TrustWorks On Call: What’s Cooler Than CRISPR

Behind the Headlines

Unpacking the forces driving healthcare's biggest stories.

1. House advances budget bill with Medicaid work requirements out of committee.

The House Budget Committee passed its reconciliation bill with a 17-16 vote Sunday night, after four Republicans who voted down a draft on Friday abstained.
The bill, which combined legislation crafted by two committees and is still considered a work in progress, is expected to receive a full House vote this week, needing the support of all-but-two House Republicans to pass on party lines.
Fiscal hawks are demanding changes to several healthcare provisions to secure their votes, including moving up the start date for Medicaid work requirements from 2029 to 2027, rescinding (rather than freezing) Medicaid provider taxes, and lowering the federal matching rate for Affordable Care Act expansion states.

TrustWorks Take: As we discussed last week, the Medicaid cuts remain the top story from this bill, with House Republicans using work requirements as a primary means to exclude underserving Medicaid beneficiaries. Given that most beneficiaries either work sufficient hours or qualify for exemptions, much of the savings generated by work requirements come from people failing to verify their eligibility. On top of that, state Medicaid offices diverting funds from patient care to bureaucratic oversight further diminishes their budgetary value. The start date is also under debate, with fiscal hawks saying the sooner the better, whereas moderates hope to delay such a disruptive policy’s implementation until after the next midterm elections. However, there are other policies worth paying attention to in this bill: the annual Medicare physician payment update could finally be tied to medical inflation, some basic pharmacy benefit manager reforms like a spread-pricing ban and savings pass-through requirements could be enacted, and—in healthcare-adjacent news—Congress might ban state governments from enacting new AI legislation for the next ten years. The procedural rules that govern reconciliation bills should keep this provision out of the final law, but it’s alarming that House Republicans would even try to slip in such a giveaway to the AI industry while attention is drawn elsewhere for this “big, beautiful bill.”

2. District court rejects drugmakers’ 340B rebate plan, for now.

The US District Court for the District of Columbia ruling issued last Thursday found that plaintiff drugmakers could not issue rebates for 340B drugs unless approved by the Department of Health & Human Services (HHS).
Eli Lilly, Bristol Myers Squibb, Sanofi, and Novartis each filed suits against HHS, which were later combined, after the subagency overseeing 340B, the Health Resources and Services Administration (HRSA), temporarily blocked their plans to offer after-the-fact rebates for 340B discounted drugs, which the drugmakers claimed was to counter programmatic fraud and abuse.
Providers could still face 340B rebates should drugmakers ultimately get HRSA’s approval for their proposed models, which the agency is still considering for Eli Lilly, Bristol Myers, and Novartis, and will be forced to reconsider for Sanofi after improperly rejecting its proposal.

TrustWorks Take: As 340B sales have grown—340B drug purchases almost tripled from 2018 to 2024—so too have the number of lawsuits contesting the program. Hospitals can celebrate this latest win, but it’s only a partial victory in a war with many fronts and billions of dollars at stake. Prior to proposing rebate models, drugmakers moved to restrict the use of contract pharmacies, and even won a case against HHS voiding any punishments for their actions, only for six states (and counting) to step in and require drugmakers to honor 340B discounts at contract pharmacies. These myriad lawsuits are proof both that the 340B program is very important to providers—various hospital administrators note that 340B discounts make up their entire margin—and that the program is poorly constructed. 340B sales (and drugmaker complaints about those 340B sales) will continue to grow until Congress intervenes. There’s talk of 340B reform legislation as a coming priority, but the current budget bill could also slow 340B sales, albeit indirectly. Since hospitals can qualify for 340B by serving a high share of Medicaid patients, the impending Medicaid cuts could reduce the number of disproportionate share (and therefore 340B-eligible) hospitals, which would amount to a devastating loss of funding for any such hospital.

3. First successful personalized gene-editing treatment performed on infant.

Scientists at the Children’s Hospital of Philadelphia and Penn Medicine announced last week that a nine-month-old infant born with a rare genetic condition, CPS1, became the first successful recipient of a customized gene-editing treatment.
The researchers used CRISPR technology to correct “a specific gene mutation in the baby’s liver cells that led to the disorder,” administering the treatment in progressively higher doses over several months.
The Food and Drug Administration (FDA) made a regulatory exception to allow the child’s parents and their doctors to decide to pursue the experimental treatment; the infant appears to have no complications from the treatment but will be carefully watched by researchers.

TrustWorks Take: One of the researchers who contributed to this amazing project put it best when they said, “We hope this has set a precedent where we have firmly entered a world of genetic cures—CRISPR cures—on demand. I think we can say: This is the year when CRISPR-on-demand is truly born." The science behind this treatment is a marvel, but ever since researchers began to reckon with CRISPR’s potential in the mid 2000s, there’s been hope for cures of the incurable. Now, the apparent success of this treatment, along with the FDA’s approval of sickle-cell gene therapies, shifts the primary barrier in the way of widespread gene-editing therapies from scientific to economic. The cost of this infant’s treatment was largely covered by federal research grants, but commercial applications for other genetic diseases will require extensive funding for research and care delivery, which has to come from somewhere, whether its taxpayers or the patients themselves. It may even require new models of care financing, as high-cost gene therapies are currently lumped into our pharmacy payment system, despite the treatments not revolving around the administration of a drug, at least in the traditional sense.

Beyond the Whiteboard

Visualizing key trends from the healthcare industry

Scale Not Helping Margin at the Largest Nonprofit Systems
Even though last year saw “notable improvement” in the median financial performance of nonprofit hospitals and health systems, the largest nonprofit health systems by revenue continued to struggle. Nonprofits comprise eight of the ten largest health systems, and four of those eight—Advocate Health, Ascension, Providence, and UPMC—lost money on operations (although UPMC’s losses stem from its insurance services, which were hit by high volumes and pharmacy costs). Meanwhile, Kaiser Permanente, by far the largest health system due to its insurance offerings and now Risant Health, barely broke even. Two systems, HCA Healthcare and Tenet, stand out among the rest as the only for-profit systems on the list and the only systems posting double-digit operating margins. It’s not a shock that for-profit systems, which are obliged to maximize shareholder profit, have the healthiest operating margins, but the gap between them and the nonprofits is remarkable. Nonprofits and for-profits alike have faced rising expenses and revenue pressures, but the for-profits have proven nimbler in their responses to these challenges. In our next edition, we’ll dig into HCA and Tenet’s financial reports to illustrate how and why.

Dialing In

Sharing insights from our work with clients

How Physicians Can Take Back Control of the Pharmacy Spend
In a recent analysis of a multispecialty group's declining margin, one line item kept surfacing: drug expense and related drug net profits. This group managed not only infusion therapies, but biologics, injectables, and in-office dispensing, all of which it had taken on for better care integration and financial control. Therefore, medication expenses weren't just a pass-through for them, but a volatile, critical lever that was breaking their bottom line. We discussed three moves forward-thinking practices employ to shift the economics.

Consolidate and negotiate through a specialty group purchasing organization (GPO). These GPOs aggregate purchasing volume across like-minded practices to negotiate lower unit costs, improve rebate access, and offer tighter formulary management. Critically, a GPO model also gives physicians leverage with suppliers and greater predictability in cost per dose, stabilizing margins in service lines like oncology, rheumatology, and gastroenterology.
Review all buy-and-bill management workflows with an eye toward inventory and reimbursement tools. Traditional buy-and-bill models can expose practices to reimbursement lags, write-offs, and waste. Instead, explore cloud-based inventory management systems, real-time reimbursement tracking, and prior authorization automation to optimize this process.
Ensure that clinical protocols encourage cost-conscious prescribing. This could include establishing written, evidence-based prescribing pathways and protocols that address clinical efficacy, cost-effectiveness, and site-of-service alternatives. Practices could also engage in formulary steering and patient education to minimize non-covered medications and reduce patient abandonment rates.

The throughline of these tactics is to elevate drug costs from a back-office issue to a frontline concern. By taking an active, strategic role in managing this spend, physician groups can reduce risk, protect margin, and deliver more affordable care without compromising outcomes. Just as important, this isn’t a “set-it-and-forget-it” function—some combination of internal leadership and external partnership needs to be keeping their eye on the ball. Pricing shifts, reimbursement changes, and formulary updates can happen weekly and in today’s market sometimes daily. For real impact, pharmacy spend must be respected as a critical economic center and managed with the same rigor as payroll or payer contracts.

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What's Cooler Than CRISPR