Dispensed: Troubles at uBiome, pharma giant Merck's plan to upend the $20 billion HIV market, and why insurers are starting to embrace brands like SmileDirectClub

Smile Direct Club brighteningHollis Johnson/Business Insider

Hello,

It's been another busy week of reporting for the healthcare team as we look into what's unfolding in the worlds of biotech, pharma, and healthcare.

I spent some time at Rock Health's Enterprise Insights Series event in NYC, where I moderated a conversation about the convergence of health-tech and pharma. It was interesting to hear from the folks at Flatiron Health, Pear Therapeutics, and Sanofi about what makes a good partner for a startup, and why working with pharma is almost unavoidable (especially when working specifically on digital therapeutics).

There was also some big news out of Denver, which voted to decriminalize magic mushrooms. Erin Brodwin has a great post detailing why the use of psychedelics in medicine is so promising. Here's what else kept us busy this week.

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ubiome thumb 2_1UBiome founders and former co-CEOs Zac Apte and Jessica RichmanuBiome; Yutong Yuan/Business Insider

Let's talk about uBiome...

A lot has happened in the two weeks since the microbiome testing company was raided by the FBI. Last week we learned more about the company's questionable billing practices and heard that the company's co-CEOs/cofounders had been placed on leave.

Starting off this week, I obtained via a Freedom of Information Act request complaints filed through the Federal Trade Commission about uBiome. The complaints indicate a lot of instances in which patients got bills for services they were promised would be covered either by insurance or by the company.

One complaint said that the patient's spouse had mistakenly been billed for the test the patient had taken. In the course of sorting out the mistake, uBiome billed both the patient and the spouse, charging an additional $2,970 for a test that wasn't taken. Read more about the complaints.

On Monday, we also learned that uBiome told customers that it was suspending its two doctor-ordered tests SmartGut and SmartJane.

This week, Erin Brodwin spoke to former employees at the company who told her about how uBiome cut corners in its quest for growth. One of the wildest things from her reporting: uBiome would push customers to order six tests, and it wouldn't be upfront with the fact that they'd be billed every single time.

We also got a copy of the letter the company's interim CEO sent investors on Wednesday, reassuring them about the steps the company's taking to comply with the investigations (which, the letter revealed extend to other agencies beyond the FBI). You can read the full letter here.

We've also learned that George Canellos, a partner at the law firm Milbank and a former federal prosecutor, is leading the independent investigation the company's board has launched to look into the company's billing practices. More digging ahead!

Elsewhere, Emma Court has a great look at where the field of HIV treatment is heading.

We got an inside look at pharma giant Merck's strategy to upend the $20 billion HIV drug market using tech borrowed from birth control

  • A promising new HIV drug could one day be implanted in the body, upending the current paradigm of daily pills.
  • The medicine, MK-8591, is being developed by US drug giant Merck. That could give Merck an edge in a market expected to top $21 billion by 2026, though it's still early days.
  • Merck has been tight-lipped about the project so far. Business Insider spoke with two top scientists about the drug and implant tech, and with HIV experts and others about how the effort could fare.

Emma dove deep into the topic of targeted protein degradation, something that could be game-changing to the way we treat cancer and other diseases (and an obsession of pharma execs).

Scientists are working on cancer treatments that attack the disease's 'Holy Grail.' Big pharma and biotechs have already invested more than $1 billion.

  • A new technology could revolutionize how everything from Alzheimer's disease to autoimmune diseases and cancer are treated.
  • Cancer has become an early focus for the technology, called targeted protein degradation or PROTAC, because there are many well-known drivers of cancer that modern medicine hasn't been able to reach.
  • At least $1 billion has been invested in the space by big pharmaceutical companies like Novartis and GlaxoSmithKline and biotech startups alike, one expert estimates.

And after the news a few weeks ago that SmileDirectClub would be in-network for Aetna and UnitedHealthcare, I took a step back and tried to pin down why insurers are starting to embrace direct-to-consumer businesses. Here's what I found out through conversations with the insurers, SmileDirectClub, and Warby Parker.

Why insurers are beginning to embrace billion-dollar healthcare startups like SmileDirectClub and Warby Parker

  • Massive insurers like Aetna and UnitedHealthcare are embracing direct-to-consumer brands like Warby Parker and SmileDirectClub by agreeing to pay for their products.
  • It's happening at a time when insurers are trying to get competitive and reach members through products they find as convenient as shopping online.
  • It's also a show of confidence in the approaches these companies are taking, which are sometimes opposed by other clinicians.
As part of my reporting into the new ways people are going to get healthcare, I chatted with Mount Sinai's Chief Product Officer David Kerwar. He walked me through how the health system plans to better appeal to consumers who are becoming an increasingly important part of the healthcare equation.

Hospitals are getting more competitive to win patients. Here's how one of NYC's largest health systems is building new tech to stay relevant.

  • New York's Mount Sinai Health System is making a bet that a revamped home page and a chat feature to answer questions and book appointments will help it appeal to patients in the competitive New York market.
  • The effort is led by Mount Sinai's Chief Product Officer David Kerwar, who drew inspiration from applications like Lyft as a way to provide estimates for booking different types of visits: from virtual video conversations, to urgent care, to a trip to the emergency room.
  • The move to make it easier for patients to access Mount Sinai's health system - as well as entice new patients to get their care there - is happening as the war for funneling in patients is heating up.

With that, I'll send you off to your weekends! As a reminder, send tips/leads/general questions about the company to lramsey@businessinsider or you can reach me on the encrypted chat app Signal at +1 646-889-2130.

And if you have something you think the whole team might enjoy hearing about, you can find us at healthcare@businessinsider.com.

- Lydia

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