Latest / Making Medicine / Can We Fix Healthcare? A Look Inside Our System
Transcript
- 0:01Speaker 1: You're listening to Making Medicine Stories from the Early stage
- 0:05Speaker 1: life Sciences Ecosystem, a podcast that explores the people and
- 0:09Speaker 1: deals that have led to the medicines, devices, and technologies
- 0:12Speaker 1: that keep us healthy. Let's get into the show.
- 0:17Speaker 2: Hello and welcome to the Making Medicine Podcast. I'm your host,
- 0:21Speaker 2: John Stanford and joined today by a known quantity in
- 0:25Speaker 2: the healthcare policy realm, Brian Reid, principle at Read Strategic
- 0:29Speaker 2: and the author of the must Read Cost Curve newsletter. Brian,
- 0:33Speaker 2: Welcome to the podcast.
- 0:35Speaker 3: Hey, thanks so much for having me. What a kick
- 0:37Speaker 3: to ticket to talk to someone who's again talked about
- 0:41Speaker 3: must Read. You all are really generating a lot of
- 0:43Speaker 3: the data we need to dissect some of the topics
- 0:45Speaker 3: that we'll get into.
- 0:47Speaker 2: Well, and we have lots to talk about because, as
- 0:50Speaker 2: you've pointed out many times, there's just a lot going on.
- 0:54Speaker 2: And I don't think it's going to be a quiet
- 0:55Speaker 2: fall either. I think this will be the first of
- 0:58Speaker 2: many episodes where you come on and share your wisdom
- 1:02Speaker 2: and thoughts. But I always like to begin with what
- 1:05Speaker 2: our listeners want to hear, and that's how did people
- 1:08Speaker 2: get to where they are? What's their background and your
- 1:12Speaker 2: personal mantra of we can't build a better healthcare system
- 1:16Speaker 2: until everyone understands the system today. How's that sort of
- 1:20Speaker 2: a guiding light and how did that take you on
- 1:22Speaker 2: your path to creating read Strategic.
- 1:25Speaker 3: Yeah, I've been in communications my entire career. The first
- 1:28Speaker 3: ten years or so, I was on the journalism side.
- 1:30Speaker 3: So I've always worked in health and medicine because I
- 1:32Speaker 3: find it really interesting and I find that's a place
- 1:36Speaker 3: where that communications is really important. Explaining this to the
- 1:40Speaker 3: people who need to understand, whether that's the health and
- 1:43Speaker 3: medicine side of it, whether that's the public policy side
- 1:45Speaker 3: of it, becomes really really important because it turns out,
- 1:48Speaker 3: if you don't understand the basics of how your body works,
- 1:52Speaker 3: if you don't understand the basics of how health policy works,
- 1:55Speaker 3: you end up getting really bad advice and really bad solutions.
- 1:58Speaker 3: And in the same way lows the advice from your
- 2:01Speaker 3: doctor makes your diseases worse. I think getting lowsy advice
- 2:04Speaker 3: about health policy makes our health system worse. And so
- 2:07Speaker 3: the goal has always been what can we do to
- 2:10Speaker 3: make this better? Smarter? So a couple of years ago
- 2:14Speaker 3: I launched read Strategic in part to really zero in
- 2:18Speaker 3: on that question of can we talk about the system
- 2:22Speaker 3: in ways that are better because I got really interested
- 2:24Speaker 3: in the health policy bit in twenty fourteen, twenty fifteen,
- 2:27Speaker 3: twenty sixteen, where you had, in rapid succession the introduction
- 2:31Speaker 3: of hepatitis C drugs in Martin Shcrelly and the EpiPen debacle,
- 2:36Speaker 3: and what tied all of that together was that we
- 2:39Speaker 3: weren't having a particularly smart discussion about value and where
- 2:43Speaker 3: the money was following and why things were the way
- 2:45Speaker 3: they were. And that's when it first became clear that
- 2:48Speaker 3: there were these big reputational hazards being created that didn't
- 2:52Speaker 3: necessarily link up with sound public policy.
- 2:56Speaker 2: One of the constant threads I think is where you
- 3:00Speaker 2: touched on there this disconnect between what policymakers believe here
- 3:05Speaker 2: maybe see in the media, and the reality of our
- 3:10Speaker 2: very in my view, broken healthcare system or certainly broken
- 3:13Speaker 2: health payer system. Do you point to that disconnect? What's
- 3:19Speaker 2: the rink cause that this is just so complex and
- 3:25Speaker 2: the complaint it's that there's not really bias one way
- 3:29Speaker 2: or the other, and it's just by the time you
- 3:31Speaker 2: pull it, all the threads of the healthcare system they're tangled,
- 3:35Speaker 2: they're nodded, and they're mixed incentives, and we just can't
- 3:39Speaker 2: get to the bottom of why things are the way
- 3:41Speaker 2: they are, or is there more Is there something else
- 3:45Speaker 2: at play? Why do we have such a disconnect From
- 3:47Speaker 2: a professional communicator standpoint, So.
- 3:50Speaker 3: I think there are two ways of looking at it,
- 3:52Speaker 3: you know. I think one is the benign way, which
- 3:54Speaker 3: you kind of laid out, which is say, there's just
- 3:55Speaker 3: a lot of moving pieces, this is hard stuff. We
- 3:57Speaker 3: have a complicated system. That's the American way, and we
- 4:01Speaker 3: all have an obligation to try to not this this
- 4:05Speaker 3: incredible system. I think the more cynical way of looking
- 4:08Speaker 3: at it is there are huge parts of the healthcare
- 4:09Speaker 3: system that benefit specifically from complexity, and so when you
- 4:14Speaker 3: look at how things are set up contractually, how regulations
- 4:18Speaker 3: are written and implemented, those who benefit from things being
- 4:23Speaker 3: more opaque, less transparent, more complicated. So in part, we
- 4:28Speaker 3: have an obligation to do our best to explain what's
- 4:31Speaker 3: really going on. But I also think there's probably from
- 4:34Speaker 3: a crusading standpoint, and I have no desire to spend
- 4:38Speaker 3: the time with you pointing fingers. But if we're going
- 4:40Speaker 3: to point fingers. Let's point at those who weaponize complexity,
- 4:44Speaker 3: regardless of where they come in the healthcare system, because
- 4:46Speaker 3: that just makes a bad problem even worse.
- 4:49Speaker 2: And I think it truly has become weaponized. And we
- 4:53Speaker 2: very rarely actually get round to talking about the patients.
- 4:57Speaker 2: We all spend so much time pointing thing and you
- 5:00Speaker 2: look at how we've in Congress holds, hearings or the
- 5:03Speaker 2: administration talks about healthcare, we're usually blaming someone and not
- 5:08Speaker 2: necessarily putting patients first. We're in this moment of dynamism,
- 5:15Speaker 2: to be sure, particularly in the space you and I
- 5:18Speaker 2: pay a lot of attention to the pharmaceutical landscape and
- 5:20Speaker 2: life sciences, and the show is called Making Medicine in
- 5:24Speaker 2: a lot. We're two years in from the Inflation Reduction Act,
- 5:28Speaker 2: where we've gotten a host of some data, not all
- 5:32Speaker 2: the data that I think you and I would like,
- 5:34Speaker 2: in terms of some of the rationale around drug prices.
- 5:37Speaker 2: What's standing out to you? What and there are a
- 5:40Speaker 2: few lenses to this question, what stands out to you
- 5:43Speaker 2: in terms of what's going to have impact to patients?
- 5:47Speaker 2: And then what stands out to you that we're not
- 5:49Speaker 2: talking about or we're talking about in the wrong way.
- 5:52Speaker 3: Boy, there's lots unpacked there. So let's start with one
- 5:55Speaker 3: of the questions that really permeates all of this is,
- 6:00Speaker 3: and I know this is something you think about every day,
- 6:02Speaker 3: So what's the impact going to be on innovation? And
- 6:04Speaker 3: I don't think we're having a particularly smart dialogue about
- 6:07Speaker 3: that because I think there are two ways of looking
- 6:09Speaker 3: at it. The first is the basic economics. Will we
- 6:12Speaker 3: get less R and D? Will we get fewer new drugs?
- 6:16Speaker 3: And that's one where the answer seems pretty clear. You
- 6:19Speaker 3: can argue about the degree, but it's a two part process.
- 6:23Speaker 3: One is will there be less revenue available to the
- 6:25Speaker 3: biopharmaceutical industry? And again the answer there seems clearly yes.
- 6:29Speaker 3: Maybe it's the six billion that the Biden administration has promised.
- 6:32Speaker 3: Maybe that number will go up, maybe that will go down.
- 6:34Speaker 3: There's clearly an impact. And then the second question is great,
- 6:38Speaker 3: what's the connection between a decrease in revenue and a
- 6:42Speaker 3: decrease in R and D and a grit. There's a
- 6:43Speaker 3: great economics literature that makes very clear that there is
- 6:46Speaker 3: a connection there. More money means more R and D,
- 6:49Speaker 3: Less money means less R and D. This ought not
- 6:51Speaker 3: be a particularly controversial take, and yet there is this
- 6:56Speaker 3: undercurrent of skepticism about whether or not there will be
- 7:00Speaker 3: any impact whatsoever on industry. So I just want to
- 7:02Speaker 3: kind of set that framework of saying there will be
- 7:05Speaker 3: an impact, and we can argue about the degree, but
- 7:08Speaker 3: it's really hard to have a smart conversation that doesn't
- 7:11Speaker 3: start with the acknowledgment that, yes, we're going to get
- 7:14Speaker 3: less of this thing we want because we've implemented price controls.
- 7:18Speaker 3: So that's one way of looking at it. The second
- 7:20Speaker 3: way of looking at it is to say what kind
- 7:22Speaker 3: of R and D are we incentivizing? And again, you
- 7:25Speaker 3: spend a lot of time thinking about this right Like
- 7:27Speaker 3: you know, there's the small molecules get four years less
- 7:31Speaker 3: of protection than biologics. There's a huge discouragement to continue
- 7:35Speaker 3: researching a drug after it's been approved because the moment
- 7:38Speaker 3: of drug has been approved, you're on this IRA clock.
- 7:41Speaker 3: The IRA applies to medicare, so there's probably a disincentive
- 7:45Speaker 3: to work on drugs that affect predominantly an older audience.
- 7:50Speaker 3: If you want to have more than one orphan indication,
- 7:52Speaker 3: you're no longer protected from the IRA. You have all
- 7:56Speaker 3: of these things, and so if you add them up,
- 7:58Speaker 3: you know, what's an example of a small molecule affecting
- 8:01Speaker 3: mostly seniors where there's traditionally been a lot of post
- 8:04Speaker 3: marketing development. I mean, what's the classic case here, or
- 8:08Speaker 3: al oncology. So we've created the system that very explicitly
- 8:13Speaker 3: discourages the creation of cancer pills. And I don't think
- 8:18Speaker 3: anyone in Congress passes law saying we want to pick
- 8:21Speaker 3: winners in losers, and we really want oral oncology drugs
- 8:25Speaker 3: to be in the loser column. You know. I think
- 8:27Speaker 3: that really gets at the weird incentives here, and part
- 8:29Speaker 3: of the reason why industry is not necessarily trying to
- 8:33Speaker 3: scuttle the whole thing. They're just trying to fix some
- 8:35Speaker 3: of these broken incentives so that if you are an
- 8:39Speaker 3: early stage company, if you are a researcher with a
- 8:41Speaker 3: great idea about a cancer pill, no one's ever going
- 8:45Speaker 3: to come to you and say, well, remember the government
- 8:47Speaker 3: really doesn't want you to develop this kind of drug.
- 8:50Speaker 2: What you just laid there. I think we're going to
- 8:53Speaker 2: freeze frame repeat because I've tried to explain to a
- 8:59Speaker 2: lot of policy makers it's not death by a thousand cuts,
- 9:02Speaker 2: but it's not death by one cut either, and there
- 9:06Speaker 2: could be easily mapped patient populations. Or maybe you feel
- 9:09Speaker 2: like you have the manufacturing setup and the pair negotiations
- 9:12Speaker 2: and you can get a drug to market quickly, and
- 9:15Speaker 2: maybe nine years is going to be enough if everything
- 9:19Speaker 2: is perfect and set up. But I love what you
- 9:21Speaker 2: just did there. It's about layering on top. Maybe it's
- 9:25Speaker 2: the small molecule limitation in addition to the ability to
- 9:29Speaker 2: seek a further indication, which we see a ton in
- 9:32Speaker 2: the oncology space, and then layer on top of that
- 9:35Speaker 2: that you don't want to deal with price controls, stay
- 9:38Speaker 2: out of the medicare population, and when you add those
- 9:42Speaker 2: on top of each other, I just think what you
- 9:44Speaker 2: laid out there, and this is the kind of brilliant
- 9:47Speaker 2: to all the listeners. This is the kind of concise
- 9:49Speaker 2: and clear reading you get from cost Curve newsletter. So
- 9:52Speaker 2: I encourage you to sign up and make sure you
- 9:55Speaker 2: read it like we do religiously. It's the accumulated effect
- 9:59Speaker 2: there that I think is so powerful, and you said
- 10:02Speaker 2: it very well. I want to also come back to
- 10:05Speaker 2: use that word skepticism because one of the reasons I
- 10:07Speaker 2: was so keen to have you on the show. Is
- 10:10Speaker 2: some recent writing you did. The moment these price controls
- 10:13Speaker 2: came out, the announced prices, so much media was devoted to, well,
- 10:19Speaker 2: the CEOs are saying on their earnings calls that they're
- 10:23Speaker 2: going to be okay, and therefore we're not losing any innovation.
- 10:28Speaker 2: There was that skepticism. I think you and I share
- 10:31Speaker 2: the sort of econ one oh one point of you
- 10:33Speaker 2: take money out of the system. Some of it was
- 10:35Speaker 2: at least going to R and D who knows how much,
- 10:37Speaker 2: but some of it was can you expound a little
- 10:40Speaker 2: bit further. I don't want to put words in your mouth,
- 10:43Speaker 2: so I won't say they have it wrong. But when
- 10:45Speaker 2: you hear someone saying, well, the CEO on the earnings
- 10:50Speaker 2: call said will be okay, therefore innovation is okay? Does
- 10:54Speaker 2: that argument hold water for you?
- 10:57Speaker 3: I mean, so, let me express some sympathy to the journal.
- 11:00Speaker 3: You know, this at one point was my tribe. You know,
- 11:03Speaker 3: they are trying to answer a legitimate and important question,
- 11:07Speaker 3: which is how badly is this law hurting pharmaceutical companies?
- 11:11Speaker 3: And the nice thing about the stock market is you
- 11:13Speaker 3: have this updated every moment of every but in the
- 11:16Speaker 3: trading hour is this scorecard, and so it's very tempting
- 11:20Speaker 3: to say, when event X happens, what's the impact, you
- 11:24Speaker 3: know why over here on the stock market, And if
- 11:27Speaker 3: there's not a direct one to one correlation, it becomes
- 11:29Speaker 3: very tempting to say, ah, there's been no impact. But
- 11:33Speaker 3: the reality is that there has been an impact. It's
- 11:36Speaker 3: just been anticipated by the market. So Wall Street is
- 11:39Speaker 3: a prediction machine, and over the last two years, analysts
- 11:42Speaker 3: and executives have really looked at the law, looked at
- 11:45Speaker 3: how it's been implemented, and made a series of guesses
- 11:48Speaker 3: about how these price controls were going to finally manifest
- 11:53Speaker 3: when they were announced. And it turns out that the
- 11:55Speaker 3: executives and analysts and investors got it right that there
- 12:00Speaker 3: is going to be an absolute impact. And if you
- 12:02Speaker 3: look at as to sales estimates for twenty twenty six,
- 12:05Speaker 3: two years ago versus today for those ten drugs, invariably
- 12:09Speaker 3: they're all lower. The reality is, though the market had
- 12:13Speaker 3: eighteen months to come to terms with this, and when
- 12:16Speaker 3: the actual event happened, it just wasn't you know, it
- 12:20Speaker 3: didn't defy expectations. So it's not that there wasn't an impact.
- 12:23Speaker 3: It's just that the impact wasn't different than it was expected.
- 12:27Speaker 3: So again it's not the wrong question to ask, it
- 12:30Speaker 3: was just the wrong metric to use. And I think
- 12:32Speaker 3: the other interesting question that is, Okay, what are some
- 12:35Speaker 3: metrics you could use to say is this law impacting industry?
- 12:38Speaker 3: And I think this is a place where you all
- 12:40Speaker 3: have done some really interesting work here starting to unpack
- 12:44Speaker 3: that question. Look, the stock ticker of MIRK may not
- 12:48Speaker 3: be a great metric here, but there are other metrics
- 12:51Speaker 3: we can look at, at least for circumstantial evidence.
- 12:54Speaker 2: I think you are right, and I think as an
- 12:56Speaker 2: industry and as observers of industry and as advocates in
- 13:01Speaker 2: my case, at least for the early stage part of
- 13:03Speaker 2: the ecosystem, we do have to do better. We have
- 13:07Speaker 2: to constantly be educating about why the stock ticker isn't
- 13:13Speaker 2: the adequate representation. And then another one that I've kind
- 13:18Speaker 2: of tussled with some research that's come out lately that
- 13:21Speaker 2: I think you've seen as well, pointing to well, small
- 13:25Speaker 2: biotechs do so much of the innovation, and all grant that,
- 13:28Speaker 2: and I think even some of the large companies will
- 13:31Speaker 2: absolutely grant that. I feel like some of the antagonists
- 13:35Speaker 2: in this space point to that as a flaw in
- 13:38Speaker 2: the system. Small biotechs do early stage up through phase two,
- 13:43Speaker 2: maybe phase three, and then the large companies come in
- 13:46Speaker 2: and acquire I'd say from our perspective as investors, that's
- 13:50Speaker 2: a sign the system's working. But I don't know how
- 13:53Speaker 2: you react to that.
- 13:55Speaker 3: This.
- 13:55Speaker 2: I feel like we're pushed to feel like it's small
- 13:58Speaker 2: versus big, but we see it very much as small
- 14:02Speaker 2: and big are what make the US system work so
- 14:06Speaker 2: well from a development standpoint.
- 14:08Speaker 3: Well, and I think you know better than I that
- 14:10Speaker 3: when we talk about biotechnology, or when we talk about
- 14:13Speaker 3: small companies, that's not remotely a homogenous group. And there's
- 14:17Speaker 3: a big difference between a researcher with a good idea
- 14:20Speaker 3: going out there seeking venture funding, seeking Series A funding,
- 14:25Speaker 3: and a company maybe they got proof of concept, maybe
- 14:27Speaker 3: they're in phase two, they're looking to they're looking to
- 14:31Speaker 3: be acquired by a company that can commercialize and help
- 14:34Speaker 3: patients in a way that they don't have the resources
- 14:36Speaker 3: to do. Those two kinds of companies are not their
- 14:40Speaker 3: different species. They exist along the spectrum. And so I
- 14:44Speaker 3: think there's been a lot of analyzes that have just
- 14:46Speaker 3: kind of said small companies or small companies and big
- 14:48Speaker 3: companies are big companies, and they're not really looking at
- 14:52Speaker 3: the disparate impacts here at how the whole system fits together.
- 14:56Speaker 3: And again, unless you've been in it, you know sometimes
- 14:59Speaker 3: that's hard to explain or make clear. But the reality
- 15:02Speaker 3: is for every one of these little subcategories, their impacts.
- 15:05Speaker 3: But let's be clear, no one is getting a tailwind
- 15:08Speaker 3: from the current policy environment. The only question is how
- 15:12Speaker 3: much harder is it than it was? And for some
- 15:15Speaker 3: companies it's a lot harder. And you've seen that in
- 15:18Speaker 3: the venture funding numbers. You've seen that in the companies
- 15:20Speaker 3: that are pulling programs. You're beginning to see the anecdotal
- 15:24Speaker 3: evidence of where these phenomenon are having the biggest effect.
- 15:28Speaker 2: Once again, so well put, I know we only have
- 15:31Speaker 2: a little time left. You also recently put out some
- 15:35Speaker 2: great commentary of what you're watching this fall, and I
- 15:38Speaker 2: would love to have you back on as some of
- 15:40Speaker 2: these things play out. We've talked a lot about IRA implementation.
- 15:45Speaker 2: What else is on your mind as the election years,
- 15:48Speaker 2: as the year wraps up, what's catching your attention in
- 15:51Speaker 2: this space?
- 15:54Speaker 3: You know, It's one of those deals where it's like
- 15:56Speaker 3: watching for sharks, you're never quite sure which one is
- 15:58Speaker 3: going to surface. But the Biden administration still has a
- 16:02Speaker 3: pending rule that would really undermine the intellectual property regime.
- 16:07Speaker 3: There is a marchin thing that needs to take action
- 16:10Speaker 3: at some point. PBM reform has been talked about as
- 16:14Speaker 3: a candidate for occurring in the lame Duck, and that's
- 16:17Speaker 3: clearly something that's going to be important in shaping that
- 16:20Speaker 3: broader environment. Dit O with three point forty B. I
- 16:23Speaker 3: think there's a lot of IRA pieces here that are
- 16:26Speaker 3: still how is this going to get operationalized? That are
- 16:29Speaker 3: still not completely clear, how the money is going to
- 16:32Speaker 3: flow through the system, what role the government is going
- 16:35Speaker 3: to take in protecting patients from efforts that may be
- 16:38Speaker 3: steering patients away from better options options their doctors want
- 16:43Speaker 3: lower cost options. I think just a number of lines
- 16:46Speaker 3: in the water here, and it's not really clear you
- 16:49Speaker 3: know which ones are going to be dramatic, but I
- 16:51Speaker 3: think we can say in totality there's a lot of
- 16:54Speaker 3: uncertainty now around the system, and I think there's a lot,
- 16:56Speaker 3: quite frankly, to get to where we started. That's going
- 16:59Speaker 3: to I'll be confusing to the general public if there's
- 17:02Speaker 3: not a real concerted effort to make these things clear.
- 17:05Speaker 2: I can't stress enough what a body of information you
- 17:09Speaker 2: are and timely in distilling that in your newsletter? Can
- 17:14Speaker 2: you tell listeners if they did want to sign up subscribe,
- 17:19Speaker 2: where can they do that? How can they get the
- 17:21Speaker 2: kind of insights that you provide on a regular basis?
- 17:25Speaker 3: Sure? So you can set it for my newsletter at
- 17:27Speaker 3: my consultancy's website, which is read Strategic dot com. And
- 17:31Speaker 3: I am on LinkedIn all the time. I may not
- 17:35Speaker 3: be the most famous Brian Read, but since you're LinkedIn
- 17:37Speaker 3: to me, I should be a second degree connection to
- 17:39Speaker 3: all of your listeners. So those are probably the two
- 17:42Speaker 3: best places to track me down.
- 17:44Speaker 2: Well, he is certainly the most famous Brian read in
- 17:47Speaker 2: life sciences, policy and the LinkedIn and absolute expert LinkedIn
- 17:52Speaker 2: follow especially because he engages with some members of Congress
- 17:56Speaker 2: and you can see policy sharpen in real time if
- 18:00Speaker 2: you follow Brian, So do that. Thank you again for
- 18:03Speaker 2: joining me, although we hope to have you back on
- 18:07Speaker 2: very soon again. I do encourage people to subscribe to
- 18:10Speaker 2: Brian's cost curb newsletter and get to know him, get
- 18:14Speaker 2: to follow his work because he is a thought leader
- 18:16Speaker 2: in this space. You can learn more about Incubator as
- 18:19Speaker 2: always at Incubatecoalition dot org. While you're there, maybe give
- 18:23Speaker 2: us a follow on LinkedIn, x and YouTube. Give Brian
- 18:26Speaker 2: a follow too, and a special thanks to Grace Moster
- 18:30Speaker 2: in making today's podcast, and as always, keep innovating.
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