6 Takeaways From the 41st J.P. Morgan Healthcare Conference

We are all recovering from the now-returned-to-in-person J.P. Morgan Healthcare Conference in San Francisco that concluded last week. As a journalist who has been covering the conference proper at the Westin St. Francis hotel and other satellite events since 2012, here are my takeaways:

The slow pace of fast change
New advancements in technology are coming at us fast and furious, but that doesn’t necessarily mean regulatory decisions guiding their use is keeping up. The changes have to do largely with the blurring of categories.

“You are seeing the convergence of therapeutics companies and device/data companies [and they are] starting to get closer and closer,” said Eli Casdin, founder and chief investment officer of Casdin Capital. “Everything is starting to converge and you’ll find these therapeutics companies talk about data and how to find the patient and data companies talking about using AI and how to find a better molecule.”

While all this is exciting, regulatory framework continues to ill-equipped to manage this change.

“I think innovation is moving so fast, whether it be biologics or AI or devices, I don’t think the regulatory agencies can keep up with the transformation…. I don’t know the answer but it seems like we are about to have a big car crash in the regulatory world,” Casdin said.

It’s all about primary care
Specialty care is the area which accounts for a lion’s share of healthcare costs, but primary care is where companies are laser focused. Be it providers, payers or even retailers, having a strong primary care strategy is what folks have coalesced around and will continue to focus their value-based care efforts on.

Last week, CVS Health — that has openly declared that it will be looking to buy a primary care company, reportedly Oak Street Health though others disagree — announced a $100 million investment in Carbon Health, which is a primary care and urgent health company.

Lyle Berkowitz, a former practicing physician, and now CEO of telemedicine startup KeyCare, believes that everyone is focused on owning primary care because it is the largest funnel allowing interactions with a large potential customer base to whom other care and services can then be delivered.

More chances of bolt on-acquisitions as opposed to biotech mega mergers

Dealmaking in the biopharma world will continue on its path of more tuck-in acquisitions rather than large companies doing major deals in search of synergies. That’s unlike in the hospital world, which has seen a fair share of large cross-market mergers that continued even in 2022.

Three deals announced on the first day of J.P. Morgan confirm this trend.

“We are not necessarily seeing very large-scale M&A, we are seeing single-digit billion-dollar type bolt-on deals,” said Matthew Leskowitz, managing director of healthcare investment banking at Goldman Sachs. “Many of the deals in this environment are of commercial or near commercial assets.”

Not all providers need to deliver care at the top of their license
As the emergency of the pandemic wanes, what type of care should large health systems deliver? It should be complex care and acute care, some believe.

But the reality, as mentioned above, is that it is all about primary care. Health systems, payers, providers, retailers are looking to cement their positions in this area. That means that primary care — assuming it is routine care — can and should be virtualized. That’s the philosophy of companies like KeyCare, mentioned above, which uses an Epic-based telehealth platform to drive virtual care providers to health systems looking to provide this convenience to their patients.

“Part of our focus is to help offload from the health systems much of what I call the triple R effect — the routine, repeatable, rules-based care — the easier, commoditized type of work,” said its CEO, Berkowitz. “That opens up the health system to be able to take care of the higher complexity issues.”

And that is precisely the vision of CommonHeath Spirit CEO Wright Lassiter III when asked the question of what is the role of the physician in the future given that so many different companies are trying to deliver primary care. He believes that some providers will be commodities, though that is not what he envisions for his own organization.

“I don’t like just being a commodity. So I think for some of us that’s what you’ll be and that’s not a negative role. It’s just more limited. In my mind, our job is to be more than just a commodity to all those folks. Our role is in some cases to be a convenor, in some cases to be a connector and not just someone at the bottom of the totem pole who gets kind of fed the scraps.

Shouldn’t innovation be about replacing other things that came before?

Controlling costs and delivering better outcomes is what was discussed endlessly at multiple panel discussions no matter where you were in San Francisco last week. You would think that all the innovators in the room would then be discussing delivering new therapies that make what came before less useful.

But in a couple of interviews it appeared that while truly innovative therapies are being developed, it merely adds choice and cost to the system. For instance AstraZeneca buying CinCor that is aiming to develop a drug to treat resistant hypertension. The company is still a couple of years from a regulatory nod in the U.S., but it is not being conceived as a pill that removes the need to take other hypertension medications. You would take it as an “add on” to whatever else you are taking said Maina Bhaman, a VC with Sofinnova Partners who sits on the board of the company. Even though she described CinCor’s product as  a “highly differentiated drug” the idea is still for patients to take it in addition to beta blockers or calcium channel blockers. Eliminating the use of the other drugs if CinCor is successful in its Phase 3 trials and ultimately with commercialization is still only a “potential.”

But does adding more and more pills — even if highly novel — to the market without eliminating the use of other drugs tackling the same condition through better outcomes make sense from a cost perspective? Is it medically trully necessary to prescribe multiple drugs to manage a condition? More importantly, will it make sense for FDA and CMS?

Another small public company developing a drug for Alzheimer’s who I met seized on this acceptance of taking multiple drugs. She was answering a question about competition given that two, if flawed and controversial, Alzheimer’s drugs have been approved by the FDA.

“In cancer, HIV, cardiovascular, you take more than one drug. It’s normal,” said Maria , founder and CEO of Annovis Bio. So why should it not be normal to take more than one drug for Alzheimer’s?”

Innovation may be about providing consumer choice but given that U.S. life expectancy has changed only about 4 years between 1990 to 2021 to 79 years while healthcare costs have gone through the roof – $718.7 billion to $4.26 trillion — maybe rethinking this approach toward innovation is necessary. And that doesn’t just mean targeting any one industry, but looking thoughtfully on what we spend on as a whole.

“Why do we do this every year?”
The weather gods rarely cast a beneficial eye on San Francisco in January when the healthcare hordes descend on the city for this annual conference. But this year, it was as if the gods had abandoned the Golden State almost entirely. Atmospheric rivers meant almost constant rain, sometimes sideways with a wicked, cold wind, upturned umbrellas, being to late meetings and sour moods.

One gentleman with an umbrella that wasn’t in the best shape cast a woeful glance at me when both of us were standing at an intersection during a heavy downpour one day.

“Why do we do this every year?” he asked me.

I smiled. An answer wasn’t necessary.

We do a lot of things in healthcare that are insane.


P.S. – I extend my thanks to all the people who didn’t come to the Westin St. Francis for this year’s conference – it made for faster elevator rides to the press room and to meetings. My sincere thanks to any J.P. Morgan conference organizer who may be reading for making certain structural changes around company presentations that made my life a lot easier. Please make this permanent.