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Monday, July 1, 2019

Four massive problems with the Democrats’ Medicare-for-all plan

All the Democrats who are running for president are promising a version of free, universal health care, and it sounds terrific.
If the insurance is going to be better than what we have now — and cheaper — I’m all in.
You can see the appeal. Cut out a lot of middlemen. Cut out the health-insurance industry’s profits and costs. Free every family from a lot of risk.
Great, right?
Sure.
First, are we really sure we want to slash payments to doctors, nurses, other medical staff, hospitals and other organizations?
The Medicare-for-all crowd are saying that the new public organization will be paying “Medicare” rates for medical services.
Alas, according to a recent report in the journal Health Affairs, “the Medicare Payment Advisory Commission recently estimated that private insurers pay prices that are 50% higher than what Medicare pays.”
In other words, right now all of us with private insurance are basically subsidizing the people on Medicare and Medicaid. And under this new system, those subsidies vanish.
A move to Medicare rates means cutting payment rates by a third. How much of this is really “fat”? And how will reducing the incomes of doctors, say, increase the supply of doctors?
The problem of fraud
Second, what exactly are we going to do about, well, fraud?
I don’t mean to be gloomy, but Medicare-for-all is going to be Mardi Gras For All Fraudsters.
Critics of private health insurance point to its high administration costs as a sign of inefficiency. But those private-sector paper-shufflers may serve a purpose.
The federal government’s watchdog, the Government Accountability Office (GAO), reported recently that “improper payments” at Medicare are already running at more than $50 billion a year.
They might not all be fraud, the watchdog adds. Many of them have no paperwork, or the wrong paperwork, but maybe it’s no big deal.
Sure, why not?
The Centers for Medicare and Medicaid Services (CMS), which oversees the system, “has not conducted a fraud risk assessment for Medicare,” the GAO adds.
About 10% of Medicare’s fee-for-service payments are “improper payments,” the CMS itself acknowledges.
And that’s in a system that caters almost entirely to those over 65. I don’t want to be rude to America’s senior citizens, but I suspect most of them have passed the peak age for running a con.
Now we’re going to open the system to the young and middle-aged as well. And we’re going to quadruple the number of customers, from 60 million to 230 million. What could go wrong?
Even at the current rate, we’re looking at $200 billion in “improper payments,” right?
Third, if we’re opening the system to anyone who comes here, legally or illegally, aren’t we just giving an enormous incentive to everyone from, say, Tijuana to Tierra del Fuego to make a sometimes long and dangerous trek to America?
If some people will risk everything for the chance to pick lettuce or bus tables, think how many will do so for the chance to get prime health care for themselves and their families.
Maybe we could save them the trip and start opening clinics south of the border.
What about stockholders?
Fourth, and finally, can you tell me why we are apparently preparing to take about $600 billion from the stockholders in insurance companies without any compensation?
The current plans include no payments to investors, even if their business is essentially made illegal.
I know the current fashion in the Democratic Party is to consider all investors and all profits to be the work of the (secular!) devil. But the biggest investors in health-insurance giants such as UnitedHealth Group UNH, -0.34% AnthemANTM, -0.47%  and Cigna CI, +0.79% are retail mutual funds, such as Vanguard funds, State Street’s SDPR exchange traded funds and BlackRock’s iShares. They should just be expropriated?
The major publicly traded health insurers are valued in total at about $600 billion, and account for about 2.5% of the value of the broad S&P 1500 Index.
Doesn’t this seem like the behavior of a dubious market with a questionable rule of law? And what sort of precedent does it set? Investors will certainly think twice about risking their capital if the stocks that win are likely to get seized.
Even the Fifth Amendment of the Constitution talks about paying “just compensation” when private citizens are deprived of their property in the public good. And this is usually the practice when state governments seize property by eminent domain.
It would be quite easy to buy them out, too. At current levels, $600 billion in Treasury bonds would cost the taxpayer about $16 billion a year in interest. Chicken feed. And that’s before taxes.

Puma Bio files U.S. marketing application for expanded use of Nerlynx

Puma Biotechnology (NASDAQ:PBYI) has submitted a supplemental marketing application to the FDA seeking approval to use Nerlynx (neratinib), combined with chemo agent capecitabine, to treat patients with HER2-positive metastatic breast cancer who have failed at least two prior lines of therapy.
The FDA approved the kinase inhibitor two years ago for the extended adjuvant treatment of early-stage HER2-positive breast cancer.

Ocular Therapeutix gains on DEXTENZA launch

Ocular Therapeutix (NASDAQ:OCUL) has commercially launched DEXTENZA (dexamethasone ophthalmic insert) 0.4 mg for the treatment of ocular inflammation and pain following ophthalmic surgery, in U.S.
DEXTENZA is the first FDA-approved intracanalicular insert, that enables the delivery of drug to the surface of the eye, obviating the need for a burdensome, monthly regimen of steroid eye drops.
Shares are up 7% premarket.

PTC teams with Odylia Therapeutics on rare childhood eye disorder therapy

PTC Therapeutics (NASDAQ:PTCT) will collaborate with non-profit Odylia Therapeutics to develop novel gene therapies based on a synthetic vector called Anc80 that was developed at Massachusetts Eye and Ear.
The lead program will be RP-GRIP1, the defective protein in a rare childhood retinal dystrophy called Leber Congenital Amaurosis 6 (LCA6).
Financial terms are not disclosed.

Teva launches generic Euflexxa in U.S.

Teva Pharmaceutical Industries (NYSE:TEVAcommences the U.S. commercial launch of its generic version of Ferring B.V.’s Euflexxa (1% sodium hyaluronate) for the treatment of pain associated with osteoarthritis of the knee in patients who have failed to adequately respond to non-drug therapy and simple painkillers (e.g., acetaminophen).
Shares are up 2% premarket on light volume.

Biotech Investors: Mark Your Calendar For These July FDA Dates

The FDA went overdrive in the month of June, deciding on several regulatory applications before the July 4 holiday. There were favorable outcomes as well as disappointments.
Acer Therapeutics Inc ACER 0.26% went about a freefall, shedding about 79% in a single session after the FDA issued a complete response letter to the NDA for its rare genetic disorder drug.
Merck & Co., Inc. MRK‘s Keytruda snagged two approvals in the month – for head and neck cancer as well as lung cancer.
As the first half of the year winds down, new molecular entity approvals thus far totaled 12 compared to 20 approvals in the same time last year.
PDUFA dates are deadlines for the FDA to review new drugs. The FDA is normally given 10 months to review new drugs. If a drug is selected for priority review, the FDA is allotted six months to review the drug. These time frames begin on the date that an NDA is accepted by the FDA as complete.
Here are the key PDUFA dates to watch in July.

Karyopharm Awaits Positive Verdict After Initial Hiccups

  • Company: Karyopharm Therapeutics Inc KPTI 0.17%
  • Type of Application: NDA
  • Candidate: Selinexor in combination with dexamethasone
  • Indication: Multiple myeloma
  • Date: July 6
Selinexor, an oral selective inhibitor of nuclear export compound, is being evaluated in combination with dexamethasone for treating patients with relapsed refractory multiple myeloma who have received at least three prior therapies and whose disease is refractory to at least one proteasome inhibitor, one immunomodulatory agent, and one anti-CD38 monoclonal antibody.
FDA’s Oncologic Drug Advisory Committee, which met in late February, voted 8-5 recommending the FDA wait for results from a Phase 3 study dubbed BOSTON before making a final decision regarding approval. In mid-March, the company announced the FDA extended the review period by three months to July 6.

Merck Seeks Approval For Antibiotic Combo Treatment

  • Company: Merck
  • Type of Application: NDA
  • Candidate: Combination of relebactam with imipenem/cilastatin
  • Indication: Complicated urinary tract infection and complicated intra-abdominal infections
  • Date: July 16
Merck communicated FDA acceptance of the application Feb. 5. The application is supported by the results of the pivotal Phase 3 RESTORE-IMI 1 trial.

Celgene Knocks The FDA Altar For Expanded Indication Of Psoriasis Drug

  • Company: Celgene Corporation CELG 0.01%
  • Type of Application: sNDA
  • Candidate: Otezla
  • Indication: BehÒ«et’s disease
  • Date: July 21
Otezla has been already been approved for psoriatic arthritis and plaque psoriasis. Incidentally, Bristol-Myers Squibb Co BMY, which has agreed to acquire Celgene, decided to divest Otezlain a bid to appease regulators.
Bechet’s disease is a rare disorder that causes blood vessel inflammation throughout the body, manifesting as mouth sores, eye inflammation, skin rashes and lesions.

Biohaven’s Neurological Disorder

  • Company: Biohaven Pharmaceutical Holding Co Ltd BHVN 0.09%
  • Type of Application: 510(b)(2)NDA
  • Candidate: BHV-0223
  • Indication: Amyotrophic lateral sclerosis
  • Date: July (date not specified)

Adcom Calendar

FDA’s Psychopharmacologic Drugs Advisory Committee will discuss Intra-Cellular Therapies Inc ITCI 0.15%‘s NDA for lumateperone tosylate capsules for oral administration in treating schizophrenia.

Sarepta target raised to $220 from $188 by RBC

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