As the last event in our 2018 Opportunities for Progress Signature Series on health care costs, this 90-minute briefing explored the differences between “price” and “cost” in our current system and the potential policy options that address these discrepancies.
- Gerard Anderson, Ph.D., professor, Bloomberg School of Public Health, Johns Hopkins University
- Damon Francis, M.D., chief medical officer, Health Leads
- Joanna Hiatt Kim, vice president, Payment Policy, American Hospital Association
- Dan Leonard, M.A., president, National Pharmaceutical Council
- Glenn Rodriguez, M.D., board chair, CareOregon
12:00 p.m. – 12:10 p.m. Welcome and Introductions
- Mary Ella Payne, R.N., MSPH
Acting President and CEO, Alliance for Health Policy
- Lori Reilly, J.D.
Executive Vice President, Policy, Research, and Membership, Pharmaceutical Research and Manufacturers of America
- Shawn Martin
Senior Vice President, Advocacy, Practice Advancement and Policy, American Academy of Family Physicians
12:10 p.m. – 12:45 p.m. Panelist Opening Remarks
- Gerard F. Anderson, Ph.D.
Professor, Johns Hopkins Bloomberg School of Public Health and Medicine
- Joanna Hiatt Kim, M.A.
Vice President, Payment Policy, American Hospital Association
- Dan Leonard, M.A.
President, National Pharmaceutical Council
- Damon Francis, M.D.
Chief Medical Officer, Health Leads
- Glenn Rodriguez, M.D.
Board Chair, CareOregon; Adjunct Associate Professor, Family Medicine, Oregon Health & Science University
- Moderator: Elisabeth Rosenthal, M.D., M.A.
Editor-in-Chief, Kaiser Health News
12:45 p.m. – 1:30 p.m. Question and Answer Session
Materials listed chronologically, beginning with the most recent, and can be found in full at the Web address indicated
“The Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured.” Cooper, Z., Craig, S., Gaynor, M., and Van Reenen, J. Health Care Pricing Project. May 7, 2018. Available at http://allh.us/YKTJ.
“Regulatory Barriers Impair Alignment of Biopharmaceutical Price and Value.” National Pharmaceutical Council. April 17, 2018. Available at http://allh.us/P4gv.
“Medicine Use and Spending in the U.S.: A Review of 2017 and Outlook to 2022.” IQVIA Institute for Human Data Science. April 2018. Available at http://allh.us/pcWT.
“Health Care Spending in the United States and Other High-Income Countries.” Papanicolas, I., Woskie, L., and Jha, A. JAMA. March 13, 2018. Available at http://allh.us/v4aA.
“Administrative Costs Associated With Physician Billing and Insurance-Related Activities at an Academic Health Care System.” Tseng, P., Kaplan, R., Richman, B., Shah, M., and Schulman, K. JAMA. February 20, 2018. Available at http://allh.us/BUt7.
“Evaluation of Oregon’s 2012-2017 Medicaid Waiver.” Kushner, J., Kyle, T., Lind, B., Renfro, S., Rowland, R., and McConnel, J. Oregon Health & Science University, Center for Health Systems Effectiveness. December 29, 2017. Available at http://allh.us/9gxF.
“Why We Need a Serious Conversation About Health Spending.” Dubois, R. Health Affairs Blog. December 7, 2017. Available at http://allh.us/GPyv.
“Health Affairs Launches New Series on Health Spending.” Weil, A. Health Affairs Blog. December 6, 2017. Available at http://allh.us/YHEC.
“Issue Brief 1: Framing the Issue of Affordable Health Care.” The Value Initiative. American Hospital Association. December 2017. Available at http://allh.us/GpyV.
“Factors Associated with Increases in US Health Care Spending, 1996-2013.” Dieleman, J., Squires, E., Bui, A., Campbell, M., Chapin, A., Hamavid, A., Horst, C., Li, Zhiyin, Matyasz, T., Reynolds, A., Sadat, N., Schneider, M., and Murray, C. JAMA. November 7, 2017. Available at http://allh.us/rxKd.
“Paying for Prescription Drugs Around the World: Why Is the U.S. an Outlier?” Sarnak, D., Squires, D., Kuzmak, G., and Bishop, S. The Commonwealth Fund. October 2017. Available at http://allh.us/VvWU.
“Tethered to the EHR: Primary Care Physician Workload Assessment Using EHR Event Log Data and Time-Motion Observations.” Arndt, B., Beasley, J., Watkinson, M., Temte, J., Tuan, W., Sinsky, C., and Gilchrist, V. Annals of Family Medicine. September/October 2017. Available at http://allh.us/JEcw.
“Opportunities to Build Upon Enhanced Competition for Medicines in the Marketplace.” Korn, D. The Catalyst. PhRMA. July 27, 2017. Available at http://allh.us/7vU6.
“Those Indecipherable Medical Bills? They’re One Reason Health Care Costs So Much.” Rosenthal, E. The New York Times. March 29, 2017. Available at http://allh.us/WhHR.
“The Cost of Caring.” American Hospital Association. February 2017. Available at http://allh.us/Akjg.
“Oregon Health Authority Patient-Centered Primary Care Home Program: 2017 Recognition Criteria Technical Specifications and Reporting Guide.” Oregon Health Authority. February 2017. Available at http://allh.us/8WvC.
“Putting the Health of Communities and Populations First.” Goldman, L., Kumanyika, S., and Shah, N. JAMA. October 25, 2016. Available at http://allh.us/PtgU.
“Caring for High-Need, High-Cost Patients—An Urgent Priority.” Blumenthal, D., Chernof, B., Fulmer, T., and Lumpkin, J. NEJM. September 8, 2016. Available at http://allh.us/fmbV.
“The Lesson of EpiPens: Why Drug Prices Spike, Again and Again.” Rosenthal, E. The New York Times. September 2, 2016. Available at http://allh.us/YvpJ.
“Implementation of Oregon’s PCPCH Program: Exemplary Practice and Program Findings.” Gelmon, S., Wallace, N., Sandberg, B., Petchel, S., and Bouranis, N. September 2016. Available at http://allh.us/mqBN.
“The High Cost of Prescription Drugs in the United States: Origins and Prospects for Reform.” Kesselheim, A., Avorn, J., and Sarpatwari, A. JAMA. August 23/30, 2016. Available at http://allh.us/cNhU.
“Why Cross-Country Comparisons on Drug Prices are Misleading.” PhRMA. July 2015. Available at http://allh.us/Bw6X.
“Reevaluating ’Made in America’—Two Cost-Containment Ideas from Abroad.” Anderson, G., Willink, A., and Osborn, R. NEJM. June 13, 2013. Available at http://allh.us/9kpC.
“Bringing Down Health Care Costs.” America’s Health Insurance Plans. March 2013. Available at http://allh.us/6VFk.
“It’s the Prices, Stupid: Why the United States is So Different from Other Countries.” Anderson, G., Reinhardt, U., Hussey, P., and Petrosyan, V. Health Affairs. May 1, 2003. Available at http://allh.us/3JTa.
|Gerard F. Anderson
|Johns Hopkins University Bloomberg School of Public Health, Professor
|Health Leads, Chief Medical Officer
|Joanna Hiatt Kim||American Hospital Association, Vice President of Payment Policy
|Dan Leonard||National Pharmaceutical Council, President
|Glenn Rodriguez||CareOregon, Board Chair; Oregon Health & Science University, Family Medicine, Adjunct Associate Professor
Experts and Analysts
|Drew Altman||Kaiser Family Foundation, President and Chief Executive Officer
|Joseph Antos||American Enterprise Institute, Wilson H. Taylor Scholar of Health Care and Retirement Policy,
|Shawn Bishop||The Commonwealth Fund, Vice President of Controlling Health Care Costs and Advancing Medicare
|Rachel Block||Milbank Memorial Fund, Program Officer
|David Blumenthal||The Commonwealth Fund, President
|Mollyann Brodie||Kaiser Family Foundation, Executive Director of Public Opinion and Survey Research and Senior Vice President for Executive Operations
|Michael F. Cannon||Cato Institute, Director of Health Policy Studies
|Michael Chernew||Harvard Medical School, Professor of Health Care Policy
|David Cutler||Harvard University, Otto Eckstein Professor of Applied Economics
|Paul Ginsburg||The Brookings Institution, Leonard D. Schaeffer Chair of Health Policy Studies
|John Holahan||Urban Institute Health Policy Center, Institute Fellow
202/ 261-5709 email@example.com
|Doug Holtz-Eakin||American Action Forum, President
|Ashish Jha||Harvard Global Health Institute, Professor
|Larry Levitt||Kaiser Family Foundation, Senior Vice President for Health Reform
|Mark McClellan||Duke University, Director of Robert J. Margolis Center for Health Policy
|Tom Miller||American Enterprise Institute, Resident Fellow
|John Rother||National Coalition on Health Care, President and Chief Executive Officer
|Topher Spiro||Center for American Progress, Vice President of Health Policy
|Cori Uccello||American Academy of Actuaries, Senior Health Fellow
|Jessica Banthin||Congressional Budget Office, Deputy Assistant Director of Health, Retirement, and Long-Term Analysis Division
|Cliff Binder||Congressional Research Service, Health Insurance and Financing Section, Analyst
|Leah Christl||U.S. Food and Drug Administration, Associate Director of Therapeutic Biologics
|Stephen Heffler||Centers for Medicare and Medicaid Services, Director of National Health Statistics Group in the Office of the Actuary
|Medicaid and CHIP Payment and Access Commission, Executive Director
|Craig Burns||America’s Health Insurance Plans, Vice President of Research
|Andrew Dreyfus||Blue Cross Blue Shield of Massachusetts, President and Chief Executive Officer
|James Gelfand||ERISA Industry Committee, Senior Vice President of Health Policy
|Eleanor Perfetto||National Health Council, Senior Vice President of Strategic Initiatives
|Leigh Purvis||AARP Public Policy Institute, Director of Health Services Research
|Lori Reilly||Pharmaceutical Research and Manufacturers of America, Executive Vice President of Policy, Research and Membership
|Michael Reilly||Alliance for Safe Biologic Medicines, Executive Director
Note: This is an unedited transcript. For direct quotes, please see video: http://allh.us/tVWY
MARY ELLA PAYNE: Good afternoon, everyone. Thank you for joining us here today for our Congressional Briefing on Healthcare Costs in America. My name is Mary Ella Payne, and I’m the acting president and CEO of the Alliance for Health Policy. Many of you probably expected to see Sarah Dash here. She’ll be back here in a couple of weeks. She’s on maternity leave right now, but she’ll be back very soon. So for those of you who are not familiar with the Alliance, we are a nonpartisan organization dedicated to advancing knowledge and understanding of health policy issues. We will be live tweeting at hashtag AllHealthLive, right up there. For those in the audience, please feel free to join the conversation there as well. This is our second event in our 2018 Opportunities for Progress Signature Series. We created this series to highlight progress on persistent health policy issues. I think healthcare costs definitely qualifies as a persistent health policy issue. But more important, we’d like to examine prospects for moving forward. This year, we are exploring two critical health topics, healthcare costs and aging. As you are all finding your seats, you may have seen the save the dates for part two of our series that will look at aging in America, and we hope to see you at those events in the fall. You can also find those references on our website. We have a panel of excellent speakers today that we will get to in a moment. But first, I want to thank our Signature Series sponsors, and invite some of them up to give some opening remarks. We would not be able to do this event today, and the previous event that we did earlier in the end of May, without the support of our sponsors. So we really are very grateful for their support. Our Signature sponsor is Bristol-Myers Squibb. Our champion-level sponsors are Aetna, Anthem, Ascension. Blue Cross Blue Shield Association, Cambia Health Foundation, GlaxoSmithKline and InnovAge. And our visionary-level sponsor is Health is Primary and Pharma. We are very grateful that two representatives from Health is Primary and Pharma are here today to give us some of their brief thoughts, but important, on why this issue is so important to them. So first, I’m going to introduce Lori Reilly who is the Executive Vice President of Policy Research and Membership at Pharmaceutical Research and Manufacturers of America, and Lori is going to go first. LORI REILLY: Thank you, Mary Ella and thank you all for being here, particularly given it is the Friday before Fourth of July recess. It’s amazing how many people were able to join us today. Again, I’m Lori Reilly and I’m with the Pharmaceutical Research and Manufacturers of America. A conversation on healthcare costs in America, we believe is an important one, and one our industry is anxious to have. It’s hard to have a conversation about healthcare costs in this country, though, without talking about one of the primary drivers of all healthcare costs, and that’s the cost of chronic disease, which is responsible for about 90% of all healthcare costs in this country. If you look at just one condition alone, diabetes for example, the annual cost burden associated with diabetes is about $175 billion annually. Today, we have an array of treatments for diabetes. We have consensus guidelines on how best to treat diabetes, but yet only one in three patients today is successfully controlling their diabetes. If we better used medicines, particularly just in the commercial market alone, we’d save about $19 billion a year with successful treatment. Despite the array of treatments that exist today, our industry isn’t done searching for new cures and treatments for patients. In fact, our industry is working on things like smart insulin, where a patient can take either a pill or an injection in the future, and the body will know when to dispense the insulin to them. Obviously, it’s great for the patient, because it improves their quality of life. But it’s also good for the healthcare system, because hopefully in the future, will avoid those trips to the emergency room, ambulance visits, and other complications associated with diabetes. That’s the promise of the innovation, the new era medicine holds for us, and our job quite honestly isn’t done until patients can get those medicines and get them at an affordable price. In the midst of the incredible scientific progress, obviously a discussion about cost and price is important. Last year, if you look at the prescription drug sector and data released by IQVIA, prescription drug cost growth increased at .6%. That was extremely low. And just so you don’t think I’m cherry-picking one year, if you look back at the last ten years, prescription drug cost growth was below national health spending growth in seven of the ten years. Price growth was at 1.9%. When you take into account, the over $130 billion of discounts and rebates offered, and both of those, cost growth and price growth were below the rates of inflation for prescription medicines last year. You might assume, though, if drug cost growth were slowing and drug price growth was slowing, that patient access and patient affordability was slowing, too. But unfortunately, that hasn’t been the case. We’ve seen deductibles increase by 300% since 2006. And more and more patients now pay co-insurance, a percent of the price of their medicine or co-pays. When we hear lawmakers in the Administration say the system needs to change, we agree. We don’t think the status quo is sustainable, and we want to be part of the solution in order to address growing healthcare costs. One of the solutions we’ve been talking about is ensuring those rebates and discounts that I mentioned before, flow back to patients. A study that was released just a month ago, which looked at diabetes and Medicare Part D, and found that if just 80% of the rebates and discounts in diabetes were passed back to the patient, average patients would save over $365 per year. Our healthcare system would be spending, on average, $1350 less per beneficiary with diabetes from just that one action, and our government would save $20 billion over the next 20 years. Those are the kind of reforms we’re interested in talking about. And again, we’re proud to be a sponsor of the panel today, and look forward to the discussion. Thank you so much. MARY ELLA PAYNE: Thank you, Lori. And next, we’re going to have Shawn Martin. Shawn is the Senior Vice President of Advocacy, Practice Advancement and Policy at the American Academy of Family Physicians. He is here today on behalf of Health is Primary. And so, Shawn is going to go next. Thanks. SHAWN MARTIN: Thank you so much. As stated, I’m Shawn Martin with the Academy of Family Physicians, but today, I’m here on behalf of Health is Primary. Four years ago, the AAFP and seven other family medicine organizations came together to launch Health is Primary, as an initiative to raise awareness about primary care, and demonstrate the overall value of primary care and family medicine to our healthcare system. We have all heard this before, but it bears repeating, that the U.S. spends roughly twice as much as any other nation on healthcare, and our outcomes don’t reflect the investment in healthcare as compared to other countries. In fact, the U.S. had the lowest health-adjusted life expectancy, or the average length a person lives in good health at 69 years, as compared to 72 years of other countries despite this overall investment in healthcare. We do know there’s a few solutions. One of them is good primary care. As Lori said, the prevalence of chronic conditions in our healthcare system has both decreasing the quality of life, but it’s also increasing the overall expenditures on healthcare in our country. The U.S. today spends about four to seven percent of our overall healthcare dollars on primary and preventive care. Recent research from Oregon, and Dr. Rodriguez is here to talk about that, shows that for every dollar invested in the State of Oregon in primary care resulted in $13 of savings from upstream healthcare costs. That is one state that made an investment in their primary care system, and saw pretty dramatic decreases in overall healthcare costs as a result. Other states are beginning to follow suit. Just yesterday, Delaware passed a law to increase their investment in primary care as well. One thing we know for certain, in healthcare, is that you don’t invest some prevention in primary care on the front end; you’ll pay a lot more on the back end. And I’m looking forward to the panel today exploring these opportunities that exist to lower healthcare costs. Mary Ella, thank you so much. MARY ELLA PAYNE: Thanks. So now, we’re going to get to our panel. I’m just going to briefly introduce our moderator for the day. We are thrilled that Elisabeth Rosenthal, who is currently Editor-in-Chief of Kaiser Health News, and has been a healthcare journalist for over 20 years is going to be our moderator today. Among her large volume of work, she has written an award-winning series for the New York Times, as well as a critically-acclaimed book about the cost of healthcare in the United States. So, no one is more qualified than she is, to lead us today in our discussion on healthcare costs. So I’m going to now turn it over to Elisabeth. Thank you. ELISABETH ROSENTHAL: Thanks very much. I’m thrilled to be here moderating a panel on my obsession of many years, healthcare costs and prices, and I hope we will solve this problem by the end of the hour-and-a-half. Anyway, I just want to briefly introduce our panelists. I’m just going to give you a quick intro to each of them, because you can read their full intro’s in the program, and then we’ll kick off the program. They’ll each talk for about six minutes, and then I have some questions. I’m sure you all have questions, and we’ll open it up after they’re done. So quickly, to go through our panelists. First, we have Gerard F. Anderson. He’s a professor at Johns Hopkins Bloomberg School of Public Health. And he’s been talking about prices and costs for many, many years, having written a paper that has been kind of a mantra in my mind for many years, “It’s The Prices, Stupid.” So, he’ll be first. Then, Joanna Hiatt Kim, Vice President, Payment Policy, the American Hospital Association will tell us about the hospital perspective next. Following that, we have Dan Leonard from the National Pharmaceutical Council. And going down the line, we have Damon Francis, who is Chief Medical Officer of Health Leads to talk about the social determinants of health. And finally, Glenn Rodriguez from CareOregon, who will talk a little bit about the experiment in Oregon that they’re doing with enhancing primary front line care. It’s going to be a great discussion, and I hope we all come away with some new ideas about how we can work together to solve this problem. So Gerry, do you want to kick it off? GERARD F. ANDERSON: Well, thank you. And everybody should buy Elisabeth’s book. I wasn’t going to plug, but if you haven’t read it, you should definitely read the book, and it definitely explains most of the issues, and in a very accessible way. This is the second time, right before a holiday, the Alliance has asked me to come. This is a much bigger turnout than the last time, when we focused on pharmaceutical prices. So, we’re number one. We might not have made the World Cup, but we have made it in terms of number one for the last 40 years in terms of healthcare spending. I arrived over 40 years ago into Washington, D.C. and have focused a lot of my attention on controlling healthcare prices. And see, I haven’t done very well. Normally, it’s good to be number one. In this case, we’re not. We’ve heard these numbers repeatedly. They’ve just gotten worse. So right now, we’re 17.2% of the gross domestic product in the United States. The next closest to us of the industrialized countries is Switzerland at 12.4%. And from an economist’s point of view, this is what you look at is the percent of the gross domestic product spent on healthcare, because it says, we’re not spending it on education or national defense or something else. We’re spending it on healthcare. And you know, just doing a little back of the envelope calculations, if we were to spend the same percentage on healthcare as Switzerland, we would spend $630 billion less. Putting it in context, that’s about the equivalent of the trade deficit that we have with the rest of the world. It’s a big, big number. Now, what’s interesting to me is for all this money, we actually get less service. So, we took a look at how many beds in the United States, and compared it to how many beds there are in the typical industrialized countries, the median OECD country. We have three beds. They have 4.4. Our occupancy rate is 63%. Theirs is 75%. Our length of stay is shorter, 5.8 days versus 6.2 days. The number of doctors that we have is fewer. The number of graduates from medical school is fewer. The number of nurses that we have are fewer. So we are investing fewer real resources in healthcare, and yet we’re spending a lot more. And as was said in the introduction, the outcomes are worse. So then, I wanted to figure out, well, what’s going on here? Well, and a number of people have suggested a variety of reasons why we spend more. Defensive medicine, malpractice. So we looked at that, and we basically saw that if you get sued in the United States compared to Canada or the UK, you’re actually going to pay less. Not more, as somebody who gets sued. I’ve been teaching the medical students at Johns Hopkins for over 20 years and I know how much debt they have. It’s on averages of $190,000. They could pay off that debt and still have money left over, compared to be practicing in the UK or any other industrialized country. We’ve heard about the aging of the population. I’m now part of that. And I don’t feel good about it, but I am part of that. And yet, we’re younger than most of the other industrialized countries. The administrative burden is substantially higher. $737 in the United States, versus the next highest, Switzerland, at $280. The OECD median, $94. So yes, we have a bigger regulatory burden. I want to try to understand, do we have a bigger regulatory burden than other industrialized countries? I don’t exactly know how to do that study. But my guess is, we don’t have a bigger regulatory burden. We’re going to hear about the fact that we spend less on social care in a moment, and we’re going to hear that because of the social economic determinants of health, we may be sicker. Although again, I don’t know how to exactly measure that. So 15 years ago, we wrote a paper, “It’s The Prices, Stupid,” with Uwe Reinhardt and two of my doctoral students. We’ve now redone that. And essentially, trying to figure out, has anything changed? And to a large extent, no. What’s interesting about this is the percent of private spending in the United States, we are number one in private spending. We spend more than half of the dollars are from the private sector, from large insurers. Large insurers pay 50% more on average than public insurers. Ten years, 15 years ago, the differential was quite small. So, the issue is what’s going on in the private sector, as much as what’s going on in the public sector. International rates paid by the Medicare and Medicaid programs are not all that different. The rates paid by the United States are not all that different than paid internationally. It’s the private insurers that are paying a lot more. Now, one of the issues you hear is cost shifting. Because Medicare doesn’t pay enough, we have to shift the cost. As a provider, I will spend every dollar you give me. As an academic, I will spend every dollar. So if public insurers pay $100, and private insurers pay $150, and it’s basically 50% Medicare and 50% private insurers, the costs are going to be 125 bucks. Well, the private insurer is paying way more than cost. The public insurer is paying less than cost. And therefore, it makes sense that you’re going to hear about cost shifting. So, what do you do here? Well essentially, what you’ve got to work with is private America. Why are they paying so much more than what Medicare is paying for these things? The large insurers, they’re all self-insured. They determine the rates. And so, the question that I have is, what can we do to help the private insurers pay less? JOANNA HIATT KIM: Great, thanks. So, the AHA is tackling the issue of affordability in healthcare from many different angles. And today, I’m going to share with you three of our biggest and most important initiatives, as well as the policy solutions that we’re working on with them. Specifically, I’m going to talk about regulatory and administrative burden, price transparency, and drug pricing. With respect to regulatory burden, we did a study last year that found that hospitals, health systems, and post-acute care providers spent $39 billion a year on regulatory compliance. And as hard as it might be to believe, that’s actually an underestimation. Because we looked at the regulatory burden from just four federal agencies: CMS, the HHS OIG, Office of Civil Rights, and ONC. So we didn’t look at the cost from all the other federal and state regulatory agencies, or the 1,300 other additional insurers that hospitals contract with nationwide. Now, what does this translate into for your average-size hospital? It translates into almost $8 million every year that the average 162-bed hospital spends on regulatory compliance. That goes up to $9 million, if they have post-acute care. For every admission that a hospital makes, there is a $1,200 cost for regulation attached to that. What that means is that you walk into a hospital, before you receive any patient care, before you talk to anybody, there is a $1,200 cost for the work that that hospital does on regulation related to your stay. And even more of a concern for us, is that this is starting to pull clinicians away from patient care and put them on paperwork. We found that 59 FTEs are what it takes at the average-size hospital to comply with regulatory requirements. And over a quarter of them, 15, are doctors, nurses, and other clinicians. So they’re being pulled away from their patient-care duties and put on paperwork. Where do we go from here, though? The AHA has comprehensive sets of policy recommendations around many of the most problematic areas of regulation, and I’ll give you a couple examples. First, fraud and abuse. We feel that those laws need to be modernized, and put in line with how care is provided today. So we have a set of recommendations around how that can be done. We have an initiative that we call Measures that Matter, that looks at quality measurement across the spectrum within Medicare, but also across private insurers, and would seek to streamline and simplify and standardize the quality measurement process. We also have taken a hard look, for example, at prior authorization and would like to do the same things. Streamline, simplify, and standardize, so that it’s not a different process for every insurer that we deal with. I also wanted to talk about price transparency. This is something that the AHA is committed to. We think that patients have a right to know what their healthcare is going to cost them. They want to be able to budget. They want to be able to compare among facilities and providers to decide who to go to. They also want to avoid a surprise or unexpected bill at the conclusion of their care. But the most meaningful data to a patient, the most meaningful information for them on prices is really what they’re going to pay on an out-of-pocket basis. And putting together an out-of-pocket estimate requires putting together data from a couple different sources. The providers have information on what the expected course of treatment is going to be. But the insurers have information, obviously, on where the patient is in their deductible, what their out-of-pocket costs are, what their benefits are. So if you put those two together, we think you can get to a pretty meaningful estimate of out-of-pocket costs for a patient, but we don’t want to provide that information to a patient in a vacuum. We think it’s important that quality information accompany that, so that a patient can do a cost-benefit analysis themselves, if appropriate. We also really think it’s important that it be paired with information on financial assistance. Because really, the absolute last thing that we want to do, in giving patients information about what their care is going to cost, is to have them make the decision to then forego that care. Because ensuring that patients get the care they need is and always will be our top priority. I also wanted to talk about prescription drugs. We have a prescription drug-spending crisis in this country. There are a lot of different data points I could give you to convince you of that. I’ll start with this one. That between 2008 and 2016, the prices of brand-name prescription drugs doubled. We see that trend continuing in 2018. We’re almost exactly halfway through, and so far, we’ve seen price hikes – staggering numbers of price hikes. Pfizer 116. Allergan 75. Novartis, another 75. And AstraZeneca 18. In fact, AbbVie’s almost 10% price hike to Humira is expected to increase healthcare costs in this nation by a billion dollars in 2018 alone. The AHA has also done research on drug pricing. What we focused on is drug prices in the inpatient setting. Insurers don’t typically reimburse for drugs distinctly or directly in the inpatient side. It’s all wrapped up into the DRG payment. But we looked at what hospitals are paying for drugs on that side, and we found that the trend continues. There was almost a 40% increase, per admission, on inpatient drug spending between 2013 and 2015. 40% in just two years. So yes, absolutely, the healthcare system is experiencing a crisis in prescription drug spending, and it is fueled by increases to the prices of drugs. So AHA recognizes the challenges of affordability in healthcare, and we’re working hard to hold costs down. We have made progress. In 2017, National Health Expenditures on hospital services went up 1.9%, which is the lowest that it’s been since 2011. And we are committed to continuing to work to hold that cost-curve down, so that we can best serve our patients and our communities. DAN LEONARD: Thank you very much, and a pleasure to be here today. This is wonderful attendance, so hats off to the Alliance for putting this together. This is just another way of looking at, essentially, what Professor Anderson was speaking to a few minutes ago, the percentage of healthcare costs as it relates to gross domestic product. And I put this up here to show you that this is not the first conversation, and probably won’t be the last conversation on the topic, but it goes back decades. Just clipping a few headlines here. From 1969, is the first one that we show on this particular slide about medical care costs, when healthcare was at 6% of overall GDP. The next headline is from the very first edition of “Health Affairs,” the journal, and that was a commentary by then Secretary of Health, Education and Welfare, Caspar Weinberger, and then it goes on and on and on. We’re now close to 18% of overall healthcare as a percentage of GDP. So it’s been rising quite regularly. The National Health Expenditure data which that is driven from, that CMS issues every year, even when this most recent publication of that data that was not necessarily consensus on what it meant, you see again two competing headlines here. One saying from “Health Affairs,” that the expenditures show that we have not solved the cost problem, but AMA saying that we have reduced the growth. So there has been a slight reduction in the growth over the first half of this decade, but it’s still an issue for sure. I’m very pleased that the Alliance is having this session, and that we’re talking about overall healthcare spending, because there are many, many inputs that drive healthcare costs. It’s not one sector that’s driving the entire trajectory of healthcare costs. There are many. This is, again, the National Health Expenditure’s data, and you see within the prescription-drug piece of the pie there, about 10% is what CMS pegs it at. Other studies have it higher, but it’s somewhere probably between 10 and 15% of the overall healthcare spend. And of that, generic medicines are 88% of that market, probably half of the cost, and generics are seen as a high value in most cases, for sure. So what you’re talking about and what the Administration is talking about, and what’s happening here on Capitol Hill right now is the focus on prescription drug pricing. Just to level set everybody, is about half of that 10% slice of the pie. So we’re talking about five to eight percent of the overall spend in prescription drugs. Lori Reilly had some similar data that she cited in her opening remarks. This is data from Express Scripts, which is the largest pharmacy benefit manager. And their year over year increase in drug pricing was the lowest in 24 years, at one point, five percent. So the question is, if we’re looking at drug pricing and trying to regulate that, or adjust for that with the Administration’s attempts and here on Capitol Hill, what’s success look like? If success is reducing the cost to the patient – because we are certainly seeing higher co-pays, much higher deductibles – so if we’re trying to get at reducing that cost and the pain at the counter to the patient, that is certainly a worthy endeavor. If people think that by focusing on prescription drugs, we’re going to bend this cost-curve that we’re talking about up here today, and we’re going to turn that curve in the other direction, I would say we’re probably going to be here next year, and in years to come, having the same conversation. Two places that are worthy of looking at, and certainly in our sector, and in pharmaceuticals, the drug supply chain. You’ve heard a lot about that. It has been growing significantly. This is essentially what happens between the list price of a medicine and the net price of a medicine has been going up significantly. Over the last five years, 107% increase. Just year to year, from 2016 to 2017, it went up 10%. But the net price of the new drugs was at a 1.5 to 1.9%. So there’s a lot going on in that supply chain, and this is certainly worthy of looking into and understanding further. Another area, and we’ve done quite a bit of work in this space – and I’ll bring it up here because it’s, I think, one of the potential success stories, or a place that we can look to for potential solutions – and this is with value-based contracting. And this is essentially where pharmaceutical manufacturers and health plans come together, and put forward a performance guarantee, if you will, and set the price of the product based on the value to the patient. So there are more and more of these taking place. You hear about some. We did some research and found out that the value-based agreements that you read about in the press, or you know about is only about a third of the number of contracts that are actually out there. There are many more. This is from work that we did with Duke-Margolis Center. But there are lots of places where these types of agreements don’t succeed, or where they fall off after the initial conversation, before they go to contract. We wanted to know, what are some of the barriers? What are some of the hurdles that prevent these contracts from taking place? So, this is a recent publication. From the governmental side, FDA recently issued guidance on pre-approval communication. This is helping manufacturers and health plans talk about evidence, and talk about the data that they were previously prohibited from speaking about. So, that’s actually very helpful. But there are still some barriers when it comes to Medicaid and Medicaid best-price, and anti-kickback safe harbors that are necessary to have to get more of these types of agreements in place. But even if you solve for the government issues, which we hope we can, not every medicine is going to be right for one of these types of contracts. The manufacturers, the pairs have to come to agreement. These are just a set, in rank order, of what they’re looking for when they are trying to come toward an agreement. And so, you can see some commonality, the terms that are in bold, measureable outcomes clearly tied to the use of the product, target patient populations, et cetera. So that’s another area I think that is right for study and potentially moving forward. Just quickly as I wrap up, there’s a desire for innovation. I think I can say that safely. There’s certainly a desire for innovation. There’s a lot of amazing new science and technology that’s coming our way, gene therapy, new cancer treatments. But many of them have high price tags, so how are we going to reconcile this? Many of them are for small rare diseases. But we also have the chronic conditions, again that Lori referenced, like diabetes, which are affecting more and more Americans. Again, it’s a conversation we’ve had for many years. I’m very pleased that we’re having it today. The National Pharmaceutical Council, we’re starting a new initiative, a new health spending dialogue, where we have partnered with “Health Affairs” on a regular conversation that will take place in their journal. They’re going to have an exciting announcement that will probably come out next week, or maybe pushed a couple days by the holiday, but there will be something that you’ll see shortly. We’re also putting together a coalition of stakeholders from across the healthcare ecosystem to have this conversation, to get around a table, and to hopefully not point fingers, but have a dialogue that can identify the questions and some potential answers. So, more on that can be found at Going Below the Surface dot org, which is the name of this organization, this entity that we’re working on right now. So, I appreciate the opportunity. DAMON FRANCIS: Thanks a lot. This has been really educational so far. So, I’m hoping to continue that. And I’m, of course, having trouble advancing the slides. There we go. So, I was asked to comment really on how social determinants of health relate to healthcare spending, in the context really of this recent finding, that social spending appears to be similar to that in high-income OECD countries. And then this question, the finding calls into question the belief that higher healthcare spending is due to a lack of investment in social determinants. And so, I definitely want to question that belief. But before I do, I really want to frame the conversation, I think the way that Americans are framing the conversation, which is how do we maximize our investments as a society in the health of Americans? Costs are a measure. They’re not really an aim. The aim that we’re talking about here is the health of Americans. And so, we need to embed the conversation about costs in the context of that purpose and that aim. So, one of my friends says, academics are haters with really precise language. So, just bear with me. I think this is really critical, though, actually. The finding was about social services and social services spending, and then the question was about social determinants. And I actually want to really unpack the difference between these two things. So, the WHO definition is the social determinants of health are the conditions in which people are born, grow, live, work, and age. These circumstances are shaped by the distribution of money, power, and resources at global, national, and local levels. Okay, so there are some social determinants of health. I’ve traveled a lot in East Africa. The roads are a social determinant of health. They have nothing to do with social spending. That will be completely ab