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San Francisco-based health insurance startup Clover Health kicked off a new drug research and development subsidiary, dubbed Clover Therapeutics, through a partnership with Roche-owned biotech company Genetech to design more effective drugs for its Medicare Advantage (MA) members.
Establishing Clover Therapeutics is the insurtech’s latest move to zero in on bolstering its services: Clover branched out last year with the launch of in-home care, which included genomic testing. And it hinted at doubling down on a broader health-focused play after it ditched 25% of its workforce in March with plans of bringing on more healthcare talent.
In theory, the potential dividends of bringing drug development in-house could give Clover a much-needed boost:
Clover could better control drug costs, which are disproportionately high for seniors — the only demographic Clover covers. Because Clover is an MA insurer, its members are predominantly seniors — meaning drug spending on chronically ill members likely eats up a large share of Clover’s funds: 80% of seniors suffer from at least one chronic illness, per Healthy Aging. And one-fifth of Medicare spending goes toward prescription drugs, according to the Kaiser Family Foundation. Taking control of the development process could help Clover cut out the middlemen in the pharmacy supply chain that tack on fees and also develop drugs that are tailored to its customers.
And Clover’s current medical expenses — driven in part by drug spending — may not be sustainable.Clover doled out $109 million in medical expenses for its members in Q1 2019, which accounted for about 95% of …read more
Source:: Business Insider