Jan 27, 2020

Axios Vitals

Good morning.

Today's word count is 839, or a 3-minute read.

1 big thing: Trump wants to lower seniors' insulin costs

Illustration: Aïda Amer/Axios

The Trump administration is working on a proposal to lower seniors' out-of-pocket costs for insulin, which have nearly doubled over the last decade.

Why it matters: Voters care deeply about prescription drug prices, and if the policy comes to fruition, it could both help seniors afford their insulin and give the administration political points.

Details: The White House, the Department of Health and Human Services and the Centers for Medicare and Medicaid Services are jointly working on the policy.

  • Details are unclear or undecided. One idea is to give insurers an incentive to offer plans with lower cost-sharing, a source familiar said.
  • "The goal is to make sure it's technically sound, and if it helps patients, get it out" as soon as possible, a senior administration official said.
  • A CMS spokesperson declined to comment.

HHS Secretary Alex Azar is recused from the effort because he was previously the president of Eli Lilly, one of three dominant insulin manufacturers.

The big picture: Even as patients are struggling to afford prescription drugs across the board, insulin stands out.

  • It's an old drug whose initial patent was sold for a mere $1. Yet its price continues to rise.
  • One-third of Medicare beneficiaries had diabetes in 2016, and total Part D spending on insulin rose from $1.4 billion in 2007 to $13.3 billion in 2017, according to the Kaiser Family Foundation.
  • Seniors spent, on average, $588 out-of-pocket for insulin in 2016 — nearly double the price they paid in 2007.

Yes, but: Lowering patients' out-of-pocket spending probably wouldn't lower the actual cost of the drug, meaning that it'd get shifted onto taxpayers.

Go deeper: The outrage over insulin prices

2. Self-insured companies no better at cost control
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Data: Kaiser Family Foundation; Chart: Axios Visuals

Conventional wisdom holds that big, self-insured companies do a better job controlling health care costs than firms that rely entirely on insurance companies to provide their workers' coverage.

Why it matters: Although a handful of big self-insured companies get a lot of attention for their cost-control efforts, the data tell a different story: Self-insured and fully insured companies are equally bad at controlling health care costs.

By the numbers: The average family premium for fully insured firms last year was a whopping $20,627.

  • For larger self-insured firms, it was $20,739.
  • There hasn't been a meaningful difference for the past 20 years.

Self-insured firms would seem to have an advantage because they cut out the middleman.

  • Big self-insured firms can contract directly with providers and limit their networks to only cover lower-cost providers.

Yes, but: Most large insured firms have implemented similar strategies. And they buy insurance from the same companies that administer self-insured plans.

  • Big companies also are often spread across the country and the world, which greatly diminishes their bargaining power.

The fundamentals have not changed for decades.

  • Most firms live by the same unspoken rule: Do what you can to control health costs without angering the workers you need too much.
  • That's especially true in strong economies with tighter labor markets.

The bottom line: Even large, self-insured companies with all the advantages still have a poor track record on cost control.

3. A big payday for an opioid distributor CEO

Steven Collis, CEO of drug distributor AmerisourceBergen, made $14.7 million in his company's 2019 fiscal year based on the actual realized gains on his stock, according to new company disclosures.

The big picture: That amount was down from the $18.7 million Collis earned in 2018.

  • But it's still above industry average and comes as the company is mired in thousands of lawsuits that allege it contributed to the opioid epidemic by not properly monitoring the flow of painkillers, Axios' Bob Herman reports.
  • AmerisourceBergen distributed 13 billion opioid pills throughout the country from 2006 through 2014, according to the Washington Post — a fact that has put AmerisourceBergen and other distributors in court.

By the numbers: A $1.9 million cash bonus was included within Collis' total. That bonus was based solely on three adjusted financial metrics and did not factor in quality or the opioid litigation.

  • An AmerisourceBergen spokesperson did not respond to questions about whether the bonuses were appropriate given the company's legal troubles, but said in a statement the company's compensation structure does "not incentivize unnecessary risk-taking."
4. Run on surgical face masks hits the U.S.
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Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Andrew Witherspoon/Axios

Despite reassurances from public health officials that Americans don't currently need to wear face masks as a precaution against coronavirus, many drug stores are selling out, Axios' Jennifer Kingson reports.

Why it matters: While it's not clear how much protection the masks offer, manufacturers are seeing a spike in demand, and the potential spread of the virus in the U.S. is spooking a lot of people.

Yes, but: So far, HHS says there's no need for Americans to panic. While coronavirus "poses a very serious public health threat, the Centers for Disease Control and Prevention (CDC) believes the immediate risk to the U.S. public is low at this time," a department spokesperson said.

  • "However, we fully expect that in the coming days and weeks, we will see more cases of this new coronavirus here in the United States and globally," the spokesperson added.

Go deeper.

5. While you were weekending...
  • Grocery-store pharmacies are closing around the country, partially a result of industry consolidation, the Wall Street Journal reports.
  • Experts are warning that it may not be feasible to contain the coronavirus, STAT reports.
  • Former Rep. Pete Stark, a fixture of health policy for decades, died on Friday.