Feb 7, 2020

Axios Vitals

By Caitlin Owens
Caitlin Owens

Good morning. It's actually Friday, and to reward ourselves for making it through this historic week, we can all watch another Democratic debate tonight.

Today's word count is 746, or a 3-minute read.

1 big thing: Decision on Anthem-Cigna lawsuit is imminent

Illustration: Sarah Grillo/Axios

The Delaware court that oversaw the trial between Anthem and Cigna over their botched health insurance merger expects to make a ruling on the lawsuit by the end of this month, Cigna CEO David Cordani told investors Thursday.

Why it matters: Whatever the resolution is, shareholders and people who get health insurance through the losing company ultimately will be stomaching a very large payout, Axios' Bob Herman reports.

Where it stands: Anthem alleges that Cigna owes $20 billion in damages, and Cigna alleges that Anthem owes $13 billion in damages plus another $1.85 billion in merger termination fees.

Between the lines: Cordani told investors during Cigna's earnings call that the court will make a decision by the end of February, and said "we feel very strong about our position relative to our contractual responsibility and contractual ability to collect our break fee."

  • Anthem did not respond to a request for comment. But Cordani's mention of the $1.85 billion termination fee, and not the larger damages, raises questions about whether the court will put much weight to either company's claims of damages.

The bottom line: This is one of the wildest corporate fights in health care — a spat that involved accusations of sabotage and stealing health insurance customers.

  • Anthem and Cigna are still extremely profitable, with each insurer reporting 2019 earnings of about $5 billion.
  • But if either company has to pay maximum damages, multiyear profits would be erased, and employers and consumers who played no role in the feud could be on the hook for higher health care premiums and fees to make up for any payout.
2. Trump's viral boom

Illustration: Aïda Amer/Axios

The Wuhan coronavirus outbreak is already scuttling supply chains and wreaking havoc on companies around the world that do business in China, but if analysts' projections are correct, the rebound from the virus could help propel the U.S. economy to new heights right around the time of the 2020 presidential election, Axios' Dion Rabouin reports.

Why it matters: With President Trump touting the stock market's performance and jobs growth as key accomplishments, that bounceback could play a major role in the election's outcome.

What's happening: S&P Global expects the outbreak to "stabilize globally in April 2020, with virtually no new transmissions in May."

  • And most economists predict the world will get back to business as usual by the summer — and make up for lost time with accelerated economic growth in the second half of the year.

What we're hearing: "We're likely to return not just to normal but above normal because of the U.S.-China trade deal," Kristina Hooper, chief global market strategist at Invesco, tells Axios.

Plus, U.S. economic data had been strengthening ahead of the outbreak: Last month the all-important services sector notched its best reading since September; consumer confidence has been holding at historically high levels; and a private payrolls survey released Wednesday showed the highest job growth in five years.

Go deeper.

3. Coronavirus researchers to meet in Geneva

The World Health Organization says it will host a "major meeting" with researchers and health agencies from around the world on Tuesday to address the coronavirus outbreak, Axios' Courtenay Brown writes.

  • The goal: To set priorities and fast-track the development and evaluation of diagnostics, vaccines and treatments, plus ensure accessibility for vulnerable populations, the WHO said.

Why it matters: Thousands of people have been infected, and the death toll is rising. There is no proven treatment or vaccine.

  • Drug makers are already ramping up research. Gilead is testing one drug in Wuhan, the epicenter of the outbreak. China applied for a patent on the use of the drug.
  • What the WHO decides won't stop individual countries or companies from going in their own directions, especially if they've started already, per Axios' Eileen Drage O'Reilly. But its recommendations will likely receive the lion's share of global funding.
4. CEO turnover at a surprise billing firm

Envision Healthcare CEO Chris Holden has departed the physician staffing company, and no successor has been chosen, the company said this week.

Why it matters: Envision, which was bought out by private equity firm KKR in 2018, is the parent of an ER staffing company that has become notorious for its practice of sticking patients with unexpected out-of-network bills, Bob reports.

  • Envision and KKR did not say why Holden left, but federal and academic scrutiny of surprise billing has put Envision and other similar firms in the public's crosshairs — and has forced the firms to lobby against any aggressive federal action.
5. Senators ask about coronavirus' impact on drugs

Sens. Marco Rubio (R-Fla.) and Chris Murphy (D-Conn.) sent a letter Thursday to the Food and Drug Administration asking for assurance that the coronavirus won't affect the supply chain for American food, pharmaceuticals or medical supplies, Axios' Marisa Fernandez writes.

The big picture: The Centers for Disease Control and Prevention has already asked U.S. health care providers and the public to not stock up on medical masks and other supplies while the risk of coronavirus inside the U.S. remains low.

What they're saying:

"[School] closures, combined with the possibility of infected workers, could limit the ability of Chinese manufacturers to maintain the production capacity needed to keep pace with global demand. Given the strain this virus has placed on China's healthcare system, we are concerned there could be reduced resources available to U.S. healthcare providers that rely on products manufactured in China."
— Sens. Marco Rubio and Chris Murphy

Go deeper: Coronavirus fears spark run on surgical face masks in U.S.

Caitlin Owens