Axios Vitals

A briefcase with a red cross on the front.

February 15, 2019

Good morning ... Situational awareness: The 5th Circuit Court of Appeals will let House Democrats participate in the case over the Affordable Care Act's constitutionality, to defend the law and what remains of its individual mandate.

1 big thing: Pharma patents in the crosshairs

A technician in a pharmaceutical manufacturing facility

Photo: Suzanne Kreiter/The Boston Globe via Getty Images

Congressional Republicans sound increasingly open to cracking down on some of the ways the pharmaceutical companies extend their patent protections, Axios’ Caitlin Owens reports this morning. That could put billions of dollars in jeopardy for the industry.

What they’re saying: "I think it's terrible that Big Pharma sort of abuses the system to try to sort of evergreen these patents and keep them around forever, and I think it’s part of the answer," Sen. Rand Paul (R-Ky.) said.

  • Sen. Susan Collins (R-Maine) said she's introducing legislation soon that's "aimed at some of the gaming of the system that we see going on.”
  • And Sen. Rob Portman (R-Ohio) told Caitlin "it's time to look at the broader issue of whether the way in which companies are protecting their patented drugs is leading to higher costs."

Nothing is certain. Looking at an issue is not the same as passing a bill, and there’s a big universe of policies that could fall under the broad umbrella of changes to patent law — some of which are more muscular than others.

  • Even so, just the rhetorical change is worth paying attention to.

Drug companies are getting worried about the GOP’s interest in their patents, a Republican lobbyist told Caitlin. And Democrats are taking note, too.

  • "Evergreening might be an area where we can get some bipartisan agreement on rooting out the worst of the abuses," said Sen. Elizabeth Warren (D-Mass.).

2. Hospitals make bank on drug markups

Illustration of a pill, half of which is dollar bills

Illustration: Rebecca Zisser/Axios

Hospitals are reaping big windfalls from commonly used drugs, my colleague Bob Herman reports — marking them up 3–7 times above their average sales prices, according to an analysis by Wall Street firm AllianceBernstein.

Why it matters: The way hospitals charge for drugs — and the consolidation that's helping to fuel this trend — leads to higher insurance premiums across the board.

How it works: Hospitals have acquired a lot of doctors' clinics over the past several years and converted them to outpatient departments. That allows them to set a higher price for the same services and drugs before they head into negotiations with insurers.

  • On average, private insurers pay hospital-owned clinics about 67% of the amount the clinic initially charges.

The big picture: "There's this large proportion of hospital outpatient billing that is really based on those charges, or a complex calculation of those charges," said Stacie Dusetzina, a health policy professor at Vanderbilt University who studies drug prices and reviewed the AllianceBernstein analysis. "It's surprising and concerning."

The other side: Aaron Wesolowski, a vice president at the American Hospital Association, said in a statement that Medicare and Medicaid payments are low, while "private payers tend to negotiate competitive rates with hospitals that often lead to bundling the cost of drugs."

  • He also had quibbles over the report's methodology and sample size. Wesolowski did not answer follow-up questions, including what "competitive rates" mean.

Go deeper.

3. Racial disparities in cancer are shrinking

The racial disparity in cancer deaths is getting smaller, the American Cancer Society reported yesterday.

  • Three cancers — lung, colorectal and prostate — have driven most of that improvement, which ACS attributed to a big decline in smoking.

By the numbers: The death rate from cancer is 19% higher for black men than white men — which is still a very large disparity, but is down from a 47% difference in 1990.

  • The disparity between black and white women dropped from 19% to 13% in the same time frame.

Yes, but: There's clearly still a long way to go, in cancer and overall. According to the advocacy group Families USA, African-Americans are 25% more likely to die of heart disease, 72% more likely to be diabetic, and 900% more likely to die from HIV.

This very bad situation is generally attributed to factors outside the immediate health care system — namely poverty. People with lower income have less access to care, and the persistent racial disparities in socioeconomic status filter through into giant disparities in health.

4. 23andMe wants to be a drug company

A 23andMe home testing kit

Photo: Eric Baradat/AFP/Getty Images

23andMe is best known for its home DNA-testing kits, but it also wants to become a pharmaceutical company.

Driving the news: 23andMe is doing early research on 13 compounds, which could ultimately treat skin conditions, cancer and heart disease, Business Insider reports (subscription required).

  • The company has 70 scientists working on those compounds, plus 2 more potential drugs that are further along in the process.
  • And all of that comes on top of 23andMe's partnership with established drugmakers. It struck a $300 million deal with GlaxoSmithKline last year.

The intrigue: The overwhelming majority of efforts to create a new drug end in failure. But 23andMe is hoping its vast stores of human DNA information will give it a better shot, per Business Insider.

5. This year's flu shot is working well

Dude getting a flu shot

Photo: Derek Davis/Portland Press Herald via Getty Images

This flu season is shaping up to be a lot milder than last year's nightmare, and scientists attribute that in large part to a more effective vaccine.

This year's flu shot is about 47% effective against the dominant strain of influenza, per NBC News. Last year's shot was 36% effective at this interim stage.

  • The Centers for Disease Control and Prevention estimates that somewhere between 9,600 and 15,900 people have died from the flu since Oct. 1. That puts this flu season on pace to be a lot less deadly than last year's, when 80,000 people died.