July 22, 2019

Good morning. There are sentences, and then there are sentences. This is very much the latter: "The irony is, if we slaughtered our goats, we could do goat yoga."

And on that note, today's Vitals is 735 words, or a 3-minute read.

1 big thing: How Big Pharma works

Pharma CEOs, including AbbVie's Richard Gonzalez, testify on Capitol Hill. Photo: Win McNamee/Getty Images

Humira is the world’s most profitable drug, but it’s also a prime example of Big Pharma's business model, as Sy Mukherjee lays out well in a big Fortune story.

The big picture: “These companies became like great big record labels: reliant on talent spotters going out and finding new artists,” SVB Leerink analyst Geoffrey Porges tells Fortune.

Details: AbbVie, which now sells Humira, did not invent the drug. It bought the smaller biotech that did.

  • Once it owned Humira, AbbVie protected it with a thicket of patents — roughly 136 of them, and it has aggressively sued to protect those patents. It has also raised its list prices every year and spent big on marketing.
  • And now, with Humira competition inevitably approaching, AbbVie is buying Allergan, where it will benefit from the lucrative market for Botox and other cosmetic products.

This is increasingly how the industry works.

  • Small biotechs patented two-thirds of the novel drugs the FDA approved last year; Big Pharma companies only developed one-quarter of them.
  • Most Big Pharma companies are expected to reduce their research and development budgets.

The bottom line, per Mukherjee: “Hundreds of millions go to marketing and legal-fortress building, while innovation and scientific discovery — ostensibly the beating heart of the biopharmaceutical industry — is often imported from the outside.”

Go deeper:

2. The opioid crisis' many enablers

Photo: Cory Clark/NurPhoto via Getty Images

With every passing day, we get more insight into just how willing the health care industry was to let the opioid crisis keep getting worse, as powerful painkillers flooded pharmacies nationwide.

“I don’t know how they can even house this many bottles to be honest,” a Walgreen's employee tasked with reviewing suspicious shipments wrote in 2011, referring to a Florida store that was ordering 3,271 bottles of oxycodone per month — more than 1 bottle per local resident per month.

Callousness in the supply chain: The Washington Post captures this exchange between Victor Borelli, a national account manager for Mallinckrodt, and Steve Cochrane, the vice president of sales for KeySource Medical:

  • "'Keep ’em comin’!' Cochrane [wrote]. 'Flyin’ out of there. It’s like people are addicted to these things or something. Oh, wait, people are ...'"
  • "Borelli responded: 'Just like Doritos keep eating. We’ll make more.'"

The Post also taps into the sheer difficulty of pinpointing a single villain in an epidemic with many, many enablers:

  • "It appears that failures mark every point along the supply chain — from manufacturers to distributors to pharmacies to the doctor all too ready to write a script."

What's next: Some of these communications were released as part of the large, consolidated civil suit pending before a judge in Cleveland, which is slated go to trial in October if no settlement is reached before then.

3. The cost of unnecessary ER visits

We waste more than $30 billion per year on emergency-room care that could be better delivered in a primary-care setting, according to new data out today from UnitedHealth Group.

By the numbers: According to United's analysis of its own claims data, about two-thirds of ER visits are avoidable, and those visits cost on average $1,800 more than they would at the appropriate venue.

My thought bubble:

  1. The use of the ER for primary care is often treated as a thing that happens mainly in lower-income areas with lower health literacy and worse access to primary care. But United is analyzing claims from people with employer-based insurance, who tend to be wealthier.
  2. No one has yet figured out a good way to solve this problem without putting an unreasonable burden on patients who might be experiencing an actual emergency.

4. Gruber backs a public option

Photo: Saul Loeb/AFP/Getty Images

Jonathan Gruber, the MIT economist who helped design the Affordable Care Act, isn't on board with "Medicare for All." He said in a Fox Business interview Friday that he prefers the public-option approach outlined by former Vice President Joe Biden.

  • "If you can’t afford to have a backyard, you got a public park to go to,” Gruber said. “I think the same thing should be true with health insurance. If you can’t afford your private insurance, there should be a public option for you to go to.”
  • “We need more government involvement to ensure that the broken health insurance market provides care for everyone,” he said. “That doesn’t mean Medicare for All necessarily, but it does mean more steps forward.”

5. While you were weekending ...

  • Defrauding health insurance companies is ... surprisingly easy? That's the takeaway from a really wild ProPublica investigation into one such scammer.
  • Turning 26 and aging off of your parents' health insurance can be a death sentence for people with diabetes, because insulin is so expensive, BuzzFeed News reports.
  • Amazon is threatening lawsuits against Surescripts over PillPack's ability to access patient health data, CNBC's Christina Farr scoops.

Thanks for reading. Don't forget to send your best tips to [email protected].