Fixing America’s Health Care System

On Thursday morning, August 13, 2009, CNBC aired a segment titled Fixing America’s Health Care System on Squawk Box, which is CNBC’s longest running program.  Appearing on the program were Dr. Scott Gottlieb, who is a former FDA deputy commissioner, Tommy Thompson, former Health & Human Services Secretary and Wisconsin Governor and Jim Greenwood, a former Republican Congressman who is currently CEO of the Biotechnology Industry Organization (BIO).  Despite the tone of the questioning, the segment is well worth watching and will no doubt dispel the myths and lack of understanding by open-minded individuals who question why the biotechnology industry wanted 12 to 14 years of exclusivity for biologics, when the FTC said zero years of exclusivity would be sufficient, President Obama wanted no more than 7 years of exclusivity and Congress opted for 12 years of protection.  Co-anchor Joe Kernan started off the questioning by saying: “How did you get 12 years? Why exclude biotechnology from the cost pressures that everyone else is going to have to live under?”  But I guess that type of hostility is to be expected when an NBC “news” organization gets three Republicans in the room.

The first person to speak in response to Kernan was BIO head Jim Greenwood.  Jim carefully explained the biotech position, explaining an alternative viewpoint with respect to exclusivity.  Greenwood explained that the question is how quickly after biotech companies spend hundreds of millions of dollars to innovate are others allowed to enter the market and copy their data and work so they can sell on their own.  This is a very interesting, and compelling, way to frame the debate.  Rather than focus on exclusive rights and the dreaded “monopoly” protection that so many people hate, the quest is how quickly can those that do not innovate copy the information and research that cost hundreds of millions of dollars to come up with in the first place.

[Bio-Pharma]

Greenwood went on to say: “above all else, you have to make sure the incentives for innovation remain.”  Kernan responded by pointing out that the biotech community is open for criticism due to the costs associated with providing life saving treatments and therapies.  Specifically, Kernan said: “it just seems like you are a poster child for the exorbitant costs of treatment and maybe some of the costs we shouldn’t be undertaking and we have to judge where to spend the money.” And people wonder why throughout the health care debate the public has been fighting so hard, despite the erroneous and scandalous labels hurled at ordinary citizens who simply want answers and know the government is lying about so much.  Here, Kernan defines the problem as should we be undertaking the cost of exorbitant treatments?  Despite what President Obama and his team say, and despite what Democrats in Congress say, the truth is that the overwhelming majority of health care costs come at the end of life, and the only way to lower costs is to ration care at the end of life, as was suggested by Kernan.

To say there will be no rationing if the government is involved is intellectually dishonest, ignores the realities of countries that have government run health care and is not what the great majority of Americans want. Americans want innovation in all aspects of life, and no where is that more evident than in health care.  Ordinary Americans understand that if you want life saving treatments and drugs there needs to be scientific advances and breakthroughs, and such innovation costs money.

Returning to this interview, Greenwood justified what are large costs for life saving treatments by pointing out the simple truth that “most of the products we try and build fail, and you build in those costs.”  He then went on to say: “We are not afraid of competition, but if the competition comes too soon no one will invest the billions of dollars that it takes to make a new drug and there won’t be anything for the generic companies to copy at the end of the day anyway.”

This lead Kernan to ask a fundamentally important question about what evidence exists to suggest that countries without strong intellectual property rights suffer from a lack of innovation.  In this regard, Kernan asked: “Has there been a loss of innovation in Europe because of not protecting patents?”  Greenwood pointed out that Europeans used to control the biotechnology world. Thompson then chimed in that Europe used to lead in pharmaceuticals as well.  Thompson then said “50-60% of drugs used to be produced over in Europe, but now75-80% of research is now done in the United States.”

Gottlieb then chimed in that the biotechnology industry is winning the debate on the facts and merits.  Greenwood then explained that in the past the biotechnology industry had fought any forms of competition, but now biotech is not at all afraid of competition.  In an incredulous tone that suggested he was not understanding anything that was being said, Kernan asked: “How is 12 years of exclusivity not fighting competition?”  Apparently, Kernan and his like would rather not have any life saving drugs or treatments at all.  As idiotic as it sounds, there are actually people who believe the world is better off without ANY life saving drugs and treatments if those drugs and treatments cannot be shared with everyone on every economic and social level the minute they are created.  Such a position ignores economic reality and defys common sense, unless of course you have the government replace the hundreds of billions of dollars in research and development money that goes into this single sector of the economy, which was actually raised by Kernan who said “can’t the government innovate?”  Greenwood’s pithy comeback was “when has the government innovated?”  Score 1 for Greenwood.  Not sure what the score it at this point, but from my perspective the panel is pitching a no hitter against Kernan, who continues to give up the long-ball.

Before leaving this point about the government innovating instead of the private sector, allow me to point out that this is the same government that will very soon bankrupt social security and medicare with a ponzi-like accounting scheme.  Why would anyone want a short-sighted government run by individuals who largely only want to be re-elected to be in charge of research and development?  Newsflash!  That was tried and didn’t work.  It is called communism and has failed everywhere it has been tried.  Even the “free” socialism or “democratic” socialism that is practiced in much of Europe is not succeeding.  When the French are trying to get away from a health care system that looks much like what is being proposed and move closer to an American system, why should we in America who already have an American system want to look more like the French? Can you tell I am frustrated?

Greenwood also brought up another excellent point, and one that likely did convince some in Congress who would ordinarily have been persuaded by the President.  Greenwood said: “I keep telling all my liberal friends in the Congress —  If you want to cure all these diseases that you say you do… don’t you want this industry to be the biggest, private sector at risk capital money magnet in the world?”  Thompson then explained: “It takes 1.2 billion and 12 years to get a drug to the marketplace.”  So those who believe that revolutionary treatments and drugs should be available immediately to everyone you need to check the facts.  Government over-regulation of biotechnology and pharmaceuticals raises costs and keeps treatments tied up unnecessarily.

I think everyone should spend the 12 minutes necessary to watch this interview.  If you do, and you have an open mind, you will be convinced that if we do want cures for Alzheimer’s disease, Parkinson’s disease and other diseases that bring unspeakable hardships, we need to encourage innovation not stand in the way of innovation.  How supposedly knowledgeable co-anchor for a supposed flagship economic program could not understand the importance of innovation and the economic realities shows either that he doesn’t get it, or perhaps that NBC no longer is interested in facts and truth even when it comes to financial and economic news.  Either way, it is very sad indeed.