to consumers. It’s purely driven by cost. And it’s not clear that anyone is benefitting from that extra spending.
It’s just cost. Yet another 340B costs that was never intended and that nonetheless falls on a part of the system that could do without the extra spending.
QUICK TURNS/ 🍁💵, 💰💼, and 🧬⚖️
Tomorrow is tariff day, I guess. Word is that pharma-specific tariffs won’t be included, and industry is working to blunt the impact of any drug duties that may be cooked up in the future. But even without targeting industry, the whole effort risks being expensive and disruptive. This new JAMA paper looks at the impact of a 25% tariff on Canadian goods alone, suggesting it will cost industry $750 million, and even if the companies just eat the increased costs, “increasing supply chain fragility” will remain a risk.
I don’t have the bandwidth to track, in-depth, the massive firing across HHS that began today. STAT and Endpoints are likely your best bets. But I found it interesting that the DOGE liaison to HHS is allegedly trying to protect CMS, where he used to work.
Congrats to Express Scripts, which moved to the #1 slot in Adam Fein’s annual PBM rankings. It’s a ranking of “claims managed,” not “consumer love,” so you can feel free to create your own rating system if you don’t like Adam’s. Also of note: smaller PBMs don’t seem to be picking up market share.
I have to admit to having a soft spot in my heart for ideas on how to make the patent system more clear and more fair, but I’m not sure that this proposal — by longtime IP lawyer Alfred Engelberg — is remotely the right approach. Engelberg is pushing what he calls a “one-and-done” solution: Companies would get 12 years, no more, no less, upon FDA approval. That strips out a lot of the incentives to do post-marketing research, and the unintended consequences here are not trivial.
I think it is absurd to characterize the act of gene therapy companies paying for fertility services for patients as a kickback, but a federal judge disagrees. Anything that discourages gene therapy work makes a genuine medical miracle harder to bring to the people who need it the most, so this is a disappointing ruling.
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.
