Pharm Exec Q&A: Tommy Thompson - Pharmaceutical Executive


Pharm Exec Q&A: Tommy Thompson

Pharmaceutical Executive

What about the politics?

The politics are going to be rough, but I'm telling you what has to be done. Healthcare is going broke. It cost us $2.4 trillion this year, and it's going to grow to $4.6 trillion by 2015. It's growing at the rate of 9 to 10 percent a year. We have to cut that to 4 to 5 percent—the rate of inflation—to maintain a healthcare system that allows us to be economically competitive.

Next comes diabetes. Last year, 18 million Americans had Type 2 diabetes. This year, 24 million. It costs us $135 billion a year. There are 41 million more Americans who are prediabetic. And an exhaustive study by the National Institutes of Health has found that if we lost 5 to 10 percent of our body weight and walked 30 minutes a day, we could reduce the incidence of Type 2 diabetes by 60 percent.

Another fact that most people don't know is that 30 percent of the individuals going into Medicare this year are Type 2 diabetic, and 50 percent of them don't know they are. Can you imagine how much we could save Medicare if we put the emphasis on preliminary physicals before going into Medicare and get them started getting treatment.

Then there's obesity. We have to recognize that in this country, we're causing it with our high fat concentrates and food consumption. Twenty-five to 30 percent of our children are overweight or obese, and we have to do something about that. This is going to be a huge emphasis next year in Congress.

Another big topic is disease management, especially in the poorest of the poor who are on Medicaid, because 20 percent of the people on Medicaid are responsible for 70 to 75 percent of the costs. We're going to have to intensely manage them and try and get them, if nothing else, to take their medicines on a regular basis.

What kind of system do you favor?

People always say, "Let's adopt the European system." Well, the European system is fraught with all kinds of problems; they have self-limitations like you can't believe, and I don't think Americans would stand still for it. I'm afraid of government control. Now, a one-payer system doesn't have to be government controlled, but that usually is the way it goes, and it stifles innovation.

In a government-controlled system like Europe, about 75 percent of the new drugs are coming out of America, because we have a market-based system. I'm afraid that if we go to a government-control or one-payer system, we will lose that innovation.

So the market system we have is running us over the edge of the precipice, and a single-payer system is not going to work. Can we really save enough money the way you're describing?

Just having the requirement that every senior going into Medicare has to have a physical for diabetes is going to be a huge money saver. Having some kind of limitations on end-of-life care—it's going to be controversial, but Europe does it. We can save Medicare and at the same time provide for the pharmaceutical industry, the biotech industry, so that they can develop new compounds—even though I don't think they're developing them nearly as fast as they should.

The mapping of the human genome was supposed to unleash all kinds of new targets. We had dinner last night with [NIH chief] Elias Zerhouni—he thinks that the next five, six years are going to be fantastic, and so do I.

One of the drivers of rising healthcare costs is rising standards. It's not just inefficiencies. We keep finding ways of letting people feel better or have better lives.

There's no question about it. That's why you've got to be able to overhaul the healthcare system completely for the new products to come out. I want that progress to continue. I want my granddaughters not to have breast cancer. Our system in America is the best way to find cures. And that's why I believe the healthcare system we have is worth saving.

Many of the ways you want to save money involve changing the way people live. How do you propose getting people who are a little—or a lot—apathetic to do this?

One way is by developing a new insurance policy. Right now we have insurance that pays after we get sick. I want insurance to pay to keep me from getting sick. I also want to go to corporate America. In the Deloitte Center for Health Solutions we did a poll and found that two-thirds of the Fortune 500 companies are going into wellness and prevention. Another one-third are looking at it.

I just saw that one of the big fast food companies now is putting out calorie counters. These things are starting to come together to make people healthy. It's going to start changing human behavior.

We're not talking about penalizing people who are sick, though?

No, with one big exception—tobacco. In my company, we charge higher insurance premiums for a smoker. But we give them a better deal. We will charge that person more—I think it's 50 bucks a month—for his or her health insurance program. But if that person will bring the whole family in for an anti-smoking program, we pay for it. And then if they quit smoking, we reimburse them their money and give them a bonus. That's the way you can change human behavior.

Incentives get people to live healthier lives. But we still have millions of people who don't have insurance of any kind.

Forty-seven million who don't have insurance and 25 million who are underinsured. That's huge. I would require every state governor to put the uninsured into an insurable class, and then put it out for bids. Let's say the state of New York has 1 million uninsured. It's more than that, but let's call it a million. We'll put a million people out for bids and then allow any health insurance company in America to bid on it. There would be a bid for single-enrollees, for families, one with high deductibles, one with health savings accounts and HRAs [health reimbursement arrangements]. Insurance would be mandatory, but for those under 125 percent of the poverty line, the state would subsidize them or use the McCain model of $5,000 per family to buy health insurance.

You would be absolutely amazed how competitive and reasonable those health insurance companies would bid. When you look at the composition of those that are uninsured, about one-third are between the ages of 18 and 34. They're healthy and they don't think they're ever going to get sick, so they just don't buy it. About 30 to 35 percent make over $60,000, $70,000 a year, so they're well-to-do. There are some who are going to be very sick, and you're going to have to put that in the mix, but overall the rating is going to be a reasonable class.

When we did this on Part D, we didn't know if we were going to get any bidders. We thought that if we could get three companies to bid nationally and 10 companies to bid regionally, we would be successful. Lo and behold, our three national companies turned into 10, our regionals from 10 to 60, and some places close to 100. We had a plethora of choices, maybe too many. But people came in and bid, and drug costs for the seniors are relatively stable, and 82 percent of the seniors like Part D. Now, there is no other program in the federal government that 82 percent of any class approves of. You couldn't get 82 percent of seniors to approve of free ice cream and apple pie. And yet they like Part D. It shows that the marketplace does work.


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