CVS Health (NYSE:CVS)
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3 Months : From Jan 2020 to Apr 2020
By Anna Wilde Mathews and Peter Loftus
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (January 17, 2020).
The annual J.P. Morgan health care conference is taking place this week in San Francisco. Here are some of the hot topics under discussion at the four-day event, which wraps up Thursday.
Politics Looms Too Large
Investors are overreacting to political developments, Centene Corp. CEO Michael Neidorff said in a Wednesday interview during the conference, and added that he is "beyond surprised" at how shares of managed-care companies have been moving around due to news related to the presidential campaign.
"There is no rational reason to let a Des Moines Register poll" affect investment decisions in the sector, he said. Mr. Neidorff said the U.S. can't afford a single-payer government health-care system and he doesn't expect one to be enacted.
"Single payers control cost by limiting access," he said. "All we're talking about with Medicare for All is politics, we're not talking about good policy."
Congress Could Act on Drug Prices
The pharmaceutical industry's top U.S. lobbyist sees signs that Congress could agree on legislation to reduce drug costs this year, potentially in May when certain government health funding expires and is up for renewal.
Steve Ubl, president of the Pharmaceutical Research and Manufacturers of America, said there are areas of overlap between certain drug-price bills in the Democratic-controlled House and a bipartisan bill that passed the Senate Finance Committee last year.
"To be honest, we don't love every aspect of every one of these bills, but if Congress wants to act on drug pricing, the contours of an agreement are there," Mr. Ubl said during a panel discussion at the conference on Tuesday. "The real question is whether politics will supersede the discussion."
The trade group, known as PhRMA, opposes provisions of a House bill that gives the federal Medicare program power to negotiate drug prices and cap U.S. prices at a percentage of foreign prices. But PhRMA supports provisions that cap patients' out-of-pocket costs for drugs.
J&J Sees Price Pressure
Johnson & Johnson says it is counting on prescription volume growth rather than price hikes to fuel U.S. sales growth in its pharmaceutical unit.
While J&J has raised U.S. list prices for some of its drugs, average net prices -- those J&J realizes after paying rebates and discounts -- have declined in the past couple of years.
"I don't see pricing getting easier," Jennifer Taubert, head of J&J's pharmaceuticals unit, said at the conference on Monday.
Cigna, Oscar Plan a Plan
Cigna Corp. and Oscar Insurance Corp. will launch their joint small-business insurance plan in a handful of markets by the start of next year, Oscar CEO Mario Schlosser said in an interview.
The product will first roll out around the third quarter of 2020, he said, and "my hope would be, over time, we can go into all the markets."
Cigna isn't taking a stake in Oscar, he said, though the two companies will share risk on the new product, which will use Cigna's provider network relationships and Oscar's technology.
CVS Expanding Health Hubs
CVS Health Corp. says it has around 50 of its new health hub stores open, in markets including Philadelphia, and aims for more than 600 by the end of this year.
The company doesn't disclose the hub stores' profitability, but says it has seen increased front-store sales, greater customer engagement and greater pharmacy penetration.
"That is what is giving us the confidence to move with the rapid rollout, " CEO Larry Merlo said. The company says it will offer more financial detail once it has a critical mass of stores, this summer.
Lilly Injects New Thinking
A year ago, Eli Lilly & Co. struck a deal to acquire cancer-drug developer Loxo Oncology Inc. for $8 billion. Recently Lilly took the unusual step of putting Loxo executives in charge of Lilly's oncology research.
More typically, a biotech's leadership departs after being bought by a larger company. But in Lilly's case, "in a 145-year-old company, it helps to inject new thinking, new people," Lilly's R&D chief, Daniel Skovronsky said on the sidelines of the conference. He said the move will allow Lilly to be more agile in developing cancer drugs.
BD Doesn't Expect Big Deals
Medical-supplies giant Becton, Dickinson and Co. has no near-term plans for another major acquisition on the scale of its purchases of CareFusion Corp. and C.R. Bard Inc. in recent years.
Instead, once BD pays down debt from the $24 billion Bard deal to a certain level, "we'll redirect a large amount" of the freed-up cash flow for smaller, "tuck-in" deals, incoming CEO Tom Polen told The Wall Street Journal on the sidelines of the conference.
Write to Anna Wilde Mathews at email@example.com and Peter Loftus at firstname.lastname@example.org
(END) Dow Jones Newswires
January 17, 2020 02:47 ET (07:47 GMT)
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