Jan 8, 2019

Axios Vitals

By Caitlin Owens
Caitlin Owens

Good morning ... Maybe I'm just a Luddite, but when I think about the universe of "immersive experiences" I could potentially have in this world, the toilet is very literally at the bottom of the list. Actually I might be more likely to pay money not to have a fully immersive toilet experience.

1 big thing: The opioid crisis at the border
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Data: U.S. Customs and Border Protection drug seizures for fiscal years; Note: 2018 figures reflect Oct. 1, 2017 – Aug. 31, 2018. Fentanyl figures for ports of entry reflect Oct. 1, 2017 – July 31, 2018; Chart: Naema Ahmed/Axios

With Washington focused on the U.S.' southern border in terms of immigration, my colleague Caitlin Owens has a reminder this morning that a different form of border security is a very real part of combating the opioid epidemic.

The big picture: Building a wall wouldn't do much to stop opioid smuggling through legal ports of entry, but there's a more bipartisan effort underway to improve interdiction capacity at the border.

  • Most heroin seized in the U.S. comes from Mexico, according to a 2018 Drug Enforcement Administration report.
  • While fentanyl exported from China is more pure than Mexican fentanyl, the U.S. seizes higher quantities of Mexican fentanyl. There's also evidence that Mexican traffickers order fentanyl from China and smuggle it into the U.S. themselves.
  • Some opioids — especially fentanyl from China — come into the U.S. through the international mail system, but most drug smuggling attempts occur at and between southwest entry points.

Where it stands: The Senate's Homeland Security spending bill includs funding to enhance drug detection technologies, modernize Customs and Border Patrol infrastructure and expand the number of agents dedicated to opioid trafficking enforcement.

Go deeper.

2. Day 1 at #JPM19

Bob Herman is back in San Francisco for the annual J.P. Morgan health care confab, which is in and around the crowded, sweaty Westin St. Francis Hotel. Here are some of the big takeaways from Day 1.

Drug deals are in demand.

  • Biotech and pharmaceuticals are often the main attractions for the conference crowd. Eli Lilly’s $8 billion purchase of Loxo Oncology, following Bristol-Myers Squibb’s $74 billion buyout of Celgene, had investors hopeful that biotech companies — whose stocks were hammered at the end of last year — still could command gigantic takeout prices from eager big pharma companies.

But pharma can’t escape drug pricing.

  • Regeneron CEO Leonard Schleifer, one of the wealthiest and most outspoken pharmaceutical executives, most outspoken pharmaceutical executives, said he was confident the Trump administration would reward the good-behaving drug companies without “killing the goose,” while attempting to “stop some of the nonsense” of drug companies routinely hiking list prices. Keep that in mind, considering Celgene raised the price of its blockbuster drug Revlimid on the same day it was acquired by Bristol-Myers Squibb, according to Bloomberg.

Tax reform is an afterthought.

  • Last year, the entire conference was doing backflips over the massive corporate tax cuts and prospect of repatriated cash. Because Wall Street has now baked in those perpetual tax benefits, it was hardly mentioned.

Bob ran into former Anthem CEO Joe Swedish.

  • Apparently, he started his own private equity firm that’s investing in tech and health care services.
3. An especially bonkers hospital bill

The uproar over surprise hospital bills usually revolves around cases in which a patient goes to an in-network hospital but is seen by an out-of-network doctor.

Vox’s Sarah Kliff takes it to another level, though, with a story on Zuckerberg San Francisco General Hospital, which does not accept any private insurance — leaving insured patients with staggering and unexpected bills.

Details: Zuckerberg — named for Mark Zuckerberg after he made a $75 million donation — is a public hospital, and San Francisco's premier trauma center.

  • The city of San Francisco sets the hospital's prices, which sure seem high, but the city didn't force Zuckerberg's ER not to take any private insurance.

What they're saying: The hospital told Vox that this is a common arrangement, necessary to subsidize care for the uninsured and Medicaid beneficiaries.

  • But it is not common for an entire emergency department not to accept insurance, or for consumers to get a surprise bill — in this case, for more than $20,000 — because the ER itself was out-of-network.

Why it matters: This is an extreme example of a well-established problem: It's impossible to look up your provider network when you're having a medical emergency.

  • It's the emergency room where patients are especially likely to end up on the hook for thousands of dollars, even with insurance, all thanks to contract disputes among doctors, hospitals and insurers that patients couldn't care less about.
4. Why drug prices keep rising

Two factors contribute to rising drug costs — price increases for existing drugs, and new drugs coming to market with high price tags. Each of those factors affects different parts of the market, according to a study published in the latest issue of Health Affairs.

The big picture:

  • New products largely drive the cost increases for generics and specialty drugs, the study found.
  • But price hikes on existing treatments drive the rising cost of brand-name drugs.

My thought bubble: A lot of the political debate over drug prices falls along these same lines.

  • The pharmaceutical industry would rather have a conversation about new specialty drugs that carry high price tags, but which often work a lot better than other, older treatments.
  • But the industry’s critics point to steep price hikes on old drugs — insulin is a prime example, as was the EpiPen — that are getting more expensive even though they’re not changing.
  • We’ll see plenty of both in 2019.
5. Newsom wants to expand ACA subsidies

California Gov. Gavin Newsom. Photo: Stephen Lam/Getty Images

Newly seated California Gov. Gavin Newsom came out of the gate yesterday with an ambitious health care plan that would, per the Los Angeles Times, impose an individual mandate and expand insurance subsidies to more middle-income people.

Why it matters: California is a traditional leader on health policy, and finding out what's politically possible there will be a good sign of where Democrats might want to turn in other states, or if they regain unified control of Washington at some point.

  • So far, New Jersey is leading the pack among blue states hoping to rebuild a version of the Affordable Care Act similar to what existed before the Trump administration, yet it hasn't necessarily seen great results.

Go deeper: In California's blue utopia, liberal health care dreams stagnate

Caitlin Owens