An Alzheimer's Drug and Cigna's Share Prices
Friday Pulse Check
Good morning and happy Friday.
It seems my Super Bowl pick of the LA Rams would have won me some money if I were a betting man. Since I am not and am still here, this is the Friday Pulse Check.
CMS and FDA Approved Drugs
This week, Ron wrote a piece about a recent Centers for Medicare and Medicaid Services (CMS) decision to not cover a new Alzheimer’s drug under Medicare. The decision has created some anger among those who want the drug and from those who believe the CMS should not be in the position of deciding what approved drugs it will and will not cover (namely congressional Republicans).
The drug is called Aduhelm and although it showed promise in its initial clinical trials, the drug does little to slow the progression of the disease and has some very high risks. In fact, the risks are so high and the impact so low that large hospitals (like the Cleveland Clinic and Johns Hopkins) will not offer it to their patients.
This situation shows the necessity to look at America’s healthcare system through an economic lens, not an emotional one. While everyone should have good access to healthcare, our costs are so high because government systems try to be everything to everyone. Because it drives up those costs, it has the opposite effect: millions of uninsured and underinsured Americans.
Cigna and the Stock Market
Wendell Potter wrote on his Substack a few weeks ago about Cigna’s share price taking heavy hit when they announced that their profits would slow in 2022. Cigna’s (temporary) dip in value demonstrates a phenomena that, to my knowledge, is unique to the American healthcare system but is a simple economic conundrum.
A publicly trade company does better when it has more customers and creates more product. That is, except for a health insurance company. Health insurance companies do better when there are fewer patients and less costs. Remember my Friday Pulse Check a few weeks ago when I asked about which mechanic? The problem is not just with Cigna, but with all the publicly traded, for-profit insurance companies. United wants to tell patients to go to cheaper radiologists so that they can reduce their costs. Cigna realized that their costs (ie. patients/customers) would go up this year, and their stock price took a hit.
It’s an interesting situation and Ron has done some good analysis on it here.
That does it for this week’s Friday Pulse Check. Check back next week as we work to bring more great healthcare news and analysis here on FLATLINING.
Ps. Nope, still no Independent Dispute Resolution Process. That makes forty-nine days and counting.