WEBVTT - Will IRA Drug Pricing Raise Employer Costs? 0:00:10.600 --> 0:00:13.720 Hello, and welcome to the Votes and Verdicts podcasts, hosted 0:00:13.720 --> 0:00:17.840 by the policy and litigation team at Bloomberg Intelligence, the 0:00:17.920 --> 0:00:22.880 investment research platform of Bloomberg LP. This podcast series examines 0:00:22.920 --> 0:00:27.280 the intersection of business policy and law. I'm Doin Wright 0:00:27.440 --> 0:00:32.440 and analysts with Bloomberg Intelligence covering government healthcare policy. So 0:00:32.520 --> 0:00:37.559 for our topic today, the Inflation Reduction Act, specifically the 0:00:37.680 --> 0:00:41.159 drug pricing provisions and how the new law will impact 0:00:41.200 --> 0:00:46.640 costs for employers, commercial payers, and employees. As you know 0:00:46.720 --> 0:00:50.680 from our previous podcast, we spent considerable time looking at 0:00:50.720 --> 0:00:54.240 how the IRA will impact life cycle management for drug companies. 0:00:54.640 --> 0:00:58.360 For example, how will the law impact the company's decision 0:00:58.440 --> 0:01:03.040 to pursue new indicators for existing drugs given the threat 0:01:03.520 --> 0:01:06.760 and timing of price cuts. We've had a discussion with 0:01:06.840 --> 0:01:11.240 the executive director of the Association for Accessible Medicines about 0:01:11.240 --> 0:01:16.440 the challenges and opportunities for generic and biosimilar competitors. Now 0:01:16.440 --> 0:01:18.959 we'd like to discuss how the drug pricing provisions of 0:01:18.959 --> 0:01:24.200 the IRA could impact employers and the commercial market. Keep 0:01:24.200 --> 0:01:27.760 in mind the prices that Medicare negotiates with drug companies 0:01:28.200 --> 0:01:33.840 will be available for Medicare beneficiaries So should employers brace 0:01:33.880 --> 0:01:36.640 for higher costs as a result of the law or 0:01:36.680 --> 0:01:39.800 will there be some spillover effects that benefit the one 0:01:39.840 --> 0:01:42.720 hundred and seventy five million people with employer or non 0:01:42.720 --> 0:01:46.200 group coverage. I think the answer to both those questions 0:01:46.280 --> 0:01:51.600 is maybe. But since it's twenty twenty three and these 0:01:51.640 --> 0:01:55.040 prices won't become effective until twenty twenty six, let's have 0:01:55.160 --> 0:01:57.600 some fun talking about it. And today I'm lucky to 0:01:57.640 --> 0:02:01.520 have Jeff Levinsure's an assistant professor at the Harvard Chan 0:02:01.840 --> 0:02:05.280 School of Public Health and Population Health leader in the 0:02:05.320 --> 0:02:10.560 Health management practice at WTW. Jeff has an MBA from 0:02:10.600 --> 0:02:14.640 Columbia Business School and a BA and MD from Boston 0:02:14.720 --> 0:02:18.280 University and the School of Medicine. So Jeff, welcome to 0:02:18.280 --> 0:02:20.280 the Votes and Verdicts podcasts. 0:02:20.880 --> 0:02:22.560 Thanks very much. Dwyane happy to be here. 0:02:23.600 --> 0:02:26.800 So, Jeff, I'm really looking forward to this conversation because 0:02:26.840 --> 0:02:30.280 as much as we talk about the impact to drug companies, 0:02:31.200 --> 0:02:34.040 there are or that could be subject to price cuts. 0:02:34.040 --> 0:02:36.919 We don't often talk about some of the downstream effects 0:02:36.919 --> 0:02:41.040 of the law, specifically with the commercial market and employers. 0:02:42.000 --> 0:02:44.640 But before we do that, can you tell us about 0:02:44.639 --> 0:02:47.399 your work at Harvard, the Harvard School of Public Health, 0:02:47.440 --> 0:02:48.399 and WTW. 0:02:49.200 --> 0:02:52.400 Sure, thanks very much so. At the Harvard School of 0:02:52.400 --> 0:02:55.720 Public Health, I teach course work around managing healthcare costs, 0:02:55.960 --> 0:02:59.240 certainly a relevant topic, as well as provider payment. And 0:02:59.360 --> 0:03:02.520 at wt W, the firm that was known as Bill 0:03:02.520 --> 0:03:05.560 as Towers Watson in the past, I'm the population health leader, 0:03:05.639 --> 0:03:09.200 So I'm giving advice to large employers about what to 0:03:09.240 --> 0:03:12.600 do about health health care and the health investment in 0:03:12.639 --> 0:03:16.760 their employees. Previously, I worked as a physician leader and 0:03:16.840 --> 0:03:20.280 provider organizations and a health plan and I'm a primary 0:03:20.280 --> 0:03:21.360 care doctor by training. 0:03:23.040 --> 0:03:25.760 And so what are you hearing from employers now about 0:03:26.040 --> 0:03:27.240 drug benefits? 0:03:28.440 --> 0:03:31.160 Well, you know, I mean, employers are struck by the 0:03:31.200 --> 0:03:34.480 fact that we have the highest rate of medical inflation 0:03:35.200 --> 0:03:38.520 really in the last decade this year, and there's good 0:03:38.560 --> 0:03:41.160 reason to believe that's going to continue for the next 0:03:41.200 --> 0:03:44.640 three or four years at least. And given that backdrop, 0:03:44.760 --> 0:03:49.600 employers are mainly thinking about costs, and very specifically, the 0:03:49.640 --> 0:03:52.960 two things that are top of mind for employers that 0:03:53.040 --> 0:03:56.160 sponsor health insurance right now are the cost of the 0:03:56.240 --> 0:04:01.080 newer antiobesity drugs, which you know, which which are very 0:04:01.200 --> 0:04:07.040 high and they're wonderful drugs, but they represent as much 0:04:07.040 --> 0:04:11.200 as ten percent of total outpatient pharmacy spending now and 0:04:11.320 --> 0:04:15.400 much of that is new. And the other is concern 0:04:15.520 --> 0:04:20.320 about the very expensive gene therapies that are becoming available. 0:04:20.400 --> 0:04:24.000 You know, joy that there are now you know, insight 0:04:24.800 --> 0:04:29.120 cures for terrible diseases like sickle cell disease and hemophilia, 0:04:29.560 --> 0:04:32.440 And terror about what the possibility of a two or 0:04:32.520 --> 0:04:36.320 three million dollar bill could mean to a self insured employer. 0:04:37.680 --> 0:04:42.000 So let's have a take a foundational look at this 0:04:42.160 --> 0:04:47.120 topic and this issue. Give us an elevator speech about 0:04:47.200 --> 0:04:51.520 what formularities are number one, and then two, how are 0:04:51.520 --> 0:04:55.440 they created for employer and commercial plans. 0:04:56.080 --> 0:04:59.360 Sure, well, one thing to understand first is about almost 0:04:59.480 --> 0:05:03.040 ninety per of the drugs prescribed to members of health 0:05:03.080 --> 0:05:07.159 plans are generic. However, eighty percent of the total cost 0:05:07.480 --> 0:05:11.200 is actually in brand name drugs, So formulais are really 0:05:11.320 --> 0:05:15.599 all all about brand name drugs. So pharmacy benefit managers, 0:05:15.720 --> 0:05:21.000 which are hired by employers to manage the pharmacy benefit, 0:05:21.440 --> 0:05:26.080 actually actually design and craft formulas with an item, making 0:05:26.160 --> 0:05:29.560 meds in each class available and driving volume to the 0:05:29.600 --> 0:05:33.000 pharmaceutical company that's willing to accept a lower net price 0:05:33.080 --> 0:05:37.159 for a drug that works well. So concessions on price 0:05:37.200 --> 0:05:40.599 can either be given as rebates or discounts, and in 0:05:40.600 --> 0:05:43.440 the brand name drug space, a lot of those concessions 0:05:43.520 --> 0:05:47.640 are made in rebates. So we often think about the 0:05:47.640 --> 0:05:50.680 gross price of a drug, which is easy to find, 0:05:51.200 --> 0:05:53.080 and then the net price of a drug, which is 0:05:53.200 --> 0:05:56.880 what price the insurance plan and its members are paying 0:05:57.080 --> 0:06:02.360 after any discounts and after any rebates. So if a 0:06:02.480 --> 0:06:07.240 drug company wants its drug to be on a formulary's 0:06:07.520 --> 0:06:10.640 it generally will and there are competing drugs that could 0:06:10.640 --> 0:06:13.520 be on instead. A drug company is willing to give 0:06:13.560 --> 0:06:18.039 a give a larger effective discount to get more volume, 0:06:18.839 --> 0:06:19.120 and so. 0:06:19.240 --> 0:06:24.520 Using control of this process. Do employers themselves have a 0:06:24.600 --> 0:06:27.760 large role here in terms of dictating which drugs are 0:06:27.760 --> 0:06:31.919 included or not included and is there a negotiation process 0:06:32.480 --> 0:06:33.280 that's involved. 0:06:34.320 --> 0:06:37.560 You know, most employers don't have their own pharmacy and 0:06:37.600 --> 0:06:41.160 therapeutics committee. They don't hire a pharmacists, they don't hire 0:06:41.279 --> 0:06:44.040 doctors to do this. They actually hire a pharmacy benefit 0:06:44.120 --> 0:06:48.559 manager and they trust the pharmacy benefit manager to offer 0:06:49.360 --> 0:06:54.320 a formulary there's a tendency for PBMs to offer a 0:06:54.360 --> 0:06:58.320 few different formulas. One that might be one that might 0:06:58.360 --> 0:07:02.719 be more restrictive and therefore lead to lower costs, but 0:07:03.040 --> 0:07:06.760 more members being forced to switch drugs when it's less restrictive, 0:07:06.760 --> 0:07:09.279 which will have higher costs, but more members will be 0:07:09.520 --> 0:07:11.680 happy because there won't be a demand for them to 0:07:12.000 --> 0:07:16.239 switch from a drug they're accustomed to potentially a different drug. 0:07:17.480 --> 0:07:21.320 There are some jumbo employers that do have their own formularies, 0:07:21.360 --> 0:07:26.120 but for the most part, employers will accept the formulary 0:07:26.200 --> 0:07:29.480 that accept one of the available formulators for their PBM. 0:07:30.240 --> 0:07:35.920 Another consideration is that the formularies do determine what kinds 0:07:35.960 --> 0:07:38.520 of rebates employers will be able to get, so that 0:07:38.640 --> 0:07:43.680 they're willing to have a more restrictive formulary, then the 0:07:43.760 --> 0:07:46.880 drugs that are on that might get more business than 0:07:47.040 --> 0:07:51.200 their competitors are probably discounted more heavily. So to the 0:07:51.240 --> 0:07:54.440 extent that employer wants to say, well, I don't really 0:07:54.440 --> 0:07:58.360 want any patients to be forced to switch drugs and 0:07:58.520 --> 0:08:01.640 have any kind of any kind of friction or abrasion, 0:08:02.440 --> 0:08:05.400 that employer will end up getting much less in the 0:08:05.400 --> 0:08:07.160 way of rebates. 0:08:07.560 --> 0:08:10.880 And I think as I look at this topic, you 0:08:10.920 --> 0:08:15.040 can see depending on the drug, some drugs have rebates 0:08:15.080 --> 0:08:18.600 that are a lot less than others in the range 0:08:19.200 --> 0:08:23.560 can vary, and this might be the answer to this 0:08:23.640 --> 0:08:26.120 might be, well, it depends on the drug. But who 0:08:26.200 --> 0:08:29.960 has the leverage here when you're talking about drug manufacturers 0:08:29.960 --> 0:08:33.560 that want their drugs on the formulaitis PBMs that want 0:08:33.640 --> 0:08:37.400 to get the rebates. There's that tension. How has that 0:08:37.480 --> 0:08:39.880 tension resolved and who has the leverage? 0:08:40.440 --> 0:08:44.319 Yeah, as you as you suggested, the answer is it depends. 0:08:44.600 --> 0:08:48.000 And if there's a drug that's pretty unique, it's the 0:08:48.040 --> 0:08:50.560 only drug of its class, it's really the only drug 0:08:50.600 --> 0:08:54.800 that accomplishes you know that it meets us meets a 0:08:54.840 --> 0:08:58.720 real clinical need, then the pharmaceutical company has has leverage 0:08:58.920 --> 0:09:02.440 and the pharmaceutical company is likely to give few price 0:09:02.520 --> 0:09:06.760 concessions because an employer pretty much has has to have 0:09:06.800 --> 0:09:10.560 that on the formulay. Whereas if there is a drug 0:09:10.600 --> 0:09:13.120 that's part of a class where there are many available drugs, 0:09:13.160 --> 0:09:17.800 maybe even some that are already available generically the you 0:09:17.840 --> 0:09:21.040 know to you know the at that point, then the 0:09:21.040 --> 0:09:24.960 pharmacy benefit manager has substantially more leverage and can can 0:09:25.000 --> 0:09:29.559 seek much much higher price concessions. So I think it 0:09:29.760 --> 0:09:32.600 all depends on really how much how much value is 0:09:32.640 --> 0:09:35.920 created by the drug and how much you know, unique 0:09:35.920 --> 0:09:39.680 and competitively differentiated value is created by the drug, and 0:09:39.760 --> 0:09:43.199 drugs that are, you know, drugs that create more value 0:09:43.400 --> 0:09:46.239 than the pharmaceutical company has substantially more leverage. 0:09:46.880 --> 0:09:49.959 And so if I'm an employer, I've got this formularity 0:09:50.679 --> 0:09:54.680 working with a PBM, how often can I expect conversation 0:09:54.880 --> 0:09:59.480 between PBMs and manufacturers to occur in terms of what 0:09:59.559 --> 0:10:01.920 the price are going to be, what the rebates are, 0:10:02.240 --> 0:10:03.280 what does that look like? 0:10:04.240 --> 0:10:09.400 Well, most commercial formularies are technically you know, they're technically 0:10:09.480 --> 0:10:12.719 created once a year. But as a practical matter, there 0:10:12.720 --> 0:10:15.280 are always new drugs coming on the market, there's new 0:10:15.320 --> 0:10:19.640 information becoming available about drugs, and so there are there, 0:10:19.800 --> 0:10:22.520 there are forms. There tend to be formulary changes somewhere 0:10:22.600 --> 0:10:25.760 between two and four times a year, depending upon you know, 0:10:26.120 --> 0:10:29.680 depending upon what you know, what what what is new? 0:10:30.200 --> 0:10:33.079 I imagine at this point that the pharmacy benefit managers and 0:10:33.120 --> 0:10:36.320 the pharma pharmaceutical companies are maybe talking virtually all of 0:10:36.360 --> 0:10:40.480 the time. But but but but in general, you know, 0:10:40.520 --> 0:10:42.960 there is an attempt to be sure to not be 0:10:43.120 --> 0:10:46.520 changing formularies dramatically in the middle of the year, because 0:10:47.200 --> 0:10:48.960 that causes a lot more patient disruption. 0:10:50.040 --> 0:10:55.200 And so when we think about healthcare policy specifically, looking 0:10:55.240 --> 0:11:00.440 at well, if you change reimbursement or coverage within one 0:11:00.520 --> 0:11:04.440 part of healthcare, it's going to impact another part of healthcare. 0:11:04.880 --> 0:11:07.360 And I know we'll get into this in a bit. 0:11:07.520 --> 0:11:09.720 I think this is a good segue for what's coming 0:11:09.720 --> 0:11:12.079 of next. But when we look at some of these 0:11:12.120 --> 0:11:16.400 commercial formulais are they influenced by what happens in the 0:11:16.480 --> 0:11:21.679 Medicare program or these two distinct conversations. 0:11:22.480 --> 0:11:26.440 So it's a really good question. So there are a 0:11:26.520 --> 0:11:30.120 lot of Medicare plans. So there are eight hundred Medicare 0:11:30.200 --> 0:11:33.720 part y plans. There are four thousand Medicare advantage plans, 0:11:33.720 --> 0:11:38.000 about ninety percent of them have pharmacy benefits. And similarly, 0:11:38.080 --> 0:11:41.480 there are you know, there are you know, there are many, 0:11:41.520 --> 0:11:44.160 many PBMs, although there are three of them that represent 0:11:44.280 --> 0:11:48.439 over eighty percent of the total market. The big PBMs 0:11:48.640 --> 0:11:53.360 almost universally have you know, universally have both Medicare and 0:11:53.360 --> 0:11:57.320 commercial contracts. I'm not at the negotiating table. So I 0:11:57.360 --> 0:12:01.080 can't tell you exactly how one impact the other, but 0:12:01.160 --> 0:12:03.840 I can tell you that if a if a pharmacy 0:12:03.880 --> 0:12:08.200 benefit management or has a good relationship with one pharmaceutical 0:12:08.200 --> 0:12:12.880 company is able to get good price concessions, they're probably 0:12:12.960 --> 0:12:14.640 going to be trying to do that on both the 0:12:14.679 --> 0:12:18.000 Medicare and the commercial side. So, uh, you know they're there. 0:12:18.240 --> 0:12:22.280 You know one one definitely does you know, have have 0:12:22.280 --> 0:12:23.600 have some impact on the other. 0:12:26.080 --> 0:12:31.240 So that helps us tee up the big issue, which 0:12:31.280 --> 0:12:35.560 is how this is all going to impact how we'll 0:12:35.559 --> 0:12:38.880 see this impact from the IRA in the commercial markets. 0:12:39.280 --> 0:12:42.960 But before we jump into some of these i RA effects, 0:12:43.480 --> 0:12:47.760 maybe another opportunity just to develop a baseline understanding for 0:12:47.920 --> 0:12:51.240 our listeners. But what are we talking about with the 0:12:51.360 --> 0:12:56.400 i RA drug pricing negotiation provisions? How is it going 0:12:56.400 --> 0:12:58.319 to happen? What specifically is it? 0:12:59.200 --> 0:13:05.800 Yeah, so so so basically, the IRA prescribes very very 0:13:05.800 --> 0:13:11.360 specifically how this negotiation works. So the Centers for Medicare 0:13:11.360 --> 0:13:15.880 and Medicaid Services, which runs Medicare, chooses this year ten 0:13:16.040 --> 0:13:19.480 ten Medicare Part D drugs, It'll be it'll be fifteen 0:13:19.600 --> 0:13:21.680 next year, and then the year after that they start 0:13:21.760 --> 0:13:24.440 looking at medicare Part D N Part B. Part B 0:13:24.640 --> 0:13:28.440 is medicines that tend to be used in hospitals or 0:13:28.440 --> 0:13:31.560 in doctors' offices. Part D is medicines that people go 0:13:31.679 --> 0:13:35.079 to their local pharmacy to pick up. So, so the 0:13:35.120 --> 0:13:38.720 first thing is they've choose choose medications. That's that's done. 0:13:39.000 --> 0:13:42.320 The ten medications have been announced and uh and then 0:13:43.360 --> 0:13:47.760 UH there is a process whereby h CMS Center Center 0:13:47.800 --> 0:13:53.439 for Medicare and Medicaid Services use goes you uses a 0:13:53.480 --> 0:13:57.080 series of criteria to determine what it thinks is a 0:13:57.120 --> 0:14:00.680 fair market price for our fair market value for each 0:14:00.720 --> 0:14:03.079 of these ten drugs that they're going to negotiate with 0:14:04.520 --> 0:14:08.559 all ten pharmaceutical companies. Impact they have agreed to this negotiation, 0:14:09.320 --> 0:14:13.560 and so CMS will on the will on the basis 0:14:13.679 --> 0:14:17.680 of how much clinical value there is, how much research 0:14:17.720 --> 0:14:19.840 and development it took, how much of that was paid 0:14:19.880 --> 0:14:25.160 for by the government. You know, what are alternatives that 0:14:25.280 --> 0:14:30.640 could achieve the same clinical benefit would cost. So the 0:14:30.640 --> 0:14:33.480 cm is supposed to supposed to put all of that together, 0:14:34.040 --> 0:14:36.920 and on that basis they make a bid to the 0:14:36.920 --> 0:14:41.960 pharmaceutical company. It's somewhere between twenty five and sixty five 0:14:41.960 --> 0:14:46.720 percent lower than lower than the existing cost, and then 0:14:46.720 --> 0:14:49.240 the pharmaceutical company has a period of time to make 0:14:49.280 --> 0:14:53.960 a counteroffer and to give justification about why they feel 0:14:54.000 --> 0:14:56.480 that the fair market price should be higher than what 0:14:56.600 --> 0:14:59.760 CMS has to do. So this will all be going 0:14:59.760 --> 0:15:05.440 on for the next year, and if the pharmaceutical company 0:15:05.480 --> 0:15:08.000 and CMS can't come to an agreement, then there are 0:15:08.160 --> 0:15:12.520 pretty serious penalties for the pharmat pharmaceutical companies. So I 0:15:12.520 --> 0:15:16.480 think that it's likely there will be agreements, and those 0:15:16.520 --> 0:15:19.320 agreements will be announced in September of twenty twenty four, 0:15:20.000 --> 0:15:22.960 but then that price won't be in effect until January 0:15:23.000 --> 0:15:26.479 first of twenty twenty six. So it's a pretty long process. 0:15:27.200 --> 0:15:31.200 It's pretty prescribed, it's not there's not a lot of 0:15:31.200 --> 0:15:35.840 flexibility about how this should go, and it is mandatory 0:15:36.000 --> 0:15:39.120 that for the drugs that are that are selected, the 0:15:39.200 --> 0:15:43.840 discounts will be will be reasonably serious. And I mean, 0:15:43.840 --> 0:15:47.560 another big difference between these kind of negotiations and the 0:15:47.600 --> 0:15:51.480 negotiations that pharmacy benefit managers have with the pharmaceutical companies 0:15:51.960 --> 0:15:56.200 is that the results of these are pretty much entirely public. 0:15:56.520 --> 0:15:59.800 So we will in September of twenty twenty four, not 0:16:00.120 --> 0:16:03.440 only know what the agreed upon medicare price will be, 0:16:04.120 --> 0:16:07.040 and it's very hard to figure out sometimes what the 0:16:07.080 --> 0:16:10.800 agreed upon PBM prices are, just because there's there's a 0:16:10.800 --> 0:16:13.680 lot of rebates and other things going back and forth. 0:16:13.960 --> 0:16:17.200 But we'll also know what the background is about why 0:16:17.280 --> 0:16:20.320 CMS chose that price and in what way the pharmaceutical 0:16:20.320 --> 0:16:25.119 company might have disagreed. So all of that information becoming 0:16:25.320 --> 0:16:29.560 part of the public record will actually, I believe, clearly 0:16:29.640 --> 0:16:32.360 have an influence on what the price is across the market, 0:16:32.440 --> 0:16:33.440 not just on Medicare. 0:16:34.560 --> 0:16:38.160 Yeah, on that point, there's going to be considerable transparency 0:16:38.280 --> 0:16:42.600 into how CMS got to this. And I think when 0:16:42.640 --> 0:16:44.680 we get there, if we get there, I think we'll 0:16:44.720 --> 0:16:47.680 all be looking at, well, Okay, we know you set 0:16:47.720 --> 0:16:50.400 the price, but how exactly did you get there? And 0:16:50.480 --> 0:16:53.120 I think we'll all be looking through that. But you 0:16:53.160 --> 0:16:56.200 know a couple of things you mentioned earlier that there's 0:16:56.440 --> 0:17:02.480 there could be some serious discounts. As you mentioned, the 0:17:02.560 --> 0:17:05.800 law provides pretty much a ceiling and it does not 0:17:05.920 --> 0:17:09.639 provide a floor. In other words, there's a maximum fair price, 0:17:09.760 --> 0:17:14.399 but there's nothing that says CMS can't go well below that, 0:17:15.480 --> 0:17:18.800 and I think that is a fear that drug manufactures 0:17:18.880 --> 0:17:23.399 pharma bile they've all expressed over the past couple of months, 0:17:24.000 --> 0:17:28.320 and so there's a bit of unpredictability there and we 0:17:28.359 --> 0:17:31.919 will see how it plays out. CBO, which is the 0:17:32.240 --> 0:17:36.160 Congressional Budget Office, when they scored the proposal, they provided 0:17:36.200 --> 0:17:40.080 some additional clarity into their thinking in terms of how 0:17:40.119 --> 0:17:44.720 they got to a score and said, well, because Medicare 0:17:44.800 --> 0:17:48.840 has such leverage, they think the discounts are likely to 0:17:48.880 --> 0:17:52.720 be well below the maximum fair price. And we'll see 0:17:52.720 --> 0:17:57.360 if that plays out or not. But also to your 0:17:57.359 --> 0:18:01.439 point about a rigid timeframe, I think it's interesting that 0:18:01.560 --> 0:18:06.040 it's it's very prescriptive, and I think that is more about, well, 0:18:06.080 --> 0:18:08.159 we don't know who the next presen is going to 0:18:08.200 --> 0:18:11.439 be and what their views on this process or the 0:18:11.520 --> 0:18:15.639 law itself, so we're going to be very prescriptive. Where 0:18:15.920 --> 0:18:19.199 I think earlier drafts of the law said up to 0:18:19.800 --> 0:18:22.160 up to ten, up to fifteen, up to twenty, and 0:18:22.200 --> 0:18:26.200 this law is now very prescriptive. It is that specific 0:18:26.359 --> 0:18:31.000 number and discounts are this is your maximum fair price. 0:18:31.080 --> 0:18:34.720 So again you know some of your earlier comments, it's 0:18:34.880 --> 0:18:40.239 very rigid and I think people might have issue with 0:18:40.280 --> 0:18:44.679 this but very transparent process, though people might not like 0:18:44.760 --> 0:18:46.160 the process. 0:18:46.720 --> 0:18:52.239 Well, I think that you know, clearly, when CMS is 0:18:52.280 --> 0:18:58.320 doing this negotiation, the IRA gives CMS some serious leverage 0:18:59.520 --> 0:19:03.000 and so so I understand that, you know, I understand 0:19:03.000 --> 0:19:08.000 that Pharma, you know, Pharma obviously is suing in at 0:19:08.080 --> 0:19:11.480 least six different courts to try to to try to 0:19:11.480 --> 0:19:14.840 try to stop this. You know, the IRA also gave 0:19:14.920 --> 0:19:19.000 some real wins to the pharmaceutical companies. So so getting 0:19:19.040 --> 0:19:21.359 rid of the doughnut hole, so being sure that people 0:19:21.359 --> 0:19:24.880 don't pay first dollar for their drugs and medicare part dy, 0:19:25.920 --> 0:19:29.399 you know, after you know, after a relatively small number 0:19:29.400 --> 0:19:32.960 of months, and also getting you also putting a cap 0:19:33.000 --> 0:19:36.560 on how much people could at maximum spend out of 0:19:36.600 --> 0:19:40.959 pocket is going to actually decrease price sensitivity for a 0:19:40.960 --> 0:19:44.080 lot of drugs. So I mean, you know, if you 0:19:44.119 --> 0:19:47.159 look at share prices of the pharmaceutical companies, they have 0:19:47.640 --> 0:19:50.520 done they have done fine, and they're not they're not 0:19:50.600 --> 0:19:53.800 doing badly. And uh, you know, I do think that 0:19:54.480 --> 0:19:56.720 there are some blockbuster drugs where there is going to 0:19:56.720 --> 0:20:00.080 be substantially less margin going forward, and we'll probably talk 0:20:00.119 --> 0:20:02.320 about it, but I think that you know, there are 0:20:02.359 --> 0:20:05.960 some incentives in this for pharmaceutical companies not to as 0:20:06.600 --> 0:20:11.520 vehemently protect you know, some patent extensions and things. So yes, 0:20:11.560 --> 0:20:14.200 there are some losses for the pharmaceutical industry in this, 0:20:14.480 --> 0:20:17.560 but there also are some very substantial wins for the 0:20:17.560 --> 0:20:21.960 pharmaceutical industry. And you know, so I'm I'm you know, 0:20:22.200 --> 0:20:28.280 I actually I don't just respect, but I am thrilled 0:20:28.440 --> 0:20:32.040 at the kind of the kind of innovations and the 0:20:32.119 --> 0:20:36.320 kind of progress we've made through pharmaceuticals. Really, I mean, 0:20:36.320 --> 0:20:39.560 pharmaceutical companies are responsible for almost all of the really 0:20:39.680 --> 0:20:43.960 big medical advances that have come since I've since I've 0:20:43.960 --> 0:20:46.600 been on the scene, so you know, making HIV a 0:20:46.680 --> 0:20:52.000 chronic disease, making hepatitis C treatable, even things like having 0:20:52.119 --> 0:20:55.160 over the counter drugs to treat ulcers. I mean, when 0:20:55.160 --> 0:20:59.560 I was in training, I saw people die of duadenal ulcers, 0:21:00.520 --> 0:21:02.840 and you know, nothing like that would happen now. So 0:21:03.280 --> 0:21:05.679 you know, I'm happy for all this innovation. I think 0:21:05.720 --> 0:21:10.119 the pharmaceutical companies should be well well rewarded. And I 0:21:10.160 --> 0:21:13.800 think that even with you know, with some you know, 0:21:13.880 --> 0:21:16.199 with some decrease in margin that they'll see on some 0:21:16.240 --> 0:21:20.720 of these blockbuster drugs or some shorter, shorter patent exclusivity. 0:21:20.960 --> 0:21:23.879 I actually am confident that the pharmaceutical industry will actually 0:21:23.880 --> 0:21:26.760 do quite well, and some elements of the IRA will 0:21:26.800 --> 0:21:28.680 in fact give them more business. 0:21:29.520 --> 0:21:32.000 And I think, you know, how do you respond then 0:21:32.080 --> 0:21:36.040 to concerns of well, this is going to mean this 0:21:36.160 --> 0:21:41.040 innovation moving forward? You know, one way to think about 0:21:41.080 --> 0:21:44.520 it is, well, CBO has said, we do anticipate there'll 0:21:44.520 --> 0:21:47.520 be fewer drugs, whether it's ten, fifteen or twenty. I 0:21:47.520 --> 0:21:51.440 think Pharma has its own study that says possibly over 0:21:51.520 --> 0:21:54.880 one hundred. Do you think that it's less it's more 0:21:54.920 --> 0:21:57.840 about we won't see those drugs, or do you think 0:21:57.920 --> 0:22:01.800 we'll see some of these drugs come on the market 0:22:01.840 --> 0:22:05.879 a bit more slower because some of these drugs are 0:22:05.960 --> 0:22:10.200 in the additional indications of existing drugs, Or maybe we'll 0:22:10.240 --> 0:22:14.639 see a drug come on the market for that second 0:22:14.640 --> 0:22:19.560 indication instead of that first indication because of the clock. 0:22:19.760 --> 0:22:22.280 And right now the game is all about the clock 0:22:22.400 --> 0:22:26.440 when it starts and when those discounts are applied. 0:22:27.359 --> 0:22:29.679 Well, you know, doing a couple thoughts. One is the 0:22:29.680 --> 0:22:33.080 Congressional Budget Office said that this would lead to one 0:22:33.240 --> 0:22:36.960 fewer drug in the first decade and thirteen fewer new 0:22:37.040 --> 0:22:41.680 drugs in over over three decades. So and just in perspective, 0:22:41.840 --> 0:22:44.280 that's I don't know, they expect to have like thirteen 0:22:44.359 --> 0:22:48.199 hundred new drugs over over over three decades. Obviously, if 0:22:48.240 --> 0:22:50.439 the drug that didn't get developed was the drug that 0:22:50.480 --> 0:22:52.919 could cure you and you were me, we would be 0:22:53.080 --> 0:22:57.120 very disappointed by that. But you know, also of all 0:22:57.200 --> 0:22:59.359 the new of the thirty eight or so new drugs 0:22:59.359 --> 0:23:02.800 that are approved every year, a lot of them don't 0:23:02.800 --> 0:23:05.800 represent like quantum leaps. Some of them do, but a 0:23:05.800 --> 0:23:10.040 lot of them don't. I think that, I think again, 0:23:10.960 --> 0:23:15.760 there there will be plenty of margin in the pharmaceutical industry. 0:23:15.880 --> 0:23:18.160 And you know, in some areas there'll be somewhat more 0:23:18.160 --> 0:23:21.959 margin just because of getting rid of of caps that 0:23:22.000 --> 0:23:25.320 we really needed to get rid of on our getting 0:23:25.400 --> 0:23:27.640 rid of very high expenses we really needed to get 0:23:27.720 --> 0:23:31.440 rid of, for for for for some Medicare beneficiaries. So 0:23:31.600 --> 0:23:35.160 I'm I'm you know, I'm optimistic. I think we'll continue. 0:23:35.200 --> 0:23:39.800 I think that pharmaceuticals will continue to be a place 0:23:39.880 --> 0:23:44.960 where money invested wisely will you know, will have substantial returns. 0:23:45.280 --> 0:23:48.760 I also think that, like we've seen some excellent reporting 0:23:48.760 --> 0:23:54.760 about pharmaceutical companies already, you know, delaying a potentially new, 0:23:54.800 --> 0:23:58.119 better drug to try to to try to get you know, 0:23:58.200 --> 0:24:01.399 to try to get longer exclusivevity on that. There's been 0:24:01.480 --> 0:24:04.920 very good reporting on Gilead and uh, you know which 0:24:04.960 --> 0:24:09.920 which put which put discov on pause so that they 0:24:09.960 --> 0:24:13.840 could you know, sort of run the that's a that's 0:24:13.880 --> 0:24:17.719 a drug used for HIV therapy and for prep for 0:24:17.720 --> 0:24:21.960 for for preventing HIV infection in people at high risk 0:24:22.160 --> 0:24:25.640 and uh, you know, basically there's a small advantage of 0:24:25.760 --> 0:24:29.919 a newer drug discov and uh it's just a different 0:24:29.920 --> 0:24:31.960 salt of one of the two drugs in it, and 0:24:32.000 --> 0:24:34.800 they they they sort of sat on it for you know, 0:24:34.800 --> 0:24:38.280 at least half a decade, maybe longer, and you know 0:24:38.320 --> 0:24:40.520 that probably wasn't you know, probably what it would have 0:24:40.560 --> 0:24:43.199 been good if it came out sooner. So I do 0:24:43.440 --> 0:24:46.800 I don't think that this is a new problem that 0:24:46.920 --> 0:24:51.520 the Inflation Reduction Act negotiation is going to create. You know, 0:24:52.440 --> 0:24:59.440 If anything, the fact that this might encourage pharmaceutical companies 0:24:59.520 --> 0:25:04.600 not to uh not to not to argue legal legally 0:25:04.680 --> 0:25:08.560 quite as vociferously against the against the end of exclusivity. 0:25:08.880 --> 0:25:11.920 Might actually you know, make more drugs, you know, more 0:25:12.000 --> 0:25:16.160 really excellent drugs available to people, you know, people sooner. 0:25:16.720 --> 0:25:19.120 So I mean, you know, I I I think we'll 0:25:19.119 --> 0:25:21.960 do okay in this. But again, like you know, it's 0:25:22.000 --> 0:25:23.760 it's going to be a long time before we can 0:25:23.800 --> 0:25:26.080 actually tell whether you know tell, Well, that's no. 0:25:28.000 --> 0:25:31.040 And to your earlier point, you know, we've seen the 0:25:31.119 --> 0:25:35.600 industry come up with some pretty good innovation. Uh. But 0:25:35.880 --> 0:25:38.280 where Democrats would say, and which is why they passed 0:25:38.880 --> 0:25:43.640 the bill which became law, are they affordable? And so 0:25:43.800 --> 0:25:46.440 when we look back at what the I rate did, 0:25:46.880 --> 0:25:49.719 why are these prices or that why will the negotiated 0:25:49.720 --> 0:25:54.480 prices only be available for Medicare and not the commercial 0:25:54.480 --> 0:25:58.399 market wide? In Congress say everybody can have access to 0:25:58.440 --> 0:25:59.800 these negotiated prices. 0:26:00.440 --> 0:26:02.960 Well, first of all, when Medicare was passed in the 0:26:03.000 --> 0:26:08.640 early sixty there simply wasn't a drug benefit. And obviously 0:26:08.680 --> 0:26:11.880 since the nineteen sixties what drugs are able to do 0:26:12.040 --> 0:26:15.040 has just you know, has just become so remarkable that 0:26:15.720 --> 0:26:17.720 you know, any any kind of an insurance plan that 0:26:17.760 --> 0:26:21.040 doesn't have a drug benefit is clearly obsolete. So there 0:26:21.080 --> 0:26:24.560 was a big argument with Medicare Party about whether that 0:26:24.840 --> 0:26:28.040 whether Medicare would be allowed to negotiate prices. And in 0:26:28.080 --> 0:26:31.840 the end, that is why Medicare Party was pretty much 0:26:31.880 --> 0:26:35.720 supported by Republicans in the House and not supported by Democrats, 0:26:35.720 --> 0:26:38.920 who you'd think would have wanted to wanted to expand 0:26:39.640 --> 0:26:44.000 you know, wanted to expand coverage. It's been it's been 0:26:44.040 --> 0:26:47.280 a public policy sticking point. Actually, you know, since Medicare 0:26:47.359 --> 0:26:50.879 PARTI started paying for prescriptions. It's been a sticking point 0:26:50.920 --> 0:26:54.479 because Medicare pays for about a third of all of 0:26:54.520 --> 0:26:57.840 all of all pharmacy costs, and you know, they're if 0:26:57.840 --> 0:26:59.600 they're paying for a third of all pharmacy costs, wh 0:26:59.600 --> 0:27:03.359 shouldn't be negotiating. So, you know, as part of the 0:27:03.359 --> 0:27:07.600 Inflation Reduction Act, the people who believes that believe that 0:27:07.960 --> 0:27:13.200 Medicare is a very large, very large purchaser of drugs 0:27:13.200 --> 0:27:18.320 should negotiate ultimately won the day. But you know, the 0:27:18.359 --> 0:27:23.160 pharmaceutical industry does very very effective lobbying. They clearly did 0:27:23.200 --> 0:27:28.040 not want this to apply to uh, apply to you know, 0:27:28.119 --> 0:27:32.600 to non governmental payers. And I think that you know, 0:27:33.000 --> 0:27:35.760 wrapping up the Inflation Reduction Act was a very hard 0:27:35.800 --> 0:27:38.760 thing with an enormous number of moving pieces, and people 0:27:38.800 --> 0:27:43.720 who were thrilled to see Medicare and negotiating prices were 0:27:43.800 --> 0:27:47.840 not willing to sacrifice that to to insist that employer 0:27:47.920 --> 0:27:52.320 sponsored health health insurance companies were brought along. I think 0:27:52.400 --> 0:27:56.560 obviously purchasers would rather be it rather, you know, be 0:27:56.640 --> 0:28:00.080 guaranteed lower prices than have to negotiate for them. But 0:28:01.000 --> 0:28:04.240 you know, as I've said, I'm I'm guardedly optimistic that 0:28:04.280 --> 0:28:07.719 we'll actually see some you know, some as you call them, 0:28:07.760 --> 0:28:10.600 spillover effects, and that there will be some benefit for 0:28:10.880 --> 0:28:14.840 employer sponsored health insurance as well. But I think that 0:28:15.400 --> 0:28:18.520 I think that there's a there is you know, there's 0:28:18.560 --> 0:28:23.840 a genuine reluctance to to have the government step in, 0:28:24.119 --> 0:28:28.200 and many people deeply believe that the markets should determine 0:28:28.200 --> 0:28:32.199 what prices are. And I think that the compromise of 0:28:32.280 --> 0:28:37.119 letting the government step in for the government's spending was 0:28:37.240 --> 0:28:39.600 it was a good compromise to make two years ago. 0:28:41.280 --> 0:28:45.840 So when I think big picture, whenever I have conversations 0:28:45.880 --> 0:28:48.960 about how to lower health care costs, to change this 0:28:49.520 --> 0:28:53.200 trajectory of Medicare spending. I always come back to one 0:28:53.400 --> 0:28:58.160 central point, which is, probably do something, but that money 0:28:58.160 --> 0:29:01.280 has to come from somewhere or some body, some entity. 0:29:01.320 --> 0:29:04.920 In other words, taking away one dollar in health care 0:29:04.960 --> 0:29:09.800 spending means lesser hospitals, doctors, insurance companies, et cetera. Which 0:29:09.840 --> 0:29:12.080 is why it's truly hard to tackle health care spending 0:29:12.080 --> 0:29:16.520 because you have a lot of stakeholders out there, and 0:29:16.600 --> 0:29:19.800 I think there's this viewpoint that if you're making these 0:29:19.800 --> 0:29:24.280 significant cuts to drug prices for the Medicare population, those 0:29:24.400 --> 0:29:28.840 losses by drug companies have to be recouped somehow or 0:29:28.880 --> 0:29:31.960 some way, And it reminds me of a headline I 0:29:31.960 --> 0:29:36.800 saw the other day from an older article as the 0:29:36.840 --> 0:29:41.040 bill was going through Congress, which is the IRA means 0:29:41.320 --> 0:29:46.640 increased drug prices for commercial plans. And so wanted to 0:29:46.680 --> 0:29:51.400 dive in a bit on this because we've heard from 0:29:51.560 --> 0:29:55.600 employer groups that have expressed concern, and they expressed this 0:29:55.760 --> 0:29:59.680 concern during the debate over what was then built back 0:29:59.720 --> 0:30:03.440 better and turned into the Inflation Reduction Act. That limiting 0:30:03.960 --> 0:30:08.000 negotiated prices to Medicare leaves the door open to cost 0:30:08.040 --> 0:30:12.520 shifting where these manufacturers, especially those that are impacted by 0:30:12.560 --> 0:30:16.280 these lower prices, will try to recoup these losses through 0:30:16.400 --> 0:30:21.360 higher prices in the commercial market. Is this a realistic scenario? 0:30:22.840 --> 0:30:28.000 I think that concern is clearly overstated. And here's why. 0:30:28.600 --> 0:30:34.320 Pharmaceutical companies actually higher among the best economists around. The 0:30:34.320 --> 0:30:38.600 best pharmacal economists to determine what the optimum price is, 0:30:38.800 --> 0:30:42.120 and the optimum price is the one that gives them 0:30:42.120 --> 0:30:45.640 the most margin. And if they set the price too low, 0:30:45.880 --> 0:30:48.680 then they're leaving money on the table. They're getting paid 0:30:48.720 --> 0:30:50.560 less than they could be paid, so they might have 0:30:50.800 --> 0:30:52.960 lower revenue than they should have. But if they set 0:30:53.000 --> 0:30:57.600 the price too high, it'll actually adversely impact utilization. Fewer 0:30:57.640 --> 0:31:00.160 people will use it, and at some point, you know, 0:31:00.240 --> 0:31:03.160 they've set it so high that they'll lose enough business 0:31:03.400 --> 0:31:06.760 that they'll actually make their margin worse, not better. So, 0:31:07.680 --> 0:31:12.200 if you believe that the drug companies have been have 0:31:12.200 --> 0:31:16.360 have actually aired, and they've they've not been maximizing shareholder value, 0:31:16.360 --> 0:31:19.840 and they've not been setting these prices at the optimum 0:31:20.240 --> 0:31:22.920 so far, and they've been setting them too low, and 0:31:23.080 --> 0:31:27.520 therefore they could raise them and not adversely impact their utilization. 0:31:28.720 --> 0:31:30.520 If you believe all of that, then you would be 0:31:30.600 --> 0:31:34.800 worried about this sort of cost shifting phenomena. But realistically, 0:31:34.880 --> 0:31:38.080 I think that the drug companies have been setting prices 0:31:38.120 --> 0:31:41.719 in a way that maximizes their margins, as you know, 0:31:41.880 --> 0:31:45.680 as their shareholders would want. And I don't I don't 0:31:45.720 --> 0:31:49.040 think that making less money on a few blockbusters is 0:31:49.040 --> 0:31:52.320 something that gives them either more leverage or creates more 0:31:52.400 --> 0:31:55.479 demand in other markets that will allow them to increase 0:31:55.520 --> 0:32:00.280 their price without decreasing their their utilization. So I don't 0:32:00.800 --> 0:32:02.880 think that the drug companies are in a position to 0:32:03.400 --> 0:32:06.360 in a position to do this, and you know, but 0:32:06.400 --> 0:32:08.560 I do. I do think like in the in the 0:32:09.400 --> 0:32:13.440 you know, in the political argument around this, it is 0:32:13.520 --> 0:32:17.040 valuable for the drug companies to have people believe that 0:32:17.080 --> 0:32:21.040 they have the ability to to do this kind of 0:32:21.080 --> 0:32:21.640 cost shifting. 0:32:22.160 --> 0:32:25.400 But we have heard these stories and these arguments that, 0:32:26.040 --> 0:32:31.280 especially when it comes to Medicare, if you reduce Medicare 0:32:31.600 --> 0:32:37.000 payment for a service, whether its hospital services or something else, 0:32:37.320 --> 0:32:42.680 pick a sector that there is ultimately it justifies higher 0:32:42.760 --> 0:32:49.480 costs elsewhere or increasing prices elsewhere. Is there are there 0:32:49.520 --> 0:32:52.160 examples where we've seen this type of cost shift. 0:32:52.920 --> 0:32:55.120 Sure, I'm really glad you brought this up. So in 0:32:55.200 --> 0:32:57.960 the in the nineteen eighties and nineteen nineties, there was 0:32:58.000 --> 0:33:01.600 this phenomena that healthcare policy people called the cost shift 0:33:01.680 --> 0:33:05.880 hydraulic And each time there was a Medicare bill to 0:33:05.920 --> 0:33:09.080 try to save some you know, decrease the deficit or 0:33:09.160 --> 0:33:12.520 save the federal governments some money. So each time Medicare 0:33:12.640 --> 0:33:17.040 lowered its fee schedule, it seemed like commercial costs were 0:33:17.080 --> 0:33:20.400 going up and you could sort of just superimpose them, 0:33:20.400 --> 0:33:23.720 and it looked like, yes, there was cost shifting. When 0:33:23.800 --> 0:33:27.840 economists started looking at this into the later nineteen nineties 0:33:27.880 --> 0:33:31.040 into the two thousands, they actually found that this went away. 0:33:31.720 --> 0:33:35.200 And the difference is that in the eighties and early nineties, 0:33:35.680 --> 0:33:39.560 hospitals were largely being paid by based on their charge 0:33:39.560 --> 0:33:44.440 master what they were billing, and so if they could 0:33:44.480 --> 0:33:47.560 simply raise their prices, and if they raised their prices, 0:33:47.640 --> 0:33:51.160 they would just get paid more. And you know, starting 0:33:51.560 --> 0:33:55.080 you know, starting in the nineteen nineties and beyond, hospitals 0:33:55.080 --> 0:33:59.360 increasingly had been paid on fee schedules, and so if 0:33:59.360 --> 0:34:01.240 they want to raise prices, they have to wait till 0:34:01.240 --> 0:34:03.560 the next time a contract is open to do it. 0:34:03.840 --> 0:34:07.240 So they so. So Since then, it turns out that 0:34:07.280 --> 0:34:11.680 when Medicare lowers its price its fee schedule, it actually 0:34:11.719 --> 0:34:14.800 saves money for for commercial providers. And it does it 0:34:14.920 --> 0:34:18.319 in two ways. One is that most fee schedules are 0:34:18.360 --> 0:34:20.960 in some way or other based on Medicare fee schedules. 0:34:20.960 --> 0:34:23.200 So if medica our fee schedules are not going up 0:34:23.239 --> 0:34:26.640 as rapidly, it actually helps make other fee schedules not 0:34:26.719 --> 0:34:30.480 go up as rapidly. The other, the other, you know, 0:34:30.520 --> 0:34:33.759 the other thing is that when hospitals saw you know, 0:34:33.880 --> 0:34:39.320 saw saw less Medicare revenue in their future, they actually 0:34:40.000 --> 0:34:43.719 they actually built fewer new buildings and things, so there 0:34:43.760 --> 0:34:47.520 was less capital expense, fewer but fewer bond payments due 0:34:47.600 --> 0:34:49.680 and as a result, they didn't have to raise their 0:34:49.760 --> 0:34:53.080 rates as much. So again, I mean, I I think 0:34:53.120 --> 0:34:57.440 that there is a there are a lot of unknowns here, 0:34:57.800 --> 0:35:03.400 but in general, uh, if the government as a payer 0:35:04.120 --> 0:35:07.399 lowers low, you know, lowers its price or doesn't raise 0:35:07.400 --> 0:35:11.439 its price as much as it otherwise might have. Other 0:35:11.520 --> 0:35:14.440 parties can only raise their prices if they have the 0:35:14.520 --> 0:35:16.360 leverage to do it. And then you always have to 0:35:16.360 --> 0:35:19.360 ask yourself the question, well, did they have the leverage before. 0:35:19.719 --> 0:35:21.719 And if they had the leverage before, why didn't they 0:35:21.800 --> 0:35:25.719 raise their prices before? And so I'm I am, I'm 0:35:25.920 --> 0:35:28.880 I'm not a believer that that we will be skeptical. 0:35:29.600 --> 0:35:34.280 Yeah, So then is it possible then that the reverse 0:35:34.600 --> 0:35:37.440 could be true here when we think about the prices 0:35:37.480 --> 0:35:40.600 that are going to be set in medicare that there 0:35:40.640 --> 0:35:45.840 could be some spillover effect where we see commercial market, 0:35:46.080 --> 0:35:51.400 employer markets some of those prices adopted by adopted in 0:35:51.440 --> 0:35:51.920 that area. 0:35:53.880 --> 0:35:56.840 I I, uh, that's my that's my feeling about it. 0:35:56.880 --> 0:35:59.080 I think that I think that we'll we will see 0:35:59.080 --> 0:36:06.080 spillover effect. We will see that that employer sponsored cut, 0:36:06.239 --> 0:36:11.520 you know, pharmacy benefits will will will see benefit. I 0:36:11.520 --> 0:36:14.160 also want to say, I don't want people to think 0:36:14.160 --> 0:36:18.560 I'm too overly optimistic. This means that costs won't rise 0:36:18.560 --> 0:36:20.640 as much as they otherwise would rise. I don't think 0:36:20.680 --> 0:36:23.480 that this means that that, you know, that we will 0:36:23.520 --> 0:36:28.600 see a dramatic decrease in in pharmacy costs. So, just 0:36:28.640 --> 0:36:31.200 to sort of put it in perspective, these drugs represent 0:36:31.280 --> 0:36:34.720 about fifteen and a half percent of commercial drug spending, 0:36:34.760 --> 0:36:38.919 these ten drugs alone, so obviously if if, if they 0:36:39.000 --> 0:36:41.839 cost less, that that's going to matter in a material way. 0:36:43.080 --> 0:36:47.759 So but but again I mean I H yeah, I 0:36:48.520 --> 0:36:52.920 believe that when these go down in price for for Medicare, 0:36:52.960 --> 0:36:55.040 that will go down in price for you know, for 0:36:55.120 --> 0:36:56.160 other payers as well. 0:36:57.239 --> 0:37:00.960 And so going back to an earlier point you made 0:37:01.800 --> 0:37:05.400 in the transparency angle of all of this, we know 0:37:05.480 --> 0:37:09.279 that Medicare is going to publish the price in September 0:37:09.320 --> 0:37:13.920 twenty twenty four. A couple months later, they'll be what 0:37:13.960 --> 0:37:19.000 we think will be detailed justification for that price remans 0:37:19.000 --> 0:37:24.120 to be seeing how detailed it will be, but we'll 0:37:24.120 --> 0:37:26.640 have a sense of Okay, how did you get to 0:37:27.800 --> 0:37:31.200 from A, which is where we are now, to Z, 0:37:32.560 --> 0:37:36.080 which is the price we'll see next year. Do you 0:37:36.160 --> 0:37:39.360 think all of that information is going to be helpful 0:37:39.600 --> 0:37:45.719 for the commercial markets to I guess accelerate or be 0:37:45.800 --> 0:37:49.359 a catalyst for this spillover effect? Or is this kind 0:37:49.400 --> 0:37:54.759 of information already out there already, but because it's coming 0:37:54.800 --> 0:37:58.440 from the government a huge payer as part of this process, 0:37:58.920 --> 0:38:00.319 that it might carry more week. 0:38:01.440 --> 0:38:05.239 Yeah, well, there are some there are some parties out 0:38:05.239 --> 0:38:08.080 there that are already doing this kind of research. The 0:38:08.160 --> 0:38:11.920 Institute for clinical effectiveness research. IICER is probably the pre 0:38:12.000 --> 0:38:16.400 eminent one doing this. They put out a cost effective 0:38:16.440 --> 0:38:21.120 price for many new drugs, and and even though the 0:38:21.200 --> 0:38:24.000 actual prices are often higher than what they say is 0:38:24.000 --> 0:38:27.680 the cost effective price, I actually think these are looked 0:38:27.680 --> 0:38:29.800 at and I think to some extent, these might actually 0:38:29.840 --> 0:38:33.800 create a bound that that doesn't allow doesn't allow prices 0:38:33.840 --> 0:38:36.280 that are you know, doesn't allow prices or even higher. 0:38:36.840 --> 0:38:41.040 So so, so, yes, there's already some information out there. 0:38:41.360 --> 0:38:45.440 I think that this will, as you said, be influential 0:38:45.520 --> 0:38:49.040 because this is from a very large purchaser. It'll be 0:38:49.360 --> 0:38:54.080 a variety of different different pieces of data, including some 0:38:54.280 --> 0:38:59.160 that IICER doesn't doesn't necessarily consider. And yeah, I think 0:38:59.200 --> 0:39:02.160 that these will have ins on prices outside of Medicare. 0:39:03.120 --> 0:39:07.359 And then then the question is, Okay, how exactly will I, 0:39:07.560 --> 0:39:15.040 as an individual not in Medicare benefits? Is it through 0:39:15.880 --> 0:39:21.680 lower premiums? Is it through or cost sharing? How how 0:39:21.680 --> 0:39:25.480 does this work for me? Because I think within the 0:39:25.520 --> 0:39:30.680 Medicare population it may depend on whether you have coinsurance 0:39:30.840 --> 0:39:34.360 and that would be pretty significant. Though you layer on 0:39:34.440 --> 0:39:37.640 top of the party redesigned like there's a lot going 0:39:37.640 --> 0:39:39.640 on there. We don't have that in the commercial market. 0:39:40.239 --> 0:39:45.080 So how would I as an employee benefit, especially when 0:39:45.080 --> 0:39:47.759 you think about the fact that these prices aren't going 0:39:47.800 --> 0:39:49.760 to be implemented until twenty twenty six. 0:39:50.440 --> 0:39:52.839 Yeah, so I asked, the first thing is, don't count 0:39:52.840 --> 0:39:55.480 any don't count any difference for the next two opening 0:39:55.560 --> 0:39:58.279 rollment cycles, right, I mean, yeah, this is gonna take 0:39:58.280 --> 0:40:04.520 a while, but uh, you know, in general, I think 0:40:04.560 --> 0:40:07.960 that that for many employers, what this does is it 0:40:08.000 --> 0:40:10.279 takes a little bit of pressure off of cost of 0:40:10.840 --> 0:40:16.239 a premium increases. So, you know, employers can employers can 0:40:16.320 --> 0:40:21.399 either use any savings to be sure that premiums don't 0:40:21.400 --> 0:40:24.000 come up more, or they can use any savings to 0:40:24.160 --> 0:40:28.799 decrease cost sharing. Decreasing cost sharing benefits people who have 0:40:29.120 --> 0:40:35.600 medical claims and therefore disproportionately benefits people who are sick. Decrease, 0:40:35.680 --> 0:40:38.960 you know, not increasing premiums is something that everybody sees. 0:40:39.400 --> 0:40:42.960 I think. I think for many employers, uh, you know, 0:40:43.000 --> 0:40:45.759 they're working hard to be sure that their employees can 0:40:45.800 --> 0:40:49.480 afford to afford the premiums to buy insurance. And I 0:40:49.520 --> 0:40:52.600 think that there will be some priority to put things there. 0:40:53.000 --> 0:40:56.520 But to some extent, also, money is fungible, so you know, 0:40:56.719 --> 0:40:59.160 if there's something that doesn't go up as much as 0:40:59.160 --> 0:41:01.960 you expected, and you know, it gives you more freedom 0:41:02.040 --> 0:41:06.600 to not make other difficult decisions like increase the premium 0:41:06.760 --> 0:41:10.280 or like you know, increase cost shifting. 0:41:11.520 --> 0:41:15.680 But I go back to this conversation about what this 0:41:15.840 --> 0:41:21.239 means for innovation and whether this isn't interfering with the 0:41:21.280 --> 0:41:25.000 competition we have now. So when you look at the 0:41:25.000 --> 0:41:27.200 the way the laws set up, you have the maximum 0:41:27.239 --> 0:41:30.640 fair price, it's twenty five at least twenty five to 0:41:30.680 --> 0:41:35.799 six percent off current prices. Think the's thing about generics 0:41:35.800 --> 0:41:38.719 and biosimilar for a second, and you know, one of 0:41:38.760 --> 0:41:43.120 the conversations we've had here is, well, as a biosimilar 0:41:43.160 --> 0:41:47.520 manufacturer or generic manufacturer, I've started this process. You know, 0:41:47.600 --> 0:41:50.520 it's twenty twenty three October twenty twenty three. I've started 0:41:50.520 --> 0:41:55.000 my process years ago in terms of going through the 0:41:55.120 --> 0:41:58.680 R and D, deciding where to go, what to target, 0:41:59.160 --> 0:42:03.800 going through the R and D, and I've probably thought, Okay, 0:42:03.920 --> 0:42:06.600 I'm going to come at come on the market at 0:42:07.239 --> 0:42:11.440 X minus ten fifteen. And now you have a scenario 0:42:11.480 --> 0:42:15.720 where that could be higher than what many care says 0:42:15.840 --> 0:42:19.799 is the price for the drug, and so I do 0:42:19.880 --> 0:42:22.799 wonder if there's going to be some kind of disincentive, 0:42:22.840 --> 0:42:27.440 at least initially maybe for some of these competitors to 0:42:27.600 --> 0:42:29.720 come onto the market. And I bring that up because 0:42:30.160 --> 0:42:32.920 one of the ways to lower costs for people is 0:42:33.000 --> 0:42:38.399 to have competition through generics and biosimilars. Is there any 0:42:38.440 --> 0:42:46.440 concern there that these lower prices would would hinder reduce 0:42:46.480 --> 0:42:49.360 this competition, would result in higher prices or is that 0:42:49.960 --> 0:42:51.040 a little far fetched? 0:42:51.840 --> 0:42:54.520 Yeah, well, I mean a couple of thoughts. One is 0:42:54.560 --> 0:42:59.440 that biosimilars are you know, are are used very widely 0:42:59.480 --> 0:43:03.759 in the europe in market. They generally cost way way 0:43:03.840 --> 0:43:07.600 less than sixty percent less than less than the generic 0:43:08.040 --> 0:43:11.920 I'm sorry, less than the brand name manufactured by manufactured 0:43:11.920 --> 0:43:16.440 biologic drug and there's no shortage of competition to you know, 0:43:16.560 --> 0:43:19.360 to to do those So I'm, you know, I think that, 0:43:20.960 --> 0:43:23.319 I mean, I don't think that the opposition to this 0:43:23.440 --> 0:43:27.839 is coming from generic manufacturers or biosimilar manufacturers. I think 0:43:27.880 --> 0:43:31.359 that there's a good reason for that. What the IRA 0:43:31.600 --> 0:43:34.960 does is it actually potentially smooths the path to having 0:43:35.520 --> 0:43:38.319 less years of legal wrangling to put in you know, 0:43:38.400 --> 0:43:42.319 to put to bring to market a biosimilar, and so 0:43:42.680 --> 0:43:45.719 I think that, you know, this, this could get us 0:43:45.960 --> 0:43:50.480 more biosimilars more quickly, and then you know, what does 0:43:50.520 --> 0:43:56.080 this do ten years out? Again, pretty pretty speculative, But 0:43:56.080 --> 0:43:59.000 but it seems like these you know, it seems like 0:43:59.040 --> 0:44:01.600 there is going to continue to be a need for biosimilars, 0:44:01.719 --> 0:44:07.200 and uh, you know, and uh and given the high 0:44:07.239 --> 0:44:10.759 fixed cost, you know, given the high fixed cost and 0:44:10.840 --> 0:44:15.279 low variable cost of drug manufacturing, even of biologics, I 0:44:15.520 --> 0:44:17.840 don't I think that, uh, I think that we could 0:44:18.160 --> 0:44:20.960 We should expect that, uh, you know, that we will 0:44:21.000 --> 0:44:23.640 get lower prices and we will not see a uh 0:44:24.200 --> 0:44:27.360 you know, we will not see a loss of competition 0:44:27.400 --> 0:44:28.560 in the biosimilar space. 0:44:29.480 --> 0:44:35.759 You hinted at something like maybe less patent litigation or 0:44:35.760 --> 0:44:39.680 you can say patent ligation, but less litigation potentially, And 0:44:39.719 --> 0:44:44.040 it's something we talk about here as well. As manufacturers 0:44:44.200 --> 0:44:47.960 have spent a lot of time and money preventing competition 0:44:48.800 --> 0:44:52.960 through patent litigation. And I wonder if we're about to 0:44:52.960 --> 0:44:57.919 see a scenario where, in select cases, some of these 0:44:57.960 --> 0:45:03.120 manufacturers might be more willing to encourage or at least 0:45:03.160 --> 0:45:06.400 be open to at least one competitor on the market, 0:45:06.480 --> 0:45:12.359 because that by definition means it does not qualify for 0:45:12.800 --> 0:45:17.200 a negotiation under the IRA. Now the guidance, when you 0:45:17.239 --> 0:45:20.800 look at the final guidance, there are all these stipulations 0:45:20.800 --> 0:45:26.120 about what is generic competition, and I think there are 0:45:26.120 --> 0:45:30.480 some questions as to whether CMS overstep their bounds in 0:45:30.560 --> 0:45:34.799 terms of their interpretation of the law of what is 0:45:34.840 --> 0:45:39.280 generic and what is I believe the term is marketed generic. 0:45:40.320 --> 0:45:44.160 But I do wonder if we will see a bit 0:45:44.200 --> 0:45:48.279 of a c change to a more welcoming environment by 0:45:48.400 --> 0:45:50.080 some of these brand manufacturers. 0:45:51.200 --> 0:45:55.040 Yeah, I think that's the hope. And you know and 0:45:55.280 --> 0:45:58.160 think I think that's the hope. That we'd like to 0:45:58.200 --> 0:46:02.600 see a bio somewhere available when you know, when the 0:46:02.640 --> 0:46:04.600 patent would allow it. We don't want to see it 0:46:05.200 --> 0:46:06.799 seven or ten years later. 0:46:07.120 --> 0:46:12.319 Right. So with all this talk, I have to go 0:46:12.800 --> 0:46:16.600 onto this subject in our final question because there's a 0:46:16.680 --> 0:46:21.080 huge debate now in Congress about what to do about 0:46:21.360 --> 0:46:25.200 the sector that wasn't directly addressed in the IRA, and 0:46:25.239 --> 0:46:32.239 those are the pharmacy benefit managers. And for many Democrats 0:46:32.239 --> 0:46:35.800 and even Republicans to bipart is an issue this seems 0:46:35.880 --> 0:46:41.080 to be the another way to lower prices or at 0:46:41.160 --> 0:46:48.520 least provide an avenue for employers and employees and others, 0:46:48.640 --> 0:46:51.160 an avenue to some of these savings that we're seeing 0:46:51.160 --> 0:46:57.600 through rebates. So beyond the IRA, what are policies in 0:46:57.640 --> 0:47:00.400 your mind that can be implemented to continue to drive 0:47:00.480 --> 0:47:05.600 down or prices? Uh, specifically within the PBM sector. Are 0:47:05.600 --> 0:47:09.200 we looking at more transparency, are we looking at policies 0:47:09.280 --> 0:47:14.360 targeting rebates, outcomes based pricing? What? What do you think 0:47:14.719 --> 0:47:17.760 some of the next steps are that you think Congress 0:47:17.800 --> 0:47:18.280 can tackle? 0:47:19.120 --> 0:47:21.959 Yeah, well, I mean clearly, this is a place where 0:47:21.960 --> 0:47:25.799 there's an enormous amount of opacity and uh. And so 0:47:26.320 --> 0:47:29.600 to some extent, the answer about like where can we 0:47:29.640 --> 0:47:32.000 where you know, where can we take money out of 0:47:32.040 --> 0:47:35.840 this system? Well, we know there's money in the system 0:47:35.840 --> 0:47:39.880 because we've seen this gradual increase in the difference between 0:47:39.880 --> 0:47:43.120 gross price and net price, so you know, so, so 0:47:43.320 --> 0:47:46.000 there is there is money leaking out that's not going 0:47:46.000 --> 0:47:49.120 to the pharmaceutical companies or or it's going to them, 0:47:49.120 --> 0:47:51.760 but then they're paying it back to some other parties. 0:47:51.800 --> 0:47:54.759 So I think I think rules that would shine a 0:47:54.880 --> 0:47:58.120 light on that and make that more uh, you know, 0:47:58.760 --> 0:48:02.840 more transparent. Are probably an important first step. They're not 0:48:02.880 --> 0:48:06.239 they're not sufficient, but they are they are an important 0:48:06.320 --> 0:48:10.880 first step. So I think sometimes sometimes people don't realize 0:48:11.239 --> 0:48:15.280 how destructive rebates are to the whole idea of ensuring 0:48:15.320 --> 0:48:18.279 people for when they're sick. So essentially, if there's a 0:48:18.360 --> 0:48:21.799 drug that's very expensive, but then there's a very high 0:48:21.840 --> 0:48:27.200 rebate to it, people who get prescribe that drug pay 0:48:27.239 --> 0:48:30.239 their cost sharing when sometimes people are indeductible, they pay 0:48:30.239 --> 0:48:32.799 one hundred percent. Sometimes they're in co insurance, they pay 0:48:32.920 --> 0:48:36.360 twenty percent, but they they they're paying based on this 0:48:36.719 --> 0:48:40.720 marked up price. And then there's a rebate that's returning 0:48:40.719 --> 0:48:43.040 a bunch of this to the to the health plan. 0:48:44.120 --> 0:48:47.280 But that rebate is probably being used to keep overall 0:48:47.320 --> 0:48:51.360 premiums down. And so now you have a diabetic on 0:48:51.520 --> 0:48:55.840 three diabetes drugs who's spent seven thousand dollars out of 0:48:55.880 --> 0:48:59.640 pocket again the IRA, if they're on Medicare, that will 0:48:59.680 --> 0:49:01.960 that will make that less of a problem, not necessarily 0:49:02.040 --> 0:49:06.920 commercial plans. So so I mean, I'm going around a 0:49:06.960 --> 0:49:10.799 long way and saying this, but but rebates are really problematic. 0:49:10.880 --> 0:49:14.360 They're essentially having the sick people subsidize the healthy people, 0:49:14.360 --> 0:49:17.080 which is exactly the opposite of what we want in 0:49:17.160 --> 0:49:21.080 health insurance. So, you know, I think the first step 0:49:21.160 --> 0:49:23.520 is probably shining a light on this, and the second 0:49:23.560 --> 0:49:27.080 step is probably to just get the prices to be lower. 0:49:27.280 --> 0:49:31.280 And the pharmacy benefit managers do some important things and 0:49:31.360 --> 0:49:33.239 you know, be sure that they just get you know, 0:49:33.320 --> 0:49:36.160 I'd rather see them get paid fees as opposed to 0:49:36.160 --> 0:49:40.280 getting paid, you know, a piece of a rebate, because 0:49:40.280 --> 0:49:44.520 that leads to that leads to a series of bad incentives. 0:49:46.040 --> 0:49:49.200 You know, I think that there's been an effort, but 0:49:49.239 --> 0:49:52.000 it's honestly not gotten very far to make rebates at 0:49:52.000 --> 0:49:55.560 the point of sale. So then then that would that 0:49:55.800 --> 0:49:58.320 would mean that the sick person who's getting the expensive 0:49:58.400 --> 0:50:01.760 drug it's not really as expensive it looks, would actually 0:50:01.800 --> 0:50:05.319 not have not have to overpay. That's not I that's 0:50:05.520 --> 0:50:08.839 that's a good idea, but it's it's it's it's it's 0:50:08.880 --> 0:50:11.799 hard to execute, and it's not been put forward in 0:50:11.840 --> 0:50:14.200 many places. And then well, go ahead. 0:50:14.120 --> 0:50:17.959 On that point, I think, correct me if I'm wrong. 0:50:18.080 --> 0:50:21.560 The Trump administration tried to move forward with this type 0:50:21.560 --> 0:50:27.239 of proposal within the Medicare program. And I think if 0:50:27.280 --> 0:50:31.440 we saw and this is probably just and maybe it 0:50:31.520 --> 0:50:34.240 was an AHA moment for a lot of people because 0:50:34.840 --> 0:50:38.800 when they try to do it within Medicare, their costs 0:50:39.200 --> 0:50:43.919 Evaluation agency said, oh yeah, this is going to cost us. 0:50:44.000 --> 0:50:45.880 I think it was close to one hundred billion dollars 0:50:45.920 --> 0:50:50.759 over ten years, because well, those rebates are being used 0:50:50.800 --> 0:50:54.280 to lower prices for premiums, and so if you don't 0:50:54.320 --> 0:51:00.440 have that valve, then premiums go up. Government pays seventy 0:51:00.440 --> 0:51:05.560 five percent percent of departy premiums, so it ended up 0:51:05.600 --> 0:51:09.239 being a net loss for government, which I think as 0:51:09.239 --> 0:51:11.680 you're talking about this and shining a light on how 0:51:11.719 --> 0:51:16.000 this whole process works, it was an painful reminder that 0:51:16.719 --> 0:51:19.959 maybe we all don't know how the drug supply chain 0:51:20.480 --> 0:51:22.719 works in terms of where all this money is going. 0:51:23.440 --> 0:51:28.600 Right, No, that's and and similarly, you know, employers are 0:51:28.640 --> 0:51:32.959 in a somewhat similar situation that you know, if if 0:51:33.000 --> 0:51:35.920 they can get a million dollars back and they put 0:51:35.960 --> 0:51:38.360 it to lowering premiums, they're paying eighty percent. 0:51:38.120 --> 0:51:40.960 Of the premium So so they are in much the 0:51:41.000 --> 0:51:45.040 same position. But still we have this problem that you 0:51:45.080 --> 0:51:47.600 know that that with rebates. We have people who have 0:51:47.680 --> 0:51:51.680 more medical needs are actually paying more than you know, 0:51:51.719 --> 0:51:53.920 more than you know, more than they should. They're not 0:51:54.000 --> 0:51:57.120 just and obviously people have more medical needs. They've already 0:51:57.160 --> 0:51:59.520 like lost because they have more medical needs, and now 0:51:59.520 --> 0:52:04.640 they lose again because they're subsidizing overall overall lower premiums. 0:52:04.880 --> 0:52:07.720 So again it's not it's not like this is easy. 0:52:07.800 --> 0:52:10.520 You started you started out by talking about the fact 0:52:10.560 --> 0:52:14.080 that you know, one person's uh, you know, one person's 0:52:14.360 --> 0:52:17.480 high medical expense is somebody else's revenue. In this instance, 0:52:17.640 --> 0:52:21.759 one one person's sort of setting the system right does 0:52:21.920 --> 0:52:24.680 mean that some other some other people feel more pain 0:52:24.719 --> 0:52:27.640 from the system. Trade offs are really tough. 0:52:27.600 --> 0:52:29.440 And that is our healthcare system. 0:52:29.840 --> 0:52:33.279 That is our healthcare system. You know. The one other thing, 0:52:33.320 --> 0:52:36.000 because you asked me, asked me about sort of other 0:52:36.120 --> 0:52:39.920 things that people have talked about. You know, there has 0:52:39.960 --> 0:52:44.000 been talk about outcomes based pricing. So if somebody you know, 0:52:44.080 --> 0:52:47.360 takes a million dollar drug and the drugs supposed to 0:52:47.400 --> 0:52:49.680 do something, if two years later it's clear the drug 0:52:49.800 --> 0:52:52.239 didn't do something for that person, that there would be 0:52:52.280 --> 0:52:56.440 a refund. And I think a lot of pharmaceutical companies 0:52:56.440 --> 0:53:02.440 actually like this conceptually and uh, but as a practical 0:53:02.480 --> 0:53:05.360 matter in the real world, it doesn't work very well 0:53:05.440 --> 0:53:10.520 because people are often you know, they often are ensured 0:53:10.520 --> 0:53:13.479 by a different insurer, a different employer two years later 0:53:13.560 --> 0:53:16.640 when it's clear. It's sometimes hard to define whether a 0:53:16.719 --> 0:53:20.280 drug really stopped working or whether it really didn't stop working. 0:53:20.600 --> 0:53:23.600 Who should collect the refund? Where should you know, you know, 0:53:23.880 --> 0:53:27.480 where should it go? These are all really difficult to do. 0:53:27.719 --> 0:53:33.120 So and realistically, if pharmaceutical companies do that, presumably what 0:53:33.160 --> 0:53:35.600 they do is if there's a ten percent chance something 0:53:35.640 --> 0:53:39.600 won't work, they should actually put that, put that the 0:53:39.680 --> 0:53:42.080 premium for that into the cost of the drug in 0:53:42.120 --> 0:53:44.840 the first place. So, for instance, if there's a million 0:53:44.880 --> 0:53:47.239 dollar drug, there's a ten percent chance it wouldn't work, 0:53:47.239 --> 0:53:49.880 they should charge one point one million for it, knowing 0:53:49.960 --> 0:53:52.400 that you know, one in ten times they would have 0:53:52.440 --> 0:53:55.480 to refund it. So I I mean, I think the 0:53:55.520 --> 0:53:58.279 real issue with those super expensive drugs is we need 0:53:58.320 --> 0:54:03.200 the largest possible h well, we need lower prices, but 0:54:03.320 --> 0:54:07.160 we also need the largest possible risk pool. So you know, 0:54:07.239 --> 0:54:11.240 having an employer with five thousand employees be at risk. 0:54:11.520 --> 0:54:14.799 I mean, they definitely need to buy reinsurance. It's it's 0:54:14.840 --> 0:54:18.759 just too small a group and there's too much randomness 0:54:18.760 --> 0:54:21.279 in the world. So so we just want to be 0:54:21.440 --> 0:54:25.319 careful that we're not having businesses fail because they had 0:54:25.360 --> 0:54:27.440 they had a sick employee or a sick kid of 0:54:27.480 --> 0:54:31.000 an employee. That's that's just not I mean, we want 0:54:31.040 --> 0:54:33.920 businesses to succeed or fail based on their business, not 0:54:34.120 --> 0:54:38.000 based on based on whether they happen to have somebody 0:54:38.000 --> 0:54:40.440 who has has a really expensive disease. 0:54:41.120 --> 0:54:44.360 Well, this is a topic that I think we're hearing 0:54:44.560 --> 0:54:48.040 Congress discuss. I know we're hearing quite a bit about 0:54:48.080 --> 0:54:53.480 what to do with PBMs and that that sector of 0:54:53.480 --> 0:54:57.120 our healthcare system. And while there was some optimism we 0:54:57.200 --> 0:54:59.879 might see some movement by the end of this year. 0:55:00.920 --> 0:55:04.360 It might not be realistic given some of the challenges 0:55:04.440 --> 0:55:09.319 right now, especially in one chamber of Congress, but I 0:55:09.360 --> 0:55:10.960 think we might see. 0:55:10.760 --> 0:55:14.080 Some a speaker list chamber, yeah right. 0:55:14.400 --> 0:55:16.840 But I do think there might be an avenue or 0:55:16.840 --> 0:55:20.359 an opening to do something early next year. But it's 0:55:20.400 --> 0:55:22.400 not going to solve all of our problems. And I 0:55:22.400 --> 0:55:26.600 feel like we've had such a great discussion over so 0:55:26.640 --> 0:55:30.960 many points we could probably have us podcast dedicated to 0:55:31.440 --> 0:55:34.600 one of these issues or one of these questions. So 0:55:35.000 --> 0:55:38.640 I hope we have an opportunity to come back and 0:55:39.360 --> 0:55:43.080 talk through these issues a bit further. And you to 0:55:43.160 --> 0:55:50.520 Jeff's earlier point, the process for Medicare negotiations is a 0:55:50.600 --> 0:55:53.840 long one, at least over the next twelve months, and 0:55:54.600 --> 0:55:57.160 these prices don't become effective until twenty twenty six, but 0:55:57.200 --> 0:56:00.120 then there's twenty twenty seven and twenty twenty eight the 0:56:01.000 --> 0:56:05.839 process that will play out there. So again, I do 0:56:05.880 --> 0:56:08.319 hope we have an opportunity to circle back on this, 0:56:08.560 --> 0:56:12.880 and with that, I think we'll wrap up this episode 0:56:12.920 --> 0:56:17.040 of the Boats and Verdicts podcast. Jeff, thank you for 0:56:17.239 --> 0:56:20.480 taking the time today, and thank you to the listener 0:56:20.600 --> 0:56:23.719 for joining us. As well as a reminder, you can 0:56:23.760 --> 0:56:26.640 read all of our BI research on the Bloomberg terminal 0:56:26.680 --> 0:56:45.319 at BI go. Thanks for listening, and have a great day.