All Things with Kim Strassel: The Future of Healthcare Under Donald Trump
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See if you qualify at oracle.com slash wallstreet. oracle.com slash wallstreet. From the opinion pages of the Wall Street Journal, this is All Things with Kim Strassel, a Potomac Watch podcast. Welcome to All Things with Kim Strassel. And it is my absolute privilege this week to sit down with Sally Pipes, the president and CEO of the Pacific Research Institute. But all

Thank you, Kim. That's so kind of you to say all those nice things. They're not true. They are.

They are all true. They are all true. Everyone would benefit from reading more Sally Pipes. I want to dig into the state of our current healthcare system and what challenges Donald Trump faces there. Also, what opportunities for change under Doge and a Republican Congress. But first, and a way of getting into that, you have a new book out, The World's Medicine Chest, which is

tells the story about how America became the leader in biopharmaceutical innovation. This is obviously a big piece of this healthcare puzzle, the question of drugs and drug innovation, but also drug pricing. Tell us how we did become the leader, first of all.

Well, back in the early days in the 1700s, 1800s, early 1900s, all of the new drugs and vaccines were developed in Europe. Penicillin, the Bayer aspirin, the smallpox vaccine, all of those were developed in Europe. There were very few drugs developed.

even through the 1980s that were developed in the United States. But by 2004, all of the countries in Europe had price controls on pharmaceuticals because they got moved into single-payer or universal coverage systems. And in order to control cost, they had to put price controls on drugs. So it gave the United States, which didn't have price controls on drugs and still had

a relatively free market healthcare system, the opportunity to move into the space of doing research and development, innovation in drugs. And so today, 80% of the new drugs that come to market are developed in the United States. And when you think about the drug companies,

in Novartis, Roche, AstraZeneca, GlaxoSmithKline. Those were all big names in Europe where these drugs were developed early on, but they have all moved their manufacturing facilities to the United States because we don't have price controls or we didn't until starting next year under IRA. So, you know, it costs about $2.6 billion from when you first register your research to getting that drug to the market through all the trials.

And only about 12% of drugs make it. And it takes about 10 to 12 years to go through that whole process. So we are now the leader and we want to keep that because all of the new vaccines for cancer, for ovarian cancer that are being developed, colon cancer,

All of these things. So we want to keep this market open because as I say about the Canadian health care system, Canada, which has a single payer system, people have an escape valve. They come to the United States. Where will the pharmaceutical companies go if they're pushed out of the market and who's going to be hurt by that? And it'll be we, the patients, because we won't have the access to new vaccines, treatments, drugs, etc.,

This is so crucial. Everybody needs to absorb this. By the way, I was living in Europe in the late 1990s. I still remember those days when Europe dominated that market. We weren't even really much of a player. We were starting to be. And they managed to, and I think this is the important part of your book, they managed to do this to themselves by, as you say, price controls. This is

a personal issue for me too. I mean, my husband was recently successfully treated for a cancer that only a decade ago was a death sentence. And because of innovation in areas like immunotherapy done here in the United States, that entire thing has changed. We are seeing remarkable advances. But when you look out there, and this worries me deeply, do you think this new administration, Donald Trump's administration, gets the importance of this? We did see these

Price controls come in under the Biden regime, in theory, for a limited number of drugs. I am so concerned that expands. Where do you think this new administration is when it comes to drug price controls? Do they understand the message you and I are making here? Well, I'm not entirely sure. They might understand it, but maybe not fully, because it is very complicated. But the issue is,

that Mr. Trump and his team that he has put in place for health, Robert Kennedy Jr., we've got Marty Makary is ready to go for a Senate confirmation for the FDA, Jay Bhattacharya for NIH. Mr. Weldon was polled because of his views about thinking that autism is

is caused by vaccines. But I do think that the Trump health care team and people in the cabinet should be pushing in order to make sure that they talk about repealing the IRA, the Inflation Reduction Act, the price controls under that act, which were signed into law by President Biden in August of 2022. And then we want

Trump to talk to people in the Senate and the House so that they will repeal this. But I haven't heard any of this yet, Kim, so I'm very worried about it. Because as you mentioned, the first 10 drugs under Medicare Part D come into effect on January 1st, 2026. The second 15 under Part D, January 1st, 2027. We have the time now before they come in to get rid of them. As Milton Friedman, my mentor, used to say, Sally, what government program is ever repealed? Very

If you get the MOHARE subsidy. So, you know, we've got to get rid of it now, Kim, before it gets in place, because it'll be virtually impossible. Just like, you know, the Affordable Care Act, Obamacare. You know, when Trump was in his first term, we tried to get that repealed. It didn't work. And now I think they just think, well, we're going to live with it. And it's a complete disaster, very expensive and not helping anyone.

Well, help these Republicans out, because you and I both know that one reason, and this is where the left is very smart, they get these subsidies in place or tax changes or new departments or programs because they know once it's there, it's very hard to get it. Right.

And indeed, when I hear more populist Republicans out there talking about the drug price issue, what concerns them is the criticism that comes from those on the left, but also average Americans that say, well, you know, why is my insulin so expensive? And these are a basic way.

group of drugs here, these 10 and the further 15, and we can't really justify the high prices for them. What would you suggest to these Republicans when they go about making this argument? There's the innovation argument, but as I'm sure you know, there's a lot of complexity behind individual drug prices too. What other changes might be made to make this situation better? Well, one thing is that when a new drug goes to the patent office, when it finally comes to market and it is under, um,

patent protection for 20 years. And then it comes off and then generic companies can duplicate it completely. And about 90% of the drugs consumed in this country today, Kim, are of the generic variety. They're very inexpensive. Very. When you hear Bernie Sanders, the former co-chair of the Senate HELP Committee, get up on the stump and say, you know, did you know that, you know, big pharma, that's why you're paying $690 a month for Eloquence,

and you're paying this and that. He's talking about the list price of the drugs. Very few people in this country pay the list price. They pay the net price. Maybe because 170 million Americans have health insurance through their employer and most plans have pharmaceutical drugs as part of the program. And then people are on Medicare and people on Medicaid. So we have to educate people so that they know what is the true story behind these list prices that Bernie Sanders is talking about.

The second point, Kim, is that you've seen everyone has read about this in the media of late, but whoever talked about PBMs at the dinner table, but that is the word of the day. Pharmaceutical benefit managers, the middleman, he is the man that negotiates the price for the insurance companies with the pharmaceutical company. There are rebates and discounts, but the PBMs want to keep the price as high as possible because the return...

goes to them and to the insurance companies. And it should be going to the man in the street who turns up at the drugstore to pick up his prescription. So even the Democrats are saying this is a bipartisan issue. We have to get this PBM issue repaired and they should be paid a set price and not being able to negotiate high prices. Right. Absolutely. We're going to take a break when we come back more with Sally Pipes.

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Hi, I'm Kim Strassel from the Wall Street Journal editorial board, and you may know me from my weekly column, Fox News, or the Wall Street Journal's daily podcast, Potomac Watch. But I'm excited to tell you that my own weekly podcast, All Things with Kim Strassel, will soon be on its very own podcast feed, one that I'm really hoping that you'll hit the button and subscribe to.

It has been a great success so far, featuring Trump officials, members of Congress from both the right and the left, pollsters, policy geeks, all of them with news, insights, and debate that you couldn't get anywhere else. And we've also got a great spring and summer planned in studio and on the road with plans for an all-star cast.

All Things with Kim Strassel, the podcast, coming next week in its own feed. You can find it at WSJ.com, Apple, Spotify, all your favorite podcast outlets. Please do hit that button and subscribe. ♪

Welcome back. I am Kim Strassel here with Sally Pipes, the president and CEO of the Pacific Research Institute. Step back a little bit. You'd mentioned some of Trump's nominees coming in. Some of these folks, I'm very excited about Marty McCary at FDA. I think he understands the

Some of the innovation questions that you are talking about, FDA has long been a problem to actually getting some cutting edge drugs across the finish line. But what would you say overall? How would you give a grade to this administration? It's interesting of all of the things that they have talked about, health care has not played a big role.

What kind of grade would you give him so far? What would you like to see come out of this administration? Well, I guess maybe right now, because we don't know. I mean, as you know, Robert Kennedy Jr. was just confirmed as a secretary of HHS. He's got the big job. And as you know, he's an anti-vaxxer. I mean, we right now have a big problem.

with measles in this country started in Texas. And, you know, he told Senator Cassidy during the Senate hearing that, you know, he wouldn't be going around being an anti-vaxxer. And yet here he is now with his measles outbreak, where many states have the outbreak. And he's saying, well, take vitamin A. Well, this is not going to work. So I'm very concerned about how he's going to unfold on the issues because we need new vaccines. And I don't want the government, I'm sure you don't either, I want the government telling you what

vaccines, what pills you have to take, but they should be there. That is the role of pharmaceutical industry, so that if you get something like shingles, if you take the Shingrix vaccine, which are two doses, Milton Friedman told me the most painful experience he had in his whole life was when he had shingles. So I immediately went and got the vaccine.

seen, you may have too. But there's so many things out there that have been eradicated and illnesses like polio, smallpox eradicated, measles, mumps, rubella. And now, you know, maybe if he doesn't behave himself, these diseases could return. And it's very, very expensive.

And it's very hard on people. And there will be deaths. Yeah, what I worry about, too, I mean, this is a very important issue and we need to just get it right. And if he had the right message, it would be something that he would be dealing with alongside everything else. But it's blowing up into a diversion. And as you and I know, there are so many issues that need to be addressed in the health care system. And I worry that this is such a preoccupation with him that not a lot

of manpower and time is going to go to some of these other huge opportunities. Let's talk about one of those. I know that you have written some things recently about the opportunities Doge has and Congress, Republicans, and tackling some waste and fraud. Republicans right now are having a debate about

about going after fraud and costs in the Medicaid program. I know that you have talked about that program and how ripe it is for some reform. Give us a little idea of what they could find in there and how they could make it better. Right. And isn't Doge a great term? I mean, who would have thought

that President Trump would have set up a Doge committee, you know, right off the bat. So I think it's very exciting. It's never happened before. And certainly fraud, abuse and malfeasance in Medicare and Medicaid are huge. I mean, we know that in Medicaid, because during the Affordable Care Act, of course, states were required to expand their Medicaid programs. Those are the programs for low income Americans and pregnant women and

people with disabilities, Medicare being the program for our seniors. But under Medicaid, under Obamacare, it was fortunate, though, that the Supreme Court said the states cannot be mandated to expand their programs in Medicaid. But as you know, most of them have. And under the expansion, it used to be the feds paid between 50 and 75 percent of the cost of Medicaid in the state, and the states picked up the rest. But then under Obamacare, the feds are now paying 90 percent

Then we had COVID and what we found was they expanded it so that many more people could sign up for Medicaid. They didn't have to prove eligibility. And we have now, it's been proved, 18 million people are on Medicaid

and they are illegally on Medicaid. They're enrolled and it's illegal. And they were supposed to make this change at the end of 2023 to stop this, allowing anybody to be on the program and not have to prove eligibility. So the cost just last year of the improper payments and fraud was $31.1 billion. And Brian Blaze at Paragon has just said over the decade, $1.1 trillion. We could eliminate so much federal debt

by getting rid of fraud and abuse. We're not talking about getting rid of Medicaid to help the very people that need it. And with all these people in California, the illegal immigrants being able to be on the program, those people that really can't find a doctor, they can't find doctors because the doctors don't want to take Medicaid patients for the most part because the reimbursement rates are so low. You have a total of 80 million people in this country on Medicaid today. And the

there aren't enough doctors to take them. So let's get the fraud and abuse out of the program and let the very people that really need it get the Medicaid coverage. And there's so many people as well, Kim, that should be at work and they won't take a pay increase because they don't want to go off Medicaid. And so many people, you know, they should really be working, building up their lifestyle as part of our economy.

So give an example. When you talk about this huge population of folks that are on here, as you say, illegally, who are we talking about there? Are we talking about people simply that the program never envisioned having in it? As you mentioned, it was supposed to be for women, those below a certain poverty level. Who exactly?

all is using this now. Well, it's amazing to me. I don't know how many sort of spam emails you get every day or on your people calling you. I don't know how they find your number, but it's amazing how smart these people are. And so a lot of these people are people who are illegally in the country, people who have died. There are a lot of people that are no longer alive and they're getting into

part of the program. Then you've got, you know, the whole issue of the DACA and the Dreamers, all of these things. You know, these people are very smart about getting into a government program. And as I say, they were supposed to end the expansion from COVID at the end of 2023, and it's still going on. So there's still opportunities for people who are here illegally to join up, and particularly in California, where we

welcome one and all, regardless of what their status is. And the Affordable Care Act, of course, I mean, Mr. Obama said that. The Affordable Care Act, the exchange coverage is only for people who are legal Americans. But of course, like with every government program, like Topsy, they just expand. And we've got, as I say, about $31 billion in fraud and abuse in Medicaid. And the

as Brian Blaze says, $1.1 trillion over the past decade. That is a huge amount of money. And we could have tax cuts if we could get rid of, you know, they can get the budget through and have tax cuts if they would work to get rid of this excess. Yeah, in my mind, this is an easy, easy call. And Republicans simply need to be making the argument that you are. We're going to take one more break. When we come back, Sally and I will discuss the U.S. health care system a bit more.

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From the opinion pages of the Wall Street Journal, this is All Things with Kim Strassel, a Potomac Watch podcast. Welcome back. Kim Strassel here with Sally Pipes of PRI. What about Medicare? Obviously, our program for seniors, my understanding is that there's a fair amount of waste and fraud in that program as well, too. Well, there is a lot of fraud and abuse in the Medicare program. And you know,

Only in a government program would they say that there's a 10% threshold for allowing improper payments. And so they say that under Medicare, the threshold is the amount of illegals is about 8%, therefore it's working well. You know, only government does that kind of arithmetic where the real answer doesn't matter. But there have been about $1.7 billion in improper

or payments for people on Medicare. That's just in the straight Medicare program, not the Medicare Advantage program, which is the Medicare program which a lot of seniors now have. Because like with Medicaid, a lot of doctors will not take Medicare patients because also of low income

reimbursement rates, slightly higher reimbursement rates for people on Medicare than on Medicaid. But it's still, there's a lot of fraud. Another case of where people are dead, still checks going out to these people. So it's $1.7 billion, 7.6% of improper payments

are going to the Medicare program. It covers about 65 million Americans are on Medicare, and we have 80 million on Medicaid, as we talked about. And these people, it's a huge program. It's expanded so much, but neither program is working well for the people that the programs are set out

to help. You know, we have both programs are close to $1 trillion now. So you can imagine that the people that are younger than I am are going to be the people that are going to figure if they don't make these changes, the young people are going to have to pay a lot more in tax in order to cover poor people and the elderly, which maybe boom generation is,

I'm part of that moving through the snake. This to me is one of the best arguments for reform and change is that if we are going to do these programs, we at least should be doing them well. And right now we're instead just spending an extraordinary sum of money to do them very badly. To bring up one other thing that you have brought up a couple of times now on this, and you've been doing this a long time, so have I, but in Donald Trump's first term, there was an attempt to get rid of Obamacare. It did not work out.

We are now eight years on from even that. So eight years longer of this being the law of the land. Do you see any chance of that program going away? Time flies, Kim. It was signed into law in March of 2010 by Obama. First insurance exchange coverage became available on January 1st.

2014. So, you know, that's 11 years this year. I was very hopeful that some of the docs in the docs caucus and some of the senators like Cassidy, Mike Burgess, these politicians would really push to get people to try and repeal and replace Obamacare once again. But I'm losing faith very quickly in this because so many of the Republicans said, oh, well, we don't want to touch this program. Do you know that it only covers 24 million people?

I mean, that's fewer people than in the state of California. It's absolutely ridiculous. And people are paying high amounts of money for the premiums, particularly on the silver, the gold, the platinum plants, and the networks of docs that are available when these people are paying double what they paid pre-Obamacare. And they can't find a doctor because docs don't want to

I go into doctor's offices, a big sign, we do not cover California. So I'm not optimistic as of today. I wish I were more optimistic about it. One thing I am optimistic about is if Jay Bhattacharya becomes chairman of the NIH, this whole idea of reducing from 50% down to 15%, the overhead, it's a complete sham at NIH, what these universities are taking in overhead and the

the amount of money that's left to go to the scholars. And they should realize that. Well, that's one good example. And as we finish this out, just to leave on a more optimistic note, even short of doing something about Obamacare. And I keep hoping that maybe this mess that exists will once again come back to put pressure on Republicans to do something about this. I just spent the weekend with people who were talking about the extraordinary sums that they have to pay for

under this exchange and the very poor care they're getting under it. But

In the absence of doing something about that immediately, what are some things you'd like to see this Republican Congress do to try to improve our health care system, either in a big way or even on the margins? Well, first of all, of course, is the pharmaceutical benefit managers, getting the middlemen out of the center of the drug issue so consumers can get the prices for the drugs that they are deserving of.

And then next, I would say there's another program called 340B. It's a drug discount program for hospitals in rural areas to help those low income people that, you know, have a hard time getting a doctor, getting good health care. And what has happened with that government program? The big hospital conglomerates, which more and more hospitals and docs are joining hospital conglomerates, they're part of the program now and they're taking the good money and not allowing the money to go to those conglomerates.

people in these rural hospitals. So we need to reform the 340B program. And I would like to see, I don't know whether it'll ever happen in my lifetime, but the whole trade issue, all of these countries with price controls on drugs, they're free riding off our research and development. And it really is unfair. And Trump has sort of talked about it, but will anything happen? But we really need to get

those people paying their fair share rather than having all of the cost come to us. Another thing would be getting rid of certificate of need laws because in many states that have, I call it their con laws, and they're a big con because they allow the hospitals or the medical centers that are in business now to vote and say, well, we don't want Sally Pipes' cancer center opening. It doesn't happen, but get rid of those so that if there's a need,

I can set up my hospital. If nobody comes, well, it'll close down. But that's the way the market works. We need market capitalism. We need to empower doctors and patients. I mean, everybody has a middleman, whether it's your insurance company or the government or a PBM. We need to get back to...

Letting people be in charge of making a lot of decisions about their health care. And that will reduce the cost and allow more affordable, accessible, quality care for all of us, which is what we want. Yep. And more transparency. Right. Transparency is huge, too. I've been talking about that.

since it came in a few years ago, but we need to really crack down with the fines on those hospitals not posting their prices. Yeah, this is just so important because if people have the information, they can make good choices. When folks say, oh, that's just too big of an area for Americans to have choice in, I laugh. We are one of the best nations on the earth for looking at deals and understanding value, but we need to have the tools to do it.

From your lips to Congress's and Donald Trump's ears, thank you, Sally Pipes. Thanks for joining us. I also want to thank our listeners for being here with us this week. If you like the show, please hit that subscribe button. And if you'd like to write to us, you can at pwpodcast at wsj.com. Thank you.

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