The Trump administration is cracking down on hospital contracting practices that it alleges are anticompetitive and drive up health care costs.

Why it matters: Hospitals have been the leading contributor to health spending growth in recent years, but policymakers are usually reluctant to go after institutions that are deeply entrenched in their communities — and politically popular.

Driving the news: The Justice Department sued the New York-Presbyterian hospital system last week, saying the nonprofit wrote contracts that forced insurers to put its facilities in their most favored tier and blocked them from offering incentives to patients who seek out lower-priced rivals.

• Similarly, DOJ sued OhioHealth in February over anticompetitive contract restrictions it said force patients to pay higher prices. The department also is investigating contracting at Advocate Health, a Charlotte-based nonprofit, the Wall Street Journal reported.
• Earlier this month, the Federal Trade Commission announced the launch of a new health care task force, arguing that "consolidation and anticompetitive conduct have distorted the economic landscape in many healthcare markets."
• Almost two dozen states now have anticompetitive contracting restrictions on providers and insurers, and DOJ is joining the states, employers and labor unions that have filed similar lawsuits against health systems.

The big picture: Hospital markets are heavily consolidated, giving big health systems leverage in their negotiations with insurers and employers.

• A KFF analysis last week found that in 2024, only one or two health systems controlled the entire market for inpatient hospital care in nearly half of U.S. metro areas.
• Nearly all — 97% — of metro areas had concentrated markets for inpatient hospital care under antitrust guidelines, the same analysis found.
• But health systems are hardly alone when it comes to consolidation and market power. Insurers are increasingly coming under fire for their metamorphosis into giant health care conglomerates that operate as both payers and providers of care.

Keep reading

Eli Lilly is solidifying its role in AI-driven drug development through a $2.75 billion R&D collaboration with a Hong Kong-listed firm that's used machine learning to speed up early-stage drug discovery.

Why it matters: Lilly's deal with Insilico Medicine could speed up the identification of molecular targets driving multiple diseases at the same time and help the U.S. drug giant firm up its pipeline in areas like cancer and metabolic diseases.

• While early-stage drug development typically takes three to six years, Insilico said from 2021 to 2024 it advanced 20 experimental therapies, with an average turnaround of 12 to 18 months per program.
• The deal comes after Lilly said this month that it plans to invest $3 billion in China operations over the next decade.

Driving the news: The agreement gives Lilly an exclusive worldwide license for the development of oral drugs in preclinical development.

• Insilico and Lilly will collaborate on multiple R&D programs focused on targets selected by Lilly.
• Insilico has developed at least 28 drugs using generative AI, with nearly half already at a clinical trial stage, per CNBC.

The companies have had an AI-based software licensing agreement since 2023.

Fewer than half of outpatient facilities for substance use disorder accept Medicare, according to a new HHS report.

Why it matters: Behavioral health issues, including substance use, are rising among older adults: More than a third of Medicare beneficiaries 65 and older had a diagnosis of or used services related to a condition.

• But low reimbursement rates and difficulty finding mental health workers factor into clinics' ability to care for older adults who need behavioral health care, the report found.

Zoom in: Just 44% of substance use treatment facilities accept Medicare coverage, which is the primary insurance payer for older adults in the U.S., according to the analysis of 2023 data.

• 67% of mental health facilities and 66% of mixed facilities take Medicare.

Only one-third of substance use and mental health programs tailor care to older adults' specific needs, per the report.

• That's despite federal health officials' recommendations that seniors get behavioral health care through such programs.

The 2-year-old bird flu outbreak in dairy cattle is waning, but it's still unclear how the virus spreads between animals, making it difficult to entirely eliminate the risk to the public.

The big picture: While vaccines look promising in early tests, agriculture interests and the government may be reluctant to embrace them, according to Science.

State of play: The Department of Agriculture says the last detection of H5N1 in a herd was in mid-December in Wisconsin, though state officials say the virus continues to circulate on farms in some areas.

• That isn't easing concerns about a rebound, especially since researchers have identified a variety of ways the flu could be transmitted, including on the wind, through waste milk fed to calves and even possibly by flies.

As the outbreak hits a lull, some researchers complain that funding has become scarce and USDA has been slow to share its data, Science reports.

The bottom line: Vaccination is widely viewed as the best way to prevent future public health crises.

• But there's lingering suspicion about mRNA vaccines for livestock in some states and the possible effects of vaccination on the export market.

💊 White House efforts to stoke drug industry support for legislation that would codify last year's voluntary drug pricing deals are getting a frosty reception. (Endpoints)

🥗 CMS administrator Mehmet Oz said hospitals will have to follow the Dietary Guidelines for Americans to receive Medicare funding. (Washington Examiner)

💸 Blackstone closed a $6.3 billion life sciences fund that could help accelerate a biopharma financing rebound. (Axios)

👀 A health insurance plan purchased through the Affordable Care Act federal exchange canceled a woman's coverage over a nickel. (WashPost)