CLEVELAND – A terse Ian Read, chairman and CEO of New York-based Pfizer Inc., took the podium at the 2016 Medical Innovation Summit, sponsored by Cleveland Clinic Innovations, to offer five "prescriptions" for the U.S. health care system, along with a dose of big pharma rhetoric for the largely med-tech audience. The system, Read said, is "on the cusp of new advances" and "at a critical inflection point," despite a growing public discourse suggesting it is, instead, "broken and inefficient."
He cited recent breakthroughs in immuno-oncology, which he attributed to improvements in biology, enhanced collaboration in translational research, "huge investments in risk-taking" and a shared commitment across the health care industry. Read called PD-1 inhibitors "only the beginning" of efforts to transform cancer care from lifesaving therapy into chronic disease management.
Such advances are fueled by market-based systems that reward return on capital invested in drug R&D, and continued flow of that investment is "a prerequisite for continuing funding of these miracles," Read said. The growing uproar over drug prices – which, he maintained, pits various industry segments against each other in a "zero sum game" – threatens to upend that dynamic.
Read ticked off a variety of forces driving health care costs. On the demand side, he cited a growing need to provide services to a U.S. population that is aging and showing an increased prevalence of chronic diseases. The current health care structure, he said, offers no incentives for primary prevention to address either major challenge.
On the supply side, Read pointed to the requirement for up-front investment in drugs, medical technologies and diagnostics. Yet spending is inefficient, with payments based on volume instead of value and regulations "that don't reflect the current reality of health care." On top of that, he lamented the "waste, fragmentation and fraud" in the system.
"I don't believe there's a magic bullet," Read said, cautioning against the move to a single-payer system such as the oft-touted Canadian or British models.
"We need to look for a solution that does not ration health care," he said.
Epipen saga 'a market failure'
To arrive at that goal, Read advised the industry first to look at both sides of the ledger when evaluating short- and long-term health care costs. A scenario where hospitals win at the expense of drug companies is counterproductive, he suggested. Instead, patients should be managed cost-effectively across the health care continuum through primary and secondary intervention.
"We need to work together to do that – the pharmaceutical industry and the hospitals," Read said. Better adherence to anti-hypertensives – which, as a class, have declined in cost by 30 percent to 40 percent over the past decade, he maintained – could avoid some 1 million annual hospitalizations, which have risen in cost by 60 percent over the same period, he added.
In fact, major conditions such as diabetes, hypertension and congestive heart failure can be managed more cost-effectively in the outpatient setting, using appropriate medications, than in the hospital, according to Read, who suggested incorporating longer term outcomes into reimbursement models designed to reward the most cost-effective and valuable innovations.
As a second fix, Read suggested moving from a treatment-based to a prevention-based health care system. "Primary prevention is the way to cut health care costs," he said.
Physicians, hospitals and pharmaceutical companies, alike, should have greater financial incentives to help individuals avoid sickness – to manage cholesterol levels, lower diabetes rates and reduce obesity, for instance – rather than treating or curing them after the fact. To participate fully in such initiatives requires shared risk arrangements, and drug companies need "clarification" on regulations and kickback rules before that can happen, Read pointed out.
"We can't do that today efficiently," he said.
Patients, too, must be required to take personal accountability for their health. That prospect might seem daunting "for a society with freedoms and a democracy like the United States," Read acknowledged. Education and rewards for healthy behavior – along with "a stick" for failure to comply – would produce results, he suggested.
The third remedy: Move everyone into the insurance system.
"But let me be clear here: I'm not advocating for a one-payer system," Read emphasized. "I believe choice and market-based systems are essential. We need to have incentives to get the right behaviors, not regulations to order what we do." Plans with attractive designs that offer reasonable premiums and deductibles could be designed, he proposed, based on more robust risk adjustment methodology.
"Insurers are overcompensated for people who are well and undercompensated for people who are sick," Read said. "This makes it very difficult to have a stable business that also pays for long-term treatments and cures."
As his fourth solution, Read recommended the FDA speed approval times to foster market competition and accelerate patient access. He was careful to draw a distinction between patent-protected branded drugs – a category where he said price inflation in 2015 was just 2.8 percent – and generics, which he characterized as an "under-invested" universe segment that has led to single-source disasters such as Mylan NV's Epipen. (See Medical Device Daily, Oct. 11, 2016.)
"This is a market failure," Read insisted. "We need regulations to ensure that high-quality generics are brought faster to market and are brought efficiently to market, which will allow that part of the market to avoid what we've seen with Epipen and other products of that nature."
During a Q&A, Read took the opportunity to thrust the spear a little deeper into the FDA.
"Most of the time that goes into developing a drug is in the interaction with the agency," he said, outlining the stream of discussions required prior to investigational new drug filings and before and after each stage of clinical studies. Most of that time is "wasted," he complained.
"I use the word 'wasted,'" Read added. "The FDA would say they add value because they improve the results of the trial. They improve the information. The question is: At what cost? Every regulatory body has a cost."
As a final regimen for U.S. health care, "let's eliminate the excessive waste, fraud and abuse, and inefficiencies," Read said, blaming these culprits for up to 15 percent of system costs. Uniform record-keeping, updated regulations and improved quality controls would eliminate many of these costs fairly simply, he said, but more complex undertakings, such as collaborative efforts to reduce avoidable hospital readmissions, also are needed.
"I'm concerned that we are fighting – each of us in the system – to preserve our slice of the pie, and we're not working together to change the inefficient insurance and reimbursement systems we have in the United States," Read concluded. "It's going to take hospitals, insurers, [pharmacy benefit managers] and the [pharmaceutical] industry to come together to define an efficient market-based system."
The alternative to working collaboratively, Read warned, is to accept government rationing, which would represent a step backwards. Although there are no "perfect" markets, the U.S. system remains the world's best, he said.