What does a pharmaceutical company have to do with U.S. national security? Perhaps more than meets the eye, based on President Trump’s negotiating style, which often involves utilizing leverage to weaken the other side’s bargaining position. In the case at hand, President Trump has repeatedly expressed an interest in acquiring Greenland from Denmark for reasons involving national security.
To pursue his goal, one tactic may involve loosening existing regulations to encourage more competition in order to pressure Denmark’s largest company. Trickle down effects may influence Denmark’s willingness to deal.
To provide some context, consider that the U.S. is home to the five largest companies in the world: Apple, Microsoft, Alphabet, NVIDIA and Amazon are combined worth more than $13 Trillion, close to half of the U.S. gross domestic product. Along with two other companies (Nvidia and Tesla) they accounted for more than 50% of stock market gains in 2024.
Each of these companies matters a great deal to the U.S. economy: they drive innovation, are major employers, and contribute to the tax base.
Yet perhaps no company is more important to its country than Novo Nordisk. At $355 billion, its market capitalization is close to Denmark’s entire GDP. Half of Denmark’s economic growth in 2023 was driven by Novo Nordisk, which is also the country’s largest taxpayer.
To understand how federal healthcare regulation and policy could impact Novo Nordisk and Denmark, and why five other health technology developments matter, read on.
Semaglutide GLP-1 Shortage Over, But ‘Personalization’ And Enforcement Are Worth Watching
On February 21st, FDA updated its drug shortage list, and marked semaglutide, the active ingredient in GLP-1 drugs Wegovy and Ozempic, as resolved. This follows the FDA’s decision to remove tirzepatide, the active ingredient in GLP-1 drugs Mounjaro and Zepbound, from the drug shortage list in December.
While the issue may seem esoteric, the impact is anything but.
Initially indicated for diabetes, GLP-1 drugs such as Wegovy and Ozempic are now popularly known for driving impressive weight loss results. A recent Kaiser Family Foundation survey found that 30 million Americans have taken a GLP-1 drug.
Normally the profits of such a blockbuster pharmaceutical go to the manufacturer, which enjoys patent protection for a period of time. During a drug shortage, however, qualified pharmacies are allowed to compound (mix) versions of the drug, using available ingredients. Because these compounded drugs are generic, they can be offered at whatever price the pharmacy determines, which can be hundreds of dollars less per month than the brand version (even when patients have insurance).
Over the past couple of years, thousands of pharmacies and telehealth companies have been compounding generic versions of Wegovy and Ozempic. Some, such as Hims & Hers, have built hugely successful, generating $100+ million of revenue off of these products.
Now that the shortage has been officially resolved, Novo Nordisk, the manufacturer of Wegovy and Ozempic, is eager to convert every patient on a compounded drug to their own brand. On its earnings call last month, Novo’s executive vice president said, “I want to remind everyone that we do not supply compounding, and we have significant actions in place to curtail this.”
Hims stock dropped 15% when the FDA shortage was removed. But the company appears to be betting that it can continue compounding semaglutide: personalization is the watchword. “There may be the potential to offer commercially available dosages of compounded semaglutide throughout the year…Personalized semaglutide dosages [an allowed form of compounding] will supplement these core offerings for the subset of consumers for whom it is a clinical necessity,” Hims Chief Financial Officer Yemi Okupe explained in the company’s latest earnings call.
The conflict between compounders like Hims and pharmaceutical companies like Novo Nordisk is playing out against the backdrop of the Trump Administration’s foreign policy efforts. In this case, Hims’ and others’ success comes at Novo Nordisk’s expense.
Notably, Hims donated $1 million to President Trump’s inauguration fund in January of this year.
What will be interesting to watch is how the Trump administration, via the Federal Food and Drug Administration and other regulatory agencies, approaches policing and enforcement efforts of compounded GLP-1 drugs. WIth Novo Nordisk’s stock down 40% over the past year, will the Trump Administration pursue lax enforcement of drug compounders in order to exert pressure on a huge driver of Denmark’s economy?
Teladoc Accused of Misuse of AI In Patient Interactions
Teladoc has had a challenging start to 2025. The ~$2.5B revenue virtual care company was accused in a February 18th report by short seller Blue Orca of incentivizing its mental health therapists to use AI in communicating with their patients. According to the report, the company compensates its BetterHelp therapists in part based on the volume of words they use in asynchronous communications with their patients, creating an incentive system in which therapists have motivation to use AI to respond more quickly and at length to more patients.
At the heart of the matter are two immediate questions: (i) are BetterHelp therapists sharing confidential patient information with a third party for purposes of training its AI models, and (ii) regardless of whether the AI is created by a third party or not, does BetterHelp risk breaching its patients’ trust if it is fostering a culture in which efficiency and productivity are prioritized over patient trust?
Teladoc has said it has policies in place that prohibit sharing personal health information with third parties, and has pushed back on other aspects of Blue Orca’s report including noting that Blue Orca is a short seller with its own incentives.(Also notable is Blue Orca’s slim website with little information about its founder Soren Aandahl or why its principal place of business is the Cayman Islands).
The company’s stock was down 10% on the Blue Orca news, and dropped again following a disappointing Q4 earnings call on February 26th.
The recent downswing comes after six months of progress for the company in terms of stock performance.
Teladoc’s operational and strategic concerns go far beyond the use of AI (or not) by its clinicians. The Blue Orca report is likely akin to a shark smelling blood in the water, likely an effect rather than cause of Teladoc’s challenges. But an interesting longer term trend for both the company and other providers to watch is whether (i) the Blue Orca report spurs media to look at how providers use AI in patient interactions and how patients react, and (ii) these stories will impact the way providers think about incorporating AI into their care delivery models.
Trump Executive Order Focuses On Price Transparency (Again)
On February 25th, President Trump issued an executive order to promote price transparency in healthcare. This executive order follows price transparency requirements for both hospitals and health plans established in the first Trump administration that raised questions, noted Jeffrey Davis, Director at McDermott+ in an email.
What’s unclear is what exactly is new about the recent executive order. “Hospitals and health plans already must comply with definitive reporting requirements, and CMS has already issued guidance on the requirements and taken enforcement actions. However, it is apparent that the Trump administration wants to do more, including issuing more regulations,” explained Davis.
One thing that does seem clear: price transparency is likely to receive more attention, more compliance monitoring, and more enforcement action under the new administration. That may mean increased penalties for non-compliance and more targeted requirements for actual (not estimated) prices, along with the potential for expanded scope to include things such as prescription drugs.
Turquoise Health, a health technology company providing price transparency tools for institutions and price shopping services for consumers, sees the executive action as a boon for the public. “This will help ensure a more experience for consumers and employers, while facilitating competition amongst providers and insurers,” notes Chris Severn, cofounder and CEO at Turquoise Health.
If we want a system that is more responsive to consumerism, this executive order may be an important start. Price discoverability is a defining feature of how markets function; without it, demand and supply do not know where to meet. Which seems apropos of how our healthcare system currently operates.
Two New Health Tech Unicorns With Innovative Business Models
Industry newcomers might look to technology for innovation in healthcare. But it is often business model innovation that brings real changes.
It is with this in mind that two digital health companies announced substantial capital raises in early 2025. OpenEvidence raised $75M at a $1B valuation from lead investor Sequoia Capital. What’s more novel than the company’s chatbots for doctors (which many others also offer) is that (i) the product is free to doctors, (ii) adoption has grown adoption largely through organic word of mouth and product-led growth motions, and (iii) the company makes money through advertising.
Hippocratic AI also became a unicorn in January, raising $141M in a Series B round. Hippocratic offers AI nurse agents to help health systems handle routine, non-diagnostic care interactions with patients. Rather than selling its technology as enterprise software, however, the sells its AI agents on an hourly fee basis. At a reported $9 per hour, Hippocratic’s AI nurses are dramatically lower cost than the $89 fully loaded cost of a full time nurse or per diem nurse.
By pricing its technology on an hourly usage basis, Hippocratic AI seems to be positioning itself to appeal to budget-minded nursing executives and/or the finance department. It will be interesting to see whether the company gains real traction in the market, as its efforts may pit raw economic incentives against a clinician workforce anxious about how AI may impact their jobs.
Continued Profits And Pressure For PBMs
It is the best of times, it is the worst of times, it is the age of power, it is the age of scrutiny, we all benefit from, we all suffer as a result of – in short, it is all these things for the largest pharmacy benefit managers (PBMs).
On the one hand, incumbent PBMs have never been better positioned. PBMs manage prescriptions for more than 275M Americans. And with no more publicly traded PBMs, there is less reporting and transparency, so it’s difficult for outsiders to scrutinize. When PBM services are shared, the results are impressive, as CVS Health’s Health Services division (of which its PBM makes up the vast majority) reported operating income of $6.9 billion in 2024.
On the other hand, after dropping efforts to reign in PBM business practices at the end of 2024, a bipartisan group of senators has just been reported to be reintroducing a bill aiming to do just that. This follows FTC’s interim report in July 2024 which found that the top three PBMs controlled ~80% of prescription claims, wield substantial power and influence over drug price and availability, and evidence of self-dealing. States are getting in on the action as well, with every state enacting at least one law (and more than 150 total) addressing PBM behavior since 2016.
More recently, a federal court ordered CVS Health to provide additional documents with FTC’s ongoing investigation.
“It matters because of the inherent conflicts of interest that come with a PBM making money on drug spend through mail order or at a retail pharmacy, for example. The more expensive a medication is, the worse the optics are if a traditional PBM earns a spread,” explained AJ Loiacano, CEO of Capital Rx. Capital Rx provides technology and infrastructure to help employers and other payers to manage their own pharmacy benefits.
Another challenger to the PBM status quo agrees about the importance. Chris Blackley is CEO of Prescryptive, a PBM offering transparent pricing and novel consumer technology to empower individual decisions. Blackley highlights the FTC’s investigation as critical because it can bring transparency and help lead to reforms.
“Ultimately, promoting competition in the PBM market could be the ‘cure’ for the systemic issues plaguing drug pricing,” noted Blackley.
Beyond more competition, Loiacano suggests watching how America’s largest employers and payers act can serve as a signal of whether real change is coming. Last year Blue Shield of California stopped using CVS’s Caremark as its PBM, instead relying on five separate partners; will more big names follow suit in 2025?
Continued Uncertainty Around Fed Approach To Health Data And Interoperability
Acronyms can be a mouthful, and the Biden Administration may have inadvertently caused a choking incident last year when it restructured ONC and gave it new responsibilities, creating the new ASTP/ONC. (Assistant Secretary for Technology Policy / Office of the National Coordinator for Health Information Technology)
ASTP/ONC is effectively the federal agency that regulates health technology. Esoteric yes, but impactful because of the weight it has with health technology vendors used by more than 90% of providers and hospitals in the country. Among other things, ASTP/ONC’s mission is to enable health information exchange between technology systems, providers and patients. The hope is that one day when tricorders are used and purveyors of longevity miracles have long since passed, so too will faxes no longer be needed in healthcare.
With changing administrations comes shifting priorities, however. The Trump Administration’s suspension of health tech advisory meetings and overall modus operandi has left industry insiders wondering about the course of important policy decisions that will affect the industry, clinicians and patients.
“I believe that the new Trump Administration has big plans for health data and ASTP/ONC will likely be part of that… but there will likely be a lot of restructuring of scope and responsibilities,” explained Lisa Bari, CEO of Civitas Network for Health. Civitas is a national nonprofit whose members are regional and state health information networks.
One of the big open questions facing Steve Posnack (recently named acting head of ASTP/ONC) is how to proceed with the Trusted Exchange Framework and Common Agreement. TEFCA is the government’s effort to provide one national on-ramp for providers (and maybe individuals) to request and exchange records.
Many important questions remain open regarding TEFCA. The governance structure. How conflicts will be handled. Privacy and security questions.
Some are skeptical. “I think the innate challenges of TEFCA…. People are starting to appreciate them,” said Don Rucker, former head of ONC, last week at the HIMSS conference. Rucker went on to question whether TEFCA conforms to existing privacy protections for individuals.
Michael Westover, Vice President of Data Partnerships and Informatics at Providence St. Joseph Health, is hopeful about TEFCA but likewise has questions. Among others, he raises how patients’ perspectives will be voiced and whether there will be conflicts of interest or self-dealing among the Governing Council.
Large technology vendors including Epic and Oracle have signaled support for TEFCA, but it is unclear how far industry can proceed without federal guidance on so many open issues. ASTP/ONC’s actions and the Administration’s messages in the coming months are worth paying attention to.
Change Will Be A Constant, And A Way To Pay For Greenland
Even in the past few days, events continue to unfold at a dizzying pace. An IPO filing from tech-enabled provider Hinge Health is buoying industry hopes that a successful exit encourages more investment in health technology. Centers for Medicare and Medicaid Services announced the early termination of eight experimental payment models.
Stress and anxiety often accompany periods of substantial change and upheaval. But for a $4.9T healthcare system where 25% of our spend is wasteful, change isn’t necessarily a bad thing. For that matter, if the Trump Administration reduced a substantial chunk of that wasteful spend, perhaps those savings could help fund a deal with Denmark for Greenland.