Saum Sutaria, M.D.

in a hospital, you get a payment, the hospital buys the drug from the pharma company, you pay them something for that drug, you administer the drug and you get paid as part of your global fee for taking care of that patient, whatever the case may be. The PBMs came in the middle. When did they show up?

in a hospital, you get a payment, the hospital buys the drug from the pharma company, you pay them something for that drug, you administer the drug and you get paid as part of your global fee for taking care of that patient, whatever the case may be. The PBMs came in the middle. When did they show up?

PBMs showed up, forms of them showed up in the 80s, but the growth of PBMs has been in the last 20, 25 years and really has taken off recently for reasons that we'll get into about their ownership structure, if you think about it that way. which has brought more scrutiny to them than used to be there.

PBMs showed up, forms of them showed up in the 80s, but the growth of PBMs has been in the last 20, 25 years and really has taken off recently for reasons that we'll get into about their ownership structure, if you think about it that way. which has brought more scrutiny to them than used to be there.

You've created a system in which now money is flowing less directly in many cases through the PBM. So the pharma companies may sell product, but depending on what the PBM is doing in terms of committing market share to the pharma company, the PBM may earn a rebate. Okay. So you have a rebate that the PBM can earn.

You've created a system in which now money is flowing less directly in many cases through the PBM. So the pharma companies may sell product, but depending on what the PBM is doing in terms of committing market share to the pharma company, the PBM may earn a rebate. Okay. So you have a rebate that the PBM can earn.

Now that rebate, the PBM may share with the insurance company or the employer who's signing up for that PBM service because they're saving them money through that rebate. So you have this new flow of dollars. Again, the idea behind this was to have better formularies, better understanding, allow people to have choice. Do you want a broad formulary? Do you want a narrow formulary?

Now that rebate, the PBM may share with the insurance company or the employer who's signing up for that PBM service because they're saving them money through that rebate. So you have this new flow of dollars. Again, the idea behind this was to have better formularies, better understanding, allow people to have choice. Do you want a broad formulary? Do you want a narrow formulary?

Of course, incentives are incentives. And part of what's happened is that with a rebate structure, you can imagine incentives can exist for higher price product to move through a PBM and pass through, and some of that being offset with rebates on both ends.

Of course, incentives are incentives. And part of what's happened is that with a rebate structure, you can imagine incentives can exist for higher price product to move through a PBM and pass through, and some of that being offset with rebates on both ends.

I think in some ways, it's what we've said about most of the US healthcare system, which is well-intended, reasonably constructed structures that might have been effective in one setting as things have changed, become less successful in this setting, and economic incentives can sometimes change to drive behaviors like you're describing, which I hope is not the norm.

I think in some ways, it's what we've said about most of the US healthcare system, which is well-intended, reasonably constructed structures that might have been effective in one setting as things have changed, become less successful in this setting, and economic incentives can sometimes change to drive behaviors like you're describing, which I hope is not the norm.

Well, I think you're getting at some of the more fundamental questions around what is innovation. So do we reward the innovation of a statin itself as the innovation, or do we reward the Me Too's that come after it, which sometimes grow to be larger than the original statin? And sometimes they're better. Terzepatide is better than semaglutide. Absolutely. They could be better.

Well, I think you're getting at some of the more fundamental questions around what is innovation. So do we reward the innovation of a statin itself as the innovation, or do we reward the Me Too's that come after it, which sometimes grow to be larger than the original statin? And sometimes they're better. Terzepatide is better than semaglutide. Absolutely. They could be better.

But how do we reward that innovation? What happens oftentimes is a floor is set in terms of the reward for the initial innovation. As things get better, rather than competition with more molecules driving price down, it often drives price up because the market moves to the better and better product. I mean, this gets back to supply-side intervention in other countries.

But how do we reward that innovation? What happens oftentimes is a floor is set in terms of the reward for the initial innovation. As things get better, rather than competition with more molecules driving price down, it often drives price up because the market moves to the better and better product. I mean, this gets back to supply-side intervention in other countries.

That's just not going to happen. And so there's a limit. And you have to qualify with certain criteria that are stringent to get to that more expensive for the incremental 10% benefit. We don't work that way in this country. Physician choice around physician decision making around those choices. And we've made the decision that we want to be able to afford that type of choice.

That's just not going to happen. And so there's a limit. And you have to qualify with certain criteria that are stringent to get to that more expensive for the incremental 10% benefit. We don't work that way in this country. Physician choice around physician decision making around those choices. And we've made the decision that we want to be able to afford that type of choice.

For the incrementally better drugs, sometimes better from a side effect profile standpoint, it can drive some of these decisions. We've made that decision on an individual basis rather than a population basis. And I think the point that we're talking about today is it's getting expensive. And it's getting expensive to the point where... 17, 18, approaching 20% of the GDP may be okay.

For the incrementally better drugs, sometimes better from a side effect profile standpoint, it can drive some of these decisions. We've made that decision on an individual basis rather than a population basis. And I think the point that we're talking about today is it's getting expensive. And it's getting expensive to the point where... 17, 18, approaching 20% of the GDP may be okay.