|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
“The cavalry is on the way”
This week brought the strongest evidence yet that there is light at the end of the tunnel in the COVID pandemic. Today, drugmaker Pfizer and its biotech partner BioNTech filed an application with the US Food and Drug Administration (FDA) for an Emergency Use Authorization (EUA) for their jointly-developed COVID vaccine, after Phase III clinical trials in nearly 44,000 patients showed it to be safe, and 95 percent effective, in preventing infection. With biotech firm Moderna announcing that their vaccine trial showed similar results, with an EUA filing shortly to follow, we are now on track for early distribution of a vaccine to high-risk groups by the end of next month. According to Secretary of Health and Human Services (HHS) Alex Azar, 40M vaccine doses will be available by the end of December. Much attention will now turn to the complex logistical challenge of distributing the vaccine nationwide. Meanwhile, a new study (which has yet to be subjected to peer review) indicated that once developed, immunity to the coronavirus might last for years—making the prospect of a safe and effective vaccine all the more promising in the battle against COVID.
As Americans prepare to celebrate Thanksgiving, the hard work of dedicated scientists and researchers has given us much to be thankful for. But this will be a very different Thanksgiving, celebrated under difficult circumstances. With the US passing the grim milestone of a quarter million lives lost to COVID, over 80,000 patients hospitalized with the disease, and daily counts of new cases averaging more than 154,000 this week—40 percent higher than the previous week—the Centers for Disease Control and Prevention (CDC) urged Americans to stay home for Thanksgiving, spending the holiday only with members of their immediate households. According to HHS data obtained by The Atlantic, 22 percent of hospitals expect to experience staffing shortages as the third wave of the pandemic intensifies, and a composite forecast from the CDC projects that over the next three weeks the COVID death toll could reach 298,000. With vaccines on the way, the “dark winter” ahead (as President-elect Biden describes it) will require continued resolve and vigilance. As Dr. Fauci said yesterday in the first White House COVID press briefing since July, “If you’re fighting a battle, and the cavalry is on the way, you don’t stop shooting. You keep going until the cavalry gets here.” Keep going.
Amazon takes another big step into healthcare
In a move first telegraphed by its billion-dollar acquisition of online pharmacy PillPack in 2018, Amazon announced the launch of Amazon Pharmacy, putting the online giant in head-to-head competition with retail pharmacies CVS and Walgreens, and its big-box nemesis Walmart. The new service will give customers access to home delivery of prescription medications, in addition to free delivery and a new drug discount card for members of Amazon Prime. Customers can have their physicians send prescriptions directly to Amazon Pharmacy and use their insurance to pay for the drugs, or they can choose to pay Amazon’s cash prices, which in many cases will be less expensive than insurance-based prices. Rather than fully disrupt the traditional pharmacy business model, Amazon has partnered with pharmacy benefit manager (PBM) Evernorth (a subsidiary of Cigna) for drug discounts, and with AmerisourceBergen as a drug supplier. Nevertheless, the new offering will surely shake up the mail-order pharmacy segment, which has been declining in recent years as brick-and-mortar retailers have expanded their in-person clinic offerings, often tied to in-store pharmacies. Given changes in consumer shopping patterns caused by COVID, Amazon may have chosen a propitious moment to try to move its customers—especially its loyal Prime members—to a mail-order model that offers the “frictionless” convenience of the broader Amazon service approach.
Also behind the timing of Amazon’s pharmacy launch may have been the recent success of drug discounter GoodRx, which recently went public with a massive valuation based on the profitability of its business, and has been engaged in an aggressive marketing push. Amazon’s announcement of a competing discount card for Amazon Prime members, with up to 80 percent off the price of generic drugs and 40 percent off for branded medications, poses a significant threat to GoodRx. Amazon’s installed base of more than 125M Prime users dwarfs the nearly 5M customers who use GoodRx, and over time its scale should attract partnerships with other PBMs beyond Cigna’s, allowing it to offer the same or better savings to Prime members. Users of Amazon’s new benefit card will be able to purchase drugs through Amazon Pharmacy, as well as at over 50,000 brick-and-mortar pharmacies including CVS, Walmart, Walgreens, and Rite Aid, without using their insurance. While this week’s launch is not as immediately disruptive to incumbents as some had feared, it will surely allow Amazon to broaden its foothold in healthcare, and to explore new avenues to leverage its massive online presence as it moves further into the $3.6T healthcare industry. Expect (much) more to come.
The AMA declares racism a public health threat
On Monday, the American Medical Association (AMA) voted to recognize racism as an “urgent threat to public health”. At its annual meeting, the organization’s House of Delegates voted to take actions to confront systemic, cultural and interpersonal racism, including acknowledging harm and bias in medical research and healthcare delivery, funding research to identify risks of racial bias to health, and encouraging medical schools to teach students about the causes and effects of racism, and strategies to prevent adverse health outcomes. The resolution was one of several proposed items aimed at addressing racial diversity and equity in medical education and care delivery. Over the past two years, the AMA has been moving toward a more progressive stance on health and social policy; in June the AMA Board of Trustees also pledged action against racism and police brutality in response to the murder of George Floyd. A generational divide between older and younger doctors was also apparent during last year’s debates on Medicare for All, when the organization narrowly voted to maintain its opposition to single-payer healthcare in a close vote that would have been unimaginable a decade ago. At this week’s meeting, however, the group gave its stamp of approval to proposals for a more limited “public option” coverage expansion. As more young physicians enter the field of medicine, we’d expect the AMA to become a stronger voice on a range of social and policy issues.