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Good morning ... Our Axios health care team has just expanded! We're thrilled that Sam Baker has joined us as the deputy health care editor. You may know his work from National Journal and The Hill, and he brings a lot of experience and a ton of smarts. We're teaming up on Vitals now, and he's going to help us make the Axios health care news stream even better, too.

Whatever happened to IPAB repeal?

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There was a time when the Independent Payment Advisory Board — the panel that's supposed to recommend Medicare cuts if the spending grows too fast — was one of the most unpopular parts of the Affordable Care Act. Then it just disappeared until you forgot it was part of the storyline, kind of like Mama Pope on Scandal.

Now it could return, as Nicholas Bagley of the University of Michigan law school points out — because there will probably be a "determination" soon about whether Medicare spending is growing fast enough to trigger the IPAB cuts. It didn't happen last year, but Medicare spending could be high enough this year to require the cuts — a ruling that would be made by the chief Medicare actuary.

So, just in case, here are some IPAB facts you need to know:

It doesn't actually exist right now. Neither President Donald Trump nor former President Barack Obama ever appointed anyone to the board. So if the Medicare cuts have to happen, they would actually be made by the Department of Health and Human Services — if HHS secretary Tom Price can bring himself to do it.

IPAB isn't included in the House ACA repeal bill. Despite being a repeal target for years, it's not included because Republicans can't do it under the budget "reconciliation" rules.

But the board could be repealed separately. There are standalone IPAB repeal bills, including one from Rep. Phil Roe, that Republicans could take up if the Medicare cuts look like a real possibility. A senior GOP aide says IPAB repeal "is something that has bipartisan support and committees in the House are actively considering."

It will be a while before we know. The determination about Medicare cuts would be made around the same time as the next Medicare trustees meeting, according to an administration official, and that meeting hasn't been scheduled yet. Last year, it happened in June.

When SCOTUS says "patents," it kind of means "drug prices"

The drug industry's pricing structure took a hit yesterday at the Supreme Court, via a 7-1 decision about patent law and international sales. It's a complicated case, and not directly pharmaceutical related, but here's the upshot: The court's ruling could make it easier for middlemen to buy prescriptions drugs overseas, where they're heavily discounted, then resell them inside the United States, where they'd normally be much more expensive.

Why it matters: It's not like the Supreme Court just solved our drug-pricing debate. Federal law still bans importing drugs from other countries. But if that ever changes, or if the "gray market" for imported, discounted drugs grows anyway, some experts fear that drug makers would raise their prices in the developing world. They might even quit selling certain products in some foreign markets — a possibility the industry itself raised in a Supreme Court brief.

The public really wants the Senate to rewrite the House bill

Data: Kaiser Health Tracking Poll, May 2017; Chart: Andrew Witherspoon / Axios

Partisanship is driving Americans' views of the GOP health care bill — and of the system it would replace. That's the gist of the Kaiser Family Foundation's latest tracking poll, which found stark partisan divides over…pretty much everything in health care. But there's a general consensus on one thing: Most Americans want the Senate to rewrite the House bill.

Why it matters: A less popular bill is less likely to pass, and harder to defend even if it does. Republicans know there's a playbook for capitalizing on an unpopular, party-line health care bill. It's a playbook they wrote.

Why it's so hard to do apples-to-apples with CBO

We got some smart pushback on our item yesterday about how the Congressional Budget Office's predictions on the ACA matched up with reality. So it's worth acknowledging that this stuff is never as cut-and-dried as it might seem.

Coverage: Peter Orszag, a former CBO director, said it doesn't work to directly compare the ACA's coverage gains — 20 million people — to CBO's prediction that 32 million would gain coverage. That's because the number of uninsured probably would have risen if the ACA had never become law.

  • In reality, he says, it's more like 22 million people gained coverage. And CBO's 32 million prediction was also made before the Supreme Court made the law's Medicaid expansion optional, lessening the impact it could have had.

Premiums: A Senate Democratic aide points out that last week's HHS report, which found that individual market premiums doubled between 2013 and 2017, isn't directly comparable to CBO's prediction that individual insurance premiums in 2016 would have been 10 to 13 percent higher than under the old system.

  • Why? Because the HHS report was comparing two different individual markets — one before the ACA, and a heavily changed one after the ACA. And CBO was only looking at one year. (Orszag also points out that premiums probably would have risen 30 to 50 percent between 2013 and 2017 anyway, even without changes in the law.)

The bottom line: Orszag's point is well taken — you should always consider what would have happened if the law had never passed. And it's worth noting that experts have different interpretations on the premiums — but the main point was that nothing in CBO's estimates warned Congress that people could see substantial premium increases because of the changes they were considering.

Mallinckrodt might sell its generic drug business

This would be a big deal in the business world (h/t Dan Primack): Mallinckrodt, the speciality biopharmaceutical company, is considering a sale of its generic drug unit for as much as $2 billion, Reuters reported last night. That would leave it focusing mostly on branded specialty pharmaceuticals. (One reason it might want to get rid of the generic unit, per Reuters: its products include opioids.)

More on the activist cloud hanging over Athenahealth

Two weeks ago, Bob Herman reported on how activist hedge fund Elliott Associates bought a hostile stake in Athenahealth, and how it wouldn't be surprising if Elliott pushed the cloud-based health care technology company to sell. Athenahealth CEO Jonathan Bush made his first public comments about Elliott at a J.P. Morgan event last week, indicating that he's at least open to hearing out Elliott.

Bush on why he thinks activist investing can be good: "It's a healthy thing to have someone come in and say, 'Your baby is fat. That's not a pretty baby, that's a fat baby.'"

But don't buy this as a happy relationship: Bush mentioned he spoke on the phone with Jesse Cohn, a senior manager at Elliott who is overseeing the Athenahealth stake, and basically said this while gritting his teeth: "[Cohn] gave me a nice 11 minutes before he filed…it sounds like he's got a lot of ideas."

The latest in health care lobbying

Bob Herman has your periodic reminder that D.C. is awash with lobbyists wrangling over the intricacies of health care policy, as well as the ACA repeal efforts. Here are some notable lobbying registrations from the past month:

  • The Blue Cross and Blue Shield Association hired Keith Fontenot of Hooper, Lundy & Bookman for a narrow reason: to lobby on "issues related to federal reimbursement for cost-sharing subsidies under the Affordable Care Act." Yep, the subsidies that Trump has threatened to cut off. Fontenot used to be Obama's top health care official in the Office of Management and Budget.
  • Ford Motor Company hired Bose Public Affairs Group (specifically Victor Smith, who used to be Vice President Mike Pence's secretary of commerce), and Boeing hired Mehlman Castagnetti Rosen & Thomas for various, unclear health issues. Remember: Companies like Ford and Boeing have hundreds of thousands of employees with health insurance, and they are just as sick of the rising costs.
  • Stride Health, an insurance brokerage startup that serves self-employed people, tapped Franklin Square Group to push for issues that "improve access to health insurance and other benefits for the independent workforce." This is Stride's first time lobbying.

What we're watching today: White House press briefing by Veterans Affairs secretary David Shulkin, 11:30 a.m. Eastern.

What we're watching this week: Senate Republican leaders and staff write the first draft of the health care bill over the recess.

What we're watching next week: The Senate comes back, reads their health care bill, and argues some more. Also, the investment bank Jefferies holds its global health care conference in New York City, June 6-9. And Facebook is reportedly holding a health summit on June 6 for pharmaceutical marketers, per CNBC.

Feedback? Tips? Now you can bother two of us: david@axios.com and baker@axios.com.

Featured

Congress has paid $17 million in sexual misconduct and discrimination settlements

Congress has paid out more than $17.2 million over the last 20 years to cover 268 settlements on Capitol Hill, according to the Office of Compliance, which was set up in 1995 under the Congressional Accountability Act. In 2002 and 2007 those tallies topped several million dollars.

Data: U.S. Congress Office of Compliance; Chart: Lazaro Gamio / Axios

Why it matters: Lawmakers and aides in Congress have been speaking out about the prevalence of sexual misconduct on Capitol Hill, including allegations that current lawmakers have perpetrated such acts, and this gives documentation, to some extent, of the incidents and settlements.

But it's not 100% inclusive; a spokesperson for Rep. Jackie Speier, who introduced legislation on sexual assault in Congress this week, told CNN 80% of the people who have told their office about sexual misconduct choose not to report to the OOC.

  • The settlements may not necessarily be related to sexual misconduct alone, since the OOC also handles racial, religious, or disability-related discrimination.

One controversial thing: The money comes from taxpayers, not from individual lawmakers' offices. Jenny Beth Martin, the leader of the Tea Party Patriots, claims that because these funds are not pulled from campaigns or offices shows they make up a "shush fund" that has "inadvertently institutionalized a cover-up culture, in which the supreme end-goal is to get the alleged victims to go away quietly." She is calling for more transparency since she says the funds do "little to stem the tide of sexual harassment" on the Hill.

The OOC is not reporting the details of the settlements, in part because some of the settlements include multiple different allegations. The office has released the numbers "based on the volume of recent inquiries regarding payment of awards and settlements."

  • The chairman to the House Administration Committee, Rep. Gregg Harper, and the ranking member may be familiar with the details of the settlements, since they have to approve payments after a settlement is reached. Speaker Paul Ryan and Minority Leader Nancy Pelosi are not aware of the details of the settlements, per CNN.
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Rape victim wants Al Franken's sponsorship dropped from her bill

Sen. Al Franken, D-Minn., on Capitol. Photo: J. Scott Applewhite / AP

Al Franken (D-Minn) helped Abby Honold, a University of Minnesota rape survivor, champion a Senate bill that would provide federal funding for law enforcement training on how to better interview victims of trauma.

Franken was set to introduce the bill later this month, but after learning that a journalist said he had forcibly kissed and groped her in 2006, Honold called Franken's office and asked for someone else to take on the bill, per the Washington Post. Honold told the Post that she could no longer be associated with someone accused of this kind of behavior.

Key quote: "It's really difficult when someone who has been a champion for you turns out to be the exact opposite for someone else," Honold said in a phone interview.

Franken's history of supporting women's rights: The senator has previously pushed for legislation that would support victims of sexual and domestic violence.

  • Franken initially got involved in Honold's bill after learning that her convicted rapist was a former intern for him. Prior to meeting Honold, Franken told the Star Tribune that, "Abby has shown tremendous courage in coming forward ... Her efforts have shed light on problems in how the system handles sexual assault cases."
  • In 2009, Franken proposed an amendment to a bill that barred "defense contractors who forced employees to mandatory binding arbitration in the case of rape, assault, wrongful imprisonment, harassment, and discrimination."
  • In 2012, defended the Violence Against Women Act on the Senate Floor.
  • Last month, he publicly condemned Harvey Weinstein and gave any Weinstein campaign dollars to the Minnesota Indian Women's resource center.
Featured

Stitch Fix CEO talks IPO, Amazon and why she doesn't care about unicorns

Stitch Fix founder and CEO Katrina Lake. Photo: Nasdaq

Stitch Fix, a personalized shopping subscription service, began trading on the NASDAQ this morning after raising $120 million in its IPO. Axios spoke with founder and CEO Katrina Lake. Here's the quick read:

  • She believes Stitch Fix serves a very different need than does Amazon.
  • Stitch Fix struggled in its early days to raise venture capital, which caused it to focus more on profitability.
  • Going public is about having increased flexibility to pursue bigger opportunities.

Setting the scene: Stitch Fix's IPO last night comes across as a dud, given that it sold fewer shares than expected at a price below its stated range. But this isn't the disaster it might be for other VC-backed startups, in that Stitch Fix raised relatively little venture capital ($44 million) at a modest valuation (last post-money was $300m). That means both investors and employees should be in the money at the $1.5 billion, post-IPO (fully diluted) value — something that wouldn't have necessarily been true if Stitch Fix had chased bloated unicorn dreams. Plus, shares are up in early trading.

Here is the Q&A:

Why did the IPO come up a bit short of your expectations?

"It's hard to say. The story of Stitch Fix is a nuanced one to tell and can take a little time for people to get their heads around. The data science and personalization is a different business model from other things out there. It's not e-commerce, it's not stores. But while we maybe didn't get the exact price we expected, we're very excited to get top-tier investors and are happy to go prove ourselves to those who might have underestimated us. I'm not going to be focused on the stock price from day-to-day, because we want to generate value over years. My deep conviction is that the company will end up being worth more in the future than it is today.

Stitch Fix only raised $44 million from VCs, which is relatively little by today's standards, and never at a valuation higher than $300 million. Why didn't you go for a "unicorn" round?

"It was hard to raise money for this company, so we always treated every dollar very preciously and focused early on profitability. I'm also not valuation focused, so we weren't going to raise money if we didn't need it. When it came to recruiting, there was a lot of upside in having a valuation to grow into."

Why go public now?

"We have plenty of capital on the balance sheet, so there was no forcing function. We're at a place where we've grown year-over-year consistently, felt there is a lot of predictability in the business and just felt like it was a good time. I'm glad we didn't go a year ago because there might have been out-sized expectations based on growth rates... It gives us flexibility, and helps us see how big a business personalization can be and how pervasive in the retail experience."

Your moat against Amazon is curation and personalization. Can that be maintained?

"We see ourselves as solving a very different problem in a very different way. Amazon is a lot about faster and cheaper when it comes to clothing, and in a lot of product categories that's a great value proposition. But the reality in fashion is that to find that one great pair of jeans that fits perfectly, you don't want endless choice or the cheapest option. You want the one thing on the planet that's best for you."

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What Congress is doing about its harassment problem

House Speaker Paul Ryan and Rep. Jackie Speier are both working to address harassment in Congress. Photo: J. Scott Applewhite, Charles Dharapak / AP

In response to the flood of sexual harassment and assault allegations, members of both chambers have introduced three bills and requirements aimed at harassment culture in Congress.

  1. "Me Too": Rep. Jackie Speier (D-CA) and Sen. Kirsten Gillibrand (D-NY) Wednesday introduced the "Me Too" Act, calling for more transparency in the harassment complaint process on the Hill.
  2. House training: House Speaker Paul Ryan also announced on Wednesday that all House members and staff will have to complete anti-harassment and anti-discrimination training.
  3. Senate training: The Senate passed legislation last week requiring all senators and staff to go through anti-harassment and anti-discrimination training.
Featured

Former JC Penney CEO: Amazon should fear Walmart

Elise Amendola / AP

Former JCPenney CEO and Apple Store pioneer Ron Johnson said on CNBC's Fast Money that Amazon "should be really worried" about Walmart's resurgence of late, arguing that the Bentonville retailer's network of stores is cheaper and more efficient to operate than Amazon's collection of warehouses.

Why it matters: Walmart's earnings announcement was the highlight of a week filled with surprisingly strong performance by Amazon's brick-and-mortar competitors, like Best Buy, Gap, Abercrombie, and Foot Locker, which all reported stronger than expected same-store sales growth. These performances have powered the SPDR S&P Retail ETF 3.9% higher this week — its best five-day stretch of the year.

Sound smart: Despite a good week, Retail indices are still down year-to-date, while Amazon's value is up more than 50%. Outside of a few exceptions like Walmart and Best Buy, brick-and-mortar retailers are still struggling to attract traffic and grow sales, just less so that we thought last week.


Featured

Pluto's hazy atmosphere keeps its surface icy cold

Image released by NASA in Oct. 2015 shows a haze surrounding Pluto. Photo: NASA/JHUAPL/SwRI

Pluto's thick hazy atmosphere may be responsible for its temperature of -203ºC, according to a study published this week in Nature.

How it works: Hydrocarbon particles created in chemical reactions in Pluto's upper atmosphere group together as they fall toward the surface and are "transformed into thick layers of haze," Alexandra Witze writes in Nature. Haze doesn't block light from the the sun, but it is able to cool down and heat up the atmosphere.

Why it matters: Leslie Young, a planetary scientist at the Southwest Research Institute in Colorado, told Nature it's important to understand Pluto's atmosphere in order to work out what might be happening on other icy planets.

  • Another view: There are other ideas about why Pluto's atmosphere is so cold, including a combination of hydrogen cyanide, acetylene, and ethane gas. The haze model could be tested with observations from NASA's James Webb Space Telescope, which is now scheduled to launch in 2019.
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Kirsten Gillibrand: Bill Clinton should've resigned

Photo: J. Scott Applewhite / AP

Sen. Kirsten Gillibrand (D-NY) told the New York Times that Bill Clinton should have resigned from the presidency after the Monica Lewinsky scandal. "Things have changed today, and I think under those circumstances there should be a very different reaction," she said.

Why it matters: Sen. Al Franken and Alabama Senate candidate Roy Moore have faced immense backlash and pressure to step down after being accused of sexual harassment and assault — accusations no worse than those brought against Bill Clinton. In today's environment, with sexual harassment and assault allegations making headlines almost daily, Gillibrand thinks that Clinton would have felt more pressure to resign, her spokesperson told the Times.

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Mueller subpoenaed Russia docs from Trump campaign officials

Robert S. Mueller speaks to a convention of campus law enforcement officials in Hartford Conn. in 2008. Photo: Bob Child / AP

Special Counsel Bob Mueller subpoenaed Russian-related documents from more than a dozen top Trump campaign officials last month, per "a person familiar with the matter," the WSJ reports.

Why it matters: This is the first known request from Mueller for information from the campaign itself. The campaign has been voluntarily complying with the special counsel investigation and its requests for information, so this suggests Mueller's requests aren't being fully met. Failure to provide requested documents can count as obstructing a grand-jury investigation.

This comes on the heels of the Senate Judiciary claiming that Jared Kushner failed to disclose emails about WikiLeaks and Russia. It also follows the revelation that Mueller's team has secured a guilty plea from a campaign associate, George Papadopoulos, and that they have indicted Trump's former campaign chairman, Paul Manafort and his associate, Rick Gates.

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How bees decode each others' dances

The three neurons involved in deciphering the waggle dance. Image: Hidetoshi Ikeno / University of Hyogo

Scientists have mapped some of the neurons that let bees talk by dancing.

Why it matters: Bees, who accomplish impressive things despite their tiny stature, have become models for understanding cognition. Scientists study how they navigate and recognize faces — and now, how they share information. "We're starting to understand how a fairly simple neural system, like a bee's, can solve a complex task like communication," says Thomas Wachtler, a researcher at the Ludwig Maximilian University of Munich and an author on the study.

Bees tell each other how to find pollen-laden flowers using the 'waggle dance.' It's incredibly precise, and can pinpoint a flower miles away. A bee stomps and vibrates her wings and waggles her abdomen while walking in a straight line, then circles back to the start and does it again. The angle she moves says which way to go. The amount of time she wags tells the distance. Other bees follow the waggle map.

The catch: Hives are pitch-black. The observing bees don't see the dance — they hear and feel it.

Researchers already knew which neurons the bees used to feel vibrations, and they knew about the dance. But no one had looked at how the two interacted.

How they did it: Wachtler, along with Hiroaki Ai and his colleagues at Fukuoka University and the University of Hyogo, drummed the beat of an artificial waggle dance to a bee, and measured signals from the neurons. At the center of the brain's response were three neurons: the first starts or stops the second in response to sound – so that measures the time period of the waggle. The purpose of the third isn't clear yet, but since it receives signals from both of the bee's antennae, Wachtler thinks it helps the observers track where the dancing bee is in space, so they can determine the angle of the waggle.

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The Bonn coal phaseout pledges in context

One of the splashier announcements at the Bonn climate talks this week has been the rollout of the Powering Past Coal Alliance — a pledge by roughly 20 countries (so far) to phase out use of coal in power generation by 2030. The countries include Canada, the U.K., several other European nations, New Zealand and more.

Data: Energy Information Administration; Chart: Chris Canipe / Axios

Reality check: The chart above compares coal use in the countries that have adopted the pledge against global coal consumption in 2015 as reported by the U.S. Energy Information Administration. (It does not include pledges by some provincial governments or the U.S. states of Washington and Oregon.)

  • It shows that the pledge currently covers slightly over 2% of global coal use. The New York Times, using a separate dataset based on BP's big annual report on energy statistics, arrives at roughly the same tally.
  • The absence of dominant coal users China, the U.S., and India — and to a lesser extent Germany, Russia, Japan and some others — means that for now, the pledge only covers a small amount of the world's use of the fuel.

Why it matters: Coal currently accounts for around 40% of worldwide power generation. Cutting emissions from coal — the most carbon-intensive fossil energy source — is vital to eventually ensuring the steep global greenhouse gas cuts that scientists call necessary to avoid the most dangerous levels of global warming.

What's next: The organizers of the pledge say they plan to add many new partners ahead of the next big UN summit a year from now. Stay tuned.