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Trump’s Transition Team & Cabinet

Trump’s Transition Team & Cabinet November 24, 20161 Comment

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Post 2: Who’s Sitting at Trump’s Thanksgiving Dinner Table: 

Trump’s Transition Team, Potential Cabinet Members and VP—And How These People Clue Us In To Where Health Policy is Headed

Let’s get the ball rolling talking about Trump’s VP, Mike Pence.

But why does Pence matter? Isn’t the VP just a figure head? Well, yes and no.

According to Impact 2016, “Vice President-elect Mike Pence is expected to be an important conduit between the White House and Congress, especially given his tenure in the House and friendship with Speaker Paul Ryan.” This means that even though Pence is technically just a figurehead as Vice President, he’s got a lot of pull in the Republican party, especially in Congress. And since Ryan’s plan is the one being considered for repealing the ACA, and since Ryan is the Speaker of the House and has a lot of say with taxes and the bills coming out of the House over the years, we need to watch how Pence influences Ryan, or vice versa.

 Pence doesn’t just attend Hamilton. He also champions our fight against HIV. But his work, and opinions, are all very contradictory. Pence is a HUGE champion for PEPFAR—the President’s Emergency Plan For Aids Relief (Impact 2016), calling it a “moral obligation” to support the initiative. That’s super exciting to me, because I was really pissed, to say the least, that President Obama reduced PEPFAR funding. We have GOT to put more resources towards fighting this disease.

At the same time, though, Pence is basically responsible for the HIV epidemic in Indiana. Pence’s failed health leadership caused a massive HIV outbreak in Indiana: Pence defunded a Planned Parenthood in Scott County, Indiana, a classic GOP move and one that makes sense from a socially conservative standpoint of anti-abortion and anti-controversial and sketchy practices of certain areas of Planned Parenthood—but this defunding was even more controversial than usual. This Planned Parenthood was the county’s ONLY HIV testing center. So the over 24,000 residents living in Scott County had nowhere to get tested for HIV (Teen Vogue).

This county has some massive problems. More than 20% of the residents live below the poverty line, many are injection drug users, and the number of those living with HIV there is astronomically high (Teen Vogue).

In 2015, two years after the closing of this Planned Parenthood clinic, more than 20 new cases of HIV were being diagnosed each week, reaching 200. The outbreak was first brought to Pence’s attention in January of 2015, but he did not take necessary measures—like allowing a temporary needle exchange program in Scott County—until until April of that year. Pence was  morally opposed to needle exchanges and believed they promoted drug use: the classic con argument that I will never understand. Even the previous Governor of North Carolina, who many criticize for his Bathroom Bill, supports needle exchange programs! This goes to show just how far right Pence truly is.

But it also shows how wrong his idea of these programs truly was. The program has been a huge success, scaled up in four other counties, and will continue until May of 2017 ( HuffPost).

Pence has taken a hard stance on the LGBTQ community, initiating the Indiana Religious Freedom Restoration Act ( The Advocate). After receiving a wave of criticism, he signed an amendment toning it back. While many on the Right have acknowledged that this move was mostly to gain political and monetary support from the far right, the Catholic community, military veterans, and insurance companies (basically, his entire cohort of voters), it created massive fear in the LGBTQ community and outrage across the country as it was interpreted as targeted discrimination. He also opposed the repeal of Don’t Ask, Don’t Tell for the military (You can watch his  speech on the House floor). Lastly, he was disappointed that Obama chose to create the federal mandate about students choosing their own bathroom based on their gender identity, not gender assigned to them from birth (you can read his statement here). I think it’s important to point out, though, that Trump appears NOT to be anti-LGBTQ, at least from what we’ve seen. He walked around with a pride flag at multiple rallies, has employed many gay people, and has openly gay supporters acknowledging his support for the LGBTQ community. Richard Grenell, whom Trump was considering for US Ambassador to the UN and whom I find an absolute expert on foreign affairs, is openly gay. Grenell himself said that Trump may be the most openly supportive Republican presidential nominee of LGBTQ rights that the US has ever witnessed.

In the early 2000s, Pence made quite a few sweeping generalizations about public health measures that were not factually accurate. Pence told CNN’s Wolf Blitzer in 2002 that, “Frankly, condoms are a very, very poor protection against sexually transmitted diseases… Let’s be clear, last year, the National Institute of Health, Wolf, and some 28 separate experts said at least a half dozen to 10 sexually transmitted diseases for which condom use has zero preventative value.” Data on the effectiveness of condoms is contradictory, difficult to measure, and often biased, but effectiveness numbers tend to fluctuate around  81% for protecting against unwanted pregnancies, are 91% for protecting against HIV, and, regardless, drastically reduce the spread of other STIs. See here for more about Pence’s stance on condoms and contraception. In addition to contraception, he said that smoking doesn’t kill. On his 2000 campaign website, Pence wrote: “Time for a quick reality check. Despite the hysteria from the political class and the media, smoking doesn’t kill.”

But, I think what makes me the most disappointed is his ignoring of President Bush’s Prison Rape Elimination Act. In 2003, President Bush signed this bill which was finalized by the Obama administration in 2012, according to Mother Jones. It’s an amazing initiative, and being a female college student—where one in four college women is raped—this holds a special place in my heart. Pence wrote a letter to Attorney General Eric Holder in 2014 about why his state is ignoring the law on purpose: Following the Prison Rape Elimination Act would “increase Indiana’s exposure to litigation and liability… Many additional staff would need to be hired, additional equipment installed, and resources put in place. This would require a redirection of millions of tax dollars currently supporting other critical needs for Indiana.” This sounds like he doesn’t want to use state dollars on a federal program that he believes is ineffective. But if that’s the case, then why is the program not effective? Why does he not want to comply? He didn’t give any specifics, so of course the natural assumption is that he simply does not care about rape in prison. Someone feel free to reach out to me if I am misinterpreting this.

Trump’s Transition Team:

According to The Washington Post, the Transition Team was chaired by New Jersey governor Chris Christie, but is now chaired by Vice President-elect Mike Pence, and also includes Republican National Committee (RNC) chairman Reince Priebus, Alabama senator Jeff Sessions, Ivanka (Trump’s daughter) and her husband, Jared Kushner, Rich Bagger, William Hagerty—a key player on 2012 GOP nominee Romney’s transition team, and Michael O Leavitt—former Utah governor and health secretary in Bush’s cabinet who was Romney’s transition chairman.

All of these people are being considered for cabinet positions—or were already chosen. You may recognize Jeff Sessions, now the Attorney General, Reince Priebus, now Trump’s Chief of Staff. Rich Bagger is being considered for Secretary of Health and Human Services. Governor Chris Christie is being considered for a number of cabinet positions, but as his controversy gets bigger and bigger, he may no longer be chosen for anything. Although, let’s be honest: Has controversy really ever stopped Trump from picking people? And there’s a whole host of drama about Kushner.

In addition to the people mentioned, according to Politico, these people are also involved in the Transition Team, doing the academic legwork to understand the complicated policies:

Former Representative Mike Rogers is leading up national security, David Malpass and Bill Walton are focused on economic issues, Ken Blackwell—the former Ohio secretary of state—is  in charge of domestic issues, and there are a whole host of others, but they do not directly relate to health, so I’ll leave them out so as not to make this post eternal.

Let’s talk about the health-related people and/or companies involved with this transition team and what they mean for health going forward.

1) Michael Leavitt:

Leavitt served as the 14th Governor of Utah from 1993 to 2003, as Administrator of the Environmental Protection Agency from 2003 to 2005 and as Secretary of Health and Human Services from 2005 to 2009. Leavitt serves as a co-leader of the Prevention Initiative at the Bipartisan Policy Center. Check out his Foundation Leavitt Partners, a consulting firm he created to advise clients in the health care and food safety sectors, and on state implementation of the ACA.

2) Former Representative Mike Ferguson, from the law firm BakerHostetler, which lobbies for Celgene, Advaxis, and the Children’s Hospital Association. In an interview, Ferguson said he’s doing his part to help Trump’s nascent team. “I’ve been trying to get talented, knowledgeable people into the transition,” said Ferguson ( Stat).

3) Paula Stannard, lawyer, Alston & Bird

Stannard joined the health care practice of this law firm, which lobbies for Novartis AG, Verax Biomedical, the American Hospital Association, St. Jude’s Research Hospital, and Aetna, after serving in the last Republican administration as deputy general counsel to the Department of Health and Human Services. She was responsible for food and drug issues and other matters, including federal health insurance and public health preparedness. On the Trump transition, she will be working under Health and Human Services. She’s clearly a very smart individual, who knows HHS matters like the back of her hand, and I love that she’s a woman ( Stat).

“There are few people who understand the Food, Drug and Cosmetics Act better than Paula Stannard,” said Ladd Wiley, an attorney who worked with both Stannard and Bremberg at HHS and is at Akin Gump, a firm known for its large food and drug practice ( Stat).

However, this is bad news for the reality of Trump actually getting rid of the Revolving Door Syndrome that he called for consistently throughout his campaign. Trump said he would get rid of the practices, and people, who are lobbyists, then work in politics, then work for department agencies, then repeat. It creates corruption, an absurd amount of money circulates, and it makes politics even more complicated.

Dr. Michael Carome, Director of Public Citizen’s Health Research Group, comments on Trump’s hiring of Stannard: “I think this reflects the fact that Trump’s pledge to drain the swamp is not going to take place,” he said. “Individuals who have close ties to regulated industries such as pharmaceuticals is worrisome, because such individuals are likely to pursue an agenda that is very industry friendly and not consumer and patient friendly,” Carome said ( Stat).

4) Holland and Knight— This law and lobby firm has a giant health care practice and produced a memo that highlights Trump’s previous statements, corresponding rule or law, and prospects for change on issues from importation of drugs to Medicare drug price negotiation, medical research funding, and of course the Affordable Care Act. The firm also put out a guide to all transition personnel working on health care issues. #dreamjob2

“We have a group of folks who have been involved and are involved in the transition,” said Lisa Tofil, a partner in the firm’s Washington office. “We wanted to put out something more substantive for our clients, in terms of the roller coaster ride we’re about to go on again. We think that’s valuable.” Asked if the firm’s hospital clients are especially nervous, given Trump’s comments about the Affordable Care Act, Tofil said: “The best way to describe it is they are assessing threats and opportunities. Let the discussion begin, it’s going to be a wild ride ( Stat).”

Man, don’t you just love when people talk about how a President’s four years—leading the most powerful nation in the world—are described as a “wild ride?” Me too.

Representative Marsha Blackburn: Blackburn  led an investigation into the stem cell industry that has gotten a lot of attention. She’s the chairman of the House Select Investigative Panel on Infant Lives and an opponent of abortion rights, accusing companies that provide fetal tissue to researchers of “selling baby parts.” The Alliance for Regenerative Medicine and others concerned about resources for scientific research should be keen on how much clout Blackburn will have with Trump and his team. Stem cell research is massively complicated, and unfortunately most people see it as a black and white issue, where one is either for stem cell research, or against it. The reality is that this research has a wide scope, with a wide variety of practices, yet Trump has not taken a position on any type of stem cell research, and Republicans and Democrats alike are divided when it comes to the nitty gritty of the issue (Stat).

5) Tomas Philipson—dual citizen of the US and Sweden—is from the University of Chicago. He’s a brilliant economist who has written hundreds of op-eds and frequently writes for the conservative think tank, the American Enterprise Institute. He’s a senior advisor on Trump’s transition team focused on health care issues. I’ve read all of his op-eds, and I’m providing links and excerpts from my five favorites at the bottom of this post—ones that I feel are the most useful for understanding a wide array of Philipson’s opinions on various health issues. Regardless of whether you agree with him, the man is brilliant and knows how to make a case. I especially love reading his work because, since he is from Sweden, he offers a European perspective that many American-based healthcare people just can’t offer. He has made me seriously reconsider my views on patent laws, innovation in general, the FDA process, and helpful reform for the ACA. Here’s a one-sentence summary of Philipson’s views, if you don’t want to scroll to the bottom and read his articles: Philipson wants to reform the ACA (he actually has his own proposal, which I’ll talk about in my next post) and the FDA, and supports patents, and these opinions are likely to influence Trump.

 Trump’s Cabinet:

How is Trump picking his cabinet? Two ways.

1) According to The Washington Post, Trump is “likely to surround himself with a hard-charging staff with mostly women in charge.” Res—a former employee of Trump’s, commented: “He totally believed that women work harder and are stronger,” Res said. “He called them [women] ‘killers,’ and that’s his highest compliment. And he didn’t feel like he had to compete with them because he was a man and we were women.”

2) Trump also likes to hire people who have opposed or blocked him. “Donald would hire lawyers who opposed him on certain projects just so they couldn’t oppose him on the next one,” Res said. “He’d say, ‘Keep your enemies close.’  Such hires weren’t just put on ice; several became important figures in Trump projects” (The Washington Post).

We see evidence of both: if you look at who Trump has asked to join him on his cabinet, many are women, and many are people who hate him.

As for people who hate him, take Bannon and Priebus, for example. The New York Times writes, “In selecting Mr. Priebus [for Chief of Staff], Mr. Trump passed over Stephen K. Bannon, a right-wing media provocateur. But the president-elect named Mr. Bannon his senior counselor and chief West Wing strategist… The dual appointments — with Mr. Bannon given top billing in the official announcement — instantly created rival centers of power in the Trump White House. In a statement Sunday afternoon, the transition team emphasized that the two men would work “as equal partners to transform the federal government.” The arrangement appeared aimed at ensuring that both men would be required to sign off on many decisions jointly. And Mr. Bannon was assured that he reports directly to Mr. Trump, not to Mr. Priebus. The simultaneous announcement and competing lines of authority are consistent with Mr. Trump’s management style in his businesses and in his campaign: creating rival power structures beneath him and encouraging them to battle it out.”  Even McCain, being considered for Secretary of State, called Trump a “phony” and a “fraud.” One of his potential nominees for Health and Human Services also publicly denounced him, as you’ll read about later in this post.

As for choosing women leaders, he just chose women for Secretary of Education and for Ambassador to the UN. We see women in his potential nominees for: Secretaries of Defense, Interior, Commerce, Labor, Housing and Urban Development, and Veterans Affairs. He’s also considering women for Administrator of the EPA, Director of National Intelligence, White House Press Secretary, and Director of NASA. In fact, though I have not researched this or verified this myself, I would venture to say that Trump is considering more women for his Cabinet than any President ever before. At the same time, though, we all know he’s said a lot of awful things to, and about, women.

From a health perspective we should watch out for who Trump names for Agriculture secretary (this affects a lot of hunger/nutrition issues), labor secretary (which will probably be Victoria Lipnic, whom I personally admire a lot), and EPA administrator (though my guess is that it will be Myron Bell). 

 But, most importantly, we need to be aware of who Trump is thinking about for Secretary of Health and Human Services.

1) Originally, Trump wanted Ben Carson, and then Newt Gingrich.

Ironically, Carson turned down the offer, saying he doesn’t know enough about how to run a government job. Wait, didn’t Carson run for President? (Sorry, I had to. I think Carson is an amazing man. He has a huge heart, is absolutely brilliant, and is clearly one of the best surgeons in the entire world. As much as I love him, I also believe he is wildly unfit for a government position, so I’m glad he’s coming to terms with that, too. However, as much as I crap on him for considering a government position without any prior experience, Trump did the same thing and here we are…)

Trump also offered Newt Gingrich to be his Secretary of Health and Human Services. But he turned it down. This would have been a HUGE victory for the science/research and development community. The science community—though mostly Democrats—admire this man to the utmost degree. I virtually attended a conference on The Future Of Science With Trump, and the panel of renown scientists and political gurus were all praising him, mostly because he is calling for the National Institute of Health (NIH) budget to be doubled. That’s an amazing statement, because Trump calls the NIH “terrible.” He is a major supporter of medication-assisted treatment to help Americans who are addicted to opioids, as STAT News notes. That’s a method that’s also been strongly endorsed by the Obama administration.

2) Rich Bagger—Executive Director of the Trump transition team and a former pharmaceutical executive who led many of the meetings this fall with health care industry donors and executives—is also being considered.

“A member of Celgene’s Management Committee, Rich is responsible for advancing patient access to Celgene therapies and driving recognition of the value of Celgene innovation through government relations, public policy, communications, patient advocacy and market access activities around the world. Rich most recently served for two years as chief of staff for New Jersey Governor Chris Christie, responsible for managing implementation of the Governor’s policy agenda and priorities. Previously, Rich was employed by Pfizer Inc. for more than 16 years in a series of positions of increasing responsibility within the company’s U.S. pharmaceuticals, corporate affairs and worldwide pharmaceuticals divisions. From 2006 to 2009, he served on Pfizer’s senior most management team as senior vice president, worldwide public affairs and policy (PHRMA).”

What Politico says about him: “Rich Bagger is described by both friends and political foes as disciplined, press adverse and focused on policy… Republicans in New Jersey who know Bagger say he will add a dose of discipline and policy bona fides to the Republican nominee’s campaign… He also spent more than a decade in the New Jersey State Legislature. A veteran Democratic strategist in New Jersey who has known Bagger for two decades says, “As an American citizen, someone who cares about the republic, I would love to see more people like Rich Bagger involved.”

3) Rep. Tom Price (R-GA):

Politico reported on Tuesday that Georgia Rep. Tom Price, “an ardent Trump supporter and early surrogate for the businessman, is being seriously considered for the role. Price would likely check a lot of boxes. He’s a former orthopedic surgeon who has consistently been one of Obamacare’s loudest Congressional critics; a top House Republican who serves as chairman of the powerful Budget Committee (in addition to seats on Appropriations, Insurance and Labor, and Health and Human Services committees); and previously led the Republican Study Committee, a conservative segment of the House Republican caucus.”

4) Former Louisiana Gov. Bobby Jindal

Another name being floated is Bobby Jindal, the former Louisiana governor and 2016 Republican presidential candidate whose campaign never really took off. Jindal left office with dismal approval ratings, with some polls showing that even a majority of Republicans disapproved of his performance. He’s headed Louisiana’s Department of Health and Hospitals and was an Assistant HHS Secretary during the George W. Bush administration. Jindal had some pretty harsh things to say about Trump during the GOP primaries, once writing a CNN op-ed calling him “a madman who must be stopped.” Seems fitting that Trump is now considering him. CNN updated who they’re predicting will be in Trump’s cabinet. They list Jindal as their “rumored” HHS.

Stay tuned to who Trump actually picks. In a future post, I’ll analyze Trump’s HHS choice and what he/she(?) will mean for health policy going forward.

SOURCES:

  1. https://www.statnews.com/2016/09/21/fetal-tissue-committee-subpoena-stemexpress/
  1. http://web.archive.org/web/20010415085348/http:/mikepence.com/smoke.html
  1. http://edition.cnn.com/2015/09/15/opinions/jindal-debate-donald-trump/
  1. http://edition.cnn.com/interactive/2016/11/politics/new-cabinet/
  1. http://www.politico.com/story/2016/11/tom-price-health-human-services-trump-231427
  1. http://www.politico.com/tipsheets/politico-pulse/2016/08/veteran-pharma-exec-plays-key-role-on-trump-transition-team-216101
  1. http://heavy.com/news/2016/11/richard-grenell-donald-trump-un-ambassador-us-appointee-gay-bio-boyfriend-fox-news-age/
  1. http://www.phrma.org/biography/richard-bagger
  1. https://www.plannedparenthood.org/learn/birth-control/condom/how-effective-are-condoms
  1. https://www.washingtonpost.com/politics/trump-maps-out-a-new-administration-to-bring-a-seismic-shift-to-washington/2016/11/09/8bb6629e-a6a6-11e6-8fc0-7be8f848c492_story.html?hpid=hp_rhp-bignews3_washington-desktoponly%3Ahomepage%2Fstory
  1. https://www.washingtonpost.com/news/powerpost/wp/2016/11/17/gingrich-says-he-wont-hold-cabinet-post-under-trump/
  2. http://www.advocate.com/politics/2016/9/01/mike-pence-criticized-hiv-activists-while-president-antigay-think-tank
  1. http://www.advocate.com/politics/politicians/2015/04/01/mike-pence-abhors-discrimination-his-record-shows-otherwise
  1. http://indianalawblog.com/documents/Pence%20Letter.pdf
  1. http://www.impact2016.org/election/
  1. https://www.statnews.com/2016/11/14/hhs-secretary-donald-trump/
  1. http://www.nola.com/politics/index.ssf/2015/11/uno_poll_bobby_jindal.html
  1. http://fortune.com/2016/07/06/obama-admin-opioids-buprenorphine/
  1. https://www.youtube.com/watch?t=31&v=vjWMNrwaRQY
  1. http://www.politico.com/story/2016/11/who-is-in-president-trump-cabinet-231071
  2. http://www.nytimes.com/2016/11/14/us/politics/reince-priebus-chief-of-staff-donald-trump.html
  1. https://www.washingtonpost.com/politics/trumps-style/2016/11/10/138bbd8a-a761-11e6-ba59-a7d93165c6d4_story.html
  1. https://www.washingtonpost.com/politics/trumps-style/2016/11/10/138bbd8a-a761-11e6-ba59-a7d93165c6d4_story.html
  1. http://www.nytimes.com/2015/03/27/us/indiana-declares-health-emergency-after-hiv-outbreak.html?_r=0&mtrref=undefined&gwh=CE79D0548F4C9F0BB16385C5AD023873&gwt=pay
  1. http://edition.cnn.com/TRANSCRIPTS/0202/15/wbr.00.html
  1. https://www.aei.org/publication/saving-lives-financial-innovation-fda-swaps-annuities/
  1. https://www.aei.org/publication/entitlement-reform-will-cutting-medicare-raise-unfunded-liabilities-in-the-future/
  1. http://www.huffingtonpost.com/entry/mike-pence-indiana-hiv_us_57f53b9be4b002a7312022ef
  1. https://www.aei.org/publication/who-gains-more-from-medical-innovation-patients-or-drug-manufacturers/
  1. https://www.aei.org/publication/global-health-who-should-pay-for-your-altruism/
  1. http://www.wsj.com/articles/economic-nonsense-from-the-u-n-on-drugs-1474064319
  1. https://www.statnews.com/2016/11/15/trump-influencers-health-care/
  2. https://www.statnews.com/2016/11/15/trump-influencers-health-care/
  1. http://leavittpartners.com
  1. http://bipartisanpolicy.org
  2. http://fox59.com/2016/05/13/indiana-schools-react-to-obama-administrations-directive-on-transgender-access-to-school-bathrooms/
  1. http://www.politico.com/story/2016/11/new-details-emerge-on-trump-transition-organization-231152
  1. https://www.theguardian.com/us-news/chris-christie
  1. http://www.vox.com/culture/2016/11/19/13683864/mike-pence-hamilton-booed-clip
  1. http://www.indystar.com/story/news/politics/2015/04/01/indiana-rfra-deal-sets-limited-protections-for-lgbt/70766920/
  1. http://www.teenvogue.com/story/mike-pence-record-reproductive-rights-lgbtq-refugees
  1. https://en.wikipedia.org/wiki/Cabinet_of_Donald_Trump
  1. https://www.technologyreview.com/s/602856/whats-trumps-plan-for-us-biomedical-research/
  1. http://edition.cnn.com/2016/03/23/politics/north-carolina-gender-bathrooms-bill/
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  1. https://www.washingtonpost.com/news/powerpost/wp/2016/11/17/gingrich-says-he-wont-hold-cabinet-post-under-trump/

Excerpts from five articles Philipson has written:

1) Economic Nonsense From the U.N. on Drugs: Blowing up the patent system will make it harder, not easier, for the global poor to get medicines. Title says it all. I’ll also talk about this concept in a future post.

2) Global Health: Who should pay for your altruism?

“Much of global health policy has been concerned with trying to lower prices for innovative treatments in poor countries, e.g. through the policies promoted by the WHO. These policies are misguided. They implicitly facilitate “free-riding” in altruism as they make innovators pay for our own altruistic desires. If we desire poor countries to receive care, why should those who invent the products to deliver that care be responsible for footing the entire bill of our own altruistic desires? These policies paradoxically result in too little care for poor nations since only the shareholders of innovating firms pay (through lower prices for products and consequently lower profits), not the rest of us.

Innovation into developing world diseases should be stimulated rather than, as currently done, discouraged by global health policy. An ideal system has the altruism of rich countries reflected in subsidies for care. These subsidies can then provide rewards, rather than punishments, for innovations that fulfill the world’s altruistic needs.”

3) Who gains more from medical innovation? Patients or drug manufacturers?

“Now consider medical innovation, where investors have to wait 10 years before FDA clears their product with only about a 10% chance of making it through the decade long waiting period. The reward for waiting that long with such a slim chance of success is that innovators must yield the same returns as in other industries in order to attract investors that act like you. When innovators don’t capture more of the value they generate, it can be difficult to draw the attention of investors seeing as how telecommunications companies, such as WhatsApp, can be valued at $17 billion in only 3 years.”

“The core of the problem lies in how R&D committees at biopharmaceuticals firms decide on which products to bankroll, where the key metric driving decisions is the future earnings those products may bring to the firm. However, those projected future earnings do not include the consumer share of the social value, which is how much payers and their patients value the product beyond what they are paying for them. Therefore, the fact that R&D committees are not driven by the social value of their products makes them pour less money into developing them than society wants them to. This means there is underinvestment in medical RD, and ultimately undermines the health of both you and your kids in the future.”

4) Entitlement Reform: Will cutting Medicare Raise Unfunded Liabilities in the Future?

The expansion of Medicaid under the ACA, for example, both expanded volume (by increasing the number of people subsidized) and lowered markups for healthcare products and services as Medicaid reimbursement rates are far below market levels. In this case, future returns on innovations are likely to increase because the larger volume of patients has a greater effect than any change in markups, which is minimal because the per-capita demand from these patients were low due to the high markups. In contrast, future returns on innovation are likely to fall when public program expansions include richer parts of a population because markups may fall more than volume rises. Take, for example, the single-payer European payment systems that provide coverage for richer parts of the population. These systems have limited volume effects because the rich population would likely be insured regardless of the single-payer coverage, but they have large markup effects because a rich population insured privately would pay larger market based prices. The combined effect of expanding coverage to the rich is that the returns to innovation are driven down…. The implications for future spending, it seems, hinge on the income levels of the populations affected by reforms. A reduction of government healthcare coverage for the rich may raise future R&D returns and, as a result, actually put upward pressure on future public liabilities. Likewise, government program expansions may lower future liabilities by reducing the incentive for medical innovation. Puzzlingly, it seems that in some cases more generous public coverage for all income levels may reduce future growth in the costs of these programs.”

5) Saving Lives Financial Innovation: FDA Swaps Annuities

“The cost of capital to conduct medical R&D is high because investors must be compensated with high returns to offset the risky and long drug development process. This cost of capital could be reduced, and thus medical innovation spurred, by better financial mechanisms for sharing risks between medical R&D investors and outside capital markets. FDA Swaps and Annuities is a step in the right direction.” Philipson supports FDA reform, specifically getting rid of Phase III clinical trials. In post 13, I’ll outline my predictions for the future of the FDA in much more detail.

PS: If you want to know more about Philipson, here are additional articles:

“Demanding Altruism from Drugmakers Won’t Improve Health of Poor” Investors Business Daily, March 19, 2012

“Cutting Medicare spending can improve health” The Daily Caller, October 20, 2011

Response to “A Dangerous Medicare Proposal” Wall Street Journal, August 1, 2011

“A Dangerous Medicare Proposal” Wall Street Journal, July 26, 2011

“Should U.S. Import U.K. Model for Medicare and Medicaid?” Forbes.com,

“Push for more trials may hurt patients,” Washington Examiner, San Francisco Examiner, July 21, 2010. (co-authored with Anup Malani)

“Quantifying High Cost Of Caution May Speed Drug Approval Process,” Investors Business Daily, June 14, 2010

“What’s wrong with Private Insurance?” Forbes, October 30, 2009.

“Borrow from the HIV battle plan to help win the war on cancer,” Investors Business Daily, March 16, 2009.

“Don’t surrender innovation in the name of health care reform,” Washington Examiner, March 9, 2009.

“FDA and Pre-emption: The Supreme Court Can Improve Patient Access,” Washington Times, October 20, 2008.

“Optimism about AIDS is Premature,” Wall Street Journal, February 4, 1998. (co-authored with R. Posner)

About Tomas Philipson’s Work

“Obamacare’s ‘one size fits all’ health care guidelines,” Washington Times, June 27, 2011

“End-of-Life Medical Spending Not So Wasteful,” Best Life Blog, USNews & World Report, January 20, 2010.

“Faster FDA Cures,” Wall Street Journal, October 12, 2006. (review of work by Berndt, Gottschalk, Philipson, and Strobeck “Assessing The Safety and Efficacy of the FDA”)

“The Economics of AIDS,” New York Times Book Review, March 6, 1994. (article by Supreme Court Justice Stephen Bryer reviewing Private Choices and Public Health)

Words Of Hope Blog– dedicated to vulnerable writing about my crazy life. Check out my new tab Missed Moments about my experiences on public transportation!

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