Mar 11, 2019

Axios Vitals

Good morning. In case you missed who won Saturday's Carolina-Duke game, here ya go.

1 big thing: The push to raise the smoking age

Illustration: Aïda Amer/Axios

A diverse and growing coalition is pushing Congress to raise the federal age limit for buying tobacco products from 18 to 21. It's even attracting some industry support, potentially as a way to help avoid a regulatory crackdown on e-cigarettes.

The big picture: Seven states and nearly 450 cities have already raised their smoking age. The change is gaining more steam in Congress partly due to the rise of youth vaping and FDA commissioner Scott Gottlieb's aggressive response to that trend.

Where it stands: Democratic Sen. Brian Schatz and Republican Rep. Robert Aderholt previously proposed raising the age limit to 21, and there's a bipartisan push to try again.

  • Gottlieb has also expressed support for the move.
  • Chatter on the subject is "all over the place," said Rep. Greg Walden, the top Republican on the House Energy and Commerce Committee.
  • Two big industry leaders — Juul and Altria — are also on board. (Altria has invested in Juul.)
  • Raising the smoking age "is the most effective action to reverse rising underage e-vapor usage rates," Howard Willard, chairman and CEO of the Altria Group, wrote last month in an op-ed in The Hill.

The other side: There's plenty of resistance. "I wouldn't do that," said Sen. Richard Shelby, chairman of the powerful Appropriations Committee.

Go deeper.

2. Everyone's making money off of drugs
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Data: The Pew Charitable Trusts; Chart: Lazaro Gamio/Axios

As various members of the drug supply chain blame one another for rising prescription drug costs, they're all making a lot of money off of said drugs.

  • Between 2012 and 2016, net spending on drugs sold in pharmacies rose from $250.7 billion to $341 billion, according to a new Pew analysis.
  • Pharmacy revenue more than doubled, and the profits of pharmacy benefit managers and drug manufacturers also increased.

While it's true that patients' discounts increased, that didn't stunt the growth in what people pay for drugs, mostly via premiums.

  • PBMs passed a greater share of their rebates on to their customers, but growth in the size of the overall pie meant that their profits held steady all the while. And other revenue streams skyrocketed at the same time.
  • Meanwhile, manufacturers significantly increased the value of patient discounts, but net sales still increased.

The bottom line: All of these profit increases are eventually borne by all of us through premiums, taxes and out-of-pocket costs.

3. Blues insurer pockets $1.7 billion tax refund

Health Care Service Corp. didn't pay a dime in federal taxes in 2018, according to its latest financial report.

  • Instead, the health insurance conglomerate received a $1.7 billion tax refund, which swelled the company's net profit to $4.1 billion, my colleague Bob Herman reports.

The big picture: As Axios reported last year, the Blue Cross Blue Shield companies were on track to retain huge sums of money in 2018 due to the Republican tax overhaul and the growing profitability of their health plans. HCSC was among the biggest winners.

By the numbers: HCSC, which is the parent of the Blues plans in Illinois, Montana, New Mexico, Oklahoma and Texas, tallied a net profit of $4.1 billion on $35.9 billion of revenue in 2018 vs. $1.3 billion net profit on $32.6 billion of revenue in 2017.

  • These numbers don't include the fees self-insured employers pay to HCSC for administrative work.
  • A separate financial filing shows the company's plans in the ACA marketplaces were extremely profitable last year: Just 64% of their premiums were spent on medical care, resulting in almost $2.7 billion in gross profit.
  • David Anderson, a health care researcher at Duke University, recently wrote that ACA plans likely will have to pay rebates back to consumers this year because they've set their premiums too high, which occurred in part to offset the uncertainty from the Trump administration.
  • HCSC said in a statement that it would pay any rebates consistent with federal law and that it "experienced record customer retention" last year.

Go deeper: Blues plans lobbied heavily to get tax reform over the finish line.

4. FDA responds to report of secret database

The FDA publicly swung into action Friday after Kaiser Health News illuminated a secret database that kept serious safety issues out of the public eye, Sam Baker writes.

How it works: The FDA maintains a public database of injuries or other problems caused by medical devices. It's a valuable tool for researchers, and also for doctors, who want to assess devices' safety before using them in patients.

  • But KHN reported last week that the FDA also has a separate reporting system, whose contents are not publicly available. Roughly 100 products are allowed to use that channel, which has collected more than 1 million reports since 2016.
  • Doctors and researchers don't know about issues raised in those reports; a former FDA commissioner told KHN he didn’t even know the system existed.

Driving the news: A mountain of reports about surgical staples and staplers have piled up in the secret system, outside of public view, leaving doctors unaware of the products' risks.

  • "I don't want to sound overdramatic here, but it seemed like a cover-up," said one doctor who queried the FDA's public database — and came up empty — after experiencing problems with a surgical stapler.

A day after that story ran, the FDA sent a letter to doctors saying it's concerned about the safety of surgical staples and staplers.

The agency said it has received reports of 366 deaths, over 9,000 serious injuries and over 32,000 malfunctions.

5. While you were weekending
  • The Agriculture Department and the FDA have agreed that lab-grown meat will be regulated, Axios wrote.
  • 23andMe announced this weekend that it will begin telling its customers how their DNA impacts their chances of getting type 2 diabetes. Stat News dug into whether this is useful.
  • The NYT reports on an emerging new class of twins: semi-identical.

Thanks for reading, and have a great week! Tips, feedback and commentary on tonight's season finale of "The Bachelor" are very welcome at