Latest / Bloomberg Intelligence / World Freeloads Off U.S. on Drug Pricing, Miller Says

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World Freeloads Off U.S. on Drug Pricing, Miller Says · Bloomberg Intelligence

• 0:04
  Speaker 1: Welcome to the Bloomberg pm L podcast. I'm Pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa Abramowitz. Each day we
• 0:11
  Speaker 1: bring you the most important, noteworthy, and useful interviews for
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  Speaker 1: you and your money, whether you're at the grocery store
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  Speaker 1: or the trading floor. Find the Bloomberg p L podcast
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  Speaker 1: on iTunes, SoundCloud and at Bloomberg dot com. Right now,
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  Speaker 1: I want to bring in Dr Steve Miller, chief medical
• 0:31
  Speaker 1: officer and senior vice president at express script. It is
• 0:35
  Speaker 1: one of the largest companies in the country. It is
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  Speaker 1: an American Fortune Fortune one hundred company, h the twentieth
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  Speaker 1: largest in the US, and it is the largest pharmacy
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  Speaker 1: benefit management organization in the United States. Dr Miller, I
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  Speaker 1: want to start with drug pricing. We hear a lot
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  Speaker 1: about you know that the price is too high? Uh
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  Speaker 1: do you think do you agree? Do you think that
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  Speaker 1: the cost of drugs in the US is too high?
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  Speaker 1: Let's start there at least I definitely think they are.
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  Speaker 1: Americans are actually should during their burdens for the rest
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  Speaker 1: of the world. So we're four point six percent of
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  Speaker 1: the world's population, We're thirty three of world drug spend.
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  Speaker 1: We're somewhere between fifty and seventy percent of drug profits.
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  Speaker 1: So we truly are funding all innovation for the rest
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  Speaker 1: of the world, and they're actually freeloading on America. So
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  Speaker 1: what could be done to actually bring prices down? So
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  Speaker 1: you know, we've worked very hard, and there's certain things
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  Speaker 1: that we can do every day, uh that, and that
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  Speaker 1: patients can actually do every day. So, for instance, if
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  Speaker 1: there's a generic available for a branded product, you should
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  Speaker 1: be taking the generics. The FDA approves them under the
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  Speaker 1: same process. They've been proven time and time again to
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  Speaker 1: be equally effective. But there's also things we got to
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  Speaker 1: do dramatically if we're going to continue that, and that
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  Speaker 1: is we've got to make biosimilars available in this country.
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  Speaker 1: So biosimilars are generic versions of the complex drugs for cancer,
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  Speaker 1: rheumatoid arthritis, other diseases. American companies have been making these
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  Speaker 1: drugs for Europeans. They've been taking advantage of them for
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  Speaker 1: the last eight years. The discounts are somewhere between sixty
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  Speaker 1: and sev yet they're unavailable in the United States and
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  Speaker 1: that makes no sense. Dr Miller, You've been described as
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  Speaker 1: a cost fighting ninja. You must there must be a
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  Speaker 1: target on you from all of the pharmaceutical companies because
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  Speaker 1: I want you to tell us about formularies and how
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  Speaker 1: you arrive at the how do you go through the
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  Speaker 1: process of determining which drugs are covered and how much
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  Speaker 1: is paid, Because this is something that you're dealing with
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  Speaker 1: by looking at your own data, not relying on the
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  Speaker 1: data from let's say the drug companies or even from
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  Speaker 1: healthcare providers. Yeah, so formularies are listed drugs, and that
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  Speaker 1: list has to have any a drug to treat any
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  Speaker 1: patient with any disease. It walks into a doctor and
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  Speaker 1: so there's about twenty five thousand different products in the
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  Speaker 1: United States, but it turns out that doctors need about
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  Speaker 1: dred of them, and so it allows us to put
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  Speaker 1: drug company against drug company to get better deals. So
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  Speaker 1: the simplest example is there are six different statins like lipatore, zoe,
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  Speaker 1: core crust or other things. What you do is you
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  Speaker 1: say to the pharmaceutical manufacturers, I need a statun for
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  Speaker 1: my patients. But the data shows that you're all equivalent
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  Speaker 1: who will give us the best price, and so by
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  Speaker 1: pitting them together, we can actually drive market share and
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  Speaker 1: get lower prices. And so we have a process in
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  Speaker 1: which our formularies are designed by external experts to express scripts,
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  Speaker 1: no employees of express Scripts. The only thing they can
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  Speaker 1: consider is clinical. They're not allowed to consider price. This way,
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  Speaker 1: we can guarantee to our plans and our patients that
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  Speaker 1: we've always put clinical first, that we always have the
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  Speaker 1: right drugs available for them. But then we once we
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  Speaker 1: have their parameters, can drive to the lowest net cost. So,
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  Speaker 1: Dr Miller, how do you respond to, let's say a
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  Speaker 1: pharmaceutical company that would say to you, by you're doing this,
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  Speaker 1: you are reducing our R and D budget and you're
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  Speaker 1: sort of inhibiting the production of new drugs. Yeah, so
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  Speaker 1: I will tell you that the typical responses is that
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  Speaker 1: you know what is we uh, there's nothing in the pipeline.
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  Speaker 1: It turns out that because of American ingenuity, we have
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  Speaker 1: over seven thousand products in clinical testing in the United
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  Speaker 1: States right now, and that's the data according to the
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  Speaker 1: pharmaceutical manufacturers. When you look at FDA approvals, two thousand
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  Speaker 1: and fifteen was almost a record. You have to go
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  Speaker 1: back twenty years to have that many drugs approved. So
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  Speaker 1: we actually have a very vigorous drug pipeline. That's funded
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  Speaker 1: by the ni H, it's funded by the pharmaceutical manufacturers,
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  Speaker 1: it's funded by others. And so I'm not worried that
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  Speaker 1: US trying to drive to the lowest cost. This is
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  Speaker 1: still a four hundred billion dollar industry. There's plenty of
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  Speaker 1: profitability there for the drug companies to do R and D.
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  Speaker 1: The President has publicly come out against high drug prices.
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  Speaker 1: He's singled out various pharmaceutical companies. What can the president
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  Speaker 1: do without Congress? Can he do anything in order to
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  Speaker 1: change drug pricing? Yeah? So we there are things that
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  Speaker 1: require legislation, obviously, but there's a lot that can be
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  Speaker 1: done by regulations. So the f d A, cms all
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  Speaker 1: have really a lot of influence over drug pricing. So
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  Speaker 1: I'll give you a couple examples. Right now, we have
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  Speaker 1: a backlog of generic approvals that the f d A.
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  Speaker 1: The FDA could obviously do things to accelerate those approvals.
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  Speaker 1: Getting those generics out into the marketplace lowers drug prices.
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  Speaker 1: We have these situations where we have only one generic
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  Speaker 1: in the marketplace, they've been jacking up the price. You've
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  Speaker 1: seen this with situations like Derra prim The FDA could
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  Speaker 1: actually prioritize a competitor to uh DERA prim So don't
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  Speaker 1: just accept the applications as they come in in but
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  Speaker 1: when there's a shortage in the marketplace, put that at
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  Speaker 1: the top priority list and get a competitor and faster.
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  Speaker 1: So there are plenty of regulatory things that can be
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  Speaker 1: done to bring down drugs. Thank you very much for
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  Speaker 1: being with us. Dr Steve Miller is the Chief Medical
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  Speaker 1: Officer Senior Vice president Express Scripts. Joining us here at
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  Speaker 1: the National Medicare Advantage Summit taking place in Arlington, Virginia.
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  Speaker 1: It is hosted by a Better Medicare Alliance. We are
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  Speaker 1: broadcasting for the National Medicare Advantage Summit taking place in Arlington, Virginia,
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  Speaker 1: right across the River Potomac from Washington, d C. And
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  Speaker 1: here to tell us more about the healthcare system in
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  Speaker 1: the United States is Tom Scully. He's a general partner
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  Speaker 1: with Welsh, Carson, Anderson and Stow. He has also senior
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  Speaker 1: counsel at Austin and Bird. But perhaps more importantly for
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  Speaker 1: our conversation, he was the administrator of the Centers for
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  Speaker 1: Medicare and Medicaid Services under President George W. Bush. And yes,
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  Speaker 1: both both bushes, one push, one end push too. Um,
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  Speaker 1: and you also really played a very important role in
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  Speaker 1: helping to design Medicare Part D Medicare Advantage both. Right, um, so,
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  Speaker 1: where do where do you? Where do you start when
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  Speaker 1: you try to explain to people the current state, because
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  Speaker 1: there's so many pieces to this, whether it's Medicare advantage,
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  Speaker 1: whether it's supplemental, whether it's Medicare Medicaid. You say you're
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  Speaker 1: on the board of a Medicaid insurance program here in
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  Speaker 1: d C. How do you tease all this out so
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  Speaker 1: that we can understand at least where we are and
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  Speaker 1: what are some of the options to move forward to
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  Speaker 1: make it better. Who would ever know healthcare was so complicated?
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  Speaker 1: Well maybe maybe the best way the reason you were
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  Speaker 1: you were the admit you would the administrator for the
• 8:01
  Speaker 1: Centers for Medicare and Medicaid Services. What does the c
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  Speaker 1: m S. C MS is a giant agency in Baltimore,
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  Speaker 1: which most people in Washington you know. It's in Baltimore,
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  Speaker 1: and it runs Medicare and Medicaid and it also runs
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  Speaker 1: the exchanges, the Obamacare exchanges, UH and a number of
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  Speaker 1: other things. But it's um so you probably have seventy
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  Speaker 1: seven million people. One of the four Americans roughly in
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  Speaker 1: the Medicaid program, which is lower income you know, lower
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  Speaker 1: income healthcare for women and kids, covers seventy the nursing
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  Speaker 1: homes in the country, covers most the disabled mentally retarded
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  Speaker 1: people in the country as far as mentally disabled UM
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  Speaker 1: and Medicare is forty four million seniors and chronically disabled people.
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  Speaker 1: So their giant programs. The combined budget for CMS with
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  Speaker 1: between all of Medicare, Medicaid and the problems about one
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  Speaker 1: point four trillion dollars a year, So it basically runs
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  Speaker 1: about half the health care economy, and uh a lot
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  Speaker 1: of it is on autopilot. So I would say n
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  Speaker 1: of the you know, the these seven right people have
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  Speaker 1: the job in less twenty years. Democrats Republicans were all friends,
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  Speaker 1: and most of the job is running giant insurance plans
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  Speaker 1: and making sure all these beneficiaries getting take care of.
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  Speaker 1: And in certain periods of time, like with Obamacare or
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  Speaker 1: in my case with the Party and Medicare advantage, they
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  Speaker 1: get very legislative legislator in tense times, you spend time
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  Speaker 1: changing the problem. So when I came in with Pushing
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  Speaker 1: two thousand one, it was like called heck, I changed
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  Speaker 1: the name. The CMS been a week after I got there.
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  Speaker 1: You didn't want to work for HECA? No, you know
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  Speaker 1: what a long story. I used to run the for
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  Speaker 1: profit Hospital Association for eight c A and ten and
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  Speaker 1: those guys back in the nineties, and I had a
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  Speaker 1: lot of friends at HeLa. But there's a perception, fair unfair,
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  Speaker 1: that there's a big slumbo and bureaucracy. So I told
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  Speaker 1: my boss at the time, Tommy Toomp, said hey, let's
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  Speaker 1: change the name. And there's nothing in the statute. So
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  Speaker 1: we just sat around made up in her name. Well,
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  Speaker 1: so you were talking about at one point for a
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  Speaker 1: trillion dollar budget for all of these agencies, and you're
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  Speaker 1: saying so on a pilot. Meanwhile, we're looking at budget
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  Speaker 1: projections that are saying that the cost is going to
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  Speaker 1: balloon as the population does age. Are there conversations that
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  Speaker 1: are being had that you're involved with with the current
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  Speaker 1: legislators for making feasible changes that would reduce costs over time?
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  Speaker 1: And what the House bill? This is the biggest debate
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  Speaker 1: in the country list you know three months is the
• 10:18
  Speaker 1: Paul Ryan House Bill didn't pass. So if you take Obamacare,
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  Speaker 1: I'm not trying to criticize President Obama. I think he
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  Speaker 1: was worthy effort to try to cover and of universal coverage.
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  Speaker 1: But what happened under President Obama's healthcare plan is if
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  Speaker 1: you look at before I kicked in two thousand twelve,
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  Speaker 1: you had fifty five million people on the medicaid. Problem.
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  Speaker 1: Between then and today, it's going from fifty five million
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  Speaker 1: to seventy seven million, So two million people on Medicaid.
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  Speaker 1: If you kept it going for the next ten years,
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  Speaker 1: you go to ninety seven million. Current spending on Medicaid
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  Speaker 1: now six hundred billion dollars a year, six hundred billion
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  Speaker 1: dollars here, it's a big number already, a drums round.
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  Speaker 1: It will be from six to nine hundred and fifty
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  Speaker 1: billion over the next ten years. But isn't that more
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  Speaker 1: of a commentary on sort of the fact that there
• 11:00
  Speaker 1: are people who are falling into poverty or falling into
• 11:03
  Speaker 1: a lower income bracket and help. No, you're President Obama did,
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  Speaker 1: I'm not trying to be good pro con that bill
• 11:10
  Speaker 1: expanded the poverty coverage of Medicaid and mandated there was
• 11:14
  Speaker 1: gonna go to a hundred and thirty eight percent of
• 11:16
  Speaker 1: poverty in every state. The Supreme Court came out said
• 11:18
  Speaker 1: you can't force the states to do that. So thirty
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  Speaker 1: one northern, largely democratic states took the hundred percent from
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  Speaker 1: the money and expanded their problems massively, and nineteen largely southern,
• 11:28
  Speaker 1: more conservative states said we're not going to do it.
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  Speaker 1: We don't want to have these giant new in talent problems,
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  Speaker 1: and until nineteen of them skipped it. Okay. So the
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  Speaker 1: real issue is what the Republicans have done. These are
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  Speaker 1: big policy changes that effect have an enormous impact in
• 11:41
  Speaker 1: every American the economy. Republicans largely said we're gonna freeze
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  Speaker 1: it where it is, So spending a Medicaid under what
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  Speaker 1: Paul Ryan wanted to do would go from six hundred
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  Speaker 1: billion this year to about seven d fifty billion, and
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  Speaker 1: ten years if you left it on the cruise control
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  Speaker 1: from Obamacare, we go from sillion to nine hundred billion.
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  Speaker 1: The Republicans would freeze it where it is at about
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  Speaker 1: seventies seven million people. Those are big policy issues. Do
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  Speaker 1: you want to cover all those new people in those
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  Speaker 1: other states? Do you want to you know, those are
• 12:05
  Speaker 1: you're talking about another twenty million people in the medicaid
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  Speaker 1: problems that good or bad those are big, fundamental, gigantic
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  Speaker 1: economic issues. So I have been to love to medicaid problem.
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  Speaker 1: But every person, let's every person is paying taxes out
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  Speaker 1: there listening to this, pays four thousand dollars per year.
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  Speaker 1: You're not a Medicaid that is your tax contribution to
• 12:22
  Speaker 1: pay for Medicaid every year is four thousand dollars per taxpayer.
• 12:26
  Speaker 1: And you and all make a decision do you want
• 12:28
  Speaker 1: to cover all those people and have universal coverage. I
• 12:30
  Speaker 1: think it's the right thing to do. The Medicaid problems
• 12:32
  Speaker 1: of a mass I could you could spend hours explaining
• 12:34
  Speaker 1: to you how screwed up it is structurally, but it's
• 12:37
  Speaker 1: a wonderful problem. I happen to be a fan of
• 12:38
  Speaker 1: usual coverage. But how much do you want to spend where?
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  Speaker 1: These are the single biggest issues in the government. Medicare
• 12:43
  Speaker 1: and Medicaid are the biggest problems in the governments security,
• 12:46
  Speaker 1: and they drive all your taxpayer spending. And these policy
• 12:49
  Speaker 1: issues about who you want to cover where and whose
• 12:51
  Speaker 1: air subsidies and who should get subsidies are massive and
• 12:54
  Speaker 1: they're important to people. And I know they're incredibly complicated.
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  Speaker 1: Who health is so complicated, but they are the budget
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  Speaker 1: and they are the governments that this is the future
• 13:03
  Speaker 1: of government policy. Is there a model or is there
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  Speaker 1: another country that is doing something that we can learn from.
• 13:10
  Speaker 1: If you were given a clean I mean you're not
• 13:11
  Speaker 1: going to ever get a clean slate, there is no
• 13:13
  Speaker 1: clean slate. But if you were to be given, you know,
• 13:16
  Speaker 1: half a clean slate, what would you do? What would
• 13:18
  Speaker 1: you say? You can't? And I've been doing this forever,
• 13:20
  Speaker 1: and I think things changing incrementally, and I look at
• 13:22
  Speaker 1: I was not a big fan of Obamacare structurally, I
• 13:25
  Speaker 1: think he's trying to do the right thing. If you
• 13:26
  Speaker 1: look at President Obama's package, and I've said this publicly
• 13:29
  Speaker 1: a lot, it looks a hell of a lot like
• 13:31
  Speaker 1: that George H. W. Bush Plan that I helped design
• 13:34
  Speaker 1: nineteen ninety with a lot more money. So what they
• 13:37
  Speaker 1: were trying to do, the unerfual covers was worthy in
• 13:39
  Speaker 1: a in a rational goal. I think they ever did
• 13:41
  Speaker 1: it went too far and and and and put too
• 13:43
  Speaker 1: much on the structure. But they were trying to do
• 13:45
  Speaker 1: the right thing. And I think when you look at
• 13:47
  Speaker 1: the Republicans are trying to do, they're actually trying to
• 13:48
  Speaker 1: scale back what President Obama did. So whatever happens, the
• 13:52
  Speaker 1: problems are going to get bigger. It's a matter of
• 13:54
  Speaker 1: how much bigger. And even on the Republican bills, Medicare
• 13:56
  Speaker 1: and Medicator and grow dramatically. The issue is are they
• 13:59
  Speaker 1: gonna grow really fair star less fast so you can't
• 14:02
  Speaker 1: really change it. Did the Dutch have a pretty good system? Yes,
• 14:05
  Speaker 1: the Germans I think a pretty good system. They have
• 14:06
  Speaker 1: kind of neighborhood based systems. But you have to go
• 14:08
  Speaker 1: back to and blow the whole thing up and start
• 14:11
  Speaker 1: from the scratch. We have an incredibly complicated web of
• 14:14
  Speaker 1: multiple problems the cover people, and you really have no
• 14:17
  Speaker 1: choice but to build on it. Tom Scully, thank you
• 14:19
  Speaker 1: so much for joining us. Truly a fascinating to hear
• 14:21
  Speaker 1: your thoughts. Tom Scully was the head of CMS under
• 14:25
  Speaker 1: both President George one. Okay, you were in the White House,
• 14:30
  Speaker 1: but you've been making healthcare policy and you did a
• 14:32
  Speaker 1: Medicare party and you also did Medicare advantage, and we
• 14:36
  Speaker 1: really appreciate you being with He looks incredibly healthy. Like
• 14:40
  Speaker 1: about nine seven, Tom Scully general partner at Wells, Carson
• 14:44
  Speaker 1: Anderson and still also Senior council at Austin and bird
• 14:48
  Speaker 1: l LP. We are here broadcasting live at the National
• 14:50
  Speaker 1: Medicare Advantage Summit in Arlington, Virginia. It is hosted by
• 14:54
  Speaker 1: the Better Medicare Alliance. This is Bloomberg. We are live
• 15:12
  Speaker 1: at the National Medicare Advantage Summit in Arlington, Virginia, and
• 15:15
  Speaker 1: we are so lucky to have Dr Kvita Patel here
• 15:18
  Speaker 1: with us. She is a nonresident Senior Fellow at Brookings
• 15:21
  Speaker 1: Institute and a former advisor to the Obama White House.
• 15:25
  Speaker 1: She worked on the Affordable Care Act. Uh So, Dr Ptel,
• 15:29
  Speaker 1: you really have a clear insight into what's going on
• 15:33
  Speaker 1: right now? What should we pay attention to. What's the
• 15:36
  Speaker 1: most realistic change that could happen in short order to
• 15:40
  Speaker 1: the a c A Affordable Care Act. So I still
• 15:43
  Speaker 1: think the most realistic change is going to be no
• 15:46
  Speaker 1: change that we're not going to see a repeal or
• 15:49
  Speaker 1: something that kind of completely rips out the Affordable Care Act.
• 15:52
  Speaker 1: There's still a lot of discussions going on, but the
• 15:55
  Speaker 1: bottom line is the votes are not there right now.
• 15:58
  Speaker 1: Dr Ptel, maybe you could just disc ride to people
• 16:00
  Speaker 1: how Medicare advantage works in the health care system and
• 16:06
  Speaker 1: how this partnership between the public system, which is of
• 16:09
  Speaker 1: course Medicare UH and private insurance. How does that come
• 16:13
  Speaker 1: together and how does they How did that present a
• 16:16
  Speaker 1: challenge because most people look at this situation they go, boy,
• 16:20
  Speaker 1: it can't get any more complicated, right, right, So the
• 16:23
  Speaker 1: Medicare Advantage Program really started as a way to expand
• 16:27
  Speaker 1: kind of what we would call private sector choices in
• 16:31
  Speaker 1: insurance for Medicare beneficiaries. And that was actually done during
• 16:36
  Speaker 1: a Republican administration previously, the actual George H. W. Bush administration,
• 16:41
  Speaker 1: and that failed a little bit in its first attempt,
• 16:44
  Speaker 1: and then there was a little bit of a reboot
• 16:46
  Speaker 1: in the in the George W. Bush administration, where we
• 16:49
  Speaker 1: then got what we have today, which is the Medicare
• 16:52
  Speaker 1: Advantage Program. And basically of people in Medicare are in
• 16:57
  Speaker 1: private plans, which are Medicare Advance Plans, which are basically
• 17:02
  Speaker 1: confusing because and what if you have a family member
• 17:05
  Speaker 1: like I do they just get a bunch of brochures
• 17:07
  Speaker 1: like around October and they have all these choices, And
• 17:10
  Speaker 1: that's what you're referencing. But where we've gotten now is actually,
• 17:14
  Speaker 1: in about five years, more than half of the Medicare
• 17:18
  Speaker 1: beneficiaries are going to be in these Medicare advantage or
• 17:21
  Speaker 1: private commercial insurance plans in Medicare, then the traditional fee
• 17:27
  Speaker 1: for service a million people currently in Medicare correct about
• 17:33
  Speaker 1: fifty five to sixty million in the Medicare program. That
• 17:37
  Speaker 1: number is going to grow in the next five years.
• 17:40
  Speaker 1: But then half of the people in this program in
• 17:43
  Speaker 1: Medicare will be in the Medicare advantage program. How does
• 17:48
  Speaker 1: Medicare advantage and partnering private health insurance companies with public
• 17:53
  Speaker 1: ones reduce costs? So the way it reduces cost is
• 17:57
  Speaker 1: basically by what what the government does is it actually
• 18:00
  Speaker 1: pays the private insurance plan kind of a lump some
• 18:03
  Speaker 1: amount to take care of basically everything. Right now, at
• 18:07
  Speaker 1: traditional Medicare, there's hospital costs, physician costs, drug costs, and
• 18:11
  Speaker 1: it's all pays out of separate pockets and pieces of
• 18:14
  Speaker 1: the government. Pie Medicare advantage, the government pays one lump
• 18:18
  Speaker 1: sum to the private plan and says you take care
• 18:20
  Speaker 1: of everything, no matter how much it costs. And if
• 18:23
  Speaker 1: someone doesn't necessarily need all that money, then the plan
• 18:27
  Speaker 1: keeps that extra money. And what the plans will do
• 18:30
  Speaker 1: in a way to save money. Is they will do
• 18:33
  Speaker 1: really aggressive things like send a nurse out to a
• 18:36
  Speaker 1: patient's home to do an in home assessment and not
• 18:40
  Speaker 1: ever have to even see the doctor to establish kind
• 18:42
  Speaker 1: of what that patient needs, all in an attempt to
• 18:45
  Speaker 1: create a more efficient system. Okay, so talking about private
• 18:49
  Speaker 1: health insurers brings me back to A C A and
• 18:51
  Speaker 1: the path forward. The latest plan that was unveiled today
• 18:55
  Speaker 1: by an Alabama Republican congressman shows that there is an
• 18:59
  Speaker 1: attempt to try to pull out high risk pools or
• 19:03
  Speaker 1: sort of group people by how risky they are they
• 19:06
  Speaker 1: are and their pre existing conditions. Can you speak to
• 19:09
  Speaker 1: that and how effective that could be? Yeah? So you
• 19:11
  Speaker 1: remember the criticism of the American Health Care Act is
• 19:13
  Speaker 1: that potentially the older or sicker you are, you're gonna
• 19:16
  Speaker 1: have to pay potentially a thousand percent more than you
• 19:19
  Speaker 1: would today under the Affordable Care Act. So what's being
• 19:22
  Speaker 1: introduced now is ways to actually deal with sicker patients
• 19:26
  Speaker 1: who are older and to try to acknowledge that they
• 19:29
  Speaker 1: need something different than just regular old Medicare insurance. So
• 19:34
  Speaker 1: what you're seeing proposed um not just for Medicare but
• 19:37
  Speaker 1: for actually any age are these high risk pools that
• 19:40
  Speaker 1: take people out based on the numbers of kind of
• 19:44
  Speaker 1: you know, numbers of diseases that they have, or how
• 19:47
  Speaker 1: sick they are, based on how much money they're using
• 19:50
  Speaker 1: in the system, or potentially pre existing conditions, and then
• 19:53
  Speaker 1: charge them more. And then well if one charges them more,
• 19:57
  Speaker 1: but then it also puts them in a different cool
• 20:00
  Speaker 1: almost like medicare advantage, where it's a private insurance system
• 20:04
  Speaker 1: that then has to take care of them for a
• 20:06
  Speaker 1: dedicated amount of money. But I don't understand this works
• 20:09
  Speaker 1: why any insurance company would agree to take them on.
• 20:12
  Speaker 1: So it's yes, that's a good question. Will anyone actually
• 20:15
  Speaker 1: take on the sickest people in a population? If you
• 20:18
  Speaker 1: pay enough money, somebody will. But who's gonna put that?
• 20:20
  Speaker 1: This gonna put the government is so at the end
• 20:22
  Speaker 1: of the day, you have mentioned I obviously am a
• 20:25
  Speaker 1: fan of the Affordable Care Act, even with its warts
• 20:27
  Speaker 1: and flaws. At the end of the day, somebody has
• 20:30
  Speaker 1: to foot the bill. We can't skirt or get around
• 20:33
  Speaker 1: the fact that as a society we have to pay
• 20:36
  Speaker 1: for healthcare as a society, including people who are really
• 20:39
  Speaker 1: sick and including people who are super healthy. And that's
• 20:42
  Speaker 1: the bottom line. I want your thoughts on prescription drug
• 20:45
  Speaker 1: prices and the insurance plans around those, because the president
• 20:50
  Speaker 1: has the President Donald Trump has come out via tweets,
• 20:53
  Speaker 1: via verbal uh rhetoric, he's saying drug prices are too high. Correct.
• 20:59
  Speaker 1: So the emphasis on drug pricing is very interesting for
• 21:03
  Speaker 1: a Republican administration, and it's largely, as you mentioned, because
• 21:07
  Speaker 1: of President Trump's quotes. Translating that into something that will
• 21:11
  Speaker 1: change the way all of us receive our prescription drugs
• 21:15
  Speaker 1: is very hard to do. However, that's something if you
• 21:18
  Speaker 1: listen to all the people who work under President Trump,
• 21:21
  Speaker 1: they've said that this is one of the top priorities
• 21:24
  Speaker 1: for the White House. The way prescription drug plans work
• 21:27
  Speaker 1: right now, most of us in America don't even realize it.
• 21:30
  Speaker 1: It's a third party that deals with the way your
• 21:33
  Speaker 1: drugs are paid for, and those are called prescription benefit plans.
• 21:38
  Speaker 1: And so there's a whole different entity and industry outside
• 21:43
  Speaker 1: of your insurance card that actually deals with all of this.
• 21:46
  Speaker 1: And that's why it's complicated and I am not likely
• 21:49
  Speaker 1: to see a change happen soon. Well, I want to
• 21:51
  Speaker 1: thank you for helping us understand that at least a
• 21:53
  Speaker 1: little bit. Dr Kvita Patel, Nonresident Senior Fellow, Brookings Institution.
• 22:10
  Speaker 1: We are broadcasting at the National Medicare Advantage Summit taking
• 22:13
  Speaker 1: place in Arlington, Virginia, is hosted by Better Medicare Alliance.
• 22:17
  Speaker 1: And to turn our attention now to politics and America's
• 22:21
  Speaker 1: relationship with China, I want to bring in Brendan A. Hearn.
• 22:24
  Speaker 1: He is the chief investment officer of Crane Shares and
• 22:27
  Speaker 1: Brendan of course, we're all wondering about the Chinese President
• 22:31
  Speaker 1: Jijing Ping's visit to UH President Donald Trump's mar Alago
• 22:36
  Speaker 1: Club in Florida. What do you think the most pressing
• 22:39
  Speaker 1: topic their meeting will be. It's going to be North
• 22:42
  Speaker 1: Korea him. It's an area of mutual interest in an
• 22:46
  Speaker 1: area where there's potential a lot of potential collaboration and
• 22:50
  Speaker 1: coming up with a solution that is certainly a factor
• 22:53
  Speaker 1: for both countries. Well, so North Korea is definitely even
• 22:58
  Speaker 1: more on people's minds just because of the recent missile tests.
• 23:02
  Speaker 1: But don't both sides have a reason to not say anything.
• 23:06
  Speaker 1: I mean, it's the best case scenario that neither of
• 23:08
  Speaker 1: them say anything and they make nice and then they
• 23:10
  Speaker 1: have a nice photo up with each other. I agree
• 23:13
  Speaker 1: at Lisa. I think ultimately you want to get the
• 23:15
  Speaker 1: dialogue going between you know, the first and second largest
• 23:19
  Speaker 1: world economies leaders talking with one another, and hopefully that
• 23:21
  Speaker 1: sets a path for more communication um in the years
• 23:25
  Speaker 1: to come. You know, Brendan, one of the issues has
• 23:29
  Speaker 1: been Chinese acquisitions of what are considered to be essential assets.
• 23:34
  Speaker 1: For example, Chinese companies attempts to purchase oil companies in
• 23:37
  Speaker 1: the United States that was thwarted. Do you think that
• 23:40
  Speaker 1: there is going to be talk about the Westinghouse Toshiba
• 23:43
  Speaker 1: unit that is up for sale that is facing financial problems.
• 23:48
  Speaker 1: Good question. I believe the this is an opportunity for
• 23:52
  Speaker 1: President g to show Trump and and really the United
• 23:56
  Speaker 1: States in general about how much business China is doing
• 24:00
  Speaker 1: here in the US. Last year, three million tourists, three
• 24:04
  Speaker 1: hundred thousand Chinese students studying. China is the second larger
• 24:08
  Speaker 1: buyer of agricultural products, and there's US companies doing well
• 24:12
  Speaker 1: in China. I think this gives China opportunities to show
• 24:14
  Speaker 1: how they can be a good business partner. And yes,
• 24:18
  Speaker 1: there are sensitive sectors, you know, technology being one of them,
• 24:22
  Speaker 1: nuclear energy. Well, what we're talking about with Westinghouse nuclear
• 24:26
  Speaker 1: energy well, and China has a pollution issue. UM nuclear
• 24:31
  Speaker 1: is going to be is currently one of those solutions,
• 24:34
  Speaker 1: along with hydro wind and solar bringing Westinghouse technology to China.
• 24:38
  Speaker 1: They're gonna build you know, it's upwards of two dozen
• 24:41
  Speaker 1: nuclear plants in the years to come. And why wouldn't
• 24:44
  Speaker 1: that be a good thing for Westinghouse to have a
• 24:47
  Speaker 1: Chinese ownership, either partial or full Brennan. I imagine that
• 24:51
  Speaker 1: one thing that will be brought up is the trade
• 24:53
  Speaker 1: deficit that the US has with China. President Trump has
• 24:56
  Speaker 1: talked extensively about it. He has lamented how big it is,
• 24:59
  Speaker 1: even though it has contracted over the years. What do
• 25:02
  Speaker 1: you expect to come out of this particular meeting with
• 25:04
  Speaker 1: respect to the trade deficit. I think it sets a
• 25:08
  Speaker 1: this dialogue and communication going forward. I believe that you
• 25:12
  Speaker 1: have a little bit of a team of rivalries within
• 25:16
  Speaker 1: the Trump administration where you've got say, Jared Kushner, Gary Cohen, Manuchin,
• 25:21
  Speaker 1: and Male Pass on one side, uh more of say
• 25:24
  Speaker 1: the globalist trade proponents, and on the other side you
• 25:27
  Speaker 1: have a Steve Banion, Wilbert Ross, Peter Navarro, and so
• 25:31
  Speaker 1: I believe you have a little bit of, uh, the
• 25:34
  Speaker 1: administration finding its way between these two camps that have
• 25:37
  Speaker 1: divergent views. Well, hold on a second. It's really interesting
• 25:40
  Speaker 1: that you mentioned that because Steve Bannon, as you know,
• 25:43
  Speaker 1: was just removed from the National Security Council. Do you
• 25:47
  Speaker 1: think that that's going to affect this conversation that President
• 25:50
  Speaker 1: Trump has with President Jejim ping and possibly ease the
• 25:54
  Speaker 1: negotiations over some kind of trade contract. I think behind
• 25:57
  Speaker 1: the scenes that the hand, the visible hand of Henry
• 26:01
  Speaker 1: Kissinger is at play. Uh. He visited China in December
• 26:06
  Speaker 1: to help arrange this meeting. He's been meeting with the
• 26:09
  Speaker 1: administration to help them prep for this meeting. And and
• 26:12
  Speaker 1: so certainly I think you're going to see a more
• 26:14
  Speaker 1: balanced view potentially. I mean, time is gonna tell um
• 26:18
  Speaker 1: in in this course of dialogue. Now, Brendan Crane Shares
• 26:23
  Speaker 1: has a variety of exchange traded funds designed for a
• 26:27
  Speaker 1: Chinese investments. Is the Chinese you want? Is it currently
• 26:32
  Speaker 1: in your mind overvalued or undervalued versus the US dollar?
• 26:36
  Speaker 1: That's a good question, PIM. I mean, I think ultimately
• 26:39
  Speaker 1: interest rate differentials helped drive currencies China has slowly slightly
• 26:44
  Speaker 1: started the titan not the official interest rates. So so
• 26:47
  Speaker 1: I don't think China meets the Treasury departments uh definition
• 26:52
  Speaker 1: of a currency manipulator. Um. But I think if we
• 26:54
  Speaker 1: were in euro, yen or pound, you might say it's undervalued. Yeah,
• 26:59
  Speaker 1: this is going to be something that that could come
• 27:01
  Speaker 1: up because President Trump has said that, uh, that China
• 27:05
  Speaker 1: is manipulating its currency. And yet you know, you do
• 27:07
  Speaker 1: wonder if there was some kind of removal of some
• 27:10
  Speaker 1: kind of state control, the direction probably would be down
• 27:14
  Speaker 1: not up right. It probably would de appreciate. Beginning in
• 27:19
  Speaker 1: China cut the official interest rates, the FED moves to
• 27:23
  Speaker 1: a tightening bias the the yuan depreciates versus the dollar.
• 27:28
  Speaker 1: China is slowly starting to tighten up a little bit
• 27:31
  Speaker 1: in advance of a big political turnover at the end
• 27:34
  Speaker 1: of this year. This is the year of stability for
• 27:36
  Speaker 1: China economically, in advance of the political and leadership changes coming. Brendon,
• 27:42
  Speaker 1: before we, you know, sort of look at China as
• 27:44
  Speaker 1: a monolithic entity. Is it worth noting that they have
• 27:48
  Speaker 1: their own problems such as bad loans, and is it
• 27:52
  Speaker 1: possible that we are underestimating the issues that face the
• 27:57
  Speaker 1: Chinese leadership. It's not just all about the United States. Oh,
• 28:00
  Speaker 1: I agree, there's a domestic agenda that's been set, you know.
• 28:04
  Speaker 1: You know, if you one looks at the thirteen five
• 28:06
  Speaker 1: year Plan, the um Chinese government is very explicit and
• 28:10
  Speaker 1: where they want to drive not only their economy but
• 28:13
  Speaker 1: the society. And there there are liabilities on the balance sheet.
• 28:16
  Speaker 1: At the same time there's assets. And I think you
• 28:19
  Speaker 1: bring up a great point. China is a big country,
• 28:21
  Speaker 1: just not geographically, but the economy and parts of China
• 28:24
  Speaker 1: is doing very well right now. Domestic consumption parts of
• 28:27
  Speaker 1: China geared to more traditional um steal aluminum coal, you know,
• 28:33
  Speaker 1: a little bit of of of a tougher roach. You've
• 28:35
  Speaker 1: got this barbelled economy right now. So for President Jijmping,
• 28:39
  Speaker 1: it's an election gear. He wants to send a message
• 28:42
  Speaker 1: to his constituents back home. What's the best case scenario
• 28:46
  Speaker 1: that could emerge from this meeting for that purpose. I
• 28:49
  Speaker 1: think ultimately this is a sign of respect of face
• 28:53
  Speaker 1: and that that Trump is willing to meet with g
• 28:56
  Speaker 1: at this stage of his new presidency. Is a tree
• 29:00
  Speaker 1: in in and of itself. So I think it's a.
• 29:03
  Speaker 1: It's a good sign and shows something that's so important
• 29:05
  Speaker 1: to China, which is respect. Yeah, and so what about
• 29:08
  Speaker 1: for President Trump? I think ultimately Trump, you know, Trump
• 29:12
  Speaker 1: is going to one. He was elected with a set
• 29:17
  Speaker 1: agenda from the people who voted for him, and he
• 29:19
  Speaker 1: wants to satisfy those voters. At the same time, the
• 29:22
  Speaker 1: US is a global leader economically, and I think upsetting
• 29:28
  Speaker 1: what what will be an increasingly better mutually beneficial relationship economically,
• 29:33
  Speaker 1: um it especially around an area like North Korea where
• 29:37
  Speaker 1: China can help. Right, Brendan to Hearn, thank you so
• 29:39
  Speaker 1: much for joining us. This will be something that we
• 29:42
  Speaker 1: I am sure we'll talk to you again about soon.
• 29:44
  Speaker 1: Brendan to Hern is chief investment officer at Crane Shares
• 29:47
  Speaker 1: in New York City, talking about President Trump's meeting with
• 29:50
  Speaker 1: President Jejan Ping of China. Thanks for listening to the
• 29:59
  Speaker 1: Bloomberg p Now podcast. You can subscribe and listen to
• 30:02
  Speaker 1: interviews at iTunes, SoundCloud, or whatever podcast platform you prefer.
• 30:08
  Speaker 1: I'm Pim Fox. I'm out there on Twitter at Pim Fox.
• 30:11
  Speaker 1: I'm out there on Twitter at Lisa Abramo. It's one
• 30:14
  Speaker 1: before the podcast. You can always catch us worldwide on
• 30:17
  Speaker 1: Bloomberg Radio