May 15, 2019

Axios Vitals

Caitlin Owens

D.C. readers: You're invited to an Infrastructure Week edition of News Shapers, tomorrow morning at 8am. 

  • Join Axios' Mike Allen for a series of conversations focused on news of the day and how it relates to infrastructure in America. We'll hear from Minority Leader Kevin McCarthy, Majority Whip James Clyburn and Massachusetts Gov. Charlie Baker and Boston Mayor Marty Walsh will join Mike onstage for a joint interview. RSVP here.
1 big thing: Health care's imminent existential crises

Illustration: Rebecca Zisser/Axios

The U.S. is facing a series of potentially devastating health care threats — some within the next decade, and some that have already manifested as a part of everyday life. 

Between the lines: As Washington struggles with staggering hospital bills and prescription drug costs, society also faces even more difficult problems fueled by the aging population, the economics of health care and the rise of drug-resistant infections.

Details: Looming problems run the gamut of affordability issues, access issues and health threats.

  • As Baby Boomers age into Medicare, health care providers will likely raise their rates for private insurance to make up for the lost revenue — squeezing employers, employees and taxpayers in the process.
  • Medicare's hospital benefit is expected to be spending more than it has to spend by 2026, threatening benefits.
  • Most middle-income seniors won't be able to afford long-term care, as NYT recently reported.
  • The drug pricing debate is stuck mostly in the past, as the future of medicine increasingly features multi-million-dollar personalized medications unlikely to ever have competition.
  • A flood of rural hospital closures is leaving many communities with no easy access to emergency care, and the U.S. also faces doctor shortages.
  • The opioid epidemic continues to ravage the country, and the reemergence of meth has become a second drug epidemic, Kaiser Health News recently reported.
  • Drug-resistant infections continue to rise, without any real government incentives for drug companies to develop new antibiotics.

The bottom line: It's hard to see how any of these topics become more prominent than the debate over Medicare for All or how to drive down spending on prescription drugs over the next couple of years. But we avoid dealing with them at our peril.

Go deeper.

2. Civica's first 2 drugs: IV antibiotics

Civica Rx, the hospital-funded generic drug company, has signed an agreement with drugmaker Xellia Pharmaceuticals to make and supply the IV antibiotics vancomycin and daptomycin, Axios' Bob Herman reports.

Why it matters: Civica is taking its first concrete step toward addressing drug shortages and high-priced generics, which will benefit patients within the 900 hospitals that are part of the nonprofit company as well as patients within the VA, which is partnering with Civica.

Details: Xellia has agreed to expand its production of the antibiotics, and Civica will buy them from Xellia at set volumes and prices over the next 5 years — guaranteed money for Xellia. 

  • "With that certainty, they're willing to make the products," Civica CEO Martin VanTrieste said, adding that annual purchases of the 2 drugs will be in the "tens of millions" of dollars.
  • Because Civica is cutting out wholesalers and other middlemen, it can offer the antibiotics at much lower rates.
  • Civica still has plans of manufacturing its own drugs, but these supplier agreements are the first phase of its development, he said.

Yes, but: Xellia is owned by the same conglomerate that owns Novo Nordisk, one of the major global insulin producers. Rod Hochman, CEO of Providence St. Joseph Health, a hospital system that backs Civica, previously told Axios the company had aspirations of making insulin, but that idea appears to be dead for now.

  • "It's not our plan to make or procure insulin," VanTrieste said when asked about Xellia's ties to Novo Nordisk and future insulin production. "That could change in the future. But that's not in our plans at this time."
3. Surprise billing momentum on Capitol Hill

The Democratic and Republican leaders of the House Energy and Commerce Committee yesterday released draft legislation to protect patients from surprise hospital bills.

  • For emergency services, patients would only be responsible for what they would pay for in-network care.
  • Patients receiving scheduled care would have to acknowledge that a provider is out-of-network. They couldn't receive balance bills from providers they "cannot reasonably choose."

Between the lines: The biggest obstacle to addressing the surprise billing problem is resolving payment issues between insurers and providers if providers can no longer balance bill patients.

  • This legislation uses a rate-setting mechanism, and sets a "minimum payment standard" at the median in-network rate for the service in the geographic area in which that service was delivered.

What they're saying: This is not providers' preferred approach, to say the least.

  • "We strongly oppose approaches that would impose arbitrary rates on providers. Insurers should maintain comprehensive networks and this plan takes us in the opposite direction by removing incentives to contract with providers," the American Hospital Association said in a statement.

Go deeper: An analysis of the measure — including its payment resolution mechanism — was published in Health Affairs.

4. The American baby bust
Expand chart
Data: Centers for Disease Control and Prevention; Chart: Axios Visuals

The U.S. fertility rate has reached a record low, and the total number of births in 2018 was the lowest it has been in more than 30 years, according to new data from the Centers for Disease Control.

Why it matters: The long-term economic implications of a shrinking future workforce could be dire, my colleague Stef Kight reports.

  • It's important to remember, however, these trends are also a result of progress — a falling number of teenage pregnancies, the education and empowerment of women, more accessible birth control and lower child mortality rates, demographers say.

By the numbers: While birth rates fell for younger women in 2018, they rose slightly for women in their late 30s and early 40s, according to the newest CDC data. Women waiting longer to start their families has been a growing, global trend.

  • The total fertility rate, the number of babies a woman of childbearing age is expected to have over her lifetime, is currently at 1.72 — 2% lower than in 2017. It's also notably below the 2.1 fertility rate required for one generation to perfectly replace the next.
5. New lawsuit alleges more drug patent games

A lawsuit filed yesterday by AIDS activists and unions alleges that Gilead conspired with other drug companies to block generic competition in the HIV market, Stat News reports.

  • "Combination cocktails" are often used to treat HIV, and they consist of fixed doses of medications made by different drugmakers.
  • The lawsuit alleges that Gilead made deals with Bristol-Myers Squibb and Janssen to use only each others' products in these cocktails, even after the patents expired.

Why it matters: The lawsuit alleges that this scheme kept prices for HIV drugs "sky-high," even when generic versions of the cocktail components were available.

  • "This gross profiteering explains why less than half of people living with HIV in the U.S. are virally suppressed, one of the lowest rates among the world's high-income countries,” Brenda Goodrow, one of the plaintiffs, said in a statement.
Caitlin Owens