The law of the jungle rules health tech

TECH MAZE

Venture capital flowing into high tech health care is continuing to fall after a pandemic surge.

New data from investment firm Rock Health shows that digital health firms secured $6.1 billion in funding in the first half of 2023, on pace to settle at or below the pre-Covid level of 2019, when firms got $8.1 billion.

“While the ‘writing on the wall’ has been clear for the past several quarters, many digital health startups are still navigating a shift from the prior funding environment to the present day,” Rock Health analysts wrote in a report. “Fewer deals, lower check sizes, and a smaller cohort of sector investors are the new normal.”

The decline, which began in earnest at the beginning of 2022, has been consistent, and signals a return to normalcy now that Covid’s transformative impact on health care has abated.

Valuations of health tech startups were unsustainably high, venture capitalists have previously told Future Pulse, and fragmentation in the market prevented companies from meeting expectations. Investors have also pulled back amid recession fears.

Some companies have laid off workers and some have shut down.

Why it matters: The pullback in funding threatens innovation in the sector, but there’s little Washington can do about it.

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Today on our Pulse Check podcast, host Megan Messerly talks with Carmen about what’s behind the Biden administration’s plan to combat the growing threat of so-called Tranq Dope — a lethal combination of fentanyl and the horse tranquilizer xylazine — which has led to a surge in deaths in the U.S.

AROUND THE AGENCIES

The military says it needs to better align its medical personnel with its current needs, and that it can do without more than 10,000 current positions.

Congress thinks it hasn’t thought hard enough about it.

A new report from the Government Accountability Office, Congress’ watchdog arm, agrees with lawmakers.

It says the Department of Defense should better assess the effects of reducing the number of active duty medical personnel before any cuts are made.

Why it matters: When the Pentagon announced plans to cut more than 17,000 active duty medical jobs in 2019, it said the skills of its doctors, nurses and other clinicians weren’t aligned with its battlefield needs, and that they didn’t have enough work to do.

It said the reductions would keep the remaining medical troops busier, enabling them to better hone their skills, and allow other job slots to go to the fighting force.

But military families, concerned about the effect on their health care, protested from the start and Congress has repeatedly put off the reorganization, most recently delaying it five years in the fiscal 2023 defense authorization law.

After Covid hit, the military services reduced the proposed cuts in 2021 to 10,739. There are currently around 108,000 active-duty medical positions.

Watchdog’s assessment: Congress asked the GAO to investigate in last year’s defense authorization, and the agency found that DOD failed to fully or consistently assess the effects of the proposed cuts. It said the quality and cost of care could be affected, but that DOD hadn’t adequately analyzed that possibility.

As part of its plan, DOD had proposed bridging the gap left by the cuts by hiring civilian or contractor replacements or moving patients to civilian provider networks through its TRICARE health plan. However, GAO found, DOD only performed limited assessments of the feasibility of that plan.

What’s next? GAO proposed — with Pentagon concurrence — that DOD assess the effects of the medical personnel reductions on military medical treatment facilities and TRICARE before ultimately deciding on reductions.

And lawmakers could weigh in again, with the fiscal 2024 defense policy bill up for consideration in the House this week.

THE NEXT CURES

DoxyPEP — a kind of morning-after pill for bacterial diseases spread through sex — reduces infections among men who have sex with men and transgender women.

That finding, in a recent NIH-funded study that confirmed the results of an earlier French study, comes as the U.S. faces record rates of sexually transmitted diseases.

How’s it work? DoxyPEP, which stands for doxycycline post-exposure prophylaxis, is meant to be taken as soon as possible after unprotected sex but no later than three days after.

The Centers for Disease Control and Prevention has yet to release complete guidelines on doxyPEP use for clinicians. But because doxycycline is already an FDA-approved antibiotic, doctors can prescribe it.

The U.S. researchers presented their preliminary results at an HIV conference last year, sparking more interest in doxyPEP.

Meanwhile, various local jurisdictions, such as San Francisco, have released their own guidelines on doxyPEP use, providing clinicians with a framework.

Treading carefully: Some public health experts are concerned about the potential for antibiotic resistance.

But the way doxyPEP is designed to be used should assuage those fears, said Philip Chan, an associate professor of medicine and public health at Brown University, who was not part of the study teams.

“We’re talking about intermittent doxycycline use. We’re talking about it just after sex, not every day,” Chan said. “We use doxycycline long-term in things like acne and malaria prophylaxis, so there’s already people using doxycycline routinely.”

What’s next? The CDC is putting together official guidelines for doxyPEP use, on which Chan is a consulting doctor. The draft guidelines are expected to go up for public comment by the end of the summer, with the final guidelines coming after.

POLICY PUZZLE

Health data privacy protections remain a patchwork a year after the Supreme Court’s Dobbs decision raised the stakes for women with unwanted pregnancies in states that have banned abortion.

Others are concerned about how the health data they share online could be used to market products to them.

The Connected Health Initiative, a digital health group whose steering committee includes Apple and the American Medical Association, has new recommendations for state lawmakers navigating the space:

— Avoid conflicting laws on health data and support a “community-based approach.”

— Exempt entities subject to HIPAA, the federal health data privacy law, to avoid “dual regulation” that could hurt consumers.

— Establish “narrow and well-defined parameters” for allowing law- enforcement access to personal health data.

“Any entity that engages in the commercial collection, processing, transfer, and sale of individuals’ health information, should be required to comply only with legitimate requests for such information when accompanied by a written attestation that the recipient will not use or disclose the information for a prohibited purpose,” the group wrote.

In government: The Department of Health and Human Services has proposed further safeguards for HIPAA-protected health records related to abortion, and some Democrats in Congress are pushing for further legislation to safeguard data.

Some states like California have also taken steps to protect abortion-data privacy.