Blue Apron May Need to Raise More Money Soon After Shrunken IPO

Less than 24 hours after collecting $300 million in its initial public offering, Blue Apron Holdings Inc. faces the reality of needing more cash — and soon.

The unprofitable meal kit-delivery company, which touted its growth prospects to potential investors on its IPO roadshow, has leaned on its marketing strategy to build a customer base. That outreach eats up a fifth of the company’s total spending.

Blue Apron believes its cash and borrowing capacity will be sufficient for at least a year, it said in its revised deal prospectus after lowering its IPO price range. The company added that its liquidity assumptions may prove to be incorrect, and it may increase the borrowing capacity under its revolving credit facility or raise additional funds through equity or debt financing arrangements.

“The story here is almost entirely one of expenses,” said James Gellert, chief executive officer of the financial health analytics firm RapidRatings. “People should be concerned that they say they’ve only got 12 months. If you’re IPO-ing and you’ve only got a 12-month runway, you’re going to be appealing to momentum players and not long-term holders of your stock.”

At the $10 opening price, the IPO yielded quick returns as it briefly touched $11 before closing at $10 in New York. That pegged the company’s market value at $1.9 billion, less than the $2 billion valuation it earned in its private funding round in 2015. The company declined to comment Thursday.

The pressure on New York-based Blue Apron — and the entire grocery sector — mounted with Inc.’s agreement to buy Whole Foods Market Inc. for $13.7 billion. The newly public company will have a smaller war chest than it had planned as it fights the retail mammoth in the already crowded food-delivery space.

On Wednesday, Blue Apron sold 30 million shares for $10 each, raising less than two-thirds of the $510 million it had initially targeted. Hours before the pricing, the company lowered the IPO range to $10 to $11 a share, down from $15 to $17.

Bad News

The downsizing was bad news for a company that had a free cash flow deficit of $74 million in the first quarter and only $61 million of cash on hand.

While Blue Apron saw a 133 percent increase in net revenue to $795 million last year, marketing expenses increased 180 percent to $144 million, according to its deal filing.

Blue Apron’s business is cost-intensive: It first sources ingredients, chops and packages them in fulfillment centers, before sending them for home delivery.

Blue Apron’s $59.94 box, with recipes such as fresh basil fettuccine and marinated beef pitas, includes ingredients for three meals for two people. About 1 million customers use the product, according to the prospectus.

Fulfillment Centers

Expanding fulfillment centers, coupled with increased marketing costs, has generated net losses. In its IPO prospectus, the company warned that it may never be profitable, adding that it anticipates that “operating expenses and capital expenditures will increase substantially in the foreseeable future.”

Late last year, Blue Apron put its IPO plans on hold while it focused on improving financials, people familiar with the matter said in December. The company had struggled to meet management’s goals for improving margins and thought a stronger performance was needed to support the $3 billion valuation it was targeting in an IPO, the people said.

Blue Apron has relied on outside funds to fuel its growth. The company raised $195 million from investors including Fidelity Investments and Bessemer Venture Partners, according to its deal filing. The company also increased a revolving credit facility to $200 million.

Blue Apron had sought additional available credit before the initial public offering, according to people familiar with the matter. Some firms declined to lend the company money because it was seen as too risky, while others weren’t willing to extend as much as was requested, said the people, who declined to be identified because the matter is private.

With its reduced IPO, Blue Apron no longer intends to pay down existing debt with the proceeds, according to its deal filing. Instead, the funds will all go toward working capital, capital expenditures and general corporate purposes.

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    111 Terminally Ill Californians Have Opted To End Their Own Lives Under New State Law

    In California, 111 terminally ill people chose to exercise their right to end their own lives in the first six months after the statesright-to-die lawwent into effect, according toa report released this week by the California Department of Public Health.

    The End of Life Option Act, signed into law in 2015 and implemented last June, allows terminally ill patients who have been given a prognosis of six months or less to live can obtain a lethal dose of medication.

    According to data collected by the state, 191 people were prescribed aid-in-dying medication from June 9 to Dec. 31, 2016. Of those individuals, 111 (58 percent) died after taking the prescribed medication. Of the remaining individuals, 21 died without taking the drugs. No outcomes were reported for the other 59 people.

    About 75 percent of the people who died after taking the medication were 60 to 89 years old. Nearly 90 percent of them were white, and 72 percent had attended at least some college.

    Those statistics are similar to data from Oregon, which implemented its right-to-die law in 1998 and served as the model for Californias legislation.

    The states data show that even during the early months of the laws implementation, the law was working well and terminally ill Californians were able to take comfort in knowing that they had this option to peacefully end intolerable suffering, said Matt Whitaker, the California director of Compassion & Choices, a leading right-to-die advocacy group.

    The law was inspired by Brittany Maynard, a 29-year-old who was diagnosed with terminal brain cancer while living in California. Maynard became a national symbol of the right-to-die movement after she decided to move to Oregon to seek options under its right-to-die law.

    I am dying, and I refuse to lose my dignity. I refuse to subject myself and my family to purposeless, prolonged pain and suffering at the hands of an incurable disease, Maynard said in a video message to lawmakers prior to her death in 2014.

    The legislation met some opposition from Catholic groupswho objected to it on religious grounds. Others raised concern that the measure could be abused. For example, lethal drugs could be offered to low-income patients as an alternative to expensive treatment. The California data appear to dispel that fear: 96 percent of the people who ended their lives under the new law had health insurance.

    The law also has several built-in protections to guard against abuse. Two doctors must sign off on the patients prognosis, and the patient must make a written request and two oral requests for the medication at least 15 days apart. Patients must also be deemed capable of making decisions about their own health.

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    Feltham young offenders institution ‘not safe for staff or boys’ – BBC News

    Image copyright Getty Images
    Image caption An officer was seriously assaulted while the unannounced inspection was being carried out

    A young offenders institution was found to be “not safe for either staff or boys” after an unannounced inspection.

    The HM Inspectorate of Prisons (HMIP) gave YOI Feltham in west London its lowest judgement for safety after finding levels of “very serious” violence had risen.

    The prison on the same site was also found to have had a “significant increase in violence”.

    However, staff were also praised for “many examples of good work”.

    Feltham A holds boys aged 15 to 18, while Feltham B is a prison for young adults aged 18 to 21.

    Chief Inspector of Prisons Peter Clarke said violence at the young offenders institution was a “serious problem” and “a serious assault on an officer” had happened while the inspection took place.

    Image caption Violence was found to have increased at both the young offenders institution and the prison

    As well as a rise in violence, inspectors also criticised how long boys were allowed out of their cells as a result of a strict but “ineffective” regime used to manage behaviour.

    About 40% of boys were locked up during the school day while 30% were allowed out of their cells for only two hours each day.

    This meant some were prevented from being able to use basic amenities including showers and telephones, inspectors said.

    Feltham B was also found to be an “unsafe environment” with inmates “often afraid for their own safety”.

    “Prisoners were enduring a regime that was unsuitable for prisoners of any age, let alone young men,” inspectors said.

    Nevertheless, staff at both the YOI and prison were praised, with healthcare – particularly mental health provision – described as “impressive”.

    Work to resettle offenders back into the community upon their release from both institutions was also considered to be “generally good”.

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    No-show women at cervical screening ‘unaware of test’ – BBC News

    Image copyright Science Photo Library
    Image caption There was a lack of awareness of cervical screening among younger women

    Nearly a quarter of women who don’t make cervical screening appointments are unaware that the process even exists, according to a UK survey.

    University College London researchers said more creative ways of reaching them were needed, like using social media instead of sending letters.

    Women who miss out tend to be younger from poorer families or non-native English speakers, the research found.

    Cervical cancer screening has been falling in the UK since 2011.

    The death of reality TV star Jade Goody from cervical cancer in 2009 is widely accepted to have contributed to a rise in women being screened – but this effect no longer appears to be working.

    The percentage of eligible women screened has dropped from 75.7% to 72.7% from 2011 to 2016 in the UK.

    The UCL survey suggests that many young women don’t get round to cervical screening, even when they intend to go.

    Some 4% of women surveyed, particularly older ones, had decided not to go for a smear test at all and around 6% of women said they were completely unaware of the test.

    Lack of awareness was higher in women from lower income families and ethnic minority groups.

    Women are also known to find the test embarrassing and often difficult to organise.


    The findings are based on a survey of 3,100 women aged 24 to 64, published in the European Journal of Cancer, in which 800 said they were not up-to-date with cervical screening.

    Dr Jo Waller, who led the study at UCL, said it was “worrying that so many women don’t know about cervical screening”.

    In the UK, women aged 24-49 are invited for a smear every three years, while women 50-64 are invited every five years.

    Image copyright Science Photo Library
    Image caption Cervical screening looks for abnormal cells in the cervix

    Dr Waller said it was time to find better ways of communicating with women about screening.

    “The results around lack of awareness suggest that campaigns using TV, radio, social media or face-to-face visits may be better… than relying on letters in the post, which is the current method.”

    She said extra reminders and specific appointment slots for first time screenings could make a difference and “potentially save lives”.

    Around 3,200 women are diagnosed with cervical cancer each year in the UK and 900 women die from it.

    Cervical screening is thought to prevent about 2,000 deaths each year.

    Sarah Williams, health information manager at Cancer Research UK, said: “We may need to be more creative in our efforts to help specific groups of women, rather than resorting to conventional ‘one-size-fits-all’ awareness campaigns.”

    Jo’s Trust – a cervical cancer charity – launched #SmearForSmear campaign earlier this year which was shared at least 14,000 times on social media.

    What is cervical screening?

    • It is a way of examining cells from the cervix
    • Screening can detect pre-cancerous and abnormal cells so they can be treated to prevent cancer
    • The appointment takes place at a GP surgery and lasts around 20 minutes – it shouldn’t be painful
    • During the procedure, a nurse or GP inserts a speculum into the vagina to collect a sample of cells

    Do you know the symptoms of cervical cancer?

    • lower back pain
    • pain during sex
    • bleeding between periods or after sex
    • post-menopausal bleeding
    • unusual vaginal discharge

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    California boy places thousands of flags on veterans headstones

    A 12-year-old boy in California was disheartened when he visited his grandfathers grave on Veterans Day two years ago. The graveyard was devoid of flags or flowers on any of the veterans headstones.

    So, Preston Sharp of Redding, Calif., decided to take action.

    He set a goal for all of the veterans headstones at McDonalds Chapel in Redding Memorial Park: each would be recognized with a flag and a flower.


    But that goal quickly expanded to include the deceased veterans buried at other cemeteries in surrounding counties.

    So Sharp created a GoFundMe page for help in reaching his goal. As of May 2017, according to the fundraisers page, Sharp organized the placement of more than 17,500 flags and flowers at cemeteries across Northern California.

    So far, Sharp has raised $30,305 of his $500,000 goal.

    Sharps website says that locals come out to help him on Sunday mornings to clean headstones, replace weathered flags and flowers and say Thank You to those that have provided their services to our country.


    For his efforts in recognizing veterans, Sharp has received community awards and recognition from military organizations throughout the state, FOX 46 reported.

    And now, Sharp has expanded his goal, according to his GoFundMe. Hes looking to honor as many veterans as possible between Redding and Sacramento.

    If you would like to contribute to Sharps mission to honor veterans, you can find more information at his GoFundMe page.

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    New law sparks debate over future of traditional Chinese medicine

    Beijing (CNN)At the dinner table, if there is one topic that Lu Yuping’s family is careful to avoid, it’s medicine.

    Her husband and other relatives chide her for making weekly trips to the local pharmacy to buy large piles of traditional herbs to treat her daily ailments.
    “They’re always telling me to stop wasting money on Chinese medicine and just go to a Western hospital to get real care,” said Lu, a 60-year-old retired hospital accountant who lives in Shanghai. “But I don’t care what they say. I know that it works.”
      Lu recalls when traditional Chinese medicine (TCM) played a greater role in Chinese society. “Now, I’d say nearly 80% of people just rely on Western medical treatment,” she said.
      Through a new law, which will go into effect on July 1, the Chinese government hopes to reverse that shift.

      More than 2,000 years old, Traditional Chinese Medicine (TCM) covers five main areas: acupuncture, massage, plants and herbs, dietary therapy and qigong exercises.

      Most practitioners learn from a master rather than studying the discipline at university — although this is also possible.

      China has some 3,966 TCM hospitals and 42,528 TCM clinics, which employ around 452,000 practitioners.

      The new law will give practitioners the opportunity to qualify as licensed physicians.

      Source: CCTV

      The new legislation will aim to raise the status of TCM by requiring local governments to launch TCM institutions in all medical centers, increasing funding for its development, and widening the scale of TCM education.
      Su Rui, an assistant researcher at the China Academy of Chinese Medical Sciences, believes that the new law might successfully promote the developmentand practice of Chinese medicine, which has been on the decline in China in recent decades.
      One of the challenges of getting doctors to come on board, she says, is closing the profit differential between TCM and Western medicine.
      As opposed to using expensive laboratory tests and X-rays to diagnose illness, TCM doctors often simply rely on external signs such as a person’s pulse, and the color and texture of their tongue — known as she tai.
      “Doctors are often reluctant to use Chinese medicine because it’s not lucrative. If a doctor can make 50 yuan from using TCM medicine and 100 yuan from Western medicine, then of course they’ll use Western,” said Su.

      Skeptics and advocates

      The other challenge is skepticism among some Chinese, particularly a younger generation, which is are more familiar with Western medicine.
      Last year, the death of a young Chinese actress who chose to treat cancer with TCM instead of chemotherapy triggered a debate around the effectiveness of Chinese medicine.
      Liu Guiming, a retired factory worker in Chengdu, says he has lost several friends to illnesses who, he believes, might have survived if they had not solely relied on TCM.
      “Western medicine is more common nowadays, and rightly so. That’s because you can actually see the effect, especially with more serious diseases,” said Liu. “I think TCM will eventually die out.”
      Proponents of TCM argue that compared with Western medicine, the traditional formplaces more emphasis on prevention.
      Every day, Lu Yuping stews a large pot of bitter herbs to treat even the slightest of discomforts like dry mouth.
      “My husband tells me that I’m not sick, but I feel that these are signs of imbalances in the body,” she said. “So I go to the doctor or pharmacist to get the necessary treatment before it gets serious.”
      Wang Chunyuan, a 30-year-old yoga instructor in Beijing, said he uses TCM because it focuses on the root of the problem instead of simply on outward symptoms.
      “You might have a headache, but it could be caused by a number of things. It might be dryness in the environment, or it might be imbalances in your bodily energy, or maybe it’s psychological,” he said. “TCM takes those nuances into account.”
      There is much disagreement, however, about which illnesses can be effectively treated by TCM.
      Not subject to Western testing standards such as randomized controlled clinical trials, and comparison with placebos, TCM efficacy has been difficult to study or provide evidence for.
      But surgeon Jiang Ping believes that even for some serious conditions like collapsed lungs and brain tumors, TCM can be more effective than Western medicine and has fewer side effects.
      “We still can’t explain why it works, but we know that it works (in certain situations),” said Jiang. “You can’t explain it using science, and that’s because the scientific means are currently too limited.”
      In Hong Kong, the two medical traditions exist side by side and both are commonly covered by private health insurance policies. The city, which is a special administrative region of China, has a Chinese Medicine Council that regulates the industry.

      Generation gap?

      Lu, the retired accountant from Shanghai, says that while she and her husband frequently argue over TCM, most people her age see its value.
      The same, however, does not prove true for those under 60 years old, she says. “Younger people have less exposure to TCM, and fewer people are studying it,” she said.
      Shan Liyun, a pharmacist at a popular vendor of TCM in Beijing, also sees cause for concern. He worries that if nothing is done the practice won’t be passed down to increasingly-Westernized future generations.
      That includes 22-year-old Zhang Xiaoyi, who graduated from Franklin & Marshall College in the US this year. She has suspicions that if TCM has any effects, they are mostly psychological.
      But not all young people are skeptics.
      A 29-year-old PhD student at Peking University in Beijing, Wu Pengzheng, contends that people his age should not be so quick to dismiss a medical tradition that has existed for more than 2000 years.
      However, he doesn’t feel that the government needs to go out of its way to support it. “Just let it go its normal path, and if it’s useful then it will naturally develop,” he said.
      As for Lu, who intends to continue brewing her herbs twice daily despite her husband’s grumbling, she thinks that the key to TCM’s survival is just what the government plans: “mutual learning” and “integration” with Western medicine.
      “That way, they can make up for each other’s deficiencies,” she said.

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      Opioid addiction rates continue to skyrocket

      (CNN)A new study finds that the number of Americans being diagnosed with opioid addiction continues to skyrocket, but still very few receive any treatment. This is in line with the rising trend documented in previous reports.

      An analysis from Blue Cross Blue Shield of its members found that from 2010 to 2016, the number of people diagnosed with an addiction to opioids — including both legal prescription drugs like oxycodone and hydrocodone, as well as illicit drugs — climbed 493%. In 2010, there were just 1.4 incidences of opioid use disorder among every 1000 members. By 2016, that rate had climbed to 8.3 incidences for every 1000 members. Yet, at the same time, there was only a 65% increase in the number of people getting medication-assisted treatment to manage their addiction.

      MAT: “gold standard”of treatment

        Medication-assisted treatment, MAT, includes the prescribing of medications like buprenorphine or methadone, along with behavioral therapy. MAT is considered the gold standard of treatment amongst doctors and there are a number of studies to back it up – one found that Suboxone, a combination of buprenorphine and naloxone could at least double a persons chances of remaining drug freeafter 18 months; another found that increased buprenorphine use was accompanied by a reduction in the number of overdose deaths. Other treatments may include detox programs such as Narcotics Anonymous.
        “Opioid use disorder is a complex issue, and there is no single approach to solving it,” Dr. Trent Haywood, senior vice president and chief medical officer for BCBSA said in a statement. “It will take a collaborative effort among medical professionals, insurers, employers, communities and all levels of government working together to develop solutions that effectively meet community needs,” he added.

        Addiction climbs, but few get treatment

        While the rates of opioid addiction treatment have increased more than 6 fold since 1999, few individuals struggling with addiction actually receive treatment. In fact, a 2016 Surgeon General’s Report found that only one in 10 people receive any specialized treatment to manage their addiction. At the same time 40% of those who are addicted do not seek treatment. Of the 20 million Americans that had a substance abuse addiction in 2015, about 10% of them were addicted to opioids.
        In addition to that, few places provide MAT. According to the Pew Charitable Trusts, less than half of private sector treatment programs offered any medications approved by the Food and Drug Administration for substance use disorders, and just 23% of publicly funded treatment centers offered them.

        More people die from drugs than from guns

        These numbers illustrate the continued difficulty of trying to get control of this public health epidemic. According to the US Centers for Disease Control and Prevention, 91 people die every day from an opioid overdose.In 2015, more than 33,000 lives were lost to opioids. In fact, drug overdoses – most of them from opioids kill more people than guns or car accidents.
        The deaths from prescription drugs alone have more than quadrupled since 1999. Added to that is the threat of heroin and synthetic drugs like illicitly made fentanyl. Deaths from synthetic opioids alone, such as illicit fentanyl, jumped 72% from 2014 to 2015.
        According to the National Institutes of Health, three in four new heroin users start by abusing prescription drugs.

        Who’s becoming addicted

        The BCBS analysis found that longer-duration prescriptions were associated with higher incidences of opioid use disorder. A CDC study from earlier this year found that an opioid prescription lasting for eight or more days increased the likelihood of using the drug a year laterto 13.5%. A prescription of 31 days or more increased chances of long-term opioid use to 29.9%.
        In an effort to reign in the problem, a handful of states — Connecticut, Massachusetts, Rhode Island, New York, and Maine – have adopted legislation that limits opioid prescriptions to seven days. This year, New Jersey became the strictest, limiting painkiller prescriptions to just five days.
        The BCBS analysis also found that women 45 and older had higher rates of abuse then men.
        According to the CDC, the overdose deaths for women due to prescription painkillers have jumped more than 400%, while for men it has increased by 265%
        Part of that may be due to the fact that women in general are more likely to be diagnosed with chronic pain and be prescribed painkilling narcotics at higher dosages and durations.

        Finding solutions

        “BCBS companies are already undertaking initiatives to help families and communities address opioid use disorder by forging partnerships with the medical community to promote best practices in prescribing and providing critical education to the public to raise awareness of the risks of opioid use,” said Kim Holland, vice president of state affairs for BCBSA.
        President Trump has said that the opioid epidemic is a top priority for his administration and established a commission, headed by New Jersey Governor Chris Christie to look at how to combat the epidemic. The commission was set to have their second meeting and provide a draft of recommendations this past Monday, but the meeting was postponed till July.

        See the latest news and share your comments with CNN Health on Facebook and Twitter.

        And while the commission has no law making abilities, during the commission’s first meeting in June, commission members and panelists alike testified to the need to maintaining Medicaid expansion in the health care proposals.
        Commission member Bertha Madras, of Harvard Medical School, has said “We need more time because it’s a massive task.” CNN reached out to Madras – as well as the other members of the commission and the White House for further comment on the status of the draft of recommendations and has not received any comment.

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        Rebel bear has made his latest (and possibly last) infiltration in Colorado neighborhood

        A Colorado woman was briefly trapped inside her vehicle after a bear snuck into her garage, following her as she pulled her vehicle inside.

        “Ahhh!” Denielle Backstrom can be heard yelling before beeping her car horn. “Freakin’ bear, get out of my garage.”

        According to The Gazette, the bear made its way inside the garage when Backstrom opened it after returning home.

        Despite laying on her car horn, and even some movement from her car, the bear was completely unfazed by the woman and her attempts to scare it. When bears aren’t afraid of humans, things get scary.

        Eventually Backstrom was able to safely close the garage door with the bear on the opposite side. Backstrom later reported the bear to the Colorado Parks and Wildlife, which determined the bear to be dangerous due to its recent encounters with humans.

        The bear has become somewhat notorious in Broadmoor, a neighborhood in Colorado Springs. The same bear stole some ice cream M&M’s from a resident’s freezer earlier in the week just a few blocks away, The Gazette reports.

        Colorado Parks and Wildlife spokesperson Bill Vogrin told the Gazette that when they do discover a bear near a neighborhood, they will first attempt to scare it away with loud noises, pepper spray, and even rubber bullets. If the bear comes back again, it is tagged and released back into the wild.

        This bear, however, has been so brazen and unafraid of human encounters that the agency has declared it dangerous. The bear will be euthanized if seen around people again, and a trap has been set near where it was last seen.

        “That’s our last resort. We hate having to do that,” Vogrin said. “But human health and safety is our primary concern, and when they become dangerous, we’re left with no choice.”

        Backstrom has received backlash from angry animal rights activists for reporting the bear, though the agency says it’s not her fault.

        “This woman is not to blame, but someone in her neighborhood sure is,” Vorgin told The Gazette. “People need to help us keep wild animals wild.”

        Vorgin says he believes the bear has been frequenting the neighborhood for years, but has gone unreported by other neighbors.

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        As the health care issue looms, Trump’s tweets mostly look elsewhere

        (CNN)If President Donald Trump’s Twitter feed is the most direct window into his brain, he is spending more time focused on cable news, the various Russia investigations and Hillary Clinton than the health care bill that Senate Republicans are trying to revive.

        Some press critics, armchair and otherwise, have long suggested that journalists band together, ignore @realDonaldTrump‘s morning chatter and devote their attention to more pressing matters. The argument implicitly demeans the medium. These are, after all, just tweets.
        But it is on Twitter that the President tells us what he really cares about — and a lot about what he doesn’t. His personality and, more importantly, his priorities are on ready, constant display. On Thursday morning, as Republicans in Washington raced to resurrect legislation to overhaul Obamacare, Trump was tweeting — and not about health care.
          “I heard poorly rated @Morning_Joe speaks badly of me (don’t watch anymore). Then how come low I.Q. Crazy Mika, along with Psycho Joe, came…,” he began, finishing his thought six minutes later, “to Mar-a-Lago 3 nights in a row around New Year’s Eve, and insisted on joining me. She was bleeding badly from a face-lift. I said no!”
          If the content of the attack on Mika Brzezinski, co-host of the MSNBC show “Morning Joe,” was unsurprising, the timing was instructive. Rather than using his platform to make the case for what is, right now, a deeply divisive and unpopular bill, Trump was fixated on criticism from a pair of morning show hosts.
          A rough analysis from Jake Tapper, on CNN’s “The Lead,” found that Trump has tweeted more about the press, usually in the form of an attack or complaint, than jobs or, separately, the military — both cornerstones, in theory, of his political agenda.

            More than 10% of Trump’s recent tweets have been attacks on press

          The messages are also legally relevant. Courts reviewing Trump’s travel ban have repeatedly cited his public pronouncements as factors in their decision-making. Former FBI Director James Comey said Trump’s tweet suggesting there were “tapes” of their conversations convinced him to leak contemporaneous memos. The bot account that frames the tweets as official statements — a phrase White House press secretary Sean Spicer used to describe them — drives the point home.
          Put simply, Trump’s tweets are important. They should not be dismissed as standard practice. Now and in the coming weeks — with the future of health care in America in the balance — they invite an especially discerning eye. The President, whose promised signature would gut Obamacare, is hardly discussing it.
          Instead, as legislators weigh their votes and thousands of Americans across the country rally against the bill, Trump has mostly dedicated his social media messaging to more personal, familiar gripes.
          His only tweet on Sunday, with a Senate vote then believed to be just days away, was this: “Hillary Clinton colluded with the Democratic Party in order to beat Crazy Bernie Sanders. Is she allowed to so collude? Unfair to Bernie!”
          (Sanders, by chance, spent his weekend on a three-city road trip — hitting Pennsylvania, Ohio and West Virginia — dedicated to defending Obamacare. At no point during the 24-hour swing did Trump, so eager to put pen to paper on the legislation, tweet to support it.)
          On Monday, with the Congressional Budget Office only hours away from releasing its assessment of the Senate bill, Trump began the morning by attacking Democrats, saying they “have become nothing but OBSTRUCTIONISTS, they have no policies or ideas. All they do is delay and complain. They own ObamaCare!”
          Whether one agrees with this assessment or not, he seemed to be spoiling for a fight, or at least directing his followers’ attention to the health care debate.
          But before he returned to the issue at a little after 9 a.m. and again in the early afternoon — once more attacking Obamacare, not pushing the GOP bill — Trump unleashed a four-tweet storm on his predecessor’s decision to remain mostly quiet, at the time, on the scope of Russian meddling in the 2016 campaign — a reference to a report in The Washington Post last week.
          “The reason that President Obama did NOTHING about Russia after being notified by the CIA of meddling is that he expected Clinton would win … ,” the first tweet began, uncorking a stream that ended emphatically nearly a half hour later with the demand, “I should be given apology!”
          That seems an unlikely proposition, but it’s hardly the point. Does Trump know that? Is he purposefully seeking to take the spotlight off Senate Republicans? Maybe.
          They have their work cut out for them. Plans to vote on the bill this week were scrapped on Tuesday. Late pushes to reshape a more palatable bill have, so far, run up against opposition from opposite ends of the Senate GOP conference. For more on those issues and what the bill actually does, spend some time on stories like this one, from CNNMoney’s Tami Luhby. She explains here, “Who gets hurt and who gets helped by the Senate health care bill.”
          Go ahead, watch:

            The Senate GOP health care bill explained

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          The Crazy Math Behind Drug Prices

          David Hernandez, a 44-year-old restaurant worker and Type 1 diabetic, didn’t have insurance from 2011 through 2014 and often couldn’t afford insulin—a workhorse drug whose list price has risen more than 270 percent over the past decade. As a result of his skimping on dosages, Hernandez in 2011 suffered permanent blindness in his left eye, and three years later he experienced kidney failure. He’s since received a lifesaving kidney transplant covered by Medicare and has drug coverage under a New Jersey program for the disabled. But Hernandez’s eligibility expires next January, at which time he’ll have to pay about $300 a month out of pocket for insulin. “I don’t really have that kind of money,” he says.

          That Hernandez is struggling to deal with big price hikes for insulin, a century-old medicine that for most of its history cost $15 a month or less, speaks volumes about America’s failing battle to control drug prices. Key combatants are the secretive drug industry middlemen called pharmacy benefit managers (PBMs), who are hired by insurers, employers, and unions to negotiate discounts from drugmakers. Hernandez is a plaintiff in a lawsuit seeking to prove that dealings between those middlemen and drug companies instead have contributed to the cost of insulin rising, in part to make sure fees to the middlemen keep going up. The same interaction inflates the prices of dozens of name-brand drugs, says Steven Berman, the Seattle-based plaintiffs’ attorney who filed the suit in February in federal court in Trenton, N.J. “It’s perverse,” he says, “but that’s the way it works.”

          Other plaintiffs’ law firms have followed in Berman’s wake, all of them alleging conspiracies in which the dominant insulin makers—Eli Lilly, Novo Nordisk, and Sanofi—continually raise list prices to curry favor with the largest PBMs: Express Scripts Holding, CVS Health, and OptumRx, a unit of UnitedHealth Group. The four cases pending in New Jersey, which are likely to be consolidated, constitute a threat of massive damages for Big Pharma—and could topple the branded-drug pricing system used in the U.S.

          Federal prosecutors are also investigating relationships between PBMs and large drug companies. The U.S. Attorney’s Office in Manhattan has ordered Lilly, Novo, and Sanofi to turn over documents regarding those relationships.

          The three drug companies say they’re cooperating with the government’s document demands. The same companies and the three PBMs say the private suits are meritless. “It is a complete falsehood that we would prefer prices to go up,” says Timothy Wentworth, chief executive officer of Express Scripts Holding Co. “We conduct business in a manner that ensures compliance with all applicable laws, and we adhere to the highest ethical standards,” Eli Lilly & Co. said in a statement.

          One of the main functions of PBMs is to elicit rebates from drug manufacturers on behalf of health plans. The incentive—or threat—is that if drug companies fail to pay rebates, they might not win spots on a list of preferred medications that the PBMs maintain. Absence from the list, known as a formulary, means that health plans won’t cover the drugs in question, which would cut into the manufacturers’ sales.

          Rebates range from single-digit percentages of list prices to 50 percent or more, depending on whether there are competing drugs the PBMs can play off against one another. The PBMs say they keep a small portion of rebates to reward themselves and pass through the rest to their client health plans. The PBMs and plans keep the actual proportions private.

          As a result, there are two prices for most brand-name drugs: the higher list price, which is public, and the lower after-rebate “net price,” which is confidential. After agreeing to give rebates, drugmakers often raise their list prices to make up some of the lost revenue, according to David Balto, a PBM critic who’s a former policy director of the Federal Trade Commission’s Bureau of Competition.

          Even though health plans benefit from the rebates under the system, higher list prices still matter, because many patients continue to pay list, or full, price. First, there are the uninsured. Even after enactment of the Affordable Care Act in 2010, some 29 million Americans lack any meaningful coverage. They confront list prices every time they go to the pharmacy. If proposed Republican Obamacare repeal-and-replace legislation were to become law, millions more may end up without insurance.

          In addition, the growing ranks of Americans whose insurance policies have high annual deductible limits—some as steep as $4,000 or $5,000—are subject to list prices for at least part of each year. An increasing proportion of those workers must pay the full cost of drugs before their coverage kicks in. Older people covered by Medicare make up a third category of patients exposed to list prices if their annual spending on drugs exceeds $3,700.

          Insulin prices started rising in the 1990s after biotechnology replaced the extraction of insulin from cow and pig pancreases. These innovations and new methods of administering insulin led to new patents, helping to reduce competition. When Lilly introduced its diabetes medicine Humalog in 1996, it cost $21 a vial. Today the same vial lists for $275. Patients often use two vials a month. Annual insulin sales worldwide exceed $20 billion.

          The Berman suit alleges that Lilly, Novo, and Sanofi have raised list prices of insulin products to ingratiate themselves with PBMs. Higher list prices mean larger-percentage rebates out of which PBMs take a slice. Speaking at an investment conference in June 2016, Lilly’s then-CEO John Lechleiter referred to “the weird way the payment system can work in this country.” He asserted that “higher rebates can be an incentive for a payer [PBM] to stick with essentially a higher-priced product.”

          “Rather than compete by lowering net prices, the drug companies compete by raising list prices,” says Berman, the managing partner of Hagens Berman Sobol Shapiro LLP. He decided to name only the drug companies as defendants, because “they’re the ones who publish the fraudulent list prices” that directly harm patients. The two other plaintiffs’ firms that filed follow-on suits, New York-based Weitz & Luxenberg and Keller Rohrback LLP of Seattle, named both the insulin makers and the three big PBMs as defendants. All of the lawsuits describe the relationships between drug companies and PBMs as unlawful “enterprises” operating in violation of the Racketeer Influenced and Corrupt Organizations Act.

          The suits are based on a “false premise” that drug companies and PBMs conspire on prices, says CVS Health spokeswoman Christine Cramer. She says the drugmakers alone are responsible for pricing.

          While they strongly deny any legal liability, insulin manufacturers acknowledge that too many diabetics are overwhelmed by high list prices. Lars Fruergaard Jorgensen, CEO of Novo Nordisk A/S, the world’s biggest maker of insulin drugs, says list prices are meant to be only the starting point for rebate negotiations with PBMs. “It was never the intention that individual patients should end up paying the list price,” he says. Novo has pledged to limit future annual list price increases to single-digit percentages. Sanofi SA similarly promised in May to keep its price hikes in the U.S. at or below the rate of health-care inflation. The drugmaker points out that it hasn’t raised the U.S. price of Lantus, its popular long-acting insulin, since November 2014.

          To ease the impact of higher insulin prices, Lilly announced in December that it would provide 40 percent discounts to patients paying out of pocket if they use an online service called Blink Health. But it’s a partial remedy at best, as the reduced payments may not be counted toward patient deductibles. PBMs also are taking steps to help certain patients paying out of pocket. CVS Health Corp. is recommending that health plans exempt insulin from patient deductibles. And Express Scripts has formed a subsidiary to offer lower prices on drugs for diabetes and asthma.

          Enrique Conterno, president of Lilly’s diabetes business, says drugmakers’ dealings with PBMs are competitive, “almost like an auction.” But he adds that PBMs are more often using the threat of total exclusion from formularies to force drugmakers to pay ever-greater rebates. For Lilly’s Humalog, a top-seller, rebates and other discounts rose to 74 percent of list price last year, up from less than 25 percent in 2009, according to an estimate by SSR Health LLC, an investment research firm. Because of rising discounts, the net price insurers pay for Humalog has actually declined during the same period, Conterno says, even as the list price has more than doubled.

          The link between list prices and rebate negotiations shows why insulin makers shadow one another’s price increases. According to Connecture Inc., which tracks drug prices, Lilly’s Humalog and Novo’s NovoLog marched in lockstep for 10 years, with 17 consecutive matching list price increases and a tripling overall in price. Conterno explains the pattern: Going into rebate negotiations with a lower list price could put Lilly at a disadvantage in offering big discounts to PBMs—and increase the danger of Lilly being excluded from formularies. Manufacturers seek to please the PBMs by maximizing rebates.

          Yet Express Scripts executives say the main way PBMs can combat high prices is by driving hard bargains on rebates. In 2014, Gilead Sciences Inc. introduced Harvoni, which cures hepatitis C at a cost of $94,500 for a 12-week treatment. When Gilead offered only a 10 percent rebate, Express Scripts excluded Harvoni and substituted a cheaper drug from rival AbbVie Inc. Gilead got the message. It has said that rebates marketwide on Harvoni exceeded 50 percent in 2016—discounts unavailable to uninsured patients. Gilead declined to comment. —

            BOTTOM LINE – Insulin prices have soared 270 percent in the past 10 years. Courts are being asked to rule on the role of pharmacy benefit managers in that inflation.

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