Dec 21, 2018

Axios Vitals

By Caitlin Owens
Caitlin Owens

Happy Friday! This will be the last Vitals of the year. We'll return to your inbox on Jan. 7. Thank you so much for reading and for all of your tips and feedback. Happy holidays!

1 big thing: The generic drug price problem

Illustration: Sarah Grillo/Axios

Generic drugs are America's solution to high prices for branded drugs, but recent events have raised the question of whether the generics market is working the way it's supposed to.

  • What began as an antitrust lawsuit over two drugs has expanded into an investigation into alleged price-fixing involving at least 16 companies and 300 drugs, the Washington Post reported earlier this month.
  • This week, Sen. Elizabeth Warren (D-Mass.) introduced a bill that would allow the U.S. government to create generics under specific circumstances when competition is lacking.

Between the lines: Sometimes competition does fail, and generic drug prices become too high, experts say. But at the same time, some generic drug makers struggle to turn a profit in the market because prices are so low, complicating the narrative.

  • The FDA is targeting areas with limited generic competition, speeding up approvals of competitors and encouraging new competitors to come into those spaces.
  • But there are also situations in which creating competitive markets can be difficult or slow. Examples include when a drug is difficult to make or when only a small population needs a drug.

The bottom line: High generic drug prices almost always stem from a lack of competition, but what drives this lack of competition can vary.

  • Government manufacturing of generic drugs — as Warren proposed — is one solution that's not going anywhere any time soon, but another idea with more traction is non-profit manufacturers.
2. Hemp is now legal under federal law

The farm bill that President Trump signed into law yesterday legalized hemp, although it will be highly regulated.

  • Hemp is defined as the cannabis plant, which also produces marijuana. However, the distinction is that hemp cannot contain more than 0.3% THC — the chemical that gets people high.
  • The legalization will promote research into hemp's uses, including as a medical product.

What happens next: While 33 states have legalized medical cannabis use, changes in federal law have lagged behind. Some advocates hope this is a step toward larger federal marijuana reforms.

The FDA issued a statement reiterating that it still has the authority to regulate cannabis products, and that it will take enforcement action against companies illegally selling these products.

  • It will also be examining how to make approval pathways for cannabis products "more predictable and efficient," FDA Commissioner Scott Gottlieb said.

Go deeper with Brookings' explainer on the new hemp law

3. Tobacco giant's Juul investment drawing criticism

Illustration: Aïda Amer/Axios

Yesterday's news that tobacco company Altria has invested $12.8 billion in Juul for a 35% stake in the e-cigarette company was not welcomed by everyone.

  • "The company responsible for addicting millions of Americans on cigarettes joining with the company that is responsible for the current skyrocketing rates of youth e-cigarette use and nicotine addiction is deeply concerning," said the American Cancer Society Cancer Action Network in a statement.
  • Juul said that Altria has agreed to certain stipulations as a part of the deal, my colleague Kia Kokalitcheva reported yesterday. "In short, Juul says it's all about cannibalizing Altria's cigarette business from every direction," she wrote.

Flashback: Surgeon General Jerome Adams issued an advisory on Tuesday warning about the "epidemic" of teen e-cigarette use.

  • The percentage of high schoolers that reported vaping in the past 30 days rose by more than 75% between 2017 and 2018.
  • The advisory notes that e-cigarette use by youths may increase the frequency and intensity of future cigarette smoking.
4. The friendly board at CHS

In the world of business press releases, announcing new board directors is extremely ho-hum. But this one released last week by for-profit hospital chain Community Health Systems caught my colleague Bob Herman's eye.

The details: CHS named Elizabeth Hirsch, a former executive at industrial gas company Praxair, as a board member. Hirsch is now the second former Praxair exec to sit on CHS’ board, following John Clerico. But the situation goes deeper than that, with some potential conflicts of interest.

  • Clerico chairs CHS’ compensation committee. Wayne Smith, the CEO of CHS, was a Praxair board member for 17 years and used to sit on Praxair’s compensation committee before the company merged with Linde. That means Clerico and Smith were essentially approving each other’s pay packages — not an ideal governance situation.
  • It’s unclear what positions Hirsch will hold on the board, and it’s also unclear if she, Clerico and Smith know each other.
  • Praxair's latest proxy also shows CHS buys medical oxygen and other industrial gases from Praxair, resulting in $1.3 million to $4.7 million in annual sales for Praxair.
  • CHS did not comment.

Bob's thought bubble: The move raised a few eyebrows among some investors, a community that has soured on the hospital company that is loaded with debt and bleeding money. But these kinds of questionable board practices are common throughout the health care industry.

5. Promising new brain surgery technology

Researchers have developed a hair-thin needle with a tiny camera and a warning system to more safely navigate during brain surgery, according to a new Science Advances study.

Why it matters: Current use of MRI imaging to assist with brain needle surgeries does not have the resolution to detect small blood vessels, making the risk higher that the neurosurgeon could cause a brain bleed when conducting a biopsy.

  • This new needle — tested successfully so far on 11 patients — shows up to 98% accuracy in detecting those blood vessels. Brain bleeds can cause complications, which can be fatal.

What's next: The researchers hope to undertake a larger trial with patients who undergo brain biopsies, and are looking for a medical device manufacturer to help bring it to market.

Caitlin Owens

Remember when we told you yesterday that America is getting heavier? Please forget about it for the next week or so — January will be here soon enough.