WEBVTT - Florida's Canadian Meds, Taking the Higher Ground

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>This is Bloomberg BusinessWeek with Carol Messer and Tim Stenebeck

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<v Speaker 2>on Bloomberg Radio.

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<v Speaker 3>Doctor Mariana Sokeal is Associate scientist in the Department of

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<v Speaker 3>Health Policy and Management at the Johns Hopkins Bloomberg School

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<v Speaker 3>of Public Health. She joins us from Brazil this afternoon,

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<v Speaker 3>Doctor sol, good to have you with us. I should

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<v Speaker 3>note the Johns Hopkins Bloomberg School of Public Health. It

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<v Speaker 3>is supported by Michael R. Bloomberg, the founder of Bloomberg

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<v Speaker 3>LP and Bloomberg PHILANTHROPIEES. So is that it is it?

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<v Speaker 4>So?

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<v Speaker 3>Is it so easy now? Now Florida can import drugs

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<v Speaker 3>from Canada?

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<v Speaker 4>Is that it?

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<v Speaker 2>Well? It's an important step. It's a new program. It's

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<v Speaker 2>the very first time we've have that initiative approved in

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<v Speaker 2>the United States and it will definitely bring some change

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<v Speaker 2>that we're excited to see how it will go.

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<v Speaker 4>Well.

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<v Speaker 3>I want to get to the core of why this

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<v Speaker 3>is an issue. It's because in the US. I don't

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<v Speaker 3>need to tell anyone who's listening who lives in the

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<v Speaker 3>US that drugs in the US are so expensive, our

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<v Speaker 3>healthcare system unbelievable. Some people would argue, Carol, yeah, that's broken, yes,

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<v Speaker 3>and that it's way too expensive for a lot of people.

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<v Speaker 3>Given that how expensive insurance premiums are and how much

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<v Speaker 3>companies spend for employer sponsored healthcare, why is it so

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<v Speaker 3>much cheaper to get drugs from Canada?

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<v Speaker 2>Doctor Sokel, Well, you guys are absolutely right. My research

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<v Speaker 2>showed that on average, we're paying three to four times

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<v Speaker 2>higher prices than other countries like Canada. And the surprise

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<v Speaker 2>here is that it's not only for new drugs that

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<v Speaker 2>you know are new launches. We pay the most for

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<v Speaker 2>drugs that have been in the US market for a

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<v Speaker 2>long period of time. So other countries do have mechanisms

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<v Speaker 2>to bring prices down over time, and in our country

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<v Speaker 2>there are some transactions and negotiations going on, but they

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<v Speaker 2>typically do not favor directly the consumer. Typically they happen

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<v Speaker 2>at the health plan level, and the health plans decide

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<v Speaker 2>and determine how much people need to pay to get

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<v Speaker 2>their drugs. So, on the one hand, we don't have

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<v Speaker 2>strong pricing mechanisms to bring prices down over time, and

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<v Speaker 2>these prices are very non transparent. And in the other hand,

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<v Speaker 2>unlike other countries, we also have a higher typically a

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<v Speaker 2>higher requirement. We allow our plans to charge higher prices

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<v Speaker 2>from people. So it's very usual to see, especially for

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<v Speaker 2>a high cost drug, plans require a person to pay

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<v Speaker 2>a twenty percent of the drugs cost when they get

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<v Speaker 2>to the fullacy counter.

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<v Speaker 4>Doctor Soka.

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<v Speaker 1>I feel like we've been talking about this for years.

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<v Speaker 1>I think go back to the Clinton administration right when

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<v Speaker 1>they first try to put some kind of health care

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<v Speaker 1>plan through. So this idea of the Americans paying higher

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<v Speaker 1>drug costs right, not a new thing my understanding though,

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<v Speaker 1>And I think what cut our attention is, like, ooh,

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<v Speaker 1>is this going to be an opportunity for individual citizens

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<v Speaker 1>of the United States to pay cheaper drugs? My understanding.

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<v Speaker 1>I'm looking at a column that was put out by

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<v Speaker 1>the Bloomberg editorial board about mid January. For more than

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<v Speaker 1>two decades, US pharmacists and wholesalers have been allowed to

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<v Speaker 1>import medications from certain countries, including Canada, provided their safe

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<v Speaker 1>and delivered savings to consumers. The Trump administration, certainly when

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<v Speaker 1>he was in the White House, Donald Trump helping to

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<v Speaker 1>move some of this along, having said that don't ultimately

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<v Speaker 1>pharmaceutical companies kind of control supply and can they not

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<v Speaker 1>potentially hold back what they sell to Canadian distributors distributors

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<v Speaker 1>excuse me, that will ultimately kind of make it difficult

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<v Speaker 1>maybe for American buyers state buyers to tap into that.

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<v Speaker 1>I mean, it's still not going to be so easy, right.

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<v Speaker 2>Well, it's just mentioned you know that the US market

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<v Speaker 2>is so many levels of magnitude bigger than the Canadian

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<v Speaker 2>pharmaceutical market. I mean, we're over twenty twenty times larger market.

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<v Speaker 2>So you know, if it wasn't just a state program,

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<v Speaker 2>if we were to depend on Canada for our drugs,

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<v Speaker 2>of course, that would put place an incredible strain on

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<v Speaker 2>the Canada drug supply. And know not to mention that

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<v Speaker 2>Canada also suffers drug shortages and all sorts of different

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<v Speaker 2>supply product problems as much as we do here, So

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<v Speaker 2>there is an incredible risk to the supply in Canada

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<v Speaker 2>as well, if you know, these product programs were to

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<v Speaker 2>be more widespread and we were to depend most more

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<v Speaker 2>on the Canada supply in order to provide drug for

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<v Speaker 2>our people.

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<v Speaker 1>How do you see it from your research? Is it

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<v Speaker 1>a case of we've really got to get to the

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<v Speaker 1>core of why is it so much more expensive here

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<v Speaker 1>in the United States, Like there's negotiating that goes on

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<v Speaker 1>right for medicare and so on and software. But why

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<v Speaker 1>is it ultimately so expensive? Is it because individuals can

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<v Speaker 1>sue companies? I try to understand why is it so

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<v Speaker 1>much more expensive for medications and pharmaceuticals here in the

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<v Speaker 1>US versus certainly in Canada and elsewhere around the world.

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<v Speaker 2>Well, first of all, you know, we have what is

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<v Speaker 2>called the market based pricing system, so companies they can

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<v Speaker 2>charge whatever the market can bear. So that's the first thing.

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<v Speaker 2>We don't have specific structures mechanisms that force prices to

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<v Speaker 2>go down over time. That's one thing, so we have

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<v Speaker 2>a free market. The other problem is that the intermediaries

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<v Speaker 2>that typically are in charge of negotiating these prices, they

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<v Speaker 2>do profit from the difference between whatever price is announced

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<v Speaker 2>and the final price that they are able to obtain

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<v Speaker 2>through price concessions such as rebates and discounts. So these

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<v Speaker 2>intermediaries that are very unique to the US, they're called

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<v Speaker 2>the pharmacy benefit managers. They don't exist anywhere else in

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<v Speaker 2>the world. They are a US entity. These entities they

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<v Speaker 2>can't profit off of the rebates and discounts that they negotiate.

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<v Speaker 2>So this represents an incentive for smaceutical manufacturers to continue

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<v Speaker 2>increase in pricing over time, even if they haven't made

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<v Speaker 2>any changes to their drug just in order for these

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<v Speaker 2>intermediar is to also make a profit and to keep

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<v Speaker 2>their drugs in the formulary in being covered.

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<v Speaker 3>We only have twenty seconds left. But what's the solution

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<v Speaker 3>that you would prescribe here?

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<v Speaker 2>Well, transparency is important. I'm eager to see the prices

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<v Speaker 2>that the Medicare Drug price Negotiation will announce. That will

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<v Speaker 2>bring transparency in the market, and ultimately that will also

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<v Speaker 2>help consumers. So the Florida importation prices that we will

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<v Speaker 2>know will be helpful, the Medicare negotiation prices that we

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<v Speaker 2>will know will be helpful. So all these added elements

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<v Speaker 2>of transparency will bring a lot of benefit to the

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<v Speaker 2>US market.

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<v Speaker 1>Right the Infation Reduction Act empowered Medicare and negotiate I

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<v Speaker 1>think an initial list of ten older widely used drugs

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<v Speaker 1>in terms of pricing, so we'll be watching all of that.

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<v Speaker 1>Doctor Marianna SoCal, Associate scientists in the Department of Health

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<v Speaker 1>Policy and Management at the Johns Hopkins Blueberg School of

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<v Speaker 1>Public Health, Thank you so much. This is Blomberg.

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<v Speaker 3>Allison Taylor. She's professor of ethics at NYU at the

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<v Speaker 3>Eastern School of Business. She's also the executive director at

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<v Speaker 3>Ethical Systems. She's got a new book out. It's called

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<v Speaker 3>Higher Ground, How Businesses can do the right thing in

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<v Speaker 3>a turbulent world. Professor Taylor joins us from Woodstock, New York.

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<v Speaker 3>Professor Taylor, good to have you with us. How are you.

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<v Speaker 5>I'm doing very well. Thanks so nice to be here.

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<v Speaker 3>Well, thanks for joining us. What do you make of

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<v Speaker 3>what we heard from the CEO of Mondaleze earlier today

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<v Speaker 3>that you know the company hasn't felt pressure from its

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<v Speaker 3>shareholders to actually stop doing business in Russia.

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<v Speaker 4>Well, I mean, I think we tend to have had

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<v Speaker 4>a pretty simplistic discussion in the press about whether companies

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<v Speaker 4>are in or out. I think the picture beneath the

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<v Speaker 4>surface is a lot more complicated than that. Companies have,

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<v Speaker 4>for example, been criticized for selling their assets to local nationals,

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<v Speaker 4>and so if we're thinking about human rights, a company

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<v Speaker 4>like Manz, arguably right has some argument for being in

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<v Speaker 4>Russia and continuing to sell essentials, at.

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<v Speaker 5>Least to Russian consumers. It's not like it's a democracy.

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<v Speaker 4>And I think the reality is that this picture is

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<v Speaker 4>much more complicated and nuanced than people suggest. I believe

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<v Speaker 4>that companies like Unilever and Neesle are actually also still

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<v Speaker 4>operating in Russia.

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<v Speaker 1>But what do you make of the argument? Take China

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<v Speaker 1>for example, the argument was always better to be if

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<v Speaker 1>you're a multinational, be there on the ground, helping an

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<v Speaker 1>agent for change overall. And yet here we are. I

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<v Speaker 1>feel like the beginning of my career was all about

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<v Speaker 1>the opening of China, specifically in every company who was

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<v Speaker 1>a global multinational wanted to have boots on the ground,

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<v Speaker 1>if you would, or have some kind of collaboration so

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<v Speaker 1>that they could tap that domestic market. Here we are later,

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<v Speaker 1>and it is a bit of a tortured relationship, it

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<v Speaker 1>feels like, and I feel like everybody is yep, still

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<v Speaker 1>want to be in China, But I'm also working on,

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<v Speaker 1>you know, diversifying my global supply chains and maybe reducing

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<v Speaker 1>some of that risk exposure. So I do wonder, you know,

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<v Speaker 1>I don't know. I don't know what the answer is

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<v Speaker 1>about what role companies can play or that they want

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<v Speaker 1>to play ultimately in doing the right thing in a

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<v Speaker 1>world that, as you rightly set rightly right, is very

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<v Speaker 1>turbulent and getting more so. It feels like every day.

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<v Speaker 4>Yeah, so I think, you know, back in the nineties

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<v Speaker 4>early two thousands, we used to tell ourselves this very

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<v Speaker 4>nice story that we should have foreign direct investment going

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<v Speaker 4>into authoritarian countries and that would lead to economic liberalization,

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<v Speaker 4>and then that would lead to democracy, and they'd all

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<v Speaker 4>be this sunny story to progress in the end of history.

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<v Speaker 5>It has not really worked out that way.

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<v Speaker 4>We're in a far more multi polar, geopolitically fraught world,

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<v Speaker 4>and I think the reality is that many companies, especially

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<v Speaker 4>in consumer led businesses, are getting trapped between the kind

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<v Speaker 4>of sella of Western consumers' expectations that they tackle human

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<v Speaker 4>rights issues, they tackle climate change, et cetera, et cetera,

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<v Speaker 4>with the reality that they still need to make money

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<v Speaker 4>for their shareholders, and then that also if companies pull

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<v Speaker 4>out of countries like China. There's been a big flood

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<v Speaker 4>out of my Ammar recently that doesn't necessarily benefit human

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<v Speaker 4>rights on the ground. So we've just had a ban

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<v Speaker 4>on projects from Jinjang on human rights grounds. That's very complicated.

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<v Speaker 4>Most of our solar panels can't currently come from that region.

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<v Speaker 4>So I think there's like this nexus of really messy

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<v Speaker 4>trade offs between environmental and social issues and between the

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<v Speaker 4>expectations of consumers and governments all over the world. There's

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<v Speaker 4>rather a crazy expectation, I think from everybody that companies

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<v Speaker 4>are perfectly consistent at all times and not hypocritical. But

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<v Speaker 4>we have really come to a consensus on whether we

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<v Speaker 4>want Western businesses to pull out of all these problematic places,

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<v Speaker 4>and then what the second order consequences of that would

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<v Speaker 4>even be. So I think the conversation is just really

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<v Speaker 4>messy and really fraught, and companies trying to chart a

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<v Speaker 4>nuanced path light Mondolei's sometimes seem to be getting the

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<v Speaker 4>most lack of ale.

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<v Speaker 3>How do you define what is right in business? And

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<v Speaker 3>the reason I ask that is because I think a

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<v Speaker 3>lot of us know fundamentally what's right and wrong, but

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<v Speaker 3>there are disagreements that happen in the business world that

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<v Speaker 3>aren't so clear cut. And you open by talking about

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<v Speaker 3>Starbucks and the fight for unionization that some of the

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<v Speaker 3>employees at stores, the baristas at stores around the country

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<v Speaker 3>are doing right now, and you make the point that

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<v Speaker 3>even some white collar workers in the Seattle headquarters through

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<v Speaker 3>their support behind these baristas. But there's certainly a way

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<v Speaker 3>that management thinks what's right in this situation that's different

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<v Speaker 3>than what the baristas who are fighting to unionize feel

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<v Speaker 3>is right. So how do you define right?

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<v Speaker 5>Yeah?

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<v Speaker 4>Well, I mean one of the problems is we don't

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<v Speaker 4>agree on this topic at all as a society, and

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<v Speaker 4>we don't even have the right language to talk about

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<v Speaker 4>it anymore. You know, terms like ethics and ESG and

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<v Speaker 4>purpose kick around. But I think we've completely lost sight

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<v Speaker 4>of this question. And I find the Starbucks example so

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<v Speaker 4>fascinating because Starbucks is by most measures, considered an ESG

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<v Speaker 4>and sustainability leader. It tips all the boxes. Even how

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<v Speaker 4>it treats its employees is up there in various credible

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<v Speaker 4>ratings and rankings with the best companies in its business.

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<v Speaker 4>And yet this unionization issue has really brought it a

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<v Speaker 4>lot of flag and really made it be regarded in

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<v Speaker 4>a different way. There's also been this tendency to treat

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<v Speaker 4>these issues as very, very partisan. You know, it's all

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<v Speaker 4>about WoT business, or it's all about people trying to

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<v Speaker 4>get their political agendas completed.

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<v Speaker 5>If you read a lot of the rhetoric out there.

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<v Speaker 4>I would tend to argue, however, that I don't think

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<v Speaker 4>at the end of the day that many questions are

0:12:55.200 --> 0:12:59.240
<v Speaker 4>actually that partisan. So there've been examples recently. We can

0:12:59.240 --> 0:13:02.600
<v Speaker 4>think of the North what Southern train derailment. We can

0:13:02.640 --> 0:13:05.600
<v Speaker 4>think of there was a settlement with Huts where Huts

0:13:05.720 --> 0:13:09.840
<v Speaker 4>was having its customers arrested and accusing them of stealing cars.

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<v Speaker 5>Or we can think of.

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<v Speaker 4>Amazon workers being forced to work next to a dead

0:13:13.480 --> 0:13:17.240
<v Speaker 4>body all day, and I would just ask how partisan.

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<v Speaker 5>Those issues really are.

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<v Speaker 2>I think I think at.

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<v Speaker 4>The end of the day, we need business to clean

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<v Speaker 4>up its own mess and treat people with dignity and

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<v Speaker 4>respect before starting to go out there and yodel about

0:13:30.160 --> 0:13:30.880
<v Speaker 4>saving the world.

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<v Speaker 1>Totally agree, and I do think there is a point

0:13:32.800 --> 0:13:35.400
<v Speaker 1>where if you like, there's all these studies that you

0:13:35.440 --> 0:13:38.960
<v Speaker 1>know rate workplaces, and I do think employees are pretty

0:13:38.960 --> 0:13:41.600
<v Speaker 1>picky when they can be that if they're in an

0:13:41.600 --> 0:13:43.839
<v Speaker 1>not a graad work environment, they're going to leave. Having

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<v Speaker 1>said that, one of the things that you know, Allison

0:13:46.720 --> 0:13:48.560
<v Speaker 1>tim and I think always grapple that if you're a

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<v Speaker 1>publicly held company, every quarter you are measured by financial metrics, Ultimately,

0:13:55.160 --> 0:13:58.280
<v Speaker 1>I'm not saying that there might be there might be

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<v Speaker 1>some views based on management does or if they break

0:14:01.679 --> 0:14:03.480
<v Speaker 1>the laws and regulators are going to come down. But

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<v Speaker 1>you know what I mean that, I feel like you

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<v Speaker 1>have a learn in your book a leadership obsession with

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<v Speaker 1>hitting goals, sales goals generally tends to trump compliance processes.

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<v Speaker 1>And you were talking about Goldman Sachs here and also

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<v Speaker 1>coming off of Wells Fargo. But how do you know,

0:14:19.880 --> 0:14:25.000
<v Speaker 1>how is that balance really playing itself out among corporations.

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<v Speaker 1>Is it really a true debate.

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<v Speaker 5>I don't think it's still a debate.

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<v Speaker 4>You know, we saw all this rhetoric from Larry Fink

0:14:32.480 --> 0:14:33.880
<v Speaker 4>from the Business Roundtable.

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<v Speaker 5>You know, we're moving to the new era of stakeholder capitalism.

0:14:37.280 --> 0:14:39.440
<v Speaker 4>There was the golden eraror of this, you know, Pete,

0:14:39.480 --> 0:14:42.000
<v Speaker 4>Larry Fink, right before the pandemic.

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<v Speaker 5>I think it.

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<v Speaker 4>Would be one thing if we'd all agreed when we're

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<v Speaker 4>moving in that direction. But as you're rightly pointing out,

0:14:48.760 --> 0:14:53.120
<v Speaker 4>those short term shareholder value pressures are just as pressing

0:14:53.160 --> 0:14:54.160
<v Speaker 4>as they ever were.

0:14:54.480 --> 0:14:55.760
<v Speaker 5>So now it's really more.

0:14:55.640 --> 0:14:58.200
<v Speaker 4>Of an everything everywhere, all at once problem where I

0:14:58.240 --> 0:15:02.080
<v Speaker 4>think leaders are really rea the harvest of this rhetoric

0:15:02.120 --> 0:15:05.120
<v Speaker 4>that they were putting out there in the late twenty tens.

0:15:05.360 --> 0:15:09.120
<v Speaker 4>They're only struggling to balance all these different voices and

0:15:09.240 --> 0:15:14.960
<v Speaker 4>certainly employee leaks, employees speaking up reputational pressures. Ethical missteps

0:15:15.240 --> 0:15:17.840
<v Speaker 4>can tank your stop. They can have a very very

0:15:17.880 --> 0:15:21.440
<v Speaker 4>serious negative financial effect. I think one of the things

0:15:21.440 --> 0:15:24.720
<v Speaker 4>that makes this so tricky is different businesses can be

0:15:24.880 --> 0:15:28.040
<v Speaker 4>treated in very different ways on social media and in

0:15:28.080 --> 0:15:31.800
<v Speaker 4>the public domain for the same conduct. So we tend

0:15:31.840 --> 0:15:34.760
<v Speaker 4>to talk about reputational risk as if it is some

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<v Speaker 4>sort of predictable formula.

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<v Speaker 5>Absolutely not.

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<v Speaker 4>It can feel like it's coming out of nowhere, and

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<v Speaker 4>so I think that's part of why it's become so

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<v Speaker 4>difficult to run a business.

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<v Speaker 3>Professor Taylor, we got to leave it there. Alison Taylor's

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<v Speaker 3>got a new book out, Higher Ground, How Business Can

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<v Speaker 3>do the right thing in a turbulent World. Joining us

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<v Speaker 3>from New York