The Senate Healthcare Bill Is Just ‘Obamacare Lite’

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June 26, 2017

The Senate Healthcare Bill Is Just ‘Obamacare Lite’

By Barbara Obstoj-Cardwell

The big news last week came from the USA, when the Senate eventually released Republican proposals for the reform of the Affordable Care Act, or Obamacare, with what is now dubbed the Better Care Reconciliation Act, which has further increased debate on the issue. Also in the news were Portola Pharmaceuticals with its new anticoagulant Bevyxxa (betrixaban), blue bird bio’s LentiGlobin, Aveo Oncology’s Fotivda, Seattle Genetics’ vadastuximab and Clovis’ Rubraca.

Biotech sees best performance in recent memory

The biotech sector soared this week in its best performance in recent memory, wrote Bret Jensen on the Seeking Alpha blog. The administration released details on how it intends to tackle drug pricing issues by fostering competition and faster drug approvals, rather than additional onerous regulation. The recently released GOP healthcare plan this week also contains no adverse actions on the drug industry.

Portola Pharmaceuticals surged over 45% in trading Friday after the Food and Drug Administration granted approval to its compound betrixaban which is an extended-duration anticoagulant, for the prevention of venous thromboembolism (VTE) in hospitalized at-risk adult patients. “The stock has nearly tripled since we gave it a big “Thumbs Up” here on these pages late in December,” said Mr Jensen.

Portola investors who stuck with it after stumbles caused share prices to crash last year are feeling a bit better about their position today, commented Todd Campbell of TMFEB Capital on The Motley Fool. On Friday, the Food and Drug Administration approved the company’s first drug, Bevyxxa, and that news caused shares to spike over 45% by late in the trading day.

“Because Bevyxxa is an anticoagulant that could displace the use of Lovenox in acute, medically ill patients who are being released from hospitals, and Lovenox was once a top seller with $3 billion in annual sales, I wouldn’t be too surprised if suitors come knocking on Portola Pharmaceuticals’ door,” said Mr Campbell.

Mr Jensen noted that bluebird bio sank over 5% on Friday despite the rally in the sector. It disclosed preliminary Phase 3 trial data from its Northstar-2 study assessing its LentiGlobin drug product in patients with transfusion-dependent beta thalassemia and non-β0/β0 genotypes. While the data met its primary endpoint, investors were underwhelmed.

Finally, Aveo Oncology soared over 70% in trading to close out the week. The European Medicines Agency’s Committee for Medicinal Products for Human Use (CHMP) decided to adopt a positive opinion recommending approval of Fotivda for the treatment of advanced renal cell carcinoma which should lead to approval for this compound for use throughout Europe. The drug submission was made by EUSA Pharma.

Thanks to the positive opinion on Fotivda, Aveo Oncology saw only the second analyst firm activity of 2017 Friday. Piper Jaffray took the opportunity to raise its price target from $1.60 to $2.00 a share on this small oncology play while maintaining its Outperform rating. FBR Capital reiterated its Buy rating and $3 price target last month in the only other rating on the stock this year.

Vadastuximab failure puts Seattle on the one-trick track

Seattle Genetics’ efforts to diversify beyond Adcetris look to have been dealt another blow with the revelation today that all trials of vadastuximab talirine, one of its key pipeline hopes, are being suspended, commented EP Vantage, the editorial arm of the Evaluate group.

Vadastuximab has been on a rollercoaster development path, its phase I study having only recently come off US clinical hold. With the end now virtually assured, Seattle’s attention could turn to further deal-making while the group again falls back on Adcetris, whose first-line Echelon study is due to read out this year.

Ariel3 puts Rubraca on Parp with Zejula

Clovis’s gain is Tesaro’s loss. Results from the Ariel3 trial of the former’s Parp inhibitor Rubraca suggest that it has a similar performance to Tesaro’s Zejula in the ovarian cancer maintenance setting, noted EP Vantage.

As well as threatening Zejula’s market share, the data appear to make a long-awaited takeout of Tesaro less likely – Clovis’s market cap is a more digestible $2.7 billion versus Tesaro’s $7.8 billion. Clovis’s stock was up as much as 46% this morning, while Tesaro sank 6%.

The Senate healthcare bill is just ‘Obamacare lite’

After weeks of closed-door negotiations, the Senate Republican leadership on Thursday released its bid to repeal and replace Obamacare. It’s the product of a 13-member Senate working group, according to a posting by the Pacific Research Institute, a California-based free-market think tank. The bill is a disappointment. It’s little more than repeal in name only. And its ideas for replacement are almost indistinguishable from the Obamacare status quo.

The Senate bill would leave much of Obamacare’s architecture in place. The state-based exchanges would stay, as would many of its regulations on insurance. Insurers would still be required to sell coverage to all comers and would not be allowed to charge people more based on their health status or history. They could charge old people five times more than they charge the young – up from Obamacare’s three-to-one age-rating ratio.

The new bill also scraps the hated individual mandate requiring people to secure coverage or pay a fine. But it doesn’t require consumers to maintain coverage continuously in order to qualify for the regulated age- and community-rated premiums. Young or healthy people would have no incentive to purchase coverage until they became ill. That would leave the insurance pool comprised almost exclusively of sick patients who knew that their medical expenses would exceed whatever they would pay out of pocket in premiums or deductibles. Insurers could not eat those excess costs indefinitely. So they’d raise premiums and deductibles further. Eventually, the individual insurance market would implode.

Obamacare’s scheme of income-based tax credits subsidizing the purchase of insurance would also survive, albeit with minor tweaks. At present, those with incomes of up to 400% of the poverty level, or $98,400 for a family of four, are eligible for credits. Starting in 2020, the Senate would dial that back to 350% of the poverty level, or $86,100 for a family of four.

Senate Majority Leader Mitch McConnell has promised a quick vote on his bill on Thursday, June 29. If it passes, the House and Senate would need to reconcile their competing bills in a conference committee before sending a unified version to the president for his signature. But as of today, it looks like McConnell is heading for a humiliating defeat.

Within hours of the bill’s release, four Republican Senators – Rand Paul, Ted Cruz, Mike Lee, and Ron Johnson – said that they could not support it in its current form. Several others from across the party’s ideological spectrum have reacted tepidly but stopped short of rejecting the bill outright. It will not pass if any more than two Republicans defect.

McConnell and company can only blame themselves for this predicament. Republicans have promised to repeal and replace Obamacare for seven years. This bill doesn’t do that.

Any bill that does not fully repeal Obamacare and replace it with market-oriented, patient-centered reforms deserves to be rejected, the think tank concluded.

Meanwhile, the Institute for Policy Innovation says that the Senate Republicans’ Health Care Bill Won’t Stop the Collapse of the Individual Health Insurance Market. It may be the GOP is willing to sacrifice the individual market in order to achieve the bill’s other important reforms, says IPI’s Dr Merrill Mathews in Forbes. The risk is that premiums continue to rise and insurers flee and Democrats, the media and maybe even the public say the Republicans’ “free market” approach didn’t work, so let’s move on to a government-run, single-payer health care system.

He writes: “A number of positive things can be said about the Senate Republicans’ health care bill, but “stopping the collapse of the individual health insurance market” isn’t one.

The first draft of the Senate bill retains several of what Democrats like to call “consumer protections,” by which Democrats apparently mean that consumers are “protected” from health insurance competition, lower premiums and lots of options.

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