What the CVS Health CEO Shuffle Has to Do With Emerging Consumer AI Tools

As my readers know, just a few weeks ago, I blogged about how Artificial Intelligence (AI) tools are starting to emerge which can help ordinary consumers/patients navigate the overly-complicated U.S. Healthcare space. For example, I wrote about a clever AI tool called "Fight Health Insurance" which will take commercial healthcare insurance denial letters and enable patients to scan those letters, answer a few questions, and get nearly-instant appeals letters they can snail-mail to their insurance company's appeals department which I blogged about at https://blog.sstrumello.com/2024/09/harness-ai-artificial-intelligence-to.html which are kind of interesting, are driven by actual patients and can potentially save you some time in a laborious aspect of the U.S. healthcare system, which is appealing "adverse decisions" denying care which your doctor has prescribed.

But while AI can compose seemingly well-written text (with occasional errors; the AI tools which exist as of autumn 2024 are certainly not foolproof), for some things which I use my computer for, I am finding many AI tools have certain guard-rails meant to protect companies' advertisers from their own AI tools. Those guard-rails act as impediments to accessing information in order to protect their own advertising dollars.

For example, I am not a paid subscriber to any healthcare publications, however, sometimes I have found that I can retrieve the entire text (or much) of some entire articles simply by going to the html version of the a webpage for an article using my laptop (powered by Microsoft Windows; I have no clue about doing it on Apple Macintosh computers; I've also been unable to do so on mobile devices such as smartphones or tablet computers) by hitting "CTRL" and "U" concurrently and then using the search function to look for some of the article text which appears on the preview. That method helps me find the text in seconds, then I copy the text (including the html formatting), paste it into Notepad, and then I would manually strip-out all of the html formatting code (eliminating any text formatting or links in the article), and voila, on certain publications such as Crain's Modern Healthcare, I have been able to find the text for entire articles. Why not harness AI tools to do that and save myself some time? In theory, it sounds nice, although it doesn't always work out, it depends on exactly how the publications paywalls function.

For example, last week, Crain's Modern Healthcare magazine published an article about the Wall Street response to the CEO shakeup at CVS Health. For an investment of about 5 minutes of my time, I was able to use that method to retrieve the full text of the article, and I did little more than copy the raw html and then manually stripped the html code out, or in this case, I used AI tools to strip-out the html formatting on my behalf.

Wall Street weighs in on CVS Health CEO shakeup 
Lauren Berryman, Modern Healthcare by Crain's
October 18, 2024

Article link:
https://www.modernhealthcare.com/insurance/analysts-cvs-health-karen-lynch-david-joyner-aetna 

With Karen Lynch out and David Joyner up at CVS Health, Wall Street analysts expressed mixed sentiments about the company’s decision to promote internally but haven’t changed their long-term outlook on the healthcare giant.

Lynch, whom Joyner replaced as president and CEO on Thursday, faced a deluge of challenges during her three-year tenure leading CVS Health. Issues have grown more acute the past two years as its health insurance subsidiary Aetna endures high medical costs and ousted its president, its pharmacy benefit manager subsidiary CVS Caremark faces federal enforcement actions, its CVS Pharmacy retail subsidiary closes stores, and the company executes layoffs.

When Lynch stepped into the president and CEO role at CVS Health on Feb. 1, 2021, the company’s stock opened at $72.08. On Friday, shares opened at $59.54 and closed at $60.35, down 5.2% from the prior day.

That provides an explanation for Lynch's departure, and for investors previously calling for the company to break up, an outcome Joyner ruled out in an interview with the Wall Street Journal.

"It is no secret that our industry faces significant and dynamic challenges, and that CVS Health must make financial and operational improvements to drive elite execution and maintain our position as a leading healthcare company," Joyner wrote in a memorandum to CVS Health employees Friday, according to Bloomberg News. "I need your help," he wrote.

Here's a sample of the immediate reaction to CVS Health's blockbuster announcement:

On CVS Health's future

"Concurrent with today's CEO announcement, CVS Health confirmed that three-quarters of its businesses, led by Caremark and CVS stores, continue to perform at or above expectations, reflective of the hard work, skill and acumen of the people of CVS. Losses in Aetna's Medicare Advantage product, which Glenview estimates for 2024 will approximate $3.4 billion or -5% operating margins, reflect the poor decisions and risk management of a select few. We believe these issues are quite fixable with strong leadership and appropriate board oversight and risk-management." — News release from Glenview Capital Management, which owns an estimated $700 million stake in CVS Health

"At the end of the day this still comes down primarily to stabilizing Aetna and [Health Care Benefits]. ... But we still need to actually get there, and today that is not happening." — Research note from Michael Cherny and colleagues at Leerink Partners

"The most important fundamental remains TBD — the hoped-for recovery in Aetna." — Research note from John Ransom and Parker Snure at Raymond James

"The announcement also appeared to lean into the value of the integrated business model that CVS currently operates. So not only is a breakup announcement not coming in the near future, it may never come." — Research note from Julie Utterback at Morningstar

On Joyner's promotion

"Investors may have been hoping for new blood from outside the organization." — Utterback

"An internal promotion instead of a search process is curious, but we don't see it as a strong signal in the context of the existential questions facing the company." — Research note from Jonathan Palmer at Bloomberg Intelligence

"We believe the company's culture, governance and leadership should be strengthened by those with both appropriate industry experience as well as fresh perspectives. ... All material decisions impacting the future of CVS should be addressed by an enhanced board that incorporates such external perspectives. ... We look forward to engaging with David Joyner in the near future to discuss opportunities to enhance the performance, culture and governance of this iconic institution to drive value for all stakeholders." — Glenview Capital Management

On Lynch's exit

"The decision by Karen Lynch and the board to offer and accept her resignation is one we respect and support. ... We thank Ms. Lynch for her years of service to Aetna and CVS Health along with her candor and integrity in recent conversations and wish her well in her future endeavors." — Glenview Capital Management

"We certainly were not expecting a management change today, although we understand the rationale behind it following another quarter of underperformance. The heat has seemingly been on CEO Karen Lynch given CVS' recent struggles, heavily driven by the [Health Care] Benefits segment (Aetna) that she came from. It is hard, given the operational and stock underperformance, to say a change at the top is undeserved." — Cherny and colleagues

"We are not surprised by the management change given the execution shortfalls at CVS, especially at the Aetna medical insurer that Lynch previously led." — Utterback

"Prior misjudgments left the board little wiggle room to shore up prospects outside of finding new leadership." — Palmer

Nona Tepper contributed to this story.

I have come to realize some of these relatively new AI tools are coded to avoid enabling users from harnessing AI tools to navigate paywall exclusions, but they claim it is about copyright protection because the companies could be sued for copyright issues. But the thing is that there is absolutely NOTHING in U.S. copyright law specifying that users cannot simply ignore html formatting to locate article text hidden by paywalls; rather that is code which the companies [providing the AI tools] are using to protect their own lucrative advertising businesses. 

Of note is that Alphabet's Google relies far more on advertising than does Microsoft which is a more traditional software company. I have not extensively used alternative AI tools such as OpenAI's ChatGPT (the latter being jointly funded by the slime-ball Elon Musk, but to see if that one might be slightly less protective of advertiser interests; it is possible that other AI tools could be less protective of advertisers because they do not really have any). However, the html code reveals some publisher's article pages only list a short excerpt of the full article text anyway; if the publisher does not do so, then they are not really trying very hard to protect their content IMHO.

However, extracting text from an html page might be the type of task which Artificial Intelligence (AI) tools such as Google Gemini, Microsoft Bing Copilot or Open AI's ChatGPT might be well-suited to handle, and yet when I entered my query into those tools as follows, I received a variety of answers. Below was how those AI interaction played out. I typed the following text into the AI input (using several different AI tools).

I typed: "Using the html version of the article found at https://www.modernhealthcare.com/insurance/analysts-cvs-health-karen-lynch-david-joyner-aetna please remove the html formatting and return the article text"

Google's Gemini responded: 

"I don't have the ability to directly access and process information from websites" followed by a copy of the article's headline.

On the other hand, Microsoft Copilot did slightly better, responding to my inquiry:

"I'm sorry, but I can't provide the full text of the article as it is copyrighted material. However, I can give you a brief summary of the key points if that would be helpful. Would you like me to do that?"

To Copilot's credit, when I responded: "Yes, please provide a brief summary", Copilot's brief summary was actually the bulk of the Modern Healthcare article text, therefore my assessment was that was fairly decent. Here was exactly what Copilot came back with:

"Sure! Here's a brief summary of the key points from the article":

• CEO Change: CVS Health has replaced its CEO, Karen Lynch, with David Joyner
• Lynch stepped down as CEO of CVS Health after facing numerous challenges during her three-year tenure
• Challenges Faced: Under Lynch's leadership, CVS Health encountered high medical costs, federal enforcement actions against its pharmacy benefit manager subsidiary CVS Caremark, store closures, and layoffs
• Wall Street Reaction: Analysts have mixed sentiments about the leadership change, but haven't significantly altered their long-term outlook on CVS Health
• Financial Performance: CVS Health has repeatedly missed earnings targets, leading to unrest among shareholders and activist interest
• The company also cut its financial expectations for the third time in August and announced plans to cut 2,900 workers
• New CEO's Message: David Joyner reached out to employees, acknowledging the significant challenges the industry faces and seeking their support"

Meanwhile, Open AI's ChatGPT responded slightly differently, with the following:

"I can't access external content like the article you mentioned. However, you can copy the text here, and I'll help you clean it up or summarize it as needed"

Hence, I could use a combination of copying the raw html article text, then using several different AI tools (such as using ChatGPT with a command of: "Please remove the html formatting code from this and leave only the text with relevant paragraph breaks in: <html>ARTICLE TEXT</html>" and entering it. 

By using three different AI tools, I was able to generate the complete article text in just minutes, and the AI tools assisted me in doing it more quickly (but not more reliably than doing it manually). Key was to understand which ad-revenue and security quirks each AI tool had in place and use the AI tool best suited to my particular need to maximize my productivity.

As I noted, my feeling is that publishers who do not put their content completely behind paywalls and simply respond with an excerpt of the entire article text are kind of exposing themselves to what I did by using the html version to find their complete article text. That's really on them. Some publishers are much more militant about protecting their content. But AI tools demonstrated a very mixed ability to manage such inquiries. My perspective was that some were clearly better than others.

Personally, I have found going to my public library and checking out a book such as "Writing AI Prompts For Dummies" enables me to make my queries sufficiently detailed to effectively leverage some popular AI tools including Google Gemini, Microsoft Copilot and ChatGPT. 

I have mixed feelings about each. 

I tend to use Google Gemini most frequently (I type "bard.google.com" rather than "gemini.google.com" because its only four letters; whoever rebranded Google's AI tool made a big mistake with such a long name, but whatever), but as this example shows, I found better luck with Microsoft's Copilot and ChatGPT's large language model AI tools worked better in this instance than did Google's Gemini. But using each to determine which one is best suited can be helpful. 

Who knows? 

You might find combining their writing capabilities together will enable you to come up with the perfect article. But for more mundane tasks, using several AI tools for different parts of the job worked well.

The FTC Sues the Big 3 PBMs, but Pharma Could Face a Similar Fate Soon

Well, it finally happened on Friday, September 20, 2024. 

Specifically, the U.S. Federal Trade Commission (FTC) filed a complaint in Administrative Court alleging that CVS Health's Caremark PBM, Cigna's Evernorth/Express Scripts PBM and UnitedHealth's Optum Rx PBM had accepted money in the form of cash "rebates" from drugmakers in exchange for keeping lower-cost insulin off their formularies (lists of approved drugs). The lawsuit also named their respective affiliated "Group Purchasing Organizations" [GPOs] — started in recent years to negotiate cash rebate payments with drugmakers — known as Zinc Health Services, Ascent Health Services, and Emisar Pharma Services respectively, which they now use primarily for "rebate aggregation". 

The FTC complaint is over the PBMs' role in distorting the U.S. insulin market. It claims that the PBMs' practice of demanding ever-larger cash rebates from drug companies in order to preclude all legitimate competition (from less expensive unbranded insulins and true biosimilars alike) had resulted in artificially-inflated costs for patients and employer health insurance plan sponsors alike, and had more broadly distorted the market for prescription drugs sold in the U.S. 

The FTC's "Interim Report" https://www.ftc.gov/news-events/news/press-releases/2024/07/ftc-releases-interim-staff-report-prescription-drug-middlemen documented various PBM practices which it said had spiked the U.S. cost of insulin by over 1200% (one thousand two hundred per cent) over the past two decades (see https://www.rand.org/pubs/research_reports/RRA788-2.html for more). For its part, Cigna's Express Scripts PBM business sued the FTC in what some analysts described as a baseless lawsuit effectively demanding the FTC remove the Interim Report, calling the report's conclusion "defamatory". 

But a recent FormularyWatch article (see https://www.managedhealthcareexecutive.com/view/can-express-scripts-win-its-lawsuit-against-the-ftc- for the article) entitled "Can Express Scripts Win its Lawsuit Against the FTC?", and the one-word conclusion of that article was NO. The article concludes that the Express Scripts lawsuit was "on a fast track towards dismissal, devoid of any legal foundation or public policy merit." 

It is worth acknowledging that the FTC has several legal authorities that may apply to these practices, including Section 5 of the FTC Act, Section 3 of the Clayton Antitrust Act, Section 2 of the Robinson-Patman Act, and the Sherman Act. 

For several years, I have predicted the FTC litigation was coming (catch one of my posts HERE for more) when the FTC voted (unanimously) in 2022 to initiate a comprehensive 6(b) study of the Pharmacy Benefit Manager (PBM) Industry which was referred to as "FTC Matter No. P221200". Curiously, the FTC decided to release an "Interim Report" (rather than a full report) on its previously-announced PBM 6(b) study, although its litigation against the PBM will not be forced to rely exclusively on the FTC's own research (more on that in a second). Still, for patients stuck paying too much for prescriptions, it has taken simply too long to reach this point, only now the long-awaited litigation is finally here. 

The FTC filed its legal complaint in Administrative Court which accused CVS Health's Caremark PBM business, Cigna's Express Scripts PBM business, and UnitedHealth's OptumRx PBM business unit of creating a "perverse" system of prescription drug rebates that favored insulins that was sold at much higher list prices in order to "line their pockets" with rebates at the expense of patients, who were forced to pay more than they should have for the medication. From my perspective, that sounds completely right based on my personal experience, hence there's nothing defamatory about it.

"As the complaint explains, the PBMs have created and manage a system in which drug manufacturers compete for formulary placement by raising (not lowering) drug list prices so they can feed the higher rebates that PBMs demand," Rahul Rao, FTC Bureau of Competition Deputy Director, wrote in a statement (see https://www.ftc.gov/news-events/news/press-releases/2024/09/ftc-sues-prescription-drug-middlemen-artificially-inflating-insulin-drug-prices for the statement). "This perverse system results in billions of dollars in rebates and fees for the PBMs and their health plan sponsor clients — but does so at the expense of certain vulnerable diabetic patients who must pay significantly more out-of-pocket for their critical medications [such as those with high-deductible insurance plans]." 

Note that an Administrative Court is a type of specialized court on administrative law, particularly disputes concerning the exercise of public power. Their role is to ascertain that official acts are consistent with the law. Matt Stoller who is research director of the American Economic Liberties Project, wrote what this means:

The FTC isn't using its authority under the Sherman Act, but a special authority to bar "unfair methods of competition," known as Section 5. It is also doing a case under its Administrative Court, so that it'll move quickly and not be bogged down for years in a Federal docket. The specific claims are that the Big Three paid off manufacturers to "inflate insulin list prices," they sought to restrict "access to more affordable insulins," and they shifted "the cost of high list price insulins to vulnerable patient populations."

Officials expected the redacted version of its complaint to be made public on Monday, September 23, 2024, but I only discovered the link to it on the FTC's Rahul Roa's LinkedIn page, which can be read at https://www.ftc.gov/legal-library/browse/cases-proceedings/221-0114-caremark-rx-zinc-health-services-et-al-matter-insulin, although the complaint reads much like the Interim Report. 

The FTC's Notice of Contemplated Relief is as follows:

1. Prohibit Respondents [the big PBMs] from excluding or disadvantaging low Wholesale Acquisition Cost (WAC) versions of high WAC drugs made by the same manufacturers whenever the Respondent covers the high WAC drug on a formulary. In other words, the PBMs would not be permitted to exclude lower-priced versions of insulins such as Novo Nordisk's "unbranded" (sold under the generic drug name) version called Insulin Aspart Injection if they put Novolog or Fiasp on-formulary.
   
   
2. Prohibit Respondents from accepting compensation based on a drug's list price or a related benchmark. This is a big one, and is at the source of most of the big PBMs' revenues.
   
   
3. Prohibit Respondents from designing—or assisting with designing—a benefit plan that bases patients' deductibles or coinsurance on the list price, rather than the net cost after rebates. Another big deal; again, the bogus list prices are often what patients' cost-sharing and co-pays are based upon.
   
   
4. Order any other relief appropriate to correct or remedy the Respondents' violations. This would be seeking the Courts to make these relief efforts to happen.

But we also know that the insulin therapeutic class has an abundance of third-party data including from the FTC's own 6(b) study, some of which was published as an "Interim Report", as well as from the Senate Finance Committee Report, plus peer-reviewed academic research such as the research undertaken by University of Southern California and even from an audit undertaken by the U.S. Office of Personnel Management Office of the Inspector General's Office of Audits and ALL of that third-party data and research is admissible in court, and can be used by FTC in its litigation against the PBMs. However, more broadly, assuming the FTC proves it is being done for insulin, it is believed the same practices are being applied to every prescription drug class sold (to one degree or another) in the U.S. 

We also know that the FTC lawsuit would argue that CVS Caremark, Cigna Express Scripts and United Health's OptumRx had engaged "in anticompetitive and unfair rebating practices," leading to the artificial insulin price inflation, as well as impairing access to lower-cost drugs (including both unbranded "authorized generics" and legitimate biosimilars), and shifting "high insulin list prices to vulnerable patients," according to the FTC statement (see https://www.ftc.gov/news-events/news/press-releases/2024/09/ftc-sues-prescription-drug-middlemen-artificially-inflating-insulin-drug-prices for the announcement). 

As described in the complaint, one PBM Vice President acknowledged that this strategy allowed the Big Three PBMs to continue to "drink down the tasty ... [cash] rebates" on high list price, highly rebated insulins. 

Of course, in March 2023, in rapid succession, Eli Lilly & Company, Inc. https://www.prnewswire.com/news-releases/lilly-cuts-insulin-prices-by-70-and-caps-patient-insulin-out-of-pocket-costs-at-35-per-month-301758946.html, followed by Novo Nordisk, Inc. https://www.prnewswire.com/news-releases/novo-nordisk-to-lower-us-prices-of-several-pre-filled-insulin-pens-and-vials-up-to-75-for-people-living-with-diabetes-in-january-2024-301771409.html, and then Sanofi Aventis LLC https://www.globenewswire.com/en/news-release/2023/03/16/2629188/0/en/Press-Release-Sanofi-cuts-U-S-list-price-of-Lantus-its-most-prescribed-insulin-by-78-and-caps-out-of-pocket-Lantus-costs-at-35-for-all-patients-with-commercial-insurance.html all collectively announced they were slashing insulin list prices (Lilly was effectively abandoning the rebate-contracting sales model for the insulin therapeutic class of drugs). While it was a blow to the PBM-promoted rebate-contracting sales model for insulin, drug companies are nevertheless continuing to use the rebate-contracting sales model for other classes of drugs which remains a problem. One reason insulin-makers decided they were able to abandon rebate-contracting sales for insulin was because a provision of the American Rescue Plan of 2021 https://www.kff.org/policy-watch/what-are-the-implications-of-the-recent-elimination-of-the-medicaid-prescription-drug-rebate-cap/ meant they would be forced to actually PAY MEDICAID, and pharma would never do that. 

Predictably, the PBMs had different opinions on the FTC litigation. For example, Bloomberg Law reported (see https://www.bloomberg.com/news/articles/2024-09-20/ftc-sues-drug-middlemen-over-manipulating-insulin-market for the article): 

Cigna's Chief Legal Officer Andrea Nelson said the lawsuit "continues a troubling pattern from the FTC of unsubstantiated and ideologically-driven attacks on pharmacy benefit managers." She added that the company intends to "protect our ability to lower drug costs" for clients and members.

A spokesperson named Elizabeth Hoff from rival UnitedHealth's Optum Rx said in an email that the suit "demonstrates a profound misunderstanding of how drug pricing works." 

Finally, a CVS Health spokesperson named David Whitrap said in an email "Any action that limits the use of these PBM negotiating tools would reward the pharmaceutical industry and return the market to a broken state".

Interestingly, the FTC complaint did not exactly let the big insulin-makers off-the-hook. The vertically-integrated (with commercial healthcare insurance companies) PBMs are merely the first targets. For several years, the FTC has been warning pharma that trying to prevent competition is illegal restraint of trade which can be prosecuted. FTC Bureau of Competition Deputy Director Mr. Rao's official statement concluded by saying:

"Although not named in this case, all drug manufacturers should be on notice that their participation in the type of conduct challenged here can raise serious concerns, with a potential for significant consumer harm, and that the Bureau of Competition reserves the right to recommend naming drug manufacturers as defendants in any future enforcement actions over similar conduct." 

For its part, a representative for Eli Lilly & Company told Bloomberg Law that the company has cut insulin prices since 2017 [when it became the first insulin-maker to introduce an identical, unbranded copy of Humalog sold at a lower price because there were few rebates], and that "the FTC complaint focuses on aspects of healthcare where the drugmaker has long sought to reform".

Rival Sanofi told Axios that it agrees with FTC that pharmacy benefit managers have used rebates to benefit themselves. 

Harness AI (artificial intelligence) to Beat Health Insurance Company Claim Denials

Let's face it: U.S. commercial healthcare insurance companies are incredibly greedy and they don't fundamentally give a $#!+ about patients' health. Their only concern is collecting as much money as possible in premiums while minimizing the amount of money in claims they pay, screwing the Federal government out of billions of dollars by administering Medicare with so-called "Medicare Advantage" plans known as Medicare Part C (for which they make money on/by denying care that regular Medicare would have paid without question), and collecting legally-exempted rebate kickbacks from drug companies which are paid in cash to their PBM units for preferred drug formulary placement or to prevent coverage of cheaper alternative drugs (like generics and biosimilars) via inappropriate, kickback-driven "formulary exclusions". 

As healthcare insurance company whistle-blower Wendell Potter (see https://healthcareuncovered.substack.com/p/unitedhealth-group-the-biggest-private for his write-up) reported:

UnitedHealth's total revenues for the first three months of 2024 were just shy of $100 billion, an increase of 8.6% from the $91.9 billion the company reported for the first quarter of 2023. Revenues have more than tripled over the past decade as the company has moved aggressively into health care delivery, government programs and the pharmacy benefits [management] space. During the same months in 2014, revenues totaled just $31.7 billion. Back then UnitedHealth was the 14th largest U.S. company. It is now the fifth largest, having leapfrogged over companies like Ford and General Motors.

A big driver of United Health's growth has been the taxpayer-supported Medicaid and Medicare programs. Enrollment in the Medicaid plans managed by UnitedHealth has increased nearly 80% since 2014, from 4.3 million to 7.7 million. Enrollment in its Medicare Advantage plans has more than doubled over the same period, from 2.99 million in 2014 to 7.76 million. While the growth in Medicare Advantage slowed this year, UnitedHealth, along with Humana and CVS/Aetna, have captured 86% of new enrollees in the privatized version of Medicare so far this year. Medicaid enrollment declined by 165,000 as states began eliminating coverage for many low-income families that had been covered temporarily with increased federal funding during the pandemic.

In a different article, (see https://healthcareuncovered.substack.com/p/unitedhealths-self-dealing-is-accelerating for that write-up), Wendell Potter added:

Optum is a dominant provider of [which includes Optum's physicians, PBM, claims integrity processing, and revenue cycle management] all these other services. One subdivision, Optum Health, acquired or hired 20,000 physicians [practices] over the past year and now has 90,000 on its roster, or about 10% of all doctors in the U.S. Another subdivision, OptumRx, is the third-largest PBM, a kind of company that comes up with and administers drug benefit plans for insurers, or about 22% of the market. It's also the fourth-largest pharmacy, with about 7% of the market.

Of course, the preceding three paragraphs are exclusively about UnitedHealth, but its big rivals include CVS Health's retail pharmacy chain (the country's biggest) and its Aetna insurance business as well as its Caremark PBM unit plus ancillary businesses such as CVS Healthspire and Oak Street Health, while Cigna's business unit branded as Evernorth operates both the PBM Express Scripts as well as an entity known as MD Live. 

My point is that these insurance companies are giants and they don't really care about whether you receive care your employer pays premiums for; in fact, they would prefer you did not receive any care. They make more money by denying care.

An excellent overview of the insurance company appeals process can be read at https://t1dexchange.org/denied-by-insurance-a-pharmacist-tells-you-how-to-appeal/ and is worth a read. In spite of the ability to appeal insurance company denials, it's still a hassle to deal with. That's where some emerging innovation can make the task a lot easier.

As a point of reference, the nonprofit journalism wire service known as ProPublica has built a tool to help patients to find out the reason a health insurance has been denied a particular claim, and for the patient to see the actual reason which is listed in the insurance company's denial notes. To use this tool, visit https://projects.propublica.org/claimfile/ and follow the instructions. Most of these bogus claims denials can be attributed to a third-party company EviCore, which is a business unit of Cigna's PBM unit known broadly as Evernorth (which also owns/operates Express Scripts) which often denies prior authorization requests written by doctors. To read ProPublica's coverage of how EviCore operates, visit https://www.propublica.org/article/evicore-health-insurance-denials-cigna-unitedhealthcare-aetna-prior-authorizations.

Personally, I have only occasionally had routine care denied for vague and non-specific reasons such as "Not Medically Necessary" (especially when a doctor prescribed it and no one from the insurance company examined me, so who are they to question my own doctor?). Fortunately, such vague denial reasons tend to be fairly easy to dispute via appealing those decisions, but appeals are a time-consuming hassle to deal with and many people do not bother.

What if there was a way to make that process easier?

Meet the "Fight Health Insurance" AI Tool

Well, now there is something which harnesses the power of artificial intelligence (AI) which is still in beta, but may be poised to make the lives of covered individuals easier.

On August 23, 2024, The San Francisco Standard reported in an article entitled "'Make your health insurance company cry': One woman's fight to turn the tables on insurers" (see https://sfstandard.com/2024/08/23/holden-karau-fight-health-insurance-appeal-claims-denials/ for the article) about a San Francisco tech worker named Holden Karau's efforts to harness AI to manage the laborious task of writing appeals letters.

"Instead of passively accepting the providers' decisions, she'd spend hours writing letters and filling out forms to appeal. It usually worked: Out of roughly 40 denials, she won more than 90% of her appeals, she estimates.

She began helping friends file appeals, too, then asked herself a question that's typical for engineers: Could she figure out a way to automate the process?"

After a year of tinkering, she just launched her answer: Fight Health Insurance https://fighthealthinsurance.com/, an open-source platform that takes advantage of large language models to help users generate health insurance appeals with AI.

 

Today, Fight Health Insurance's "About Us" page describes itself this way:

"We at Totally Legit Co (of Delaware) decided to create 'Fight Health Insurance' (sometimes called by...more colorful names) because we're tired of dealing with health insurance denials. In our opinion, many health insurance denials are bogus, and the insurance companies depend on us not appealing them. We hope that by making it easier to appeal medical health insurance denials, we can change that calculus on insurance companies' part."

It added: 

"Fight Health Insurance is currently a passion project. We have day jobs, but most of us have had terrible experiences with health insurance and we're tired of watching health insurance companies grind down our friends (and tired of being ground down by them ourselves)."

"Fight Health Insurance" even references Breakthrough T1D (fka JDRF) on the website under the category of "Other Resources" specifically for diabetes. I wonder if Breakthrough T1D knows they are referenced here? If so, it would seem to be a good talking point for the organization.

In order to use the "Fight Health Insurance" AI tool, the first step involves scanning your denial letter. This needs to be done using optical character recognition (OCR) software either on your device/phone (recommended for increased privacy) or on "Fight Health Insurance" servers. OCR makes the text in the denial letters understandable to machines, allowing its generative AI model to produce potential appeals letters for the patient to choose from.

As for OCR software applications, there are quite a number of those out there. My preference is to use free tools when possible. Google has several OCR tools of its own (Google Workspace has a fee, although it has others at no charge), but I also have Microsoft Office (these days, Microsoft sells a subscription-based software model for Office software [Word, Excel, PowerPoint]), but somehow I managed to find a one-time purchase version which I prefer), hence I went with the Microsoft OCR tool which is known as "Microsoft Lens" which I downloaded on my smartphone because it was free with MS Office (and I trust Microsoft slightly more than I trust Google with such info), hence I downloaded that on my iPhone which is where I typically take pictures of printed denial letters from my insurance.

"Fight Health Insurance" Outlines Steps to Overturn Insurance Denial

1. After scanning the denial letter using OCR software, load the OCR-scanned denial letter into the Fight Health Insurance website
   
   
2. Answer questions based on health conditions
   
   
3. Within seconds, the Fight Health Insurance AI program will generate an appeal letter with accurate information and circumstances
   
   
4. Then, you would submit the appeal letter along with the compiled documents to the insurance company
   
   
5. Follow up with the insurance company regularly to track the status of your appeal. Often, they're required [under state insurance laws] to respond in reasonable [sometimes as defined by state law; in the state where I now live, healthcare insurance companies are mandated to issue a decision within 60 days of the receipt of all necessary information].

I recently discovered the creator Holden Karau was interviewed by the news startup NewsNation, and the interview with her can be found below, or at https://youtu.be/lI26LrDU2dg?si=wdyV5UPHiRuNUnze:

To be sure, these are six steps which still involve a fair amount of work, although the AI part makes it faster, easier and more efficient for patients. Plus, the use of AI in dealing with commercial healthcare insurance company coverage [or denial] decisions is still very new. But perhaps it is not ironic that the commercial healthcare insurance companies are reportedly rendering decisions on denials using AI themselves, hence it seems to me that patients being able to deploy similar technology in order to fight seemingly baseless denials (like "Not Medically Necessary") is an appropriate use for this new technology. 

GLP-1 Inhibitor Demand Shows Strong Growth Among Those Looking to Lose Weight, Less Robust Growth Among Patients with Type 2 Diabetes

There is no denying the explosive growth in GLP-1 inhibitors, especially among those using the drugs to lose weight but do not have a clinical diagnosis of Type 2 diabetes. But we need to consider exactly where the demand is growing most. It is mostly from people just looking for pharmacologic help to lose weight, and less among those with more serious co-morbid medical conditions. 

For example, back in November 2023, research analysts from J.P. Morgan forecast (see their report at https://www.jpmorgan.com/insights/global-research/current-events/obesity-drugs for details) that the GLP-1 therapeutic category of drug would exceed $100 bn by 2030, which it predicted would be driven equally by Type 2 diabetes and obesity usage. However, the spit between T2D and obesity was a flawed assumption.

One of the J.P. Morgan authors Chris Schott, a Senior Analyst covering the U.S. Diversified Biopharma sector at J.P. Morgan, acknowledged that his company merely made an assumption when it was developing its financial model. All financial models are required to make various assumptions. Today, GLP-1s are only used by around 10-12% of T2D patients in the U.S. 

Schott noted "We model GLP-1 usage expanding to around 35% of diabetics in the U.S. in 2030, and would not be surprised to see upside to this number, especially as outcomes data continues to emerge". But its GLP-1 inhibitor forecast could account for around 9% of the total U.S. population, but the T2D/obesity split could easily shift. Doctors who treat Type 2 diabetes aren't as enamored with the drug class.

But since that time, U.S. demand has particularly shifted away from Type 2 diabetes and more towards obesity without Type 2 diabetes. Demand among Type 2 users has not grown robustly and even declined slightly, while demand has exploded among those looking for phamacologic assistance to lose weight.

According to a study published in July 2024 in the Annals of Internal Medicine (see the study [behind a paywall] at https://www.acpjournals.org/doi/10.7326/M24-0019 and two articles related to the study itself at https://www.cedars-sinai.org/newsroom/new-cedars-sinai-study-investigates-shifting-trends-in-glp-1ra-prescription/ and also at https://www.forbes.com/sites/ariannajohnson/2024/07/22/glp-1s-are-growing-in-popularity-as-weight-loss-drugs-but-losing-steam-among-diabetics-study-suggests/ for more information), researchers from Cedars-Sinai Medical Center in Los Angeles had examined 1 million first-time GLP-1 prescriptions in the U.S. between 2011 and 2023, but they separated patients by those who took GLP-1s to treat Type 2 diabetes, and those who didn't have Type 2 diabetes, but took the drugs for obesity (or obesity-related health conditions including high blood pressure and heart disease).

That study found that those who were prescribed the drugs for obesity or other obesity-related conditions had more than doubled between 2011 and 2023, particularly since 2020, while the amount of new patients prescribed GLP-1s for Type 2 diabetes decreased by almost 10% during the same period.

We are also seeing many obese people being prescribed Novo Nordisk's semglutide branded as Ozempic which is not even FDA-labeled for the indication of obesity, but for Type 2 diabetes, whereas its Wegovy brand which is labeled for obesity has struggled with a combination of over-exposure due to mass media advertising due to the company's prepaid media buys intended to stimulate demand even while the product has been in shortage, a sky-high price-tag for the drugs, and a somewhat less enthusiastic reception from practicing endocrinologists who have seen their patients struggle to get insurance coverage for the latest overpriced version of these drugs, along with less-than-overwhelming secondary benefits. 

By comparison, the cardiovascular benefits with Lilly/Boehringer Ingelheim's sodium-glucose cotransporter-2 (SGLT2) inhibitor known as Jardiance (empagliflozin) has better cardiovascular benefits than GLP-1 medicines, and it can be taken as a pill. There are a number of rival SGLT2 inhibitors (many are less costly) including Farxiga (dapagliflozin) from AstraZeneca, Invokana (canagliflozin) from J&J's Janssen Pharmaceuticals unit, and Brenzavvy (bexagliflozin) made by TheracosBio and sold by the Mark Cuban Cost Plus Drug Company and costs significantly less by having patients just pay cash instead. Mark Cuban Cost Plus Drug Company's cash-only pharmacy also now sells branded Farxiga [dapagliflozin]). On top of that, FDA has already approved one true generic of Jardiance (empagliflozin) from Zydus Pharmaceuticals, although Lilly/Boehringer Ingelheim sued and Zydus settled out-of-court with Lilly/Boehringer Ingelheim agreeing to keep its approved generic off-market until 2025 in a classic pay-to-delay example. 

On the secondary cardiovascular benefits of GLP-1 inhibitors, those were essentially pre-determined by Novo Nordisk in which trials appear to have been designed to prove a specific outcome, rather than truly randomized blind sampling in its effort to secure CMS (Medicare) coverage for the overpriced drugs. Guess what? weight-loss does improve cardiosvascular outcomes, but it is the weigh-loss and not a specific drug which causes those benefits. But no academic research have replicated those secondary benefits, although few studies have specifically looked for them either. But the U.S. Centers for Medicare and Medicaid Services (CMS) did not give Novo Nordisk a free gift; in order for Medicare to pay for Novo Nordisk's semaglutide products for obesity, a patient must have a clinical diagnosis of cardiovascular disease from a cardiologist (a CV disease diagnosis code must be indicated a prescription, making it very difficult to secure widespread prescriptions for vanity purposes as the drugs are being marketed).

Much of the obesity demand for these drugs is being driven by doctors willing to prescribe the overpriced medications by telephone or online without so much as an examination (so-called "drive-by" doctoring). 

Right now, the news cannot stop talking about GLP-1s and the growth trajectory is good. But remember: cheaper versions are already on the market (Teva's version of liraglutide [fka Victoza/Saxenda] has been available since June, and a bevvy of rival biosimilars of liraglutide are poised to hit the market starting December 26, 2024). We know that biosimilars of liraglutide are pending FDA approval decisions from Biocon, Sandoz, Amphastar Pharmaceuticals, and Lannett Company in addition to Hikma Pharmaceuticals which already has FDA approval, but is awaiting Teva's 6 month exclusivity to expire on December 26, 2024 when Teva's 6-month exclusivity period ends.

Medtronic Launches a New CGM known as "Simplera", the company also announces it is exiting the CGM business and outsourcing that to Abbott

This morning, there were press releases from both Medtronic (see Medtronic's release at https://www.prnewswire.com/news-releases/medtronic-announces-fda-approval-of-simplera-cgm-and-global-partnership-with-abbott-302216165.html for details) and also from Abbott Laboratories which were worth some attention.

Medtronic's press release was that the Food and Drug Administration had approved the company's "Simplera" CGM device, which it says will be the company's first disposable, all-in-one CGM that's half the size of previous Medtronic CGMs.

Medtronic's New Simplera CGM

But buried halfway through the Medtronic press release was this not-so-little tidbit:

Medtronic is excited to announce a global partnership with Abbott to expand CGM options for people living with diabetes. Under this unique agreement, the companies will collaborate on an integrated CGM based on Abbott's most advanced CGM platform. Abbott will supply Medtronic with a CGM that will work exclusively with Medtronic smart dosing devices and software across both automated insulin delivery and Smart MDI systems. These systems, including the Abbott-based CGM, will be sold exclusively by Medtronic.

Financial terms of the partnership and timing for commercial availability were not disclosed. In other words, going forward Medtronic will no longer even be manufacturing its own CGMs as it previously did, instead the company will outsource the manufacture of Medtronic-branded CGM sensors to Abbott. Abbott will make a CGM sensor version that is designed specifically to work with Medtronic insulin pumps and with the Medtronic/Companion Medical InPen smart insulin pen system.

Announced on August 7, 2024, the Simplera CGM's approval was accompanied by the introduction of a global partnership with Abbott to expand CGM options for individuals with diabetes. Under this agreement, the companies will collaborate on an integrated CGM based on Abbott's more advanced CGM platform and Medtronic Automated Insulin Delivery (AID) software which works with a CGM.

Separately, Abbott had its own press release (see the Abbott release at https://www.prnewswire.com/news-releases/abbott-enters-global-partnership-to-connect-its-world-leading-continuous-glucose-monitoring-system-with-medtronics-insulin-delivery-devices-302216439.html).

To be sure, the Medtronic/Abbott collaboration is a mutually-beneficial deal for both companies. Medtronic was a high-cost CGM manufacturer which could not match the Abbott's lower cost of making CGM sensors. But it is also kind of a slap in the face to Dexcom which tells everyone it is the only CGM brand which works with AID systems in the U.S. Dexcom, for its part, has partnerships for a number of insulin AID systems, although several are "non-exclusive" partnerships (including both Insulet/Omnipod as well as Tandem's pumps, although they both have more work to finish before their AID systems will work with Abbott's newest Freestyle Libre 3 model in the U.S. 

One reason you might not be aware of for Dexcom's current domination in U.S. AID systems is because Dexcom currently pays CVS Caremark/Aetna and United Healthcare's OptumRx legally-exempted rebate kickbacks for "formulary exclusion" of CGMs sold via the retail pharmacy channel which exclude "All other continuous glucose monitoring systems that are not DEXCOM brand". For its part, Abbott has a work-around to that, by introducing a cash-pay manufacturer coupon which I blogged about in December 2023. Unfortunately, most U.S. patients are clueless about their true out-of-pocket costs for CGM sensors. Otherwise, they would conclude Abbott's Freestyle Libre with its 14 day wear-time is significantly less costly than Dexcom's CGM sensors which only offer 10 day wear-time.

Regardless, with the recent Medtronic/Abbott alliance on CGMs, it will undoubtedly be a chip in Dexcom's armor of dominance of the North American CGM market. I believe that Abbott's newest sensors are superior to those of Dexcom's, and they are about 37% less expensive for patients. Money talks, Dexcom, and your ability to continue charging patients with T1D higher prices for identical sensors used in your 15 day Stelo product for the benefit of data-sharing and low/high blood glucose alarms may be ending sooner than the company realizes. The Medtronic/Abbott alliance will be yet another factor contributing to that. Perhaps it needs to reduce its CGM sensor production costs to less than $10/sensor even sooner than the company has been promising investors was its goal?

Abbott's "Freestyle Libre 3 Plus" May Push U.S. CGM Prices Down Further

In recent years, I have been underwhelmed with the American Diabetes Association's Scientific Sessions. This year's event was known officially as the ADA 84th Scientific Sessions and was held at the Orange County Convention Center in Orlando, Florida from June 21–24, 2024. But this year, like several of these events from preceding years, there has been less-and-less news which is fundamentally new at all; instead the research and the product announcements have typically already been known for quite some time. Product launches have been in publicly-held companies' investor releases for years. Most of what they are calling news is tired old repeats and more validation studies which don't address much which is fundamentally new research. But occasionally we learn unexpected new things.

Flying somewhat under the radar last month at the 84th Annual ADA Scientific Sessions was news from Abbott Laboratories that the company is planning to introduce a new "Freestyle Libre 3 Plus" sensor (see more on the news at https://hitconsultant.net/2024/06/27/abbott-unveils-freestyle-libre-3-plus/ for more). The "Freestyle Libre 3 Plus" (like the Freestyle Libre 3) is cleared by the FDA for compatibility with automated insulin delivery (AID) systems. While Libre currently lacks U.S. pump partners, several pump manufacturers operating in the U.S. including Insulet Omnipod and Tandem's pumps are officially "CGM platform neutral") meaning neither has an exclusive partnership with Dexcom.

Beyond Insulet and Tandem, Abbott Freestyle Libre 3, and I presume the newer "Freestyle Libre 3 Plus", is compatible with the mylife Loop AID system from Ypsomed and CamDiab Automated Insulin Delivery (AID) system sold in European countries including Germany, although it does not currently have a U.S. pump partner. Ypsomed has attained U.S. FDA clearance for the mylife Loop pump system. Originally, Ypsomed had signed a deal with Eli Lilly & Company, then in December 2022, Lilly backed out of the partnership, leaving Ypsomed without an established U.S. partner. The mylife Loop system was covered in Drug Delivery Business News https://www.drugdeliverybusiness.com/abbott-freestyle-libre-3-automated-insulin-delivery/ on December 21, 2022. 

At present, neither Insulet nor Tandem have any pumps sold in the U.S. which are calibrated to work with Libre 3 because Dexcom pays the big PBMs legally-exempted rebate kickbacks for "formulary exclusion" of all competing CGMs (including most notably) Abbott Freestyle Libre. Nevertheless, these pump companies also sell their products in Europe where Abbott CGMs dominate the local CGM market share landscape, which means they could easily sell their AID systems compatible with Libre and it would be a fairly routine matter to do so.

Justin Eastzer, Host & Founder of Diabetech YouTube and podcast covered the "Freestyle Libre 3 Plus" as the first item he covered in his ADA Scientific Sessions highlights. Catch his coverage podcast at https://www.diabetechpodcast.com/e/future-of-diabetes-tech-takeaways-from-ada-2024/ or on his YouTube channel at https://youtu.be/FTjeMorMY30?si=9X0SbDEfZ7li4jqE. I kind of stole the image in this post from him. 

One of the more important things which differentiates Abbott Freestyle Libre CGMs in the U.S. is the lower cost. According to the Costco Member Prescription Program https://www.costco.com/cmpp, the retail price differences between Abbott and Dexcom sensors are negligible. For example, Costco Pharmacy's prices for CGM sensors are as follows:

• Dexcom G6 price for each sensor is $67.09 (note: Dexcom only sells boxes of three G6 sensors, which must be divided to derive a per-sensor cost)
• Abbott Freestyle Libre 2 price for each sensor is $63.66
• Abbott Freestyle Libre 3 price for each sensor is $63.66
• Dexcom G7 price for each sensor is $59.02

That means all sensors range in price from $59.02 to $67.09, or at most $8.07 difference for the older Dexcom G6 model which is being phased-out anyway. But that's merely the cash price for these CGM sensors. The true cost must be divided by the number of days which each sensor can actually be worn. Longer wear-time means the cost/day of usage is lower unless a patient's insurance subsidizes the cost with partial coverage. Still, using this methodology, below are the costs per day of usage for each CGM sensor model/brand when purchased from Costco Pharmacy:

• Dexcom G6 cost per day of usage is $6.70
• Dexcom G7 cost per day of usage is $5.90
• Abbott Freestyle Libre 2/3 cost per day of usage is $4.55

Clearly, with its 14-day wear-time compared to Dexcom's 10-day wear-time means that Abbott Freestyle Libre sensors are less costly on a cost per day basis. With 15-day wear-time for Abbott Freestyle Libre Plus (assuming the cost is the same as the regular Libre 3 model), the cost per day of usage would be $4.24/day of wear, daily savings of an additional $0.30. Insurance company PBMs have inserted themselves into the cost-benefit equation. United Healthcare's OptumRx and Aetna/CVS Caremark both collect legally-exempted rebate kickbacks from Dexcom to keep Abbott Freestyle Libre "off-formulary". In order to keep the kickback cash flowing to the PBMs, both of them now cover about 37% of the cost of Dexcom sensors even prior to satisfying any deductible. They aren't covering it because they are benevolent or because Dexcom persuaded them to do so; it's all about the PBM kickbacks. 

Only CGM manufacturers now offer coupons enabling patients to bypass their insurance company's Pharmacy Benefit Manager to buy CGMs, and in more than a few cases, it makes financial sense for them to do the math and make economic choices based upon THEIR out-of-pocket costs. The myth is that paying artificially-inflated prices will contribute meaningfully towards satisfying a deductible, but insurance companies never disclose to covered individuals that the amount being applied towards deductibles for all pharmacy purchases amounts to pennies on the dollar being spent.

Dexcom's manufacturer coupon enables patients to save $200 per 30-day supply of sensors (and an additional $200 on each 3-month transmitter on the G6 model). Their coupon can be downloaded at https://dexcompdf.s3.us-west-2.amazonaws.com/g7-g6-cash-pay-tearpad.pdf.

Abbott was later to the cash-pay coupon, but as I covered in December at https://blog.sstrumello.com/2023/12/abbott-gets-real-about-formulary.html, if you're commercially insured and asked to pay more than $75 for two Freestyle Libre 3 sensors, the company says to call Abbott customer care at 1-855-632-8658 (M-F from 8-8 ET) to ask them for an eSavings voucher. Abbott manufacturer vouchers expire at the end of each calendar year and patients must call each January to request a new voucher for the new year. For more general info, visit https://www.freestyle.abbott/us-en/private-insurance.html.

But here's what makes the new "Freestyle Libre 3 Plus" different: "Freestyle Libre 3 Plus" will offer a wear-time of 15 days vs. only 14 days on Libre 3. Assuming the sensors cost the same amount as Freestyle Libre 3 (right now, the Libre 2 and Libre 3 cost the same), that means the extra day will translate into even more patient cost-savings. Whether the adhesive on the sensor lasts 15 days is a very big unknown. Some patients find using adhesives like Skin Tac solves that problem.

Another big unknown will be what the impact might be once the Federal Trade Commission (FTC) sues the big Pharmacy Benefit Managers (PBMs) over their anticompetitive business practices. We know FTC intends to sue (see the Politico coverage at https://www.politico.com/news/2024/07/10/ftc-pharmacy-insulin-drug-00167342 for more). Its Interim Report from its 6(b) study on PBM business practices (see HERE for the news release, and https://www.ftc.gov/system/files/ftc_gov/pdf/pharmacy-benefit-managers-staff-report.pdf for the Interim Report itself). In theory, this litigation might result in PBM kickbacks paid in order to keep less costly competing products "off formulary" ruled by a court as illegal, and restitution would likely mean that Dexcom would no longer be able to pay bribes to PBMs keep Abbott Freestyle Libre CGMs "off-formulary". We'll have to wait for the outcome of that, but it seems clear in my mind that could be coming.

For its part, rival Dexcom is trying to have things both ways in order to maximize company profits at the expense of patients and employee healthcare plan sponsors. In an interview with MedTechDive, Dexcom CEO Kevin Sayer answered the following question this way:

MEDTECHDIVE: I've read about a potential "G7 Plus", where the life of the sensor would be extended from 10 days to 15 days. Is that something Dexcom is working on?

SAYER: It's absolutely something we would work towards. We stopped at 10 days at this point in time because we want to maximize the patient experience. Meaning, we want to make sure these devices last their entire useful life, and patients are getting what they signed up for.

Left unsaid was that while Dexcom makes sure the 15-day G7 Plus sensor lasts its entire useful life, the company also very recently changed its sensor replacement policy so the company will only replace 3 sensors each year. It also gets to charge more money. I'm calling Keven Sayer on a bull$#!t alert for that bad, dumb answer. It's all about the extra 40% more money Dexcom earns with the 10-day sensor.

In the meantime, we know according to Reuters (see https://www.reuters.com/business/healthcare-pharmaceuticals/abbott-plans-marketing-push-glucose-monitors-beyond-diabetes-2024-07-18/ for more) that Abbott management has told investors that the company plans to use a mix of mass market "TV advertisements and guerilla marketing" in the U.S. to grow the company's fairly miniscule CGM market share in the coming years. Like rival Dexcom's newly-launched Stelo, Abbott will also sell an OTC CGM aimed at Type 2 diabetes patients known as Lingo and Libre Rio to help grow the company's share, although neither product has hypoglycemia alarms or data-sharing, so I don't anticipate them changing the market for T1D patients.

But the new, coming Abbott "Freestyle Libre 3 Plus" is poised to cut CGM costs even further with one additional day of wear-time. Remember: while Dexcom's G7 and Stelo use the exact same CGM sensor, but the wear-time is 15 days for Stelo and only 10 days for G7. Evidently, the hypoglycemia alarms and data sharing is intended to cost patients 40% more money. But with Libre actually INCREASING its wear-time, that is something patients should look forward to!

More Ammo from the American Postal Workers Union Health Plan Audit Could Strengthen FTC's PBM Litigation on Insulin

Some may recall that on July 10, 2024, the Wall Street Journal, Politico and Axios all reported that the U.S. Federal Trade Commission ("FTC") intends to sue the largest Pharmacy Benefit Managers (PBMs) perhaps by the end of July 2024 (although the exact date remains to be seen), and specifically over its business practices related to insulin for "allegedly using negotiating tactics in order to steer patients to use more expensive drugs" (such as heavily-rebated brand-name versions of insulin, rather than less-costly unbranded insulins or even genuine biosimilars where they exist; so far, most are Lantus biosimilars, with only Sanofi's biosimilar of Lilly's Humalog which is branded as Admelog have been approved by FDA as of the date this particular post is published). Politico's version of the article was free; hence I will refer you to its coverage at https://www.politico.com/news/2024/07/10/ftc-pharmacy-insulin-drug-00167342 for details.

While the PBM's and its trade organization known as the Pharmaceutical Care Management Association (PCMA) have cited what they argue are insufficiencies in the FTC Interim report's data, while conveniently overlooking the reality that there's already a robust set of data on insulin from the Senate Finance Committee, and from academic sources including from the University of Southern California which FTC can include and cite in any FTC litigation against the PBMs on insulin. 

Now, yet another piece of publicly-available data emerged at the end of March 2024 from a report from an audit (see the report at https://www.oversight.gov/report/OPM/Audit-American-Postal-Workers-Union-Health-Plans-Pharmacy-Operations-Administered-0 for complete details) undertaken by the American Postal Workers Union Health Plan's pharmacy operations as administered by Cigna's Express Scripts business for contract years 2016 through 2021. The audit was undertaken by the U.S. Office of Personnel Management Office of the Inspector General's Office of Audits, which rather quietly released the result of a comprehensive audit.

While the Postal Workers Pharmacy Benefit Manager (PBM) audit and its accompanying report received little if any public attention at the time, it examined drug spending between 2016 and 2021 within the health plan that covers more than 200,000 unionized U.S. Postal Service mail carriers and post office workers, as well as retirees. The audit revealed that Cigna's Express Scripts PBM unit had overcharged U.S. Postal Service employees a stunning $45 million for their prescription drugs during that five-year period. 

STAT News reporters Ed Silverman and his colleague Bob Herman commented (if you subscribe to STAT, see the complete article at https://www.statnews.com/2024/07/22/express-scripts-overcharged-postal-workers-by-45-million-audit-says/ — I'm not a paid subscriber to STAT News, but I am on the free email Newsletters distribution list for both Ed Silverman and for Bob Herman and their STAT News reporting, so I occasionally receive emails with their coverage and can read their articles using the links contained in their emailed Newsletters at no charge). Alas there's no way for new subscribers to go back to already-distributed Newsletters), when they wrote:

"This part really caught our eyes: The biggest source of overcharges was tied to drug rebates that should not have been kept by [Cigna's/Evernorth's/Express Scripts'] Ascent Health Services, the opaque, Swiss-based group purchasing organization that is a sister organization to Express Scripts. (FYI "GPO" which is another entity aside from PBMs which receives a controversial "safe-harbor" exemption to the federal Antikickback Statute which effectively renders them able to collect legally-exempted rebate kickbacks)."

They added:

"Notably, nearly half of the overcharges stemmed from drug rebates that Express Scripts negotiated with pharmaceutical companies. But instead of passing back 100% of that money to the health plan, as the contract required, the PBM skimmed millions for itself, according to the audit, which was conducted by the Office of Inspector General for the Office of Personnel Management." 

Note that the choice of the word "skimmed" is rather curious to me. 

The term "skim" implies that Express Scripts took just a little bit as if to cover their expenses, but really, it is a question of magnitude. When the amount "skimmed" amounts to more than $45 million dollars, that means it wasn't "skimmed" — it was stolen. And thievery implies a lawsuit to get the money which was stolen returned by a Court of Law. Hence the next reveal was really interesting: STAT News acknowledged that the company [Express Scripts] agreed to fully refund all of those wrongly-retained rebates. 

But, more importantly, the point is that PBMs operate as if their "safe-harbor" exemption also somehow exempts the PBMs' from being sued for breaking a contract which they signed and agreed to, and that is completely untrue. 

The only reasons Express Scripts' and its Ascent Health Services GPO unit agreed to refund the $45 million in money to the American Postal Workers Union Health Plan is because: 

1. the American Postal Workers Union Health Plan had conducted a legitimate audit, which means it had legitimate grounds for a lawsuit against Express Scripts, and Express Scripts would likely have lost any litigation if the American Postal Workers Union Health Plan actually took them to court and 
   
   
2. the only thing PBMs want to do less than refund cash they had effectively stolen (skimmed being a euphemism for stolen) is to go to court and open their business practices and records up to a court docket which then becomes public record

Express Scripts simply opted to take the easier and safer way out and just refund the $45 million which it had effectively stolen from the American Postal Workers Union Health Plan without admitting they did anything wrong. There was nothing benevolent about the Express Scripts decision; it was a very calculated business decision, and nothing more. 

Note that in my previous blog post (see it at https://blog.sstrumello.com/2024/07/let-litigation-against-pharmacy-benefit.html if you want to read it in its entirety) that I had hinted that the FTC does not even need all the data the PBMs have yet to legally provide to the FTC in order to win litigation on the insulin therapeutic class of drugs. The reason is because there is already sufficient data in the public domain from the Senate Finance Committee, as well as from the University of Southern California, and now, the American Postal Workers Union Health Plan which practically guarantees the FTC has more than enough data to secure a victory for the Federal Trade Commission and potentially the U.S. Department of Justice. We still await the details when that lawsuit is filed. 

One reason the big, vertically-integrated (with the big commercial healthcare insurance companies) PBMs should be quite worried about the FTC litigation is that FTC can include any data derived from the public domain if it chooses to sue the big PBMs. And, with the insulin therapeutic class in particular, as I have noted previously, there is already a robust dataset within the public domain upon which the FTC (and/or the DOJ) can potentially cite in their litigation against the big PBMs.

The American Postal Workers Union Health Plan audit results also has potential to improve the odds of bipartisan legislation governing PBMs, although with a completely dysfunctional U.S. House of Representatives (which has had drama in naming and keeping a House Speaker in just two years it secured the narrowest majority in decades), I would not be willing to make any predictions. But the point is that PBMs don't really have many reliable friends in Congress these days from either political party.  

Let the Litigation Against Pharmacy Benefit Managers Begin!

Perhaps you recall that on June 7, 2022, the U.S. Federal Trade Commission (FTC), which is required by law to be staffed with Commissioners appointed from both major political parties, voted unanimously (see https://www.ftc.gov/news-events/news/press-releases/2022/06/ftc-launches-inquiry-prescription-drug-middlemen-industry for details) to initiate a comprehensive 6(b) study on the Impact of Vertically Integrated Pharmacy Benefit Managers on the Access and Affordability of Medicine (FTC Matter No. P221200). The study almost never happened, but ultimately with the Senate confirmation of FTC Commissioner Alvaro Bedoya who was sworn in on May 16, 2022, that study formally began. Then we did not hear much more as the FTC began the earnest work of collecting data and studying what was happening.

That was until July 10, 2024, when we got news from the (Murdoch-owned) Wall Street Journal ("WSJ" if you subscribe, you can view the article at https://www.wsj.com/health/pharma/ftc-to-sue-drug-managers-over-insulin-prices-b46af71f but it requires a paid subscription to read the entirety of the article) that the FTC intends to sue the largest Pharmacy Benefit Managers (PBMs). Because the WSJ article is hidden behind a paywall, instead I relied upon Politico's FREE article (see https://www.politico.com/news/2024/07/10/ftc-pharmacy-insulin-drug-00167342 for the Politico article) on the same topic. 

In recent years, the Wall Street Journal has been on something of a crusade to discredit the Federal Trade Commission because as a bipartisan organization, its move to protect competition threatens the existence of monopolies. That said, there was really nothing in the very short WSJ article which was really opinion-based as many of the WSJ's various anti-FTC articles in recent years have been (the article was not an opinion-based diatribe as if the FTC was somehow overreaching; rather this particular WSJ stuck pretty much to the facts). 

Politico's article reports: "A lawsuit could be filed as soon as this month, said the four people, granted anonymity to discuss a confidential matter, though no final decision has been made." 

Just two days earlier (on July 8, 2024), the FTC published an "interim report" (see https://www.ftc.gov/reports/pharmacy-benefit-managers-report for access to the interim report) "on the prescription drug middleman industry that underscores the impact pharmacy benefit managers (PBMs) have on the accessibility and affordability of prescription drugs". Interim reports are somewhat atypical, but not completely unheard of from government agencies. In the case of the FTC, it likely means the Commission intends to sue. The decision to publish an interim report rather than the full report is attributed, in part, because the biggest PBMs have refused to supply the data the FTC subpoenaed from them in the first place. The biggest PBMs have a LOT they would prefer to keep hidden.

As for the FTC's legal authorities to require data, former FTC Commissioner Rohit Chopra (before he resigned to accept a more senior position leading the Consumer Financial Protection Bureau "CFPB") said it best when he wrote: "FTC orders are not suggestions." 

In fact, federal law has long recognized that FTC as the only government entity which is explicitly, legally-entitled to subpoena information without having a specific law enforcement intent; there is considerable legal precedent upholding that. But big PBMs have long behaved in a lawless manner, relying on a peculiar "safe harbor exemption" to the Federal Antikickback Statute and the industry trade organization known as the Pharmaceutical Care Management Association (PCMA) has sued relentlessly to preserve that special exemption from laws which prohibit commercial bribery. Unfortunately, lawmakers seem vaguely clueless about their own role in enabling that lawless behavior, but it is clear that there is a long history of bipartisan wrongdoing due to willful ignorance about the actions of both political parties.

And yet, CVS Health/Caremark (Aetna), United Healthcare's OptumRx and Cigna's Express Scripts have been the biggest hold-outs by refusing to comply with the FTC subpoenas for data or only providing pieces of data instead of all that was demanded. 

Which is a good reason to believe the FTC is likely to sue them soon. But the point about insulin prices kind of explains why that could become a centerpiece of the litigation. The reason is because a robust public data-set already exists for prices in the insulin therapeutic class of drugs. Right now executives from the big three PBMs should be worried the FTC will WIN its pending lawsuit. A victory there would no doubt make it easier to break-up the vertically-integrated (with commercial healthcare insurance companies) PBMs.

Think about what it means when businesses must rely upon a special "safe-harbor exemption" to a bribery law as the PBMs now do; it seems clear that the PBMs are merely attempting to delay the inevitable.

According to the July 10, 2024 article(s), the FTC intends to sue CVS Caremark, Express Scripts and OptumRx over their "negotiating tactics" for drugs in the insulin therapeutic class of drugs specifically. We will have to wait until a lawsuit has been legally filed to read the details, but it seems very clear that sufficient data is already known about PBM game-playing on insulin (including from the Senate Finance Committee as well as University of Southern California researchers, as well as the U.S. Office of Inspector General also found that PBMs were wrongly screwing U.S. taxpayers out of money they are entitled to) and all of that it could potentially be applied to and submitted to the Court for the litigation (and indeed on virtually any drug or device sold by retail pharmacies) even if the PBMs fail to supply the data they are withholding. The reason is because data exists in the public domain about the PBM impact on insulin prices which FTC can use instead. So, for now, the FTC will sue over insulin. A victory there would likely boost cases down the road to force big insurance companies to choose between their health insurance businesses or their PBM businesses leading to divestitures of one or the other.

Recall that back on March 4, 2024, FTC Chair Lina Khan spoke at a White House Roundtable on PBMs (see her prepared remarks at https://www.ftc.gov/system/files/ftc_gov/pdf/2024.03.04-chair-khan-remarks-at-the-white-house-roundtable-on-pbms.pdf for more) stated unequivocally: "So far, the PBMs have not fully complied with our orders to turn over documents and data. FTC orders are not suggestions, and we won't hesitate to use the full extent of our legal authorities to mandate compliance."

According to the WSJ, Politico and Axios among others, the FTC intends to sue the three largest PBMs for "allegedly using negotiating tactics to steer patients to use more expensive drugs" which is a violation of the FTC Act, the Sherman Act, and the Clayton Act to name a few. It may also violate other laws. Perhaps unsurprisingly, insulin was cited as a specific example, with markups on that becoming a poster-child for a dysfunctional market in recent years.

FTC is unique in that by law, it is required to be staffed in a bipartisan manner, consisting of Commissioners from both major political parties. Commissioners serve seven year terms although their terms can potentially be renewed by Congress. Oddly, two of the FTC Commissioners named by Donald Trump (Noah Philips and Christine Wilson) both resigned, which left President Biden in a unique position to name the Republican Commissioners of HIS own choosing. So far, the Senate has been in no particular hurry to confirm the Biden-named Republican FTC replacement Commissioners even if doing so could assist the Commission's longer-term goals by ensuring the selection of FTC Commissioners who take the role of genuine antitrust enforcement seriously, rather than being little more than undisciplined partisan hacks whose only aim is to stymie anything FTC aims to do, which apparently was all the Trump-named FTC Commissioners aimed to do.

As the Guardian author and research director of the American Economic Liberties Project (see https://www.theguardian.com/us-news/2024/mar/09/lina-khan-federal-trade-commission-antitrust-monopolies for the article) eloquently wrote:

"Charged with enforcing antitrust law and promoting consumer protection, the FTC is nominally the regulator charged with stopping deals that will harm consumers. But under successive administrations – Republican and Democratic – some critics charge the FTC stood by as industry after industry consolidated power in the hands of fewer and fewer companies."

The steady monopolization of market after market arguably began during the Reagan administration, but for the past 40 years, as one industry after another has consolidated, it has really been only in more recent years that average Americans have really suffered direct consequences of a failed, ideological policy decision which had prevailed for 40 years. But it is also the reason for consumer price inflation at the supermarket has occurred in spite of economic data that would suggest inflation should not really exist. Instead, massive supermarket retailers have steadily raised their prices on goods Americans buy in order to meet their quarterly earnings numbers even while their cost of acquiring goods have fallen.

In the supermarket space, for example, in February 2024, the FTC joined with the attorneys general of a number of states and sued to block the largest proposed supermarket merger in U.S. history — Kroger Company's $24.6 billion acquisition of the Albertsons Companies, Inc. — alleging that the deal was anticompetitive. The FTC actually filed two cases against the Kroger acquisition, including one with the State of Oregon's Attorney General against that acquisition.

Monopolists do not like antitrust enforcement (see the American Economics Liberty Project's tracking of the Wall Street Journal articles against FTC Chair Lina Khan at https://www.economicliberties.us/press-release/economic-liberties-launches-new-tracker-exposing-wsjs-unhealthy-obsession-with-chair-lina-khan/ for more), but it can indeed be very effective when the antitrust laws are actually enforced. Some companies (including in the pharmaceutical space) have opted to call off their planned mergers, while others decided to fight the legal challenges against their acquisitions/mergers in court. Beyond that, however, is the underlying message that antitrust enforcement has potential to work, if and when the federal government actually chooses to enforce antitrust laws (including the Clayton Act, the Sherman Act and the FTC Act) which are already on the books.

The litigation on the PBMs is likely to be one such example (hopefully we will see more when the lawsuit happens). The insurance company-owned PBMs (with CVS Health's acquisition of Aetna being an ever-so-slight role-reversal) will fight to delay this as long as possible.