Progyny (PGNY) – Regulation – February 24, 2024
The Alabama Supreme Court ruled last week that embryos are considered children. This week, the news led to University Systems and other clinics like The Center for Reproductive Medicine pausing IVF treatments as they weighed the decision. There’s a lot of confusion about the legality of IVF treatments in that state and there will be appeals to this ruling. That confusion will resolve itself over time.
I’m not here to talk about politics. I will let you form your own opinion about the news. I’m here to discuss potential implications for Progyny and its fertility benefits business. A couple years ago, Dobbs. v. Jackson Women’s Health Organization overturned Roe vs. Wade. There were 13 states with “Trigger Laws” that meant abortion became illegal following this decision. Abortion doesn’t directly restrict fertility treatment. Still, this news gives those 13 states more flexibility to define embryos used in IVF treatments as human beings. Non-viable and extra embryos are routinely discarded, which technically can be considered abortion and banned. Alabama’s ruling could easily lead to an IVF ban, which is a large piece of Progyny’s business.
This all sounds intimidating, but more context is needed. Of those 13 states with potential IVF bans, Texas is the only densely populated one. It has already mandated the legality of IVF treatments, so this is a non-issue there. The other 12 states represent 3% of total fertility treatment volume in the USA. Alabama makes up well under 0.5% of total USA volume. No other state in the group has made a similar ruling. Furthermore, the best clinics in the U.S. are concentrated on the coasts. Fertility tourism to pursue treatment from these best-in-class clinics is already common. When prospective parents from the southeast are traveling, they’re traveling to New York or California… not Alabama. So? From the maximum 3% volume hit, a large chunk will simply travel somewhere else for treatment. It’s hard to believe that passionate parents with deep employee benefits won’t spend $500 on a plane ticket to realize their family building goals.
All of this is to say that the potential maximum hit to this business is 3% of volume, the current maximum hit to this business is less than 0.5% of volume and the actual hit to this business will be immaterial. I chatted with my contacts at the company to confirm that this is the case.
