Revised IRA Drug Provisions, Teladoc's Handwaving, & Insurers Gaming The System

Hey all,

I hope your week has been great so far. I found Chris Deacon's three-part series on Teladoc's financial games fascinating, as I've been anticipating their downfall for quite some time. The news about insurers manipulating medical loss ratios was also a complete shock—who would have thought these upstanding, law-abiding corporate citizens would ever engage in such behavior?

Enjoy the rundown!

Jacob Brody (Co-Founder & CEO, ZorroRX)

(STAT) Bill Reintroduced to Revise IRA Drug Pricing Provisions

A new bill, the Ensuring Pathways to Innovative Cures Act, has been reintroduced in Congress to extend Medicare’s price negotiation window for small molecule medicines from nine to 13 years, aligning it with biologics. Supporters, including pharmaceutical companies and investors, argue that the current timeline discourages investment in small molecule drugs, potentially reducing innovation. However, critics, including consumer advocacy groups, see the move as a pharmaceutical industry tactic to maintain higher prices, warning that it could increase healthcare costs and undermine Medicare savings. Full Article

(LinkedIn) Teladoc's Alleged Financial Manipulation

In a LinkedIn post, healthcare lawyer and consultant Chris Deacon claims Teladoc Health is using accounting maneuvers to mask financial struggles, shifting R&D expenses into "capitalized software" to artificially boost EBITDA by 32% and cash flow by 127%. This tactic coincides with declining revenue growth, rising customer acquisition costs, and increased marketing spend, raising concerns about the company’s transparency and long-term viability. As investors take notice, Teladoc’s financial practices face growing scrutiny. Full Article.

(HEALTH CARE un-covered) Gaming the System: Medical Loss Ratios and How Insurers Manipulate Them 

Health insurers exploit loopholes in medical loss ratio (MLR) regulations to minimize consumer rebates and maximize profits. By categorizing expenses as "quality improvement" and inflating internal medical claims through vertically integrated subsidiaries, insurers manipulate financial statements to appear compliant while diverting billions into corporate profits. These tactics undermine the intent of MLR rules, which were designed to ensure premium dollars go toward patient care. Full Article.