DC MDs Dean and Frist talk healthcare reform and biopharma
There isn't much in the Affordable Care Act to cut healthcare costs, agreed former senator Bill Frist (R-TN) and ex-governor Howard Dean (D-VT), both of whom came to politics with MDs instead of JDs. But the law has led to a serious national discussion on reducing expensive care and, combined with measures supporting the biopharma industry, could set the stage for reining in US healthcare spend, the odd couple said in Phoenix yesterday at the annual meeting of the Pharmaceutical Marketing Research Group (PMRG).
With the year-old law under attack on legal grounds, both men said they expect the Supreme Court will declare the individual mandate unconstitutional but not the entire act, leaving industry to continue grappling with its impact. Frist and Dean agreed that the country needs to, and will, use the law as a catalyst to wean itself from expensive fee-for-service care.
“That's what I think is the teachable moment over the next five years,” said Frist. “[The law] pays lip service to innovation and quality and ACOs [accountable care organizations]. All that provides a certain level of certainty. At the end of the day, it comes down to you and how well you do your job, how smartly you do it in the private sector.”
What was not in the legislation, and needs to be addressed, according to Frist, is a way to deal with skyrocketing national debt. Under the fee-for-service model, driven mostly by growth in Medicare and Medicaid, federal debt is 65% of GDP, projected to grow to 110% of GDP by 2075. “We can't sustain that and remain the most powerful nation,” he said. “We have to reform this.”
The Affordable Care Act, Frist said, provides the building blocks for a shift away from fee-for-service to a value-based system in which health plans reimburse for cost reduction. ACOs, essentially hospitals that coordinate care for large numbers of people and get paid a flat rate for each patient as opposed to billing for each procedure or treatment, can plow savings back into reimbursement.
If adopted, Frist said this shared savings model can return primary care to a “quarterback” position in the healthcare system. “It has nothing to do with federal legislation. It's the private sector.”
Dean, who railed against the pharma industry as a presidential candidate but has since consulted for biotech trade group BIO, also voiced support for business, with some caveats. ACOs create a model where more money can be made by taking care of people early than by delivering expensive care later. Not getting reimbursed for anything extra “will transform medicine,” he said.
However, “if we're going to go back to capitated care, we have to find a different way to do it,” Dean warned. Once HMOs go public, and are traded on Wall Street, they set up a dynamic where their fiduciary responsibility to shareholders conflicts with the moral responsibility to patients, he said. “Nonprofit hospitals will end up being the core of the new ACOs.”
Dean called for less partisanship and told the crowd of around 500 he wants Washington to support the biopharma industry and the FDA. “We're losing hundreds of millions of dollars because we're starting to do offshore trials and now offshore licensing of drugs,” he said. “It's easier to get your drug licensed in the EU and bring it in that way than to go through the FDA.”
Because of the culture of risk-averseness permeating FDA, “we're losing one of the industries where we have a huge edge,” Dean said, citing China's offering American scientists incentives to conduct clinical trials overseas.
He said Republicans and Democrats bear equal responsibility for an increasingly fraught approvals process. “When FDA recalls a drug, some congressman beats them up on C-SPAN and says how incompetent they are, so of course they're going to go back and approve nothing,” said Dean. “They want to cover their rear ends.”
He called for a national risk-efficacy debate, led by patients. “They need to advocate government…especially with these high-end biotech, extraordinary drugs being developed. They understand – without risk, they die.”
Dean's wish list also includes patent extension. “I don't think various members of Congress understand biotech all that well. They confuse it with small-molecule drugs,” he said, referring to the 15 years of data exclusivity for biologics written into the healthcare bill which was ultimately reduced to 12. “But you need protection for your intellectual property or no one's going to innovate. Explain to me why you'll invest $800 million in a drug when you can't recoup that because the patent runs out in five or six or seven years.”
Innovation and how to pay for it should become a focus for lawmakers on both sides of the aisle, Dean added: “We need to get this message out: the pharmaceutical industry has saved us an enormous amount of money.”
While acknowledging drug prices can be high, the former Vermont governor argued that pharma is not a cost driver. Thirty years ago, a patient admitted for myocardial infarction would spend 10-14 days in the hospital, he said. Today, a patient who suffers an MI can be discharged in three or four. “If you think some of the cardiac drugs…are expensive, they're a whole lot cheaper than $3,000 a day for a cardiac care bed.”