transcript

Speaker 1:
[00:15] Welcome to this week's episode of The Readout Loud, a weekly biotech podcast from STAT. I'm Allison DeAngelis.

Speaker 2:
[00:21] I'm Adam Feuerstein.

Speaker 3:
[00:23] And I'm Elaine Chen.

Speaker 1:
[00:24] It's April 23rd, and on this week's show, venture capitalist Bryan Roberts joins us to discuss his firm's investment in Kelonia Therapeutics. The cell therapy startup almost ran out of money three times, but was just acquired by Eli Lilly for $3.25 billion.

Speaker 3:
[00:41] Next, our colleague Katie Palmer sits down with us to talk through a story she wrote this week about pharma companies using bargain-based mental health providers to drive drug prescriptions and sales. It's a new twist on the quote, talk to a doctor now marketing pitch that is raising some alarm bells.

Speaker 2:
[00:57] But first, a word from our sponsor. So before we get to Bryan's interview, let's take a moment to talk about some big news in obesity and Medicare. Elaine, fill us in.

Speaker 3:
[01:22] Yeah, so one of the key health policy accomplishments the Trump administration wanted to claim was securing coverage of obesity drugs for seniors. But now that plan is unraveling. For background, Medicare so far has been legally barred from covering medicines for weight loss purposes, but the Trump administration announced last year that it wants to launch a pilot program to cover weight loss drugs through the Part D drug benefit. This week was the deadline for plans to say whether or not they wanted to participate in this pilot, and they needed to meet a certain threshold for enough plans to participate for the pilot to actually be able to launch. Not enough plans agreed to participate, and so Medicare has indefinitely delayed these plans for this pilot.

Speaker 1:
[02:12] So this pilot obviously would have involved Novo Nordisk and Eli Lilly because of their weight loss medicines. Those companies both are having, between the injectables and the pills, are making quite a bit of money. How big of a deal was this pilot program for them?

Speaker 3:
[02:30] Yeah, this was probably going to be a pretty big deal for Novo and Lilly. This pilot program, it's called Balance. It's part of a deal that the pharma companies and the White House announced last year. It was a big flashy press conference. Novo and Lilly agreed to offer their GLP-1 drugs at $245 a month to Medicare. And Medicare would allow plans to cover them for weight loss purposes, as long as the plans opted into this pilot. And Medicare also promised that seniors would only have to pay $50 out of pocket for these drugs. So given that it's a relatively lower co-pay for seniors, it was expected that a lot of seniors would have wanted to get on GLP-1s for weight loss purposes. And this would have increased dramatically the volume of scripts for Novo and Lilly. And obviously, that would lead to a great increase in sales. But ultimately, this plan would have also meant a lot of additional costs for plans. And that's probably likely why most did not opt in.

Speaker 2:
[03:36] Yeah, I was going to say, Elaine, I was going to ask you, why aren't insurance plans signing on to this program? What have we heard from insurers about that?

Speaker 3:
[03:45] So it's basically just, it would have been really costly. If you think about just the number of people with overweight or obesity, there would have been probably millions more people newly eligible for GLP-1 drugs if this pilot had started. And that would just be way more additional costs for plans. And it's difficult to know how they would have had to offset those costs. They probably would have had to raise premiums, but then that would obviously affect all Medicare beneficiaries in the Part D drug benefit. So it just would have really just increased costs.

Speaker 1:
[04:22] Yeah, I mean, that's something that we've seen on the private insurance side, that many large health insurers have had to increase premiums because of weight loss drugs. I mean, those who have at least in some part opted to cover them have had to increase premiums for all of their clientele.

Speaker 3:
[04:40] Yeah, and then this whole situation is a little complex because basically the government's original plan was this balance model would launch in 2027. But before that, they wanted to do a temporary pilot model that would bridge to this balance pilot, and that bridge program was called Bridge.

Speaker 1:
[05:02] Great name.

Speaker 3:
[05:03] Yes.

Speaker 1:
[05:04] Innovative.

Speaker 3:
[05:04] Yes. This Bridge program was interesting because it would have expanded coverage to obesity drugs, but the government promised to foot the cost of that coverage. That would have been the government fully paying for the cost, not the plans, and the actual balance pilot, it would have been the plans managing the cost and having to calculate and figure that out themselves. The balance was intended to be an easy way for seniors to try this because the plans themselves did not have to take on the cost themselves. It would be the government. Now, the government says because balance is on hold indefinitely, they're going to extend this bridge model until the end of 2027, so a full year more than it originally intended. That raises a lot of questions because again, if the government is footing the cost of this, that will be a huge cost for the government to take on. Probably people are estimating maybe tens of billions of dollars, and it's not clear where the government is going to get that money. It might also end up being premiums increase for people. There's a lot of questions about where that money is going to come from. Then there's also questions of this bridge model is temporary. Once the bridge model ends, what happens to the Medicare beneficiaries after that? Say they were on the bridge model, they had obesity coverage, and then suddenly the model ends and they no longer have obesity coverage, then we know that once you stop taking weight loss drugs, you regain weight. It essentially gets rid of any health benefit that you could have had. Presumably, if this goes through, then the government would have spent tens of billions of dollars on a model that ultimately may result in no health benefit for seniors.

Speaker 1:
[07:01] As we mentioned at the beginning of this episode, Kelonia Therapeutics became the newest takeout target this week. The privately held company, which is developing cell therapies for cancer and autoimmune diseases, will be acquired by Eli Lilly.

Speaker 2:
[07:13] The acquisition is a boon for the small startup, which has subsisted on $60 million over the last five years and previously struggled to stay afloat. The company came within a week of running out of cash three times. Now, it's being bought for $3.2 billion with potential milestone payments that could double that payout.

Speaker 4:
[07:34] 3.25, don't short me.

Speaker 2:
[07:38] Yeah, you know, when you make billions, I mean, I can see that extra $50 million.

Speaker 4:
[07:44] Dude, the only way you make millions is by counting the millions.

Speaker 3:
[07:47] To discuss how this small company managed to land a big deal, specifically $3.25 billion, we're bringing in Bryan Roberts, a partner at VC firm Ventrock, which financed the company. Bryan, welcome to the podcast.

Speaker 4:
[08:01] Thanks for having me, guys. It's fun.

Speaker 1:
[08:03] Okay, Bryan, wait, I got to ask. So did you go to Lilly and say, I'm going to need a billion dollars for every time this company almost went under? Was that how that came about?

Speaker 4:
[08:13] No, that's a great negotiating strategy, Allison. You should definitely, if this whole journalist thing doesn't work out, you should do BD.

Speaker 1:
[08:20] Every time I revived this company, I need a billion dollars. Okay.

Speaker 2:
[08:24] I think you should be better than a lot of the BD people that I know. So.

Speaker 1:
[08:27] Oh, them fighting words. Okay. Well, let's talk about, you and I spoke earlier this week, and when I asked your initial thoughts on this whole deal, it was curious. The first thing that you said came to mind was, Kelonia tried and failed to raise money for two years. Tell us what's been so difficult about keeping this company afloat to this point.

Speaker 4:
[08:48] Well, look, I think that between 2022 and 2025, it's been widely reported the chill in the biotech financing markets. I think actually it was probably worse than that. I think that VCs were completely focused on their own portfolios. They were taking meetings with new investments, but they weren't making any investments. They were taking meetings because otherwise they have to say they're out of business, right? So like you kind of have to keep doing stuff. And so the biotech financing markets were bad. And then the stuff that was getting done was all clinical stage because there was a bolus of businesses that had been started in the boom, zurp era. And so if you don't have to take preclinical risk, you don't, which is what those sort of mid to later stage investors were doing. So layer on top of that, cell therapy on preclinical, on biotech bad financing market. I mean, I don't think we even just failed to raise money. I think we failed to get anybody deep into diligence because people just looked at those couple of things were like, uh, I got to the place I can spend my time.

Speaker 1:
[10:05] Oh, so you just couldn't even get people to kind of open up, you know, give me the password to the data room so I can look at this. You couldn't even get them there.

Speaker 4:
[10:14] That's my opinion. Right? I don't think anybody was ever really serious.

Speaker 2:
[10:19] So I wonder how much competition plays a role in that, Bryan. You know, you shared the original investment memo from 2020 with STAT, you know, which is something that the public, we don't, you know, we don't really see these kinds of things, those kind of details. And the memo literally states, it says, quote, there are a kajillion gene therapy efforts. And you note that Kelonia was going to be in direct competition with another company, USANA, that had like something like $700 million in financing. So first of all, let me ask you, kajillion, is that a real thing?

Speaker 4:
[10:49] That's a Venrock trademark term.

Speaker 2:
[10:51] Maybe that's why the memo wasn't taken seriously, you can tell me. But more seriously, what makes an investor look at levels of competition and want to back another venture?

Speaker 4:
[11:00] So I think that depends a little bit on where you are in the overall macro, right? In the 2018 to 2022 timeframe, nobody made a bad decision, right? Now they all turned out to be bad. But in the moment, every decision anybody made to invest in anything, like people around them clapped and were happy, right? And then the market turned and money got much tighter and everybody started to rethink and rue a bunch of decisions they'd made, at which point they went from looking at upside possibilities to downside risk. And I think 2022 to 2025 was a story of protecting downside risk, right? Which is why people went to, I want to see clinical data and they had the opportunity to go see clinical data. So I think actually we weren't competing particularly against other gene therapy companies. Like there was nobody who came in was like, oh, I'm looking at you guys and ESO Biotech and Interious, right? What they were like, I'm looking at you, not very hard, and a company with 15 patients of clinical data. And so like the discussion that I would have with Kevin, the founder CEO all the time was we need to figure out a way to get ourselves to clinical data. And that will fundamentally change the availability of capital for us.

Speaker 3:
[12:30] So digging a bit more deeply into Kelonia, the research focus is on in vivo CAR T therapies. So essentially they edit or make cancer fighting T cells inside the body instead of in a lab like current CAR T products. This is an emerging field of research, but one that's becoming increasingly competitive. There are many in vivo CAR T startups. Many are being acquired by Big Pharma. What got you interested in backing Kelonia specifically? How is it different?

Speaker 4:
[12:57] I think two things. One, you have to parse apart those in vivo CAR T startups to the ones that are using viral delivery platforms that are integrating into the genome, which is what you want for cancer and stuff like that. Then the lipid nanoparticle ones, delivering mostly RNA, which are non-integrating, which are going to be used by and large, especially for autoimmune disease. A bunch of the supposed competition in the space, you need to split those two out. The fact is, in the integrating viral chassis group, which were things like ESO and Interior and Emoja, when we got started with Kelonia, boy, Michael Birnbaum and I first started meeting in early 2019. It took us about 18 months to get the company up and off the ground, find Kevin, seed it, so that was late 2020. Nobody cared about in vivo car. Like it was just it was early. So to some degree, Elaine, like we got in before it got hot, which is kind of what I like to do. But it also does increase the likelihood you're going to be wrong. Right. We don't talk about those. You guys don't invite me on to the podcast to talk about the stuff that fails.

Speaker 1:
[14:11] I mean, next time we'll invite you on to the podcast to talk about stuff that fails. I want I want all of those gory details, Brian.

Speaker 4:
[14:17] But then Adam won't won't go. Biotech isn't back. It's in a stupid bubble. He'll be like, boy, Brian sucks as a venture capitalist.

Speaker 2:
[14:24] We'll get to that in a second.

Speaker 1:
[14:26] Adam taking his victory lap.

Speaker 4:
[14:28] So, Elaine, to answer your specific question, Michael Birnbaum at MIT had shown data that suggested that he could deliver in the body to T cells in mice at that point with enormous specificity, okay? Like hundreds of thousands to one specificity, okay? So, that was what got me in the technology platform. What got me interested in the market, and this is where we'll come back to Adam's question about like what Lilly paid and whether it was too much, right? Like ex vivo autologous CAR T is showing fantastic efficacy for patients, right? And just about everything else about that therapeutic sucks, right? The cost, the side effects, the time it takes to get it into a patient, right? Like in J&J's trial, 16% of the patients died before they ever got the therapy, right? So all of those other things, we had hopes we could dramatically improve by going to in vivo. Let's add an addition, COGS.

Speaker 2:
[15:43] So do you feel like you've reduced, you know, you talked about integration and obviously the risk with integration is that you integrate into the wrong, you know, you edit the wrong, in the wrong place. Do you feel like that's part of the thing that, the secret sauce that you guys have with Kelonia that you've reduced that risk?

Speaker 4:
[16:01] We, yes, I do. I think that is one of, happily for us, a number of dimensions that were the data broke in our favor. And again, we're not going to know, Adam, right? Like the safety, it's so funny, for years I've been trying to get the FDA to think about different sets of numbers of patients you need to look at efficacy versus safety, right? Because efficacy, you kind of care whether it works on most people, safety, you kind of care whether it works on everybody, right? So there is long tail risk in the safety, for sure. There has to be, right? Otherwise, you wouldn't have had Celebrex decades ago.

Speaker 1:
[16:43] So Bryan, going back to the data of it all, Kelonia had kind of been chugging along, you know, you're managing to keep the company afloat with bridge loans. And then you get to Ash in December. Adam was there on site. Kelonia presents this data from its lead program in multiple myeloma, and it causes a bit of a stir. For patients with advanced multiple myeloma achieved complete remissions with MRD negativity. Were these the data that got Lilly interested in Kelonia? Had you been talking to Lilly beforehand?

Speaker 4:
[17:23] Before that, we would have talked to anybody we could stop on the street. But no, it was really the late breaker abstracted ash that got a variety of pharma alert to the possibilities of the data. To be clear at that point, it was for patients, everybody was MRD negative, that was awesome. The side effects looked really good, but we needed more patients, and what we really needed was more durability.

Speaker 1:
[17:51] Okay, so then Eli Lilly sees this data at ash, and how interested were they initially? How did this all play out? Take us behind the scenes. Were they frothing at the mouth?

Speaker 4:
[18:02] Well, no. I think with most of these things, they're a slow ramp. Again, honestly, this was probably six months from start to finish, with it getting increasingly frothy at the end. But I would say we had a couple of months of periodic meetings to bring them up to speed, to get them knowledgeable and comfortable with our team, and therefore our quality of data, and how we were doing things. Manufacturing, stuff like that. And then, at some point, people flip over into less evaluating a company and more, I wanna buy this, and what price can I get it at?

Speaker 1:
[18:58] What was that flip point?

Speaker 4:
[18:59] I don't know, I'm gonna guess it was six weeks ago. Something like that.

Speaker 3:
[19:03] So, Kelonia will be reporting updated results at the ASCO meeting coming up at the end of May. How many patients' worth of data will be presented, and has Lilly seen all of this data as part of its due diligence before deciding to buy?

Speaker 4:
[19:16] So, I'm gonna be careful not to get crosswise with the Jakes at Lilly and not talk about what's going on. I will tell you that we answered every question Lilly asked and they asked a bunch.

Speaker 2:
[19:27] Let's get to Lilly and Jake and the $3.25 billion that you're getting, at least up front, with many, several billion dollars more potentially on the table for you. That is a lot of money, Bryan, for a company with just not very much data. Tell us, is this just Jake, you know, who's got billions of dollars to spend because of obesity drugs? Like, what's going on here? Is he tilting the market? Like, what, is this a bubble? Am I wrong about that? Give me your take on this.

Speaker 4:
[19:57] Yeah, is it a bubble? I think you and I will only know that in about five years when we know whether the product worked, right? I think what the Lilly folks saw, which is what I think all of us, everybody around it saw, is you see something like Carvicti, right? Now projected to do five or six billion dollars in revenue in 2029 or 2030, and you're like, huh, I might take that whole franchise, right? Like, why would there still be ex vivo autologous? Why would it have any place in the armamentarium for a patient if in vivo was safe and efficacious and cheaper and had much higher margins for the pharma company, etc? You could imagine a wholesale switch.

Speaker 2:
[20:55] Again, when the data came out at Ash in December, I mean, that was the conversation, right? It's like, do these data suggest now that ex vivo Carti is a thing of the past? You mentioned Iterius, Gilead bought them, right? They're doing in vivo Carti, but they also bought our cellics. I was about to say, but they also bought our cellics.

Speaker 4:
[21:14] 7.8 billion for half the economics.

Speaker 2:
[21:18] Are you laughing at Gilead for buying our cellics?

Speaker 4:
[21:20] Never laugh at Gilead. Man, we were their Series A investor all those low those many years ago when they were called Oligogen and doing nothing like what they're doing now. Look, I believe you're right that this data is early. If it continues to play out, I think that ex vivo is done.

Speaker 1:
[21:43] Bryan, beyond bragging rights, like if this all works out and Kelonia just totally unseats, everybody else in the car team market, particularly the ex vivo car team market, what's Venrock's takeaway from this deal? What kind of return are you getting from this investment?

Speaker 4:
[22:01] If we make the milestones, we'll make about 70x.

Speaker 1:
[22:05] That's impressive. And for context for listeners, I mean, like a 2 or 3x is a good investment in biotech generally.

Speaker 4:
[22:13] No, it's not, Allison. It sucks.

Speaker 1:
[22:15] It's passable.

Speaker 4:
[22:17] I mean, it may be median.

Speaker 1:
[22:19] That's the median, yeah.

Speaker 4:
[22:22] This is why all those tech VCs booted all their health care partners out 10 and 15 years ago. They're like, this stuff is terrible.

Speaker 2:
[22:30] I think the headline now is Bryan Roberts, a 3X return sucks.

Speaker 4:
[22:36] Well, for the risk and the time, you're in these things for 10 years, right? There's one percentage likelihood it fails. It's awful.

Speaker 1:
[22:43] I know, but that's the industry. That's, I mean, if you cobble everything together, it's like 2 or 3X.

Speaker 4:
[22:48] Allison, you got to figure out a way to make your destiny.

Speaker 1:
[22:50] I have the data, Bryan.

Speaker 4:
[22:53] I know.

Speaker 3:
[22:53] It's terrible.

Speaker 5:
[22:55] We'll chat offline.

Speaker 3:
[22:58] Okay. So we've seen recently that pharma companies are really interested in buying. They're facing substantial patent cliffs in the coming years. What do you think pharma companies are looking for, and do you think this pace of M&A is going to continue?

Speaker 4:
[23:12] I guess two things. I think these patent cliffs have been going on for a long time. I don't know this. I believe that somebody like Lilly's like, we have this awesome obesity franchise, and no one wants to be the jerk who has an awesome franchise and then sees revenue drop by like $20 billion when that patent cliff comes, right? So they're like, we're in good shape now. How do we secure our next lap around the track, right? To still be good. And they're trying to place a bunch of bets. So I do believe that there's some terrific advances in science, right? Cell therapies, all the autoimmune immune reset stuff, right? And you see huge competition in that space. Obviously, the obesity stuff continues to move along. So there are some great advances in science, which I think are providing people with the possibility of products that could be big blockbuster products. And that's what gets pharma interested in stuff, right? I don't think pharma gets interested in products where they're like, oh, peak sales might be a billion dollars. If peak sales might be five or ten billion dollars, then they get interested, right? Because the leverage on that is just terrific.

Speaker 2:
[24:27] So Bryan, as I said, Kelonia will have that data at Asko. I will be at Asko. So it's now on my list of things to watch and see.

Speaker 4:
[24:36] Excellent.

Speaker 2:
[24:37] I'm assuming, you know, with $3.25 billion spent, I'm assuming the data look pretty damn good. But you know, we'll check it out.

Speaker 4:
[24:47] Great.

Speaker 1:
[24:48] We'll have an update from Asko where Bryan and Adam fist fight.

Speaker 2:
[24:52] Yeah, maybe we'll have you back on to talk about the data.

Speaker 4:
[24:55] Absolutely. I'm here for it. Here, I'll know that you want me to come back on when you tweet something inflammatory and you tag me on it.

Speaker 2:
[25:03] I think we're going to consider having you as a permanent co-host to the podcast. We like you, so we'll talk about that. But for now, we're going to say goodbye. Thanks for joining us, Bryan.

Speaker 4:
[25:14] It was a total pleasure, you guys. Have fun.

Speaker 2:
[25:27] Drug makers have long used coupons to lower the out-of-pocket costs patients pay for expensive medications. But now a new twist has emerged. Pharma companies linking up with telehealth providers to offer cut rate coupons for physician consults that can lead to a drug prescription.

Speaker 3:
[25:44] It's an arrangement that can be very profitable for telehealth companies and for the drug makers who end up selling a prescription to a new medicine. But critics are questioning whether these partnerships break federal laws prohibiting financial kickbacks and whether they promote overprescribing of drugs that might not be medically necessary.

Speaker 1:
[26:01] Joining us to discuss this topic is Katie Palmer. Katie, welcome back to The Readout Loud.

Speaker 5:
[26:06] Hi, guys.

Speaker 2:
[26:07] So, Katie, explain to us how these discounts work. Like I said, if you go to a website of a drug maker, what happens from there?

Speaker 5:
[26:14] Yeah, I mean, it happens a couple of different ways. Some of the discounts you can access through the drug maker sites, but more often you'll find a code in their ads. So, the primary example in my story is Addie. They started doing a marketing question when they got a broadened indication at the end of last year. So, a bunch of their ads say, Pink pill, add this coupon code to your telehealth visit, and it'll get knocked down to $10. Others are a little bit more to grease the wheels once somebody has expressed interest already in a telehealth appointment. So, in another example, a patient who follows a link to a telehealth visit from the Contre website, a weight loss medication, if they don't complete their request for a telehealth visit, they'll get a follow up from a number that says get Contre of saying here, here's a discount coupon for $10 off your telehealth visit, just to nudge you toward getting started on that path.

Speaker 3:
[27:03] So Katie, as we set up front, the concern here is that this kind of arrangement might lead to overprescribing, prescribing drugs that may not be medically necessary. Can you explain that?

Speaker 5:
[27:16] Yeah, I think it's sort of the combination of practices involved in some of these pharma telehealth partnerships that are leading to those concerns. So there's the clinical side of things. Overall, there are a lot of different direct consumer telehealth platforms that have a drug-specific approach to care. There are patients who have gotten a lot more comfortable with the idea of essentially adding a drug to a shopping cart and then proceeding through a survey-based clinical interaction to determine their eligibility for that specific drug as opposed to talking about their symptoms overall with a physician in a way that could lead to a variety of different treatments. So we've got that clinical side of things and that's happening both in pharma-mediated televisits and broadly across the spectrum. And then you've got the drug ads on top of that, that occasionally include things like coupon codes for the telehealth visits, that could further incentivize patients to use that form of care over a form of care that could potentially be a little bit more holistic in addressing their concerns and looking at a variety of treatments, including those that are non-pharmacological.

Speaker 2:
[28:25] So you mentioned Addy, the pill, and the company that sells that is Sprout Pharmaceuticals. And they have a partnership with a telehealth provider called Prescribery. And this is obviously a financial arrangement that seems to benefit both. I mean, is that the issue here? I mean, first of all, let's talk about the name, Prescribery. I mean, it seems like if you're working for a company, a telehealth provider called Prescribery, the goal of that company is to get people to prescribe drugs and maybe not say, hey, you know what? You might not need a medication. I mean, is that kind of the underlying concern here?

Speaker 5:
[29:02] I think that's what it boils down to. There are several companies, including Prescribery, that do have life sciences companies as their target clients. And that's just the business model. I started reporting on this phenomenon in 2022 when it was a little less robust, but now it's gotten extremely popular with Pfizer and Lilly, launching their own direct to patient consumer websites with telehealth links. So these companies are not shy about saying this is their goal to support life sciences companies in reaching the appropriate patients who could benefit from their medications. And in that first story that I wrote in 2022, there was an executive for one of these companies that said I believe it was 90% of patients who are eligible for a medication who enter the flow will receive a prescription. So they have a very demonstrated value to their pharmaceutical company clients.

Speaker 1:
[29:57] So there is an argument to be made that this is a useful option for patients, right? I mean, as you note in the article, we are in the midst of a primary care shortage across the country, their health care costs are rising, and you spoke to some folks who basically laid out that this is something that could be useful for patients who know what medications they need, right? Or they want to be more active in their health care decisions.

Speaker 5:
[30:24] Yeah, it definitely does not escape me that it could be really useful to have a $10 or a free appointment when otherwise you have a super high deductible plan or the sexual health specialist that you want to see doesn't even get covered by your insurance or you have a chronic disease, you just need a refill for the medication that you know you're successful on. It's incredibly cheap or relatively cheap to use one of these direct-to-consumer platforms as opposed to the rigor moral of setting up an entire separate appointment and a new co-pay.

Speaker 3:
[30:57] So Katie, how regulated are these arrangements or practices? We talked about anti-kickback statutes. I understand that that applies to drugs that are reimbursed by the government, but a lot of these telehealth prescriptions patients pay for through cash. So what is the regulation here? Is there regulation? Is this in a regulatory gray zone?

Speaker 5:
[31:22] Yeah. The two relevant statutes that the lawyers seem to be considering here are the anti-kickback statute which prohibits remuneration flowing in either direction, sending or receiving to incentivize products that are going to be reimbursed by federal health programs. And then the patient side of that is beneficiary inducements under the civil monetary penalties law. And that's just saying you similarly shouldn't induce a patient directly with something of value to encourage them to pick something, one product over another. Because a lot of the medications associated with these arrangements are not covered by insurance, not covered by Medicare. They don't necessarily fall under those laws. But the same ethical questions that underlie those two statutes, I think still exist. And are the concerns that are raised by a lot of health policy experts and patient safety experts looking at these arrangements, regardless of whether or not federal or state health programs are impacted directly.

Speaker 2:
[32:23] Katie, we know many patients are taking weight loss drugs these days. Many of them are obtaining them through telehealth. Are we seeing this phenomenon that you're talking about here, these arrangements, more broadly with weight loss drugs? I mean, you mentioned Contrave, which is a weight loss drug, although one that's probably older and less used than the ones that we talk about most often.

Speaker 5:
[32:43] Yeah, I haven't seen discounting specifically for weight loss telehealth visits other than in that Contrave example. And I haven't seen a lot for GLP-1s. I imagine that would be because of supply and demand. It was expressed to me by these telehealth companies that coupons are usually applied when they want to encourage more patients to follow up on these visits with the GLP-1 drugs. It doesn't seem like there's any lack of demand. They don't really, patients don't need much incentive or nudging to be continuing with those visits at this point.

Speaker 3:
[33:17] Well, something we did talk about recently on this podcast is Novo's new subscription model where they're saying, you could get a cheaper price if you subscribe, but it's only through certain telehealth platforms. So I feel like that might be a similar situation as this, right? It's some kind of payment model that is meant to encourage people to go to certain telehealth sites to get that specific drug.

Speaker 5:
[33:38] Yeah, and I don't know exactly how to expand on that, but I think it's an interesting point to draw attention to.

Speaker 1:
[33:46] So, Katie, you went and looked at these questionnaires, the actual process of getting prescriptions through these telehealth programs, and a lot of them, you found these 15-point questionnaires, most of which were focused on potential side effects. Was there any outpoint you could identify that would actually stop a prescription from being written? Has anybody tested that? Is that a concern that there's really nothing of these questionnaires that would actually kind of put halt on prescribing, that they're so actually incentivized to make prescriptions?

Speaker 5:
[34:27] Yeah, and I do want to clarify here, I think that the medical surveys that I've seen, at least, do seem very carefully designed to ensure that patients who are at risk, who are contraindicated for a specific medication will not receive them. So, they, you know, for the ADI flow, for example, it asks patients if they have liver problems. ADI has a black black black swarming that makes it clear that patients with liver problems are at risk if they take the drug and should not take ADI. So, there's a very specific question in the ADI medical intake that makes sure patients don't proceed if they say, yes, they have liver problems. Same with, you know, other medications that might be contraindicated with drugs. ADI also has a risk of low blood pressure if taken with alcohol. And the survey asks patients to acknowledge that specific indication and risk for the drug before proceeding all the way through. So, I think, you know, in terms of safety, these surveys are very well structured to make sure that patients who are truly at risk from medication do not receive prescriptions. I think the broader question is whether patients who might benefit from other treatments more or is a first line effort. Those questions aren't really asked adequately, at least not in the Addie example, according to the sexual health experts I talked to, to determine whether Addie is the best first thing to try.

Speaker 2:
[35:54] Katie, fascinating story. Thanks for joining us.

Speaker 5:
[35:56] Thank you, guys.

Speaker 2:
[36:05] That does it for another episode of The Readout Loud.

Speaker 3:
[36:07] Thank you to Hyacinth Empanado for producing this week's episode.

Speaker 1:
[36:11] Our senior producer is Alyssa Ambrose, our executive producer is Rick Burke, and our theme music is by Brian Joel.

Speaker 2:
[36:17] We'd love to hear from you. Tell us what you like about this week's episode, what you didn't like, and whether or not you think Lilly might buy our podcast. You can do all that by sending us an email at readoutloud at statnews.com.

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Speaker 1:
[36:38] See you next week.

Speaker 2:
[36:39] I am not moving to Indianapolis.