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How Better Data Fosters Health Equity w/ Kirsten Axelsen · Making Medicine

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You're listening to Making Medicine Stories from the Early Stage Life Sciences Ecosystem, a
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podcast that explores the people and deals that have led to the medicines, devices,
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and technologies that keep us healthy. Let's get into the show. This
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is John Stanford. You're a regular host of the Making Medicine podcast. Today,
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it's my pleasure to welcome back to the show. Kirson Axelson. She's
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a senior policy advisor at Charles River Associates, among her many other titles,
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and she's been working with the Incubate Policy Lab publishing studies on the detrimental effects
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of price controls on the early light stage life sciences industry. But that's only
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scratching the surface of the report she's been doing with her colleagues that have really
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been illuminating, not just for the folks here at Incubate, but all around.
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Kirson, so pleased that you could come back to join us. Your
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previous podcast was definitely one of our most popular, So if you'll have us,
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we're going to keep bringing you back. You know, the last time
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you were here, you spoke to us about some of the hidden costs of
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price controls and how drug development affects the US economy and most importantly, the
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world's patient population. Can you give us a quick refresher of that last report
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and what were your top line findings. Thank you so much for having me
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here today, and I would like to start off by also thanking my co
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authors of these reports, Regina Giasuria and Clara Zakaro. Thanks for them for
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alignment to represent them. So, you know, starting with the implications of
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price controls in the US, and you all speak specifically to the types of
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controls that were included and build back better. I'm going to start by saying
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that you know, US is forty percent of the global biopharma market and the
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only place currently where there is a competitive, privately negotiated system for establishing the
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price of drugs really of any of the major markets. But we think about
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the impact of price control policies, the only analogs we have are much smaller
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countries where there have been price control and people will often say, oh,
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well, you can do it, and Europe where you could do it.
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In Japan and you know, we still have a care for cancer and that
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is entirely because the US market has really buoyed the investment in R and D
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and supported the globe's health. There is no question that the list prices in
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the US for drugs as well as hospitalization as well as doctor visits are higher
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than the prices in other countries. When you can start taking discounts and effect
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the gap is smaller, and then when you look at the prices in the
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US for low income people and veterans, the gap disappears in many cases.
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So on that backdrop, I'm thinking about price controls such as the one proposed
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and build back better. There are two. One is really allows the Secretary
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of Health and Human Services to set prices on sort of the biggest, most
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commercially successful drugs in medicare both Part D, which is the drugs that you
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get in the pharmacy see and Part B, which is the drugs that you
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would see a minister in the physician's office. You know. I think some
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people have looked at that and said, oh, okay, well, it's
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it's a smallish number of drugs and it's growing over time. It's not the
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whole market. But the fact is that kind of a policy, in some
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ways, you might as well have price controls over the whole market. Because
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when you're making the decision to invest in the drug. You don't know whether
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or not your drug is going to be the one that falls under the domain
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of a price control policy. So it's going to skew people away from wanting
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to invest in sort of the likely most commercially successful drugs. I think you're
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going to see more and more investing in niche drugs for smaller populations, which
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we know would tend to be expensive. This small population Vernessasse drugs are incredibly
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important, but you know, I think there's a question how much more do
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we want to skew incentives towards those smaller population drugs than that we already have.
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I think where there is investment in sort of the bigger, larger market
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drugs, it will be more incremental or cost investment, you know, things
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like line extensions or sort of smaller changes, so that if the investment in
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R and D ends up and going into a drug that is eventually price controlled,
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it's a bit de risked. You know, the CBO assumed a relatively
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small number of drugs wouldn't be developed because of this price control. I think
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they're way underestimating it. But they haven't even gone into how it would skew
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investments. So even if we see the same number of drugs, we see
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very different drugs being developed and we would have otherwise. That's an issue for
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health. The second type of price control that is in build back better is
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what's called an inflation penalty. So if the list price of the drug goes
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up more than consumer inflation, then the biopharmaceutical manufacturer would have to basically pay
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that back in the form of a rebate. I think there are many who
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who including myself, who thinks some of the list price increases in drugs over
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time have you been out of control? They largely affect cash paying patients people
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in deductibles, and that's not good for those patients. However, this type
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of a policy is not going to have as intended effect of helping people pay
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less for drugs. In fact, I think it's going to raise prices because
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if you can't increase the price over time, you're going to see drugs launch
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at a higher price. Moreover, if a drug is launching into a crowded
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class, the way a biopharmaceutical company gets on a health plans formulary is with
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a rebate, not with a low price drug so you're going to see biopharmac
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companies launching at a price higher than the competitor in order to be able to
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give a big rebate and get on that formulary. So I think it's going
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to have a twofold increase in enlist prices, and it's going to be to
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the detriment of the drugs that are already on the market, who won't be
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able to make up that disparity or give a big enough rebate to be able
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to compete. You know, I think that you've pointed to sort of there's
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so much complexity in the system, and I'm all for demystifying that complexity.
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I'm all for Congress, the Administration ourselves taking a hard look at this payer
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setup that leads to higher list prices and the role of rebates and the role
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of sort of these middlemen that everyone had been talking about. But you know,
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we continue to see. You know, I think you've put out some
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good things, and I'm gonna I'm gonna try summarizing. Let's see if you
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are great that. You know. One of the points I suppose in favor
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of this bill is, well, it's not a price control on all drugs,
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but you know, do you think it's I think it's fair to say,
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you know, hearing from you an expert, A price control on one
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is a price control on all because of the drug development process. Absolutely,
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Imagine if you were a home builder and there is a new tax on houses
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with five bedrooms, right like all houses would have four bedrooms in a bates
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rooms, you know, I mean, it's it's just it would immediately change
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the type of house you built, even if you knew that the tax soeling
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and apply to one out of ten houses with six bedrooms or five bedrooms.
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So it's just it imposes this constraint on development front. Development should be about
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disease and unmet need, and I'm not naive enough to know that it isn't
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hugely about reimbursement as well. But again, particularly in health systems where you
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want the setup to be disease, unmet need and data demonstrated to show that
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the drug is worth its price, and there's an increasing scrutiny on that.
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If you impose this other constraint of and if you're successful, there's a chance
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that the drug is going to be price controlled by the federal government. You
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just introduce another element of risk that is going to skew investment away from drugs
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that are likely to be commercially successful. You know this new paper that you
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put out in December that you've been talking about a bit and the Build Back
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Better Act. Maybe it's on hold, maybe it's not. But I think
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the paper pointed to some real concerns that I'm not sure everyone's talking about.
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You know, we look back to the Trump administration. They proposed reference pricing.
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Terrible idea, importing form price controls. You wrote on that at the
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time. Now we've got a democratic administration, a democratic Congress putting forward another
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price control Why do you think, you know, when you get into the
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weeds, the logic behind these begin to fall apart. And if you believe
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that we need more drugs, we need new innovation, these policies aren't the
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right recipe for that. Why do you think we continue to see this misconception?
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Is it the complexity? A complexity of our system is that it's too
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easy to say, gosh, you know, we could just pull down prices.
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Why do we keep seeing on both sides some sort of shortsighted policies Because
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beating on drug prices is a very popular thing to do. And nobody likes
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going to the pharmacy and having to pay a lot for their drugs, including
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me. And you pay a much larger proportion of the cost of your drugs
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than you do for a hospitalization or your doctor, and you know, going
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to a doctor or going to a hospital, and nobody likes it. There's
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a human face associated with it. We don't, I think, necessarily see
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the human face associated with her drugs. I mean, I think you get
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different responses from people who've had serious illnesses cured. But you know, nobody
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who likes to spend money on drugs, and many people can't. They just
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don't have the money. And that is probably even more speeling right to know
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that you really need this treatment and you just absolutely cannot pay for it.
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You know. While there are a number of assistance programs and hopefully people are
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able to get to them, I think not always people find out about them.
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So I mean, in just about every administration for as long as I've
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been in this business, there has been the same price control policies pulled out
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and proposed, and ultimately some of the adoptives some haven't. You know,
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the ACA had not price controls, but increasing rebates and discounts, and then
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in the meantime, you know, there's some really I think important policy changes
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that could happen that would reduce the net price of drugs or create a more
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competitive environment, and those haven't happened because it's just more politically popular to talk
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about drug price controls and then ultimately not do a lot about them. Yeah.
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I think that's a really good point. Is it's not to say everything
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out there being proposed is bad. There are some really good things. The
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outrageous out of pocket costs associated with drugs, you made a great point there.
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We're not exposed to the full cost of that hospital visit. God forbid
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one of us or a loved one has to go the doctor. We get
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that human to human interaction and preventative care is largely covered thanks to the Affordable
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Care Act, and then boom, a seven thousand dollars deductible that you have
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to meet before your medications are taken. Proposals around smoothing that people with chronic
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conditions don't have to pay this full lump sum in January. I mean,
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these are common sense fixes, but they seem to only get tied up with
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these other policies that say, gosh, we've got to have price controls,
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We've got to join the rest of the world. And you know, I
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think stepping out of my own lane of life sciences. You know, we've
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always talked about America as this world's policeman, and whether you'd like it or
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not, our defense budget is enormous, and we subsidize a whole host of
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the world. But then when it comes to being the world scientists, the
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world's innovator, and you know, the world's drug maker, we get we
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get so itchy about that, and that dichotomy is as I've always struggled with.
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But I think you made some sort of good points your reports of you
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put out another report that I found equally compelling about health equity. You know,
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something that's a lot in the news. You know, in this moment
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of reflection nationally, we've had a lot of conversation about disparities and health,
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and you took a look at how health equity can be impacted by these price
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controls. Can you talk a little bit about that report and what some of
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your key findings were. Absolutely, and thank you, and I'll again reiterate
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that this is what I co authored with Reginie and Clara. You know,
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we took a look at the price controls and also compared it to you know,
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this administration's sort of repeated declarations of policies to improve health equity and to
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reduce disparities and health outcomes. I mean, I'll start by saying, way
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at least I define health disparity, and the way we defined it further report
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is you know, the outcome of your healthcare or your disease state or your
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mortality being sort of predictable based on your race or ethnicity. So you know,
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we should not given to people with similar disease states and similar cum morbidities
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your race, ethnics. You should not be able to predict that you will
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be fair worse either on a drug or just worse in terms of your overall
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survival. But yet, you know, and everything from breast cancer, colon
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cancer, cardiovascual disease, mental health, death by suicide, or smoking cessation
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rates, there are significant differences that are explained by race and ethnicity. So
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we looked at you know, the provisions in Build Back Better, and we
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also compared it to recommendations of policies that actually would improve health equity. And
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those are things like, you know, ensuring there's appropriate resource allocation two groups
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that have been historically underserved, you know, centuries of racism are costly and
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they're costly to health, and you can't assume that des by having blanket policies
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that don't allocate the right level of resources commensurate with the burden of disease and
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different groups that you're going to have equal outcomes of health, that kind of
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thing. So, you know, considering the three you know, main proposed
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policy levers, which are lowering prices through drug price setting, the inflation penalty,
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and the reductions in patient cost share proposed to build back better, you
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know, directly lowering the prices of drugs in you know, through some sort
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of a price setting policy wouldn't really do that much. For we thought mostly
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about lower income people as it reflects as it relates to that policy, they
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still have coverage gap deductibles doesn't really meaningfully address high out of pocket costs and
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the unlimited out of pocket costs if done in isolation, you know, does
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help people who are cash paying patients, although again I'm quite convinced that inflation
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penalty would lead to much higher launch prices. So the combined effect of those
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two policies really I don't think on that would be that helpful to anybody,
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including the cash paying patient. In addition, it results in less investment or
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skewed investment into different types of drugs and disease states, which also has an
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effect on which drugs get developed, and you know, the drug that's not
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developed isn't there to help anybody. The reductions in patient cost sharing, in
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particular the out of pocket caps and smoothing, we do think could be something
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that we would improve the affordability of care for lower income people, although also
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keeping in mind that in both Medicare and Medicaid there are already limits on auto
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pocket costs, so that is something that could be helpful in particular to the
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cash paying patient, but wouldn't really give any additional protection or support to the
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person who is already in the lower income subs to the portion of a benefit
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or on Medicaid. Yeah, I yea, you know, I found that
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point about the cash paying and these inflation inflation rebates. I think if you
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asked any policymaker do you want to see higher list prices launch prices, they
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would say no, and yet so many of them are pushing for a policy
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that your research says, well, that's exactly what you're going to get.
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And yes, most of us in the insured community, all of us in
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the insured community are not seeing anything close to a list price. Those of
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us in the uninsured, those that tend to be less fortunate and lower income,
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they are experiencing a cash price. And now all of a sudden you're
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staring down, like you said, a much higher launch price because of a
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fairly shortsighted policy. You know, you've been around this industry a long time,
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and you know what what can the industry be doing to be meaningful in
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a health equity space? Recommendations about what whether it's us in the VC landscape,
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whether it's the manufacturers, whether it's clinical trials, what what can we
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do to make it a more equitable health and health discovery system. I think
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it's a good question. There's so many things that companies aren't doing. I'll
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touch on a few points. I mean, if you look back at in
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the twenty nineteen and the twenty twenty FDA Drug Trial Snapshot, which is a
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report that shows the race and ethnicity of people enrolled in clinical trials, pivotal
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clinical trials. Those are the clinical trials that ultimately to a drug being approved.
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The rate of black and Hispanic people enrolled in trials is far less than
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their representation in the US population. And then consider that there's a number of
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diseases where the incidence is higher in blacks and aspects. So not only are
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they underrepresented real of the US population, they're probably underrepresented relative to the disease.
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You know, I know a number of companies are investing in clinical trial
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diversity programs and partnerships, and those are important steps to make, and the
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FDA is issued guidance going back I think twenty years now on things that can
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be done, including things like reducing the exclusion criteria, so you know,
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potentially allow people with things like hypertension that is more prevalent in certain races and
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esthsnic groups than in white which is fine. You know, something to consider
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is when you change those criteria, that makes the trial potentially bigger, because
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if somebody drops out to an adverse event, you have to account for that.
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Every adverse event ends up in the label, whether it's related directly into
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the drug or not. It makes the trials longer, and more expensive.
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Bigger companies can may be able to afford that, smaller companies may not be
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able to afford it. So I think we need to think about incentives that
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could potentially be put in place. There have been incentives put in place to
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encourage investment in rare disease in postmarketing pediatric studies. If we really want to
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see data and clinical trials that meaningfully represents the population of people that take the
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drug, I think we're gonna have to do more than issue guides. Yeah,
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and I think that's what we've seen work. I mean you can look
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back to buy Dole or the or Hatch Waxman or all the rug development policy
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since the reason we have such a robust marketplace of an ecosystem is because of
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incentives that we have dangled various carrots and we have supercharged everyone to chase after
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them. We even saw that recently with vaccine and treatment development to COVID nineteen.
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So we're in this moment where I think everyone's eyes are opened. I
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think many folks eyes have been opened for some time that we need more clinical
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trial diversity. That's one of the most important things we can do. And
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yet, as you say that is going to put more onus on the company,
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more onus on the developer, and in reality more cost And so paradoxically
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we're saying, companies, we want you to do this, do a lot
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more, by the way, on this. With our other hand, we
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are attempting to cut into your margins to the tune of twenty to fifty percent.
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And I really hope policymakers who listen to the show tune into that that
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there is a lottable goal of improving health equity, but some of the other
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things are talking about actually undermine that goal. And I thought your paper did
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a good job at connecting those dots where other folks haven't. You know,
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I want to spin away from a key focus of racial equity, but to
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two other sides of equity. You know. One is in the news and
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that's sort of a sense of age equity. And there is a recent decision
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around covering Alzheimer's a specific type of Alzheimer's drugs that were coming through for possible
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approvals, and CMS took sort of a new step in pushing back on an
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FDA approval, you know, and said not just for this specific product,
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but for all Alzheimer's drugs that come through in this way, we are going
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to put in place a challenging coverage decision. I think it's fair to say,
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you know, any any reaction to that news, any of your studies
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or your experience, speak to the NCD and what you think that might mean
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for that Alzheimer's population. I'm going to speak generally to the Alzheimer's population because
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I Am not going to say that I am a clinician or have perfect insight
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into the efficac of those drugs. But you know, the cover decision basically
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said, we'll cover the drugs for people who are enrolled in a clinical trial.
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If that population looks somewhere the population that is currently a rolled clinical trial,
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it will be more white, more effluent, less corribidities. So it's
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basically saying, we'll cover drugs for people who fit that criteria have somebody who's
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able to enroll them in a clinical trial. You know, people who have
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Alzheimer's's tend to be more frequently in long term care facilities if they are white,
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and less frequently in long term care facilities if they are black or Hispanic.
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So I would imagine that would possibly have an effect upon the ability in
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the clinical trial and make the appointments and follow the protocols. So it feels
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like the kind of policy that would have a distortionary effect. You know,
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when drugs are launched, we have the worst information about them that we're or
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in a half, and so I think it's obviously very hard for insurers and
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policymakers and people paying for these drugs to have a good sense of whether they're
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worth it, And so I can see how that would lead to this type
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of a policy. You know, I think something as an alternative to consider
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is that the US really fund its commitment, again going back to before the
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ACA, to develop rural evidence and registries. There it is, you know,
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other than maybe the COVID vaccine, which even then, I don't think
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that the data has been collected and shared as systematically in different subpopulations could have
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been. A drug is launched and there's no nationwide database of that's easily accessible
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by researchers who could interrogate the efficacy in different populations. You know, the
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data can be accessed and is expensive, and if you have a well funded
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drug company or university, you can generally access data through insurer claims datas,
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but race isn't always captured, and I mean there's just it's the lack of
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data that actually you can conceive if these drugs are worth it, worth their
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price, how they're working in different populations. It's really hindering the ability of
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anybody to negotiate effectively with a drug company on price and value. Yeah,
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I think that's you know, so much of that decision, at least to
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me, felt reflexive. We've had a few of the investor community sort of
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say, hey, this dissension between FDA and CMS causes a little uncertainty.
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Absent the specifics of this example, you know, it's just one more thing
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we're going to have to worry about. And I think any econ one O
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one says worry gets priced into the cost of capital. And so we've had
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a few in the investor community kind of definitely raised their concerns there. But
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I think you bring a whole new narrative there of Well, let's look at
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who's in the clinical trials for pretty much any drug. They are going to
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tend to be a subset of the population that is more white, that is
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better off, that has had access to the trial and so if we constrict
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any kind of coverage to someone in a trial, we're going to find ourselves
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disappointed with some of those diversity and equity goals that I think we're all trying
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to achieve. So I just think that's a really good additional point in one,
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it's not being talked about. So grateful that you took some time with
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us. We're kicking off a new year. Anything you want to foreshadow,
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you're a big mind in this industry. Anything you're going to be looking at
24:30
in twenty twenty two as you continue your research and examinations of the life science
24:34
ecosystem. I'm super excited for our role with new vaccines. I think of
24:40
how much we have learned well already, there are so many more vacs.
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If you look at the number of vaccine trials that have been registered that are
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towards you know, the phase three pivotal trial stage, it's just grown incredibly
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even before the pandemic. But then all that we've learned in the last few
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years about how a quick develop vaccines, it's just exciting to think of a
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time we would have more preventable diseases. And then you know, we also
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have to get back to a time where we're thinking about things like antimicrobial resistance
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and how we can use vaccines to more effectively manage infective infectious disease so that
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we aren't ending up a situation where our antibiotics are becoming more and more absolutely
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so. Yeah, that's my excitement for the next few years is thinking of
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a world where we have more vaccines. Twenty twenty two the year of the
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non COVID vaccine, and I share things, I share your optimism. It's
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going to be exciting. I have no doubt that we'll have you back soon
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to talk about them. She has. Kirsten Axelson, thank you for the
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incredible reports, her work. Her great team at Charles Rivers Associates as partnered
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with Incubates Policy Lab on a number of reports. We'll look forward to keep
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working with them. Thanks to our audience for listening and as always sharing your
25:55
feedback. More from Incubate is available at www dot Incubate Coalition dot org.
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A special thanks as always to Ashland Roberts and Olivia Lucani and making today's podcast,
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