Jul 19, 2019

Axios Vitals

Good morning ... CVS has finally gone too far — literally.

Today's Vitals is 648 words, or a less than 3-minute read.

1 big thing: UnitedHealth's prowess only grows

UnitedHealth's headquarters in Minnesota. Photo: Bruce Bisping/Star Tribune via Getty Images

If you own stock in UnitedHealth Group, you essentially own a slice of a private-sector empire — and a very profitable one at that.

And yet, United's stock price fell by 2.3% yesterday after the company released its second-quarter earnings.

  • Wall Street is quibbling over the "quality" of UnitedHealth's earnings beat. But that doesn't really matter, my colleague Bob Herman writes.

The big picture: UnitedHealth remains the most financially powerful private entity in the U.S. health care system.

  • 39 million people had full-scale medical coverage through UnitedHealthcare as of June 30. About two-thirds of its insurance premium revenue comes from government programs.
  • UnitedHealth continues to expand OptumRx, which is part of the pharmacy benefits triumvirate that controls how prescription drugs are paid for.
  • Perhaps most importantly, UnitedHealth increasingly is becoming your surgeon or doctor, and now it's taking over back-end operations for hospitals.

And that market power also leads to political power.

  • UnitedHealth retains 9 outside lobbying firms in addition to its own stable of state and federal lobbyists.
  • On the federal level, they have aggressively worked to eliminate the Affordable Care Act's tax on health insurers, won the battle over the drug rebate rule and have pushed for other things like expanding short-term plans.
  • UnitedHealth is also part of the national coalition to kill "Medicare for All" and actively denounced Medicare for All earlier this year.

The bottom line: Wall Street's reactions shouldn't obscure just how much power UnitedHealth Group has and continues to accumulate.

2. We can't just take Canada's drugs

American politicians love to say they'll let Americans import cheaper prescription drugs from Canada. But there's a problem: Canada.

Canadian officials' internal briefings say that the country "does not support actions that could adversely affect the supply of prescription drugs in Canada and potentially raise costs of prescription drugs for Canadians," according to documents obtained by Reuters.

Importation into the U.S. would fit that bill. If we really did begin importing large quantities of drugs from Canada, its domestic supplies could shrink.

  • Pharmaceutical companies would have every incentive to either limit Canada's supplies, to ensure that not many pills make it back across the border, or to try to raise their prices in Canada.

There are other problems, too, despite importation's political popularity here.

  • The FDA has consistently resisted large-scale importation efforts, saying it can't adequately guarantee those products are safe.
  • Drugmakers' purchasing contracts in Canada also often prohibit the practice, per Reuters. (Canada's federal health care does not cover prescription drugs — they're covered through a mix of provincial programs and private insurance.)

My thought bubble: If the U.S. wants to set some standards about how much it will pay for drugs, we always have the option of setting our own rules rather than importing Canada's.

3. A "value-based care" success story

A new Harvard study finds that Blue Cross Blue Shield of Massachusetts is among the handful of entities successfully testing a model of value-based care.

How it works, via the Boston Globe: "Blue Cross's payment program gives doctors a fixed amount of money to take care of their patients. When doctors stay on budget and improve care, they can earn bonuses. If not, they can be penalized."

  • That's pretty similar to the risk-sharing models Medicare is attempting.
  • Over 40% of Massachusetts patients are covered by one alternative payment model or another, per the Globe.

And it works: The Massachusetts Blues' program was associated with a 12% savings, while quality held steady or improved, according to the Globe.

4. 1 🤢 thing: Testing a new seasickness drug


Dramamine has a pretty good corner on the market for motion-sickness drugs. Let's say you want to sell a competing drug. You're going to have to do clinical trials — and that means you're going to have to get a lot of people seasick.

That's the challenge Vanda Pharmaceuticals took on, when it sent 126 participants with a history of motion sickness out into the Pacific, according to a fun Bloomberg story about this process.

  • "Researchers elected to use a single-hull boat for more variability because catamarans, which have two hulls, are considered to be more stable," Bloomberg reports — in other words, they chose to maximize the seasickness.
  • But hey, there's only one way to know if a seasickness medicine works, and it's seasickness.