 Well, thank you, Peter. Thank you, Dr. Azari. Thank you, Tony Beretta, for kicking off the day with some super interesting and provocative thoughts. We're now going to transition to our first panel of the day on defining and assessing drug value and it's going to be moderated by my Kaiser Permanente colleague, Dr. Maisha Draves, and I'll invite them to come up while I give a little bit information about Maisha. She's the medical director for pharmacy in Northern California for the Permanente Medical Group and in this role she collaborates with the chair of the Regional Pharmacy and Therapeutics Committee on Formulary and Pharmacy Policy and with Drug Information Services Group on strategies related to drug shortages and recalls. She provides oversight for pharmacy related research and develops strategies for KP's Northern California Drug Utilization Management efforts, and she received her medical degree from Stanford of the East, also known as Harvard Medical School. So Maisha, I'll turn it to you. Thank you. So good morning, everyone, and thank you for having us today. I have the distinct pleasure of posing a hard question. How do we define and assess value? And I'd say that's in the eyes of the beholder and you'll see those different points of view up here today. So we have the eyes of the patient, the eyes of the physician, the eyes of the payers, manufacturers, academia, investors, pharmacists, it goes on and on. And even within each of those groups, there's a diversity of thought. And that's why you can spend an entire day talking about it. So that's what we'll do. So you all know that in the news today is spinal, muscular, atrophy, SMA. And the reason is two and a half short years ago we had nothing to offer except supportive care. And now we have two blockbuster therapies, both SpinRaza and Zolgensma. We also still have a long way to go before the devastating effects of the disease are actually cured and our patients are actually living disease free and we want to get there. So whose eyes do we start with? We start with the patient. The patient has to think about the cost of the care. They have to think about that in the context of all the other care for that condition, not just the one drug. They think about giving and prolonging life. They think about whether or not they're still going to need that wheelchair, whether or not they still have to buy a transportation van or not. They're thinking about all of these complex matters when we are talking about one single drug. For the physicians, you have to remember our first credo is do no harm. And so we care a lot about the safety of any of these medications coming to market. FDA and manufacturers have moved safety over to patients and physicians to figure out in the post-market world. And if you are a physician and you have ever been in the unfortunate situation of causing harm to a patient or you think you have, it is one of the most painful feelings you could ever have. And it's not the position we ever want to be in. At the same time, it's balanced with the desire to treat and cure. And we have physicians and pharmacists also in academia pushing those boundaries, innovating, and we want them to figure out how to cure diseases like SMA. We also have payers. Payers are tax payers who are also patients. We also have health plans. We have a state. We have the federal government. We have the investors. We have all sorts of sides of payers. And they're thinking about the cost of the single medication that we're talking about. They're also talking about the totality of care, both the quality and the safety and the affordability of that care for an entire patient over their entire life, not just the one treatment. So how does this one treatment fit in the entire regiment of care for that patient's life and that population and their entire membership of a plan or a state or a country? And then we have our manufacturers and we need them to break boundaries. We need viable pathways for them to move forward. SMA is only at the brink of discovering different treatments and ways to really cure. We actually want everyone to get there. We want a full cure to the disease and take away the devastating effects of it. So we need our manufacturers to have a viable pathway forward to continue the road they've begun. So it's a lot of fun as a moderator because I get to give you an extremely difficult problem and just throw a huge conundrum out there. And then I get to step away and introduce some really smart people who are going to fix it all for you in like just a few minutes. So with that, I'd first like to introduce Sarah Edmond, she's Executive Vice President and Chief Operating Officer for the Institute of Clinic and Economic Review. And she's had over 20 years of experience in business and the policy of health care. She leads strategic operations at ICER, which is a leading not-for-profit health policy research organization. She oversees public programs, stakeholder engagement, and finances. So we have Sarah Edmond today. We also have Mark Miller. He's the Executive Vice President of Health Care that leads in Arnold Ventures and works to lower the cost and improve the value of health care with more than 30 years of experience developing and implementing health policy. Prior positions include the Executive Director of Medicare, Payment Advisory Commission, Assistant Director of Health and Human Resources at the Congressional Budget Office, Deputy Director of Health Plans at the Center of Medicare and Medicaid Services, and Health Financing Branch Chief at the Office of Management and Budget. We also have Reena Conti, who is the Associate Research Director of Biopharma and Public Policy for the Boston University Institute of Health Systems Innovation and Policy. And she is also an Associate Professor at the Boston University Equestrian School of Business. Reena Conti's research focuses on the organization, the financing and regulation of medical care, and she has written extensively in pricing, demand, and supply of prescription drugs. And finally, we have Chris Leidman, who is Senior Vice President of Value and Access at Biogen in Cambridge, Massachusetts. In this role, Chris leads the payer, evidence planning, and access strategy organization globally. He joined Biogen in 2014. Prior he had been the Vice President of Europe and Canada Market Access Pricing at Biogen. And prior to that, he also served in the head of Market of Access and Policy in Neuroscience at Janssen Pharmaceuticals and led teams responsible in the development execution of market access strategy and value in evidence generation across neuroscience franchise. Please welcome all of our panelists today. So we're going to start off with very easy question. How do you define and assess value? So why don't you go ahead and start us off? So I'm going to use the F word too. Fair, right? We're going to put that right out there and we're going to talk about the different ways that we think about and can calculate what's fair. I'll also share that sitting in the back seat of my parents' station wagon fighting with both of my brothers and my older brother was allowed to, you know, drink a soda and I wasn't because I'd probably make a mess. I was like, but mom, that's not fair. My mother's reaction was no one ever said life was fair. So when we take a look at what we're trying to accomplish by tackling this issue, at the end of the day, what do we want? We want patients to get access to the care they need. We want fair prices. So we have the out of affordability for those patients and we want enough money for future innovation to cure the diseases that impact all of us and our families. There is a lot of discussion about value and what should be in value. When we hear this a lot at ICER, we often get criticized for leaving out certain measures of things that are important to patients, caregivers, or others in our calculation and some of that comes from a misunderstanding of what we're really trying to do. We are not trying to capture every single thing that an individual patient may value when making a treatment decision, because that's really left to the conversation between that patient and Maisha. That's the conversation between a doctor and their caregiver. What are the trade-offs? What are the side effects? How much will this cost? Those are individual values. But when manufacturers set a price, they set one price. All right, we can get into rebates and everything else. And yes, there's many different prices that happen after that, but there's one wholesale acquisition cost. The manufacturer is choosing one price for the population of patients eligible for that condition, for that treatment. And so what goes into saying whether or not that price is fair? Well, where ICER comes down on this is informed by the health technology assessment principles internationally, the clinical benefit for patients. Full stop. We can do modified analyses of societal benefit, caregiver burden, productivity. Those things are all really important, but we have to ask ourselves, does the manufacturer get to capture all of that in the price they set? Or does society just get to benefit from that because that's what it means to be part of a society. You don't get to capture every single possible benefit of having an iPhone if you're Apple. If you use your iPhone to call 911 because you're having a heart attack and you get to the hospital in a timely manner and you are able to make a recovery, Apple isn't doing an analysis of how much value that iPhone is to you. And you know it's a little bit of a stark contrast and health is different. At the end of the day, we have to think to ourselves, where does it end in terms of what we're trying to say should be captured in the value? So ICER's perspective on this is that it's clinical benefit. And I'm just going to spend a minute talking about how we do that and what's included and hopefully leave some of you with the impression of what we believe truly, which is it's very patient-centered. We take a look at the data that are produced in a clinical trial program if there's real world evidence, if it's been on the market for a while, to try and understand how much better it improves length of life and quality of life. There are standard metrics for doing this. Sometimes the information we get is actually directly from the manufacturer in the clinical trial program. They've surveyed and asked the patients who are actually on treatment for these data and we're able to use them in our analysis. And at the end of the day, you sum up how much one treatment improves the quality and length of life of a cohort of patients versus how much the comparator sums up the quality of life and length of life for the patient. And then you use math. And Peter was kind to mention this in his remarks that there can be discussions about the math. There can be discussions about where you draw the line about what's fair. You and Peter put forth that it's sort of a society willingness to pay threshold for getting length of life and quality of life and delivering that to patients. There's also opportunity cost, which there's enough nerds in the room. There's just people here who understand what opportunity cost is. And what we've been able to show through research, not ours actually, from other leading health economists is there's a point at which when we overspend, there are real patients suffering because they cannot access health insurance anymore. They're either not insured or uninsured because the premium increases are rising so much faster than their ability to get access to that care. And guess what? That means real harm for those patients. So when we draw the line and say this is the threshold above which we shouldn't pay higher than this, and so there's a price at which we can hit that line, that's saying we're doing less harm to other patients. That's the opportunity cost of continuing to overpay. I just want to leave a few examples before I'm very much looking forward to the remarks of the other panelists. But we talked about a couple of disease areas today. Everyone wants to talk about spinal muscular atrophy, and it's got a big price tag. And we have some concerns and we are interested in what the long-term benefit is for a potentially curative one-time therapy. And we don't know that answer yet because we just don't have the data. But when we did our analysis, the magnitude of benefit was striking. Probably among the biggest magnitude of benefit we've ever seen any therapy that we've studied and we've studied over 100. And so you have to take some assumptions into how long that benefit's going to last, sure. And then people can beat up the model we use to do it. But guess what? The end of the day, $2.1 million is actually a pretty fair price. And when Peter mentioned what New York State was grappling with CF, we're talking about the real trade-offs that policymakers have to make because they want to be able to cure every kid with SMA at $2.1 million, if you agree, that's a fair price. And they literally can't do that when they overpay by 70% for drugs for cystic fibrosis. If you reduce the cost of all of the cystic fibrosis drugs to ICER's calculation of a fair price, you would have all of the money you need to cure every child in this country with SMA and still have $750 million left over for other priorities in health care, lowering premiums, access to community health workers, expanding access to behavioral health services. So I don't want to lose sight of the fact that, yes, some prices are high, but just because they're high doesn't mean they're not high value. And if we align our system to reward true clinical benefit, then we have plenty of money to pay for all of the treatments that we want to see for society. Thank you, Sarah. Mark, will you please give us your thoughts on defining and assessing value? Yeah, I assume that's why you guys asked me here, so. No, thank you. So I'm going to do a couple things. The first thing I'm going to do is just make sure that you understand where we're placed in the context here. So Arnold Ventures is a philanthropy. We focus on social problems. We're particularly drawn to situations where the market fails or the government doesn't seem to be operating as efficiently as it possibly could. We've done work on criminal justice and education and gun violence and pensions, all stuff I know nothing about. My portfolio, as mentioned, is health care, and I want to be very clear. Our objective is to reduce spending for taxpayers, for employers, for patients. That is the objective. And there's many objectives in health care that people can pursue, but that is ours. We've done things like supported the development of a not-for-profit drug company. We've done things like supported Louisiana on the implementation and rollout of their hep C subscription drug. We're deeply involved in the policy processes at both the state and federal level. And this is going to seem like a disconnect, but I'm going to bring it together at the end. It's going to be beautiful, so just watch for it. We're deeply involved in the out-of-network building process that's occurring at both the federal and state level and beginning to look at in-network rates, and I'm going to try and make a connection there at the end. I think we all understand why we're having this conference. I mean, we're approaching a $500 billion spend on drugs, projections of a 31% increase in that spend between now and 2023. On the public side, we have Part D at net $100 billion, let's say, increasingly driven by specialty, brand-name specialty drug spend, which in a recent study, five-year period, the spending for those drugs tripled as part of Part D. Single-source drug prices in Part D to differentiate from spending increased something like 220% since the inception of the program. In Part B, we have a $30 billion spend, 9%, 10% annual growth rate, half of that is prices. Medicaid, we have a $30 billion spend that's net after rebate. That's a 50% increase since, say, 2011. Meanwhile, we have a debt in this country. It's equal to 78% of the size of the economy projected to grow to 92% of the size of the economy in the next nine to 10 years. 40% of American families can't afford $400 in an emergency, and then, of course, there is the usual statistics that are running between 20% and 25%, 30% of people don't fill scripts because of cost. So that's to define the problem. I have a few comments to make that I think are on topic, and then this one at the end that's going to make you sound like, it's going to make it sound like we're at a different conference, but just heads up, stay with me. Okay. So I expect a lot of the conversation here today will be around how to price a drug when it comes to market, whether you use things like clinical cost effectiveness, whether you use some kind of reference pricing strategy, whether you think about the cost of developing the drug or an affordability standard. All of them are legitimate standards, and they should be part of this conversation through the rest of the day. There was a brief allusion to this, I think, in Peter's comments or in some of the other opening comments, but value even starts upstream from that, and we have a revenue-driven innovation system and a particular regulatory structure that's driving manufacturers to produce certain types of drugs. There's not a lot of interest in developing second-generation antibiotics, for example. So one thing in thinking about value is where I think today we're going to talk a lot about what do you do with this drug when it shows up on your door step, but as a matter of policy, we also, and people have already mentioned this, there's no innovation here, we need to be thinking about the process that develops that drug to drop on your doorstep. As a philanthropy, we are involved in looking at alternative ways to finance innovation and also building for another round of patent and market exclusivity policy change that we think needs to happen. There's some in the current debate, but we think it's mostly, it needs to be revisited. With respect to ICER and cost-effectiveness, clinical cost-effectiveness methods, we are strong supporters, both philosophically and financially. We support what ICER is doing. We are very much for transparent, you know, evidence-driven processes, so this is very much what we support. For myself, I think from a policy point of view, there needs to be more attention to the budget impact analysis, which was briefly referred to here, and considering how to include ICER's work in the policy process. I mean, even if a drug has long-term value immediate and middle-term cost to the insurance, to, you know, introducing it into insurance in terms of premiums or taxes can prevent that drug from being used. That means states like Louisiana have to choose between their education budget and hep C or a cancer patient has to decide whether this treatment is worth bankrupting my family for or the larger lack of compliance that we're seeing out there. So I think that that is and should get more attention than it does. I also think, and I don't want Sarah to freak out, we need to think beyond the ICER methodology. And again, as a philanthropy, we need to focus on, you know, each what's happening now but as well as the next generation. And what I'm thinking about here is research and policy that is directed to transparently and objectively trying to measure what it cost to bring a drug to market. That information is very opaque and there is a huge disagreement between the industry and, you know, the academics on relative cost. I think at a minimum, this work needs to be brought to bear in order to at least be part of the value proposition or in fact to think about replacing the value proposition. And I realize that that could be upsetting for some to hear. I think it's important to keep in mind that there's a trade-off that we have to think in terms of trade office. And I think Peter was saying something about this. These are shared dollars, whether they are your premium or whether your taxes. These are shared dollars. The majority of what we're paying for is paid through a shared dollar. And we need to ask ourselves, what is the value of paying for this drug or another drug or another medical service like a primary care or in fact another social service altogether. And then in trying to wrap this up, the other thing that I want to say is that drugs account for 17% of spending. Hospital and physician services account for another 33, 12, 15% of spending. You know, drug manufacturers get their monopolies given to them by the government. Hospitals and certain specialties say anesthesiologists have developed their monopolies the old-fashioned way through market concentration. The prices that we are paying for hospital services and certain physician services now are unrelated to cost. They are unrelated to quality. They are unrelated to value. And they represent a policy objective that we should also be paying attention to because in the end what we want and I think this is an obligation on the part of the research and the policy community is a set of resources that we can use to optimize drug, medical and social services and frankly to Sarah's last point to reduce the burden of healthcare spending on working families. That should be the point and I think that hospital and physician spending has to come into the discussion too. I'm done. Thank you very much. So next, next I'd like, you can just drop your lapel on the floor. So I'd like to turn over to Rina Conti and as you're thinking about defining and assessing value what information and resources we need to really have that conversation. Thank you. Good morning everyone. I don't know about you all but I was up all night watching the Democratic debates and thinking hard about what's next for health policy, particularly in drug pricing. So excuse my notes. There is another argument that we commonly hear in this debate which is that high prices really reward incentives for current innovation but touching those prices in any way will, to better align those prices with the value that we're actually receiving clinically but may have spillovers into other things, work, other types of productivity, et cetera would also result in less innovation. So I'm a card-carrying economist. I have a pocket protector tattooed in my back, just joking. Don't tell my mom. But in a series of articles on ongoing work in part supported by the Arnold Ventures Fund but in others as well, I've investigated this claim empirically and have found that the empirical evidence supporting that a dollar coming out of the prices of drugs will actually fundamentally affect current and future innovation is a little bit more complicated than the normal dialogue suggests. So specifically, economic theory suggests innovative companies make investment decisions on research opportunities that are going to come in fruition 10, 15, even 20 years in the future based on their expectations of future net profit. And just to be cranky about this for a second, net profit does not equal high prices. Net profit is a conjunction of two things, spending, which is a composed of quantity and also price. It also has to do with the cost of innovation, which has something to do with the production of these products and an innovative or a marginal sense but also in all the sunk costs of R&D that have gone in the past. On its own, reducing revenue, the first part of net profit earned from the US, the largest and best insured prescription drug market in the world would reduce R&D incentives and the future yield of new therapies. However, the argument that more is better in pricing or that a dollar change is actually going to fundamentally alter the incentives for innovation is really actually quite unsettled. And in fact, there is some literature that suggests more revenue derived from these new therapies may lead to more drugs but doesn't necessarily lead to increased benefit in terms of clinical outcomes, particularly among really important therapeutic areas for which we still frankly have a lot of unneed. Moreover, the price that R&D investment should respond to according to economic theory is actually the price that the innovator receives. That's not necessarily how we think about drug prices in the US context, particularly colloquially. Because of the discounts and rebates that exist in the system but also because of the variation in what payers actually pay for the same thing, the correspondence between what the innovator gets and actually what payers pay, either insurers or patients, is actually a little bit complicated. There have been no empirical studies as far as we can tell that examine how innovation incentives respond to the variation in expected revenue by payer. And there's no correspondence that we can tell between net prices received by the innovator, which are largely baby biotech companies and their venture capital investors, and the reimbursement that are paid by payers and patients. There are other drivers of net profits that are reaped from pharmaceutical innovation that have been put in place over more than a hundred years of the American investment and support of biomedical innovation. For example, Americans' dismissive pricing environment is in part supported by pull incentives that reward successful products through the granting of temporary monopoly rights. Those rights are temporary. They are not permanent. The FDA also grants a variety of additional market exclusivities to innovators. And then coexisting with all of these pull incentives are a lot of other incentives that in economic parlance we consider to be push incentives that spur innovation by reducing the company's costs at other part of net revenue calculation, which include direct federal R&D subsidies, including the investments that we make in the NIH, tax breaks, which we don't think may not be actually the most important in terms of R&D investment, and more, importantly, faster or less onerous approval processes through the FDA. Only a very small number of these other incentives have been analyzed in depth. Most of them are erected on top of America's permissive pricing policies, so it's actually very difficult to discern the empirical contribution that those policies have actually made. The studies that do exist actually yield very mixed results about how important these incentives are, and if we took those incentives away, whether we would get any types of innovation in other types of, in other therapeutic areas, particularly the ones that have very, very high net, unmet need. To summarize, while changing drug revenue in the U.S. would alter pharmaceutical investment and the output of new drugs, high prices are just one incentive that we have for innovation, and in some therapeutic areas, they may not even be the most effective. We just don't know. I believe one of the major barriers to developing effective policy in this area is our lack of empirical evidence for how fungible price incentives, and particularly the prices that innovators are receiving, not big biotech or big pharma, is ultimately receiving for these products, and other types of non-price innovation drivers, and how best to deploy each of them to optimally address unmet medical needs. Thank you. Thank you, Rina. So, Chris, since you're at the end of the line and get to give you the harder questions, you know, it just goes from easier to harder. So, in this day and age, pre-market evidence is less robust than what it used to be, and we're learning more about drugs in the real world and post-market. How do we balance that when we're defining and assessing drug value, when we want innovation and potentially curative therapies, but we're shifting to less robust evidence to figure out how to define and assess that value? No pressure. Thank you, and good morning. Again, my name is Chris Leibman. I want to thank Murray and the organizers. It's a real privilege to be on the panel here with this group. During a time which I think is outlined at the beginning of the meeting, it's so crucial that we have open dialogue and discussion. So, it's a real privilege on behalf of Biogen to be here. It's a fantastic question, and as I ruminated a bit on defining and assessing drug value, I think many would expect me to talk about the holistic value necessary and the frameworks, the importance that we have the patient involved, the importance of innovation and industry and the value that drugs bring, but I thought that would be a bit more predictable. And so, I actually was heading in the same direction of a couple observations I've had, and the observations come from the majority of my career I've spent in the U.S., and while much of that research and time focused on other countries, several years ago I moved to Europe, and I spent three years there leading up our patient access programs, our market access efforts for several programs and drugs that launch, including Spenraza in Europe, but I came back a year ago, and I'm very happy to be back, but of course the dynamic going on in the U.S. is one that we're all talking a lot about and was in the debates last night, and so I thought what I would share is a couple surprises as I came back from Europe that I've observed in the last year about this topic, and the first of those would be incentives and incentives around evidence, not the incentives that Rena was talking about with regards to drug development, drug discovery, but incentives to develop evidence, and the way the frameworks that we're creating incentivize all of us and the manufacturers on the evidence that they create, and the example I'll use, and I know Sarah will appreciate this because we're not talking a lot about this topic, is around SMA. And I've been at Biogen now for five years, and we've had a number of programs come, fail, move forward, but there's a couple really big-faced reprograms that I'm very proud about, and I spent a lot of energy on trying to ensure that they're going to satisfy decision-making and pair evidence expectations. One of them, very unfortunately and tragically, was AgiCannumab for Alzheimer's disease, and I know it's not news to most of the room. Biogen earlier this year in March became one of many companies now, who after decades of research and billions of investment very tragically had to call thousands of patients and discontinue those phase three trials. So my hope is that there'll be a health policy of the forum in the future. We'll all be back. We'll be talking about fair pricing for Alzheimer's treatments, which society isn't so deep need of. And in fact, there was another announcement from Biogen Eastside this morning on another phase three that we're discontinuing in Alzheimer's for a base inhibitor. So this is an area obviously that I have a personal and professional passion about, but unfortunately I'm not talking about that, but I am talking about another program that we made some decisions on phase three. And it was Spinraza for SMA. Now Spinraza had some very encouraging and hopeful phase one, phase two, B data in 2014, and we had a choice at that point, which was what do we do next? Do we try to seek approval or do we do phase three trials? And if we're going to do phase three trials, which type do we do? And the choices we made during that period were we have to reduce uncertainty. There's a tremendous need, patients are waiting, but if we're going to ultimately have success in having patients gain access to this treatment, we need a lot of evidence and we need a lot of certainty. So we did multiple trials across multiple patient types with a comparison group, multiple sites around the world, and the result of that has been not only a phenomenal drug, but as I say to everyone, the reason why as of this week Spinraza is reimbursed in 54 countries around the world, it's not because the drug works so well. It's because we have the evidence to support and reduce the uncertainty and the decision making about that. And I've been part of those assessments around the world and I'm very proud of those decisions. And to compare it, if you look at, or can be, Kaleidiko, Strenzy, Kanuma, a lot of other orphan medicines, Exondus 51 was mentioned earlier this morning. These are products that are reimbursed after five, six years off in a dozen countries, 14 countries, five countries. So to have 54 speaks to the evidence it was brought. And when we went through the ICER review, we're supportive ICER. So I want to say that up front, and it disclosed my biases here, we're supportive of the efforts that they're taking. It doesn't mean we would agree on everything, but we certainly support the effort there. And as part of their assessment, they were very fair in the treatment of the evidence that Spinraza brought. But where I was surprised was I described the evidence path that we went on. They gave us a rating of A, very fair, very fair. And they actually, and I give Sarah and Steve a lot of credit. They actually called out very specifically in the press releases and the report, Biogen being a best in class, or I think it was the standard of care now for development programs for orphan medicines. But we were being compared against a product that had one site, no comparison group, 12 patients, over half of who ended up on Spinraza. They were also given an A. And to me, that speaks to a bit, not that the assessment was wrong, but the fact that they were considering that leads us in a very different direction. And I've shared this, so for full disclosure, I share with Steve and Sarah on this topic, so I'm not speaking out of turn here. I had calls from R&D colleagues. I'm passionate about evidence. They said, does this mean we should stop our sham control in our Parkinson's program? Does this mean we can reduce, you said, we need 15 more sites in four more countries? Can we get rid of those now? Can we get away with 50 patients instead of 400? And I thought, my goodness, health technology appraisal has advanced this field tremendously on how we develop drugs, the types of comparators, the length of studies we do. This has the risk of stepping backwards. So that's one big surprise. And I think we're all wrestling with how do we bring patient access forward, while at the same time being sure we reward and incentivize development of more evidence at the time of launch, incentivize development of evidence that will answer questions soon after the product is approval, and we have clarity of that. And I do believe we should be incentivizing manufacturers to develop administratively feasible tools to measure outcomes that could support performance-based agreements and reward companies doing that. So quickly, the second piece that surprised me is, and I'm very glad to see that Peter is still standing in the back, because when he got up, I thought he was going to leave, and I wanted to acknowledge that discussion this morning and what's happened the last six months from their first health affairs article. I think Peter and Mark Trousheim and colleagues have done a tremendous service on a topic that surprises me coming back to the U.S., which is the urgency around biosimilars. Now, I have to say I am biased in this space. Biogen, while we don't have the rights to manufacture at this point, biosimilars in the U.S., we do in Europe, and we have three anti-TNFs that we've launched over the last several years across Europe, and I'm informed and biased by those experiences. And what I would say on that is, this is foundational to everything about fairness and price, and it's really what we stand for, which is what Peter showed in the curve. There's something that we describe as a social contract, and I know that term has been abused and described in different ways, but the social contract that we believe in is one that's been outlined by Peter Kolchinsky and colleagues and describes it as very much there is a period of time in which there will be investments and taking risks, after which there will be a period of time in which that investment is rewarded. But the contract and the social contract is based on one foundational principle, which is that period will end. And while we spend a lot of time on the drug pricing part, if you don't have that contract intact, then the whole thing falls apart. And to me, the urgency that I see in the U.S. is a little bit different. However, what I would say is, when I got to Europe in 2015, it wasn't looking so good in Europe either. And if you went country by country, biosimilars were off to a slow start. Now, our own experience, the anti-TNFs in FlixMab and then Humira this past October, country by country, this has changed. And there is a role for policy to support that change. But when you look at what's happening now for Humira even, it's not perhaps marginal cost, as Peter described. But it's greater than 60 percent discounts after only nine months. And to me, that speaks volumes to the direction that we're heading as the industry. And I don't claim we should be very humble with regards to what's possible in the U.S. and isn't. And so there's different policy ideas on that. But to me, this topic is one that we need to take with urgency, because everything else that gets talked about on the pricing of medicines rests on a foundation of that. Thank you very much. So as promised, they solved everything for you. But in case they didn't, we'd like to take some questions now for our panelists. So if you would come up to the microphone and our panelists will have a chance to answer some of your questions. Hi, I'm Lynn Nichols. I'm a simple country health economist in George Mason University. And I wonder if, you know, first of all, thank you for the panel. It's a great amount of wisdom up there. But I sort of feel like we should take a step back and ask, are we thinking about this in the right way? Have we got the right frame? Because it occurred to me, you know, if a patron in a restaurant sees somebody a couple of tables away having a congestion moment and they perform a Heimlich maneuver, they don't ask that saved patron to pay for their dinner the rest of their lives. If a fireman goes in a house and takes a baby out and brings it to the mother, fireman doesn't say, I'll give you your baby for $300,000. An ER doc who pulls a bullet out of you and saves your life gets the same amount for that surgery. They would have gotten if it had been a much simple sort of, you know, football injury. And think about a third grade teacher, our little league coach, giving a kid the right quiet whisper of self-confidence that changes their ability to do everything for the rest of their lives. You don't pay those teachers and coaches. My point is, Pharma somehow got in our head, and God bless them, they're smart, that they get the marginal value of everything they save and every value of every moment I live for the rest of my life. Somehow that doesn't seem fair when I think about the fireman and the third grade teacher and the ER surgeon. So I just wonder if we might not go back to what the hell are we talking about here? You know, we should be rewarding those people who do the innovation with, if you think about all the examples I just gave, the opportunity cost of their time and the cost of the capital has got to be there to make that possible. But this notion that somehow they get to claim every present value stream, I just wonder if we're thinking about this in the right way. I love this question. Thank you. So I play a health economist on TV, and so I'll let the real health economist like correct everything I'm about to say, but I love this question because we don't reimburse a general surgeon doing a life-saving apendectomy based on the quality adjusted life years that they gain after that. That is correct. The way we think about this at ICER is that the approach that we take is for things that have barrier to entry. There is a government granted monopoly for the pricing, which means the market dynamics, and Peter talked about this beautifully earlier, don't exist. There's no barrier to entry. Well, there's a little one, you got to go to medical school for doing an apendectomy. There are plenty of people who can perform the apendectomy. And so our proposal is that aligning a price with the clinical benefit is a way to set the ceiling price during that monopoly pricing period. It's also predicated on the fact that that period ends, which Chris talked about so beautifully. And so I want to also make sure everyone realizes we don't think ICER's approach is appropriate for a generic. A generic, the barrier to entry is gone. It's supposed to be marginal cost of production, right? I mean, that's sort of the social contract. And so my line, I love the point. I think it's very important. I think it's also important that there's something different about the monopoly pricing that's granted to a manufacturer for that period of the patent that leads to a different approach. But, Reena, did you have? Yeah, I mean, Len, thank you so much for the comment and exactly. I think that the point of the empirical research that we've been doing is really to actually fundamentally question this equivalence, which is that value and price are exactly the same thing. And that price is the only relevant incentive that investors are actually thinking about when they're thinking about biotech. One of the things that Chris mentioned that I wanted to pick up on that's related to this is that in our interviews with innovators, what has become very clear is that reducing uncertainty and in particularly the risks of doing R&D may actually be more valuable than actually paying for drugs at a very, very high price because what they want to do is transform people's lives. They want to bring new products to market that are actually valuable. But to get there, they actually need the tools to do so. And so actually reducing uncertainty in that transition probability from clinical trials or being in mice all the way to humans, it may actually be more valuable to them than the ultimate price that's paid. And so thinking about that investments in basic science that really accrue to the entire scientific community are really important as are reducing risks and certainty attached to FDA approval, which has to do with standardization of outcomes but or main outcomes, but also may have to do with more knowledge generation, which includes companion outcomes such as quality of life. I think that's no, go ahead. No, no, go ahead. I was just going to say to me this is an excellent point. And I think the framework piece for me is why I emphasize the evidence because you can determine a lot of different frameworks and there's a lot of good ideas out there, but it has to be anchored to evidence at the end to support decision making. And at that point, then you have choices that you can make. But as long as you have a cornerstone focused on evidence and incentivizing that, you've got many more options to work with with regards to how you actually choose. And certainly piece to me, it's exactly why we did those trials was to reduce uncertainty on would we be able to gain access or not. So I think it's a fantastic point. Yeah. And I'll just say this. The way I think about Len's point is I mean, I agree with the reframing and my comments, I'm sure it was chaotic and was intended to drive in that direction. But I also am trying to say that there are things that you can do now and then things that you should be moving toward. And so part of the way I see the ICER methodology and the, you know, the pure clinical value framework is Sarah's point that she's made, I think today and certainly in other contexts of like, we should make it today. You know, look, even if you move that to that now, you can free up dollars to pay for an expensive drug. And just to be clear, Len, I'm not buying into the fact that they should get that price, but just in the interim. And by the way, if you go after other inefficiencies, clear inefficiencies out there, monopolistic pricing, you can create dollars in order to work your way through to. And then that's the next generation I'm trying to talk about in the research where we really should be moving to what does it cost and what is a reasonable rate of return and at least enter that into the debate. If not, with all respect, move the value framework into the rear view mirror and go to a different model altogether. Next question. I'm Diana Zuckerman, president of the National Center for Health Research. This is really an interesting conversation. I wanted to get back to the evidence-based value issue focused on the benefit part, not the cost part. But our center looks at FDA decision-making a lot. And the standards, as has been raised, are sometimes very low for FDA approval. Sometimes the studies are very small, very short term, and don't include all the kinds of patients that might want to use the drugs. So with Spinraza, in particular, the FDA approval was based on some very good studies of infants, but then FDA approved it for adults and children of all ages. And that made no sense to us. And I don't know if ICER has dealt with that issue at that part of the issue. My understanding is Spinraza is now being tested on adults, and it may end up being effective. But because the disease is different for adults than children, the benefits might be very different for adults than children. In other drugs that we've looked at, the drugs may be approved for all adults, but they're studied only on people under 50. And the benefits and the risk ratio may be very different when you're older. And in other cases, of course, mostly studied on white people and not people of color. So I just was interested in what the panel would say about this issue of value not being across the board. It can vary greatly, depending on age and comorbidities and many other issues. Maybe I start. Because it's a fantastic question. It was mentioned in the opening that the gene therapy for SMA, it only had up to six, but it's been approved to two. Spinraza, with the multiple trials, it was approved for the entire population. Now, the consequence of having larger studies is we did have adult data, but it looks like not very much when it's put up against a whole bunch of other patients. But they looked at the science and decided to make that choice. And to me, you're bringing up, to me, a fantastic point with regards to this incentive around evidence. We developed very robust evidence, but it was concentrated in a population. We have far less, at the time of approval, far less on adults and older patients. And to your point, the disease could behave differently. The heterogeneity there could be different. And to me, the incentives there for time of approval pricing, wouldn't it be fantastic if we could move to a world where we're incentivizing companies like ours to continue the adult trials, to make this more robust? And there's a way to adjudicate that as we learn more about the condition. We recognize patients need these treatments now. We are going to continue in a world in which limited evidence, in some cases, is going to come forward, and yet the need is so great. We need to have better ways to avoid just setting a price once at the time of approval. Wouldn't it be great if we could continue to advance that conversation as you learn more and reduce the uncertainty for decision making? Diane, it's a great point. I won't unpack the SMA review in too much detail, because I'll just expose it. I don't know the super detailed stuff, especially not as much as Christa's. He can probably tell you more about the ICER SMA review than I can in the weeds. But what we have seen, you're right, is this push towards less evidence, and Peter illustrated this beautifully with sort of reducing the barrier to entry, less evidence in order to get approval. And so the two things I will tell you. As experts in evidence-based medicine, we're still able to draw conclusions by what we see. And when we see magnitude of benefit, even in a small patient cohort, that gives us certainty that the drug is really doing what we're seeing. When we see no clinical benefit from a small or even a large cohort, we're also able to say that. And so we've had cases of drugs approved under accelerated approval. We've given an I rating, which means insufficient. There are no data to tell us whether this drug works. What a disappointment to society and patients and families who deserve to know. And we've given an A rating on a small evidence base because of the magnitude of benefit. And that's the way we approach it as experts in evidence-based medicine. But I'll also tell you that on the economic modeling side, we test a whole bunch of assumptions. We can change things in our model. What if this drug only works for four years? What if this drug works for a lifetime? What if this drug only works for this population and not this one? And we can triangulate on the question of what value is for all of those different things. I mean, we put that out in our report so that individual decision makers, and this happened with the SMA report, looked at what we put out and said, I think that's actually a BS assumption and the one you did over here in this scenario analysis is more reflective of my understanding of the evidence and the value. And that's what I'm using as I move forward with pricing and negotiation and coverage. And so I just want to make sure that I emphasize that the value calculation is not static. We go to war with the data we have. And then when we get more data, we're committed to updating so that we can answer the questions when we get more information. So it's a good question, Diane. So I want to follow up and with Sarah's point and say so, again, as a geek on the panel, and in doing these analyses, these sensitivity analyses are incredibly important for testing the evidence-based both on clinical benefits but also on clinical costs. One of the things that we hear over and over again in the ICER meetings is, oh, well, you didn't measure qualities the right way, or you didn't include other measures of quality of life or of work productivity or other things that really, really do matter to patients and their families. And I think actually the models do include that to the extent that they are actually measured and provided. And if we want to get to a better value conversation about ICER and about other types of evidence evaluations, we need better data. And this is actually incumbent upon all of us in this ecosystem. So if patients and physicians and others say, oh, look, FDA approval is based on a very, very small patient population or a very small margin of outcome, and we don't like the way that's being assessed into economic benefit, true, fair enough, bring better data. Better data means power the trials to different end points, collect other end points. As a patient advocacy group, go out and talk to your pharma partners about other outcomes that actually matter and may actually flip economic evaluations. That's not just economic evaluators' problem to solve. It's also all of our problems to actually contribute to and push the conversation forward on evidence. Thank you very much. We have another question. Hi. Good morning. My name is Tiffany McCaslin. I am with the National Business Group on Health, which is an organization that represents primarily large, self-insured plan sponsors or employers across the country. I attended a meeting recently where I was reminded of a quote, which is that if we find a way to pay for it, then we have built the market for it. Picking up perhaps on Len's earlier question around this idea of allowing the extrapolation of every single intricate piece of value of a pharmaceutical, but then carrying that forward and thinking about something that was in Peter's slides around this notion of mortgage payment plans for pharmaceuticals. My question is from the perspective of the plan sponsors, but maybe also just from my perspective as a patient and a single mother of three children and maybe, Rena, it's most positioned for you, but just thinking economically and futuristically, how might those types of payment arrangements have an impact on patients, but more broadly just societally? When we think about a mortgage to purchase a home, that's a material asset that doesn't lose value. When we begin mortgaging our lives to pay for a pharmaceutical when quite frankly we're all going to expire, there's no material value to any of us. Speaking of course just about myself, but what does that mean long term and what are the implications for our economy? Thank you so much for that question. So I'm actually really excited about alternative ways of paying for new therapies and I think we're really early days. The idea of a subscription model like that being implemented in Louisiana is one that actually solves the value equation or solves the revenue equation for pharma in that yes we're paying lower prices on average for these products, but the quantity is actually going up that's being sold and so the net revenue or the revenue that's being generated here is actually greater than was expected. So it seems to me like places where we can actually expand access even if the net price that we're paying might actually have some implications both for infectious disease but antibiotics are now being explored. The potential option for subscription model are really I like to think of it as just a quantity guarantee in exchange for a lower price. There are other potential applications as well in CAR-T and other gene therapies that we should explore and that innovators should be I hope at least open to as well. In terms of mortgages, mortgages are difficult. I actually think it's kind of a misnomer to think about it this way. What I think Andy Lowe's real proposal is is that gee we need to have a way of providing of gaining access to these therapies and for innovators to actually realize a return that they can go out and use that money and invest on the next thing and it needs to be kind of in the static sense of like innovators actually know that there's a revenue stream that they can actually go out and tell their shareholders and then go out and use and so we do that already by investing in the new thing by actually de-risking new investments by investing in NIH and we could continue to do that. We could also pool our resources to provide access to therapies that really truly do work and transform our lives. Now we can do that in the individual family way I pay in a little or we can do that in society way we kind of do that already that's health insurance. We're pooling our resources. Now do we want it to be perfectly pegged to new therapies? Sure there might be some role for new types of insurance or add-on types of insurance that will allow us to speed up the approval process for us to gain things if we have the rare unfortunate experience of being diagnosed with a disease that actually may be amenable to these therapies we can think about those type of insurance policies as well. Yeah I'd be more concerned about certainly the mortgage concept anyway and you know we were involved in the subscription drug you know rollout as I was saying and you know I think part of what was attractive to us about that was there was a fight among the manufacturers of who was going to get it and in a sense there was an implicit unit price you know argument going on and I'm driving at this point what I worry about these mortgage conversations and some of the other kind of long-run financing stuff is there's no downward pressure on the price you're basically figuring out how to pay for the drug and you in a sense and I'm saying this you know for drama's sake you know that type of thing because I'm pretty dramatic when it comes right down to it but I mean just for for drama's sake you know we're sort of buying into the current frame work we're buying into a point that Len made a second ago that all the value does apply to this drug and now we're just trying to figure out how to pay for it and I also think the thing we're missing here and again this is very difficult I can think of incremental ways to do it but there needs to be a longer runway to think about it it starts to like silo things off when we should be talking about trade-offs every moment of the day if I spend this next dollar is the right this the right place to spend that dollar I'll quickly make sure if you don't mind I'm many of you probably saw this but we were very interested in the ESI news express grips news that came out a couple week or two ago and they said that they're basically going to have this entity that will take on it's almost like reinsurance they'll take on the financial risk for these cell and gene therapies what you single and short-term therapies and charge a pmpm to clients and so for the plan sponsors I know Tiffany's out there somewhere like so that would be like a budget way to sort of manage access they're purporting that it would be rapid access to patients with no cost sharing so I'm thinking this is like reinsurance with rapid access it doesn't get at the fundamental issue of is the price they're charging right at the at the outset but it is one of the things I the markets trying to experiment with to avoid the mortgage approach because the manufacturer gets paid up front the entity will just pay up front for the therapy it's done and then collects the pmpm over time I think it's worth watching I'm a little skeptical because the what the price is going to be sort of not clear and if we're still overpaying for the clinical value that some of these therapies bring then we're not really solving that problem but I thought I'd mention it in case there are people who hadn't heard about it yeah I mean for me on this one we have to be more innovative in our payment models yeah yeah it's it's frustrating to me that one we make assumptions with the pharmaceutical company will take all the profits there's an assumption that the price will be too high we'll have to restrict access right and it's frustrating to me that you have situations where we just don't know how many patients there will be at the beginning and so the discussion ends up being focused on price when if you were able to you may be able to sit down with a customer with a parent say we both agree on tremendous value this is how much I'm prepared to invest to ensure every patient that needs this could benefit from it but that's all I've got unfortunately the netflix model after years it's been difficult to implement and to me that's a that's a tragedy because well it's a tragedy that it couldn't be done more simply and so I just feel like we need to become more creative we need to have the barriers taken down so that we could have a bit more robust discussion on how do we align the incentives so that patients would get access and treated and not devolve into just a focus on unit price sorry so one of the reasons that these innovative payment models are hard to implement is because so many parts of our system make of money off the high prices of drugs and so if you alter that incentive or alter those prices or try to bypass some parts of the system for to in the service of gaining wider access everybody has something to say about that and and it just that takes time to sort out so I'm I'm hopeful that the fact that we are now in the field with the subscription model in Louisiana will signal to other innovators and other people who are interested in experimenting that yes this can be done no it was not easy but yes it can be done and maybe we'll even see a faster glide path to more and more of these type of experiments moving forward so we're almost out of time I'll make one last comment before we close to bring back the conversation of value and do we extract all of the value of an entire life for one drug Sarah made a very interesting comment when she said you know icers reviews are supposed to be the ceiling I believe of the value and yet I think what you're all grappling with is when a drug comes to market the ceiling is the launch price icers review is the floor and we're dangling in between and I think that's where we're all trying to grapple if that's the ceiling and the maximum maybe we redefine how we have these conversations and so I'll leave you with that because again I don't have to solve world problems I only have to give them to you as a moderator but I would like you to please give a round of applause and thank you to our panelists