Dear clients and friends: Given your interest in health and medicine, we would like to share with you our collection of the most interesting perspectives on our industry's trends and developments. We are happy to share them with you — and hope you share your thoughts with us.

1. Mavericks vs. Middlemen

In this larger-than-life Texas Monthly piece, Mark Cuban, Martin Shkreli, and PBMs finally cross paths. In 2015, Alex Oshmyansky, a disillusioned medical resident, was so disgusted by the Shkreli debacle that he drafted a business plan to cut out pharma middlemen. Then he sent it, cold, to Mark Cuban—and Cuban wrote back:

Osh’s Affordable Pharmaceuticals was set up to buy generic drugs from their manufacturers and sell them directly to pharmacies, undercutting pricing for a few important medications by leapfrogging what Oshmyansky has called the “monopolistic middlemen in the supply chain.”

Cuban had even loftier ideas, which he hammered out with Oshmyansky through a weekly email exchange. Oshmyansky, “didn’t sell me,” Cuban says by email. “I sold him on doing more and thinking bigger.” That thinking led to the quiet creation in May 2020 of the Mark Cuban Cost Plus Drug Company. Emerging publicly in January of this year, the Dallas-based venture’s goal is to buy, package, distribute, and someday even make low-cost versions of many expensive generic drugs while offering “radical transparency” about prices.

2. Knockin’ on Walmsley’s Door

So if “zero COVID” is a fever dream, now what?

Pity GSK CEO Emma Walmsley, who now sits in the crosshairs of notorious activist investor, Elliott Investment Management. In the midst of a turnaround at GSK, which required selling off large parts of the company to reinvest in innovation, Big Pharma’s only woman CEO approaches dangerous territory:

Unlike in some situations, Elliott has no current plans to solicit a hostile takeover, according to people with knowledge of its strategy. In any case, GSK is enough of an asset to British science that the Johnson government would face enormous pressure to prevent its acquisition, particularly by a foreign player—as then-Prime Minister David Cameron did when Pfizer attempted to buy AstraZeneca in 2014.

Instead, the ugliest potential outcome would probably be a proxy fight, with Elliott asking investors to support a slate of new directors for GSK’s board. That’s a risky tactic, and one that activists typically employ only as a last resort. But it would be unwise for GSK, and Walmsley, to think too highly of their chances in such a situation. In the dozens of investments Elliott Investment Management has made over the past decade, it’s failed to get its way only a handful of times.

3. The Return of the “Early-Detection Empire”

In March 2020, when lockdown became a thing, the American Cancer Society declared: “No one should go to a health care facility for a routine cancer screening.” The moratorium was brief. The Atlantic argues it was about the bottom line:

With so many other services and businesses still closed, the health-care system worked relentlessly to reschedule patients for all of their mammograms, colonoscopies, PSA tests, pap smears, lung-cancer scans, and skin checks. Hospitals suffered immediate financial distress when elective procedures were canceled at the start of the pandemic, and they had to make the pause as brief as possible.

“It was bad for business,” says Laura Esserman, a breast-cancer surgeon and screening expert at UC San Francisco. “So they reached out to get everybody back in.” … But the financial impact extends far beyond the price of [screenings]. Each positive diagnosis corresponds to another cancer patient, who will then come in for additional clinic visits and treatments. For doctors who specialize in identifying or treating these cancers, screening could make up a large portion of their livelihood.

4. Now Hiring: Agency Nurses

A “massive and massively underreported shift” is underway right now with hospital nurses: “agency nurses” are taking over. A discussion thread on Marginal Revolution points to a quiet yet profound change:

What’s happening in the labor market, I think, is that there are two paths for a bedside nurse in the COVID era — keep working for a hospital or go work for an agency. Agency pay has gotten ridiculously high, so more and more nurses are quitting the local hospital, signing on with the agency, and then going to work for any hospital that can pay the agency’s rates. In exchange for going wherever the highest bidder is, they get huge increases in their take-home pay. No shame in that.

The net effect, I suspect, is that the bargaining power of nursing labor is going way up, though with unequal gains; to benefit, you have to quit your hospital-employed job and be willing to go wherever the agency sends you.

And then your open slot gets backfilled by another agency nurse from somewhere else!

Nurses, in the discussion thread, weigh in and paint a more complicated picture. But one thing emerges: hospital nursing staff are changing rapidly, and changing patient care at the same time.

5. AI Butler > AI Overlord

While AI is often framed as pharma’s sexy future, MIT Tech Reviewshows how AI shines on the dull tasks. Take Calithera Biosciences, which previously spent 30-40% of overhead on “compliance-related data wrangling.” Now “Calithera has sidestepped much of that additional cost and vastly improved its ability to track its data”:

Here’s how it works: clinical or patient data is put into the system and scanned by AI, which recognizes specific features that pertain to accuracy, completeness, compliance with regulations, and other aspects of the data. AI can flag when there’s a missing test result, or when a patient hasn’t submitted a required diary entry. It knows who’s allowed to access certain types of data and what they are and are not allowed to do with it. It can detect ransomware attacks and head them off. And it can automatically document all that to the satisfaction of the FDA or any other regulatory body.

“This approach takes the compliance burden off of us.”