Archives For December 2018

2018 – “Thrilling Three”

December 21, 2018

2018 will be recorded as the year of “Us and Them” – a textbook illustration of how fear triggers us to cluster.  To partition with the familiar. To seek strength amongst tribe. To emphasize boundaries and seek specificity in who “we are”, while seeking to distance (or protect ourselves) from who “we, are not”.

Fear is powerful and useful. It reminds us of the fragility on which health, peace, and prosperity rest – it heightens the pulse, sharpens our attention, prepares us to react. On fear, we have long relied. Yet in exchange for enabling our readiness, fear must short-circuit our analysis. It removes the time to consider, the chance to challenge the facts and the opportunity to double check our assumptions. Fear’s primary utility is transient and when run on overtime, one must, in Franklin D, Roosevelt’s prescient 1933 inaugural words “must begin to fear, fear itself”.

This year the fear of being left behind, or worse, has triggered populism across the world. Most recently have been our “yellow jackets” of France. Just before it was Bolsonaro winning on the promise to put “Brazil before everything, and God above all”. Or Mexico’s completely new political MORENA party and the resulting presidential win of AMLO. A direct response to the grisly fact that 25,000 Mexicans were murdered in 2017— the highest number ever recorded.  With an estimated 130 political Mexican candidates and other public officials assassinated just during the 2018 election alone. Prior to these we had the 2016 US election and followed just after by Brexit. Both catalyzed by “us vs. them” thinking.

Markets react to fear in humanly ways as well, with rapid reflexes that shift portfolios from risk to value. And as we near the end of 2018 we’ve seen tremendous shifts in market perception along these lines. At the governmental level have been tariffs, the economic equivalent of immigration controls. The US has a long and storied relationship with fear inspired trade policy. In fact, the second bill of the newly elected George Washington was the Tariff Act which imposed strict (and steep up to 60% for silk) tariffs on all incoming products into the fledgling country. Said to be intended, to help pay down the war debt, it was also purely protectionist, as Hamilton was fond of quoting, “this Act is critical to protect our infant industries”. The “we” in this instance was clearly the young and comparably inferior US manufactures and the “them” the sophisticated British industrial complex.

But where does this take us?  It helps to start with evidence. To look for demonstration and to look at what we know to be true, while avoiding the natural reflex to imagine the negative.  To seek and see the positive. Each year I collate and select out three remarkable new innovations that have caught my attention and prompted me to say “wow” that might change everything. These I call my “thrilling three”:

2017, 2016, 2015, 2014

As a reminder in 2017, it was MoBikea rapidly expanding ridesharing platform that a built customer base of over 200 million who averaged of about 30 million (peddling!) trips per day on a fleet of eight million bikes across the world. The equivalent of taking 1.24 million cars off the road for a full year. One year later, the shared-bike trend continues to rapidly expand with new formats like scooters (see below) and an increasing use of environmentally friendly electrification. Next up was WeDoctor, a Tencent Holdings-backed online appointment booking, prescription, diagnosis and payment service. By end of 2017, the company already had 150 million registered users across China. Using their mobile platform, users could both find the most appropriate doctor to handle their needs but also secure an appointment, have immediate access to their medical test results and pay for their services – all from their mobile phone and without the conventional hours of queueing. One year later, telemedicine continues to sweep across the world and will soon to be seen as conventional and “old school” as the home visit. Lastly was Mitobridge – a biotech working on medical conditions that result from inborn errors in mitochondria function as well as looking to find methods to maintain mitochondrial fitness in settings associated with aging, inflammation and the host of conditions that result from cellular atrophy. By January of this year, the Mitobridge had been acquired by Astellas Pharma to help further expedite the advance of these technologies and the “primordial pool” of mitochondrially focused companies continues to grow.

So, for 2018 here they are:

Microbility – We tend to like things to be “in their place”.  We have bright lined parking spots to make sure our cars are tucked in neatly, we have drawers for our folded clothes, and tidily named file folders to keep all things organized (except for that desktop!).  So when we see what seems to be the random array of shared bikes left as is, unowned or unchained, it stirs us up. Yet, behind what might seem to be all the sidewalk clutter, lies one of the most useful new solutions for urban gridlock (and all the resulting CO2 belched by those frustrated drivers) – single person electric transportation.  Nothing beats the dual benefits (health and climate) of a self-propelled bicycle, but they not for all and certainly take much larger footprints on the sidewalk (or parked in the office/home). Then there is the remarkable energy savings and the calculus is simple.  Transportation of anything is all about weight. Given their form factor advantage, e-scooters are highly efficient. By way of example, a typical gasoline-powered car (~4,100 lbs) can travel a little less than a mile on one kilowatt of energy. With the increased efficiency of a typical electric car (e.g. Tesla or Volt) one can travel about four miles on the same amount of energy.  Whereas on an e-scooter that same one kilowatt can buy you more than 80 miles of transport.  Hope to see you, next to me, scooting past that traffic jam soon!

Democracy – In 2018, we have begun to fully grasp the extent to which electronic meddling has become commonplace in elections across the world. And although the format (memes, fake news, alias accounts, etc….) may seem to be new entrants into politics, the tools of propaganda, misinformation and societal manipulation have been commonplace since the invent of elections themselves. What is new, is the scale, potency and cross-border reach that these new e-formats can achieve. And in the yin and yang of all things, technology may have just the counterpoint needed to help re-invigorate our democratic muscles. For democracy to function, participants must believe that their vote matters – democracy relies on engagement. Few things pull us forward more than peer-pressure, and in voting too. Emotions were unusually high for the US 2018 mid-term elections, and mid-term voter turnout was the highest in a century. Aside from emotion, it appears that many where pulled into action by get-the-vote-out tools that allowed individuals to target their contacts with SMS messages that were synced with voter registration databases.  When it comes to voting (and democracy!) it is critical that we maintain interest, even if it takes some technology to “guilt trip us” into caring.

China 1st – While participating in a keynote panel at the 2015 Shanghai DIA Annual Meeting I was asked: “what would be the most meaningful signal that China’s pharmaceutical markets have come of age”. My answer was simple, “when the first/best-in-class drugs are approved – first – in China”, approved here before other regulatory approvals, eg. FDA, EMEA etc.. This will signal that a new dawn has arrived for all of China’s patients awaiting access to the world’s most innovative medicines”.  Just three years later, that day has arrived.  Just this month, China has for the first time approved a treatment from a global drugmaker before any other market, illustrating its recent push to bring in cutting-edge medicines. The product is called “roxadustat”, a new anemia drug from AstraZeneca and Fibrogen.  And this Chinese approval is well ahead of the potential approvals in the other markets. Since 2015, profound change has occurred within China’s regulatory body, the “CFDA” and the roxadustat approval is just one of the many of the fast-moving outcomes that will soon become more and more evident as China’s healthcare presence ascends. Approval is one thing, pricing is another – another critical innovation topic that I have covered a lot this year but will leave further wishful thinking on this one to another day.

He Did It – As “thrilling” as these 2018 stories are, one would be remiss not to mention in, an end of year recap, the “chilling” (if not worse) advances reported in gene editing.  The revolution of evolution represented by gene editing has been reflected on here before. For all its potential, the world’s best minds had made it abundantly clear, “we are not ready to move beyond experimentation, into clinical exploration”. The risks are simply still way too high. The lists of technical (and ethical) concerns still way too long (off-target effects, the likelihood of mosaicism, etc.), the need for explicit unmet medical need/urgency before any clinical attempts could ever be considered. And the absolute need for complete transparency and robust oversight. For reasons yet to be understood, a Chinese researcher, Dr. He Jiankui, appears to have breached the collective trust.  To have inappropriately enlisted participants (disparate-to-be parents) and created the world’s very first genetically engineered twins. Presenting to a stunned group in Hong Kong, He nervously sprinted through his data. Full analysis awaits, but if confirmed the results are at a minimum deeply saddening. With hope and grace, the young twin girls (Lula and Nana) will suffer no long-term medical hardship, but only time will tell. But what must result is a deeper resolve to hold those who exploit the “possibilities” of these technologies accountable until it is abundantly clear how best to ensure they are most effectively and appropriately used. For the privilege and trust bestowed on those trained with these skill sets, they must be expected to understand the resulting responsibilities.

Truly yet another “historic” yet “thrilling (and somewhat chilling)” year. Next up, J.P. Morgan 2019 and reflections on the historical path on which our healthcare innovations have traveled to get us here.

And Happy Holidays to all.

“Come on dowwwwwn!”; fateful words that all anxiously await.  Having pinned their hopes on being plucked from the live audience for “Contestant Row.” The first step from which they might win a treasure trove of goodies, based on their uncanny ability (or luck) in guessing prices – prices of products that can range from a can of mushroom soup to a new car or a dream vacation.

“The Price is Right” game show has set countless records.  It is the longest-running network television program in history (currently in its 46th year).  And even today it remains the #1 watched USA daytime television program.  Although it has tweaked its games and products slightly (adding items like VR goggles alongside the soup) to remain relevant across the decades, the vast majority of its fast-paced format remain wholly unchanged over all these years.

Game experts suggest that it is the “high win-per-minute ratio” along with the “use of life skills” (i.e. accumulated knowledge derived from purchasing) that are the key ingredients in the game’s attraction.  But when asked why, Bob Barker the host of the program for 35 years, made it clear, “The reason it was so popular originally and why it is still popular is because of the powerful basic premise of the show… everyone identifies with prices. The minute we put something up for bid and a contestant offers a price, all of us are deeply involved.”

Books are written and websites filled with stories of, and tactics for, winning (with all the resulting statistics).  Some of “The Price is Right” gurus will push for product pricing memorization drills and card counting-like training.  Others will drive you toward a game theory-based approach which focuses more on the optimal counter bids than it does on knowing the price per se.  For example, from Contestants Row, if you are last, then bidding either $1 above the lower bidder or $1 above the higher bidder, depending on the spread between the other bids, results in a 54% winning outcome as compared to 34% for all other strategies.  And for the other ~75 sub-games, similar tactics abound.

But the apex moment of the show is the “Final Showcase”; here is where the big-ticket items await and only two contestants make it to this stage. The showcase offerings are presented as bundled packages.  Often with a theme, but in each instance, each contestant will need to put a total price on one or the other package.   And as with all The Price is Right sub-games, it is critical to get as close to the actual price as possible, but to NEVER OVERPAY; for being even $1 over is an automatic losing bid.

Interwoven with the psychology and success of The Price is Right are keen insights into human behavior and motivation.  As highlighted by Barker, we all care deeply about price.  And although we may differ in what we believe is an appropriate or “fair” price, we have visceral reactions when we believe we may have overpaid. The positive aspects of getting a good deal are important and motivational too.  We will drive a great distance, sit in a cold pre-dawn Black Friday queue or perhaps even endure the tedium of cutting coupons to save just a little money. But as rewarding as it feels to save some, we have significantly more potent emotions attached to losing money.  And The Price is Right wonderfully highlights this with its overbid elimination rule.  We always feel, if/when we have overpaid, that we have lost – we feel cheated, or worse, we feel stupid.

For the vast majority of our transactional lives, we have agency, experience and expertise in buying stuff – in all but one. When it comes to buying the products and services on which we will all eventually seek and need–namely healthcare–we must all blissfully proclaim utter ignorance.  For when it comes to these matters, we’ve been trained to presume that “price” cannot matter.  Yet matter it must – any illusion to the contrary is truly a fool’s folly.

But what price is right?  Who should decide? What value has been received? How can we know?  These are but a few of the thorns in the briar patch of health economics.  And depending on who you ask, the answers vary wildly.   Ask the parent of a critically ill child and even the mention of price can evoke condemnation – “how could you?!!”.  A similar query to a physician will often result in questions regarding the “how could we know;” medical outcomes come in variation, often wax and wane and each are steeped in long-term uncertainty; “this is more of an art than a science.”  Ask an Rx R&D executive and they quickly retort, “be careful, if the incentive to invest in the remarkably risky business of drug development is compromised, then medical innovation itself will die a swift death.”  Or speak to a payor and the conversation quickly turns to prevalence and value.  In the setting of a single payor system, the conversation hinges less on time-to-efficacy and more on population coverage cost; a calculus of can they, the actuarial pool, truly afford it.  In the US, in which coverage responsibility jumps fleetingly with each change of employment, any conversation of long-term savings/value with payors generally falls on deaf ears.  Their businesses are living in the moment; what claims will we have to pay this year.

But regardless of these complexities and headwinds, we must pave new ways.  Develop new systems in which the vagaries of treatment effect can be more effectively classified, if not truly quantified. Build new business models and relationships with those who seek treatment, allowing them to actively capture the data on which their benefits can be more clearly understood. This real-world data must be entirely owned by them, used per (and only with) their agreement and their participation should be economically (and attractively) rewarded.

To move toward a world in which costs (i.e. prices) are clearly understood by both the recipient (and really the buyer) and those that provide care, the real cost/price must enter into the picture. In this new landscape, deeper patient engagement becomes expected and incented.  It requires an utter commitment to personal privacy; underwritten by sound policy/data security and is as focused on the long-term as it is on near-term outcomes.

We have a long and difficult way to go.  Today, we see steady annual increases in Rx prices, without any commensurate proof of increased cost or utility.   While global sales of branded drugs rose from $720 B to just under $800 B between 2011 and 2017, the volume of prescriptions filled concurrently drop from ~998K to 584K. Over the same time window the average of branded Rx prices increased between 6.5-14.0%.  For the top 45 already approved branded drugs, annual price increases drove >60% of the 28% US sales growth between 2014-2017.   Innovation is remarkably expensive, particularly in the setting of new Rx treatments. Further, it is certainly true that of every healthcare dollar spent, less than 25 cents of it is spent on drugs.   But that said, when buying “stuff” as opposed to “services,” per unit prices are particularly sensitive and increasing prices well above the rate of inflation is even more so.

Just imagine a day on which informed patients, rather than hyperbolic contestants, were invited to “come on dowwwwwn” and take a seat at the table of “The Price is Right for Healthcare” – we would begin to see a new dawn.   A day in which prices in healthcare are set exactly like they are in all other markets.  The right price based on the value thought to be received, by those who paid.  Some will be willing to pay more and others less.   Some will expect brand and others will look for savings, but all will be dramatically engaged in the process.  Prices will be dynamic, reflecting market-driven decisions and patients will have much more and tailored information to help support their purchasing choices.  Outcomes, or least prices, will come with guarantees.

Until patients help set prices and personally determine value, all too often they will feel cheated.  And the new tools on which this paradigm rests must be the responsibility of those who seek to enter this market.  If one cannot provide a means by which outcomes can be assessed, by the patient themselves, then they too will soon prove to be relics – the history of medicine is filled with them.   As the industry walks down the plank of year-over-year price increases, an abrupt end awaits and the waters below are not friendly.  Building robust evidence platforms to validate utility (value) and ensuring consumer-driven advocacy is the only “pricing lifeboat.”  We all want and will need, medical innovation, but the Price (must be) Right.

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