Deep Dive 305 - Does President Trump Have the Authority to Pause and Modify the Medicare Drug Price Negotiation Program?

WEBVTT
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Regulation after regulation.
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There are pagated regulations that need to be changed.
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One hundred and eighty five thousand pages.
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Now public accountability and transparency. There will be no public supports.
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It's really the best we can do.
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There's a regulation that doesn't make any sense.
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Why do you kid?
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You know who wrote the regulatory laws you must comply with.
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Welcome to the Regulatory Transparency Project's fourth Branch podcast series.
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All expressions of opinion are those of the speaker.
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Good afternoon, and welcome to today's Regulatory Transparency Project webinar
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titled does President Trump have the authority to pause and
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modify the Medicare Drug price negotiation program? We're glad you're here.
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My name is Marie Blanchard, and I am the assistant
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director of the Federalist Society's Regulatory Transparency Project. Moderating today's
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discussion is John Schue. John's focus areas include constitutional law,
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securities and corporate law, anti trust laws, politics, and international affairs.
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He served President George H. W. Bush and President George W.
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Bush just as one example. As a note, as always,
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the opinions expressed are those of the experts. Thank you, John,
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I will hand it off to you so you can
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introduce our speakers for today.
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Thank you, Marie, and thanks to the Federal Society and
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the Regulatory Transparency Project for putting this great panel together
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on this very very important topic. Our panelists today in
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alphabetical order, mister Jeff Steyer. Jeff is one of those
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folks who holds multiple hats. He's a senior fellow at
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the Consumer Choice Center and also a senior fellow at
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the Taxpayers Protection Alliance. So if you have tax problems,
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you can call Jeff. No, I'm joking, that's not what
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he does. He's also a policy advisor to the Heartland Institute.
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He's worked quite a bit on FDA and other drug
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ish shoes, and also at omb and perhaps most cool,
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he was once a healthcare and environmental policy advisor to
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Mayor Giuliani in the Great City of New York, which
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is Jeff's hometown. Our other panelist is Dan Troy, and
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we're very lucky to have him. Dan is currently the
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managing director at Berkeley Research Group commonly known as BRG.
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Before that, he had several hats at Valo of Pharmaceuticals
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in Boston. Prior to that, he was a senior vice
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President and General Council at Glaxo smith Kline and was
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very involved in managing their litigation, intellectual property, risk management,
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all the stuff that you would imagine a big shot
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general counsel handling. And before that he was at Sidley
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Austin in the DC Office and was formerly Chief Council
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at the FDA and also served as a liaison to
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the White House. And perhaps the most cool, Dan served
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as a law clerk to the Honorable Robert Herron Bork
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on the United States Court of Appeals for the DC Circuit.
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So thanks to Dan and Jeff for joining us. Today's
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topic is Medicare price negotiation. For those of you who
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are unfamiliar with it, the Medicare. The Medicare price Negotiation
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program is part of the twenty twenty two Inflation Reduction Act,
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which President Biden signed into law in twenty twenty two.
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The Inflation Reduction Act covered a lot of issues, you know,
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and then had a lot of money allocations for certain things.
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But the Medicare Drug Price Negotiation Program is unusual in
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that they're not allocate Congress didn't allocate money to Medicare
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or CMS. Part of this requires that allows Medicare to negotiate,
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and I am going to put that word in quotes
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air quotes, because there's some question as to whether it's
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really a negotiation, and we'll talk about that when we
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talk about the litigations that are going on right now.
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But according to the statute and according to the Biden administration,
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a CMS slash Medicare is now allowed to negotiate pricing
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with the pharmaceuticals. And there are certain conditions for it.
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You know, it has to be still under patent. There
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aren't other manufacturers of it, et cetera, et cetera. But
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to give you an idea of how much money that
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we're talking about, you know, just for a single drug,
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for example, there's a Under the Biden administration, they issued
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a list of ten, the first set of ten drugs
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which would be covered under the negotiation part of it.
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One of them is eloquists. You've probably seen a lot
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of TV commercials about eloquist It's basically for the prevention
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and treatment of blood clots. Just to give you an idea,
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the total Medicare Part D coverage is eighteen point two
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seventy five billion US dollars.
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That's a lot of money.
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Other drugs include on that first list include for diabetes,
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part disease. These are all related to chronic diseases, and
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most of them related in some way to obesity. But
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we are talking about numbers and the many, many, many
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billions of dollars. And then even in the second set
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of drugs that was released recently, again it's not as
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focused as the first set was, but it still has
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to do with a lot of chronic diseases and serious diseases.
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The pharmaceutical companies not necessarily happy with this. There is
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a question something called the the pill penalty, where if
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if a drug is administered through an IV like where
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you have to go to a clinic or a doctor's office. Uh,
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and if it's administrative, if it's considered what's known as
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a biologic drug there you can still get reimbursed for
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that at the normal price. But if it's a pill,
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if it's something that that's easy for the consumer to take,
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and I think even self administered injectables is falls under
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this as well. Now now now you have to uh,
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you have to fall under the quote mandatory negotiation unquote.
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And we're again we're talking about billions of dollars and uh,
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the pharmaceutical companies argue that this law and this policy
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will it's basically a government price control and it they
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argue that if they can't charge the normal market rate,
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that it'll take away from other drugs, it'll take away
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from research and development, and it'll take away from their
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innovations of drugs because the money has to come from somewhere.
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Of course, on the other side, the Biden administration would
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have argued that that's just poppycock. And you know, the
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pharmaceuticals are price gougers and all they care about is profits.
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And we have our population in the United States, as
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in the rest of the world, is getting older and
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so a lot of these diseases asthma, prostate cancer, heart disease, diabetes,
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we're just going to see more and more of it,
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and therefore it's important for us to get a control
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on it. So with that, and oh, I should say
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that we'll have a question and answer session at the end,
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but for now, well let's have Dan Troyd began and Dan,
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we'd love to hear your your thoughts.
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Well, thanks, I'm going to actually explain why it's way
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worse than a price control, and that it is you know,
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very much a sham negotiation, and every time I use
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that word there's going to be air quotes. So three disclosures. First,
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Normally I testify as an expert witness in FDA related matters,
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as a not the managing director at Berkeley Research Group,
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and so I don't provide legal opinions because expert witnesses
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can't do that. But here I'm just going to provide
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legal opinions. Well maybe well maybe some policy opinions, but
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they are entirely my own and not of my employer
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of Berkeley Research Group. Second, I filed an a Meekus
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brief on behalf of the challenging pharma companies in this
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In these cases challenging the constitutionality of the IRA, no
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one paid me to do that. I did that entirely
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on my own motion. But I am, i guess a
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participant as in Amiki and my company, and I do
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testify on behalf of pharma companies, including some that are
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challenging these the law. But I have absolutely no financial
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stake or involvement in this matter. It's something that I've
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been just intensely interested in because I think it's a
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terrible law and terrible policy. So the part of the
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problem is I think John will do to this price
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controls pull badly. But the word negotiation polls well, so
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they pretended that this was a negotiation, but it's not. Basically,
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CMS lists ten drugs a year, so eventually almost all
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the drugs will be under this program. And you have
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to agree to participate as a pharma company and submit
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confidential information or you face a fine of a million
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dollars a day and then you have to agree to
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this price. Or your alternatives is to withdraw from all
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of Medicare, which accounts for about sixty percent of the market,
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or pay nineteen times at tax. They called it a
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tax or really a fine on all revenues of the drug,
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including non Medicare revenues, or you can just sell the
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drug and not not you know, be in the business
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of selling that drug. So importantly, there is no not
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I'm quoting now from a Novo Nordis brief. There's no
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notice in comment rulemaking. There's no hearing on the selection
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of a judge of drugs. There's no hearing on the
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price CMS imposes. There's no neutral adjudicator to ensure that
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prices are fair and applied. In a non discriminatory fashion.
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There's no administrative review of cms's unilateral decisions and no
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judicial review of them either. Okay, So essentially CMS is
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the judge, jury, executioner, and beneficiary of this, which is
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why I think it is a constitutional monstrosity. You know,
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it's being challenged under various flavors of takings in due
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process and excessive fines, unconstitutional conditions, even a First Amendment claim.
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I think it's vulnerable on almost all of those grounds
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because it is such an it's so unprecedented because we've
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had price controls before. We have price controls, for example
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the Federal Energy Regulatory Commission, but there's always a requirement
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that they feel ultimately just and reasonable, otherwise they could
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be a taken and so. But that's not here. In fact,
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there's a cealing price, but no floor price. And the
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reason why this is not a normal price control is
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I was the General Council of blackso Smith client. We
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sold products to European countries where there are price controls.
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A price control is you take it or you leave it.
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And there were times when GSK decided that it wasn't
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worthwhile for us to sell this drug to this company
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to this country at this price.
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Okay.
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Here you don't have that option.
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Here.
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The option is if you don't accept the price, if
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you don't participate, you're kicked out of medicare, okay, which
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is again sixty percent of the market. So the question
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really is, you know, is the are the courts going
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to look at the practical implications of not participating in
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this program or are they going to as they have
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and as the government is arguing, pretend that this is
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voluntary and that you have the choice not to participate
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in medicare. So, you know, turning to the so what
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we can spend a lot of time on the constitutional arguments.
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I think there have been other webinars on that. This
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is really much more about, you know, sort of what
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what can the Trump administration do? And I think Jeff
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and arguement in violent agreement, there are things that CMS
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can do. Especially it could not aggregate drugs together right now.
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What it's done is it's said, well, even if if
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an active ingredient of a particular product was approved, you know,
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more than seven years ago, we can take even later
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active ingredients that are different drugs according to the FDA
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and have different names and are entirely different indications, and
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we can put them all together, right, and then we
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can make the company basically sell all those drugs to
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us at one price. It's called a sort of single
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source issue. And CMS has been extremely aggressive about this.
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I think they group five or six of Novo and
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Ordiss drug calling one, and there's definitely administrative discretion for
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them to not do that. But the biggest problem in
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this law, which I think John alluded to, is what's
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called the pill penalty, and that is there's after nine years,
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CMS can require a small molecule drug a normal pill
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to negotiate and with respect to a biologic that gets
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thirteen years of exclusivity at protect it and let's just
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say price freedom that can really only be fixed by Congress.
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There are very sound policy arguments against this, you know,
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pill penalty. Small molecule funding is down seventy percent since
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the IRA basically, I mean, the University of Chicago has
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an estimate that two hundred there'll be two hundred and
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thirty two billion dollar reduction in R and D for
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small molecule medicines over the next twenty years. And let's
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remember just sort of you know, let's get this back
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to patients. Small molecules are way better for patients. It's
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a dosage form that can be swallowed normally. They require
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fewer doctors, fewer visits to a doctor and an infusion
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center they have. They can have significant therapeutic benefits because
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if they're smaller size, simpler structure, they can get through
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the blood brain barrier. Don't ask me to explain the
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medicine behind that, but because they can do that, that
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can inhibits the delivery of other medicines for diseases with
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therapeutic targets inside the brain. And so we are really
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sort of shooting ourselves very much in the foot. And
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the problem with the America, you know, with presenting this
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to the American people, is negotiation sounds great. Everybody thinks
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drug prices are too high, even though their actual out
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of pockets are very different than what the list price is.
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And it's the dog that didn't mark. People aren't going
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to know the drugs that aren't developed as a result
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of this. But according to a company called Vital Transformation,
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which did some lot of research on this, the revenue
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reductions on these drugs, the one hundred drugs that will
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be potentially affected by this over the next ten years
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are so large that thirty seven drugs currently available today
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would likely not have come to market if the IRA
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polypsies had been in place over the past decades. And
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looking forward, Vital Transformation estimates that because of the IRA,
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as many as one hundred and thirty nine therapies may
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not be developed and will not get to patients over
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the next ten years. We're you know, as I mentioned,
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we're already seeing companies stop critical research because of the IRA,
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and Avalier has a finding that only zero point three
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percent to zero point one percent of fee for serve
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Medicare beneficiaries are likely to experience lower out of pocket
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costs for the first at Part ten B drugs likely
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to be selected for prese setting. And so what we're
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really doing is devastating the innovation, the engine of innovation
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that has helped so many patients. The only people who
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I really think are going to be hurt on this
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air patience groups and who because they're really the only
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ones I think who are going to be able to
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be credible in talking about these medicines that are not
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going to come to market and not be developed because
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of this, and again vital transformation, which I did think
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did some work for bio models. A loss of US
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jobs betwe a loss of sixty six eight hundred to
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one hundred and thirty five thousand, nine hundred direct and
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three hundred forty two thousand to six hundred and seventy
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six thousand jobs in the US biopharma ecosystem. These are
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based on two different the two hundred and fifty two
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thousand and the three one hundred and sixty five thousand.
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You're based on two impact scenarios. So we're hurting innovation,
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we're hurting patients, we're hurting our economy, we're hurting the
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biopharmaceutical sector, and you know, we're doing it in a
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way that is really really unprecedented. So I would hope
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that the folks at CMS will will at least take
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a look at the last list of drugs that came
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out like three days before the election. So it's well
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within the time that that, you know, the Trump administration
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can pull back on what was done. And I think
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I'll turn this over to Jeff, and I think Jeff
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will get into this more. But all of this was
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done by guidance and what can be done by guidance,
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can be undone by guidance, and so none of this
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has been done by noticing comment rulemaking. Arguably the statute
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allows that. There are arguments that it didn't allow that,
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but that's that's the position that the government is taking.
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But you know, as we've seen, what can be done
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by executive order can be undone by executive order. What
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can be done by guidance can be undone by guidance.
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It's a lot easier to change that than it is
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to change rules. And so one would hope again that
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the Trump CMS would would would not buy into this
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constitutional monstrosity. And if the courts get it right, then
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hopefully they will acquiesce in you know, the judicial decisions
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in validating it. But thus far it has not been
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invalidated by any of the courts.
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So with that turnover you, Jeff, thank you, Thank you
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very much. Dan.
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Before we go to Jeff, I want to note that
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the statutory provision about the negotiation and renegotiation process is
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Title forty two, Chapter seven, Section thirteen twenty f as
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in Foxtrott, speaking of negotiation, arenegotiation, Dan, from your perspective,
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as Glaxo Smith Klein is one of the most famous
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and prestigious pharmaceuticals in your experience as a general counsel there,
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what would happen to Glaxo Smith Klein if it wasn't
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allowed to sell to Medicare patients?
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Oh? I mean, you could never not sell to Medicare patients.
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It would devastate the business. I mean, it's sixty percent
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basically of the US business, and it's the US business
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that drives the success of almost every you know, big
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pharma company. I mean, is it true that the US
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subsidizes innovation for the rest of the world. Yeah, it
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is true. It's not fair. But you know, what are
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we going to do about it? Start a trade more
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that we're going to lose at the WTO. I mean,
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I remember when I was chief counsel and I had
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this conversation with Mark mcleullan, and he's like, if this
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went to the World Trade Organization, basically US and the
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Swiss would vote for US and everybody else would vote
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against US, you know, And I just I'm not I'm
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you know, I'm not sure that. I mean, obviously, are
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our president Trump uh leaves in aggressive sort of trade wars,
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but is he going to wage an aggressive trade war
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on behalf of you know, US pharmaceuticals. I'm not sure
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that that's you know, that high on his mattering map
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and on a mattering list, although it should be. I mean,
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you know, in a just world, European companies and you
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know countries would not be free riding on US innovation.
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So you know that that is that is a reality.
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But you know, if I have been in the room
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when the board and the senior executive team have had
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to decide how much money to spend an R and D,
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and if the returns are not there, then they will
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not make the investment. And it's not because they're evil,
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are bad, or only about profits. It's because the discipline
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is imposed by the market and by the shareholders who
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ultimately own the company. And the shareholders will say, if
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you cannot promise me, you know, an appropriate risk adjusted
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return on this drug on these investments, don't make the investment.
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Either give me the money back through a dividend or
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give it to me through a share buyback. And that
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is one of the things that people don't realize. They
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think that pharma companies have unlimited ability to just print money,
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and that is just not the way it works. I mean,
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this is the only business in the world where basically
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you need to reinvent yourself every nine or thirteen yu
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now every nine or thirteen years, every whatever it is,
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you know, fifteen years, because all of your products go
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away and get you aicized it. And if there isn't
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an addic I mean, money will just go elsewhere if
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there's not an adequate return. These are not regulated utilities.
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These are companies that are taking enormous risks on drugs
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that cost two point three billion dollars on average according
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to Tufts, including the amortization and failures to develop.
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All right, thank you, Dan.
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Well, you know the new list of drugs includes ozembic
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rybelsis and we go vire what are known as GLP agonists,
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and obviously that's to treat obesity and type two diabetes.
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But a lot of these come from the Scandinavian country,
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so they might join America and the Swiss on that.
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But I can tell you that for those real housewives
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of Beverly Hills or Orange County that are over sixty
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five and have Medicare, they're probably happy about this new list. Jeff,
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please take it away, and we're excited to hear your thoughts,
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especially from the consumer perspective.
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Thanks John, and thanks Dan. Thanks to the Federal of
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Society and the Regulatory Transparency Project for hosting this debate.
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And it sounds like some of us agree on some things.
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But I will disagree with Dan on one important factor.
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He said he's going to use scare quotes every time
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he refers to a sham negotiation. I would say, actually,
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that's a pretty accurate description. In the scare quotes only
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go if you don't preface it with sham. But I
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want to kind of reset a little bit and just
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give some additional context. I do agree with a lot
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of the substantive stuff that John used to introduce the
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discussion in Dan in terms of diving into the specifics
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of the Inflation Reduction Act. And I'll point people to
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my Twitter where I just reposted an article that I
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wrote for Law three sixty on this very topic. I
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am jeff A. Styre st I E. R. On Twitter,
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and you can find the piece. It's behind a paywall
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on Law three sixty, but there's a pdf on the Twitter.
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So resetting the Inflation Reduction Act and the drug price
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Negotiation is the law of the am So I don't
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want anyone misinterpreting that we are recommending that the Trump
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administration ignore what the law that Congress pass and that
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President Biden signed. So we'll acknowledge first that it's the
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law of the land. Another common misperception that I hear
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when we talk about repealing or replacing or pausing the
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implementation of the price negotiation aspect of the Inflation Reduction
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Actor the IRA is that you don't want lower drug prices.
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And everything that Dan said is absolutely true. I would
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I would call it killing the goose that lays the
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golden egg. And if you are concerned about high drug prices,
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think about you know, can you can we have a
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wizard waiving a magic wand to lower the price of drugs.
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Let's call it the Wizard of Doctor Oz, Right, Can
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that wave a magic wand and say drug prices will
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be lower? That's what the law says. I think we
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all recognize that there are implications, there are unintended consequences
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of doing that. So I would say, I think everybody
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recognizes that we would all benefit from the cost from
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a lower cost of pharmaceuticals. The question I think that
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ought to be on the table, and then maybe Congress
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needs to reconsider and maybe society needs to have a
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conversation about is how do we achieve that without asking
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doctor Oz to wave his magic wand and make the
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high prices go away. What contributes to the cost of drugs?
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You have to make sure that they're safe. Do we
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want to not make sure that they're safe? We have
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to make sure that they're effective? Do we want you know,
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there is a debate maybe the FDA should not require
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that drugs be effective before approving them. That's a more
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libertarian angle. So you have to kind of figure out
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what causes the high price of drugs. You know, it
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takes a lot of research. If Dan pointed out to
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almost two and a half billion dollars for every drug
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that comes to market, and if Dan explained, you need
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to be able to attract investors for a risky investment,
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and you have to give them a high rate of
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return for each individual investment to be able to put
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their money at risk. I think Dan did a really
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good job of explaining that. Dan kind of teased my
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interest and someone involved in the regulatory transparency project of
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long being concerned about what agencies tend to do is
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they tend to shortcut, short circuit the process, and they
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don't always issue rules. They do they instead of going
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through the notice and comment period processes is required by
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law to institute a rule a regulation. Very often agencies
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kind of take a shortcut and do guidance. In fact,
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that's really a part of Diviiden administration's implementation has been done.
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And as as Dan said, you can it's much easier
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to repeal guidance by guidance than it is to repeal
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a rule, which would also require that notice and comment
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period and take a lot more time. And as my
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article on my Twitter, Jeff A. Steier will kind of
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outline for you, and Dan has a really good piece
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as well that was in the Wall Street Journal. Hopefully
439
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we can get that in the chat and I'll tweet
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it out later if I get a link. Is that
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there are a lot of constitutional problems. I'm not gonna
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list them. Dan and John did a pretty good job
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of going through what they are going forward. Right The
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topic of this debate is do we pause? What is
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the Trump administration supposed to do? Doctor Oz has not
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yet been confirmed, so maybe he'll be listening if he
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is confirmed. And no offense about the doctor the Wizard
448
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of Oz joke. But what are his options? What are
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the administration's options. Now, you've got a law that is
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coming under constitutional attack on many fronts, and many of
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those are legitimate. As I said from the beginning of
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the IRA and the negotiation is a rule of land,
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so it's not as if the administration is going to
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ignore the law. However, while there are legitimate constitutional questions,
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many of them that have already begun to begin to
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overcome some procedural hurdles in the court, particularly in the
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Fifth Circuit, it might be prudent for the Trump administration
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to say, there are legitimate concerns about the constitutionality of
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this law. We are not saying it is not the
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law of the land, but we are going to pause
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our implementation of the law so that we don't cause
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further problems and let the courts figure it out. I
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do not believe that there is a requirement that the
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administration advanced a law that it itself might recognize is unconstitutional.
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And because those lawsuits, many of them are in process
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right now, we're in the filing stages, I think it
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would be prudent for the Trump administration to pause implementation
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so that the courts can figure out whether the law
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that the administration is about to implement further implement is
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constitutional in the first place. So I don't think, you know,
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some consumer anti pharmaceutical consumer group will be able to
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challenge the administration's lack of implementation and then for that
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litigation to leap frog ahead of the ongoing litigation. So
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I think that's a very safe move for the administration
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to acknowledge, the very least acknowledge the constitutional challenges. Maybe
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the administration will recognize that it is unconstitutional and wait
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for the courts to figure out. But that doesn't accept Congress,
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the new Congress, from paying careful attention. And as I
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think it was John who said early on, a lot
480
00:30:15.200 --> 00:30:18.720
of things were packed into the IRA. It happened very quickly.
481
00:30:19.559 --> 00:30:25.559
There is unfortunately no legal doctrine that says bait and switch.
482
00:30:25.880 --> 00:30:26.079
Right.
483
00:30:26.519 --> 00:30:32.880
Clearly, lower drug prices are popular among the populace. Drug
484
00:30:32.960 --> 00:30:36.720
negotiations are equally popular because that may be one way
485
00:30:36.720 --> 00:30:41.519
to lead to lower drug prices, but imposing in this
486
00:30:41.799 --> 00:30:46.920
potentially unconstitutional way, impunitive way, without due process and with
487
00:30:47.039 --> 00:30:54.720
excessive fines, there is no consensus. Maybe you've got you know,
488
00:30:54.799 --> 00:30:58.039
the far left might be okay with that, but they
489
00:30:58.039 --> 00:31:02.400
did not persuade the public of that. But they did
490
00:31:02.440 --> 00:31:06.400
pass it in the bill, and the Trump administration cannot say, well,
491
00:31:06.440 --> 00:31:11.319
the title of the bill was negotiation. John and Dan
492
00:31:11.359 --> 00:31:14.920
and Jeff just convinced the administration that this is not
493
00:31:14.960 --> 00:31:18.240
a negotiation, and therefore the bill was a sham. You
494
00:31:18.279 --> 00:31:19.960
can't say that it is the law of the land.
495
00:31:20.240 --> 00:31:21.960
The question is how to move forward, and there are
496
00:31:21.960 --> 00:31:26.200
many fronts, so most minimally they should pause it and
497
00:31:26.279 --> 00:31:29.200
allow the legal issues to win the way through courts,
498
00:31:29.640 --> 00:31:33.720
because I don't think the Trump administration is looking for
499
00:31:33.839 --> 00:31:38.279
more accusations that they are forcing us into a constitutional crisis.
500
00:31:38.319 --> 00:31:41.000
And we see We've seen the news over the past
501
00:31:41.039 --> 00:31:43.279
few days, and I would like to see the Trump
502
00:31:43.279 --> 00:31:46.759
administration say we don't want a constitutional crisis. We are
503
00:31:46.799 --> 00:31:49.079
not going to advance a law that has so many
504
00:31:49.279 --> 00:31:55.880
legitimate constitutional problems. But that leaves us to Congress. Congress
505
00:31:56.000 --> 00:31:58.920
ought to address drug pricing and ought to try to
506
00:31:58.960 --> 00:32:04.279
find a consensus. I am in favor of negotiations. Negotiations
507
00:32:04.680 --> 00:32:09.200
are arms length, even handed. You have an opportunity to
508
00:32:09.240 --> 00:32:14.400
walk away without getting whacked with excessive fines. Maybe rewrite
509
00:32:14.440 --> 00:32:18.000
the bill, but the administration should not wait for this
510
00:32:18.119 --> 00:32:21.960
divided Congress on such a complex issue to rewrite the bill.
511
00:32:22.359 --> 00:32:25.720
It ought to pause, but Congress ought to stand up
512
00:32:26.759 --> 00:32:30.400
and fix the legislation. Maybe give the American people what
513
00:32:30.440 --> 00:32:33.880
the previous Congress promised it would do, which is to
514
00:32:33.920 --> 00:32:37.160
negotiate drug prices. I at least before that, and maybe
515
00:32:37.160 --> 00:32:39.599
one way, one small way. I think there are going
516
00:32:39.680 --> 00:32:40.960
to be a lot of things you have to do
517
00:32:41.000 --> 00:32:43.920
to bring drug prices down. But I'm all in favor
518
00:32:43.920 --> 00:32:48.079
of negotiation. This is not negotiation, and therefore there are
519
00:32:48.079 --> 00:32:52.559
a number of tracks dantees that I would get into
520
00:32:52.599 --> 00:32:59.160
the fact that it was a guidance. The Trump administration today,
521
00:32:59.200 --> 00:33:03.000
even before Dotter E is confirmed, can undo that guidance,
522
00:33:03.039 --> 00:33:04.960
and I hope it does. So I'll finish there and
523
00:33:05.519 --> 00:33:18.079
hope to get to some questions. You're on me, John,
524
00:33:18.119 --> 00:33:19.759
I'm not hearing you. I don't know about everyone else.
525
00:33:21.319 --> 00:33:26.720
There's a lot of litigations that are going on Astra Zeneca,
526
00:33:28.640 --> 00:33:32.200
uh Mark, I mean, all all the big pharmaceuticals have
527
00:33:32.240 --> 00:33:36.799
filed lawsuits either against the former HH secretary Javier Bacerra
528
00:33:38.359 --> 00:33:42.119
or just HJAS in general and CMS. So my question
529
00:33:42.160 --> 00:33:45.279
for both of you is to let's talk about those litigations.
530
00:33:45.319 --> 00:33:48.480
It seems to me that there's some core arguments that's
531
00:33:48.839 --> 00:33:52.519
common to all the litigations. One of them is a
532
00:33:52.640 --> 00:33:57.920
takings argument, another one is a procedural due process argument.
533
00:33:58.920 --> 00:34:00.599
Some the finds can range.
534
00:34:00.359 --> 00:34:02.799
From anywhere between one hundred and eighty five percent all
535
00:34:02.839 --> 00:34:06.960
the way to nineteen hundred percent, nineteen times how much
536
00:34:07.039 --> 00:34:10.400
they make on a daily basis. And also I think
537
00:34:10.440 --> 00:34:15.719
it's nineteen times what the pharmaceutical company makes not from Medicare,
538
00:34:16.440 --> 00:34:21.599
but overall the overall come from any particular drug. That's
539
00:34:21.639 --> 00:34:26.599
a lot of money. And so there's the procedural due
540
00:34:26.639 --> 00:34:30.159
process and we get that from, of course, the BMW
541
00:34:30.159 --> 00:34:33.400
of North America versus Gore and the State Farm versus
542
00:34:33.440 --> 00:34:39.159
Campbell cases. In terms of procedural due process, the takings,
543
00:34:39.840 --> 00:34:42.199
there was some argument for a first Amendment, but that's
544
00:34:42.280 --> 00:34:44.480
kind of gone by the wayside a little bit. And
545
00:34:44.519 --> 00:34:48.880
then AstraZeneca had an unusual argument about the Administrative Procedures Act,
546
00:34:49.199 --> 00:34:55.440
arguing that there was insufficient notice and comment. So let's
547
00:34:55.440 --> 00:35:00.400
start with Jeff, would you please tell us your your
548
00:35:00.440 --> 00:35:04.440
feelings on some of these arguments that are being made
549
00:35:04.599 --> 00:35:08.400
on behalf of the pharmaceuticals because they haven't had any
550
00:35:08.519 --> 00:35:11.039
success at the district court level so far.
551
00:35:11.559 --> 00:35:14.440
Yeah, well, it's still early on and I can address
552
00:35:14.639 --> 00:35:18.079
what's happening in terms of the arguments by the pharmaceutical industry.
553
00:35:18.119 --> 00:35:20.800
But I think there I'm with the Consumer Choice Center.
554
00:35:20.840 --> 00:35:23.559
I think there has to be a voice for consumers.
555
00:35:23.599 --> 00:35:27.599
I think patient groups should be very concerned about this.
556
00:35:28.519 --> 00:35:32.559
Where is who is their voice? And that's why we
557
00:35:32.639 --> 00:35:36.320
have the constitution to protect not only the drug companies,
558
00:35:36.360 --> 00:35:40.159
but those are that are affected by this. You mentioned
559
00:35:40.199 --> 00:35:42.760
there's one hundred and eighty eight percent. I think I
560
00:35:42.840 --> 00:35:46.599
had one hundred and eighty seven point five percent fine
561
00:35:46.679 --> 00:35:49.880
to start. They call it an excise tax, but it's
562
00:35:49.880 --> 00:35:53.119
a fine. And therefore when it goes up to nineteen
563
00:35:53.199 --> 00:35:59.800
hundred percent of that drugs market value, then how is
564
00:35:59.800 --> 00:36:04.000
that not an excessive fine? There has also been a
565
00:36:04.039 --> 00:36:09.000
non delegation argument right Congress. So the pharmaceutical industry is
566
00:36:09.039 --> 00:36:12.159
a major part of our economy, a major part of
567
00:36:12.159 --> 00:36:17.840
our healthcare, a critical part of it, and in one regime,
568
00:36:18.239 --> 00:36:22.039
a part of a Larger Inflation Reduction Act piece of legislation.
569
00:36:23.159 --> 00:36:28.880
Congress hand it off to an unelected bureaucrat the opportunity
570
00:36:28.960 --> 00:36:33.679
to set drug prices. Negotiate, but set drug prices right.
571
00:36:34.159 --> 00:36:39.599
The law dictates a twenty five to sixty percent discount
572
00:36:40.320 --> 00:36:43.280
for the negotiation, the so called sham negotiation or the
573
00:36:43.400 --> 00:36:49.760
sham negotiation. And you know, maybe if Congress had dictated
574
00:36:49.800 --> 00:36:53.320
what the drug prices should be, that was it's more
575
00:36:53.320 --> 00:36:56.000
of a legislative function. If you actually want to dictate
576
00:36:56.079 --> 00:36:58.400
drug prices, which I don't think you should, it may
577
00:36:58.440 --> 00:37:03.880
still be a taking. Under the non delegation, you can't
578
00:37:03.920 --> 00:37:08.079
just say to the administrative branch, go ahead, here's ten
579
00:37:08.159 --> 00:37:10.960
drugs every year, and go and set the prices. It's
580
00:37:11.000 --> 00:37:14.840
a huge part of the economy, it's a huge part
581
00:37:14.840 --> 00:37:19.199
of our healthcare system. And non delegation would indicate that
582
00:37:19.480 --> 00:37:23.119
Congress can't just hand that off to the administration to
583
00:37:23.159 --> 00:37:25.960
do to the executive branch to do so. There's also
584
00:37:26.000 --> 00:37:29.119
that argument. But one hundred and eighty seven point five
585
00:37:29.239 --> 00:37:33.000
percent finds to start and by the way, which congressional
586
00:37:33.039 --> 00:37:36.199
staffer thought one to eighty seven point five would be
587
00:37:36.239 --> 00:37:39.079
able to address the problem, curious about that. Maybe dose
588
00:37:39.159 --> 00:37:41.840
can look into that, But it goes up to nineteen
589
00:37:41.880 --> 00:37:47.400
hundred percent. Clearly they can call it an excise tax,
590
00:37:48.000 --> 00:37:51.119
but it is an excise tax that only comes into
591
00:37:51.199 --> 00:37:56.400
play if you choose not to participate in the negotiation program.
592
00:37:56.960 --> 00:38:01.599
And that's not an excise tax. That's fine, and that.
593
00:38:02.280 --> 00:38:04.840
Fine that night up going up to nineteen hundred percent.
594
00:38:05.440 --> 00:38:08.320
Maybe I don't know, maybe someone figured that, maybe someone
595
00:38:08.320 --> 00:38:13.519
in the Congressional Research Service said, you only reach excessive
596
00:38:14.320 --> 00:38:16.880
if the five is one hundred and eighty eight percent,
597
00:38:17.000 --> 00:38:18.320
and so we're going to keep it at one eighty
598
00:38:18.320 --> 00:38:21.440
seven point five to start, But certainly it goes up
599
00:38:21.480 --> 00:38:25.400
to nineteen hundred percent, which makes it excessive. And I'm
600
00:38:25.480 --> 00:38:30.199
very concerned about the process argument. I think because Congress
601
00:38:30.280 --> 00:38:35.360
knew that it was passing a negotiation and in fact
602
00:38:35.480 --> 00:38:40.199
was putting in price controls, they inoculated themselves from any
603
00:38:40.280 --> 00:38:45.599
judiciary oversight. Right, the legislation itself says that the courts
604
00:38:45.599 --> 00:38:49.480
can't review this from a separation of powers perspective. Yes,
605
00:38:49.599 --> 00:38:52.800
Congress passed the law. Yes, it is an obligation upon
606
00:38:52.840 --> 00:38:56.079
the administration to implement that law, and certainly it should
607
00:38:56.079 --> 00:38:58.440
be able to pause it as legal questions are addressed.
608
00:38:59.599 --> 00:39:02.000
But there is a role of the judiciary here, and
609
00:39:02.480 --> 00:39:05.039
in terms of not only was there a no non
610
00:39:05.079 --> 00:39:09.519
delegation problem, who is Congress to change the constitution and
611
00:39:09.599 --> 00:39:14.079
say no, the courts can't interpret this. It's simply unconstitutional.
612
00:39:15.079 --> 00:39:17.119
All right, Dan, what are your thoughts on those?
613
00:39:17.480 --> 00:39:20.440
As an education I think I think what really exacerbates
614
00:39:20.480 --> 00:39:23.159
this we've seen price controls before is what Jeff just said,
615
00:39:23.159 --> 00:39:27.079
which is the fact that it's absolutely unreviewable. That's that's
616
00:39:27.880 --> 00:39:30.800
you know, my understanding is unprecedented. May give you an extent.
617
00:39:31.000 --> 00:39:33.360
You know, there's one very interesting case out of the
618
00:39:33.400 --> 00:39:37.000
DC Circuit in August of twenty twenty three. The opinions
619
00:39:37.000 --> 00:39:39.519
written by an Obama judge. It's an Obama judge, a
620
00:39:41.280 --> 00:39:44.840
Carter judge Edwards, and a Reagan judge I think maybe
621
00:39:44.880 --> 00:39:50.960
Bush Henderson. And essentially it's there was a mandatory deposit
622
00:39:51.039 --> 00:39:54.440
requirement found in the Copyright Act that said that if
623
00:39:54.480 --> 00:39:56.800
you get a copyright within three months, you have to
624
00:39:56.840 --> 00:39:59.719
give two complete copies of the best edition to the
625
00:39:59.760 --> 00:40:02.519
Live of Congress. And if you don't, you're going to
626
00:40:02.599 --> 00:40:06.079
get do that within three months. Then you get liable
627
00:40:06.159 --> 00:40:09.920
for a fine and if you willfully repeatedly fail to comply,
628
00:40:11.239 --> 00:40:13.679
the fine is not two hundred and fifty dollars but
629
00:40:13.719 --> 00:40:17.239
twenty five hundred dollars. And these three DC Circuit judges
630
00:40:17.320 --> 00:40:20.840
found this to be a taking. So you know, not
631
00:40:20.920 --> 00:40:24.400
to get Latin a Foreshori, but or collpa Homer. But
632
00:40:24.639 --> 00:40:27.559
if this isn't if that's a taking, boy, is this
633
00:40:27.679 --> 00:40:32.599
a taking? And you know, the most important case is
634
00:40:32.639 --> 00:40:37.679
this case called Horn. We're basically this the government said,
635
00:40:38.199 --> 00:40:42.119
you know, you're not allowed to market your raisins except
636
00:40:42.159 --> 00:40:46.079
at a particular price, and you know, and they are
637
00:40:46.119 --> 00:40:51.679
defended as as saying, well, you know this is it's okay,
638
00:40:52.000 --> 00:40:54.679
you know, because we're The benefit that we're giving you
639
00:40:54.800 --> 00:40:57.159
is that we're allowing you to market your raisins. And
640
00:40:57.239 --> 00:40:59.840
the court said, no, no, no, no, you can't. You know,
641
00:41:00.079 --> 00:41:03.719
you can't condition that's not a benefit. Now, of course,
642
00:41:04.000 --> 00:41:06.639
there are two arguments that the government is making here
643
00:41:06.960 --> 00:41:11.320
that actually the benefit that the companies are getting here
644
00:41:11.360 --> 00:41:13.239
is not just the right to sell their products, but
645
00:41:13.280 --> 00:41:15.079
the right to sell them to the government, and that
646
00:41:15.119 --> 00:41:17.800
there's no right to sell your product to the government.
647
00:41:17.920 --> 00:41:20.840
So that's where you get into this, you know, is
648
00:41:20.880 --> 00:41:25.119
it really viable for a company not to participate in Medicare?
649
00:41:25.280 --> 00:41:27.960
Is it, as a practical matter, a gun to the head,
650
00:41:28.239 --> 00:41:32.719
just like frankly the Medicaid cut that was held unconstitutional
651
00:41:32.760 --> 00:41:36.519
and n FIV versus Sibelius, the Affordable Care Act case.
652
00:41:38.360 --> 00:41:42.800
The other argument that the government is running as well,
653
00:41:43.119 --> 00:41:45.760
because we are not coming up to the factories and
654
00:41:45.800 --> 00:41:49.880
physically seizing these medicines. Therefore it's not a taking. But
655
00:41:50.280 --> 00:41:52.400
you know, of course we're not allowing you to sell
656
00:41:52.440 --> 00:41:55.119
it at you know, at what you might find to
657
00:41:55.119 --> 00:41:58.199
be a price. I mean, I think John, you and
658
00:41:58.239 --> 00:41:59.960
I discussed this to me. That's like if the gun
659
00:42:00.360 --> 00:42:03.000
say you can't sell your house for more than a penny.
660
00:42:04.000 --> 00:42:06.199
But it's not a taking, because we're not physically seizing
661
00:42:06.199 --> 00:42:06.719
your house.
662
00:42:06.960 --> 00:42:07.840
We're we're not.
663
00:42:08.039 --> 00:42:09.880
We're just saying you're not allowed to sell it for
664
00:42:09.960 --> 00:42:12.719
more than a penny. Obviously, that's kind of a you know,
665
00:42:12.760 --> 00:42:15.920
a bit of an extreme hypothetical, but it's not dissimilar
666
00:42:15.960 --> 00:42:18.519
from what is going on here. The government is saying
667
00:42:18.880 --> 00:42:22.519
you can't sell your product except at this particular price,
668
00:42:22.679 --> 00:42:25.760
which you know we're presuming is going to be less
669
00:42:25.840 --> 00:42:29.960
than would reimburse the companies for their you know, investment,
670
00:42:30.599 --> 00:42:33.320
And in fact, the statute explicitly says you're not allowed
671
00:42:33.360 --> 00:42:37.519
to consider the cost of the other drug failures and
672
00:42:37.559 --> 00:42:39.480
that what this does is it gets to the whole
673
00:42:39.559 --> 00:42:41.960
This is both a policy argument and illegal not a
674
00:42:42.000 --> 00:42:45.760
con social argument. It undercuts the entire business model of
675
00:42:45.800 --> 00:42:49.960
the pharmaceutical sector. The business model the pharmaceutical sector is
676
00:42:51.400 --> 00:42:55.199
we try a lot of drugs, we you know, but
677
00:42:55.280 --> 00:42:57.960
it's a funnel and like literally of the five thousand
678
00:42:58.000 --> 00:43:01.320
compounds that we test, one makes it all the way
679
00:43:01.360 --> 00:43:05.440
through the process, and we need that one to basically
680
00:43:05.480 --> 00:43:09.239
cover the costs of a the hundreds of millions that
681
00:43:09.280 --> 00:43:12.360
it just takes to study that one particular drug that
682
00:43:12.480 --> 00:43:15.199
makes it all the way through, but also the cost
683
00:43:15.239 --> 00:43:19.119
of the failures because otherwise, you know, where's the cost
684
00:43:19.159 --> 00:43:20.199
of the failures covered?
685
00:43:20.280 --> 00:43:21.199
Right? I mean it.
686
00:43:21.679 --> 00:43:27.760
So this you know, sham negotiation is really it really
687
00:43:27.800 --> 00:43:30.920
does get to the heart of the business model, and
688
00:43:30.960 --> 00:43:33.760
it's why it is inevitably going to lead and already
689
00:43:33.800 --> 00:43:39.559
has led to just less investment in particularly small molecules
690
00:43:39.599 --> 00:43:41.559
which have this nine year pill penalty.
691
00:43:41.840 --> 00:43:44.039
And I want to add one thing to Dan's excellent,
692
00:43:44.320 --> 00:43:49.760
sometimes talmudic discussion here, and that is, and I'm almost
693
00:43:49.760 --> 00:43:52.599
embarrassed to have to make this explanation, but I have
694
00:43:52.719 --> 00:43:57.920
heard on my Twitter that it's not a taking because
695
00:43:57.960 --> 00:44:02.920
the government isn't taking away the drug. But you know, taking,
696
00:44:02.960 --> 00:44:06.639
they say only refers to property. Well, we're talking about
697
00:44:06.760 --> 00:44:11.800
intellectual property, right. We call it intellectual property because we
698
00:44:11.920 --> 00:44:17.320
recognize that intellectual property is property, and therefore it is
699
00:44:17.440 --> 00:44:21.960
subject to the takings provisions. You just can't take intellectual property.
700
00:44:22.000 --> 00:44:25.159
And you don't need to be a constitutional scholar to
701
00:44:25.199 --> 00:44:29.239
figure that out, because why would anyone be incentivized to
702
00:44:29.480 --> 00:44:33.519
produce life saving intellectual property if it weren't protected as property.
703
00:44:34.679 --> 00:44:38.639
Well, and on that not just their patents recognized in
704
00:44:38.719 --> 00:44:42.400
the Constitution as we all know, but patents I think
705
00:44:42.440 --> 00:44:46.039
have been protected by the takings clause since the late
706
00:44:46.079 --> 00:44:49.639
eighteen hundreds. I mean this, it's not a new thing
707
00:44:49.800 --> 00:44:54.599
to say that patents are protected intellectual property from a taking.
708
00:44:55.920 --> 00:44:59.119
All right, Well, we've already got a flood of questions
709
00:44:59.119 --> 00:45:00.679
from the audience, Thank you very much.
710
00:45:00.719 --> 00:45:03.800
We hope to get more if we can please.
711
00:45:03.599 --> 00:45:08.719
Use the Q and a feature on your zoom app
712
00:45:08.800 --> 00:45:13.800
or program. You know one thing, Let's start with the
713
00:45:15.280 --> 00:45:20.039
presidential power question. Now, now that Pam Bondi has been confirmed,
714
00:45:20.880 --> 00:45:24.039
we know that the Trump administration has the power to
715
00:45:24.199 --> 00:45:28.480
pause any litigation, whether it's this or any other subject,
716
00:45:28.559 --> 00:45:34.000
to review and to consider it. So we know that
717
00:45:35.360 --> 00:45:40.800
Dan and Jeff both mentioned Congress pushing through some amendments
718
00:45:40.840 --> 00:45:47.599
or revisions to the drug price negotiation program. But Dan,
719
00:45:48.119 --> 00:45:53.519
do you believe that the administration has the power to
720
00:45:53.760 --> 00:45:57.519
pause the program, not the litigation, but to actually just
721
00:45:57.719 --> 00:46:03.639
pause the program let's say another amendment through Congress or
722
00:46:03.679 --> 00:46:07.000
pending review of the litigation, because there is a bill
723
00:46:07.079 --> 00:46:10.599
right now, a bipartisan bill looking to remove the pill
724
00:46:10.639 --> 00:46:13.639
penalty from the program.
725
00:46:14.559 --> 00:46:16.719
Well, so it's not for me to give advice to
726
00:46:17.079 --> 00:46:20.159
the pharmaceutical sector, and I'm not a lobbyist, never have been,
727
00:46:20.199 --> 00:46:23.800
not a hill person. But in addition to pursuing the litigation,
728
00:46:23.920 --> 00:46:26.079
I would be putting a lot of my sort of
729
00:46:26.320 --> 00:46:30.119
efforts into trying to get that pell penalty revote, because
730
00:46:30.119 --> 00:46:33.320
that would make a very big difference as a practical matter,
731
00:46:33.719 --> 00:46:38.039
and especially if there's a bipartisan consensus as there should
732
00:46:38.119 --> 00:46:40.559
be to get rid of this penal pill penalty. I
733
00:46:40.559 --> 00:46:44.519
don't know who thought of why you would do this
734
00:46:44.920 --> 00:46:48.280
to small molecules as opposed to biologics. I mean talk
735
00:46:48.320 --> 00:46:51.760
about unintended consequences. I think you alluded to that earlier.
736
00:46:53.360 --> 00:47:00.000
I think that the president could could pause this program
737
00:47:00.079 --> 00:47:02.559
and could not pursue it. I mean, I don't know
738
00:47:02.679 --> 00:47:05.239
that that's something that they're going to do. I would
739
00:47:05.320 --> 00:47:07.840
hope that they at least again would look at the
740
00:47:07.880 --> 00:47:10.559
list of drugs that came out three days before the election,
741
00:47:11.440 --> 00:47:19.239
and particularly would modify this I think very problematic approach
742
00:47:19.480 --> 00:47:24.480
of saying. So to be clear, the way FDA app
743
00:47:24.920 --> 00:47:27.719
approvals work is you get an active ingredient approved for
744
00:47:27.760 --> 00:47:30.559
a particular indication that is its own and New Drug
745
00:47:30.599 --> 00:47:36.119
Application NDA. That is a drug. Okay, many years later,
746
00:47:36.119 --> 00:47:38.960
if you get the same you know, or a variation
747
00:47:39.039 --> 00:47:41.800
on that active ingredient approved for a totally different purpose,
748
00:47:42.159 --> 00:47:44.800
that's a different NDA. Not it's not a supplemental new
749
00:47:44.840 --> 00:47:47.519
drug application. You can sometimes do a supplemental that it
750
00:47:47.559 --> 00:47:51.360
adds a different that adds an additional indication. But if
751
00:47:51.400 --> 00:47:53.880
you're you know, you've got this for an entirely different
752
00:47:53.880 --> 00:47:59.440
condition and an entirely new you know, form or dosage
753
00:47:59.519 --> 00:48:02.800
or whatever that's it, that can be its own NDA.
754
00:48:03.119 --> 00:48:06.559
And and what CMS has done is said, well, if
755
00:48:06.559 --> 00:48:09.880
it's the same active ingredient, if these drugs are basically related,
756
00:48:09.920 --> 00:48:11.639
we're going to go back to the earliest one and
757
00:48:11.679 --> 00:48:13.800
we're going to pull them all together. And that's how
758
00:48:13.840 --> 00:48:19.280
they're getting to a GOVI uh for example. And I
759
00:48:19.320 --> 00:48:22.840
definitely think that Trump administration, you know, could pull back
760
00:48:23.000 --> 00:48:27.800
on that interpretation and on that approach. I think if
761
00:48:27.800 --> 00:48:30.719
they if you know, presidents are allowed to decide whether
762
00:48:30.800 --> 00:48:33.960
or not they think that a program is constitutional and unconstitutional.
763
00:48:34.320 --> 00:48:38.519
If they genuinely think that it's unconstitutional, they could say
764
00:48:38.559 --> 00:48:41.320
we're going to I mean, I suppose they could acquies
765
00:48:41.559 --> 00:48:46.079
in the court challenge that has happened, you know, the
766
00:48:46.199 --> 00:48:49.599
sort of sue and settle, uh, you know, approach that
767
00:48:50.440 --> 00:48:54.440
certainly has been pursued in democratic administrations. So they could
768
00:48:54.440 --> 00:48:57.039
acquiesce in the court decision. Or they could just say
769
00:48:57.320 --> 00:48:59.960
we're going to pause it until, you know, the court's
770
00:49:00.159 --> 00:49:02.800
sort it out. I don't know if they can really
771
00:49:02.880 --> 00:49:06.320
pause the litigation other than by giving up I don't know.
772
00:49:06.360 --> 00:49:07.519
I mean, you'd have to go to the court and
773
00:49:07.559 --> 00:49:10.280
say we want to stay this. I don't know. I
774
00:49:10.320 --> 00:49:13.760
mean that I don't know that they can do that unilaterally.
775
00:49:14.840 --> 00:49:19.199
But I don't think that a president is forced to affirmatively,
776
00:49:19.519 --> 00:49:21.760
you know, do a program that the president believes in
777
00:49:21.800 --> 00:49:23.440
good faith is unconstitutional.
778
00:49:23.880 --> 00:49:28.679
All right, So thanks for that, Jeff. If Jeff, if
779
00:49:28.719 --> 00:49:33.320
you were a litigant, if you were a pharmaceutical company litigant,
780
00:49:34.519 --> 00:49:37.239
are there any other arguments that you would make besides
781
00:49:37.320 --> 00:49:41.880
the takings and procedural due process arguments and the other
782
00:49:41.960 --> 00:49:43.480
arguments that we've discussed already.
783
00:49:43.519 --> 00:49:45.760
What's missing? If anything?
784
00:49:46.159 --> 00:49:49.400
I think those are the key arguments. There's certainly we've
785
00:49:49.440 --> 00:49:53.199
discussed it until now. There is the economic argument. There
786
00:49:53.280 --> 00:49:56.880
is the policy argument. I would like to highlight on
787
00:49:57.599 --> 00:50:02.239
behalf of consumers that if you do this, if you
788
00:50:02.320 --> 00:50:04.920
continue on with this program, if Congress doesn't fix it,
789
00:50:05.440 --> 00:50:08.440
if we do not prevail on the courts and overturning it,
790
00:50:08.519 --> 00:50:11.800
is unconstitutional on any of these grounds. What are the
791
00:50:11.840 --> 00:50:15.880
costs to the next generation? Right?
792
00:50:16.440 --> 00:50:20.480
So, those are I'm sorry, Jeff, the next generation of
793
00:50:20.559 --> 00:50:22.480
drugs or the next generation of humans.
794
00:50:22.920 --> 00:50:27.079
Yes, Essentially, what we're doing here is we're taking money
795
00:50:27.840 --> 00:50:31.679
and saving money. For current consumers at the expense of
796
00:50:31.760 --> 00:50:35.320
their children and grandchildren, who will no longer benefit from
797
00:50:35.400 --> 00:50:38.400
new life saving innovation because we will have killed the
798
00:50:38.400 --> 00:50:41.360
goose that's laying the golden egg that continues to innovate,
799
00:50:41.360 --> 00:50:45.480
because there won't be investors who think it's in their
800
00:50:45.519 --> 00:50:49.239
worthwhile to take on a risky investment while having those
801
00:50:49.280 --> 00:50:53.079
profits capped so low artificially. Again, that goes to waving
802
00:50:53.079 --> 00:50:56.280
the magic wand. You can't wave a magic wand and
803
00:50:56.360 --> 00:51:00.280
lower drug prices just because you want to without suffering
804
00:51:00.480 --> 00:51:05.000
consequences somewhere else squeezing, squeezing the balloon. Something else is
805
00:51:05.039 --> 00:51:08.559
going to give. And what's going to give is the
806
00:51:08.599 --> 00:51:11.480
pipeline of innovation, of research and development that funds the
807
00:51:11.519 --> 00:51:15.239
innovation that will lead to new life saving drugs for
808
00:51:15.360 --> 00:51:19.000
your children and your grandchildren and beyond. So I think
809
00:51:19.039 --> 00:51:21.719
that's something that people need to consider. That's why I
810
00:51:21.800 --> 00:51:24.679
began with you need to have consensus. Okay, we all
811
00:51:24.719 --> 00:51:27.719
agree we want lower drug prices. The real question is
812
00:51:27.719 --> 00:51:30.679
how do we achieve lower drug prices? What is it
813
00:51:30.719 --> 00:51:33.440
that we have to give? Life is full of compromises.
814
00:51:33.480 --> 00:51:36.199
There's pros and cons to everything, and the issue is
815
00:51:36.239 --> 00:51:38.280
what do we want to compromise? And I don't think
816
00:51:38.559 --> 00:51:43.400
the American people want to compromise innovation for their children
817
00:51:43.440 --> 00:51:47.320
and grandchildren to save themselves money. Right now, that doesn't
818
00:51:47.320 --> 00:51:49.719
mean I don't want lower drug prices. I do, but
819
00:51:49.760 --> 00:51:53.000
we have to address the underlying reasons those drug prices
820
00:51:53.039 --> 00:51:55.880
are so high. And do you want to give up
821
00:51:55.880 --> 00:51:57.960
some safety? Do you want to give up some efficacy?
822
00:51:58.119 --> 00:52:00.039
Do you want to crack down on trial lawyers? What
823
00:52:00.079 --> 00:52:01.440
do you want to do to bring the cost of
824
00:52:01.519 --> 00:52:04.599
drugs down without breaking the system that brought us those
825
00:52:04.679 --> 00:52:05.719
drugs in the first place.
826
00:52:06.840 --> 00:52:09.920
Yeah, I just want to go ahead, possible. It's just
827
00:52:10.079 --> 00:52:14.920
impossible to believe, right if you you know, believe in
828
00:52:15.000 --> 00:52:18.400
any any kind of economics that you can pay less
829
00:52:18.400 --> 00:52:23.599
for something and get the same amount or more. I mean,
830
00:52:23.639 --> 00:52:29.320
it just defies common sense. Now, you know, a lot
831
00:52:29.360 --> 00:52:32.559
of the problem is these are you know, drugs that
832
00:52:32.639 --> 00:52:34.800
will never be approved and so nobody will know that
833
00:52:34.840 --> 00:52:37.760
they're not getting this medicine. But when I was an FDA,
834
00:52:37.840 --> 00:52:42.159
we found something super interesting. If you ask somebody who's
835
00:52:42.199 --> 00:52:46.320
not sick, who's not a patient, what what's their risk tolerance?
836
00:52:47.000 --> 00:52:48.559
Their risk tolerance was like, I don't know, one in
837
00:52:48.639 --> 00:52:51.880
one hundred thousand, one million is like really really high, right,
838
00:52:52.039 --> 00:52:54.599
I don't want I don't want to ever have a
839
00:52:54.599 --> 00:52:58.880
safety problem. You ask people who are sick, You ask patience,
840
00:52:59.440 --> 00:53:02.559
what's there risk colorance, what are they willing to accept
841
00:53:02.599 --> 00:53:05.079
in terms of, you know, for the benefit, what kind
842
00:53:05.079 --> 00:53:08.559
of safety risk are they? And it was entirely different. Okay,
843
00:53:09.599 --> 00:53:11.960
you know, many of the American people are not patients,
844
00:53:12.760 --> 00:53:15.800
but we will all be patients. We will all at
845
00:53:15.840 --> 00:53:18.840
one point, you know, if we live long enough, you know,
846
00:53:19.039 --> 00:53:22.280
have to take medicines and have and health have health issues,
847
00:53:22.760 --> 00:53:26.039
and you know, all of us want, you know, innovative
848
00:53:26.079 --> 00:53:30.119
new drugs to address you know, the many, many, many
849
00:53:30.159 --> 00:53:34.960
disease conditions that we don't yet have therapies for. People
850
00:53:35.000 --> 00:53:37.679
don't realize this, but you know, you go to someone
851
00:53:37.679 --> 00:53:39.079
in the street and you're like, how many new drugs
852
00:53:39.079 --> 00:53:41.840
are there a year? And people have no idea that
853
00:53:41.920 --> 00:53:45.320
the average number of new drugs in a year are
854
00:53:45.360 --> 00:53:48.199
between thirty and let's say at the max. I think
855
00:53:48.280 --> 00:53:51.559
one year maybe they hit fifty maybe, and a lot
856
00:53:51.639 --> 00:53:54.960
of those are orphan drugs. Of course, we have we
857
00:53:55.000 --> 00:53:58.480
haven't even gotten into is the disincentives in the IRA
858
00:53:58.760 --> 00:54:03.239
for orphan drugs UGS and the disincentives for doing research
859
00:54:03.320 --> 00:54:09.199
to get additional indications. Those are two other massively problematic policy.
860
00:54:09.719 --> 00:54:13.599
You know, problems with this, with with this, with this law.
861
00:54:13.679 --> 00:54:17.639
But you know, again, you know, we're not We're not
862
00:54:17.679 --> 00:54:21.880
going to really. Obviously, the pharmaceutical sector is trying to
863
00:54:22.000 --> 00:54:24.800
raise people's consciousness about the dog that doesn't bark and
864
00:54:24.800 --> 00:54:26.840
the dog that won't bark, and the drugs we won't have.
865
00:54:27.519 --> 00:54:32.280
But that's different than taking something away that's that people have. Yeah,
866
00:54:32.960 --> 00:54:35.440
and and so that's part of the problem with making
867
00:54:35.480 --> 00:54:36.880
these arguments.
868
00:54:37.159 --> 00:54:38.559
Yeah, and I.
869
00:54:38.480 --> 00:54:40.519
Want to I want to flash out what Dan said.
870
00:54:40.719 --> 00:54:44.599
I highlight the importance of studying indications other than the
871
00:54:44.639 --> 00:54:48.559
initial one. A lot of wigov UH and g l
872
00:54:48.639 --> 00:54:53.000
P one information in the news, but every day it
873
00:54:53.079 --> 00:54:56.480
seems there is another article that comes out published journal
874
00:54:56.559 --> 00:55:00.000
article that seems to suggest that will gov which affects
875
00:55:00.199 --> 00:55:03.360
reward centers in the brain. I think today's article was
876
00:55:03.480 --> 00:55:10.599
alcohol alcoholism. I'm interested in tobacco policy individuals there there
877
00:55:10.679 --> 00:55:13.719
maybe haven't been enough studies on this, but individuals who
878
00:55:13.760 --> 00:55:17.000
are on MACGOVI have reported less of a desire to smoke.
879
00:55:17.800 --> 00:55:22.880
I've heard the same thing about excessive shopping anything that
880
00:55:22.920 --> 00:55:26.599
affects the reward centers because of its effect on weight loss.
881
00:55:26.800 --> 00:55:30.280
It has been indicated for heart disease, but now it
882
00:55:30.320 --> 00:55:34.039
may be indicated for sleep apnea, a major cause of stroke.
883
00:55:34.880 --> 00:55:39.199
There is value for consumers to have this additional research
884
00:55:39.239 --> 00:55:42.239
on indications because if it's not indicated for a certain
885
00:55:43.400 --> 00:55:47.679
a certain disease or effect, UH, the insurance companies won't
886
00:55:47.679 --> 00:55:50.480
pay for it. So if you want your insurance company
887
00:55:50.519 --> 00:55:53.760
to pay for your new innovative drug, you want those
888
00:55:54.519 --> 00:55:58.880
pharmaceutical companies to do the research to justify new indications
889
00:55:59.519 --> 00:56:02.920
that will not one address your underlying condition, but it
890
00:56:02.960 --> 00:56:05.559
will also help get it covered by insurance.
891
00:56:05.960 --> 00:56:06.320
So there.
892
00:56:07.360 --> 00:56:10.360
Oh, sorry, Jeff, we're bumping up against the time. I
893
00:56:10.400 --> 00:56:13.880
want to ask Dan one last question and Jeff one
894
00:56:13.920 --> 00:56:15.800
last question, but I'm going to have to limit your
895
00:56:15.840 --> 00:56:18.079
answer to about thirty to forty five seconds each.
896
00:56:18.440 --> 00:56:19.199
My apologies.
897
00:56:19.840 --> 00:56:23.639
Dan, would it make any difference if you negotiate the
898
00:56:23.679 --> 00:56:27.360
price of a drug at the drug launch as opposed
899
00:56:27.360 --> 00:56:32.519
to now after it's already nearing its loss of exclusivity.
900
00:56:33.079 --> 00:56:35.920
Well, first of all, it's not nearing its loss of exclusivity.
901
00:56:35.920 --> 00:56:40.679
That's the problem, particularly within nine years life. Let's be clear,
902
00:56:40.880 --> 00:56:44.320
pharmaceutical companies have to negotiate the price of their drugs
903
00:56:44.400 --> 00:56:48.320
with PBMs, with insurers. This idea that they're free to
904
00:56:48.360 --> 00:56:50.880
set any price at all that they want is just
905
00:56:51.559 --> 00:56:56.000
not right. BRG has a study that says fifty percent
906
00:56:56.079 --> 00:56:59.440
of the drug dollar goes to manufacturers. The other fifty
907
00:56:59.480 --> 00:57:03.559
percent goes to PBMs, to insurers, to pharmacies, to all
908
00:57:03.599 --> 00:57:06.519
sorts of other people. This idea that you know, drug
909
00:57:06.559 --> 00:57:08.800
companies could do whatever they want, it's just wrong.
910
00:57:09.559 --> 00:57:13.400
And then Jeff, final question, do you think if if
911
00:57:13.440 --> 00:57:17.639
the pill penalty were removed such that biologics and small
912
00:57:17.679 --> 00:57:19.360
molecules were treated the same way?
913
00:57:20.519 --> 00:57:24.119
Uh? Do your think here is right and the and
914
00:57:24.239 --> 00:57:24.800
the distance?
915
00:57:26.039 --> 00:57:28.480
Do you think that would Uh? That would help to
916
00:57:28.519 --> 00:57:31.440
alleviate the problem that that we're facing with this.
917
00:57:31.639 --> 00:57:32.159
Is that enough?
918
00:57:32.719 --> 00:57:34.039
No, it's not enough. Would it help?
919
00:57:34.159 --> 00:57:35.440
You asking two different questions?
920
00:57:35.440 --> 00:57:36.079
Would it help?
921
00:57:36.400 --> 00:57:37.400
Of course it would help.
922
00:57:37.440 --> 00:57:40.159
It Uh takes something really bad and makes it only
923
00:57:40.880 --> 00:57:41.519
pretty bad.
924
00:57:42.000 --> 00:57:42.239
Uh.
925
00:57:42.280 --> 00:57:44.480
But no, it wouldn't solve the problem because if the
926
00:57:44.800 --> 00:57:47.519
underlying problem is when we spent the last hour discussing.
927
00:57:48.000 --> 00:57:48.239
Uh.
928
00:57:48.480 --> 00:57:52.320
Certainly, Uh, that would help, but it wouldn't resolve the problem.
929
00:57:52.320 --> 00:57:55.239
It wouldn't relieve Congress of the obligation to fix the law,
930
00:57:55.599 --> 00:57:58.760
and it won't relieve the courts from their obligation to
931
00:57:58.800 --> 00:58:03.599
address the constitutionally issues. And it doesn't give If that happened,
932
00:58:03.760 --> 00:58:06.360
it wouldn't give the Trump administration a reason to say, Okay,
933
00:58:06.360 --> 00:58:07.400
well there's no problem here.
934
00:58:07.440 --> 00:58:07.800
There is.
935
00:58:08.360 --> 00:58:14.639
And you know, pausing the implementation would not pause the litigation.
936
00:58:15.119 --> 00:58:19.360
You'd be pausing the implementation to let the litigation play
937
00:58:19.360 --> 00:58:21.159
out because you don't want to implement a law that
938
00:58:21.199 --> 00:58:23.639
may very well be on constitutional All.
939
00:58:23.599 --> 00:58:27.440
Right, Well, Dan, Troy, Jeff Sire, thank you very much
940
00:58:27.480 --> 00:58:31.159
for sharing your expertise. It was a great discussion and
941
00:58:31.239 --> 00:58:34.719
I think I hope everybody enjoyed it. Thanks for joining us.
942
00:58:34.760 --> 00:58:38.440
Please join us again for our next RTP Regulatory Transparency
943
00:58:38.480 --> 00:58:43.079
Project webinar, and I'll turn it back to Marie Blanchard.
944
00:58:44.079 --> 00:58:47.039
Thank you, John, thank you for moderating, and thank you
945
00:58:47.159 --> 00:58:50.119
Dan and Jeff. We're glad also to the audience who
946
00:58:50.159 --> 00:58:53.320
came and listen to this discussion, and if you would
947
00:58:53.400 --> 00:58:56.119
like to find similar discussions like this, you can go
948
00:58:56.199 --> 00:58:59.519
to our website RAG project dot org. We'll see you
949
00:58:59.599 --> 00:59:00.000
next time.
950
00:59:00.719 --> 00:59:01.360
Thanks so much.
951
00:59:01.360 --> 00:59:02.800
Everybody really appreciate.
952
00:59:02.400 --> 00:59:06.519
You on behalf of the Federal Society's Regulatory Transparency Project.
953
00:59:06.519 --> 00:59:09.519
Thanks for tuning in to the Fourth Branch podcast to
954
00:59:09.559 --> 00:59:12.079
catch every new episode when it's released. You can subscribe
955
00:59:12.199 --> 00:59:16.480
on Apple Podcasts, Google Play, and Speaker For lays from
956
00:59:16.480 --> 00:59:19.840
our TP, please visit our website at Regproject dot org.
957
00:59:20.000 --> 00:59:22.320
That's ore egproject dot org.
958
00:59:31.199 --> 00:59:33.079
This has been a FEDSC audio production