 Hi everyone. Thank you again for coming today. Can we get a round of applause for this morning so far? This has been a pretty cool event. So my name is Jamie Mulligan. I work for Kaiser Permanente in our government relations area. I've been working on drug pricing for a few years now and I've had the privilege to meet a lot of you in this room and to collaborate on issues around drug pricing. And I think what's great about this particular panel is that we have an opportunity to bring together some of the amazing experts in this field to give us a deeper dive on why is this happening. And I think that there's a lot of reasons obviously and there's only so much we're going to be able to get through in the period of time for this panel. But again, we're very excited to be joined by all of you here today. So just to do a little bit of bio introduction, to my immediate left is Dr. Peter Bach, who I'm sure many of you know. Peter's the director of Memorial Sloan Kettering's Center for Health Policy and Outcomes. Through the drug pricing lab, he and his team educate policymakers, healthcare professionals, industry officials and patients on drug development and pricing. He served as a senior advisor to the administrator of the Centers for Medicare and Medicaid Services. And also served as a chair of the CMS expert panel that developed quality measures for cancer hospitals. He's currently the vice chair of the CMS Medicare Evidence Development and Coverage Advisory Committee. He holds a bachelor's from Harvard, a medical degree from the University of Minnesota, and a master of applied positive psychology from the University of Chicago. Just past Dr. Bach, we have Dr. Steve Pearson. Dr. Pearson is the founder and president of the Institute for Clinical and Economic Review, ICER, an independent nonprofit organization that evaluates the evidence on the value of medical tests, treatments, and delivery system innovations to encourage collaborative efforts to improve patient care and control costs. Prominent among its evidence reports are ICER reviews of new drugs that include full assessments of clinical and cost-effectiveness, along with suggested value-based price benchmarks to inform policymakers and guide price and coverage negotiations. Steve is a lecturer in the Department of Population Medicine at Harvard Medical School, and he also serves as a visiting scientist in the Department of Bioethics at the National Institutes of Health. And immediately to Dr. Pearson's left, we have Professor Fiona Scott Morton. Fiona is a professor of economics at the Yale University School of Management, where she has been on the faculty since 1999. Her area of academic research is an empirical industrial organization with a focus on studies of competition. From 2011 to 2012, Fiona served as the Deputy Assistant Attorney General for Economics at the Antitrust Division of the U.S. Department of Justice, where she helped enforce the nation's antitrust laws. She holds a Bachelor of Arts degree from Yale and a Ph.D. from the Massachusetts Institute of Technology. Thank you all again so much for joining us. What we're going to do to kick off this conversation is each panelist will have about three to five minutes to talk about some introductory thoughts on the subject matter. And I think we're actually going to kick it off with Fiona. Thank you very much for coming everybody, and thanks to the organizers for the invitation to speak. I have just two slides. I was asked to talk about the root causes of this pharma pricing problem, and so I want to spend my time on those concepts. So why do we have such high prices in the United States? First of all, the government does not engage in price regulation. We let the free market determine prices, and that works really well for things like bread and cars and so on. Why doesn't it work well for drugs? Because the physician makes the choice between drugs. You make a choice between a Ford and a Honda. Your doctor makes a choice between drugs. And as we heard on the last panel, most often the doctor doesn't even know the price of the drug that he or she is selecting. And moreover, if they did know the price, it would be specific to just one person because the next patient who comes in has a different PBM or different insurer and faces different net prices. So that's a really hopeless situation for the physician unless, for example, they work for Kaiser in which case somebody has already worked all of this out and gives them the formulary with the lowest price. And they only see Kaiser patients. Then secondly, we move to the patient who's the final consumer. That person's usually insured. What does that mean? They either pay a price of zero or some fix them out like a $20 copay or even a list price. You might have a high deductible plan, a thousand dollar deductible, and you go to the drug store and your EpiPen has a list price of $600 even though your PBM is paying $250 for that drug. None of those is a market price the way you would experience the price of your Ford automobile being a market price. How do we try to fix this in the U.S.? We had some success, I would say, 15 years ago with PBMs as shoppers who gather a large group of patients and move them around in response to price. And that, for reasons I'll discuss, is no longer working very well. So we just really don't have shoppers who respond to price and quality the way they do for bread or for cars. And then you don't get prices that make any sense if you're not in that world. Why now? Why are we having this conference now and not say five years ago? I think there are several reasons and they're listed on this slide. And these reasons all have been driving us toward higher list prices and actually higher net transaction prices also. First is the reason that Tony mentioned in the introduction, fragmentation and innovation. If I'm a large pharmaceutical company with a big portfolio, I understand that if I raise all the prices in my portfolio, the cost of medical care goes up and I have to go testify on Capitol Hill about why my drug's so expensive. If I'm a little biotech startup with one drug, my bonus payment and my buyout and my equity value depends on how much I can extract from the buyer, the big pharma buyer of my little drug. So those small firms charge extortionate prices because they only have one drug. And they free ride on the rest of the industry by causing conferences like this to happen. The design, well, they are. I mean, there are a lot of the problem and you'll see that the large firms in this space are actually somewhat more constructive because they understand that they would like the free market pricing of their drugs to last as long as possible. And if every drug is a half a million dollars, we can't keep going down the road we're on. The design of Part D makes the catastrophic region profitable. That leads to higher list prices, the protected classes where every drug must be purchased. It gives a buyer no bargaining power to shift share around. The biologic market share is growing and we have tiny amounts of biosimilar entry in this country compared to, say, Europe. We also have tactics in the biosimilar area that are entry deterrents and these have been defeated largely in the small molecule area, but they're now reappearing in the biologics area without a government response. So pay for delay, loyalty rebates and other kinds of abuses that reduce competition. And then I'll talk about generics and then come back to PBM consolidation because that's the hardest one. Generics actually, part of the reason we've had some high priced generics lately in this country is that the generics were actually price fixing. They were agreeing among themselves to divide up customers and not engage in price competition. That's illegal under the antitrust laws. The states have 48 states are pursuing those manufacturers and they will get in trouble. So those generic prices will come back down again. Scott Gottlieb at the FDA is trying to reduce time to market for generics and that's also very promising. And then the big problem is that buyer I mentioned on the previous page of the PBM. We've had a lot of PBM consolidation. I think that has reduced competition between PBMs and it's turned the PBM to a less good agent for the final client. And that less good agent is doing things like instead when the product hop arrives and the extended release arrives and all the doctors move their patients to the extended release. When the generic comes out, the PBM should move everybody back to the generic. That's what happens at the LHMO. I'm sure that's what Kaiser does. But if you're a PBM and you can extract a big rebate from the brand, you don't really have quite the incentive to move everybody back on to the generic. And that big rebate should be in a perfectly competitive market return to the final customer and the PBM wouldn't respond to it. But if you don't have enough competition, the PBM might be responding to that rebate. So we're seeing a lot of vertical mergers now with PBMs that I think is partially in response to this problem. And then why are consumers getting particularly worked up about this now and it's salient? Many consumers now have high deductible plans. So when the list price goes up and you're actually paying list price in the deductible, you have anti-insurance. So the idea of insurance is to lower your out-of-pocket cost when you get sick. That's the idea so that your expenses are smooth over time whether you're healthy or sick. When the list price of an EpiPan is $600 and the market price of an EpiPan is $250 and you're sick and you have a high deductible plan, you're not paying the market price. You're not paying a subsidized price because you have insurance. You're paying double the market price in the deductible. So insurance is actually causing you to pay more for medical care. And that's actually not what insurance is supposed to be doing and so consumers I think are reacting to that problem. So that's the setup. That's why we have a problem and that's why the problem has become particularly acute right now. Thank you. Alright, that was a great introduction. I think it's also helpful, I'll emphasize several of those, but it's also interesting just to reflect that when you talk to state Medicaid programs and to purchasers, this isn't the nature of the problem, this is the way that they feel it. It's just that health care costs overall are back to growing faster than the national economy and it's growing faster than the profits of companies and so it's just creating tremendous tension not just within the health care system about how to use resources as wisely as possible but it's looking at the state budget and seeing what's being stripped out of education and every other line item in order to feed the health care beast. And mixed with that then people look under the hood and they see pharmaceutical costs, the spending overall, seeming to rise more quickly than many of the other costs. We're just on the tail end of the hepatitis C era in which every purchaser and insurer in the country, maybe for the first time in years, had C-suite discussions about drug pricing and drug costs. And so now that's where the searchlight has pivoted and people are wrestling with both what is causing it but also obviously what they can do about it in this broader context of the growing sense that there's not enough money for the system and then obviously how that trickles down to influence the impact on individual patients. So within that I think there's also been a growing sense, we can talk about the problem of prices but there's a growing sense that we have a fantastic ecosystem if you will for innovation but when we get drugs at the end of the day we often, I've had a hard time really figuring out when we're getting a great value based on their price and when we're not, when we're getting ripped off. We've had no national approach to this as Fiona mentioned. So that just makes everybody even less comfortable with the status quo. So back to my short story of how, kind of the nature of how this builds on itself. We have a great ecosystem with fantastic innovation in this country, the ability to raise capital, to get the merits, I should say the fruits of basic science research handed off to you, the ability to do clinical research. This is the best place in the world to do all of that. And at the end of that stream you get a monopoly on your product and that gives you tremendous obviously on paper pricing power to start off with. Then you twin that with the idea that the pricing is not regulated and regulation is an ugly word in many quadrants of Washington but it basically means that the government is a price taker and if you honestly ask most people on the street and you told them a story of how your federal government basically turns around and says, how much do you want me to pay you for this? They would find that a bizarre way to run anything in terms of a market system to say how much can I pay you for this? You get to tell me. So we are price takers and linked to that again because we have no national infrastructure for it. We have had a relative lack of authoritative information even to guide private purchasers in thinking kind of systematically about the value that they are getting. Then on the private payer side, they get handed off drugs with a potentially very high list price at launch and they have limited negotiating tools. They have to cover in many ways through legal kind of requirements that they cover many or most new FDA drugs in one way or the other. Their patients certainly want access to these drugs and to be fair, the payers are part of a private market system too. They don't want to blow it up. They don't want to say, we can't do this, we need a single payer. That's the only way forward. You're not going to hear that from the health plan industry. They don't want to blow it up. They don't want to enrage their customers. They don't want to enrage the physicians. So they try to make do but the revenues keep going up. If drug companies are making more, it costs more for premiums. Health plans have higher revenue. So it's hard to figure out how to cut that chain. The other piece about the limitations on payers is that they have moved heaven and earth over the last 10 years or so to try to figure out how to share the financial risk around physician and hospital services on the commercial side and they feel like they've got levers to push. Conversations to have with hospitals and physicians, not always wholly successful, but conversations to have about how do we share the accountability for the costs and how do we share in the savings that we can produce while improving quality. You can't have that conversation with your fee-for-service drug company pill provider. It doesn't work that way for them. So again, payers feel like they can't draw them into that kind of culture of trying to seek shared savings. The last thing that I think is kind of interesting is if you talk to folks in the pharmaceutical industry, of course there's a huge spectrum. We should never consider them all one type of animal. CEOs differ. Internal company cultures differ. But what I've heard from many of them is that if you've been in the business long enough, it feels really different today than it did 15 years ago. Many will tell you that it feels now that the average CEO tenure is two to three years as opposed to 10. That their focus on the near-term revenue and profit stream is enhanced by all of the features of their compensation and share price that I know you've heard some about today. And that there used to be, of course we all look back to the golden era, but some folks in Pharmall say there was a golden era where we actually got it, that there was a social contract, that we were given power with the monopoly to price, and we were required to exercise restraint in order to keep the access and the overall costs in check. They say that's changed. Now, whether it's again their problem and they need to sort it out or whether it's a systemic problem, I just think it's important to realize that their ecosystem now drives a very different set of decisions around pricing than it used to not all that long ago. So that's my brief take on some of the kind of core underlying features. And I highlighted a few, obviously, that Fiona already mentioned. Peter? Thanks. Thank you. You haven't left me much to talk about. That's just a few problems. Let me emphasize a few things. So getting to this, so Fiona mentioned the, if you will, the free market or the marketplace setting prices. Steve also mentioned this and I'm going to come back to some of these, but one of the challenges I think in looking at this space and looking at pricing and is trying to get some reckoning whether or not this primary claim that the prices that we're paying for many of these new drugs are in line or out of whack. And that's actually not whack WAC for all of your nerds, by the way. And it's challenging. And so we've actually been trying to look at this problem. So we track things like cancer drug price launches and I can tell you adjusted for inflation, new drug launch in the cancer market. Prices are about up about a hundred fold since 1965, adjusting for everything else like standard dosing and stuff like that. And that doesn't even include the CAR T's which are again off the charts. And that kind of trend makes you start to worry. We and others have done a bunch of work trying to look at those prices and see like can we figure out if those align with, the rising prices align with other things that you would be willing to pay for like life prolongation or something like that. And every analysis we've done and others have done show the same general pattern which is that the prices are rising out of proportion to any measure of what that drug is buying in cancer. The prices have risen about 5x with respect to the survival benefits new drugs provide. Some of the work that ICER has done around the lipid lowering drugs shows pretty clearly that if you go back to the heydays of Lipitor, the old days of pharma, if you will, the restraint days, they're looking at the branded prices of Lipitor and other statins back when they launched compared to the new PCSK-9s. There's about a 10x difference in price relative to the magnitude of the benefit of, if you will, the LDL lowering of those drugs. And actually across the sector we just see these general prices increases out of proportion to value. And we've done other work trying to say like, okay, maybe we can find some other variable that explains it and you just can't. And so there's something sort of out of balance. And the other thing is it's hard to look at European prices and not scratch your head. And now the pharma industry is far under saying, oh, that's price controls. So that's different. That's sort of un-American, of course. But it's actually not, that's just, if you will, a label. It actually doesn't describe most of the European markets accurately at all. Most countries negotiate and they act as collective purchasers. And the deal is not, pharma will say, well, they'll just compulsorily license our product if we don't agree to a price. That is mostly a boogeyman. There are not a lot of examples of compulsory licensing from Europe and the context of them, we're in the setting of anti-competitive behavior and not price negotiation. But nevertheless, it's sort of interesting to look at a country like Ireland, which has just a handful of millions of people paying lower prices for essentially every branded product than we do in the U.S. purely through negotiation. It's got like four or five million inhabitants. Expresscripts has 80 million covered lives, 20x the number and can't achieve the same prices. So something, you look at those things and it's sort of out of whack. And you could say, well, Ireland, you know, they'll compulsorily license. It turns out Ireland is a major home of biotech and pharma. So they actually have an entire industry they depend on from a tax-based perspective that they're probably not going to be quick to alienate. So it's actually kind of an interesting window into what could be achieved if there were actually serious negotiation going on. So those are the kind of things that suggest that there's problems in the pricing. And then the consequences here, most of the data suggests actually that access even amongst the insured is poorer here than it is in most European countries. If you look at cancer drugs, which is where I tend to focus, you just look at the population of diagnosed cancer patients with respect to the volume of prescribed cancer drugs for them, we rank lower than the other major economies in the country or in the world. We still rank, even though the penetration into that population is lower, we still rank way higher per diagnosed cancer patient in terms of spending on cancer drugs. And as Fiona mentioned, our tools for dealing with these prices are intrinsically problematic. From a number of perspectives, I try to look at this thing as a doctor at an innovative biomedical research institution that provides care, hopefully cutting edge to patients with cancer. And so I look at this portfolio of cancer drugs that's coming along. It's very exciting. There's been some disappointments as well, but we're all very excited about CAR-T and IO and things like that. And then I look at the insurance products that we offer people for these treatments, and we generally say, well, okay, nobody else, the PBMs with 80 million-covered lives can't solve this problem, so we'll let individual patients with advanced cancer deal with it instead. So we'll stick them with a $5,000 deductible, and maybe they'll solve this pricing problem because the nation's PBMs cannot and neither can the federal government. And the problem with that are many fold, but the first is that I thought the purpose of innovation and investment was to create products that could help people, so I don't think that a system that creates financial barriers to accessing that help makes a lot of sense, or at least is cogent with this larger objective. But the other problem as Fiona mentioned is that high deductible plans, I disagree by the way that it's anti-insurance and I'll say why, but high deductible plans are intrinsically regressive, and equity I think is still a value that probably many people hold, particularly when so much of this is research and the reimbursement for drugs is supported by tax dollars. So on this anti-insurance question, it's true that because of the way drugs are priced that patients often pay list price, but I actually think we are struggling with a more basic question of what insurance should do for us, and we live in this hybrid world of insurance as essentially a subscription plan to the health economy, where in which case Fiona's right that this is a crummy aspect of the subscription if my first fee is $5,000, but you could also view it as a pure catastrophic benefit, and that is the frame through which high deductible plans come through, and so people would spend a lot of money to then access very low cost of subsequent care. By saying I disagree that it's anti-insurance doesn't mean I embrace the high deductible model. I just think that what we're really caught in here is do we think of insurance as a low cost subscription to the entire healthcare bucket, or do we think of it just as kind of an airbag for truly catastrophic spending, and that bifurcation actually characterizes, I think a lot of the policy debate is going on around the general structure of insurance. Let me just, I appreciate that, and I understand what you mean. My concern, the reason I call it anti-insurance is a high deductible is often promoted as something that lets the consumer shop with her dollars and be responsible for her spending and figure out who the low cost doctor is and the low cost drug and so on. So then to tell that patient, well you're supposed to shop, but we're going to give you prices they're going to be the list price that nobody pays and that's the price that you shop with. Then it kind of makes a mockery of that whole let's let market prices help people be responsible under their deductible. So I would rather see patients be able to shop among say EpiPen prices that were close to real market prices. That's all. I agree, I mean high deductible plans are crap. So that part I agree on and they don't have these market of forces and like I said I really don't think using individual cancer patients who are facing all these other problems to deal with prices when these big purchasers won't is a great solution, in fact it's the opposite of that. And I mean they're also designed for wealthy people and then sold to poor people. So it's great for high income earners like physicians, like I can invest my HSA in the market, great. It's not designed for, that's not who we're selling these things to. So let's talk a little bit more about money. I think one of the things that I mean again thank all of you for your sharing just now because I think it really puts into clear relief just how complex this area can be. So there's actually two questions that I have and any one of you who have a take, feel free. The first is if anyone has additional thoughts on the incentives specifically that the decision makers at the pharmaceutical companies are dealing with and the two to three year cycle of being in a leadership position and then the way the compensation works and any other thoughts on what that might look like in terms of why that shift happened and any predictions in that area. And then just due to time, the second question that I would love for you all to mull is if you were talking to a policy maker and you could really only dig in on one part of why we are where we are, what would be the thing that you would lead with either because you think it's something that there isn't enough attention paid to or because you think it's really one of the most critical aspects of the whole conversation. And I know those are two kind of big questions, so I don't know if anyone's willing to volunteer themselves as tribute to go first. Yeah. Yeah, so actually I doesn't surprise me that the general erosion if you will of this long-term social contract in the industry is occurring that, you know, the benevolence doesn't generally persist when too much power is concentrated. But I actually think the primary aim should be on all of the entities that are feeding additionally at the trough. And I'm not saying that pharma companies are, you know, beyond reproach or anything like that or I think that they need the level of profits that they do need to fuel innovation. But a bigger problem is that essentially the entire system is geared towards proportional profit increases when drug prices rise. And so even the PBMs, and like everyone's favorite thing to beat on right now, but even the PBM structure ultimately feeds off of this pharmaceutical industry. And so, fine, they keep, you know, they get the bigger rebates they get, they get to keep some of it, maybe about 11%, then there's these other fees, but they just all do better. Even insurers at some level, as long as they can keep premiums aligned, do better, right? The big lament from insurers around Hep C was not how much the treatments cost. It was that they didn't have warning, so they couldn't kind of accommodate premium increases to capture it, and then they have a piece on top of it. You know, doctors in hospitals, including mine, when we administer drugs, we'd mark them up. We don't get to mark them up that much into the Medicare program. It's 6%, and then it's actually about 4.3% with this by statute. But to the commercial, we concentrate market power and average markups for hospitals for infused drugs is more than 100% in the commercial market. 340B hospitals, it's even more. Many of these hospitals will then get specialty pharmacies. The gross profits for the pharmacy industry are about $80 billion this year, just from the moving of drugs. So like everybody, except those who are paying premiums and paying out of pocket, is benefiting from a rising share here. And what we need to, policymakers should be thinking about is trying to make this chain, I would prefer neutral, rather than adverse, only because I worry about the reverse effect of rationing and not making it too hard to manage a formulary. But that's actually where policymakers should aim their target, because we need to at least get out of a system where I, I'm not an oncologist, but if I were, and I had a choice between a $10,000 drug and a $1,000 drug, I am heavily incentivized to prescribe the $10,000 drug. I would just like to get to neutral on that. I would add one interesting thing about what's been emerging around the role of the PVMs as part of a very opaque system, is that again, the purchaser community, especially the more sophisticated self-insured community, is basically done with that. And they've told their PVMs, we're not doing that anymore. And there's already data that shows a huge shift in the contracting between purchasers and PVMs where they're either getting rid of rebates, or they're either keeping them all, I should say, or they're paying a small administrative fee. They're really moving away from this model where they don't really know how much rebates coming in and they get some of it and it's, they're all these other fees. They've got consultants out the back door now telling them how to renegotiate these contracts and kind of sort that out. So the PVMs are looking at a new landscape themselves, but ultimately I think that's one of the sleeping giants in this story, is the purchaser community. And again, they often talk a big show at the end of the day, they don't want their single employee to call them up and say, my son or daughter can't get the drug that, you know, they want, and what are you doing? So they are always conflicted. But now I'm getting the sense that the purchaser community, there's really reached a tipping point and that they are willing to think much more aggressively, both with their PVMs, but even outside the PVM in terms of negotiating. So if I were going to say the one, I think the second part of your question was what's the one thing. I do think people have to fundamentally decide in their own minds whether this is a problem that can be solved by fixing competition or not. If it can, you figure out how to speed generics to market. I mean, there's no reason not to do all these things, but you speed generics to market, you get biosimilars in, maybe you get rid of protective classes, all the things that kind of, if you will, inhibit true power of negotiation. Or you decide that no matter what we do, that's not going to work. And like water and electricity, there's going to have to be some kind of public utility approach to saying at least in certain circumstances, maybe where there is a new drug that faces no competition, we have to have some kind of regulation slash price ceiling, something along the lines of that. And you'll find people obviously focused sometimes much more in one of those camps rather, but it is a fundamental to divide. To me, if I were to say the one thing I would say, it's this idea of negotiation. Should Medicare negotiate? To me, you can link that to the idea of making sure that we don't have situations where the market creates every incentive aligned to have a higher price. And again, that's frequently in areas where they used to call new drugs, where drugs would come in to coverage without, at least for some time, without any real competition. There you have to have an approach, and this is what the Europeans are the best at, at just saying, okay, great new drug, we want to cover it, but we got to sit down. We have to have some independent approach to judging what a fair price would be in accordance with the value to patients. We have to look at our budget, by the way, depending if we're Ireland or Switzerland or wherever, and we'll go our way through that. So I think that ultimately the idea of having information to drive negotiating by states, and we're seeing that in New York. I know if you know this, but later this month New York is having its first public meeting of its Drug Utilization Review Board. New York has established a spending cap for drugs within its Medicaid program. They have been exceeding that cap, and so they have a new law passed this year that allows them to target a lower payment than even Medicaid would ask for through supplemental rebates. And if they can't get there, they have a public meeting, and the first one is going to happen in April. It's now been announced, it's a company called Vertex, Cystic Fibrosis Drugs, will be on the table, and the question for New York will be what's a fair price for the state of New York to pay for these drugs? So they are empowered to ask that question, they're empowered to use independent analysis, they're using our report to help get there, and then we're going to see how, you know, in a sense what the dynamic is following that meeting. But there is movement both on the private side and in the state public insurer side that I think offers the opportunity for the basic idea of negotiation to really play out in a way that I think will be very important. I think negotiation is key, but the way that you have strength as a negotiator is if you're willing to walk away, and that's why the competition piece of this is so important. If there's a competitor drug I can walk away from a drug that's charging too much. If the Cystic Fibrosis Drug is the only one available and the company doesn't move is the state of New York willing to say we're not buying? I don't know. I can tell you what the law says, and they've created this new bag of sticks that they can basically reach into and start to club the manufacturer. And it includes the most onerous disclosure requirements I've ever seen, disclosing every single price they charge in every market in the world, everything about the development costs where they got some of the science and other kind of federal investments involved. So there are lots of ways. It's still America, so they don't call this price setting, but they do call it pretty close to that because of the nature of the sticks. So I come down on the side but before we move to regulation let's try actually having competition. Drug companies I would say claim that we're in competitive markets but for the reasons I outlined at the beginning of the panel I think there are many situations where competition really isn't working. So it's very helpful to have the people who want regulation out there beating the drum really loudly because that makes competition sound more attractive to the parties in the marketplace I think. So I would encourage everybody to advocate for both regulation and competition. I think what Peter said about how every single party along the supply chain gets a percentage of the list price cannot be overstated. If the physician is being paid on percent if the distributor is being paid on percent if the retailer is being paid on percent if the PBM is being paid on percent then everybody wants a higher price and that's really a problem. The cost of moving a box of pills around really does not rise with the price of the medication inside so there are better ways to write those contracts. My one thing that I would focus on is the issue of kickbacks that I asked about earlier today. I think we have a real problem in incentivizing competition between drugs when the consumer is being paid to consume one drug versus another. So let's imagine we have a biologic that's $100,000 and there's a competitor that's $40,000 if I have to pay 30% of the list price either way I can't afford that so I send in my tax return to one of them and the manufacturer gives me patient assistance and I get $30,000 a year paid so that I'm on this $100,000 drug and my insurer is paying $70,000. My insurer would like to move me to the $40,000 drug but I don't want to move because my catapocket costs are zero because the manufacturer of the more expensive drug is paying me to shift a $70,000 bill to my insurer. That's a huge competition problem. If instead we said look that manufacturer payment is just disallowed manufacturers may not give financial assistance to patients. That would allow PBMs to move and insurers to move around business. Now then you say wait we're exposing the consumer the patient to a $30,000 copay and that's why these rules I think need to be combined with a state level perhaps cap on out-of-pocket costs. My understanding from PBMs is that people are quite responsive to out-of-pocket costs that range from zero to say 200. So if you wanted a patient to consume the $40,000 medication that could have a zero out-of-pocket cost to the patient and the $100,000 drug could have a $195 cost to the patient or a $200 cost to the patient per month and that's quite salient. Do you want to pay nothing? Your free medication or do you want to pay $200 a month? I think you get people to shift drugs under those circumstances and then the insurer is saving $30,000 every month by having the patient on the less expensive drug and actually the more sophisticated last step of that analysis is the economist who says in equilibrium the price of that $100,000 drug doesn't stay at $100,000 anymore because they've lost all their customers. They're going to have to come down to 70 or 60 or whatever the competition is charging. So that's the way we get to competition by getting rid of these kickbacks that go to patients. Thank you so much. Unfortunately we're actually out of time for this panel. So one thing I did want to say for those of you who are out in the audience with your questions, one major advantage of this event today is that there is a lunchtime and I believe all of our kind speakers will be here during lunchtime so feel free to write down your questions and we also do have a solutions panel this afternoon because obviously we've begun to excavate a bit here and you may be wondering what to do next and I also know that all of these speakers have plenty of ideas in that area so I think before the actual hook pulls us off the stage we will transition to the next panel but can we get a round of applause for our panelists today? Thank you so much.