Week of September 17, 2024 | Vol. 13, Issue 38 | |
If you are a CEO, Founder, or Owner and interested in receiving an invitation to our Global Healthcare CEO Summit, please reach out to your Bourne representative. | |
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Bourne Insights
Top Five Articles Our Research Team is Reading this Week
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The BIOSECURE Act is back. The U.S. House of Representatives passed the BIOSECURE Act by a wide bipartisan margin of 306-81. In our view, the BIOSECURE Act could be very disruptive to the global pharma supply chain as it would effectively prohibit the life sciences industry from working with companies that are seen to be associated with adversaries of the United States by 2032. Five companies were explicitly named in the House bill: WuXi AppTec, WuXi Biologics, BGI Group, MGI Tech Co, and Complete Genomics. The next step would be a Senate vote, which will need to propose its own version of the legislation. In March, Senate proposed a version of the BIOSECURE Act that gave companies only 18 months to transition away from WuXi and other China-based “companies of concern.” Refer to our Bourne Briefing: Hopes and Concerns Related to the Pending BIOSECURE Act (June 7, 2024) and Text of House Bill. | |
Estimates on the Importance of China to the Global Pharma Supply China Chain Vary | |
Source: Avalere Health LLC. The study accounts for all three ways APIs enter the supply chain for US consumed medicines: API imports, domestic production of APIs, and APIs used in imports of finished pharmaceutical products. | | |
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Demand for priority review vouchers (PRVs) continues to improve. At its R&D Day, Moderna (MRNA-NASDAQ) referenced plans to purchase THREE (3) PRVs in order to accelerate two new filings and one supplemental filing for the RSV vaccine mRESVIA (which received initial approval earlier this year after using a PRV also). This follows closely on the heels of another PRV sale by Ipsen (Euronext: IPN; ADR: IPSEY) for $158M in late August. This elevated demand for PRVs in the face of a relative scarcity of PRVs (2024 vs 2023) sets up a strong pricing environment. Also, we see this validating how PRVs are a good use of cash as well -- given that Moderna is otherwise looking to reduce it R&D spending by 20% by 2027 and discontinue five clinical programs. Read more and see our recently published Bourne Update on the PRV marketplace. | | |
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The Biden administration is getting more aggressive with mental health parity regulations on private health plans under the Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008. The newly issued final rule for mental health parity provides more specifics around how health plans must evaluate provider networks, payments to out-of-network providers, the use of prior authorizations, and other utilization management processes to ensure alignment with physical health coverage. Also, the final rule requires that non-federal governmental health plans, e.g., plans covering state and local government employees, must comply with the MHPAEA, adding 200+ new health plans under the regulation. A number of organizations were critical of the new final rule arguing that the new regulations would complicate compliance and increase costs so much so that employers would simply opt drop mental healthcare coverage entirely. Read More. | | |
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IQVIA Holdings (IQV-NYSE) was asked questions at the Morgan Stanley Global Healthcare Conference about any reaction of from its pharma/biotech customers to the recent price cuts associated with the Inflation Reduction Act (the IRA) in August. To the extent that a drug has potential for sales for multiple indications, management commented that, there will be greater incentive to run clinical trials for these multiple indications simultaneously and bring them to market quickly -- rather running clinical trials sequentially. This is because of the way the period of pricing protection works -- by molecule, not by indication. Also, to a modest degree, management confirmed that some pharma customers are re-prioritizing prospective drugs with more marginal economics. Finally, pharma companies are more focused on large molecules (vs small molecules) due to the extended price protection. Read More. | | |
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Management of Universal Health Services (UHS-NYSE) presented at the Wells Fargo Healthcare Conference, and discussed its expectation of improving UHS’s behavioral health operating margins to above pre-COVID levels. Historically, revenues at UHS’s behavioral health business have increased by 6%-8% annually, driven mainly by patient volumes. Recently, behavioral health revenue growth UHS’s have accelerated into the 8%-10% range due to unusually strong and durable pricing. In our view, much of this is likely due to multi-year managed care contracts “catching-up” and re-repricing with general inflation. However, volumes have been slower due to i) labor shortages in a variety of areas (e.g., nurses, therapists, counselors, and health technicians), ii) Medicaid redeterminations in Texas and other “red” Southern states, and iii) reduced volumes in “a handful” of residential facilities. Read More. | |
Source: S&P Global Insights | | | | |
