Private equity may have an opioids problem
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Sens. Ed Markey (D-Mass.) and Mike Braun (R-Ind.) want more information on private equity ownership of methadone clinics, and how those investments may impact both clinical decisions and lobbying efforts to restrict broader methadone distribution.
Why it matters: Private equity could have an opioids problem, after years of gobbling up abuse treatment facilities.
- The senators — who don't see eye-to-eye on much — this week sent letters to nine PE firms after earlier letters to their portfolio companies were met with more noise than signal.
The big picture: Private equity has stakes in over 29% of all methadone clinics, which is higher than its penetration in other health-care sectors. The largest provider, Acadia Health, previously was owned by private equity before going public and remains chaired by that firm's founder and managing partner.
- This is a major change from how the industry used to work when it was dominated by nonprofits.
- Private equity's interest is driven by three factors: (1) A steady stream of customers, due to America's unending opioid epidemic; (2) A rule change in 2020 that required Medicaid and Medicare to cover treatment at methadone clinics; (3) Decades-old rules that only allow methadone to be distributed at such clinics, rather than at regular pharmacies.
Zoom in: Markey and Indiana's governor-elect Braun have co-sponsored a bill, along with a bipartisan group of other legislators, that would broaden accessibility to methadone — an opioid itself, but one that's been found to significantly reduce overdose deaths.
- The bill would allow a subset of U.S. physicians — only around 7,000, including ones already working at methadone clinics — to prescribe methadone that could be picked up at regular pharmacies. This could be a godsend for those who don't live near a clinic since those patients must pick up new methadone doses daily.
- But they've run into fierce lobbying opposition from a group called "Program, not a pill." It's funded by many of the PE-backed clinic operators and argues that pharmacy distribution would be dangerous because there isn't adequate oversight, nor a guarantee of associated counseling and related services.
- Now Markey and Braun want to learn more about the profit motives of these clinics, particularly given a recent NY Times investigation into Acadia that alleges rampant fraud. Namely that those related services aren't always provided, even though they're billed.
Axios reached out to several of the private equity firms and individuals that received letters, but none agreed to comment.
The bottom line: It's not surprising that private equity may be trying to protect market share. But sometimes the stakes should outweigh the share.
