TMC PULSE

32 t m c » p u l s e | j u n e 2 0 1 9 Q | Arnold Ventures is one of three philan- thropic organizations that has invested in Civica Rx, a nonprofit hoping to drive down drug costs by collaborating on generics. Catholic Health Initiatives and Memorial Hermann Health System are among the 19 large hospital systems that have partnered with Civica Rx. How will this initiative and others drive down drug prices? JA | Pharmaceutical pricing is one of the hardest areas because there's a dozen different problems or inefficiencies in the system. We have this dif- ficulty when we're talking to politicians because there's no 'Do this one thing and it will fix all the problems' solution. The market is so bifurcated between generics and branded, between drugs that are unique in their class and drugs that have competition, even by the different types of payers—Medicare is very different from Medicaid is very different from private payers or cash pay- ers or the VA. There are problems throughout that whole structure. But broadly, there's a whole class of fixes that's trying to increase competition within the sector. How does a drug shift from being branded and having an exclusivity period to being in the competitive space? How does that shift happen more efficiently and more under the spirit of the current rules? A lot of these rules are 35 years old through Hatch-Waxman [1984 federal legislation that established the approval pathway for generic drug products] so some have become outdated. Industry is getting away from the spirit of the regulation and has created a lot of ways to extend the exclusivity period. We have a whole host of policy proposals on that, about six or eight different things. There's a second group of proposals around trying to get rid of some of the poor incentives in the system. We're talking about the pharmaceuti- cal benefit managers—the PBMs—and some of the bad incentives they have. Maybe they get paid a percentage of the discount between the list price and the net price of drugs, which drives some bad incentives as to how they negotiate and how those drugs are priced to the individual. LA | With pharma pricing, there is a consen- sus that there's a problem. There may not be a consensus on who the culprits are and what the solutions might be, but very few people would argue that the system is optimal. There's a really powerful grassroots movement of individuals who are patients who can't afford their drugs. And one of the things that we're very proud of having done is contributing to galvanizing all those grassroots policies. One of our most powerful grantees and partners in this work is an organization called Patients for Affordable Drugs. It was founded by a cancer patient who has an incurable but manage- able form of cancer. He is insured but he saw that his medications cost hundreds of thousands of dollars a year. He started collecting the stories of patients who were similarly situated, of people who had to cut their pills into four pieces because they couldn't afford a full dosage, or who couldn't afford to fill a prescription. People who were forgoing food and rent, cashing in their IRAs just to pay for medications. So those voices—and he has brought those voices to the Senate, to the House of Representatives—really bring home the point that this is not a theoretical argument. That this is affecting real people. Q | What about hidden medical fees? Let's say a woman goes in for surgery. She finds an in-network surgeon so insurance will cover the operation, but after the sur- gery she receives a $15,000 bill from the anesthesiologist, who is out-of-network. How do you approach that problem? JA | We started working on this a couple of years ago. We got some of the health care policy experts to focus on this and funded a number of different people to think about what's driving the problem and what are the policy fixes. Our grantees have come up with a number of different options. Some are saying there should be a maximum that an out-of-network doctor can charge. Others have suggested that the out-of-network provider should have to bill through the hospital, so the hospital is forced to negotiate, not the individual. Different ideas are debated and vetted and then the best options are delivered to the policymakers. Q | Arnold Ventures employs about 85 peo- ple in Houston, New York and Washington, D.C. What specific qualities do you each bring to Arnold Ventures? Laura, what does John bring to the table? John, what are Laura's strengths? LA | John brings a spirit of skepticism. We like to think that the only people who truly are successful here at Arnold Ventures are skeptics, because in philanthropy, most people are super nice and super optimistic, right? It's a spirit of goodness, a spirit of giving, which is a wonderful thing. But when you do the policy-related work that we do, you are faced with certain brutal real- ities, one of which is that most social programs don't work. Changing human behavior is super hard and much of what you try in terms of policy experiments doesn't really move the needle. So the challenge is to figure out which things do move the needle and why, and to be very clear that you should not devote resources to things that don't work. That discipline is very, very hard for a philanthropist, because it puts you in situations where you're often telling wonderful people, 'No. There's no evidence that your program works.' John keeps us anchored to the vision that we want to do good, but we will only do good if we invest in things that work. Spotlight Most policy ideas that we're working on aren't going to work. But you have to work on problems that are big enough and ideas that are scalable such that when you find something that does work, it has a real impact. — JOHN ARNOLD

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