Healthcare Shifting Sands: Policy, Technology, and the Greenland Question
The intersection of healthcare, policy, and national security may seem unlikely, but as demonstrated by various events, the dynamics are increasingly intertwined. The potential acquisition of Greenland by the U.S., a proposition linked to President Trump’s negotiating style, highlights this complex interplay. One possible tactic involves leveraging regulatory powers to influence existing economic relationships, an approach with significant implications for industries like pharmaceuticals.
To understand the context, consider the massive scale of the U.S. economy. Several major tech companies, including Apple, Microsoft, Alphabet, Nvidia, and Amazon, have a combined worth exceeding $13 trillion. These companies drive innovation, support employment, and contribute substantially to the tax base. However, even among these economic giants, some companies wield outsized influence in their home countries. Novo Nordisk, with a market capitalization of $355 billion, nearly equals Denmark’s entire GDP and contributes significantly to the nation’s economic growth. This makes the relationship between U.S. healthcare regulation and policy, particularly those affecting Novo Nordisk, a critical area to watch.
GLP-1 Drug Market Faces a Turning Point
Ozempic pen close-up.
The U.S. Food and Drug Administration recently addressed the supply issues related to semaglutide, the active ingredient in GLP-1 drugs such as Wegovy and Ozempic. Initially prescribed for diabetes, these drugs have gained popularity for their effectiveness in weight loss. Recent surveys indicate that millions of Americans have used these medications.
Drug shortages have opened a market for compounding pharmacies, which can create generic versions of the drugs at lower prices, sometimes hundreds of dollars less per month even for insured patients. Now that the shortage is officially resolved, Novo Nordisk, the manufacturer of Wegovy and Ozempic, is keen on converting patients on compounded drugs to its brand-name products.
This transition has significant impacts. With compounding pharmacies like Hims & Hers generating substantial revenue from generic versions, the conflict between these compounders and pharmaceutical companies is now intensifying. Hims donated $1 million to Trump’s inaugural fund, raising questions about potential implications.
What remains to be seen is how the Trump administration will address policing and enforcement of compounded GLP-1 drugs through the FDA and other regulatory bodies. With Novo Nordisk’s stock down in value, the approach taken by the administration may impact the dynamics of the market.
Recent Legislative and Regulatory Developments
Several key areas are experiencing developments:
- Price Transparency Efforts:
President Trump recently issued an executive order to promote price transparency in healthcare, something that was also an important part of his first term. The aim is to enable consumers to make more informed healthcare purchasing decisions. “This will help ensure a more consistent experience for consumers and employers, while facilitating competition amongst providers and insurers,” according to Chris Severn, cofounder and CEO at Turquoise Health.
- PBM Scrutiny and Challenges:
Pharmacy benefit managers (PBMs) are under increased scrutiny. Despite managing prescriptions for millions of Americans the top PBMs control a substantial portion of prescription claims. With less transparency, it’s harder for outsiders to assess PBM business practices. Recent developments include a reintroduction of a bill aiming to regulate PBMs.
More recently, a federal court ordered CVS Health to provide additional documents with FTC’s ongoing investigation.
AJ Loiacano, CEO of Capital Rx, emphasized the inherent conflicts of interest within PBMs, highlighting how PBMs can profit from drug spend. Chris Blackley, CEO of Prescryptive, highlighted the role of the FTC’s investigations in promoting transparency and competition.
- Uncertainty Regarding Health Data and Interoperability:
The transformation of health data technology, especially given agency restructuring, has triggered industry and patient concern. The future of TEFCA (Trusted Exchange Framework and Common Agreement) is uncertain, with questions about governance, conflict of interest management, privacy implications, and operational functionality. Don Rucker, former head of ONC, has questioned whether TEFCA aligns with existing privacy norms. Michael Westover, vice president of data partnerships and informatics at Providence St. Joseph Health, has also questioned the project.
The actions of ASTP/ONC and the administration’s messaging in the coming months will influence the industry.
Tech’s Newest Unicorns
Innovation in the healthcare sector is also coming from unexpected places. Two companies recently announced substantial capital raises:
- OpenEvidence: Raised $75 million at a $1 billion valuation. What’s novel is that the product is free to doctors, adoption has grown largely through organic word-of-mouth and product-led-growth motions, and the company makes money through advertising.
- Hippocratic AI: Achieved unicorn status with a $141 million Series B round. The company offers AI nurse agents at an hourly fee. The strategy may attract both budget-conscious executives and the finance department.
As the healthcare landscape continues to evolve at a dizzying pace, the Trump administration’s actions could reshape the sector, potentially influencing not only domestic policy but also international relationships. The coming years will test how the industry adapts to regulatory changes, technological advancements, and economic pressures.
