The Jory Weekly
Update: October 30, 2023
§ GDP had a 4.9% annual rate of growth last quarter, the strongest since late 2021.
o However, there are signs the job market is softening and Americans’ spending has been fueled by falling savings rates. That could bode poorly for a consumer-driven expansion in the quarters ahead.
§ The European Central Bank did not raise interest rates after 10 straight rate hikes.
§ 12.8% of American households and 17.% of children are food insecure, up YOY from 2.6% and 5%, respectively.[i]
§ Congress: Congressman Mike Johnson (R-LA) was selected as Speaker, allowing the House to resume legislating, including focusing on the November 17 government funding deadline.
o As the Chair of the Republican Study Committee in 2019 – 2021, Johnson oversaw policy proposals that included an ACA replacement plan which ended enhanced funding for Medicaid expansion, increased Medicare eligibility to 67, expanded HSAs, and changed essential health benefit requirements.
o Health policy is not expected to be a key area of focus for the Speaker, aside from potential messaging bills leading into the 2024 elections.
§ AI: The Biden Administration released an AI Executive Order, ahead of the November 1 – 2 AI safety summit in the UK, which Administration Officials will participate in.[ii] Of note, the EO:
o Requires companies developing AI systems that could pose a threat to health, national security, or the economy to share the results of safety testing with government.
o Directs NIST to create “rigorous standards” to test AI systems before they’re released and agencies that fund life science projects to use these standards as a condition for grants to “protect against the risks of using AI to engineer dangerous biological materials.”
o Says the Commerce Department of Commerce will develop guidance to clearly authenticate and watermark AI-generated content to address deepfakes and disinformation.
o Funds a Research Coordination Network to strengthen privacy tools.
o Calls for strengthening privacy guidance for federal agencies using information from data brokers, particularly personally identifiable data.
o Directs a pilot of the National AI Research Resource to provide researchers and students access to key AI resources and data in areas like health care and climate change.
o Provides resources for small developers and entrepreneurs to commercialize AI.
o Provides guidance on preventing algorithmic discrimination.
o Streamlines visa criteria, interviews, and reviews for highly skilled immigrants with expertise in critical areas.
o Builds on commitments tech entities like OpenAI, Meta, Amazon, and Alphabet made in July.
G7 countries are expected to agree on a voluntary “code of conduct” for AI developers this week.
§ MA: CMS anticipates MA enrollment will grow 7% to 33.8M during open enrollment (October 15 – December 7), the slowest growth since 2017.
§ Exchanges: Open enrollment for exchanges begins November 1; consumers will have ~100 plans to choose from, down from 114 last year to minimize confusion.[iii]
o As of June, ~350K people who lost their Medicaid coverage had enrolled in an Exchange.
§ Risk adjustment program: CMS noted Bright Health Group and Friday Health Plans are unable to pay ~$1.1B of their 2022 ACA risk adjustment pool dues into the risk adjustment program that calls for insurers that cover healthier Exchange customers to transfer funds to those that insure sicker enrollees.[iv]
§ 340B: HRSA released a notice requiring hospitals participating in 340B to register offsite clinics with HRSA and list them on Medicare cost reports to qualify for 340B, a reversal of the previous rules that eased the certification process.[v]
§ Surprise billing: The Biden Administration released an updated proposal on the independent dispute resolution (IDR) process of the No Surprises Act designed to increase early communication between insurers and providers.[vi] This includes:
o A requirement insurers supply claim adjustment reason codes and remittance advice remark codes at the initial payment or notice of denial.
o Changing batching requirements.
§ ESRD: CMS issued the End-Stage Renal Disease (ESRD) Prospective Payment System final rule for CY2024 including updating the payment rate for renal dialysis services furnished by an ESRD facility to individuals with acute kidney injury and requirements for the ESRD Quality Incentive Program and the ESRD Treatment Choices Model.[vii]
§ Apple: The U.S. International Trade Commission issued an order that Apple’s watch violates medical technology company Masimo’s patent rights for its light-based pulse oximetry tech.[viii]
o President Joe Biden has 60 days to review the order and Apple is likely to appeal the order.
§ Opioids: The Biden Administration sent a letter to U.S. schools to keep an opioid overdose reversal drug on hand and train staff on how to use it as overdose deaths among adolescents 10 – 19 increased by 109% 2019 – 2021.[ix]
§ SAMHSA: SAMHSA announced a reorganization by topic areas and the addition of two new divisions: the Division of Children and School Mental Health and the Division of Suicide Prevention and Community Supports.[x]
§ Notable articles and studies:
o Mercer: 15% of large employers are offering at least one free medical plan to employees in 2024, a 4% YOY increase.[xi]
o Commonwealth Fund: Insured adults said it’s difficult to afford healthcare (43% with ESI; 57% with individual plans; 45% with Medicaid; 51% with Medicare).[xii]
· This causes them to delay or skip necessary healthcare or prescription drugs (29% with ESI; 37% with market plans; 39% with Medicaid; 42% with Medicare).
o JAMA: Study on insurer price variation found mean county-level prices were lowest in the central U.S. and Florida and higher in the upper-Midwest and Southeast.[xiii]
o Cigna’s Vitality in America study: Downward shifts in physical, emotional, and financial, but optimism is increasing.[xiv]
· Affirms link between high vitality and workforce productivity.
· Gen Z adults report the lowest levels of vitality, driven by poor mental health, stress about finances, and 83% report experiencing negative impacts of social media.
o Bloomberg Law overview of the National Labor Relations Board’s new rule for determining when multiple businesses jointly employ the same workers.[xv]
o Fortune’s 100 Fastest Growing Companies: The industrial sector led the list with the most companies and a 108% three-year average annual earnings growth rate.[xvi]
§ Congressional redistricting:
o A federal judge ordered Georgia to draw new Congressional districts by December 8.
o North Carolina’s state legislature approved new Congressional district that could help Republicans pick up <4 seats.
§ The American Independent Medical Practice Association (AIMPA) launched with 5K physicians as an advocacy organization for independent practices.[xvii]
§ Morgan Stanley named Ted Pick, head of investment banking and trading, as the next CEO, effective at the end of 2023.
§ Financial guidance platform NerdWallet launched a secured credit card focused on helping consumers build their credit responsibly.
§ Google launched the ability for commuters in certain locations to store transit passes in their digital wallets.
§ $50M+ health deals include:
o Google has agreed to invest <$2B in Anthropic (generative AI), following Amazon’s $4B investment.
o The University of Pittsburgh Medical Center and Pennsylvania’s Washington Health System signed a definitive merger agreement.
o Blue Owl Capital agreed to acquire funds managed by Cowen Healthcare Investments, which represents ~$1B in assets.
o Madison Industries agreed to buy CAE’s health care business for $224M.
o Merck KGaA agreed to pay $169M upfront for Jiangsu Hengrui Pharmaceuticals’ PARP1 inhibitor and ADC.
o Spire Healthcare Group acquired Vita Health Group (mental and physical health services) for £74M.
o Trend Health Partners acquired PrecisionGx (healthcare payment accuracy software).
o PicnicHealth acquired AllStripes (drug research and tracking).
o Isto Biologics merged with Advanced Biologics.
o Lovell Minnick Partners acquired a majority stake in ACU-Serve (post-acute healthcare RCM).
o Aiolos Bio (biotech) raised $245M in Series A funding from RA Capital Management, Atlas Venture, Bain Capital Life Sciences, Forbion, and Soffinova.
o Triveni Bio (I&I disorder antibodies) raised $92M in Series A funding, co-led by Atlas Venture and Cormorant Asset Management.
o Lexeo Therapeutics (gene therapy) set IPO terms to 9M shares at $13 – $15.
o Aimei Health Technology (small-cap healthcare SPAC) increased its IPO size by 20% to $60M.
o Citius Pharma plans to spin off its oncology unit and merge it with TenX Keane Acquisition.
o Sanofi said it plans to split off its consumer health division.
o International Flavors & Fragrances is seeking to sell its pharma unit for ~$3.5B, per Bloomberg.
o OrbiMed raised $4.3B for its funds, including its ninth flagship healthcare VC fund.
o Revelation Partners (healthcare VC) raised $608M for its fourth fund.
o Abingworth raised $356M for a new clinical co-development, co-investment fund.
o Sofinnova Partners raised $200M for its first digital medicine VC fund.
The Jory Weekly is authored by Robyn Lippert.