Almost every year, I’ve tried to make some predictions about what will happen over the next 12 months in healthcare. This year, I’m going back to a format proposed by former Forbes.com editor Paul Maidment. Here are some thoughts on drug pricing, Obamacare and more.
The Big Trend
Health policy becomes a campaign issue. Martin Shkreli, the so-called “pharma bro,” put drug pricing on the political map not only because he raised the price of a drug to treat toxoplasmosis by 5,000% but also because he refused to show any contrition, taunting the world that he should have raised the price more.
But drug pricing isn’t the only healthcare issue on the table. As the campaign season settles down into a race between one Democrat (likely Hillary Clinton) and one Republican (Marco Rubio? Ted Cruz? Donald Trump?), Obamacare is likely to take center stage again. There are ways in which the law has undeniably worked–decreasing the number of people who are not insured. But premiums in the insurance exchanges the law created are very high in some regions, and one big insurer, UnitedHealthcare, has said it may stop offering plans on them. What, the candidates will debate, should come next?
The Unconventional Wisdom
Drug prices aren’t the biggest healthcare issue for voters. Drug companies are simply the easiest target, a problem Shkreli has made worse by providing critics with a telegenic villain. (Does anybody else see parallels between Martin’s hoodie-clad public persona and the pouty, tantrum-plagued Star Wars baddie Kylo Ren?) In fact, the drug pricing market, as opaque as it is, is among the most transparent in healthcare. Just try figuring out the list price or average rebate on a knee implant–or the surgery it is used in.
For the pharmaceutical industry, this is an intractable problem, born of two decades of missteps as one of the most-respected industries in the country fell to be viewed along with tobacco and oil companies. Somehow, Gilead, which created a drug that cured hundreds of thousands of Americans of hepatitis C, has been cast as a villain over pricing issues. So too, cancer drugs, even as Jimmy Carter, taking Merck’s $150,000 Keytruda, apparently saw his tumors become undetectable. The big challenge for pharmaceutical companies is how to widen the discussion. The big challenge for politicians is coming up with any policy that will actually affect U.S. drug prices.
The Misplaced Assumption
That Congress will be able to do anything about drug prices. Most of the legislative solutions to lowering drug prices are exceedingly tough lifts. Is this Congress, divided both across the aisle and within the GOP, really going to give Medicare the ability to negotiate drug prices? The most workable solutions are the worst ones. The proposal that would save the most money would have poorer seniors covered under Medicaid, the program for the poor, not Medicare–essentially saying that if you're poor, you get less of a handout from the government.
But the drug pricing controversy will hurt pharma in Washington, D.C. The industry has been trying to push through a friendly bit of reform of the Food and Drug Administration, called “21st Century Cures.” Good luck with that, even with Ted Cruz pushing his own more radical (and more dangerous) FDA-weakening bill. And it’s possible that small, administrative reforms could have a big impact on some of the worst drug-pricing behavior, perhaps by encouraging the creation of generic versions of drugs whose prices have been jacked up.
Anyway, with Pfizer, the largest drug company, executing the biggest merger ever in part to avoid paying U.S. taxes and Shkreli providing a villain, good luck to drug company lobbyists. They’ll need it.
The Watch List
Martin Shkreli: His next court appearance is in a few weeks. He could still testify before Congress. He’s no longer CEO of either of his companies, but he may still control them. He says he’s going to drop a rap album. You know you’re watching, even if you don’t want to.
Valeant Pharmaceuticals: Has pharma’s big roll-up finally run out of stuff to roll-up? Can the company be stabilized, or will it be broken up and sold off in parts, allowing other drug makers to move their tax domiciles outside the U.S.?
Theranos: Do the company’s diagnostic tests work as advertised? Will it publish data? Chief executive Elizabeth Holmes promises that we’ll see data in the coming year.
The Obamacare Exchanges: Will insurers stay in?
Pfizer: Its merger with Allergan moves its tax domicile to Ireland and provides for more growth. What’s next? Will the company break up? What will the PR impact of the merger be?
CRISPR-Cas9: This molecular tool–used to edit genes–is taking biotech by storm. How long before it can be turned into a tractable therapeutic?
The Bold Prediction
Here are two: One, that House Speaker Paul Ryan and President Barack Obama will both feel the weight of their collective legacies so heavily that they will find some compromises they can make together on Obamacare before the year is out.
And second: At least one new medicine in 2016 will prove to be a story not about prices but about progress, as we find a new way to battle an intractable disease.
Happy new year!
