Proposing An Innovative Bond To Increase Investments In Social Drivers Of Health Interventions In Medicaid Managed Care.

Interventions to address social drivers of health (SDH), such as food insecurity, transportation, and housing, can reduce future health care costs but require up-front investment. Although Medicaid managed care organizations have incentives to reduce costs, volatile enrollment patterns and coverage changes may prevent them from realizing the full benefits of their SDH investments. This phenomenon results in the "wrong-pocket problem," in which managed care organizations underinvest in SDH interventions because they cannot capture the full benefit. We propose a financial innovation, an SDH bond, to increase investments in SDH interventions. Issued by multiple managed care organizations in a Medicaid coverage region, the bond would raise immediate funds for SDH interventions that are coordinated across the organizations and delivered to all enrollees of the region. As the benefits of SDH interventions accrue and cost savings are realized, the amount managed care organizations must pay back to bond holders adjusts according to enrollment, addressing the wrong-pocket problem.

Just how good an investment is the biopharmaceutical sector?

Uncertainty surrounding the risk and reward of investments in biopharmaceutical companies poses a challenge to those interested in funding such enterprises. Using data on publicly traded stocks, we track the performance of 1,066 biopharmaceutical companies from 1930 to 2015-the most comprehensive financial analysis of this sector to date. Our systematic exploration of methods for distinguishing biotech and pharmaceutical companies yields a dynamic, more accurate classification method. We find that the performance of the biotech sector is highly sensitive to the presence of a few outlier companies, and confirm that nearly all biotech companies are loss-making enterprises, exhibiting high stock volatility. In contrast, since 2000, pharmaceutical companies have become increasingly profitable, with risk-adjusted returns consistently outperforming the market. The performance of all biopharmaceutical companies is subject not only to factors arising from their drug pipelines (idiosyncratic risk), but also from general economic conditions (systematic risk). The risk associated with returns has profound implications both for patterns of investment and for funding innovation in biomedical R&D.