To $223 from $219; maintains Outperform.
Monday, June 3, 2019
What the left doesn’t understand about healthcare
In one case, an insurer prevented a woman from getting a CT scan her doctor ordered. In another, a mother couldn’t afford the full regimen of special bags needed to clear her cancer-stricken daughter’s lungs. In a third case, a woman lost her health insurance and could not afford end-of-life chemotherapy.
These examples come from National Nurses United, the country’s largest nurses’ union. To prevent further incidents like these, the union favors a universal, government-run health care system. A lead editorial in the New York Times last week appeared to endorse their thinking.
Here is what these folks are missing.
The events described and many more like them happen every day. In every country. All over the world. And more than 90 percent of the time, the insurer is the government. According to one report, one out of every sixBritish cancer patients is denied access to the latest cancer drugs. That’s mainly because the British National Health Service has decided that the drugs are too costly relative to the gain.
So how does turning medical decisions over to government improve things? More often than not, it makes things worse.
Most of what left-of-center thinkers have to say about health policy makes no logical sense. That’s mainly because they don’t understand health economics. And that’s because they reject the economic way of thinking as such.
Let’s see if we can help them out.
A Dollar Is a Dollar. Editorials like the one in the Times tend to treat a dollar spent on health care as though it is different from a dollar spent on something else. It isn’t. It’s the same dollar.
No country in the world meets every health care need. That’s because there are other needs that are judged more important. Just as needs compete against each other in a family budget, needs compete against each other for society as a whole. These other needs include food, housing, potable water, etc. – which, for many people, may be more important for health than medical care.
When people create family budgets they prioritize. The normal focus is on deciding what needs will be met. The flip side of that, however, is determining what needs will not be met.
The important social question is: how should such decisions be made?
In a Public System, Patient Needs Compete against Taxpayer Needs. On the very same day the editorial appeared in the Times, the Dallas Morning News described a horrible incident in the Texas Medicaid program. A severely disabled child who was not given proper care is now in a “vegetated state.” This is only one of hundreds of examples of patient abuse the newspaper discovered in a year-long investigation of the state’s Medicaid program.
All of the Texas patients are already in a government program. Yet the denial of care in that program seems to be as bad or worse than anything described by the nurses or the Times.
As a technical matter, Medicaid in Texas is administered by private insurers and the less they spend on patients the more money they make – a point emphasized a lot by the News. In fact, about two-thirds of the Medicaid patients in the country are in private plans. The reason: since private plans are usually more efficient, they save taxpayers money. Also, care decisions are more rational than garden-variety bureaucratic rationing.
But the blame for any undertreatment of patients ultimately belongs to the state. It could get better care if it paid more. But that would mean less money for taxpayers.
Personal Is Better than Bureaucratic. The most frequent way we decide what health care needs will not be met is by people making their own choices. For example, millions of times every year Americans buy over-the-counter drugs. In almost every case, they are opting for self-medication over going to a doctor and seeking professional advice.
When making these choices, people don’t always make the right decisions. But one of the reasons why I pioneered Health Savings Accounts and would like to see a much larger role for them is that no one cares about you more than you care about you. If you control the money, the health care system is likely to work better for you than if you surrender control to an impersonal bureaucracy,
Competition Is Better than Monopoly. One thing often ignored by the proponents of “Medicare for All” is that more than one-third of Medicare enrollees today are actually in private health insurance plans. Although the government pays most of the premium, these plans compete. If a senior is dissatisfied with one, she can switch to another or even back to traditional Medicare.
Although the system is far from perfect, private sector competition works. The Brookings Institution concludes that these Medicare Advantage plans have lower costs and higher quality than traditional Medicare.
Profit Is Just Another Cost. The word “profit” appears in the Timeseditorial several times – always in a negative way. The Dallas Morning News titled its investigative series “Pain & Profit,” as though profit were the cause of the pain.
There are two things you need to know.
First, every single dollar spent in our health care system ends up in someone’s pocket. That means someone has a financial interest in every spending decision that is made. Similarly, every single dollar not spent stays in someone’s pocket. Taxpayer pockets are a prime example.
If you take paper money out of your pocket and examine it closely, do any of the bills have the world “profit” on them? How about the word “wage”? Or, “gift”? Or, “tax rebate”? Clearly, the bills are just as valuable to you, regardless of how you acquire them. As we said in the beginning, a dollar is a dollar.
Second, economists look on profit as a cost of doing business. It’s not a cost that can be avoided. To build a hospital, for example, someone has to provide capital. That capital is costly, and someone is bearing the cost – even if it doesn’t show up on an accountant’s balance sheet. Also, business ventures involve risk. Some hospitals succeed while others fail. If the government (and therefore the taxpayer) bears the risk and supplies the capital these costs don’t go away. They are merely being relabeled.
In general, researchers find no difference between for-profit and non-profit hospitals. Non-profits are run the same way and they pay their administrators the same way. With few exceptions, they do not provide more charity care. Ditto for insurance companies.
Markets Work. The beauty of the marketplace is that it makes it in everyone’s self-interest to meet other people’s needs. The more needs you meet, the more money you make. Ergo, if we want more needs to be met in better ways, we need more reliance on the market in health care, not less.
A lot of people on the left hate that idea.
Genentech Xolair hits co-primary, key secondary endpoints for rhinosinusitis
Roche Group member Genentech announced that Xolair (omalizumab) has significantly reduced nasal polyps and congestion symptoms in adults with chronic rhinosinusitis with nasal polyps (CRSwNP) in two phase III studies.
The company has revealed the positive topline data from two phase III multicentre studies assessing Xolair to treat adults with CRSwNP who have not adequately responded to intranasal corticosteroids.
According to the company, the Polyp 1 and Polyp 2 phase III trials achieve both co-primary endpoints and major secondary endpoints.
Xolair is an injectable biologic medicine developed to target and block immunoglobulin E (IgE). It also demonstrated to be better tolerated and the safety profile was consistent with that observed in earlier studies in people with moderate to severe allergic asthma and chronic idiopathic urticarial.
The co-primary endpoints of both studies were change from baseline in Nasal Polyp Score (NPS) and change from baseline in average daily Nasal Congestion Score (NCS) over 24 weeks
Xolair showed statistically significant and clinically relevant improvements in both of these co-primary outcomes, said the company.
The studies also achieved major secondary endpoints, including improvement in smell, post-nasal drip (posterior rhinorrhea score), runny nose (anterior rhinorrhea score) and the Sino-Nasal Outcome Test-22 (SNOT-22) health-related quality of life assessment.
Polyp 1 and Polyp 2 are replicate Phase III studies designed to assess the efficacy and safety of Xolair compared with placebo in adult patients with CRSwNP who have had an inadequate response to standard of care treatment.
Humana swats down rumor it wants Centene
Market stakeholders have speculated that Humana could make a proposal to combine with Centene as an alternative to Centene’s planned merger with WellCare Health Plans.
KEY TAKEAWAYS
As the future of Centene’s proposed WellCare merger remain murky, some had suggested Humana might be waiting in the wings.
While share prices slumped for Centene and rose for Humana, one analyst says longer-term investors for both ‘are likely relieved.’
Humana Inc. signaled in an unusual filing Monday morning with the Securities and Exchange Commission that it has no intention of pursuing a merger with fellow health insurer Centene Corp.
The note—which sent Centene shares tumbling more than 8%shortly after markets opened—came after Centene’s proposed merger with WellCare Health Plans hit a bit of a speed bump, with antitrust regulators from the U.S. Department of Justice indicating they will scrutinize the deal that has been criticized by the American Hospital Association and others.
A report last month by Reuters’ Carl O’Donnell and Svea Herbst-Bayliss added fuel to rumors that Humana would be interested in merging with Centene if the WellCare deal falls through.
Humana said in Monday’s SEC filing that its “long-standing policy is not to comment on rumors or speculation regarding possible M&A activity.”
“However, in light of the significant investor speculation and persistent market rumors regarding the Company’s intentions with respect to pursuing a combination with Centene … the Company has chosen to make a one-time, limited exception to its no-comment policy (which continues in effect) and confirm that the Company will not make a proposal to combine with Centene as an alternative to Centene’s proposed transaction with WellCare Health Plans, Inc.,” the SEC filing states.
“The Company does not intend to make any further statement regarding the foregoing,” Humana’s filing adds.
As Centene shares sank, Humana’s rose more than 5% Monday morning.
SVB Leerink analyst Ana Gupte told the St. Louis Post-Dispatch that Humana needed to respond to claims it had been putting pressure on its stock.
“Shorter term activist shareholders of Centene may be disappointed by it, but large long-only institutional share holders of both Centene and Humana are likely relieved,” Gupte wrote in an email to the Post-Dispatch.
Emergent Bio awarded 10-year HHS contract for VIGIV in smallpox
Emergent BioSolutions (NYSE:EBS) has received a contract award of ~$535M over 10 years for the continued supply of Vaccinia Immune Globulin Intravenous (VIGIV) into the U.S. Strategic National Stockpile (SNS) in support of smallpox preparedness.
The contract consists of a one-year base period of performance valued at $23M and nine option years.
The scope of work under the contract includes the collection of plasma, manufacturing, and delivery of finished drug product.
VIGIV is the only product licensed by the FDA for the treatment of complications due to smallpox vaccination.
Seattle Genetics drug could provide new option for bladder cancer
- Tumors either got smaller or stopped growing in more than two-fifths of certain advanced urothelial cancer patients put on an experimental drug from Seattle Genetics, according to clinical trial data presented Monday at the American Society of Clinical Oncology’s annual meeting.
- The Phase 2 trial looked at patients previously treated with platinum-based chemotherapy and a PD-1 or PD-L1 checkpoint inhibitor. Among patients who had not responded to these inhibitors, 41% responded to Seattle Genetics’ drug, enfortumab vedotin. So did 38% of patients with cancer that spread to the liver.
- The trial also enrolled patients who previously received a checkpoint inhibitor and no platinum-based chemotherapy — but data from that group, which is still enrolling, wasn’t reported at ASCO. Still, Seattle Genetics has said it is confident in the results seen thus far and plans to file its drug for approval later this year.
Seattle Genetics built its now two-decades-old business around ADCs, or antibody drug conjugates. The strategy has resulted in one product, Adcetris (brentuximab vedotin), but that number could soon rise.
Executives said in February that enfortumab vedotin, also an ADC, is “on the path to becoming” the company’s next marketed drug. A positive readout in an ongoing Phase 2 trial, they argued, would set it up for a regulatory filing in 2019 under the Food and Drug Administration’s accelerated approval program.
The company didn’t have to wait long to get that readout; topline results announced in March showed an objective response rate of 44% in the study’s first cohort — the one where patients had already been treated with platinum-based chemotherapy and a PD-1 or PD-L1 checkpoint inhibitor.
More complete data presented at ASCO found 12% of those patients had no detectable signs of cancer after receiving enfortumab vedotin. Median overall survival was a little less than a year.
On safety, a release from ASCO said the drug was well-tolerated, with 40% to 50% of patients experiencing fatigue, hair loss and decreased appetite.
ASCO noted too how patients had a median of three prior systemic treatments in the locally advanced or metastatic setting before getting Seattle Genetics’ drug.
The clinical activity seen in the Phase 2 study closely resemble what investigators saw in earlier testing. That’s reassuring, according to Arlene Siefker-Radtke, a professor at the University of Texas MD Anderson Cancer Center.
Siefker-Radtke foresees enfortumab vedotin, should it gain approval, being a welcome addition to clinicians’ list of advanced urothelial cancer treatments.
Currently, most patients are put on chemotherapy or checkpoint inhibitors, though Johnson & Johnson did in April receive FDA approval for Balversa (erdafitinib) in patients who have two types of mutation in a gene called FGFR.
“We clearly need more options,” she said in an interview with BioPharma Dive. “Having platinums, having immunotherapy and having an FGFR-targeted agent isn’t enough. And it really is thrilling seeing enfortumab vedotin come into play.”
Enfortumab vedotin is now being investigated in a Phase 3 trial as well as another study enrolling newly diagnosed patients with advanced urothelial cancer. Astellas is jointly developing the drug with Seattle Genetics.
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