 So for those of you just tuning in on the livestream, I'm Murray Ross, Vice President, Government Relations and Director of the Institute for Health Policy at Kaiser Permanente. I'm very honored to welcome our next speakers, Matt Isles, President and CEO of America's Health Insurance Plans, and Stephen J. Ubel, President and CEO of the Pharmaceutical and Research Manufacturers of America, here today to participate in a moderated conversation about drug value with Julie Rovner at Kaiser Health News. I'll give you a little bit of information to introduce Julie before I hand it over to her. Julie Rovner is Chief Washington Correspondent for Kaiser Health News and host of the All-Women Panelist podcast KHN's What the Health. And, Julie, I think I am probably one of your, like, launch listener number six or something like that behind a few relatives, but that's a great podcast and I commend it to folks. Prior to joining Kaiser Health News in 2014, she spent 15 years as Health Policy Correspondent for NPR, specializing in the politics of healthcare. Rovner served as NPR's lead correspondent covering the passage and implementation of the Patient Protection and Affordable Care Act of 2010, better known now as ACA. A noted expert on health policy issues, Julie is the author of a critically praised reference book, Health Care Politics, and also Policy A to Z, and was awarded the Everett McKinley Dirksen Award for Distinguished Reporting of Congress for her coverage of the passage of the Medicare Prescription Drug Law and its aftermath. I'm very pleased that you've agreed to handle this next session here with some very high-profile and tough customers, so thank you, Julie, and welcome to Matt and to Steve. So thank you. Thank you and good afternoon and thank you, Murray, for that kind introduction. For those of you who don't already know, Kaiser Health News is not affiliated in any way with Kaiser Permanente. We are an editorially independent project of the Kaiser Family Foundation, which is also not affiliated with Kaiser Permanente. As an ex-editor used to say, we share a common ancestor, the industrialist Henry J. Kaiser, from way back when. So with that taking care of, let us get to our discussion. I am very excited to be joined here on the stage by the heads of two organizations who are key to a lot of the health debate happening in Washington in 2019. Ahip and Pharma. First, to my immediate left, we have Matt Isles, President and CEO of America's Health Insurance Plans. Matt joined Ahip in 2015, became its head in 2018. He previously worked at a number of insurance and other health organizations, as well as at the Congressional Budget Office. And then to Matt's left is Steve Ubel, who's President and CEO of the Pharmaceutical Research and Manufacturers of America, Pharma. Steve came to Pharma in 2015 from AdvaMed, the Medical Device Maker Association, which he ran for the 10 years prior to that. So we're going to let each of our guests give a brief opening statement. Then the three of us will have a discussion, and in about a half an hour, I will open it up to audience questions. So you and the audience here, please be thinking. Matt, why don't you start us off? Great. No, thank you, Julian. It's great to be here. And I'm sorry I missed the earlier part of the sessions. But I think it's so important to have the conversation that we're having today about value. And when I talk about value in thinking about the pharmaceutical industry, I usually start with a little quip that maybe some of you have heard before, that I approach this as a recovering pharmaceutical executive. As someone who worked in the industry for about 12 years at some really great companies, Lily and Wyeth. Wyeth was bought by Pfizer. So I think I have a little bit of a unique perspective recognizing that the world is different today than when I operated in the pharmaceutical industry. And when I think about the pharmaceutical industry, I think we have to be impressed with the cures and the treatments that we see that are being developed. I think back two decades ago it was about blockbusters and drugs to treat chronic diseases for various conditions. And what we've seen is a real evolution of the industry to be much more targeted and focused on rare diseases, on conditions, on trying to find cures. And I think that's really admirable. Where I think we probably have seen the biggest change over time is in terms of issues related to pricing practices, how intellectual property is being protected, and all of these factor into how value gets computed. I think two decades ago again, I don't know that anyone of us could really have imagined a Luxterna or a Zolgensma. We probably also couldn't have imagined the price of upwards of a million dollars for Luxterna and 2.1 million for Zolgensma. And they're extreme examples. And it's important to remember that we need to look across the continuum of all therapies and try and figure out how do we get to value. From, I'd say, the AHIP perspective, a couple of points. First, we want to have a better understanding about what goes into a drug's price, because that's really informative to think about how we are paying for value. We know that there are a lot of treatments that never make their way to market, but we also know that a lot of those that do get to market now are increasingly being developed with smaller and smaller patient panel sizes, and perhaps with, hopefully, lower research and development costs, and maybe that could translate into a different pricing model longer term. Second is being able to measure outcomes. This is complicated. I know that there are various different panels, but when you translate medicine from going to the clinical trials into the real world, people who have multiple chronic conditions that don't necessarily meet the profile of people that were in the clinical trial, what does that really mean for outcomes and how they perform in the real world? Third, we need to develop, I think, a reasonable payment structure. By and large, I'll just say it outright, we're not a fan of the drug mortgage concept. We need to think about how we're going to make these high cost drugs, which are potentially transformative and potentially curative. It remains to be seen whether the cures are actually durable, just given how new they are, but to come up with new payment models to think about that. Finally, getting the incentives right, paying for value, and making sure that to the extent that there are regulatory barriers in the way to doing that, we address them. Some of them would require statutory congressional action. We all know how easy it is to get something done in Congress these days, so that's something we need to be mindful of. Final comment is encouraged by some of the innovations that are happening out there and the relationships between health plans and pharmaceutical manufacturers in terms of how we think about the future. A number of AHIP member companies have been engaged in value-based contracting arrangements, trying to find ways to make that work more effectively, and you probably all saw the Wall Street Journal article the other week about some innovative models from other companies that are trying to figure out ways to pay for these really expensive, but potentially transformative drugs. I think we can all say we agree that we want to find a solution to these problems and that we want to find a way to ensure that all patients have access to affordable healthcare, including prescription drugs, that help them achieve their optimal health. So I'll stop there. Steve. Well, thanks, Julie, and thanks. Thanks, Murray, for inviting me to join the discussion today. I agree with an awful lot, alarmingly a lot, of what Matt had to say. I'll try to keep my comments brief so that we can get into the interactive part of the discussion, but I start from the premise that what really drives healthcare spending is patients with chronic disease, oftentimes multiple chronic diseases, and as Matt said, the good news is that our industry and the innovation coming out of our industry right now is poised to make really an incredible impact on human health, on public health, and you think about things like immunotherapies and CAR T, you know, harnessing the body's immune system to fight cancer, you know, we're seeing great late-stage data on sickle cell, hemophilia. You know, Matt mentioned some of the gene therapies focused on SMA and reversing blindness in kids. I mean, these are scientific advances that would have been referred to as science fiction, you know, just a few years ago. And we understand as an industry that if patients can't access or afford these breakthroughs, they're meaningless. And I want to assure you that our industry is committed to making needed improvements in the system. We're not for the status quo. We think there's a lot of common ground, and hopefully we'll talk about that today. I think we do believe that largely the competitive marketplace is working to constrain costs. You know, Matt's members are actually really good negotiators. They're heavily consolidated today. Now, there's relatively few health plans. There's three PBMs that control 80% of the market. They've got lots of tools to either not cover medicine or to place it on a formulary. They use their leverage very effectively. And as a result, actually drug spending is growing at record lows. So, you know, last year, net prices after rebates and discounts negotiated between our members and Matt's members were 0.3%. You know, one PBM just released data on last year, their total drug spending, not prices, but spending went up by 0.4%. So, these are historic lows. And we had something like 170 billion in rebates negotiated between our respective members. The problem as we see it is that patients aren't really feeling the benefits of that robust marketplace competition. So, if you look at the way most health plans configure their benefits today, they expose patients to a higher degree of their drug costs than their health care costs, their other health care costs. So, I came out of the device industry. Get your hip or knee replaced, you go to the hospital, you pay a relatively small amount in your hospital deductible and you're on your way. You know, for drug costs, just in percentage terms, plans expose patients to about 16% of their drug costs compared to about 3% of their overall health care costs. We know that the issue with rebates, that plans are not sharing rebates with patients at the point of sale, although that's changing to some degree. And we've seen copays and deductibles in cost sharing grow three to four times faster than underlying medical costs. I do think there are a range of pragmatic proposals that are aimed at lowering patient out-of-pocket costs for medicines. And we're eager to work with Matt, his members, and other stakeholders towards that end. And hopefully we'll have time today to explore some of those. All right. Well, thank you both. Let's just dive right in. There's been a lot of finger pointing about the cost of prescription drugs. We've seen a little bit of it already here today. How much blame do you think your industry deserves and what are you doing to get past it? Why don't you start, Matt? Sure. I mean, when it comes to drug pricing, let's just be perfectly clear with respect to how prices are set and when prices increase. The manufacturer is the one that sets the list price. No one else controls it. All right. And if they would like to set lower list prices, I think all of us would welcome that. At the same time, the manufacturer also makes the exclusive decision on when to change the list price. And what we've seen historically is that manufacturers increase at least once, sometimes a couple times a year, typically at rates that have exceeded the rate of general inflation, medical inflation or other measures. And so what's going on here? I think a lot of it has to do at some level with respect to the negotiations that Steve has mentioned that plans and PBM partners are being effective in terms of limiting net price increases. And for those manufacturers who, based on their product portfolio, have products really that there's a fair amount of utilization outside of the preferred formulary structure, they get to realize 100% of that list price. So while the net price might be low for a fair number, the list price is being paid by a lot. I think we need to look at where is their competition. When there's competition, it can be effective. I think as we think about the future and paying for value as we're talking about drugs that are more targeted towards rare diseases, ultra orphan populations, we are not likely to see the level of competition that you see in therapeutic classes, like diabetes or insulin, right? And what are the implications for how we need to think about sort of prices long term? I know our industry has said, you know what, we're not wedded to prescription drug rebates. We put out a statement with our board back in June, July of 2018, basically saying we're open to alternatives, but we need to get to a lower price, a lower net price, and just walking away from competitive market-based tools at this point in time without an alternative is not going to be a workable solution. But I think, again, thinking about the future in terms of how we're going to pay for these drugs, again, I want to be optimistic, but I'm also realistic to know when you don't have competition, you're essentially just going to be a price taker. And that's what we see in a lot of these very rare ultra orphan drugs that are being developed. Steve, I mean, you started out by saying we don't just want to invent these drugs. We want people to be able to get them. Absolutely, absolutely. And I would just say, again, at the outset, that we do have a competitive marketplace, but there are areas for improvement. I mean, Matt mentioned this sort of gross-to-net bubble that has grown up, where list prices have grown, but actually many companies in our industry are experiencing net prices on a negative basis. And so we've got to figure out a way to puncture that gross-to-net bubble, because what happens, the outrage is, so my son has type 1 diabetes, I'm pretty close to the insulin market. A patient that needs insulin goes to the pharmacy counter, pays full list price if they're in a high deductible plan, and the health plan is capturing a 50% to 70% discount. If that rebate or discount was passed through to patients at the pharmacy counter, it would be dramatic relief on the cost of that medicine. So we spend a lot of time, actually, in focus groups around the country asking patients what their highest priorities are and what their concerns are. And what we hear is that insurance just isn't what it used to be. You've got a lot of patients in high-deductible plans. What's at the top of the list? Growing co-pays, co-insurance deductibles, and we need to find a way, again, it's not as easy as Matt would have you believe in terms of lowering the list price. One of our member companies, Eli Lilly, just released an authorized generic at 50% of the list price of insulin. Do you know how many Part D plans or private insurers are covering the 50% off version? Very, very few. The system still prefers high-priced, high-ribated medicines. And until we get a handle on that, we're not going to be able to provide relief to patients at the pharmacy counter. I think that's sort of a great example, though, Steve, which is from a net perspective, it's more expensive. So that's the problem when you have an authorized generic that comes out. Yes, the list price is lower, but at the end of the day, the net price is higher. If you work back from a vial of humalog at 300 or so of aisle, and it's a 60% or 70% rebate, net to the payer at the end of the day would be 120. And so, yeah, it sounds nice that Lilly's offering an authorized generic at half the list price, but the cost overall is higher. So is that really the type of sort of system that we want to have? I think at the end of the day, we want to make sure that people that were getting the lowest net cost, net price product, and there are things I think that we can probably discuss and work on with respect to co-payments and others that might get us a little bit in that direction. I just think we need to get to, insurance has sort of become inverted. It should be the healthy people subsidizing the sick. And instead, what we have today increasingly is patients with multiple chronic conditions on one or more medicines. They're paying a disproportionate, in my view, share of the cost of that medicine. So in a way, the sick are subsidizing the healthy. And again, until we get at some of these misaligned incentives in the system, I'll give you another one, just about every actor in the supply chain is paid based on the list price of the medicine. Not just Matt's members, PBMs, wholesalers and distributors, pharmacies at some level, it's perhaps not a surprise that there's been a hydraulic effect on list prices. So we've argued, delink the way supply chain entities are paid. They shouldn't be paid based on the list price of the medicine. They should be paid on the value of the services they're providing. I do think to be positively not know you're going to get there in terms of common ground, but Matt's mentioned value based approaches. I think our members are willing to put their money where their mouth is. Instead of big dumb volume based rebates, we should be in good faith negotiations with health plans around what are the outcomes that patients are actually achieving when they're taking the medicine and using the new technology and tools that are available to gather real time evidence about actual performance in the marketplace. And I do think it's one of those areas that's a win-win-win. It's a win for patients because they tend to have lower cost sharing in these value based arrangements. Health plans get more visibility on actual performance outside of clinical trials. Our members have a seat at the table. It's not, again, a big dumb rebate. It's basically saying we know the performance attributes of our product. We don't get disintermediated. We get to negotiate. If the product works, we get reimbursed. If it doesn't, we don't. I was to say what happens to the companies who are making the drugs that maybe don't do so well on that value proposition? I think that our companies are willing to, again, put their money where their mouth is and go at risk to a greater degree than they have historically. And perhaps optimistically for all of us, where the science is going, used to be one drug, one price, one broad patient population. Where the science is going as we know more about the genetic response to particular medicine. It means there's going to be smaller patient populations, but lower risk in terms of bringing the product to market, but also lower cost. We're not going to have, again, we're not going to have a scattershot approach. We're going to have a much more targeted approach, which should save resources for everyone. So you've both addressed this broadly, but I want to, Peter Bach, sort of definition of value this morning, I don't know if you both saw it, which was a very sort of mathematical equation in one sentence. I want to know, sort of in a couple of sentences, if you need to, how do you define it? How do you see value when it comes to prescription drugs? Right. I mean, I think it's cost, right, relative to performance, right? I mean, we all have great examples, you know, in the real world of items and services outside of the, you know, healthcare sector, right, where a price or, you know, cost of a product is, you know, related to a quality and an outcome. And, right, whether it's in technology, you know, automotives, you know, others, right, that you're willing to pay, you know, more for things that you think deliver higher quality, higher value. You know, I think where we've struggled with in healthcare, right, is to really define that well. And a lot of your perspective, really, it's sort of the old adage, like, right, where you stand on an issue depends on where you sit. If you are, you know, taking risk, you have one perspective, perhaps, then if you're not, right, I mean, you're, if you're not taking risk, right, just keep, you know, plugging things out and, you know, trying to maximize volume and revenues, that's one thing. If you're on the hook for having to take on, you know, risk for performance outcomes and costs, right, it's a different perspective. And so, you know, I think healthcare has been slower maybe to evolve in that way. I'd say the relationships between health insurers and health providers has been more sophisticated and advanced. We're glad that, you know, pharmaceutical manufacturers are coming to the table now and joining the party, right? Because when you think about the relationships on the plan provider side, I mean, there have been very sophisticated, you know, risk-based, value-based arrangements for quite a while and good that it's extending into the pharmaceutical sector. What's your, your core belief of what value is when people, because it's obviously a word that's thrown around an awful lot in this debate? Yeah, I mean, in many respects, it doesn't matter what my view of value is. What really matters is how does the patient experience value? And I think where we run into trouble, a lot of times, you know, people talk about health technology assessment and defining value as if there's this magic box that we can put a series of inputs into and get to a magic, you know, price or number that reflects value. And the fallacy with that is just that individual patients, you know, view value differently. You know, what Matt looks at value might be looking at what the short-term costs are for a plan in return for costs that are offset, hospitalization, for example, or other downstream costs. But what a patient might look at, you know, I think about the de-shane muscular dystrophy example where, you know, if you have a rigid quality-based model where you're focused on longevity gains, most parents and most patients are not focused on that. They're focused on can I avoid an emergency room visit? Or can my kid use an adaptive device effectively? And unfortunately, we're still at the nascent stages of defining those dimensions of value. It's not that we're going to get rid of qualities. Qualies will always play a role in this discussion, but we have to get to a multifactorial, patient-centered definition of value. Otherwise, we'll continue to have this back and forth where we're going to argue plans, payers, academics, and others. We need to get to a place where methodologically there's some agreement that we've captured these dimensions of value so that there's buy-in and participation in the process. Where I think the frustration has arisen is really around a notion that with some of the pricing that's occurred out there in the market, that it feels as if manufacturers are trying to capture every single direct and indirect medical, social, and other sort of cost offset when they're talking about value and setting prices out there until we get to some more, I think, to Steve's point, some common definitions. I'm looking at Sarah out here because I know that she thinks about this every day. A lot of our members do too. I think that's where we're heading. We need to get there more quickly. And we cannot be afraid to talk about cost in this equation. I think one, I'd say difference in terms of where we are with respect to the debate, a decade ago when the ACA was being talked about with PCORI and people were saying, no, you can't talk about cost. I think we've generally evolved or I'd like to think we've evolved as a country say, no, we do actually have to talk about cost at some level. And so hopefully we can get to some of those value assessments more quickly. That involved both the direct offsets but then other things like patient preferences. I think we're not seeing yet are how those patient preferences are actually being captured quantitatively. I know that there's efforts through FDA, right? But we need to really find a way because until we have data, we're not really going to be able to assess what those patient preferences mean from a price and value perspective. Well, you've led very well into my next question, which is that obviously public doesn't think that the value proposition is being served very well at the moment and they are complaining to members of Congress who also don't seem to believe that the value proposition is being served very well. So we have an awful lot of proposals that are kicking around on Capitol Hill, including some we haven't actually seen yet but should soon, like from House Speaker Nancy Pelosi. I would like each of you to tell me which of those you would most like to see become law and which of those are giving you nightmares at the possibility that it might become law? Well, maybe starting in reverse order, you know, I would think there's common ground with Matt and his members on the Pelosi proposal. I mean, I would think that we would agree that a competitive marketplace, you know, with the benefits that we've described today outweigh giving the government sweeping authority to set price. I mean, our view is there's been a clinical trial. Although the Pelosi, at least as we've heard of it, it would only set price for drugs for which there's no competition. Well, I think, you know, details remain to be seen, but references to 250 medicines. This is not a modest proposal by any stretch. And again, if you look at countries that have moved in this direction, many of us have experience in interacting with health ministers in these countries. The reality is that patients have markedly less access, you know, if you have a tough diagnosis, there's still only one place you want to be here because we have the best doctors, the best hospitals, and the best access to cutting edge treatments. In terms of, you know, what we'd like to see, you know, I think we're heartened that there is growing momentum in the Congress on a bipartisan basis for a set of reforms that in our view would actually solve the problem. That is, they would reduce what patients ultimately pay at the pharmacy counter. So if you look at the Finance Committee, there's an out-of-pocket cap in Medicare Part D at $3,100. That would help a small but important share of members. You know, also in the Finance Committee markup, there was one of the few moments of bipartisanship where you had Sherrod Brown on the one hand and Pat Toomey on the other arguing that we should have rebates shared with patients at the point of sale. We can, you know, smooth the cost for patients across the year instead of forcing them to pay all of their cost sharing at the beginning of the year. You could lower cost sharing outright from 25% in Medicare to 20%, where in other parts of Medicare, that is the percentage contribution that is expected from patients. So there's a whole set of policies that we think would actually solve the problem and that have some level of momentum. What we don't want to see is, you know, a bill, frankly, the Finance Committee bill as it currently exists, takes $130 billion out of the industry and doesn't solve the problem. So we understand that we're going to have to make a contribution to this effort, but let's make sure as we work through this debate that we're actually solving the problem. You know, you talk about the price control in Medicare Part D in the Finance Committee bill where there's a penalty if a company raises a price beyond inflation. That's essentially a rebate mechanism that creates a rebate stream to the government. Again, we're trying to solve that in the case of sharing rebates with patients at the point of sale. Let's not recreate the problem that we're trying to solve by creating another one. I hope that's helpful. So the way that we look at the proposals are really through three specific sort of prisms. The first is, are patients' beneficiaries going to be better off? Are they going to have lower cost sharing and out-of-pocket cap? Are they going to be made better off? The second is, are taxpayers going to be better off? So is the federal government going to spend less money? And that's important for a number of reasons, affordability, but also a lot of it has a proxy then in terms of how it ties to beneficiary or consumer premiums. So the way that subsidies are structured, etc., if premiums are lower, taxpayers will pay less. And then the final piece is really in terms of making sure that pharmaceutical manufacturers are, and I welcome the comment from Steve, making a meaningful contribution to helping to offset the cost of whatever the legislation is. We've said, for example, with the Finance Committee package that we're willing to take on greater liability than what is structured under the current Part D benefit, but there needs to be significant, maybe equal liability by pharmaceutical manufacturers under Part D. So those are the three areas that we're looking through. And when you think about something like the inflation penalty, I think it's really a reflection of really just a lack of trust around pricing-related practices and trying to make sure that there is some- So are you for it or against it? We're willing to live with it. I mean, if that's what it takes to get these other pieces done. But I think if we're going to get, I mean, is there enough time to get something big done? I don't know. I mean, I'd like to think that there's a lot of interest given what we've heard from the Speaker office and what we've heard from the Senate and the administration certainly, but I guess it'll be an interesting couple of weeks and months ahead of us. What absolutely should Congress not do? What should absolutely Congress not do? Wow. I don't want to get on to different topics, so I don't want to miss that. I'm not surprised how in the drug space. You know, I think really anything that would tie the hands more of plans and others who are able to negotiate lower prices, anything that would not enhance the ability to use market-based tools to get to lower prices should not be included. So I think we've been sort of nibbling around this a little bit, but I promised I would ask, are there areas of common ground where you will agree as competing industries that could address this problem? Obviously, it is a big issue currently and for the presidential campaign, so obviously going forward. Well, we've touched on a few. I do think there's good dialogue between our respective sectors on value-based models and how to address some of the legitimate issues that arise and the complexities that arise in those those arrangements. You know, I do think we have a collective role in defending the market, the private market approach in Medicare. I mean, the irony with the Pelosi proposal is that there already is negotiation in Medicare. And I remember when Part D was introduced, I wasn't in the sector at the time, but there were efforts, and you'll recall this, Julie, to hardwire in the statute what the premium would be. Thank God we didn't do that, because guess what? The premium is a hell of a lot lower than it would have been had they done that. And the reason is, because it's a competitive model that's worked, you know, premiums are down, patient satisfaction is up. The average discount or rebate between our respective members is around 30%. And so, you know, I hope there's room for us to work together to defend the competitive marketplace. A couple of areas we haven't touched on, which I also think are fruitful ground, is I'm sure that Matt would agree that provider consolidation, hospital markups, there are other things in the system that increase both patient costs as well as system costs, where I think there's probably common ground. Yeah, I would agree on those points. Yeah. Anything else? I think Steve touched on the bigger, we talked about an out-of-pocket limit, if it's structured the right way, I think protecting patients. And the value-based contracting arrangements in advancing them or eliminating barriers that exist to them, whether it be the best price or other issues that sort of limit the ability of those to move forward, I think would be ways that we would definitely agree. I think it's really important to focus on when we have a competitive market and when we don't in certain instances. And that's, I think, when we have competition, it works well. When we don't have competition, I think that those are the types of areas that we need to make sure that we address and advancing things like biosimilars and other ways to create additional sort of headroom within the system that we have today. I have one more question and then we're going to turn it over to the audience for their questions. And it's actually about quality, literal quality. Hospital drug buyers have told my cage and colleagues, they wish there was more transparency about where drugs are made so that they can buy drugs made at facilities with the best inspection records. Does AHIP have a position on this sort of quality transparency and how could pharma help solve this problem? No, we haven't really focused on that. I think generally our perspective has been if drugs are manufactured in FDA facilities, FDA approved facilities, then they should be of adequate quality. But we haven't really focused specifically on that. I mean, our space is a heavily regulated space. And to my knowledge, there isn't a quality issue within at least the branded side. I would say it's more on the generic side. But there have been some risk chip. I do think it does point to concerns that we have with importation schemes. I think policymakers have taken great strides to protect the U.S. drug supply and in recent years have really focused on that closed system. And importation schemes can really threaten that through counterfeit medicines and so forth. And as a practical matter, it really is a workaround. If you look at foreign reference pricing or importation or government setting the price, they're really the derivation of the same proposal. And again, we think there are much better ways to address drug costs holistically in a way that really reduce patient out-of-pocket costs. Yeah. And we have not been supportive of the importation side. I mean, mostly because it don't think it's really workable. I don't think anyone... You mean the entirety of the United States can't go to Canada and get its drugs? Well, we could try. But, I mean, and I'm going way back now to early 2000s when importation was first passed and people thought it was a real threat. You know, manufacturers have very sophisticated supply chain mechanisms. They know how much product needs to be delivered in Canada or the UK or others. And I don't think that they're really going to supply enough to be able to come back. And also at a pharmacy level, right? I mean, are you going to have the U.S. priced product on this counter and the X-US product on another counter? And how are you going to manage all of that? So, I mean, it's really about getting to a lower price. All right. We have time for just a couple of questions. I see people already lined up. Just a reminder to use the mics because we are streaming. And can you make them brief because we're running out of time right here in the front? Laurie Lucas with the Employee Benefit Research Institute. Matt, you alluded to this a little bit, but I wanted to ask, what can employers be doing? What should their role be in all of this? And like forming things like the Health Transformation Alliance? So, I mean, employers are providing coverage to 180 million Americans or so. I play a critically important role. I know that there's been a lot of focus on ways to look at items like specialty drugs and specialty drug spending. I think working with other parts of the healthcare system really to advance this notion around value and paying for value. Most employers are very sophisticated purchasers when they're looking at items outside of healthcare, but some are very sophisticated in the healthcare space and helping to move the rest of the system to pay for value would, I think, be a good start. I would agree with Matt on the direction of moving towards value, but I think we need to have a more candid conversation with employers about the nature of insurance. I made this point earlier about how we're evolving to a system where instead of the healthy subsidizing the sick, it's the reverse. And in the employers that I've spoken to who oftentimes meet with their PBM or plan, the nature of the conversation goes something like this. Your drug costs were X last year. We will keep them at X end of the conversation. And we need to have a much broader conversation about some of the incentives in the system that even if your drug costs are being held harmless year over year, maybe disadvantaged patients, maybe disadvantaged employers because the patients are not adherent or, again, these changes particularly aimed at chronic conditions which they're paying for in other ways. All right. The second microphone back here. Dana Brown from the Democracy Collaborative. I'm wondering how you think we can begin to work together to look at value to society as a whole rather than value to one patient or one insurer or one employer. I'm really glad that you brought up the insulin because, for instance, the American Diabetes Association calculated in 2017 that as a country on a whole, we spent almost $15 billion on insulin and diabetes cost us about $90 billion just in reduced productivity in terms of increased incidences of disability and absenteeism. So how do we start to look at what the value is to society as a whole of keeping people on the workforce in helping them manage disease in the first place rather than treating complications once they arise because they can't afford their medication? That's a great point. And again, as we think about value and the dimensions of value, I think we do have to do a better job of capturing those sort of off ledger savings if you will, both system savings but economy-wide savings. I think about things like, again, my son has type 1 diabetes. What is the cost of my wife having to go to school to pick our son up early because he or she's not feeling well? Time and range. We have to get into a more, I think, sophisticated conversation about value that tries to capture those off ledger aspects of value. You're talking about the holy grail of value, I think, in terms of trying to identify from a societal perspective. It's complicated. But we have to try. I've worked for a number of different CEOs that basically have said, if you don't measure it, you're never going to change behavior. So we have to make some efforts around even starting to measure some of those things that we haven't really at a societal level and figuring out how we can make things better. Hi, I'm a health policy reporter with Bloomberg Law. Steve, you had talked a little bit about your thoughts on the speaker's drug pricing proposal, but Matt, you didn't really address that one. Can you talk a little bit about what you think about it? Yeah, I don't want to say too much because to Steve's point, the devil is in the details. I know we've seen some of the drafts and we think it's important to focus on some of the market failures that we see out there. But I mean, until we actually see what's in it and is it going to apply to the entire competitive marketplace, is it going to be Medicare-based, I think it's a little premature to get too far out there. I think we're encouraged by a lot of the concepts, but there's so much important detail when we see it, we'll definitely be ready to comment on it. Well, what about just in principle, the government negotiating price? I mean, I guess I'm a little bit underwhelmed by the response. And I think we want to see how it's going to play out with respect to areas where there is no competition. I think that's, and what are the definitions around, is it 250 drugs? How is it going to work with that? I mean, yes, we want the competitive market to work. I will go out and say that is how our members want it to work. But until we see in those areas where there is no competition and how are we going to make sure that we get some competition, I don't want to go too far out there until we actually see what it says. I mean, it does say it's the 250 most expensive drugs that don't have two or more generics, biologics, or biosimilar competitors. So it does specify that. No, I know. But again, when we actually see what it looks and how it will impact the competitive or the commercial market versus the Medicare market and we actually see it, I mean, I think we're encouraged that we know we would need to take on drugs that don't have competition. And that's what we're waiting to see is how detailed it is. Can I just make a point about the competition point? I mean, branded competition is coming sooner than it ever has. I mean, again, if you look at the hepatitis C medicines, you know, the sky was going to fall with Sevaldi, even though, by the way, ICER said it was cost effective even at the price it came out at, notwithstanding that, the reality is you now have multiple manufacturers that came months after the initial product was on the market, not after some period of patent exclusivity and drove prices down by 60%. So do we need the government to set in and set price? You know, again, I would have hoped for a more clear cut sort of response that that's not the direction we want to go. All right, let's sneak in one more because we're just about out of time. John. I've got a question for both Matt and Steve. The whole discussion around value seems to focus on launch prices. But it seems to me if we look at it more broadly, benefit design is part of value because what is an affordable drug if people can't afford the copay? And then likewise, a lot of the economic burden comes from year to year price increases. And that's not usually addressed when we talk about value. And it's unclear to me what the case is. If we have a value that's corresponding to the launch price, then what justifies the continued price increases? So if you could just address those briefly. I think it's a good question, John. I mean, that's when I think one of our biggest problems year after year is seeing price increases on products that have been on the market for a very long time. Not to pick on one specifically, Humira. Right? But we've seen year after year. And I was just looking at this earlier today. Average price increases seven or 8%, almost 9%. And in one of the years out of the last four, they pushed through two price increases that totaled about 18%. So there's not really a good, I mean, especially in a value-based world, I don't really think that there's a good rationale for it. Yeah. Again, I feel compelled to interject that, again, if you look at what's happening on a net price basis, many companies experiencing net negative pricing. And I mentioned the data before about 0.3% last year in terms of net price increase and overall spending growing by 0.4%. There are, by the way, reasons for some price increases. You mentioned Humira. The reality is it's about nine different drugs at this point because it's had to go through various clinical trials to grow indications and so forth. And if you look at, on the plan side, again, you mentioned cost sharing, co-pays cost sharing, deductibles are growing at about 3 to 4x, what underlying medical costs are growing at. So I think we need to step back and look at it holistically. Look, there have been companies, I'm not going to defend every bad actor in the industry, but on balance, the competitive marketplace in our view is working. And I would also point out that unlike anything else in healthcare, medicine is the only thing where the price goes down. After the patent expires, the price goes down by 80%. And if you want to look at bypass surgery, it's $100,000 today, it's going to be $150,000 five years from now. You look at Lipitor, it's pennies on the day, and not just for this generation, but for every future generation. So I think you have to look at it in context. My main point here, though, is the value discussion needs to be broader than just launch prices. And I think we had to think about benefit design. We ought to think about year-to-year increases if we're really going to get serious about value. All right, I think on that note, we're out of time. Thank you both for coming. This was great, and I'd love to do it again soon. Thank you, Joy.