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The Health 202: Health industry giants get tax windfall. But it's unclear how it will be used.

with Paulina Firozi


Health-care industry giants are sitting pretty this year with extra cash from the GOP tax overhaul — but they’re also sitting tight.

Companies have been less aggressive on the consolidation front than analysts say they had anticipated in the four months since Congress lowered corporate tax rates in a sweeping overhaul, freeing up overseas cash and reducing tax bills for pharmaceutical makers, life-sciences companies and health insurers.

“We’ve seen [mergers and acquisitions] roll out slower than expected,” said Ben Proce, pharmaceutical and life sciences tax leader for the firm PwC. “Prices could be on the high end, but given the liquidity unlocked here, we think it’s more a matter of time than anything else at this point.”

One thing is for sure, however: the tax overhaul certainly unlocked more profits for the industry. It not only lowered the domestic corporate tax rate from 35 percent to 21 percent, a huge boon to insurers and pharmacy benefit managers, but it also enticed drug and biotech companies to bring home huge overseas cash reserves by slashing taxes on those earnings, too.

Pfizer, which has been mentioned as a potential buyer of Shire, announced an extra $10.7 billion in reported income for 2017 because of the tax changes. Allergan, UnitedHealth and Anthem have also recorded a benefit from the tax overhaul, according to a recent analysis by Bloomberg.

Indeed, all five major U.S. health insurers have announced the tax overhaul will increase their revenue this year — and several say they’re putting the savings toward boosting wages and retirement benefits.

In February, Anthem announced it would contribute an extra $1,000 to the retirement accounts of its nearly 60,000 employees and recent retirees. Cigna announced it is raising wages, spending $15 million on salary bumps for front-line employees and adding $30 million to its retirement program. Around the same time, UnitedHealth said it was using an additional $1.7 billion in profits on data analytics, technology and innovations.

When Kentucky-based Humana said it, too, would be raising minimum wages and paying incentives for workers, Senate Majority Leader Mitch McConnell (R-Ky.) was the first to announce it. “For these Kentucky workers, the tax cuts and jobs act will mean more money in their paychecks,” McConnell said in a Senate floor speech in January.

McConnell and other Republican leaders have spent the past few months seizing every possible opportunity to tout their tax bill, promising American taxpayers it will put more money in their pockets while dramatically boosting economic growth. That's despite last week’s projection from the Congressional Budget Office that the overhaul would grow the economy 0.7 percent over a decade, which is not nearly enough to keep the measure from adding to the federal deficit.

At a news conference, House Republicans reminded Americans taxes are due and that they had a role in changing the tax code. (Video: Meg Kelly/The Washington Post)

Republicans viewed yesterday — Tax Day — as a prime opportunity to draw more attention to how businesses are responding to a lighter tax burden. And they expect the savings for companies and some individuals to be a mainstay of their 2018 campaign messaging.

“Tax reform is working; it's actually even exceeding our expectations, giving us a stronger economy, a healthier economy, and it's going to make us more prosperous for years to come,” House Speaker Paul Ryan (R-Wis.) told reporters.

From Ivanka Trump:

But for now, many major players in the health-care industry appear to be mulling exactly where to spend their extra cash. They’ve made some moves favorable to shareholders, such as raising dividends, but there's been no flurry of activity on that front, analysts say. Instead, it appears health companies are waiting to increase merger activity later in the year.

“I think the companies are keeping their powder dry,” said Arthur Wong, director of health-care corporate ratings for Standard & Poor’s. “Companies are in M&A mode, and I think with tax reform they’re going to use greater access to cash to kind of figure out what acquisitions make sense to them.”

The industry went on a merger spree last year, and industry watchers expect that trend to continue in 2018. They’re keeping a close eye on a proposed consolidation between CVS Health and Aetna, which federal regulators have yet to approve, and Cigna’s plan to buy Express Scripts. And then there’s the prospect of an effort by Walmart to acquire Humana.

Opponents of the GOP tax bill charge pharmaceutical companies should have used their financial windfall to lower costs for patients. Sen. Cory Booker (D-N.J.) issued a report last week that says five U.S. drug companies — Pfizer, Merck, AbbVie, Amgen and Celgene — instead implemented a total of $45 billion in shareholder buybacks.

“Given the windfall that pharmaceutical companies are anticipating as a result of the Tax Cuts and Jobs Act, there is no excuse but to act to lower the cost of prescription medications,” Booker said.

Other Democrats criticized Pfizer's earnings announcement. Rep. John Yarmuth (D-Ky.): 

Sen. Joe Donnelly (D-Ind.): 

Sen. Ron Wyden (D-Ore.): 

But market analysts say companies would be better served by dump extra profits into new drug development since the price of some medicines is already trending downward.

“I think what we’d like to see them do is invest more in research and development, because just getting a lower price out is temporary,” Wong said. “I think prices are already going down, given all the [pharmacy benefit managers], mergers.”

Barbara Bush, who was the wife of one president and the mother of another, died on April 17. (Video: Monica Akhtar/The Washington Post)

— Barbara Bush died yesterday at the age of 92, The Post's Lois Romano reports. The office of her husband, former president George H.W. Bush, issued a statement last night announcing her death but did not disclose the cause. Mrs. Bush was reportedly battling chronic obstructive pulmonary disease and congestive heart failure. Her family announced two days earlier that she had “decided not to seek additional medical treatment” after recent hospitalizations amid her “failing health.”

More from Lois's obit: "As the matriarch of one of America’s political dynasties, Mrs. Bush spent a half century in the public eye. She was portrayed as the consummate wife and homemaker as her husband rose from Texas oilman to commander in chief. They had six children, the eldest of whom, George W. Bush, became president. Their eldest daughter, Robin, died at age 3 of leukemia, a tragedy that had a profound impact on the family ... 

Only Abigail Adams, whose husband, John Adams, and son John Quincy Adams served as the second and sixth presidents, respectively, of the United States, shared Mrs. Bush’s distinction of being the wife and mother of commanders in chief.

American leaders shared their condolences:


— Alex Azar was hospitalized because of diverticulitis, an infection that strikes the walls of the colon, Health and Human Services representative tells The Post's Amy Goldstein. The HHS secretary will be on a modified schedule in coming days, which includes a postponement of a Senate budget hearing at which he was scheduled to testify on Thursday. “He is hard-charging. This is a forced slowdown,” the representative said.

The agency had disclosed Sunday night that Azar was hospitalized because of an infection, but didn't specify the infection's nature. Azar is expected to return to Washington this week after being treated at St. Vincent’s Hospital in Indianapolis.

— CDC Director Robert Redfield has resigned his positions at four groups, including a gene therapy biotechnology company and a conservative AIDS organization, to comply with government ethics rules, The Post's Lena H. Sun reports. Redfield's predecessor Brenda Fitzgerald resigned Jan. 31 after serving only half a year because she was unable to divest from her financial holdings. She had also purchased tobacco stocks as CDC director.

“The job of CDC Director is very important to me," Redfield said in a statement. "Therefore, I have worked closely with the HHS Ethics Office to comply with all reporting requirements of the Ethics in Government Act."

"Redfield, a professor of medicine at the University of Maryland, said he has also divested stock holdings in two private biotechnology companies and is recusing himself from participating in matters involving the university and seven organizations, according to his ethics agreement and a memorandum about his recusals," Lena writes. "Redfield also will no longer work as a consultant for four law firms or as a speaker for a medical education company. He said he plans to sign over his share of royalties from a forthcoming book about HIV infections to his co-author and future licensing fees or royalties on several patents to the University of Maryland."


AHH: Utah and Oklahoma -- two of the most conservative states in the country -- are now moving toward legalizing pot, another sign of how feelings around marijuana have shifted. The two states could join 30 others that have legalized medical marijuana in some form, the Associated Press reports. Utah and Oklahoma already allow the use of CBD, or cannabidiol, a compound of cannabis that is used for a variety of health concerns but doesn’t get users high.

Utah’s measure wouldn't allow residents to grow their own pot, nor would it allow people to smoke marijuana. Instead, it would authorize state-regulated growing and operations to let people with medical conditions buy edible forms of marijuana after attaining a legal card. Under the Oklahoma proposal, patients could get a medical marijuana license that would allow them to possess up to three ounces of the drug as well as six mature plants and six seedlings, per the AP.

OOF: Nearly 100 people were arrested yesterday and charged with distributing heroin and fentanyl in the takedown of a drug distribution network operating in West Virginia and Michigan, The Post's Sari Horwitz and Katie Zezima report. Law enforcement officials have seized enough fentanyl in the ongoing operation to kill more than 250,000 people, Attorney General Jeff Sessions said. More than 200 federal, state and local law enforcement officials were involved in the operation, which began at 6 a.m.

“Justice officials said the multistate operation is the latest example of the tough stance that the department has taken under Sessions in combating the opioid crisis,” Sari and Katie write. In August, Sessions assigned a dozen prosecutors to areas where opioid addiction is prevalent and created a new data analytics program to focus on investigating opioid-related health-care fraud. Later he ordered all U.S. attorneys' offices to designate an opioid coordinator to supervise anti-opioid strategy and announced that anyone who illegally possesses, imports, distributes or manufactures any fentanyl-related substance can be criminally prosecuted.

“Our great country has never seen drug deaths like we’re seeing today,” Sessions said in a statement yesterday. “Under President Trump’s strong leadership, the Department of Justice has taken historic new actions to put drug traffickers in jail and keep dangerous drugs out of the wrong hands.”

OUCH: An ailing person's salvation is another family's grief. A rise in organ transplants is linked to a similar rise in drug overdose deaths across the nation, The Post's Cleve R. Wootson Jr. reports. In 2016, there were 3,533 transplants using organs donated from overdose victims, compared with 149 such transplants in 2000, a new study found. Overdose victims made up 1.1 percent of all donors in 2000. In 2017, they made up 13.4 percent. 

“Although the organs are from people who had risky lifestyles, people who receive such transplants do not appear to have more negative effects over time,” Cleve writes. “That is decidedly good news to the more than 114,000 people who the United Network for Organ Sharing estimates were awaiting transplants Tuesday afternoon — though researchers concede it comes with an asterisk.”

“This is not an ideal or sustainable solution to the organ shortage,” researcher Christine Durand wrote in the journal Annals of Internal Medicine, where the data were published.


— Trump’s pick to head the Department of Veterans Affairs has privately pledged to Democratic Sen. Jon Tester (Mont.) that he would oppose efforts to privatize veterans’ health care, our colleague Seung Min Kim reports. Ahead of his April 25 confirmation hearing, Jackson is “not only battling the perception that he lacks sufficient management experience, but trying to assuage the concerns of Democratic senators who oppose outsourcing more veterans health care to the possible detriment of VA,” Seung Min writes.

Tester said Jackson made the promise at a one-on-one meeting on Tuesday, but said Jackson had not yet explained his stance to the president. “Look, he seems to be somebody who’s gonna listen to the veterans through the [veterans service organizations] and seems to be somebody who doesn’t want to privatize the VA,” Tester said yesterday after his meeting. “But we’ll see as this process unfolds.”

— The man with ALS, or Lou Gehrig's disease, who caught national attention for confronting Sen. Jeff Flake (R-Ariz.) last year about the Republican tax bill, has launched a new “Be a Hero” campaign targeting Republicans. In a new minute-long TV and online ad running ahead of an April 24 election in Arizona’s 8th congressional district, Ady Barkan slams Republicans for pushing tax legislation that could affect his health care if lower tax revenue leads to eventual federal benefit cuts.

“Four months after my wife gave birth to a beautiful baby boy named Carl, I was diagnosed with ALS,” Barkan says in the ad. “I was shocked when Congress proposed a tax bill that would take away my health care.”

The six-figure buy was designed to create a splash in a race that outside Democratic groups have largely ignored — but one where the Democratic nominee, Hiral Tipirneni, has campaigned heavily on expanding Medicare, our colleague Dave Weigel reports. “Barkan… said that the ad would be one of many around the country, fronting his own story to describe what would happen if lower tax revenue led to benefit cuts.”

— A few more good reads from The Post and beyond:


Sessions Tries to Put New Pressure on Drug Companies in Opioid Crisis (New York Times)

US regulators float ideas for boosting medical device safety (Associated Press)


Woman was sickened by E. coli after eating contaminated romaine lettuce at Panera Bread, suit says (Kristine Phillips)


France had a big heroin epidemic in the 1980s and ’90s. Here’s how the country fixed it. (Vox)



  • The National Institute for Health Care Management Foundation holds an event on “Stopping the Superbug Threat.”
  • Brookings Institution holds an event on medical marijuana.

Coming Up

  • The Senate Appropriations Subcommittee on the Departments of Labor, Health and Human Services and Education and Related Agencies on the budget for HHS on Thursday.
  • The Tatia Oden French Memorial Foundation will host a hill briefing  on two bills on making childbirth safer on Thursday.
  • The Senate Finance Committee holds a hearing on the opioid epidemic on Thursday.
  • The Better Medicare Alliance holds a briefing on improving consumer understanding of Medicare Advantage on Friday.

Former FBI director James Comey tells Stephen Colbert on Trump: " I’m like a breakup he can’t get over:"

Former FBI director James B. Comey appeared on “The Late Show With Stephen Colbert” on April 17. Watch the highlights. (Video: Amber Ferguson/The Washington Post)

Stormy Daniels's interview on on "The View," annotated:,

"The View" hosts interviewed Stormy Daniels on April 17 and showed a sketch of the man Daniels said threatened her to stay quiet. (Video: Elyse Samuels/The Washington Post)

Stormy Daniels released a sketch of a man she said warned her in 2011 to stop discussing claims she had a sexual encounter with Donald Trump, while her lawyer offered a $100,000 reward for information about the man.

Stormy Daniels on April 17 released a sketch of a man she said warned her to stop discussing her claims she had a sexual encounter with Donald Trump. (Video: Reuters)