Week of February 17, 2025 | Vol. 15, Issue 7 | |
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Bourne Insights
Key Topics of Conversation this Week
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Hims & Hers Health (NYSE: HIMS) has brought significant attention to the compound pharmacy space with its highly successful Super Bowl advertisement that featured its compounded GLP-1 medications as a less costly alternative to the more expensive branded GLP-1 drugs (e.g., Ozempic and Wegovy). HIMS expanded into weight loss space in late 2023 with the addition of compounded GLP-1 drugs in May 2024. Prescriptions for branded Wegovy and Ozempic start at around $1,800 per month, while compounded semaglutide (GLP-1) medications are priced at $165 per month. Post airing, HIMs reported a 650% increase in its web traffic, and the company’s “Hers app” jumped to #2 in the Health & Wellness category on the Apple Store (after previously not being in the top ten). This has immediately led to push back from pharma companies, including the Pharmaceutical Research and Manufacturers of America (PhRMA), and several U.S. Senators threatening sanctions. There is also concern from the physician community as well. In a survey of 2,000 primary care physicians, two-thirds (67%) said accessing GLP-1 prescriptions for weight loss via a third-party telehealth provider creates patient health risk. See Here | | |
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Confirmed. The U.S. Senate has officially confirmed Robert F. Kennedy Jr (RFK) as the next U.S. Secretary of Health and Human Services by a 52-48 vote. Getting a positive vote from Senator Cassidy was a critical vote for the confirmation. In exchange for Cassidy’s support, among other things, RFK promised to not make changes to existing vaccine recommendations and/or scrub the Centers for Disease Control and Prevention of statements that clarify vaccines do not cause autism. Looking ahead, RFK is expected to focus on the rising incidence of chronic diseases (diabetes, hypertension, etc.) and consumption of processed foods and artificial ingredients that are believed to contribute to obesity. Read More | | |
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We are hearing more and more concerns about major cuts to Medicaid spending, which could have a broad negative impact on healthcare providers, particularly in the behavioral health space. Specifically, the House Budget Committee released a budget framework that directs the Energy and Commerce Committee to generate $880 billion of budgetary savings over the next 10 years. President Trump has promised that he would not cut Medicare for senior, implying that much of these savings would need to come from either Medicaid or the Affordable Care Act marketplace. Several obvious targets for savings commonly discussed by Republicans would include the creation of a Medicaid block grant system (~$900 billion of savings over 10 years), the elimination of federal matching payments for ACA Medicaid expansion (~$600 billion of savings), and the implementation of Medicaid work requirements (~$100 billion of savings). Under a block grant (or per capita cap) system, the federal government would provide states with matching funds based on the number of enrollees, not as a percentage of a state’s Medicaid spending. Moving to a per capita matching payment system would force state governments to make tough decisions with respect to Medicaid eligibility, covered services, tax increases, or cuts elsewhere in their budgets to cover any shortfall. In order to pass reconciliation bills and advance major legislation on party lines, both the Senate and the House must pass identical budget resolutions. It is not clear whether the Republicans are enough unified to do this. Read More | | |
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We are monitoring a lawsuit to undo regulations issued by the former Biden administration that were intended to improve the enforcement of mental health (and substance use) parity rules for employer sponsored health coverage. The civil lawsuit, filed by the ERISA Industry Committee (ERIC), argues that the updated parity regulations are overly complex, vague, and burdensome and are in violation of a number of federal regulations themselves. It is unclear how the Trump administration will respond to this, particularly given his overall focus on reducing government regulatory overreach. In our view, it is possible that the Trump administration does not defend the rule at all (letting the lawsuit prevail) -- or maybe he will defend only part of it. The federal government typically has 60 days to respond to a civil lawsuit, so this would imply a response from the Trump administration by mid-March. Otherwise, the new Biden mental health parity regulations would fully go into effect at the start of 2026. Read More | | |
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The pharma services space continues to work through an environment of elevated clinical trial delays and cancellations, particularly among small/mid-sized biopharma sponsors, as highlighted by the recent financial results of Medpace Holdings (MEDP). Management referenced a number of projects that are in a “holding pattern” that could become cancellations in the coming months. For the calendar year 2025, Medpace management now expects revenue growth of only 0.0%-4.8%, ~flat profitability, and a book-to-bill ratio of sub-1.15x. This contrasts starkly to the average annual revenue growth of 20% over the past five years and it seems to follows similar commentary from IQVIA Holdings (NYSE:IQV) last week. IQVIA commented that a relatively high level of cancellations will continue for “another quarter or two” as pharma and biotech companies manage through project prioritizations associated with Inflation Reduction Act (IRA). Read More | |
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Note: Market values as of the close of business February 14, 2025
Source: S&P Global Intelligence
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