An Underappreciated Aspect of Power: Listening

David Shaywitz

As the summer draws to a close, I thought TR readers might enjoy a final August distraction. I’ve always been an avid reader, and lately, I’ve found myself increasingly drawn to the history and science of American politics. 

On the history front, and inspired by Stanford professor Jeffrey Pfeffer (an expert on power and leadership), I’ve started Robert Caro’s famously comprehensive multi-part biography of Lyndon Johnson. I’ve completed the first volume: The Path To Power (1982), which describes how the Johnson family first arrived in Texas, and takes us from Johnson’s rough childhood in the unforgiving hill country, through his election as a Congressperson in 1937, and concludes with his razor-thin loss in the special Senate election of 1948.

Johnson emerges as a striking if deeply flawed individual, with indomitable ambition, a relentless work ethic, a need to be in charge, and a drive to win at all costs. A student of human nature, he cajoles those whose support he craves and dominates those beneath him, tirelessly manipulating all who he encounters.

Johnson steals a series of elections, starting in college. Ironically, his defeat in the Senate 1948 race apparently reflected not the propriety of the election, but rather the ability of his opposition to cheat more effectively. 

It becomes immediately apparent that ambition, narcissism, and the privileging of victory over ethics is not the sole provenance of a particular person, party, place, or time. I’m just beginning the next volume (Means of Ascent [1990]), and the author cautions in the preface that (somehow) it promises to be even darker than the first.

For those interested in a deeper understanding of the contemporary political state, the obvious must-read here is Tim Alberta’s American Carnage (2019), describing the transformation of the Republican party into the party of Trump. Alberta is now the Chief Political Correspondent at Politico, and previously wrote for  the conservative National Review.

Alberta brings unusually deep insight into his subject, and the sense that he’s reporting about the party’s current state more in sorrow than in triumph. You can get a feel for his style from his deeply perceptive recent essay about the state of the GOP, lamenting that no one really knows what the party believes in anymore.

Technology and the sophisticated use of data and social media is often said to have played a central role in Trump’s 2016 victory. We’re afforded an insider view of this in Targeted, Brittany Kaiser’s account of her involvement with the infamous data firm Cambridge Analytica (CA), and its close relationship with the Trump campaign. Aspects of this are also covered in the Netflix documentary, “The Great Hack.”

While Kaiser suggests Cambridge Analytica played a key role in Trump’s victory, many others are more doubtful. Writing in The Atlantic, Ian Borogos and Alexis Madrigal dismiss the contribution from Cambridge Analytica, and emphasize the role of the Facebook algorithm itself.   

Even here the impact isn’t clear; Hugo Mercier, a cognitive scientist immersed in this literature, tells me that “the effects of advertising [including online ads] for political campaigns in general elections are small at best.” 

He adds “the effects of online ads are small and noisy, indeed, so small and noisy (as a rule) that even researchers at Google admit that it’s impossible to know whether online ads bring positive ROI [return on investment].” I recently downloaded his new book, Not Born Yesterday, and look forward to his discussion of why persuasion is so difficult.

The challenge of voter persuasion in particular was highlighted by a high-profile 2017 study from two academic researchers: David Broockman, now at UC Berkeley and Joshua Kalla, at Yale. They examined data from 49 field trials, and concluded that political campaigns have essentially no detectable impact on candidate choice in general elections. Most people ultimately vote along familiar party lines, and it’s apparently much more effective to mobilize your own partisans compared to trying to get partisans on the other side to switch.

It also turns out that the fraction of persuadable voters is probably also a lot less than you might think. A key research finding is that while ever-more people self-identify as “independent, if you push them, most of these acknowledge they lean left or lean right. Data suggest these leaners are at least as partisan in their ultimate voting as the voters who affiliate from the outset as either Democrat or Republican. Thus the number of true independents is comparatively small.” 

There’s also the added challenge of how to think about this middle group, often referred to as “undecideds.” This can refer to likely voters who are actively weighing who to vote for, but could also encompass voters who feel alienated from politics (and the increasingly partisan nature of politics), and opt not to vote at all; such “low frequency” voters are notoriously challenging to draw to the polls. 

Two fascinating political scientists who’ve thoughtfully discussed aspects of these issues: Rachel Bitecofer (here) and David Shor (here).

The difficulty of changing votes meanwhile doesn’t mean persuasion is entirely useless.  Work from Todd Rogers applying psychology to election strategy through an iterative series of field trials has resulted in a series of ways to “nudge the vote,” as Sasha Issenberg of the New York Times put it in 2010. (Issenberg subsequently wrote a book on the topic, The Victory Lab (2012), examining the science behind Obama’s 2008 win).

One successful method: closing the intention/action gap by asking voters questions that force them to think through how they’ll actually go about voting; this approach has been shown to increase turnout in a statistically significant fashion.

Importantly, while it can be difficult to convince voters to change their minds, research suggests that some efforts to persuade people to change their opinion – particularly outside the partisan signaling associated with a general election – can be successful. For example, Broockman and Kalla published a study in 2016 that found a small but significant number of respondents (about 10%) could be persuaded to embrace a more sympathetic view of transgender rights, a change that endured for at least three months. 

The key, it turned out, was “deep canvassing,” meaning the field volunteers engaged in an extended, empathetic conversation with the respondents, listening intently and asking thoughtful follow-up questions.

In these fractious times, this is a hopeful message from which we all can learn. When everyone is so busy trying to talk, there can be remarkable power in attentive listening.


Insurance Reform, Not Executive Orders, Is the Best Tool to Protect U.S. Patients and U.S. Pharmaceutical Innovation

Peter Kolchinsky, managing partner, RA Capital

With today’s Aug. 24 deadline looming, it’s important to explain how President Trump’s “most favored nations” executive order to purportedly lower drug prices would actually backfire, and hurt patients both at home and abroad.

The order, which ties prices for certain drugs paid for by Medicare to the lowest prices paid in other countries, including Canada and much of Europe, also conspicuously ignores the real problems faced by the American healthcare system.

Trump says that “Americans are funding the enormous cost of drug research and development for the entire planet,” which is why he doesn’t like that other countries are getting lower prices.

The trouble is that the president is wrong. Right now, other countries do pitch in – and his new order isn’t going to make other countries pay their fair share for pharmaceutical R&D.

Instead, it’s going to result in them paying no share at all.

Even a bad roommate that chips in a bit of money here and there helps defray the cost of a mortgage. For drug companies, some profit from Europe and elsewhere is better than nothing. In the meantime, Americans continue to benefit as Europeans, Canadians, and many others defray at least some cost of paying off the mortgage on pharmaceutical innovations that American patients need.

But instead of ensuring that Americans pay less for drugs, Trump’s order – while intending to “import” prices from abroad – would actually force companies to “export” U.S. prices for drugs to other countries in an attempt to protect their most important market. And when European and other countries refuse to pay, patients suffer the world over.

Turning Europe and Canada into entirely untapped markets would mean that instead of benefiting from other countries pitching in for, as President Trump has said, “the enormous cost of drug research and development,” Trump’s order will leave America standing by itself to shoulder those costs.

The downstream impact is obvious: because he doesn’t seem to understand basic economics, the president’s “favored nations” order would literally cost Americans more.

The dynamic is pretty simple. To make up for the loss of revenue in Europe, Canada and elsewhere, pharmaceutical companies would respond by raising US drug prices higher than they already are. And given our dysfunctional healthcare system, this would translate directly into higher out-of-pocket drug costs for the people that Trump claims to be fighting for.

Other nations have demonstrated that they’re willing to deny life-saving medicines to their citizens on the basis of cost. They have demonstrated that they’re willing to wait longer for access to new, lifesaving drugs – even when they do eventually decide they’re worth paying for.

Those kinds of price controls are simply un-American and mistakes we do not want to import or normalize.

Nevertheless, since President Trump’s orders do nothing to lower out-of-pocket costs, Americans would still be saddled with high deductibles and copays.

Some might be inclined to just fall back on blaming the drug industry, mistaking high drug prices for large profits. But the drug industry’s collective profits are only 10-12% of revenues when the successful companies are combined with all the unprofitable biotechs still investing tremendous amounts of money, at risk, on developing new drugs, including treatments and vaccines for COVID-19.

Because drugs eventually go generic, in order to stay in business, drug companies have to invent new drugs that Americans need. If they don’t invent, they die.

Meanwhile, insurance companies invent nothing. Insurance companies generated greater profits when COVID-19 struck because they were able to continue collecting monthly premium payments while patients stopped going to doctors and getting treatments. Even in the pandemic when so many people had to sacrifice so much, insurers  still had the gall to reject coverage for COVID-19 testing and care when people got sick.

The diagnosis for what ails America is clear – our health insurance plans.

What the president could do – but hasn’t done – is push for all Americans to have insurance with low out-of-pocket costs. He might also consider eliminating out-of-pocket costs for drugs when there is no clinically equivalent, inexpensive, high-quality, generic alternative.

This, however, would require an acknowledgement of a simple but elusive truth: what makes any aspect of healthcare affordable for patients is a function of the insurance they have. If an insurance plan sticks patients with massive out-of-pocket costs, then treatment is expensive and inaccessible. If an insurance plan covers treatment fully, treatment is accessible.

The bottom line: America needs insurance reform. We need our next president and Congress to reform health insurance so that Americans’ insurance plans actually offer what they advertise – affordable access to healthcare.

Peter Kolchinsky, a biotechnology investor and scientist, is Managing Partner of RA Capital Management, L.P., and author of The Great American Drug Deal.


Spiritual Renewal in the North Cascades, and Facing Homelessness

All of us need some time and space for spiritual renewal. Especially in a year like 2020.

Mountain climbing does it for me.

Last weekend, I was fortunate to get out to Mt. Shuksan in the remote North Cascades of Washington. It was a gorgeous climb, led by my friends and partners at Alpine Ascents International.

The climb was a charity fundraiser for Facing Homelessness. It’s a Seattle-based group that uses the power of photography to expand our sense of empathy for our fellow humans. It’s an important first step.

I hope you enjoy these mountain photos, and that you may find some inspiration in the good work of Facing Homelessness.

Watch for the Frontpoints column next week.

Thanks for reading, and stay well.–Luke

Mt. Baker, shot from the Shannon Ridge Trail up Mt. Shuksan.

Mt. Shuksan, from a distance.

Sunrise on Mt. Shuksan, looking East at the North Cascades.

The view of Mt. Baker, near the summit of Shuksan (elev. 9,127 ft).

Summit of Mt. Shuksan, Aug. 17, 2020. Photo by David Gottlieb, Alpine Ascents International


From Rio to Rome: Rosana Kapeller on The Long Run

Today’s guest on The Long Run is Rosana Kapeller.

She’s the president and CEO of Cambridge, Mass.-based ROME Therapeutics.

ROME aims to discover and develop drugs based on emerging science in what is sometimes called the “repeatome.”

Rosana Kapeller, president and CEO, ROME Therapeutics

These are long repeat stretches of DNA that scientists until recently knew very little about, and still have a lot to learn about with regard to its function. ROME made its official debut in April with a $50 million Series A financing from GV, Arch Venture Partners and Partners Innovation Fund. The stated plan is to interrogate this territory to look for new targets to treat cancer and autoimmune disease.

Rosana was born and raised in Rio de Janeiro, and went to medical school there before coming to the Boston area to do her PhD in molecular and cell biology. She got in early at Millennium Pharmaceuticals, was there during its rise to prominence in the first genomics boom, and then took on increasing roles of responsibility at a couple of startups – Aileron Therapeutics and Nimbus Therapeutics.

She has serious science and technology chops, and is now learning to adjust to the new role of being a CEO.

Rosana is a warm person and has a wonderful laugh, which you’ll hear from the start. This is an enjoyable conversation with a consummate scientific entrepreneur.

Now, please join me and Rosana Kapeller on The Long Run.

Are you a fan of The Long Run podcast? Trying to raise awareness of your company, your organization, or your services with a high-powered crowd of entrepreneurs and venture investors who listen to The Long Run? My business representative, Stephanie Barnes, can tell you about sponsorship opportunities of this show. But first, tell me about your company in a brief email – luke@timmermanreport.com.


COVID-19 Is Driving a Shift in How We Value Diagnostic Tests

Bonnie H. Anderson, chairman and CEO, Veracyte

There are very few things many of us can say with 100 percent certainty. But after three decades of experience in molecular diagnostics and the life science industry, I can say this: never before has the healthcare profession, and even the American public, been so laser-focused on diagnostics.

For all the tragedy it has caused, the COVID-19 pandemic has shone a much-needed spotlight on the value of medical diagnostics. It has forced important discussions about how we think about and deploy these tools.

Challenges in running enough tests to quickly and accurately diagnose everyone infected with COVID-19 in the United States – in order to properly treat those in need and gather the information necessary to slow the spread of infection – have forced our country to take a crash course in diagnostic tests.

Everyone from the United States’ leading infectious disease experts and our country’s most influential healthcare reporters to a broad swath of the general public are intensely engaged in COVID-19 tests, weighing accuracy against turnaround time, sensitivity against specificity, or the appropriate time to use a molecular test to spot an active infection versus an antibody test to determine whether an individual was previously exposed to SARS-CoV-2.

Beyond the education factor, COVID-19 has revealed the broader utility of these tests. Diagnostics have become the gatekeeper to getting the economy back on track, sending children back to school and allowing American citizens to travel into other countries.

COVID-19 has also – finally – forced our hand in terms of making testing more accessible. Diagnostic testing is no longer limited to clinical centers. Instead, people are getting creative, expanding test access in order to meet a previously unfathomable demand for tens of millions of tests. Around the country, we’ve seen the dramatic expansion of mobile testing centers, pop-up testing locations, and point-of-care testing. Employers are testing their workforce — a move that’s been largely lauded by both groups as a means of getting people back to work safely and responsibly.

In some of these settings, a doctor’s prescription isn’t always necessary to get these tests. The surge in demand forces us to ask ourselves basic questions, such as when a prescribing healthcare professional is necessary to maintain safe and effective healthcare decision-making and when having to see one creates an unnecessary bottleneck in the system. In this case, the RT-PCR tests marketed by reputable companies and performed by well-equipped academic and private industry labs are so simple and reliable that it makes more sense in the long term to open the floodgates for consumers to directly order up tests themselves, have sample collection kits shipped straight to their homes, and then ship their samples back to a lab for analysis.

As diagnostics have become a central character in the pandemic story, public and private funding has poured in for the development of new tests.

Valuations for companies designing and manufacturing diagnostic tests have soared. New tests are cheered by reporters on the national news. The success we’ve seen has come from a massive, concerted effort by diagnostic developers, healthcare providers, regulatory agencies, and insurance companies.

As a veteran of the diagnostics industry, I am pleased to see that these tests are finally getting their due.

But it also makes me wonder why it took a global pandemic to get us here. And when COVID-19 is finally conquered, will the interest in diagnostics fade along with it?

Funds started flowing freely to diagnostic development when it became clear these tests would be necessary to get the economy back up and running at full capacity. Unfortunately, we have never seen this response when just as many lives were at stake, but the economy was functioning as usual.

Consider lung cancer, an area that I have focused on for more than a decade. The American Cancer Society estimates that more than 228,000 people will be diagnosed with lung cancer and nearly 136,000 people will die from it in the U.S. this year. The vast majority of funding dedicated to lung cancer goes toward research efforts focused on developing new therapeutics. But diagnostic tools that could detect lung cancer at much earlier stages and significantly improve patients’ chances of survival might offer more benefit and take a lot less funding to bring to market.

The most common objection I hear about introducing new diagnostic tests is that they will add to the already unsustainable costs of healthcare. This is a fundamental misunderstanding of diagnostics; good tests, developed carefully and targeted at specific health needs, will in fact reduce costs.

Today, just 2.3% of healthcare spending in the U.S. comes from in vitro diagnostics. Think about that for a second – it’s a statement about our traditional view of the value of diagnostics. This is the number one reason why we see so many therapeutics startups receive large sums of venture capital, while relatively little is directed toward diagnostics.

We pay a lot for drugs, not so much for diagnostics.

Looking a little further into the healthcare spending data, we can presume that advanced genomic tests from specialty laboratories – one of the most technologically promising aspects of the diagnostics industry — account for an even smaller slice of overall spending. If we doubled or even tripled that spending in order to detect health problems earlier — to start treatment of diseases when they are far less expensive to manage than they are in later stages — we would still be coming out ahead on overall expenditures. Testing is cheap compared to long-term illness, treatment, and death.

Placing a higher priority on the development and availability of advanced genomic tests for early disease detection would represent a major step in shifting our healthcare system’s focus from treatment to wellness. Diagnostics can help us catch diseases early, prevent the spread of illness, keep people healthy at work, and reduce all kinds of costs associated with undiagnosed disease and therapies. While those of us in the diagnostics community have known this all along, the COVID-19 pandemic has raised awareness of it for a much larger audience.

We need payers to buy into the value of early diagnosis through more sensitive and less invasive testing. This model can save lives and lower costs. Yet in the past, government agencies and insurance companies have often balked at covering such tests.

Consider the example of idiopathic pulmonary fibrosis (IPF), a serious and progressive lung disease. It takes the typical patient years to get diagnosed, often through multiple invasive, costly and potentially dangerous procedures. During that time, more than 20% of these patients will be given treatments that can actually harm them. My company has developed a clinically validated genomic test that can help end the diagnostic odyssey and get patients on the right treatment faster. This would improve health and reduce healthcare costs, and yet private payers have been very slow to cover it.

If we can conceive of pandemic-related diagnostic strategies to determine which people are safe to go to school, get on a plane, or return to work, then surely we can see the value in using diagnostic tests to tackle other leading causes of death.

We need to start waking up and realizing the benefits of early diagnosis of disease — the idea that we can test to stay well, instead of counting on therapies to make us well again.

Perhaps the new models of testing established for the pandemic will jump-start a different approach to diagnosis.

Could the new model of workplace testing be an avenue that opens up diagnostics beyond just COVID-19 testing? For example, does it open the door for broader screening and earlier detection of lung cancer? There are obvious issues with how much access employers have to their employees’ health information, and those will have to be managed carefully. But if employees come to trust their employers to deliver high-quality diagnostic tests — perhaps better tests than those they could access through typical healthcare channels — this could transform the valuation of and payment for important tests designed to keep people healthier and keep insurance premiums in check.

Self-insured employers could be the first to adopt this approach, and if it proves successful, other large employers might quickly follow suit. This is not enough, but it could be an interesting place to start.

COVID-19 has changed the way we are delivering healthcare and has — at least for the moment — dramatically increased the value we place on diagnostics and early detection. I truly believe if we can hold onto the lessons we are learning from this pandemic, there could be a brighter future for improving health and reducing healthcare costs through the use of diagnostic tests across a wide range of diseases and health conditions.

Bonnie H. Anderson is Chairman and Chief Executive Officer of Veracyte, a global genomic diagnostics company that improves patient care by providing answers to clinical questions that inform diagnosis and treatment decisions.


Closing Medicine’s Feedback Gap: Can Tech Help Integrate Clinical Care and Clinical Research?

David Shaywitz

Medicine is plagued by a feedback gap, or perhaps more accurately, a feedback paradox. 

On the one hand, clinicians are bombarded by feedback. Every day, there are a slew of process and billing metrics to review, providing an accounting of the volume of patients seen, and the intensity of each visit. 

How thorough was the exam? What procedures may have been performed? 

Even beyond the measures related to billing are an ever-growing number of measures related to guideline adherence. Doctors have an increasingly long set of questions to answer, boxes to check.

Did you ask about seatbelts use? Did you ask about home safety? Have you scheduled an eye exam for your patient with diabetes? These are often, individually, sensible and relevant considerations. In aggregate, however, they can be overwhelming and lead to guidance fatigue and ethical slippage, as Bill Gardner (here) and Drs. David Blumenthal and J. Michael McGinnis (here) have discussed, and as I recently reviewed in the context of COVID-19.

Yet for all these metrics and assessments, what’s often lacking is any sense of how the patients are actually faring – the thing that matters most. 

It’s not at all clear whether all the carefully documented and billed work is leading to improved outcomes for patients. Are there approaches for some patients that are leading to better outcomes than other approaches, and which could be generalized?  Are there other approaches that should be abandoned?

The heart of the problem is how most clinical research is done. On the one hand, to demonstrate, scientifically, that a particular approach (whether a novel drug or a new approach to therapy, like placing sick COVID-19 patients on their stomachs instead of their backs when they’re in the hospital) works, a clinical trial – ideally, a randomized, double-blind, placebo-controlled, to the extent possible – is performed. This is a highly choreographed exercise, where the exact characteristics of the subjects to be enrolled, the evaluations to be performed, and the criteria for success are all spelled out, clearly, in advance (or at least, ought to be). Enrolled subjects are tracked meticulously, and ultimately, you should be able to determine if the intervention was more effective than your control at achieving the pre-specified outcomes. 

This is the way medical science advances – through rigorous clinical studies, and then the adoption of these results in clinical practice.

The conceit of this approach is that the results from a rigorous clinical study will be widely generalizable, meaning that the patient you’re treating will respond like the subjects in the study, and the treatment you’re providing will mirror that offered in the study.  

Of course, we all know side effects can emerge over time that weren’t seen in clinical trials, and we recognize that certain groups – women and minorities in particular – have historically been underrepresented in clinical trial populations.  

To the extent that you accept the basic premise that a well-run clinical trial yields results that can guide care, then it makes sense for health systems to impose processes that try to ensure patients with a particular condition receive the treatment indicated by clinical trials.  

This approach has given rise to the idea of “disease pathways,” that provide a   template for managing patients with a particular condition, and the embrace of  process metrics, that try to ensure doctors are following the updated guidance – rather than, say, doing what perhaps they’ve always done because it’s what they know.

In practice, there are two problems with this system: one stemming from doctors who disregard these pathways, the other related to doctors who adhere to them.

Many physicians (perhaps especially in august academic institutions) worry most about their colleagues, especially those who practice in the community. 

These physicians are often presumed by their university colleagues to be less attuned to the latest scientific literature, and hence neither of relevant advances in care nor practicing in a setting that encourages them to do so. Consequently, their patients may not be receiving the most optimal care, and have no way of knowing it.

But a second category of challenge involves the physicians who are attuned to guidelines, perhaps because they closely follow the literature, or perhaps because their health system nudges them to adhere. While arguably the patients in the care of these physicians are on balance better off than those in the first group, there are still important challenges – and embedded opportunities.

For starters, subjects in clinical studies are notoriously unrepresentative of the more general population – enrolled subjects tend to be healthier and to have fewer co-existing conditions, in effort to enable a clearer evaluation of the intervention, and provide a sort of “best case” read-out.

In addition, subjects in trials tend to be followed unusually closely – they may be reminded to take their medicine, for example, and encouraged along the way by study staff.  While inclusion of a placebo group controls for the therapeutic impact of the extra attention (known as the “Hawthorne Effect”), it doesn’t account for the combined effect of experimental intervention plus attention – the increased likelihood that a subject in a study will reliably take a given medicine, say, compared to a patient in a doctor’s office, where the medication adherence rate can be astonishingly low. (It’s also why tech-enabled health service companies that feature a strong coaching and tracking component, like Omada and Virta, have gained considerable traction.)

As UCSF’s Dr. Fred Kleinsinger noted in a 2018 publication:

“Medication nonadherence for patients with chronic diseases is extremely common, affecting as many as 40% to 50% of patients who are prescribed medications for management of chronic conditions such as diabetes or hypertension. This nonadherence to prescribed treatment is thought to cause at least 100,000 preventable deaths and $100 billion in preventable medical costs per year.”

Finally, some patients in clinical practice may actually respond better than expected to a particular intervention – perhaps because of an intrinsic characteristic (involving their genetics or their microbiome, for example), or perhaps because of something subtle a particular physician or care provider did, a tweak that might goose the patient along a little bit. These are opportunities to learn from “happy accidents,” to institutionalize serendipity, so to speak, and benefit from the ingenuity of inquisitive physicians (medicine’s lead users, to use von Hippel’s term) –opportunities that are easily missed in the course of routine care.

The common feature of all these clinical care scenarios is the almost complete absence of tracking the one thing that matters most – actual patient outcomes over the long term.  

  • How is the psychiatrist doing with her patients with depression? 
  • How about the endocrinologist with his diabetics (in fairness, A1c is occasionally tracked)?
  • Is the neurologist getting average, worse, or better, results than expected for patients with multiple sclerosis? For which patients?

A new medicine may get approved on the basis of robust clinical trials, but the approval of a drug, as I’ve argued, doesn’t necessarily equate with the improvement of outcomes of real world patients.

Why aren’t outcomes tracked in routine care the way they are in clinical trials? For one, it’s surprisingly hard to track patient journeys, especially as patients often get care from multiple medical systems – though even rigorously determining the outcome for a patient entirely within one medical system can be remarkably difficult, especially in the context of real life, when appointments are missed, and assessments can be spotty and inconsistent, and documentation unreliable.

But the second reason the information isn’t tracked is, essentially, no one (besides the patient!) really cares, in the sense of being personally invested in (and accountable for) the outcome. Certainly not in fee-for-service systems, where doctors (who, to be clear, obviously try their best for each patient) charge based on their activity rather than patient outcome. Hence, the extended push for approaches that seek to prioritize improved care, and specifically, improved outcomes. But even here it’s challenging – doctors will always argue that their specific patients are different – more complex or sicker, say, so of course they’ll do worse. 

Often, the doctors may be right, and efforts to increase transparency around the success of certain surgical procedures has naturally led to notorious gaming of the system, where a mediocre heart surgeon who selects only the easiest cases scores higher than an exceptional surgeon who takes on the most difficult ones. 

Attempts to adjust for complexity, inevitably, go only so far.

What emerges from this is a health system that, despite what may be the best intentions of providers, essentially, is flying blind, and lacks the basic ability to see what’s it doing, a system that lacks the fundamental ability to iteratively optimize and improve. 

Yes, care improvement occurs – but over incredibly long periods of time, driven by the slow pace of robust clinical trials, rather than by the opportunities to systematically learn from patients and providers every single day. 

For years, we’ve championed the concept of a “learning health system,” and today, it remains largely an unrealized aspiration.

What is to be done?

Mark McClellan, professor, Duke University

A remarkable recent two-day conference organized by Dr. Mark McClellan and colleagues at the Duke-Margolis Center (all materials available here) dug into exactly this challenge, drilling into the question of whether there can be some kind of convergence between the process of collecting and analyzing data for clinical trials and doing the same for clinical care; data collected outside of traditional clinical trial is often called “real world data,” or RWD. 

While it would be a disservice to condense such a rich conference into tidy conclusions, there were nevertheless several powerful lessons that I took away.

For one, I was reminded yet again of the rigor and meticulousness of clinical trials. I knew this, of course, having designed, written and executed a number of studies, and having been immersed for years in research environments focused on this process. Even so, it was instructive to go through the challenges of defining who, exactly, has a particular condition – what is the definition of a “case?”  What is the definition of an “outcome?” In the context of clinical trials, the criteria tend to be exceptional explicit, and evaluation of results can often require a deliberate, pre-defined process of adjudication.

The challenge, many speakers emphasized, is that doctors, busy taking care of patients – perhaps seeing patients every 15 minutes or 20 minutes (not uncommon, and I’ve heard of less) – barely have enough time to perform the minimum services (and documentation) required to get paid. 

The detailed evaluation typically required in clinical trials feels like a luxury few busy physicians have as they fly through their day. Many speakers highlighted the importance of not contributing to provider burden, and several noted the increasing rate of doctor burnout, which some have attributed to the “death by a thousand clicks” nature of existing interactions with the electronic health record system.

Another huge challenge is that, while clinical trial data is typically captured in a dedicated database explicitly built with the desired analysis in mind, patient care data is often scattered across a healthcare system, or multiple healthcare systems, where it can be difficult to even know what other relevant data exist and might be germane. 

For at least one speaker, UCSF breast surgeon and clinical trial innovator Dr. Laura Esserman, the right solution would involve the radical re-engineering of care delivery — “a sea-change in how clinicians practice,” so that clinical-trial quality data are routinely captured. By doing a much better job collecting data, and by improving how we gather and share data, she argues, we can ultimately both save time — by entering data once, and using it many times — and improve care. 

Laura Esserman, professor, surgery; UCSF

As Esserman points out (and I couldn’t agree with this point more), “Imagine a business where you have no idea what your outcomes are, no idea what your metrics are. We must be in the business of quality improvement.”

For many other speakers, the priority was searching for ways to improve the system while not requiring extensive changes in the way doctors practice. For all the discussion of stakeholder alignment, the intrinsic tension between providers and researchers was palpable, and acknowledged by a number of the presenters.

In one of the day’s best talks, Chhaya Shadra of Verana Health, a startup focused on real world data in several specialties including ophthalmology, neurology, and urology, argued “If you have to take time to improve documentation to help researchers, it’s not fair to clinicians whose primary responsibility is patient care.”

Similar sentiments were expressed by UCSF’s unfailingly insightful and articulate health IT policy researcher Julia Adler-Milstein, in a recent Annals of Internal Medicine commentary on a paper revealing that physicians spend around 16 minutes per patient engaging with the EHR system, about a third of the time on chart review (i.e. trying to find information), another quarter of the time on documentation (adding their own notes), and another 17% of the time on order entry – all told, a remarkable amount of hunting and pecking.   

The dilemma we face, Adler-Milstein observes, is:

“How do we generate the foundation of clinical data needed to support the EHR’s many high value uses (including but not limited to clinical care) while doing so efficiently (for example, improving user interface design, using digital scribes, and simplifying documentations)?  Even with the most efficient approach, physicians (and many other types of clinicians) will never obtain a direct return from future use of their documentation equal to their time cost of documentation.  At a minimum, acknowledging this mismatch and making physicians feel valued for the time they spend in the EHR is needed.  (emphasis added)

Many of the mitigation approaches Adler-Milstein described were also highlighted by speakers at the Duke conference: for instance, the founder of Google Glass company Augmedix described the company’s focus on serving as a digital scribe; other presenters emphasized the need for improved EHR user interface, and more generally, for more human factors research and design.

Julia Adler-Milstein, professor of medicine, UCSF

A number of presenters also emphasized the importance of understanding the questions you are trying to ask, and pointing out that for a number of applications – some population trends, for example – you may not need perfect data, and may be able to extract real value from what you have. But, even there, you still need to have a sense of both the quality of the underlying data and the nature of the existing imperfections, so that you don’t subsequently use the data inappropriately, and draw misguided conclusions.

Dr. Paul Friedman, chair of cardiology at the Mayo Clinic, offered examples that highlighted both the possibility and the limitations of using existing data. On the bright side, he highlighted a project demonstrating the use of artificial intelligence to deduce, with remarkable accuracy, a patient’s ejection fraction (a measure of heart output typically determined using cardiac echocardiography) from routinely collected electrocardiograms (ECGs) archived by the Mayo. 

On the other hand, Friedman described the frustration of trying to predict COVID-19 infections (which may impact heart cells) using the sort of detection technology commonly available on smartphones and some wearables. In this case, he says, a key barrier turned out to be the lack of underlying standardization among these tools. 

While all may report out something looking like a “standard” ECG, their approaches to deriving this are so different that you really struggle to develop an algorithm from these disparate data. Alignment around some set of standards involving sampling rate and dynamic range would help, he suggested.

Speakers evinced particular interest in the ability to stitch together multiple data types (say EHR data with claims data and specialty clinical data) using privacy-preserving technology like that offered by Datavant, a Bay Area startup cited by several presenters. This approach obviously won’t solve issues related to underlying quality of data that’s being linked, but it can help not only develop the rich data set representing a patient’s longitudinal journey, but by bringing together a range of sources, the technology may help surface — and in some cases, resolve — data entry errors and other ambiguities.

The opportunities – and the risks, especially around privacy – of collecting and including more data from wearables and other “consumer” products in a patient’s health record were also highlighted by several speakers. This 10-minute talk by Elektra’s Andy Corovos may be among the best overviews I’ve seen on this topic — a topic that for years has been especially near and dear to my heart

As Veradigm’s Stephanie Reisinger noted in (another) compelling presentation, the consumerization of healthcare, including the increased use of devices and apps, represents a major healthcare trend, “empowering us to see and share health data,” and “driving informed consumers to demand a greater say over health journeys. Human bodies are becoming big data platforms.”

Of course, this possibility also relates directly to the sorts of security concerns Coravos and others highlighted.

What’s also clear is that pharma is looking at these large integrated datasets in different ways than they once did. Initially, pharma companies turned to real world evidence primarily in the context of health economics – typically “health technology assessments.” Primarily, pharmas were seeking evidence of real-world performance, to facilitate engagement (and negotiations) with payors (and, ex-US, regulators who require a discussion of relative value). 

Today, Veradigm’s Reisinger says, the most common questions from pharma partners involve protocol optimization (understanding the impact of various inclusions and exclusion criteria and the number of patients you might be able to recruit, for example), patient finding (recruitment – an effort to connect eligible patients with suitable trials) and the development of synthetic control arms for some studies (for situations when a suitable control arm may not be feasible or ethically appropriate but a relevant basis of comparison is required, for example).

Finally, several speakers, including FDA’s Dr. Amy Abernethy, highlighted the potential value of real world data in understanding and developing effective therapeutics for COVID-19; this is the focus of the COVID-19 Evidence Accelerator, for example. The recent Surgisphere scandal involving COVID-19 data (I discuss this in detail here) was cited by several speakers including Abernethy, who highlights the need for “ruthless transparency.”

I left the conference feeling neither entirely elated nor thoroughly despondent – though perhaps with a healthy mixture of the two emotions. As Abernethy observed, “doing science is messy, and we’re doing science together as a community.” 

There are real opportunities here, as well as intrinsically difficult hurdles – many presenters pointed out that the social/political/”psychological” (as one speaker said) hurdles are far greater than the technology hurdles. That said, it’s also quite possible that improved technology could catalyze advances that might highlight the potential value here and motivate further collaboration. 

Another hope would be that an innovative health delivery system, perhaps reimagined along the lines that I’ve described here, and that Esserman has championed, emerges somewhere and proves so compelling to patients that it becomes the immediate gold standard, and is widely adopted. 

A more immediate step might be the voluntary adoption of some of the technical standards for devices that Friedman describes.

In short, I came away impressed by the urgent need to improve how our healthcare system captures and shares data, and thus learns – or, presently, fails to learn – from patient experience. I also appreciate, along a range of dimensions, just why this seemingly urgent and obvious problem has remained such a stubbornly difficult nut to crack.  

Above all, I’m struck, by the need – in the phrase of legendary NASA flight director Gene Kranz – to continue to work the problem.


Jill Hagenkord’s Rags To Riches Story Reminds Us Why We Still Admire Entrepreneurs

David Shaywitz

Entrepreneurial stories, often told through the narrative framework of the hero’s journey, are by now well past the point of cliché. 

Yet, it’s important, perhaps even instructive, to remind ourselves every now and again about the exceptional, transformative power of entrepreneurship, the can-do thinking it motivates, and the remarkable progress it can propel.

This potential emerged as a central theme of Dr. Jill Hagenkord’s recent appearance on the Tech Tonics podcast that Lisa Suennen and I regularly host, as Hagenkord shared her journey that Suennen nicely characterized as “a rags to riches story in the most American of ways.”

A Tough Childhood in Rural Iowa

Hagenkord grew up in rural Iowa, an already difficult childhood made worse, she says, by her parents divorce when she was ten. Dependent on government assistance for housing and food, she was a self-described “behavior problem” throughout school.

Jill Hagenkord

She chose to attend college — an almost unheard of decision for girls in her area, according to Hagenkord — because she wanted to get away, and heard there were “great parties and cute guys” at the University of Iowa, in Iowa City, 90 minutes away.

At college, she partied hard but also worked hard, both in her classes — she made the Dean’s List first semester, despite the nearly complete absence of college prep in high school — and beyond, where she typically held down 2-3 jobs to make ends meet. 

Initially, she focused on fortifying the humanities education she realized she missed in high school. 

However, her life direction was then profoundly influenced, as she tells it, by a “jerk boyfriend,” a medical student who she dated for six years. When the guy told her she was only doing well because she was taking easy humanities classes, she took science classes in order to prove him wrong – which she did. 

Then he bet her she could never succeed in the most difficult pre-med classes, a biology lab. She aced it, despite lacking any of the prerequisites. She won the wager and claimed the prize: dinner at the “nicest restaurant in town” – the local Red Lobster. 

Unimpressed, Hagenkord’s perversely significant other assured her she could never get into Harvard or Stanford University. So she applied and won admission to the MD/PhD program at Stanford.

The Bay Area, Part I

Hagenkord was excited about coming to the Bay Area, but never felt “culturally comfortable” at Stanford’s campus in suburban Palo Alto. So she lived in the city, almost an hour away, and never showed up for class, just for the exams, which she apparently crushed anyway. 

She dropped the PhD part, and decided to pursue a medical residency in pathology — a discipline without a lot of one-on-one contact with (living) patients. She had found aspects of clinical medicine — like telling a patient or a family that there was nothing that could be done — overwhelming sad. 

She started her pathology residency training at UCSF, but was drawn away by the lure of a startup. It was the boom of the late 1990s, she said, and it seemed everyone in the Valley was joining a startup, where new millionaires appeared to be minted by the day. 

The experience, she said, was “exhilarating.” She was surrounded by “all of these super bright science PhDs and tech people, super bright and super ambitious.”  

She added, “I learned so much and it opened my mind up so much to the possibility of how can I be an entrepreneur in medicine.” 

Hagenkord joined the company when it was relatively small, stayed with it through growth to over 500 people, saw it expand internationally, and was there for its IPO. While it doesn’t sound like she saw a large financial return, the startup experience clearly affected the way she thought about problems. 

Even when she returned to finish her pathology residency — which she did back in Iowa — “every step of the way,” she said, “I was constantly thinking — this could be done better, this could be done more efficiently, how do we do this better?”

As Suennen points out on the podcast, this must have represented a huge contrast for Hagenkord: “After hearing all your life that ‘things cannot be done’ or ‘you cannot do this,’ on the entrepreneurial side, things are characterized by ‘you can do anything, if you work hard enough.’” 

It sounds like this more hopeful attitude suited Hagenkord. “It’s such a long shot but you can will it to happen,” she explains. “It was something that had never been done before. And I did get criticized — but it gave me all the courage I needed to think, ‘I can start my own company.’”

Even so, she initially elected to continue her training in Iowa because:

“I tried to be a ‘normal’ pathologist, live a quiet life, make a good paycheck pushing glass slides — but as I finished my residency, there was too much happening on the bleeding edge. What I saw coming were these massively parallel testing technologies, where instead of looking at one analyte at a time, we were looking at hundreds or millions at a time, and were going to need computational tools to distill this information into medically meaningful nuggets. That’s what I was the most excited about and wanted to learn the most about.”

Consequently, she pursued a customized dual pathology fellowship program. The faculty at the University of Pittsburgh Medical Center liked her proposal so much that they “invented” the fellowship for her. The program allowed Hagenkord to gain specialized pathology training in both molecular genetics and oncology informatics – a combination she says has since become more common. 

When she told the head of her residency program about her plans, Hagenkord says, he told her “Jill, why don’t you do a real fellowship? You’re never going to get a job.” 

She adds, with a grin, “When the old curmudgeonly white dude is telling you that you don’t know what you’re doing, you should feel reassured that you’re onto something.”

Bay Area, Part II

She then returned to Silicon Valley, in a series of roles at genetics companies. Early on, she got to know the co-founders of 23andMe. As she tells the story, “I got to know [23andMe co-founders] Anne [Wojcicki] and Linda [Avey — see her Tech Tonics episode here] through the Silicon Valley network. We’re around the same age, have kids, are working moms, live in the same town.”

She continues, “I could look at what they were doing from a regulatory point of view and recognize gaps. I would always say [to Anne and Linda] the consumer aspect of health is so exciting and you are leading the charge, let me help you any way I can. It wouldn’t hurt you to fix these gaps.”

For while, it seems, Hagenkord offered occasional, informal advice.  But “after they got the warning letter [from the FDA] in November  2013, this led to another long conversation and wound up in a job offer [as Chief Medical Officer]. So I joined the company after they were shut down by the FDA, to try to re-build bridges with medical community.”

Hagenkord worked through that thorny set of issues with the team at 23andMe. These efforts paid off, and over time the company worked itself back into the Agency’s good graces. While Hagenkord left the company, she distinctly remembers the day she sold her 23andMe shares (on the secondary market, as the company hasn’t sold shares to the public). Her shares in the private company were worth enough to be “truly life-changing.”

A “Silicon Valley” Moment

On vacation in Mexico, when she heard the funds had been deposited in her account, she says she left a $1,000 tip for the bartender. 

“It felt awesome — and we got really good service rest of time we were there.”

Reflecting on the experience, she describes it as “one of those Silicon Valley moments — not a ‘founder of Google Silicon Valley moment,’ but a decent Silicon Valley moment, when you have more money that you ever, ever, ever thought you’d have shows up in your bank account one day.”

She then reveled in the opportunity to play what she called, tongue-in-check, “Hillbilly Millionaire”:

“I called family — in Iowa — flew back, and said ‘everybody, get in the car, we’re going to the mall, buy anything you’ve ever, ever wanted.’ They were really bad at it, at first.  They went into Target, went back to the clearance sale rack — spent like $250, and I was like, ‘I didn’t fly back here so you could buy $250 at the clearance sale rack — now get out there and really shop!’ They really did.” 

The experience, she says, was “the best feeling ever” — though she also apparently enjoyed the 50th birthday present she treated herself to — a trip with 22 family members on a private yacht around coastal Turkey,” which she viewed as a chance to appreciate the “people who really supported me.”

After several more years advising health tech companies, she recently took on a new role, as head of genetics at Optum a subsidiary that’s been described as “the information technology and services arm” of UnitedHealth Group.

Once again, she is thinking of moving back to Iowa.

Lessons About Medicine And Tech

In addition to her inspiring story, Hagenkord shared several lessons about her experiences as an entrepreneurial physician working with technology entrepreneurs in Silicon Valley. 

Although my own life journey could not have been more different from Hagenkord’s, we seem to have come to remarkably similarly conclusions from our experiences at the intersection for technology and medicine. 

“In the last ten years,” Hagenkord says,

“tens of billions of dollars have been invested in healthtech, with very, very few success stories. It’s like watching the same movie over and over again, and it’s pretty torturous, especially as I’m usually the only person with a medical background in the company. 

I know the recipe — there are no shortcuts, and if you try to skip a step, you’re going to set yourself back three years. But to watch these brilliant tech entrepreneurs, who’ve been wildly successful in consumer tech, try to take the recipe that’s worked in consumer tech — go fast and break things, fake it ‘til you make it. If you get it wrong trying to sell somebody a pair of shoes online, and they have to wait three days for their shoes instead of one day, it’s going to be OK. 

The same recipe does not work well when you apply it to a real health product –what we call that is ‘unconsented human subjects research’ in healthcare. You can’t sell someone a finished product that you know is full of bugs without telling them. The philosophical and cultural differences between tech and health need to be better balanced. 

Taking the best of these brilliant tech and design people and combining it with the best of the people with the medical experience and the understanding about how to access the medical market — having that balance are the healthtech companies that are going to be the most successful.

Hagenkord also weighed in on whether coastal entrepreneurs think about people in the middle of the country, and whether one can imagine Silicon Valley-type innovation in places like Iowa.

On how Silicon Valley tech entrepreneurs tend to see the world:

“One of the things you see is someone in love with their own technology looking for a place to stick their technology, as oppoed to looking at a problem and trying to solve the problem.

The Bay Area is such a weird bubble place — so not like middle America where I grew up. To be able to really understand — especially when you’re thinking about your commercialization strategy — the idea that ‘people will just buy this.’ People who can’t really pay their mortgage, and have their lights turned off, and are struggling to get milk — for them, looking at their genetics is a huge luxury that’s beyond comprehension, and I think that gets lost sometimes. But often times there are representative people like me in [startups] to remind them of that aspect.”

And the idea of entrepreneurship in the Midwest, as promoted by champions like J.D. Vance and Steve Case?

“I did spend a lot of time thinking about it — it’s really too hard to be an entrepreneur in the middle of the country, because none of the venture money is there. 

There are very smart people in the Midwest; if I had a good loving family, I’d have wanted to stay there and raise my family there. It’s a matter of access — [to capital] and to mentors — so much of the Silicon Valley game is who you know, and who can introduce you to who, and who can vouch for you. When you’re living in Des Moines, it’s hard to make those connections.”

I raised a final point with Hagenkord, by email, after the podcast, asking her about the thought process leading to her recent decision to join not a venture capital firm or a startup, but rather at a massive insurance company — over the summer, she took at new job as Vice President of Genetics at Optum. 

My own top of mind reaction echoed Hamilton’s King George III’s response to the news that President Washington would be succeeded by John Adams: “Good luck.”

But here’s how Hagenkord sees it:

“Health tech startups can raise an ungodly amount of funds, but they often struggle to 1) identify a real, tractable problem in health, and/or 2) try to apply a consumer tech go to market strategy to a health-related product. They are smart people and they learn and iterate, but often they waste valuable time and money learning how the health care market works and what kind of evidence they need to achieve widespread adoption.

At Optum, I can help tech entrepreneurs understand how to get on the market legally and how to successfully get to widespread adoption and payer coverage (if desired). Since Optum invests, partners with, and acquires health-related startups, the tech entrepreneurs and investors have a vested interest in engaging with Optum. They are more inclined to generate proper evidence data when Optum says they need it. I also have the support of an amazing team at Optum Genomics who are all aligned with this same vision. In short, I could do more good more quickly at Optum as part of a team than as an individual consultant.”

I hope her lived experience at Optum ultimately matches up to these lofty, worthy expectations. 

One thing I know for sure: I wouldn’t bet against her!


Race and Life Sciences: Where is the Healing?

Stacy Lawrence

When I started to go to the J.P. Morgan Healthcare Conference, it was still known as H&Q after boutique bank Hambrecht & Quist that had originated it.

This means that, as a journalist, I have been able to watch biopharma grow up over the last 20 years.

Those first few events I attended had so little diversity that the upstairs women’s bathroom, tucked in next to the Westin St. Francis chapel — now infamous for being packed to overflowing during the Q&A sessions from the Grand Ballroom presenters — was entirely empty. It seemed like a personal sanctuary.

Over 20 years, that’s shifted dramatically. That bathroom is rarely empty anymore. Many, many more women, as well as Indian and Asian attendees and presenters, are everywhere. But by my measure, Black presence has barely changed a bit.

All the Westin St. Francis’ security guards are Black. I know because every one of them always takes note of me with a smile, a hello or a too-forceful insistence to see my badge. One day, I thought, the number of Black executives presenting on stage and attendees of the conference would surely outnumber those security guards.

But that day has not yet come. Believe me, I can’t help but take a count every year.

Forced optimist

The life sciences industry is brimming with optimism. It has to be. The work, conducting science intended to improve upon the quality and quantity of human life, is difficult. A relentless, enthusiastic spirit is essential to get through this careful, cumulative endeavor. It’s infectious, and one of the things I enjoy about covering this industry. That same upbeat, future-oriented outlook can also blind people to hardships and injustice in our midst.

I’m well aware of racial injustice. I grew up on a farm in southern Ohio, attending public schools that were almost all white. I am nothing if not a realist about the prospects for change when it comes to systematic racism in America.

I am a part of the Loving Generation, the cohort of mixed race children born in the United States in the years just after the 1967 Supreme Court decision Loving v. Virginia that legalized interracial marriage throughout the country. As promising as that sounds, my white mother’s family split when I was born into those who accepted me and those who could not — and therefore would pretend I did not exist.

That was entirely characteristic; they were from a long line of small Ohio and Indiana farmers who were among the earliest colonizers of the region and deeply invested in white supremacy. Many of their ancestors had originally been Virginia planters and slaveholders, in fact my seventh great-granduncle was a signer on the Articles of Confederation for the thirteen colonies.

Race was at once everywhere and nowhere in my upbringing. My high school years included a Ku Klux Klan rally that passed one block from my house, sparked because a classmate had been suspended for a few days after wearing his uncle’s entire white-sheeted Klan costume to school. The rally was in response, an objection to that scant punishment.

I grew up arguing my way into honors classes that weren’t assigned to me, then aced them. Academic success became my ticket out of a place that had no room for me. I used it to hurtle my way into an urban future, where I was sure I could flourish, find my people and make my home.

I won a full tuition scholarship to New York University through its Martin Luther King Jr. Scholars Program. Terrified of debt even then, I chose NYU over Columbia University, which was my preference but had admitted me without sufficient aid.

Then I headed to graduate school at UC Berkeley, where I was backed first by a fellowship from the Ford Foundation and then by another from the National Science Foundation.

I am a student of history, having spent a chunk of grad school in the mid-1990s at Berkeley interviewing sickle cell patients and their families about the paucity of pain relief and their fears and realities around a lack of access to adequate healthcare.

Like so many other racial disparities, this is one aspect of our country’s history that remains unaddressed and unresolved.

I was born just after the Civil Rights movement. There were historic achievements, yet in the many years since, major measures of racial disparities have barely budged and voter disenfranchisement remains rampant.

School segregation simply reshaped itself through housing segregation, while income and wealth gaps remain as wide as ever. Health disparities remain glaring with significantly disproportionately high rates of maternal and infant mortality, diabetes, cardiovascular disease, cancer, asthma and other chronic diseases. Black Americans also are less likely to have adequate health insurance to address these ailments. The list goes on.

White supremacy is the reason America doesn’t have basic public benefits, like universal health insurance as well as affordable daycare or university education. Rich European countries that were racially and ethnically homogenous, where people are largely seen as deserving of potential support, were willing to provide all the public goods. That’s getting tested now, as many of these countries become more diverse, often with an influx of immigrants of color from former colonial countries.

All of America’s racial disparities remain true despite massive advances on Black achievement of college degrees. Advancement through education doesn’t insulate us from the sting of racism; I’ve often felt it.

Realtors have actively discouraged me from buying in a white neighborhood. Neighbors have welcomed us with a slashed car roof and punctured tires along with countless noise and permit complaints. Hotels and restaurants have tried to deny me service because they presumed that I was a prostitute on the hunt for a client.

There was once a boss who loaded me with multiples of the work assigned to my co-workers — and then turned around and yelled at me in the office for being “stupid” after an error and, separately, for loving hip hop music.

I was told by the recruiter assigned to replace me at that position after I left that he was unable to find anyone able and willing to do all the work I had done — for a similar salary to what I had received. I mean, I do consider myself the James Brown of life sciences business journalism, always hustling the hardest for the story, but that’s just ridiculous.

Bay Area dreams

But it didn’t really hurt until I got older and started to see it unspool against my family. Overachievement and hypervigilance can only get you so far — and at great personal cost, believe me. I’m so good at sublimating my feelings to function in a hostile environment, that sometimes I only know I’m angry or upset because my rib cage hurts like a giant hand is squeezing me.

Like the time a couple years ago, when my now 80-year-old father was ill in a hospital that attempted to prematurely discharge him. The hospital had fudged the paperwork to note that he was ambulatory, even though he was not, on the assumption that no one would advocate for him or ask questions.

Whispered guidance from Black hospital staff, including a nurse, a resident and a social worker, instructed me on how to officially appeal his status and get him all of the treatment that he needed and deserved. He needed an advocate, and I was the only one he had.

That’s the most difficult part, watching people and institutions treat your loved ones like they don’t deserve care, respect or the benefit of the doubt.

I spend a lot of time trying to ensure that people with power get to know my children and my father, so I can try to believe that they see at least some little bit of what I love in them.

For example, in middle school, I had to go visit the assistant principal every trimester. My son was earning top grades. I needed to go in there because the assistant principal kept putting my son in easier classes, when he needed to stay enrolled in the harder classes.

When we were picking a high school for our eldest son, I called the best public one in town. I talked to one of the only Black professionals there, a guidance counselor, after about a half-dozen Black former school students and parents advised me not to send him. Hoping for reassurance, I instead got a warning. She told me that she herself had a complaint pending against the district — and that she would advise against me sending my son there because the academic environment isn’t supportive of Black students.

If we did send him, the advisor suggested that both parents attend every event and underscore how committed we are to supporting his education with all of the administrators and teachers — otherwise they wouldn’t see him as a serious student.

We instead chose a very small, public early college high school where the teachers could get to know him.

We repeatedly have what is now widely known as “the talk” with our sons advising them of how to best navigate a hostile, dangerous environment, starting heartrendingly early. And, sadly, at ages 11 and 15, it’s already proven useful for them both.

I had been deeply hopeful that the diversity of the Bay Area, where I have made my home for almost 30 years, would meet with the burgeoning Internet and biotech industries that have come to fuel the region’s prosperity to help buoy the Black and brown communities. But that is not what has happened. Instead we’ve largely gotten pushed out — again.

We embody our history. My wife, who is second-generation from Mexico, likes to remind me that our house was built only a few short decades after California was no longer a part of Mexico. Her family moved back and forth several times over the generations between what is now the U.S. and Mexico. Calafia, for whom the state is named, is a fictional Black warrior queen from a 16th century Spanish novel.

There used to be such a large Black community in Oakland because it was the terminus of the first transcontinental railroad. Black people worked on the railroad as porters — and in many of the dangerous jobs building and running it.

My own great-grandfather was a brakeman, which then entailed running outside on top of the train to throw a brake on each railroad car. Another great-grandfather was a Georgia sharecropper, with his son, my grandfather, being the fourth and final generation on the plantation after ‘emancipation’.

Today, with housing prices soaring, more and more Black people have been forced out of Oakland. In 1980, almost half of Oakland’s population was Black, now that’s down to less than one-quarter. I cried my way all the way through the film The Last Black Man in San Francisco, which highlights the city’s historically Black neighborhoods, the Fillmore District and Hunter’s Point, whose Black residents are squeezed out by prosperous, newcomer neighbors.

That’s the real rub, that we keep pushing, striving, building and learning only to be served up again and again merely as exploitable fodder for American capitalism, rather than its intended beneficiaries. Unlike many Americans, we could never count on accessing a good job without pulling out all the stops like moving to a new state or getting an expensive education — and even then that remained out of reach for most.

Interestingly, that top-flight education has been found to be a key ingredient for successful women and people of color — but far less necessary for white men since they are typically perceived as exuding promise even without the sign-off of the most elite institutions of higher education.

Amoral entities

All of this plays out in life sciences, like every other industry in America. Corporations are amoral entities; they serve the interests of their shareholders. No one expects life sciences companies to lead when it comes to racial justice.

Still, the life sciences industry can start by owning up to their own historical and current participation in racial exploitation and neglect in pursuit of healing.

Now is the time to examine how institutional racism influences how you and your company interact with Black and brown neighbors, employees, contractors and service providers, not to mention the patients receiving your company’s treatments, the clinical trial participants, and the clinicians prescribing your products.

Only 3% of biotech employees are Black, according to a recent BIO report. Since the University of California system had to dismantle affirmative action in 1996 under Proposition 209, schools across the board have seen Black enrollment plummet. UC Berkeley saw its Black freshman enrollment fall from about 7% prior to that to less than 3% currently.

(There is a current movement to repeal Prop. 209 and a push to make admissions more like the University of Texas system that admits the top 6% of students from each high school in the state, thereby both diversifying the universities and reducing the incentives for parents to drive up real estate prices in areas with “good” schools.)

Black Americans have long been mistreated research subjects (see Tuskegee Syphilis Experiment, gynecology experimentation on slaves and Henrietta Lacks) as well as underserved and poorly served patients whose doctors often have racist misperceptions about even their basic anatomy.

Not to mention the potential threats from emerging technologies. If social media can be weaponized to imperil democracies and AI facial recognition offers more opportunities for discrimination, it’s not much of a stretch to see how gene editing opens the door to eugenics. Already, genetic tests are being used by governments to more effectively control and manipulate ethnic minorities in China.

If now is the time to heal America’s traumatic past, life sciences companies and institutions have the opportunity to examine, reveal and clean out the racial wounds that they have been a party to inflicting — and to determine their obligations to ensure reparations and a more equal future.

I hope for real changes to address structural racial inequality, but I won’t hold my breath. For me, at the barest minimum in this industry, if we ever have another J.P. Morgan Healthcare Conference that’s jammed in the Westin St. Francis again, I hope to see that the Black attendees outnumber the full ranks of Black security guards.


“For a very long time, America prospered—or seemed to prosper: this prosperity cost millions of people their lives. Now, not even the people who are the most spectacular recipients of the benefits of this prosperity are able to endure these benefits: they can neither understand them nor do without them, nor can they go beyond them. Above all, they cannot, or dare not, assess or imagine the price paid by their victims, or subjects, for this way of life, and so they cannot afford to know why the victims are revolting.

James Baldwin

They are forced, then, to the conclusion that the victims—the barbarians—are revolting against all established civilized values—which is both true and not true—and, in order to preserve these values, however stifling and joyless these values have caused their lives to be, the bulk of the people desperately seek out representatives who are prepared to make up in cruelty what both they and the people lack in conviction. This is a formula for a nation’s or a kingdom’s decline, for no kingdom can maintain itself by force alone.”

― James Baldwin, No Name in the Street


Pfizer Secures $2B for COVID-19 Vaccine, BioNTech Raises $500M, & Our Test

Luke Timmerman, founder & editor, Timmerman Report

When Donald Trump first considered a run for president in 2000, he never rose above 1 percent in the polls.

America changed in the early years of the 21st century.

Trump was always good at harnessing tabloid media weaknesses to his advantage. When our information commons shifted to a 24/7 advertising-based attention-grab economy on the Internet and TV, he was uniquely positioned to seize the moment.

Through feeding the beast with an endless stream of outrage and conflict and provocation and distracting infotainment, he put himself in a position to drive cultural and political conversation in America. By dominating the attention economy, he ended up winning the Presidency in November 2016.

Here’s what we know has happened as of July 23, 2020.

  • More than 4 million people in the US have been infected with COVID-19.
  • More than 144,000 Americans have died from the infection
  • More than 1,000 people in the US are dying each day
  • Other countries with serious leaders are performing better. On July 23, the US recorded 1,067 deaths; Germany had 5; Italy, 10; France, 10; the UK, 53. (Source: Worldometers)
  • About 32 million Americans are collecting unemployment checks, and new claims are rising
  • The US still has no national testing, tracing, and isolation strategy
  • The US has no national plan to safely re-open schools this fall
  • About 29 million rental households are at risk of eviction

This is a test.

We have a chance to correct this mistake by voting in overwhelming numbers this fall.

If we fail this test, we can expect long-term erosion of US leadership in biopharma. Driving away legal immigrants, 25 percent proposed budget cuts to the NIH, and crude drug price controls are just a few of the anti-biotech policies that this Administration and its enablers supported in office.

Entrepreneurs around the world see an opportunity to poach US biotech talent. See the increasingly bold appeals by ex-US companies, like the one below.

I appreciate our friends in Canada and around the world. But this is up to us in America to chart a different course.

This Week in Drug Pricing

When our information commons is algorithmically transmogrified into a psychological warfare battle zone – not a marketplace for ideas – then it stands to follow that you can’t have a reasoned debate over serious topics like what the price ought to be for a COVID-19 vaccine.

The infodemic, and our nation’s resulting dalliance with a cynical entertainer-in-chief, is the main reason why the US has failed – and continues to fail — to respond properly to the COVID-19 challenge.

  • Why Those Most at Risk of COVID-19 Are Least Likely to Respond to a Vaccine. NatGeo. July 17. (Roxanne Khamsi)
  • Pfizer Gets $1.95 Billion US Contract to Produce 100 million COVID-19 Vaccine Doses by Year End. NYT. July 22. (Noah Weiland et al) (Press release).
  • Dexamethasone in Hospitalized Patients with COVID-19. A Preliminary Report. NEJM. July 17. (The RECOVERY Collaborative Group)
  • Inhaled Interferon Beta Shows Promise for COVID-19, But Scientists Urge Caution. NYT. July 20. (Benjamin Mueller)
  • Just-Evotec Secures $18M US Defense Contract to Make Monoclonal Antibodies Against SARS-CoV-2. (Company statement)
Timmerman Report Articles

Boston-based Longwood Fund closed its fifth fund with $170 million to put to work into biotech companies, largely around company creation.

Burlingame, Calif.-based ALX Oncology raised $185.7 million in an IPO at $19 a share. The company is working on drugs that block the CD47 checkpoint pathway.

Emeryville, Calif.-based Berkeley Lights, a digital cell biology company, raised $204.9 million in an IPO at $22 a share.

Watertown, Mass.-based Pandion Therapeutics, a developer of treatments for autoimmune diseases, raised $135 million in an IPO at $18 a share. (See TR coverage of the company’s Series A financing, January 2018).

London and Raleigh, NC-based Verona Pharma, the developer of treatments for respiratory diseases, raised $200 million in a private placement.

Columbus, Ohio-based Forge Biologics raised $40 million in a Series A financing led by Perceptive Xontogeny Venture Fund. The company is seeking to manufacture viral vector gene therapies for other companies on contract, and to develop its own novel therapies.

New York-based Elevation Oncology raised a $32.5 million Series A financing, led by Aisling Capital. The company is going after genomically defined cancers.

Boston-based Cerevance, a company working on brain diseases, tacked on an additional $20 million to close its Series B financing at $65 million.

San Francisco-based Olema Oncology raised $54 million in a Series B financing to advance its work against breast cancer.

Germany-based BioNTech, the mRNA vaccine and therapeutics company working on a COVID-19 vaccine in partnership with Pfizer, raised $511.5 million in a stock offering at $93 a share.

South San Francisco-based Cytokinetics, the developer of treatments for muscle diseases, raised $201 million in a public offering.

Kiniksa Pharmaceuticals raised $155 million in a stock offering. It says it’s based in Bermuda, which we all know is a place where companies go so they can pay their fair share of taxes to support the education and research that makes for a thriving biotech hub.

Personnel File
  • Biogen hired Mike McDonnell as chief financial officer.
  • Amy Miles, the former CEO of Regal Entertainment, joined the board of directors at Amgen.
  • Boston-based Gamida Cell hired Michele Korfin as chief operating and chief commercial officer.
  • Woburn, Mass.-based Replimune, the developer of oncolytic virus therapies for cancer, hired Andrea Pirzkall as chief medical officer.
  • South San Francisco-based Twist Bioscience, the DNA synthesis company, hired Erin Smith as senior vice president of government affairs and public policy.
  • Toronto-based Notch Therapeutics hired David Main as CEO. It’s working on universally compatible T-cell therapies.
  • San Francisco-based Parker Institute for Cancer Immunotherapy hired John Connolly as chief scientific officer.
  • Cambridge, Mass.-based Generation Bio, the developer of non-viral vector gene therapies, hired Matthew Norkunas as chief financial officer.
Racial Equity
  • Investing in Racial Diversity. A Call to Action in the Biotech VC Community. Nature Biotechnology. July 22. (Jackie Grant)
  • Leave a Ladder. LifeSciVC. July 20. (Sam Truex)
Data That Mattered

Wilmington, DE-based Incyte said its JAK inhibitor ruxolitinib (Jakafi) met the primary endpoint and key secondary endpoints in a Phase III trial of patients with Graft-vs.-Host disease. The results support findings from two previous studies.  

New Haven, Conn.-based BioXcel Therapeutics passed a pair of Phase III clinical trials with its sublingual film formulation of dexmedetomidine. The first study was in schizophrenia patients, and the second was for bipolar disorder. The drug appeared to work fast (within two hours), it worked at both a low and high dose, and had a clean safety profile.

San Diego-based Amplyx Pharmaceuticals said in a topline press release that it passed a Phase II clinical trial of a first-line treatment for invasive fungal infections with Candida.


GSK stepped up its game in the mRNA vaccine and therapies arena by partnering with Germany-based CureVac. The big drugmaker paid 120 million Euros upfront in cash, and another 150 million Euros in equity investment to work on as many as five mRNA vaccine and therapeutic candidates against infectious diseases.

Cambridge, Mass.-based EQRx in-licensed a CDK4/6 inhibitor from G1 Therapeutics, to develop a low-cost challenger in that therapeutic category of cancer treatment.

South San Francisco-based Assembly Biosciences struck a deal with BeiGene, which obtained China rights to Assembly’s three drug candidates for hepatitis B virus. Assembly is getting $40 million cash upfront.

Foster City, Calif.-based Gilead Sciences paid $300 million for a 49.9 percent ownership stake, and the exclusive right to acquire South San Francisco-based Tizona Therapeutics, the developer of a novel checkpoint inhibitor against cancer.

France-based Genfit said it will stop investing further in its lead drug candidate for NASH, and will release a new corporate strategy by the end of September.


When Raising Drug Prices Helps Patients

Chris Morrison, editor, RA Capital Management

Sometimes there are good, patient-friendly reasons to raise drug prices. Proposed legislation that aims to eliminate price hikes on prescription drugs will have unintended consequences.

San Francisco-based Jaguar Health, for two years in a row, lost more than $30 million a year. Revenue from its only product, a diarrhea treatment for HIV patients, was only $5.8 million in 2019.

Peter Kolchinsky, managing partner, RA Capital

The drug works, and it addresses a real need. Market research suggests about one out of every five HIV patients suffers from diarrhea related to their antiretroviral treatment regimens, and there are more than a million HIV patients in the US.

But the drug, crofelemer (Mytesi), wasn’t being prescribed anywhere near that widely. Worse, when the drug was prescribed, insurance companies often refused to pay for it, wearing down doctors and patients with onerous paperwork and phone calls.

Jaguar couldn’t go on like this forever, and had to make a decision earlier this year. It could take the drug off the market, cutting its losses. Or, it could raise the drug’s price to try to get the company to profitability.

So, Jaguar raised the price, roughly three-fold from $668 for a 60-pill supply to $2,206.

Predictably, Jaguar took heat in the press, in part because the hike came after a failed attempt to gain Emergency Use Authorization from the FDA to treat COVID-19-related diarrhea (expanded use into COVID-19 patients might have allowed the company to break-even without raising the price). And Jaguar briefly caught the attention of lawmakers who might soon be considering legislation that would impose mandatory rebates from drugmakers that increase their products’ prices more than inflation. Legislation under consideration by the Senate Finance Committee, the Prescription Drug Pricing Reduction Act, would penalize big price increases, like Mytesi’s, especially for drugs covered under Medicare Part D.

Price hikes are routinely pilloried as attempts to wring every dollar from a vulnerable patient’s wallet. But are all large price increases a form of gouging?

Jaguar’s new price puts it on a path to sustainability. It lets it continue treating HIV patients who were benefitting from Mytesi and provides extra revenue that it can use to expand its patient assistance programs that provide free drug to low-income patients falling through various holes in the US safety net. With higher revenues from the few prescriptions that are covered, Jaguar now helps cover patients’ out-of-pocket costs. It also funds a service that helps physicians navigate prior authorization roadblocks insurers ostensibly rely on to prevent inappropriate utilization; these end up also interfering with appropriate treatment with Mytesi.

An experienced drug marketer might have done all this from Day One, knowing just how hard insurers would push back on paying for a drug like Mytesi. But Jaguar, which sells Mytesi through its subsidiary Napo Pharmaceuticals, wasn’t an experienced drug marketer. In fact, it never expected to be selling Mytesi itself, having counted on a larger partner, Salix Pharmaceuticals. But after a legal dispute in which Jaguar accused Salix of failing to adequately commercialize Mytesi (then known as Fulyzaq), Jaguar regained its rights in 2016, inheriting a drug for a relatively small group of patients, yet being sold at a mass-market low price.

To Jaguar, the common US practice of setting artificially high prices and offering hefty rebates to insurers to remove access barriers was foreign territory. Jaguar eventually learned it needed to inflate Mytesi’s list price just to allow the middlemen to extract a rebate, a sliver of which they would keep to pad their own profits.

It’s not unusual for a drug to be mispriced. Nor is it rare for companies to raise prices for drugs that reach a smaller patient population than originally expected. These tweaks typically go unnoticed when price increases are in the single-digit percentage range, and the companies implementing them are larger. Any corresponding price reductions are typically hidden in negotiated rebates.

For already profitable, large companies, net price increases can preserve or boost profits. For small companies like Jaguar with only one marketable product, the ability to re-price a mispriced drug can mean the difference between surviving and going out of business.

Pricing and shortages

The Prescription Drug Pricing Reduction Act ignores other reasons to raise prices. Sometimes a higher price is necessary for a company simply to manufacture enough of it to meet demand.

Take Bacillus Calmette-Guerin (BCG), an inexpensive, hundred-year-old, live-attenuated tuberculosis vaccine made from bacteria that infect cattle. In the US where TB is rare, the vaccine is used as an immune-stimulating bladder cancer treatment.

When manufacturing problems drove Sanofi from the BCG market a few years ago, the pharmaceutical giant Merck remained as the sole manufacturer. Despite being left with a monopoly, Merck did not do what economists might expect in such a situation – it didn’t raise the price, and it didn’t boost its production capacity enough to serve all the US patients who had previously been getting supplied by Sanofi.

This meant that a lot of bladder cancer patients were being left in the lurch, without access to an effective drug.

Ken Frazier, CEO, Merck

During remarks at the annual BIO convention in June 2019, Merck CEO Ken Frazier acknowledged the problem, noting that Merck only supplied 28% of the US market for BCG when the other manufacturers dropped out. Merck doubled its output fairly quickly, he said, but it is now capacity constrained.

BCG isn’t patented, so anyone is free to jump into the market. There isn’t a strong market incentive to invest in new manufacturing capacity, in part because manufacturing of a live-attenuated virus is non-trivial.

This means Merck is all alone, the sole supplier of an old, tricky-to-make drug, and not making enough of it. If the company wanted to, it could cash in on its monopoly by doubling, tripling, quadrupling, quintupling the price. “But that’s not the right thing to do,” Frazier said. And yet, Merck has not sufficiently invested the necessary millions of dollars it would require to expand production to ensure that patients don’t go without.

This failure is confusing and frustrating to many observers, given Merck’s size and skill in the treatment of cancer.

Merck charges a high price for its newer oncology drugs, like the PD-1 inhibitor pembrolizumab (Keytruda). That monoclonal antibody drug is approved to treat several cancers, including bladder cancer in patients who do not benefit from treatment with BCG. Merck has invested in substantial manufacturing capacity for Keytruda. There is a market incentive to do so, with a patented drug that generates $11 billion-per-year in revenue. Merck has invested to ensure that there will not be any supply shortages of this drug.

Why is Keytruda worth keeping in stock but BCG not worth it? Probably because Merck charges such different amounts for these two drugs. To patients who need BCG, it would be well worth it for Merck to charge whatever it needed to justify keeping BCG as well stocked as Keytruda.

If Merck is trying to be charitable, then it should invest in expanding BCG production. Keeping the price static while not investing in production is robbing patients of a drug that only Merck can currently provide.

But Merck is a business. It shouldn’t be expected to give away its products for free, or charge less than it costs to make them. So then what if raising the price of BCG is the right thing to do?

An unlikely solution

At some price point, at some level of revenue, it would be worth Merck’s time and capital to expand BCG manufacturing to make enough for every patient who needs it.

Merck should do that, starting today.

Here are two ways this could play out.

Were Merck to raise the price of BCG so steeply that it became a blockbuster on par with its newer cancer drugs, it would certainly attract unwanted attention. Elected officials, and the media, would accuse the company of price-gouging. Raising the price would also invite competitors, who could enter the market, expand the supply and eventually help drive down profit margins.

Or, Merck could raise BCG’s price modestly, making it profitable enough to merit investment in high-quality, reliable production. In this scenario, Merck is unlikely to attract competitors. And while it might attract some attention for increasing its price at all, any negative publicity would be undeserved. Rather, Merck would be striking a balance between charity and gouging, protecting its brand and profitability for the long run.

Hopefully the public, media, and Congress would see this as an act of responsible stewardship of an important medical resource.

In fact, all off-patent, generic drugs should be priced in this zone: high enough to be worth making reliably and low enough that they can still be considered commodities.

Patients who can’t get BCG today because of supply constraints would take either scenario. Any means of increasing production would be an improvement over the status quo. BCG is clearly priced too low. Repricing it would enable Merck and others to treat more patients with a drug that saves lives and spares patients from invasive (and expensive) surgery that often results in permanent impairment. And yet, if Merck raised BCG’s price it could run afoul of proposals like the Prescription Drug Pricing Reduction Act.

For Merck, a huge company generating billions of dollars per year in profit, there is a third scenario. Pressured from all sides, Merck can afford to spend the few tens of millions necessary to expand its manufacturing supply without increasing BCG’s price at all. It would probably lose money doing so. But it would be a true hero to patients while avoiding the PR headache of explaining a perfectly reasonable price hike. Were Merck to do this, it would only be because Keytruda and other branded drugs Merck sells are profitable enough to subsidize investment in BCG supply expansion.

But few companies are as large and diversified as Merck.

Jaguar, for example, couldn’t afford to continue funding production of Mytesi without raising its price. It’s too early to know whether Mytesi’s new price and access programs that this new price supports will save Jaguar. But the price hike gives it a chance to ensure that it can keep supplying patients who rely on the drug.

Any legislation that caps drug price increases should carve out exceptions for the Jaguars of the world facing do-or-die situations that would leave patients in the lurch if they go out of business. New legislation should account for companies that misprice their drugs because they didn’t anticipate the US insurance system’s ability to keep drugs from patients who need them. Commercializing a prescription drug cannot fall under the adage of “measure twice, cut once.” It can take years for a company to undertake “price discovery” and for a drug to find its footing and niche in any therapeutic marketplace.

A more reasonable version of the Prescription Drug Pricing Reduction Act would delay imposition of price increase caps for several years after a drug’s launch to enable companies to determine how payers will handle access. How many patients a drug might reach is a key element of price discovery. This Act would also allow manufacturers to make price adjustments that would support funding of adequate, high-quality supply as a market evolves.

Rethinking reforms

Beyond putting Jaguar out of business and keeping BCG in short supply, passing the Prescription Drug Pricing Reduction Act would have another unintended consequence. It would logically lead companies to launch new drugs at even higher prices than they otherwise might have, to make sure that they don’t risk underpricing them.

If a company knows it cannot tweak its drug’s price, it will err on the side of caution from the start. That means pricing high on the assumption that few patients will be allowed to get the drug (a self-fulfilling prophecy – the higher the price, the more payers push back). That would leave room to negotiate bigger rebates with payers if more patients get treated than expected. But if pricing that drug with the needed safety margin also means setting a price so high that it would trigger outrage, the safest thing might be to not develop that drug in the first place.

That would be the worst unintended consequence of all.

The Prescription Drug Pricing Reduction Act, like other bills circulating around Congress, contains an important reform that is worth preserving. It calls for lowering out-of-pocket costs for patients. Caps on price increases are merely the concession Congress wants in trade. The trade-off between increasing affordability for patients (which also makes it easier for drug companies to sell their products) and seeking value for society goes back to the Hatch-Waxman Act of 1984.

Hatch-Waxman traded an extension of the patent-protected period for branded drugs for the abbreviated generic drug approval pathway and generic interchangeability that brought about the modern era of generic drugs and patent cliffs. Later, the Affordable Care Act expanded insurance coverage to more Americans (which also made it easier for drug companies to sell their products) and established biosimilars as a new path toward affordable, off-patent biologics.

Drugs going generic is the price control we have long had and is the one we need to shore up. As the only aspect of healthcare that can go generic and drop in price, drugs are unique. When factoring in all the money losing biotech companies, the drug industry’s overall profit margins are only around 10-12% – a clear sign that drugs are not systematically overpriced. That patients can’t afford them is purely a function of out-of-pocket costs that insurance reforms can fix.

And so, there is indeed a grand bargain to be struck today that continues in the tradition of Hatch-Waxman and the ACA. Let’s lower out-of-pocket costs for patients (all patients, not just those on Medicare). And let’s make sure that once a drug’s patents expire, society has a reliable, inexpensive supply, protected against both profiteering and shortages. These products should be treated as a National Strategic Resource, the way we treat medical countermeasures to combat pandemics or biological attacks.

For those situations, the US agency BARDA contracts with companies to make medicines at pre-negotiated prices. Those prices are high enough to ensure a quality supply but far lower than what a theoretical monopolist might charge during a pandemic or attack. A similar contract with Merck to produce BCG at some reasonable margin over its cost of reliable production would provide all the BCG doses that US patients need.

Mytesi, by the way, is also complex to manufacture. Jaguar’s drug is purified from the sap of a tree found in the Amazon rain forest. It reached the market in 2012 and remains the only oral medicine approved under the FDA’s botanical drug product pathway. When Mytesi’s patents expire, competing manufacturers would probably struggle to replicate that complex supply chain and might not bother to try, leaving Jaguar with a perpetual monopoly.

Jaguar should harvest a substantial reward for having invented the drug. But when its patents expire, a BARDA-like supply contract would allow society to get long-term value from Jaguar’s invention, simulating genericization.

During the patent-protected years of a new drug’s life, Congress should avoid price controls and their unintended consequences. While there will always be those who assume every price-hike is an act of gouging, it is essential that Congress not fall for that facile conclusion and certainly not adopt harmful legislation in response to it.

America needs Congress to be more sophisticated about pursuing the right reforms to bring about affordable biomedical innovation.

Chris Morrison is an editor at RA Capital Management, where he covers the biotech and pharmaceutical industries. Peter Kolchinsky is managing partner at RA Capital Management and the author of “The Great American Drug Deal.” RA has no position in any of the companies mentioned in this article.