Introduction: Big Pharma and Healthcare Cost Debate (03:21)
Moderator John Donvan introduces Intelligence Squared Chairman Robert Rosenkranz and Adam Smith Society co-president Arnav Kacker. Rosenkranz discusses atypical business aspects of the pharmaceutical industry, including government funded drug technology, the patent system, and a market comprising insurance companies.
Debate "Housekeeping" (06:07)
Donvan states the motion, explains the debate format, instructs audience members to vote, and introduces panelists for each side.
For the Motion: Neera Tanden (05:56)
Center for American Progress President and CEO, Tanden provides examples of patients driven to bankruptcy by high drug prices. Taxpayers pay twice: to drug companies and to the federal government for research. Pharmaceutical companies can charge monopoly prices, a medically unethical practice.
Against the Motion: Paul Howard (06:30)
Manhattan Institute Health Policy Director, Howard argues that price controls will result in fewer medicines. He says that hospitals, nursing homes, and doctors’ visits are causing uncontrolled healthcare costs—not drug prices. He provides examples of why initial costs should not outweigh long-term drug benefits.
For the Motion: Ezekiel Emanuel (06:52)
University of Pennsylvania Medical Ethics and Health Policy Department Chair, Emanuel cites statistics of drug prices inflating faster than other healthcare costs. Pharmaceuticals spend more on marketing than on research, and have 15% profit margins. The government gives them patent monopolies, but does not regulate prices.
Against the Motion: Lori Reilly (06:37)
PHARMA executive vice president for policy research, Reilly says chronic illnesses cost the healthcare system the most; innovation is the only way to fight them. She explains how generic entry and brand competition lower prices, and urges reforming the FDA to approve drugs faster.
Increase in Drug Prices (07:22)
Donvan summarizes arguments from both sides. Emanuel and Howard disagree whether specialty drug prices are increasing disproportionately. Tanden states that all drug prices increased by 12.8% in 2014. Reilly clarifies that was spending growth; new Hepatitis C treatments are saving the healthcare system.
Drug Noncompliance and High Deductibles (04:25)
Emanuel argues that prices prevent patients from taking medications, and competition does not always lower prices. Reilly holds insurance companies responsible for high prescription costs. Tanden calls for pharmaceutical price transparency, and says high profitability is hidden in costs.
Pharmaceutical Profit Margins (04:31)
Howard argues that the drug industry should be profitable, to develop effective treatments and retain investors. Tanden criticizes new "vulture" capitalists using monopolies to inflate drug prices. Reilly faults health insurance companies for patient bankruptcies.
Hepatitis C Drug Example (04:29)
Emanuel says the NIH funded most research for Sovaldi; Gilead set unnecessarily high prices to recuperate investment quickly. Reilly says the drug was priced similarly to previous Hepatitis C treatments, and competition lowered prices. Howard points out that many biopharmaceutical companies fail.
Reducing Long Term Healthcare Costs (03:25)
Tanden argues that "replacing" expensive future treatments cannot justify pricing drugs high. Taxpayers subsidize pharmaceutical monopolies through government research. Emanuel adds that most expensive specialty drugs are not curative.
QA: Drug Price Regulation (05:05)
Reilly says three purchasers use leverage to contain drug costs; regulating prices would deter investors that expect high returns for high risk. She and Tanden disagree on pharmaceutical industry profit margins.
QA: Making Healthcare more Affordable (05:46)
Tanden explains why pharmaceutical company profits are relevant to the debate. Emanuel proposes streamlining the FDA, greater drug price transparency, and tying price to patient benefit. Reilly argues the industry is moving towards a value-based system.
QA: Healthcare Models in other Countries (04:37)
Tanden states that other countries negotiate lower drug prices; U.S. consumers pay more due to a fragmented system. Howard argues that other countries "free ride" on U.S. research and development investments. Reilly clarifies that NIH funds only a small percentage of R&D investment.
QA: Importing Drugs (00:58)
Emanuel argues that we would not consider purchasing medications from Canada if U.S. consumers had fair prices.
QA: Lowering Prescription Drug Costs for Patients (02:40)
Reilly criticizes insurance companies for "punishing" chronically ill patients for their biology and failing to pass payer rebates and discounts onto patients. Tanden argues that insurance companies insulating drug prices would increase policy premiums.
Volley Round (03:13)
Emanuel asks how to reduce drug costs. Howard says the Medicaid best price rule protects patients; Emanuel responds that companies can still set a high initial price. Reilly says increased spending is acceptable if pharmaceuticals cure diseases and save long-term healthcare costs. Emanuel says non-curative drugs should be affordable.
Closing Statement For: Neera Tanden (02:24)
Tanden argues for market mechanisms and Medicare negotiation to protect against new companies buying existing drugs and increasing the price—a bipartisan issue.
Closing Statement Against: Paul Howard (02:09)
Howard presents a "Shark Tank" scenario in which investors choose between a low risk parking app and a high risk drug costing $50 million just to get through clinical trials. He argues FDA regulations are the biggest innovation barriers.
Closing Statement For: Ezekiel Emanuel (02:21)
Emanuel argues that since 2008, brand drug prices have increased 164% compared to regular inflation, and pharmaceuticals are more profitable than other healthcare areas. Lowering insurance deductibles will increase premiums. He advocates matching pricing with health benefits.
Closing Statement Against: Lori Reilly (02:30)
Reilly states that pharmaceuticals account for 15% of healthcare spending. She argues that expensive drug innovations, such as an Alzheimer's treatment, would save money in the long-term.
Time to Vote (04:12)
Donvan thanks panelists, instructs the audience to vote, and outlines upcoming Intelligence Squared debates.
Audience Vote Results (00:55)
Predebate for - 33% against - 28% undecided - 39% Post- debate for - 42% against - 48% undecided - 10%
Credits: Blame Big Pharma for Out-of-Control Health Care Costs: A Debate (00:04)
Credits: Blame Big Pharma for Out-of-Control Health Care Costs: A Debate
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