Speaker 1: Hello, and welcome to the Votes and Verdicts podcasts, hosted
Speaker 1: by the policy and litigation team at Bloomberg Intelligence, the
Speaker 1: investment research platform of Bloomberg LP. This podcast series examines
Speaker 1: the intersection of business policy and law. I'm Doin Wright
Speaker 1: and analysts with Bloomberg Intelligence covering government healthcare policy. So
Speaker 1: for our topic today, the Inflation Reduction Act, specifically the
Speaker 1: drug pricing provisions and how the new law will impact
Speaker 1: costs for employers, commercial payers, and employees. As you know
Speaker 1: from our previous podcast, we spent considerable time looking at
Speaker 1: how the IRA will impact life cycle management for drug companies.
Speaker 1: For example, how will the law impact the company's decision
Speaker 1: to pursue new indicators for existing drugs given the threat
Speaker 1: and timing of price cuts. We've had a discussion with
Speaker 1: the executive director of the Association for Accessible Medicines about
Speaker 1: the challenges and opportunities for generic and biosimilar competitors. Now
Speaker 1: we'd like to discuss how the drug pricing provisions of
Speaker 1: the IRA could impact employers and the commercial market. Keep
Speaker 1: in mind the prices that Medicare negotiates with drug companies
Speaker 1: will be available for Medicare beneficiaries So should employers brace
Speaker 1: for higher costs as a result of the law or
Speaker 1: will there be some spillover effects that benefit the one
Speaker 1: hundred and seventy five million people with employer or non
Speaker 1: group coverage. I think the answer to both those questions
Speaker 1: is maybe. But since it's twenty twenty three and these
Speaker 1: prices won't become effective until twenty twenty six, let's have
Speaker 1: some fun talking about it. And today I'm lucky to
Speaker 1: have Jeff Levinsure's an assistant professor at the Harvard Chan
Speaker 1: School of Public Health and Population Health leader in the
Speaker 1: Health management practice at WTW. Jeff has an MBA from
Speaker 1: Columbia Business School and a BA and MD from Boston
Speaker 1: University and the School of Medicine. So Jeff, welcome to
Speaker 1: the Votes and Verdicts podcasts.
Speaker 2: Thanks very much. Dwyane happy to be here.
Speaker 1: So, Jeff, I'm really looking forward to this conversation because
Speaker 1: as much as we talk about the impact to drug companies,
Speaker 1: there are or that could be subject to price cuts.
Speaker 1: We don't often talk about some of the downstream effects
Speaker 1: of the law, specifically with the commercial market and employers.
Speaker 1: But before we do that, can you tell us about
Speaker 1: your work at Harvard, the Harvard School of Public Health,
Speaker 1: and WTW.
Speaker 2: Sure, thanks very much so. At the Harvard School of
Speaker 2: Public Health, I teach course work around managing healthcare costs,
Speaker 2: certainly a relevant topic, as well as provider payment. And
Speaker 2: at wt W, the firm that was known as Bill
Speaker 2: as Towers Watson in the past, I'm the population health leader,
Speaker 2: So I'm giving advice to large employers about what to
Speaker 2: do about health health care and the health investment in
Speaker 2: their employees. Previously, I worked as a physician leader and
Speaker 2: provider organizations and a health plan and I'm a primary
Speaker 2: care doctor by training.
Speaker 1: And so what are you hearing from employers now about
Speaker 1: drug benefits?
Speaker 2: Well, you know, I mean, employers are struck by the
Speaker 2: fact that we have the highest rate of medical inflation
Speaker 2: really in the last decade this year, and there's good
Speaker 2: reason to believe that's going to continue for the next
Speaker 2: three or four years at least. And given that backdrop,
Speaker 2: employers are mainly thinking about costs, and very specifically, the
Speaker 2: two things that are top of mind for employers that
Speaker 2: sponsor health insurance right now are the cost of the
Speaker 2: newer antiobesity drugs, which you know, which which are very
Speaker 2: high and they're wonderful drugs, but they represent as much
Speaker 2: as ten percent of total outpatient pharmacy spending now and
Speaker 2: much of that is new. And the other is concern
Speaker 2: about the very expensive gene therapies that are becoming available.
Speaker 2: You know, joy that there are now you know, insight
Speaker 2: cures for terrible diseases like sickle cell disease and hemophilia,
Speaker 2: And terror about what the possibility of a two or
Speaker 2: three million dollar bill could mean to a self insured employer.
Speaker 1: So let's have a take a foundational look at this
Speaker 1: topic and this issue. Give us an elevator speech about
Speaker 1: what formularities are number one, and then two, how are
Speaker 1: they created for employer and commercial plans.
Speaker 2: Sure, well, one thing to understand first is about almost
Speaker 2: ninety per of the drugs prescribed to members of health
Speaker 2: plans are generic. However, eighty percent of the total cost
Speaker 2: is actually in brand name drugs, So formulais are really
Speaker 2: all all about brand name drugs. So pharmacy benefit managers,
Speaker 2: which are hired by employers to manage the pharmacy benefit,
Speaker 2: actually actually design and craft formulas with an item, making
Speaker 2: meds in each class available and driving volume to the
Speaker 2: pharmaceutical company that's willing to accept a lower net price
Speaker 2: for a drug that works well. So concessions on price
Speaker 2: can either be given as rebates or discounts, and in
Speaker 2: the brand name drug space, a lot of those concessions
Speaker 2: are made in rebates. So we often think about the
Speaker 2: gross price of a drug, which is easy to find,
Speaker 2: and then the net price of a drug, which is
Speaker 2: what price the insurance plan and its members are paying
Speaker 2: after any discounts and after any rebates. So if a
Speaker 2: drug company wants its drug to be on a formulary's
Speaker 2: it generally will and there are competing drugs that could
Speaker 2: be on instead. A drug company is willing to give
Speaker 2: a give a larger effective discount to get more volume,
Speaker 2: and so.
Speaker 1: Using control of this process. Do employers themselves have a
Speaker 1: large role here in terms of dictating which drugs are
Speaker 1: included or not included and is there a negotiation process
Speaker 1: that's involved.
Speaker 2: You know, most employers don't have their own pharmacy and
Speaker 2: therapeutics committee. They don't hire a pharmacists, they don't hire
Speaker 2: doctors to do this. They actually hire a pharmacy benefit
Speaker 2: manager and they trust the pharmacy benefit manager to offer
Speaker 2: a formulary there's a tendency for PBMs to offer a
Speaker 2: few different formulas. One that might be one that might
Speaker 2: be more restrictive and therefore lead to lower costs, but
Speaker 2: more members being forced to switch drugs when it's less restrictive,
Speaker 2: which will have higher costs, but more members will be
Speaker 2: happy because there won't be a demand for them to
Speaker 2: switch from a drug they're accustomed to potentially a different drug.
Speaker 2: There are some jumbo employers that do have their own formularies,
Speaker 2: but for the most part, employers will accept the formulary
Speaker 2: that accept one of the available formulators for their PBM.
Speaker 2: Another consideration is that the formularies do determine what kinds
Speaker 2: of rebates employers will be able to get, so that
Speaker 2: they're willing to have a more restrictive formulary, then the
Speaker 2: drugs that are on that might get more business than
Speaker 2: their competitors are probably discounted more heavily. So to the
Speaker 2: extent that employer wants to say, well, I don't really
Speaker 2: want any patients to be forced to switch drugs and
Speaker 2: have any kind of any kind of friction or abrasion,
Speaker 2: that employer will end up getting much less in the
Speaker 2: way of rebates.
Speaker 1: And I think as I look at this topic, you
Speaker 1: can see depending on the drug, some drugs have rebates
Speaker 1: that are a lot less than others in the range
Speaker 1: can vary, and this might be the answer to this
Speaker 1: might be, well, it depends on the drug. But who
Speaker 1: has the leverage here when you're talking about drug manufacturers
Speaker 1: that want their drugs on the formulaitis PBMs that want
Speaker 1: to get the rebates. There's that tension. How has that
Speaker 1: tension resolved and who has the leverage?
Speaker 2: Yeah, as you as you suggested, the answer is it depends.
Speaker 2: And if there's a drug that's pretty unique, it's the
Speaker 2: only drug of its class, it's really the only drug
Speaker 2: that accomplishes you know that it meets us meets a
Speaker 2: real clinical need, then the pharmaceutical company has has leverage
Speaker 2: and the pharmaceutical company is likely to give few price
Speaker 2: concessions because an employer pretty much has has to have
Speaker 2: that on the formulay. Whereas if there is a drug
Speaker 2: that's part of a class where there are many available drugs,
Speaker 2: maybe even some that are already available generically the you
Speaker 2: know to you know the at that point, then the
Speaker 2: pharmacy benefit manager has substantially more leverage and can can
Speaker 2: seek much much higher price concessions. So I think it
Speaker 2: all depends on really how much how much value is
Speaker 2: created by the drug and how much you know, unique
Speaker 2: and competitively differentiated value is created by the drug, and
Speaker 2: drugs that are, you know, drugs that create more value
Speaker 2: than the pharmaceutical company has substantially more leverage.
Speaker 1: And so if I'm an employer, I've got this formularity
Speaker 1: working with a PBM, how often can I expect conversation
Speaker 1: between PBMs and manufacturers to occur in terms of what
Speaker 1: the price are going to be, what the rebates are,
Speaker 1: what does that look like?
Speaker 2: Well, most commercial formularies are technically you know, they're technically
Speaker 2: created once a year. But as a practical matter, there
Speaker 2: are always new drugs coming on the market, there's new
Speaker 2: information becoming available about drugs, and so there are there,
Speaker 2: there are forms. There tend to be formulary changes somewhere
Speaker 2: between two and four times a year, depending upon you know,
Speaker 2: depending upon what you know, what what what is new?
Speaker 2: I imagine at this point that the pharmacy benefit managers and
Speaker 2: the pharma pharmaceutical companies are maybe talking virtually all of
Speaker 2: the time. But but but but in general, you know,
Speaker 2: there is an attempt to be sure to not be
Speaker 2: changing formularies dramatically in the middle of the year, because
Speaker 2: that causes a lot more patient disruption.
Speaker 1: And so when we think about healthcare policy specifically, looking
Speaker 1: at well, if you change reimbursement or coverage within one
Speaker 1: part of healthcare, it's going to impact another part of healthcare.
Speaker 1: And I know we'll get into this in a bit.
Speaker 1: I think this is a good segue for what's coming
Speaker 1: of next. But when we look at some of these
Speaker 1: commercial formulais are they influenced by what happens in the
Speaker 1: Medicare program or these two distinct conversations.
Speaker 2: So it's a really good question. So there are a
Speaker 2: lot of Medicare plans. So there are eight hundred Medicare
Speaker 2: part y plans. There are four thousand Medicare advantage plans,
Speaker 2: about ninety percent of them have pharmacy benefits. And similarly,
Speaker 2: there are you know, there are you know, there are many,
Speaker 2: many PBMs, although there are three of them that represent
Speaker 2: over eighty percent of the total market. The big PBMs
Speaker 2: almost universally have you know, universally have both Medicare and
Speaker 2: commercial contracts. I'm not at the negotiating table. So I
Speaker 2: can't tell you exactly how one impact the other, but
Speaker 2: I can tell you that if a if a pharmacy
Speaker 2: benefit management or has a good relationship with one pharmaceutical
Speaker 2: company is able to get good price concessions, they're probably
Speaker 2: going to be trying to do that on both the
Speaker 2: Medicare and the commercial side. So, uh, you know they're there.
Speaker 2: You know one one definitely does you know, have have
Speaker 2: have some impact on the other.
Speaker 1: So that helps us tee up the big issue, which
Speaker 1: is how this is all going to impact how we'll
Speaker 1: see this impact from the IRA in the commercial markets.
Speaker 1: But before we jump into some of these i RA effects,
Speaker 1: maybe another opportunity just to develop a baseline understanding for
Speaker 1: our listeners. But what are we talking about with the
Speaker 1: i RA drug pricing negotiation provisions? How is it going
Speaker 1: to happen? What specifically is it?
Speaker 2: Yeah, so so so basically, the IRA prescribes very very
Speaker 2: specifically how this negotiation works. So the Centers for Medicare
Speaker 2: and Medicaid Services, which runs Medicare, chooses this year ten
Speaker 2: ten Medicare Part D drugs, It'll be it'll be fifteen
Speaker 2: next year, and then the year after that they start
Speaker 2: looking at medicare Part D N Part B. Part B
Speaker 2: is medicines that tend to be used in hospitals or
Speaker 2: in doctors' offices. Part D is medicines that people go
Speaker 2: to their local pharmacy to pick up. So, so the
Speaker 2: first thing is they've choose choose medications. That's that's done.
Speaker 2: The ten medications have been announced and uh and then
Speaker 2: UH there is a process whereby h CMS Center Center
Speaker 2: for Medicare and Medicaid Services use goes you uses a
Speaker 2: series of criteria to determine what it thinks is a
Speaker 2: fair market price for our fair market value for each
Speaker 2: of these ten drugs that they're going to negotiate with
Speaker 2: all ten pharmaceutical companies. Impact they have agreed to this negotiation,
Speaker 2: and so CMS will on the will on the basis
Speaker 2: of how much clinical value there is, how much research
Speaker 2: and development it took, how much of that was paid
Speaker 2: for by the government. You know, what are alternatives that
Speaker 2: could achieve the same clinical benefit would cost. So the
Speaker 2: cm is supposed to supposed to put all of that together,
Speaker 2: and on that basis they make a bid to the
Speaker 2: pharmaceutical company. It's somewhere between twenty five and sixty five
Speaker 2: percent lower than lower than the existing cost, and then
Speaker 2: the pharmaceutical company has a period of time to make
Speaker 2: a counteroffer and to give justification about why they feel
Speaker 2: that the fair market price should be higher than what
Speaker 2: CMS has to do. So this will all be going
Speaker 2: on for the next year, and if the pharmaceutical company
Speaker 2: and CMS can't come to an agreement, then there are
Speaker 2: pretty serious penalties for the pharmat pharmaceutical companies. So I
Speaker 2: think that it's likely there will be agreements, and those
Speaker 2: agreements will be announced in September of twenty twenty four,
Speaker 2: but then that price won't be in effect until January
Speaker 2: first of twenty twenty six. So it's a pretty long process.
Speaker 2: It's pretty prescribed, it's not there's not a lot of
Speaker 2: flexibility about how this should go, and it is mandatory
Speaker 2: that for the drugs that are that are selected, the
Speaker 2: discounts will be will be reasonably serious. And I mean,
Speaker 2: another big difference between these kind of negotiations and the
Speaker 2: negotiations that pharmacy benefit managers have with the pharmaceutical companies
Speaker 2: is that the results of these are pretty much entirely public.
Speaker 2: So we will in September of twenty twenty four, not
Speaker 2: only know what the agreed upon medicare price will be,
Speaker 2: and it's very hard to figure out sometimes what the
Speaker 2: agreed upon PBM prices are, just because there's there's a
Speaker 2: lot of rebates and other things going back and forth.
Speaker 2: But we'll also know what the background is about why
Speaker 2: CMS chose that price and in what way the pharmaceutical
Speaker 2: company might have disagreed. So all of that information becoming
Speaker 2: part of the public record will actually, I believe, clearly
Speaker 2: have an influence on what the price is across the market,
Speaker 2: not just on Medicare.
Speaker 1: Yeah, on that point, there's going to be considerable transparency
Speaker 1: into how CMS got to this. And I think when
Speaker 1: we get there, if we get there, I think we'll
Speaker 1: all be looking at, well, Okay, we know you set
Speaker 1: the price, but how exactly did you get there? And
Speaker 1: I think we'll all be looking through that. But you
Speaker 1: know a couple of things you mentioned earlier that there's
Speaker 1: there could be some serious discounts. As you mentioned, the
Speaker 1: law provides pretty much a ceiling and it does not
Speaker 1: provide a floor. In other words, there's a maximum fair price,
Speaker 1: but there's nothing that says CMS can't go well below that,
Speaker 1: and I think that is a fear that drug manufactures
Speaker 1: pharma bile they've all expressed over the past couple of months,
Speaker 1: and so there's a bit of unpredictability there and we
Speaker 1: will see how it plays out. CBO, which is the
Speaker 1: Congressional Budget Office, when they scored the proposal, they provided
Speaker 1: some additional clarity into their thinking in terms of how
Speaker 1: they got to a score and said, well, because Medicare
Speaker 1: has such leverage, they think the discounts are likely to
Speaker 1: be well below the maximum fair price. And we'll see
Speaker 1: if that plays out or not. But also to your
Speaker 1: point about a rigid timeframe, I think it's interesting that
Speaker 1: it's it's very prescriptive, and I think that is more about, well,
Speaker 1: we don't know who the next presen is going to
Speaker 1: be and what their views on this process or the
Speaker 1: law itself, so we're going to be very prescriptive. Where
Speaker 1: I think earlier drafts of the law said up to
Speaker 1: up to ten, up to fifteen, up to twenty, and
Speaker 1: this law is now very prescriptive. It is that specific
Speaker 1: number and discounts are this is your maximum fair price.
Speaker 1: So again you know some of your earlier comments, it's
Speaker 1: very rigid and I think people might have issue with
Speaker 1: this but very transparent process, though people might not like
Speaker 1: the process.
Speaker 2: Well, I think that you know, clearly, when CMS is
Speaker 2: doing this negotiation, the IRA gives CMS some serious leverage
Speaker 2: and so so I understand that, you know, I understand
Speaker 2: that Pharma, you know, Pharma obviously is suing in at
Speaker 2: least six different courts to try to to try to
Speaker 2: try to stop this. You know, the IRA also gave
Speaker 2: some real wins to the pharmaceutical companies. So so getting
Speaker 2: rid of the doughnut hole, so being sure that people
Speaker 2: don't pay first dollar for their drugs and medicare part dy,
Speaker 2: you know, after you know, after a relatively small number
Speaker 2: of months, and also getting you also putting a cap
Speaker 2: on how much people could at maximum spend out of
Speaker 2: pocket is going to actually decrease price sensitivity for a
Speaker 2: lot of drugs. So I mean, you know, if you
Speaker 2: look at share prices of the pharmaceutical companies, they have
Speaker 2: done they have done fine, and they're not they're not
Speaker 2: doing badly. And uh, you know, I do think that
Speaker 2: there are some blockbuster drugs where there is going to
Speaker 2: be substantially less margin going forward, and we'll probably talk
Speaker 2: about it, but I think that you know, there are
Speaker 2: some incentives in this for pharmaceutical companies not to as
Speaker 2: vehemently protect you know, some patent extensions and things. So yes,
Speaker 2: there are some losses for the pharmaceutical industry in this,
Speaker 2: but there also are some very substantial wins for the
Speaker 2: pharmaceutical industry. And you know, so I'm I'm you know,
Speaker 2: I actually I don't just respect, but I am thrilled
Speaker 2: at the kind of the kind of innovations and the
Speaker 2: kind of progress we've made through pharmaceuticals. Really, I mean,
Speaker 2: pharmaceutical companies are responsible for almost all of the really
Speaker 2: big medical advances that have come since I've since I've
Speaker 2: been on the scene, so you know, making HIV a
Speaker 2: chronic disease, making hepatitis C treatable, even things like having
Speaker 2: over the counter drugs to treat ulcers. I mean, when
Speaker 2: I was in training, I saw people die of duadenal ulcers,
Speaker 2: and you know, nothing like that would happen now. So
Speaker 2: you know, I'm happy for all this innovation. I think
Speaker 2: the pharmaceutical companies should be well well rewarded. And I
Speaker 2: think that even with you know, with some you know,
Speaker 2: with some decrease in margin that they'll see on some
Speaker 2: of these blockbuster drugs or some shorter, shorter patent exclusivity.
Speaker 2: I actually am confident that the pharmaceutical industry will actually
Speaker 2: do quite well, and some elements of the IRA will
Speaker 2: in fact give them more business.
Speaker 1: And I think, you know, how do you respond then
Speaker 1: to concerns of well, this is going to mean this
Speaker 1: innovation moving forward? You know, one way to think about
Speaker 1: it is, well, CBO has said, we do anticipate there'll
Speaker 1: be fewer drugs, whether it's ten, fifteen or twenty. I
Speaker 1: think Pharma has its own study that says possibly over
Speaker 1: one hundred. Do you think that it's less it's more
Speaker 1: about we won't see those drugs, or do you think
Speaker 1: we'll see some of these drugs come on the market
Speaker 1: a bit more slower because some of these drugs are
Speaker 1: in the additional indications of existing drugs, Or maybe we'll
Speaker 1: see a drug come on the market for that second
Speaker 1: indication instead of that first indication because of the clock.
Speaker 1: And right now the game is all about the clock
Speaker 1: when it starts and when those discounts are applied.
Speaker 2: Well, you know, doing a couple thoughts. One is the
Speaker 2: Congressional Budget Office said that this would lead to one
Speaker 2: fewer drug in the first decade and thirteen fewer new
Speaker 2: drugs in over over three decades. So and just in perspective,
Speaker 2: that's I don't know, they expect to have like thirteen
Speaker 2: hundred new drugs over over over three decades. Obviously, if
Speaker 2: the drug that didn't get developed was the drug that
Speaker 2: could cure you and you were me, we would be
Speaker 2: very disappointed by that. But you know, also of all
Speaker 2: the new of the thirty eight or so new drugs
Speaker 2: that are approved every year, a lot of them don't
Speaker 2: represent like quantum leaps. Some of them do, but a
Speaker 2: lot of them don't. I think that, I think again,
Speaker 2: there there will be plenty of margin in the pharmaceutical industry.
Speaker 2: And you know, in some areas there'll be somewhat more
Speaker 2: margin just because of getting rid of of caps that
Speaker 2: we really needed to get rid of on our getting
Speaker 2: rid of very high expenses we really needed to get
Speaker 2: rid of, for for for for some Medicare beneficiaries. So
Speaker 2: I'm I'm you know, I'm optimistic. I think we'll continue.
Speaker 2: I think that pharmaceuticals will continue to be a place
Speaker 2: where money invested wisely will you know, will have substantial returns.
Speaker 2: I also think that, like we've seen some excellent reporting
Speaker 2: about pharmaceutical companies already, you know, delaying a potentially new,
Speaker 2: better drug to try to to try to get you know,
Speaker 2: to try to get longer exclusivevity on that. There's been
Speaker 2: very good reporting on Gilead and uh, you know which
Speaker 2: which put which put discov on pause so that they
Speaker 2: could you know, sort of run the that's a that's
Speaker 2: a drug used for HIV therapy and for prep for
Speaker 2: for for preventing HIV infection in people at high risk
Speaker 2: and uh, you know, basically there's a small advantage of
Speaker 2: a newer drug discov and uh it's just a different
Speaker 2: salt of one of the two drugs in it, and
Speaker 2: they they they sort of sat on it for you know,
Speaker 2: at least half a decade, maybe longer, and you know
Speaker 2: that probably wasn't you know, probably what it would have
Speaker 2: been good if it came out sooner. So I do
Speaker 2: I don't think that this is a new problem that
Speaker 2: the Inflation Reduction Act negotiation is going to create. You know,
Speaker 2: If anything, the fact that this might encourage pharmaceutical companies
Speaker 2: not to uh not to not to argue legal legally
Speaker 2: quite as vociferously against the against the end of exclusivity.
Speaker 2: Might actually you know, make more drugs, you know, more
Speaker 2: really excellent drugs available to people, you know, people sooner.
Speaker 2: So I mean, you know, I I I think we'll
Speaker 2: do okay in this. But again, like you know, it's
Speaker 2: it's going to be a long time before we can
Speaker 2: actually tell whether you know tell, Well, that's no.
Speaker 1: And to your earlier point, you know, we've seen the
Speaker 1: industry come up with some pretty good innovation. Uh. But
Speaker 1: where Democrats would say, and which is why they passed
Speaker 1: the bill which became law, are they affordable? And so
Speaker 1: when we look back at what the I rate did,
Speaker 1: why are these prices or that why will the negotiated
Speaker 1: prices only be available for Medicare and not the commercial
Speaker 1: market wide? In Congress say everybody can have access to
Speaker 1: these negotiated prices.
Speaker 2: Well, first of all, when Medicare was passed in the
Speaker 2: early sixty there simply wasn't a drug benefit. And obviously
Speaker 2: since the nineteen sixties what drugs are able to do
Speaker 2: has just you know, has just become so remarkable that
Speaker 2: you know, any any kind of an insurance plan that
Speaker 2: doesn't have a drug benefit is clearly obsolete. So there
Speaker 2: was a big argument with Medicare Party about whether that
Speaker 2: whether Medicare would be allowed to negotiate prices. And in
Speaker 2: the end, that is why Medicare Party was pretty much
Speaker 2: supported by Republicans in the House and not supported by Democrats,
Speaker 2: who you'd think would have wanted to wanted to expand
Speaker 2: you know, wanted to expand coverage. It's been it's been
Speaker 2: a public policy sticking point. Actually, you know, since Medicare
Speaker 2: PARTI started paying for prescriptions. It's been a sticking point
Speaker 2: because Medicare pays for about a third of all of
Speaker 2: all of all pharmacy costs, and you know, they're if
Speaker 2: they're paying for a third of all pharmacy costs, wh
Speaker 2: shouldn't be negotiating. So, you know, as part of the
Speaker 2: Inflation Reduction Act, the people who believes that believe that
Speaker 2: Medicare is a very large, very large purchaser of drugs
Speaker 2: should negotiate ultimately won the day. But you know, the
Speaker 2: pharmaceutical industry does very very effective lobbying. They clearly did
Speaker 2: not want this to apply to uh, apply to you know,
Speaker 2: to non governmental payers. And I think that you know,
Speaker 2: wrapping up the Inflation Reduction Act was a very hard
Speaker 2: thing with an enormous number of moving pieces, and people
Speaker 2: who were thrilled to see Medicare and negotiating prices were
Speaker 2: not willing to sacrifice that to to insist that employer
Speaker 2: sponsored health health insurance companies were brought along. I think
Speaker 2: obviously purchasers would rather be it rather, you know, be
Speaker 2: guaranteed lower prices than have to negotiate for them. But
Speaker 2: you know, as I've said, I'm I'm guardedly optimistic that
Speaker 2: we'll actually see some you know, some as you call them,
Speaker 2: spillover effects, and that there will be some benefit for
Speaker 2: employer sponsored health insurance as well. But I think that
Speaker 2: I think that there's a there is you know, there's
Speaker 2: a genuine reluctance to to have the government step in,
Speaker 2: and many people deeply believe that the markets should determine
Speaker 2: what prices are. And I think that the compromise of
Speaker 2: letting the government step in for the government's spending was
Speaker 2: it was a good compromise to make two years ago.
Speaker 1: So when I think big picture, whenever I have conversations
Speaker 1: about how to lower health care costs, to change this
Speaker 1: trajectory of Medicare spending. I always come back to one
Speaker 1: central point, which is, probably do something, but that money
Speaker 1: has to come from somewhere or some body, some entity.
Speaker 1: In other words, taking away one dollar in health care
Speaker 1: spending means lesser hospitals, doctors, insurance companies, et cetera. Which
Speaker 1: is why it's truly hard to tackle health care spending
Speaker 1: because you have a lot of stakeholders out there, and
Speaker 1: I think there's this viewpoint that if you're making these
Speaker 1: significant cuts to drug prices for the Medicare population, those
Speaker 1: losses by drug companies have to be recouped somehow or
Speaker 1: some way, And it reminds me of a headline I
Speaker 1: saw the other day from an older article as the
Speaker 1: bill was going through Congress, which is the IRA means
Speaker 1: increased drug prices for commercial plans. And so wanted to
Speaker 1: dive in a bit on this because we've heard from
Speaker 1: employer groups that have expressed concern, and they expressed this
Speaker 1: concern during the debate over what was then built back
Speaker 1: better and turned into the Inflation Reduction Act. That limiting
Speaker 1: negotiated prices to Medicare leaves the door open to cost
Speaker 1: shifting where these manufacturers, especially those that are impacted by
Speaker 1: these lower prices, will try to recoup these losses through
Speaker 1: higher prices in the commercial market. Is this a realistic scenario?
Speaker 2: I think that concern is clearly overstated. And here's why.
Speaker 2: Pharmaceutical companies actually higher among the best economists around. The
Speaker 2: best pharmacal economists to determine what the optimum price is,
Speaker 2: and the optimum price is the one that gives them
Speaker 2: the most margin. And if they set the price too low,
Speaker 2: then they're leaving money on the table. They're getting paid
Speaker 2: less than they could be paid, so they might have
Speaker 2: lower revenue than they should have. But if they set
Speaker 2: the price too high, it'll actually adversely impact utilization. Fewer
Speaker 2: people will use it, and at some point, you know,
Speaker 2: they've set it so high that they'll lose enough business
Speaker 2: that they'll actually make their margin worse, not better. So,
Speaker 2: if you believe that the drug companies have been have
Speaker 2: have actually aired, and they've they've not been maximizing shareholder value,
Speaker 2: and they've not been setting these prices at the optimum
Speaker 2: so far, and they've been setting them too low, and
Speaker 2: therefore they could raise them and not adversely impact their utilization.
Speaker 2: If you believe all of that, then you would be
Speaker 2: worried about this sort of cost shifting phenomena. But realistically,
Speaker 2: I think that the drug companies have been setting prices
Speaker 2: in a way that maximizes their margins, as you know,
Speaker 2: as their shareholders would want. And I don't I don't
Speaker 2: think that making less money on a few blockbusters is
Speaker 2: something that gives them either more leverage or creates more
Speaker 2: demand in other markets that will allow them to increase
Speaker 2: their price without decreasing their their utilization. So I don't
Speaker 2: think that the drug companies are in a position to
Speaker 2: in a position to do this, and you know, but
Speaker 2: I do. I do think like in the in the
Speaker 2: you know, in the political argument around this, it is
Speaker 2: valuable for the drug companies to have people believe that
Speaker 2: they have the ability to to do this kind of
Speaker 2: cost shifting.
Speaker 1: But we have heard these stories and these arguments that,
Speaker 1: especially when it comes to Medicare, if you reduce Medicare
Speaker 1: payment for a service, whether its hospital services or something else,
Speaker 1: pick a sector that there is ultimately it justifies higher
Speaker 1: costs elsewhere or increasing prices elsewhere. Is there are there
Speaker 1: examples where we've seen this type of cost shift.
Speaker 2: Sure, I'm really glad you brought this up. So in
Speaker 2: the in the nineteen eighties and nineteen nineties, there was
Speaker 2: this phenomena that healthcare policy people called the cost shift
Speaker 2: hydraulic And each time there was a Medicare bill to
Speaker 2: try to save some you know, decrease the deficit or
Speaker 2: save the federal governments some money. So each time Medicare
Speaker 2: lowered its fee schedule, it seemed like commercial costs were
Speaker 2: going up and you could sort of just superimpose them,
Speaker 2: and it looked like, yes, there was cost shifting. When
Speaker 2: economists started looking at this into the later nineteen nineties
Speaker 2: into the two thousands, they actually found that this went away.
Speaker 2: And the difference is that in the eighties and early nineties,
Speaker 2: hospitals were largely being paid by based on their charge
Speaker 2: master what they were billing, and so if they could
Speaker 2: simply raise their prices, and if they raised their prices,
Speaker 2: they would just get paid more. And you know, starting
Speaker 2: you know, starting in the nineteen nineties and beyond, hospitals
Speaker 2: increasingly had been paid on fee schedules, and so if
Speaker 2: they want to raise prices, they have to wait till
Speaker 2: the next time a contract is open to do it.
Speaker 2: So they so. So Since then, it turns out that
Speaker 2: when Medicare lowers its price its fee schedule, it actually
Speaker 2: saves money for for commercial providers. And it does it
Speaker 2: in two ways. One is that most fee schedules are
Speaker 2: in some way or other based on Medicare fee schedules.
Speaker 2: So if medica our fee schedules are not going up
Speaker 2: as rapidly, it actually helps make other fee schedules not
Speaker 2: go up as rapidly. The other, the other, you know,
Speaker 2: the other thing is that when hospitals saw you know,
Speaker 2: saw saw less Medicare revenue in their future, they actually
Speaker 2: they actually built fewer new buildings and things, so there
Speaker 2: was less capital expense, fewer but fewer bond payments due
Speaker 2: and as a result, they didn't have to raise their
Speaker 2: rates as much. So again, I mean, I I think
Speaker 2: that there is a there are a lot of unknowns here,
Speaker 2: but in general, uh, if the government as a payer
Speaker 2: lowers low, you know, lowers its price or doesn't raise
Speaker 2: its price as much as it otherwise might have. Other
Speaker 2: parties can only raise their prices if they have the
Speaker 2: leverage to do it. And then you always have to
Speaker 2: ask yourself the question, well, did they have the leverage before.
Speaker 2: And if they had the leverage before, why didn't they
Speaker 2: raise their prices before? And so I'm I am, I'm
Speaker 2: I'm not a believer that that we will be skeptical.
Speaker 1: Yeah, So then is it possible then that the reverse
Speaker 1: could be true here when we think about the prices
Speaker 1: that are going to be set in medicare that there
Speaker 1: could be some spillover effect where we see commercial market,
Speaker 1: employer markets some of those prices adopted by adopted in
Speaker 1: that area.
Speaker 2: I I, uh, that's my that's my feeling about it.
Speaker 2: I think that I think that we'll we will see
Speaker 2: spillover effect. We will see that that employer sponsored cut,
Speaker 2: you know, pharmacy benefits will will will see benefit. I
Speaker 2: also want to say, I don't want people to think
Speaker 2: I'm too overly optimistic. This means that costs won't rise
Speaker 2: as much as they otherwise would rise. I don't think
Speaker 2: that this means that that, you know, that we will
Speaker 2: see a dramatic decrease in in pharmacy costs. So, just
Speaker 2: to sort of put it in perspective, these drugs represent
Speaker 2: about fifteen and a half percent of commercial drug spending,
Speaker 2: these ten drugs alone, so obviously if if, if they
Speaker 2: cost less, that that's going to matter in a material way.
Speaker 2: So but but again I mean I H yeah, I
Speaker 2: believe that when these go down in price for for Medicare,
Speaker 2: that will go down in price for you know, for
Speaker 2: other payers as well.
Speaker 1: And so going back to an earlier point you made
Speaker 1: in the transparency angle of all of this, we know
Speaker 1: that Medicare is going to publish the price in September
Speaker 1: twenty twenty four. A couple months later, they'll be what
Speaker 1: we think will be detailed justification for that price remans
Speaker 1: to be seeing how detailed it will be, but we'll
Speaker 1: have a sense of Okay, how did you get to
Speaker 1: from A, which is where we are now, to Z,
Speaker 1: which is the price we'll see next year. Do you
Speaker 1: think all of that information is going to be helpful
Speaker 1: for the commercial markets to I guess accelerate or be
Speaker 1: a catalyst for this spillover effect? Or is this kind
Speaker 1: of information already out there already, but because it's coming
Speaker 1: from the government a huge payer as part of this process,
Speaker 1: that it might carry more week.
Speaker 2: Yeah, well, there are some there are some parties out
Speaker 2: there that are already doing this kind of research. The
Speaker 2: Institute for clinical effectiveness research. IICER is probably the pre
Speaker 2: eminent one doing this. They put out a cost effective
Speaker 2: price for many new drugs, and and even though the
Speaker 2: actual prices are often higher than what they say is
Speaker 2: the cost effective price, I actually think these are looked
Speaker 2: at and I think to some extent, these might actually
Speaker 2: create a bound that that doesn't allow doesn't allow prices
Speaker 2: that are you know, doesn't allow prices or even higher.
Speaker 2: So so, so, yes, there's already some information out there.
Speaker 2: I think that this will, as you said, be influential
Speaker 2: because this is from a very large purchaser. It'll be
Speaker 2: a variety of different different pieces of data, including some
Speaker 2: that IICER doesn't doesn't necessarily consider. And yeah, I think
Speaker 2: that these will have ins on prices outside of Medicare.
Speaker 1: And then then the question is, Okay, how exactly will I,
Speaker 1: as an individual not in Medicare benefits? Is it through
Speaker 1: lower premiums? Is it through or cost sharing? How how
Speaker 1: does this work for me? Because I think within the
Speaker 1: Medicare population it may depend on whether you have coinsurance
Speaker 1: and that would be pretty significant. Though you layer on
Speaker 1: top of the party redesigned like there's a lot going
Speaker 1: on there. We don't have that in the commercial market.
Speaker 1: So how would I as an employee benefit, especially when
Speaker 1: you think about the fact that these prices aren't going
Speaker 1: to be implemented until twenty twenty six.
Speaker 2: Yeah, so I asked, the first thing is, don't count
Speaker 2: any don't count any difference for the next two opening
Speaker 2: rollment cycles, right, I mean, yeah, this is gonna take
Speaker 2: a while, but uh, you know, in general, I think
Speaker 2: that that for many employers, what this does is it
Speaker 2: takes a little bit of pressure off of cost of
Speaker 2: a premium increases. So, you know, employers can employers can
Speaker 2: either use any savings to be sure that premiums don't
Speaker 2: come up more, or they can use any savings to
Speaker 2: decrease cost sharing. Decreasing cost sharing benefits people who have
Speaker 2: medical claims and therefore disproportionately benefits people who are sick. Decrease,
Speaker 2: you know, not increasing premiums is something that everybody sees.
Speaker 2: I think. I think for many employers, uh, you know,
Speaker 2: they're working hard to be sure that their employees can
Speaker 2: afford to afford the premiums to buy insurance. And I
Speaker 2: think that there will be some priority to put things there.
Speaker 2: But to some extent, also, money is fungible, so you know,
Speaker 2: if there's something that doesn't go up as much as
Speaker 2: you expected, and you know, it gives you more freedom
Speaker 2: to not make other difficult decisions like increase the premium
Speaker 2: or like you know, increase cost shifting.
Speaker 1: But I go back to this conversation about what this
Speaker 1: means for innovation and whether this isn't interfering with the
Speaker 1: competition we have now. So when you look at the
Speaker 1: the way the laws set up, you have the maximum
Speaker 1: fair price, it's twenty five at least twenty five to
Speaker 1: six percent off current prices. Think the's thing about generics
Speaker 1: and biosimilar for a second, and you know, one of
Speaker 1: the conversations we've had here is, well, as a biosimilar
Speaker 1: manufacturer or generic manufacturer, I've started this process. You know,
Speaker 1: it's twenty twenty three October twenty twenty three. I've started
Speaker 1: my process years ago in terms of going through the
Speaker 1: R and D, deciding where to go, what to target,
Speaker 1: going through the R and D, and I've probably thought, Okay,
Speaker 1: I'm going to come at come on the market at
Speaker 1: X minus ten fifteen. And now you have a scenario
Speaker 1: where that could be higher than what many care says
Speaker 1: is the price for the drug, and so I do
Speaker 1: wonder if there's going to be some kind of disincentive,
Speaker 1: at least initially maybe for some of these competitors to
Speaker 1: come onto the market. And I bring that up because
Speaker 1: one of the ways to lower costs for people is
Speaker 1: to have competition through generics and biosimilars. Is there any
Speaker 1: concern there that these lower prices would would hinder reduce
Speaker 1: this competition, would result in higher prices or is that
Speaker 1: a little far fetched?
Speaker 2: Yeah, well, I mean a couple of thoughts. One is
Speaker 2: that biosimilars are you know, are are used very widely
Speaker 2: in the europe in market. They generally cost way way
Speaker 2: less than sixty percent less than less than the generic
Speaker 2: I'm sorry, less than the brand name manufactured by manufactured
Speaker 2: biologic drug and there's no shortage of competition to you know,
Speaker 2: to to do those So I'm, you know, I think that,
Speaker 2: I mean, I don't think that the opposition to this
Speaker 2: is coming from generic manufacturers or biosimilar manufacturers. I think
Speaker 2: that there's a good reason for that. What the IRA
Speaker 2: does is it actually potentially smooths the path to having
Speaker 2: less years of legal wrangling to put in you know,
Speaker 2: to put to bring to market a biosimilar, and so
Speaker 2: I think that, you know, this, this could get us
Speaker 2: more biosimilars more quickly, and then you know, what does
Speaker 2: this do ten years out? Again, pretty pretty speculative, But
Speaker 2: but it seems like these you know, it seems like
Speaker 2: there is going to continue to be a need for biosimilars,
Speaker 2: and uh, you know, and uh and given the high
Speaker 2: fixed cost, you know, given the high fixed cost and
Speaker 2: low variable cost of drug manufacturing, even of biologics, I
Speaker 2: don't I think that, uh, I think that we could
Speaker 2: We should expect that, uh, you know, that we will
Speaker 2: get lower prices and we will not see a uh
Speaker 2: you know, we will not see a loss of competition
Speaker 2: in the biosimilar space.
Speaker 1: You hinted at something like maybe less patent litigation or
Speaker 1: you can say patent ligation, but less litigation potentially, And
Speaker 1: it's something we talk about here as well. As manufacturers
Speaker 1: have spent a lot of time and money preventing competition
Speaker 1: through patent litigation. And I wonder if we're about to
Speaker 1: see a scenario where, in select cases, some of these
Speaker 1: manufacturers might be more willing to encourage or at least
Speaker 1: be open to at least one competitor on the market,
Speaker 1: because that by definition means it does not qualify for
Speaker 1: a negotiation under the IRA. Now the guidance, when you
Speaker 1: look at the final guidance, there are all these stipulations
Speaker 1: about what is generic competition, and I think there are
Speaker 1: some questions as to whether CMS overstep their bounds in
Speaker 1: terms of their interpretation of the law of what is
Speaker 1: generic and what is I believe the term is marketed generic.
Speaker 1: But I do wonder if we will see a bit
Speaker 1: of a c change to a more welcoming environment by
Speaker 1: some of these brand manufacturers.
Speaker 2: Yeah, I think that's the hope. And you know and
Speaker 2: think I think that's the hope. That we'd like to
Speaker 2: see a bio somewhere available when you know, when the
Speaker 2: patent would allow it. We don't want to see it
Speaker 2: seven or ten years later.
Speaker 1: Right. So with all this talk, I have to go
Speaker 1: onto this subject in our final question because there's a
Speaker 1: huge debate now in Congress about what to do about
Speaker 1: the sector that wasn't directly addressed in the IRA, and
Speaker 1: those are the pharmacy benefit managers. And for many Democrats
Speaker 1: and even Republicans to bipart is an issue this seems
Speaker 1: to be the another way to lower prices or at
Speaker 1: least provide an avenue for employers and employees and others,
Speaker 1: an avenue to some of these savings that we're seeing
Speaker 1: through rebates. So beyond the IRA, what are policies in
Speaker 1: your mind that can be implemented to continue to drive
Speaker 1: down or prices? Uh, specifically within the PBM sector. Are
Speaker 1: we looking at more transparency, are we looking at policies
Speaker 1: targeting rebates, outcomes based pricing? What? What do you think
Speaker 1: some of the next steps are that you think Congress
Speaker 1: can tackle?
Speaker 2: Yeah, well, I mean clearly, this is a place where
Speaker 2: there's an enormous amount of opacity and uh. And so
Speaker 2: to some extent, the answer about like where can we
Speaker 2: where you know, where can we take money out of
Speaker 2: this system? Well, we know there's money in the system
Speaker 2: because we've seen this gradual increase in the difference between
Speaker 2: gross price and net price, so you know, so, so
Speaker 2: there is there is money leaking out that's not going
Speaker 2: to the pharmaceutical companies or or it's going to them,
Speaker 2: but then they're paying it back to some other parties.
Speaker 2: So I think I think rules that would shine a
Speaker 2: light on that and make that more uh, you know,
Speaker 2: more transparent. Are probably an important first step. They're not
Speaker 2: they're not sufficient, but they are they are an important
Speaker 2: first step. So I think sometimes sometimes people don't realize
Speaker 2: how destructive rebates are to the whole idea of ensuring
Speaker 2: people for when they're sick. So essentially, if there's a
Speaker 2: drug that's very expensive, but then there's a very high
Speaker 2: rebate to it, people who get prescribe that drug pay
Speaker 2: their cost sharing when sometimes people are indeductible, they pay
Speaker 2: one hundred percent. Sometimes they're in co insurance, they pay
Speaker 2: twenty percent, but they they they're paying based on this
Speaker 2: marked up price. And then there's a rebate that's returning
Speaker 2: a bunch of this to the to the health plan.
Speaker 2: But that rebate is probably being used to keep overall
Speaker 2: premiums down. And so now you have a diabetic on
Speaker 2: three diabetes drugs who's spent seven thousand dollars out of
Speaker 2: pocket again the IRA, if they're on Medicare, that will
Speaker 2: that will make that less of a problem, not necessarily
Speaker 2: commercial plans. So so I mean, I'm going around a
Speaker 2: long way and saying this, but but rebates are really problematic.
Speaker 2: They're essentially having the sick people subsidize the healthy people,
Speaker 2: which is exactly the opposite of what we want in
Speaker 2: health insurance. So, you know, I think the first step
Speaker 2: is probably shining a light on this, and the second
Speaker 2: step is probably to just get the prices to be lower.
Speaker 2: And the pharmacy benefit managers do some important things and
Speaker 2: you know, be sure that they just get you know,
Speaker 2: I'd rather see them get paid fees as opposed to
Speaker 2: getting paid, you know, a piece of a rebate, because
Speaker 2: that leads to that leads to a series of bad incentives.
Speaker 2: You know, I think that there's been an effort, but
Speaker 2: it's honestly not gotten very far to make rebates at
Speaker 2: the point of sale. So then then that would that
Speaker 2: would mean that the sick person who's getting the expensive
Speaker 2: drug it's not really as expensive it looks, would actually
Speaker 2: not have not have to overpay. That's not I that's
Speaker 2: that's a good idea, but it's it's it's it's it's
Speaker 2: hard to execute, and it's not been put forward in
Speaker 2: many places. And then well, go ahead.
Speaker 1: On that point, I think, correct me if I'm wrong.
Speaker 1: The Trump administration tried to move forward with this type
Speaker 1: of proposal within the Medicare program. And I think if
Speaker 1: we saw and this is probably just and maybe it
Speaker 1: was an AHA moment for a lot of people because
Speaker 1: when they try to do it within Medicare, their costs
Speaker 1: Evaluation agency said, oh yeah, this is going to cost us.
Speaker 1: I think it was close to one hundred billion dollars
Speaker 1: over ten years, because well, those rebates are being used
Speaker 1: to lower prices for premiums, and so if you don't
Speaker 1: have that valve, then premiums go up. Government pays seventy
Speaker 1: five percent percent of departy premiums, so it ended up
Speaker 1: being a net loss for government, which I think as
Speaker 1: you're talking about this and shining a light on how
Speaker 1: this whole process works, it was an painful reminder that
Speaker 1: maybe we all don't know how the drug supply chain
Speaker 1: works in terms of where all this money is going.
Speaker 3: Right, No, that's and and similarly, you know, employers are
Speaker 3: in a somewhat similar situation that you know, if if
Speaker 3: they can get a million dollars back and they put
Speaker 3: it to lowering premiums, they're paying eighty percent.
Speaker 2: Of the premium So so they are in much the
Speaker 2: same position. But still we have this problem that you
Speaker 2: know that that with rebates. We have people who have
Speaker 2: more medical needs are actually paying more than you know,
Speaker 2: more than you know, more than they should. They're not
Speaker 2: just and obviously people have more medical needs. They've already
Speaker 2: like lost because they have more medical needs, and now
Speaker 2: they lose again because they're subsidizing overall overall lower premiums.
Speaker 2: So again it's not it's not like this is easy.
Speaker 2: You started you started out by talking about the fact
Speaker 2: that you know, one person's uh, you know, one person's
Speaker 2: high medical expense is somebody else's revenue. In this instance,
Speaker 2: one one person's sort of setting the system right does
Speaker 2: mean that some other some other people feel more pain
Speaker 2: from the system. Trade offs are really tough.
Speaker 1: And that is our healthcare system.
Speaker 2: That is our healthcare system. You know. The one other thing,
Speaker 2: because you asked me, asked me about sort of other
Speaker 2: things that people have talked about. You know, there has
Speaker 2: been talk about outcomes based pricing. So if somebody you know,
Speaker 2: takes a million dollar drug and the drugs supposed to
Speaker 2: do something, if two years later it's clear the drug
Speaker 2: didn't do something for that person, that there would be
Speaker 2: a refund. And I think a lot of pharmaceutical companies
Speaker 2: actually like this conceptually and uh, but as a practical
Speaker 2: matter in the real world, it doesn't work very well
Speaker 2: because people are often you know, they often are ensured
Speaker 2: by a different insurer, a different employer two years later
Speaker 2: when it's clear. It's sometimes hard to define whether a
Speaker 2: drug really stopped working or whether it really didn't stop working.
Speaker 2: Who should collect the refund? Where should you know, you know,
Speaker 2: where should it go? These are all really difficult to do.
Speaker 2: So and realistically, if pharmaceutical companies do that, presumably what
Speaker 2: they do is if there's a ten percent chance something
Speaker 2: won't work, they should actually put that, put that the
Speaker 2: premium for that into the cost of the drug in
Speaker 2: the first place. So, for instance, if there's a million
Speaker 2: dollar drug, there's a ten percent chance it wouldn't work,
Speaker 2: they should charge one point one million for it, knowing
Speaker 2: that you know, one in ten times they would have
Speaker 2: to refund it. So I I mean, I think the
Speaker 2: real issue with those super expensive drugs is we need
Speaker 2: the largest possible h well, we need lower prices, but
Speaker 2: we also need the largest possible risk pool. So you know,
Speaker 2: having an employer with five thousand employees be at risk.
Speaker 2: I mean, they definitely need to buy reinsurance. It's it's
Speaker 2: just too small a group and there's too much randomness
Speaker 2: in the world. So so we just want to be
Speaker 2: careful that we're not having businesses fail because they had
Speaker 2: they had a sick employee or a sick kid of
Speaker 2: an employee. That's that's just not I mean, we want
Speaker 2: businesses to succeed or fail based on their business, not
Speaker 2: based on based on whether they happen to have somebody
Speaker 2: who has has a really expensive disease.
Speaker 1: Well, this is a topic that I think we're hearing
Speaker 1: Congress discuss. I know we're hearing quite a bit about
Speaker 1: what to do with PBMs and that that sector of
Speaker 1: our healthcare system. And while there was some optimism we
Speaker 1: might see some movement by the end of this year.
Speaker 1: It might not be realistic given some of the challenges
Speaker 1: right now, especially in one chamber of Congress, but I
Speaker 1: think we might see.
Speaker 2: Some a speaker list chamber, yeah right.
Speaker 1: But I do think there might be an avenue or
Speaker 1: an opening to do something early next year. But it's
Speaker 1: not going to solve all of our problems. And I
Speaker 1: feel like we've had such a great discussion over so
Speaker 1: many points we could probably have us podcast dedicated to
Speaker 1: one of these issues or one of these questions. So
Speaker 1: I hope we have an opportunity to come back and
Speaker 1: talk through these issues a bit further. And you to
Speaker 1: Jeff's earlier point, the process for Medicare negotiations is a
Speaker 1: long one, at least over the next twelve months, and
Speaker 1: these prices don't become effective until twenty twenty six, but
Speaker 1: then there's twenty twenty seven and twenty twenty eight the
Speaker 1: process that will play out there. So again, I do
Speaker 1: hope we have an opportunity to circle back on this,
Speaker 1: and with that, I think we'll wrap up this episode
Speaker 1: of the Boats and Verdicts podcast. Jeff, thank you for
Speaker 1: taking the time today, and thank you to the listener
Speaker 1: for joining us. As well as a reminder, you can
Speaker 1: read all of our BI research on the Bloomberg terminal
Speaker 1: at BI go. Thanks for listening, and have a great day.