Robert Kennedy Jr., U.S. President-elect Donald Trump’s nominee to run the Department of Health and Human Services, arrives on the Hart Senate Office Constructing on Capitol Hill in Washington, U.S., December 16, 2024.Â
Benoit Tessier | Reuters
As Robert F. Kennedy Jr. faces two days of Senate confirmation hearings this week in his quest to turn out to be secretary of Health and Human Services, a distinct segment group of startups might be watching closely.
Kennedy, a divisive pick to hitch President Donald Trump’s Cabinet, will first go before the Senate Finance Committee on Wednesday. As HHS secretary, he would oversee a budget of greater than $2 trillion, covering every little thing from drug research and approvals to the Medicare and Medicaid health programs.
Kennedy’s skepticism of vaccines, and filings that show he benefited from anti-vaccine lawsuits, will likely be a central area of questioning; each side of the political aisle have criticized the nominee for his stance.
Kennedy has pledged to make nutritious food, moderately than drugs, central to combating chronic disease within the U.S. As Republicans goal the federal-state Medicaid program for funding cuts, some investors and startups in nutrition-based services covered by Medicaid are hoping Kennedy’s vow to “Make America Healthy Again” will boost the food-as-medicine sector and keep the growing programs off the Trump administration’s chopping block.
“I actually think all signs are pointing to — with this administration — we’re going to have a look finally at the explanations … why individuals are as sick as they’re,” said Ashley Tyrner-Dolce, CEO of FarmBoxRx, a start-up that works with Medicaid and Medicare Advantage plans to supply nutritious food shipments to have interaction patients to enhance their health conditions.
As obesity and Type 2 diabetes rates climb within the U.S., state Medicaid programs have looked to supply energetic dietary counseling to assist members combat chronic conditions, much as large employers and business insurance policy have been doing for the last decade.
In the course of the first Trump administration, the Department of Health and Human Services spurred states to handle social needs resembling food insecurity and health disparities. A handful of states received what’s often known as an 1115 Medicaid demonstration waiver to supply dietary programs as a type of preventive care — sparking major investment within the space along the best way.
During the last 4 years, greater than 4 dozen food-as-medicine corporations have raised over $2 billion from enterprise capital firms, including Khosla Ventures and Andreessen Horowitz, together with health-care players resembling CVS Health, in response to data tracking by Rock Health Advisory.
Funding for food-as-medicine deals topped $483 million in 2024, a 175% increase from the prior 12 months, in response to Rock Health Advisory data. In one in every of the largest deals of the 12 months, telenutrition startup FoodSmart secured $200 million in enterprise funding led by TPG’s Rise Fund.
Food-as-medicine corporations now see Kennedy as a possible ally.
In an interview with NPR, Kennedy said Trump has given him “three instructions” on his role as HHS secretary: end corruption and conflicts in regulatory agencies, return health agencies to the “gold standard” of evidence-based science, and tackle chronic conditions.
“He desires to end the chronic disease epidemic with measurable impacts on a diminishment of chronic disease inside two years,” Kennedy said.
Robert Kennedy Jr., U.S. President-elect Donald Trump’s nominee to run the Department of Health and Human Services, walks through the Dirksen Senate Office Constructing between meetings with senators on Capitol Hill in Washington, U.S., December 17, 2024.Â
Benoit Tessier | Reuters
Growth of food programs in Medicaid
Demand for food and nutrition programs grew substantially over the past five years, with 20 states and Washington, D.C., approved for waivers by the top of the Biden administration, in response to the Centers for Medicare and Medicaid Services. That has helped drive the expansion of startups focused on serving government health plans.
“There’s significantly more interest by payers, when it comes to how they’ll use food interventions to each improve patient lives after which reduce cost,” than there was a decade ago, said Sanjeev Krishnan, managing partner at S2G Ventures, a enterprise capital fund founded by Walmart heir Lukas Walton.
S2G has funded five food-as-medicine startups, including NourishedRx, a five-year-old digital nutrition company which mixes food deliveries with health coaching for patients in Medicaid and Medicare plans.
“To essentially give you the option to assist the individuals who need it probably the most, those that are socially vulnerable, nutrition insecure, who even have diet-related disease, we needed to work through the [government] payers,” said NourishedRx founder and CEO Lauren Driscoll, adding that it has taken time to construct momentum.
“We needed to do pilots and drive proof points, and now we’re moving into recurring revenue, renewable and expanding contracts,” she said.
Reaching an inflection point
Kennedy’s support for specializing in weight-reduction plan, moderately than medicine, to treat chronic conditions may only fuel more investor enthusiasm in regards to the growing space.
“Proposals from the incoming HHS administration to expand coverage of healthy foods and nutrition services as medical advantages and increase research funding for medical nutrition are more likely to proceed propelling investor enthusiasm within the space,” said Chris Lew, a principal with Rock Health’s consulting team.
FoodSmart CEO Dr. Jason Langheier said the high cost of diabetes and weight reduction drugs helps fuel interest in food programs, as much as Medicaid waivers and policy initiatives which have increased coverage of nutrition aid.
“Food care providers will now have … a chance to work with the state, to create a program that is driven off a return on investment for the state and the health plans, to truly help people at scale — especially due to pressure being placed on them for his or her spending on GLP-1s, which has grown to astronomical levels,” said Langheier.
Boxes of Wegovy made by Novo Nordisk are seen at a pharmacy in London, Britain March 8, 2024.Â
Hollie Adams | Reuters
In late November, the Biden administration proposed extending coverage of breakthrough anti-obesity drugs resembling Novo Nordisk‘s Wegovy and Eli Lilly‘s Zepbound to Medicaid and Medicare patients.
If confirmed, Kennedy will likely oppose GLP-1 coverage expansion, given his vocal criticism of the pricey weight reduction drugs. The proposal may also likely be a nonstarter for the Trump administration due to its cost, which the Congressional Budget Office estimates can be $35 billion from 2026 to 2034.
Whether or not Kennedy is confirmed, S2G’s Krishnan said the U.S. is heading toward a fiscal looking on health-care spending, and food programs can play a pivotal role by reducing preventable disease.
“We’ll have an actual form of conversation on health care, and the way will we get ideal outcomes for patients, but in addition not have your entire budget or good portion of the U.S. budget focused on health care,” he said.
