[Music]
suppose for one moment that you have a
disease that might kill you now suppose
there is a cure that you hear about for
that disease so you call your doctor
doctor is this true that by taking a
pill once a day for a few weeks I could
be cured forever yes the doctor says
this is a fantastic medical breakthrough
but I'm really sorry I can't prescribe
it to you it's a very expensive drug and
you're only at early stage of the
disease you're not sick enough yet
imagine if that was your situation how
would you feel
imagine how would you feel if this was
about your child this is not a
hypothetical situation in 2014 a new
class of drugs came out on the market
that could cure hepatitis C and
fortunately it costs eighty five
thousand dollars per patients and that
that price there was no health care
system across the world that could
afford to treat everybody so they had to
prioritize patients you see hepatitis C
or Hep C is a disease that attacks the
liver it takes sometimes years but
eventually it could turn into a liver
cancer and require a liver transplants
now I'm sure many of you are thinking
well the prices was too high why don't
we lower the price and I agree we should
look at this and prices went down by
thirty forty fifty percent and more but
in the past five years we've only cured
depending on countries between 15 20 up
to 30% of the population still many are
dying of the results of hepatitis C now
the interesting fact is that the price
of the drug initially was deemed to be
cost-effective which means that this
drug creates some savings down the road
because we do not have to treat people
for cancer and liver transplants iffing
and cure them today
so I think we don't really have a price
point problem I think we have a pricing
model problem I think the problem is not
the number but the unit by which we
price I think if we change the way we
price this drug we could potentially
price over time and if we do that we
could cure everybody today have savings
along the way because we don't need to
cure people for cancers and liver
transplant down the roads and use part
of the savings to pay for the drug if we
do that it could be a win win win
solution win for the patients win for
the healthcare system because we could
spend less and win for the
pharmaceutical company because we could
still pay for the drug now at this stage
I probably need to introduce myself I am
NOT a doctor I am NOT a healthcare
professional I am a pricing professional
I have spent the last 20 years thinking
about how to price product and services
across sectors and across the world and
what I found is that in many
circumstances changing the pricing model
the unit by which we price things could
unlock a lot of value because it can
increase the access to that product or
service for instance if you buy a card
and you buy cash up front it can be very
expensive but if you buy it monthly with
the lease or credit many more people can
afford to buy a car because it's not as
expensive another example is with movies
we can now with subscription services
like Netflix what any movie we want
anytime we want now the movie and drugs
are unconventional comparisons but they
have similarities movies take a lot of
talent and effort and cost to be
produced but once they are made they are
very cheap to be distributed over the
Internet
drugs are a bit like that they cost a
lot of talents and effort in medical
research and testing in order to find a
new drug but once it has been discovered
and approved distributing it to many
patients can be quite cheap in
comparison to
the initial costs the cost of the pills
themselves is really not that much so I
believe we can invent the new pricing
models for drugs something I called the
Netflix pricing model for drugs and in
this model we could give the drug to
everybody the same way we give access to
all movies to everybody and we would pay
for the drug over time if we do this we
could have the savings to pay for the
drug now to explain to you in more
details about how this would work let me
show you a few charts and what I like to
illustrate with these charts is one
first
the usual pricing model the per patient
pricing model that works for many other
things wouldn't work and is flawed in
that particular case and how the Netflix
model could solve the problem so who
pays for the drug the payers pay for the
drug and payers are either health
insurance or national health care system
let's take the perspective of a payer
and since they pay by getting savings
let's look at their costs over the next
ten years let's imagine we're focusing
on a payer who is responsible for
100,000 patients we could see all the
costs arrayed here for all of the
patients from the red people that will
need liver transplants to orange people
that might get cancer - all the way on
the yellow side people that might not
have any symptoms yet and therefore
there's not that much cost to treat them
over the next ten years now notice that
we have more than 100,000 patients it's
because this is the situation before we
have the cure and because it is an
infectious disease it will spread and
more patients will get it over time now
the sum of all these costs the red the
orange the yellow all of this sums up to
two billion dollars over the next ten
years now we have here a cost per
patient the prices per patient let's
look at what happens when we start to
buy the drug and we charge let's say
eighty five thousand dollars which is
the first price that was treated
initially if we treat three thousand
patients and we start with the patients
on the Left the ones who needed liver
transplants we gotta save all the green
area and we're going to cure them but
we're going to have to spend the
area a number of patient times of high
school patients and you could see on the
right the blue area and so we save point
four billion dollars but we will link
your two percent of the population this
is not enough let's see what happens if
we divide the price by two if we divide
the price by two we have roughly the
same amount of revenues for the drug
company but we have much more savings
but we only treat 7 percent of the
population let's divide the price by two
again now we treat more people but not
that many more the revenues for the
pharmaceutical company are bigger and we
have more savings everything goes in the
right direction let's divide the price
by two again now the revenues for the
pharmaceutical company code that goes
down we still have cured only 24% of the
population and we have a lot of savings
let's keep going divide the price by two
again and you could see the revenues for
the pharmaceutical company goes down the
savings goes up but we only cure 30% of
the population if we divide by 2 the
price again it won't solve the problem
how far do we have to go we have to go
to a price where the revenues for the
fam'ly civil company would be around 6
percent of the entire span that we had
before that think about this innovation
medical breakthrough and only six
percent of the money saved is used to
pay for the drug and this is not enough
to either pay for all the research or
Anchorage drug companies to come up with
new drugs that could be breakthroughs so
we have a trade-off between treating
everybody and the revenues for the drug
company and paying for the drugs I don't
think this is right their general
strategy in that situation is to have a
price that goes that starts up and goes
down this is the way the pharmaceutical
companies have priced this drug this is
also the way it works for Moody's but
when you have a price that goes down
over time it forces a choice on us about
who are we going to treat for movies
let's think about this if you are a
teenage boy and you just met a teenage
girl and you want to invite her for the
movies is it worth to spend $20.00 well
yes of course she might become your
girlfriend's but she's if she is already
your girlfriend or if 10 years later
you're married with her is it worth
paying $20 well now
maybe three dollars is enough for a DVD
rental let me translate this in
healthcare terms is it worth when the
price has gone down but might go down
even further treating patients today
that might not have any symptoms because
the price might go down by twenty to
thirty percent two years for now I think
it is but this is what will happen to
the economics we would spend more in
blue and have a bit less savings now is
it worth trying to launch a broad
campaign to identify all of the people
that have hepatitis C but not know it
yet because they don't have any symptoms
if we do that the cost is going to start
to go up our savings are disappearing
and now the cost goes to more than three
billion dollars think about this now
three billion dollars in blue means
three billion dollars with the current
pricing model per patient that we need
to pay today the two billion dollars was
a cost over ten years which meant every
year we paid roughly two hundred million
dollars that's an enormous amount of
money and very few payers can afford to
do that I think we should say yes to
these questions we should screen
everybody we should find these patients
we should treat them even if they don't
have any symptoms but in order to do
this in an economical way we need a
different model we need a model that
doesn't force us to prioritize patients
versus each other we need a model that
looks at all of the patients together so
let's look at the cost for this
particular payer to take care of this
100,000 patients over the next ten years
the overall cost for each of the
segments you can see are people that
will need liver transplants and cancer
and our early stages of the disease it
goes up slightly over time because
people get sicker but it's a very stable
cost over time now we have a cost over
time let's put a price on it and here's
the deal the drug company could say
we're gonna make as much drug available
to the payer as you need to treat all
the patients that you can identify and
we're going to treat them right away
and if we do that you're gonna save a
lot of money in hospital costs that you
will not have to pay in exchange you
commit to pay us for the next 10 years
the same amount of money a subscription
for the drug and as soon as you identify
more patients you're gonna be able to
treat them no matter the number of
patients that are going to be treated
it's going to be a fixed price now note
that in this model I am not recommending
the price points I am not recommending
whether the price should be high or low
I am just saying that pricing this way
could solve the problem it could solve
the problem because it will now be
possible to launch a broad campaign to
screen all the population identify
people and treat them we could cure 94%
of the population and if we cure 94% of
the population that means for 100,000
people that have hepatitis C today 2,000
less death over the next 10 years and of
course the hospital savings are are
pretty big and we still can't pay for
the drug now I am NOT saying this is
easy any new pricing model requires time
to change Netflix didn't come out in one
or two years and this is the same thing
for other industries many detailed
questions need to be answered
for instance what happens if this works
in an Ulta payer system what happens if
many different drugs are coming to the
market at the same time what happens if
we have to change regulations the fact
is we will need to solve these problems
and this needs to be things that are
worked out between payers drug companies
and regulators in order to make this
work but I can tell you this is possible
and this is worth it we have here the
different outcomes of what happens if we
try to have a price for patient model
and the current trajectory today in our
third column is one where in the next 10
years in many countries we will only
treat 50% of the patients and we have
very few savings alternatively with the
new model we could treat 94% of the
patients have almost 1 billion dollars
of savings and still spend the same
amount of money to encourage drug
companies to come up with new drugs now
I only talked about hepatitis C but
there are many other
drugs in clinical trials today for which
that model could apply drugs that could
cure him Ophelia or help with Amelia
hepatitis B or cell therapies or gene
therapies some of these drugs might cost
more than 1 million dollar per patients
but the pricing for patient model is not
the right model I believe a Netflix
model would allow to make the drug
available to all the people who need it
there's a simple way to know whether a
drug would qualify for this new model
this is each time we hear someone ask
the question is this worth to treat you
are you sick enough on us if we hear
that I think we need to find a new
solution I need I think we need to cure
entire populations thank you very much
[Applause]