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Speaker 1: Global business news twenty four hours a day. If Bloomberg

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Speaker 1: This is a Bloomberg business flag from Bloomberg World handquarters

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Speaker 1: on Charlie Pellet. Oil is lower along with the Dow

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Speaker 1: AM the SMP five hundred index NA Sanka's Hirelet's head

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Speaker 1: right over the first word breaking news TSK for today's

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Speaker 1: afternoon call. Here he is Bill Maloney, Good afternoon. Try.

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Speaker 1: The dowin STP are lower today, giving up early gains,

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Speaker 1: with the Dow currently lower by sixty one point. Sespes

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Speaker 1: drop six, but the NASDAC is higher by ten. Over

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Speaker 1: In Europe, stocks gain led by technology, telecom and the financials.

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Speaker 1: The FOOTS one hundred rose one point one percent. Back

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Speaker 1: In the US is small cap six hundred is higher

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Speaker 1: by a point, and the US ten yield at one

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Speaker 1: point three nine percent. Six out of tennis V sectors

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Speaker 1: are lower, led by losses and utilities. Energy and telecom

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Speaker 1: technology lead down. Transports gained twenty six snez a Biotex

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Speaker 1: rise twelve, and the VIX is higher by three percent.

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Speaker 1: Down Leaders to the downside included chevron X on Mobile

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Speaker 1: and Verizon, while Intelgomen, SAX and Visa led to the

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Speaker 1: upside humanity plunge as much as eleven point nine percent.

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Speaker 1: In to day report said ed Is said to meet

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Speaker 1: with the d o J tomorrow about their humanity deal,

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Speaker 1: while First Solar felt ten percent shares were cuts. A

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Speaker 1: hole from by over at Deutsche Bank Live from the

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Speaker 1: first breaking newsdask on, Bill Maloney, Charlotte, all right, hey,

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Speaker 1: thank you very much. Bill Maloney in to hear live

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Speaker 1: breaking news over your Bloomberg Times squawk s q U

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Speaker 1: A K on your terminal. I'm Charlie Pellett. That's a

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Speaker 1: Bloomberg business flash. You're listening to taking stock with pin

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Speaker 1: Box and Jatholene Hays on Bloomberg Radio. Spending for prescription

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Speaker 1: drugs continues to rise. What does this mean for the

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Speaker 1: federal government and for Medicare and Medicaid. Brian Ryes, Senior

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Speaker 1: Healthcare Policy and a list for Bloomberg Intelligence, his government team,

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Speaker 1: and he joins us now from Washington, d C. Home

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Speaker 1: to Bloomberg one and to one oh five point seven

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Speaker 1: h D two. Brian, thanks for being with us. Just

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Speaker 1: outline exactly the battle over the rising cost of brand

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Speaker 1: name drugs. Well, certainly both Hillary Clinton and Bernie Sanders

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Speaker 1: and several other Democrats have made it a hot topic

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Speaker 1: of this campaign season. And the issue is they want

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Speaker 1: the government to have greater authority to help negotiate and

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Speaker 1: influence the cost of prescription drugs in the US. And

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Speaker 1: it's been frustrating at the federal level because Republicans control

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Speaker 1: Congress and they really haven't wanted to pursue that that

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Speaker 1: that avenue. And so what we've seen is an increasing

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Speaker 1: level of interest at the state level, where states are

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Speaker 1: essentially saying, well, if nothing's gonna happen in Washington, we're

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Speaker 1: gonna try and take matters into our own hands. And

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Speaker 1: one potential issue coming up this this November on the

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Speaker 1: ballot is is in California, where Proposition sixty one aims

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Speaker 1: to try and address that problem. Tell us a little

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Speaker 1: bit more about what that proposition would do and how

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Speaker 1: does it dovetail, compliment or maybe even be a cross purposes.

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Speaker 1: What's with what is on the books the federal level? Sure, Um, well,

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Speaker 1: the proposition essentially says that you know, any state agency

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Speaker 1: within California their medicaid program, for example, medical and other agencies,

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Speaker 1: you know, whatever price they pay for for their drugs

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Speaker 1: could be no higher than what the Department of Veterans

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Speaker 1: Affairs pace. And why is that important? Well, the v

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Speaker 1: A is actually able to negotiate drug prices themselves, something

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Speaker 1: that the government can't do with the Medicare prescription drug program.

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Speaker 1: And that's a key difference. Now, why does it sounds

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Speaker 1: simple enough? Why does it? Why isn't that a good deal?

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Speaker 1: What's the catch? The potential catches that you're able to

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Speaker 1: get those lower prices by essentially being able to exclude

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Speaker 1: drugs from those formularias. And so the response from the

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Speaker 1: industry is like, well, you can have lower prices, but

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Speaker 1: then you won't have access to a lot of especially

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Speaker 1: the newer innovative drugs that are coming on the market.

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Speaker 1: And so that's the battle that's going to play out

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Speaker 1: between the two sides heading up to November. A couple

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Speaker 1: of data points taking a look at prescription drugs, understand

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Speaker 1: that heyers and the government programs as well as the

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Speaker 1: private sector, spent a combined three hundred and ten billion

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Speaker 1: dollars last year on prescription medicines. Does that that sound right? Right? It? Does?

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Speaker 1: You know? It's you know Medicare Medica and Medicare is

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Speaker 1: about half fab between the Part D and the Part

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Speaker 1: B programs for the various drugs if they cover. Uh,

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Speaker 1: it's a growing part of the healthcare system. But frankly,

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Speaker 1: you know, everything is a growing part of the health

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Speaker 1: care system. Uh. These days of growth, growth picks back

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Speaker 1: up in hospital spending in other areas. But certainly you've

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Speaker 1: seen a lot of new drugs come on the market

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Speaker 1: in the hepatitis C space, and a lot of the

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Speaker 1: controversy that Democrats have pounced on has had to do

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Speaker 1: with some older drugs where there's really no generic competitor.

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Speaker 1: The drugs been acquired and he's seeing price bikes and

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Speaker 1: does as well. Well, you know, you have noted a

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Speaker 1: the outset that it's been tough for those who want

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Speaker 1: to change the system as it is to make progress

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Speaker 1: at the federal level. And you know, the pharmaceutical biotech

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Speaker 1: manufacturers have largely dodged more direct involvement from the Feds

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Speaker 1: in d C. Do you can you talk to us

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Speaker 1: anything about lobbying about to what extent this is just

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Speaker 1: the result of of of you know, lobbyists with deep

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Speaker 1: pockets who have been you know, backing some of the

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Speaker 1: Republicans who have stood in the way of this, well, certainly,

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Speaker 1: you know it's in their interest to to not have

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Speaker 1: the government um involved in these negotiations. I would say

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Speaker 1: it's also something that the health insurers who are on

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Speaker 1: the other side the negotiating table, frankly, they won't They

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Speaker 1: don't want the government involved in their either. They believe

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Speaker 1: they can get better deals for their customers than if

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Speaker 1: the large central UH federal government were involved in that process.

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Speaker 1: But you're right, you know, this goes back to when

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Speaker 1: the Medicare prescription drug program, the part DEEP program was

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Speaker 1: created back in two thousand and three. It specifically prohibits

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Speaker 1: the government from interfering in those negotiations between drug makers

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Speaker 1: and insurers, and so that means an Act of Congress

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Speaker 1: is required to change that. This isn't something that the president,

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Speaker 1: whether President Obama or potentially a President Clinton, could change

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Speaker 1: on their own. And again, since Republicans control right now

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Speaker 1: at least both a House and the Senate, that's been

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Speaker 1: a pretty effective someone block to get anything done. As

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Speaker 1: far as the actual cost to individuals, UH, the average

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Speaker 1: patients out of pocket cost has gone up more than

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Speaker 1: since to about forty four dollars per prescription for generic drugs,

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Speaker 1: of course it's remained about eight percent. Is there a

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Speaker 1: reason why we're seeing this pick up in branded prescriptions?

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Speaker 1: Is that is that because as you describe, there are

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Speaker 1: these new formulations. Yeah, you know, there's been a lot

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Speaker 1: of newer innovative drugs that have come on the market

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Speaker 1: for a number of diseases where they're there in the

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Speaker 1: cancer space or hepatitis space for example. And you know,

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Speaker 1: the brand name manufacturers certainly are happy to to give

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Speaker 1: give out coupons other things to incentivize their patients not

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Speaker 1: to use the gineered versions if one exists, um and

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Speaker 1: so that that's been an effective way for them to

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Speaker 1: to avoid that. And again, if some of these newer drugs,

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Speaker 1: if they if they are in fact new, then it's

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Speaker 1: not quite time for a gineer competitor to come on

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Speaker 1: because the patents haven't expired. Brian right, what an interesting development.

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Speaker 1: He can't make progress at the federal level changing some

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Speaker 1: parts of medicare and drug pricing, We'll go to the states,

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Speaker 1: California leading the way there, Keith, Brian right, thank you

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Speaker 1: so much for joining us today. Seeing your healthcare policy

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Speaker 1: analysts part of our Bloomberg Intelligence Government team in Washington,

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Speaker 1: d C. On Kathleen Hayes along with pim Fox, this

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Speaker 1: is Bloomberg coming up on taking stock white Wave. It

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Speaker 1: is being swamped by then on it's boosting its US

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Speaker 1: business with a ten billion dollar acquisition of white Wave.

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Speaker 1: We'll tell you about the foodmaker next