Episode Transcript
Alan Helgeson (announcer):
“Reimagining Rural Health,” a podcast series brought to you by Sanford Health. In this series, we explore the challenges facing health care systems across the country from improving access to equitable care, building a sustainable workforce, and discovering innovative ways to deliver high-quality, low-cost services in rural and underserved populations. Each episode examines how Sanford Health and other health systems are advancing care for the unique communities they serve.
In this episode, Courtney Collen with Sanford Health News talks with Dr. Scott Gottlieb, former FDA commissioner. Dr. Gottlieb is a keynote speaker at the 2024 Summit on the Future of Rural Health Care with the topic “Navigating Health Care’s Next Chapter: Innovation, AI, and the Future of Patient-Centered Care.”
Courtney Collen (host):
I have Dr. Scott Gottlieb, former FDA Commissioner here in Sioux Falls, South Dakota, at the third annual Summit on the Future of Rural Health Care. It is a pleasure to have you. Thanks for being here.
Dr. Scott Gottlieb (guest):
Thanks for having me.
Courtney Collen:
We are delighted that you’re delivering the keynote fireside chat at this year’s summit focusing on pioneering innovation in a shifting landscape. Now, as the 23rd commissioner of the U.S. Food and Drug Administration, you were an aggressive advocate for advancing the health of patients, promoting health care access and driving innovation.
During your tenure as the FDA’s Commissioner, we saw a record-setting number of approvals of novel drugs, medical devices, and generic medicines. My question to you is this: How are we doing today? Are we ensuring that the FDA’s consumer protection efforts are put to the most efficient use?
Dr. Scott Gottlieb:
Yeah. Look, the FDA’s continued to have record output. If you measure output in terms of new medical technology, you’re seeing drug approvals in recent years hit near all-time highs. So there’s a lot of novelty in the pipeline. There’s more generic competition entry in the market.
The one place where I think that we’ve seen pullback of investment is around medical devices. And so you’re not seeing the same pace of innovation that I saw when I was there that I think we want from a public health standpoint, in the medical device space. You’ve seen a lot of investment capital exiting that, particularly venture capital.
In terms of consumer protection, I have a lot of confidence in how the agency’s looking at these new technologies, the kinds of safeguards that they’re building in the rigor of the process. I don’t think that there’s an inherent trade-off between trying to foster innovation and make sure regulatory processes are efficient and that they’re adaptable to new kinds of technology and making sure consumers are protected. I think that the agency’s very vigilant and continues to be very vigilant.
So my view was there was never an inherent trade-off. People always used to say when I was there, “well, if you’re going fast or you’re approving all these drugs, there must be some shortcuts you’re taking.” And that’s simply not the case. There isn’t that policy trade-off built in.
Courtney Collen:
Right. Thank you. A regular contributor on CNBC Squawk Box, you recently talked about drug benefits and the disparity between net and list price of drugs on the market. Dr. Gottlieb, you mentioned that consumers deserve less of a disparity. At the same time you noted that venture capital has pulled out of a medical device innovation because the returns are not there and approvals are harder.
My question is, how do we not hurt innovation? Where does the problem lie?
Dr. Scott Gottlieb:
Yeah, so the disparity that you’re talking about is between the net and the list price. So companies will come to market with a very high list price knowing that that’s not the real price in the market that they’re going to have to discount. So they’ll set a high list price knowing that there’ll be mandatory rebidding to government programs like Medicaid, and that they’ll also negotiate concessions with health plans where they’ll give rebates back to the health plans that offer that list price.
The problem is that consumers, some consumers are out-of-pocket for the list cost of the drug. So if you’re underinsured or uninsured for a drug, you’re not paying the rebated price that the health plan’s getting; you’re paying the list price. And also a lot of consumers will pay copays that are based on the list price and not the rebated price.
And so this kind of almost like a fiction that’s grown up in the marketplace between the list price, which isn’t what most people anticipate will be the real price in the marketplace. And then the net price, which is the discounted price of the health plan, creates a real hardship on certain people. And so it’d be much better in the marketplace if you had the price that a drug’s offered at being the real price in the market, being the price that bakes in all the discounts and the concessions that they’re making because of competition.
In terms of just innovation more generally, you know, I think that there’s still a lot of capital flowing into life sciences. New modalities like cell and gene therapy, antibody-based drugs, mRNA technology, antibody drug conjugates, all these new platforms. I think what you’re seeing on the life science side is that the cost of developing a single drug has gone up exorbitantly, could literally be a few million dollars, a few billion dollars direct money out-of-pocket, and maybe more. The cost of putting a single patient into a clinical trial with a cell and gene therapy could be a million dollars.
And so, because the costs have gone up so much, and they’ve gone up, frankly, faster than the price of the drugs, you have more capital, but you don’t have a higher amount of capital to offset the rising costs. And so there’s fewer shots on goal, that companies just can’t put as many drugs into development.
And the other thing that’s happening in the marketplace is that the drugs that they’re putting into development, they’re compelled to do more studies around each drug, not necessarily for regulatory purposes, but for commercial purposes that they have to come to market. If you’re a drug maker, you have to come to market with a very comprehensive drug label because you’re going to have to penetrate the market very quickly.
And so you’re going to need to make the best sales pitch possible to patients and providers and health plans. You don’t have five years to do subsequent studies and slowly get new indications on a drug label, which is what it was like in the old days. And so you’re putting more money into each individual drug, which means fewer drugs will get developed.
On the medical device side, as I said, the concern there is just capital’s come out of it because the returns weren’t there. And the ability to do public offerings in that space has largely eviscerated. So you’ve seen most venture capital firms pull out. I’m a partner at a venture capital firm. We’re still making investments in the medtech space. We’re one of the few, but we’re not making many investments. And we used to be one of the most active medtech investors.
Courtney Collen:
Dr. Alex Oshmyansky, co-founder of Mark Cuban Cost Plus Drug Company, is also speaking here in Sioux Falls at the Summit on the Future of Rural Health Care. What is your take on how this program will further impact innovation in drug price negotiations?
Dr. Scott Gottlieb:
Yeah, Mark’s done a great job kind of eviscerating that model that I talked about earlier, where you had this high list price and this much lower net price by having one price and offering direct-to-consumer access to a range of older drugs, mostly generic drugs where there is no spread. And so there’s much more transparency about what the actual price is.
And for a lot of consumers, it’s a much lower cost-attractive option, especially if you’re out-of-pocket for the cost of the drugs, and you’re not able to benefit from the negotiated prices on a lot of these drugs that is being given to the health plans.
So, I would think what Mark has done more than anything else isn’t necessarily disrupt the manufacturing process … or the development process. What he’s disrupting is the commercial process. He’s disrupting that access point and providing a much different selling model. And that’s really important for a lot of consumers.
And I think you’re going to see it’s already having an impact in the marketplace. You’re already seeing many more instances where health plans say, “you know what? We’re going to make sure that the discounts that we’re negotiating, those rebates get paid back to the consumer at the point of sale.” And so they’ll get those rebates right at the pharmacy counter. And so their copays aren’t going to be based on a much higher list price. I think some of that pressure that they’re feeling is a result of what Mark’s done.
Courtney Collen:
What innovation or action do you think will move the needle the most in the next one to two years?
Dr. Scott Gottlieb:
So certainly, and we talked about a lot here today, certainly artificial intelligence, and you’re going to hear that so many times today.
The other thing that I’m very enthusiastic about: I’m actually writing a book about the history of the development of cell therapy in the oncology space. So the history of the development of CAR-T, and I think that we’re going to see cell therapy applied to a much broader range of human conditions and the sort of holy grail of pluripotent stem cells and other forms of stem cells that we talked about 30 years ago. And this vision that they would one day cure paralysis, which obviously hasn’t happened and is going to be much more complex than we ever potentially anticipated.
But the idea of regenerative medicine, the idea that you’re going to be able to use cells to reconstitute the function of the pancreas or other forms of metabolic disease, that you may be able to reconstitute certain kinds of neurons in neurodegenerative diseases like Parkinson’s disease, that you’ll be able to reconstitute muscle in certain conditions where you have a loss of muscle tone or muscle function that results in a debilitating condition like heart failure. I think those are potentially achievable.
Certainly some applications of this, we’re already seeing in early-stage clinical trials, doctors have success. The idea of recreating a pancreas using cell therapy – I saw a very interesting study that read out recently at Stanford where they’re using stem cells that they’ve been able to reconstitute to replicate the function of smooth muscle to provide tone back to the urethral, the sphincter that controls bladder function for people with urinary incontinence. And so that’s a relatively simple procedure, a relatively low-risk application of stem cells, not like putting them in the heart for a very targeted function that seems to be working.
And so I think we’re going to see a lot more applications like that in the coming years. We seem to have reached a tipping point when it comes to cell therapy in the same way we reached tipping points with other modalities. I would say back in – I’ll just put sort of pause here – but back in like the early 2000s when I was at FDA, monoclonal antibody drugs were just starting to really penetrate medicine. And they were reserved for third-line cancer, certain very unmet medical needs, because there was a lot of theoretical risk, not, there wasn’t really risk, but there was a perception of risk associated with these drugs.
We really didn’t understand exactly how they worked, how to manufacture them. There was a lot of variability or perceived variability, and so they hadn’t penetrated mainstream medicine, but we were right at a tipping point where they were going to start to get more widespread applications.
And today we’re using monoclonal antibodies for lowering cholesterol and treating asthma. If you would’ve said to me back in 2000 when I was a young person at FDA, “oh, one day we’re going to be using monoclonal antibodies to treat high cholesterol,” I would’ve said you’re crazy. It’s just never going to happen. And I think we’re kind of at that tipping point with cell and gene therapy right now, where things that we’ve talked about for 30 or 40 years now seem achievable and we’re going to start to achieve them quickly, I think.
Courtney Collen:
It is so fascinating. Thank you so much for that insight. How do we strengthen trust in health care during a time of rapid disruption?
Dr. Scott Gottlieb:
Yeah, and I think we should, and I think we did, but we should draw a lot of lessons also from COVID around public trust in health care. … I was very aware of this during COVID and talked about this during COVID as well.
I think we didn’t do a good job of talking about uncertainty. And I struggled with this also when I was at FDA where there was this sort of furtive concern in the agency that if you had a concern around a drug, you know, a safety issue, that you were monitoring the post-market and you were too sort of visible, and you talked about it too much, that you might discourage patients from using that drug in a circumstance where it’s otherwise providing benefit and then you’ll just find out six months later that whatever the concern was disproven and it was wrong.
And now what have you done? You’ve kind of influenced a whole bunch of behavior in a very negative way. And so there was this kind of cultural kind of like inhibition against warning about things or informing the public too early. This was back in like the early 2000s. And then we had a whole spate of drug safety issues. A bunch of drugs were withdrawn with … troglitazone. We had issues of concerns around suicidality associated with SSRIs in young people. And what we learned coming out of that was, and the public’s reaction to that was, you knew about this all along FDA, you had been studying this, and you didn’t tell us you were sitting on it.
And that certainly wasn’t the case. The FDA was investigating these things, but didn’t really know about it. They hadn’t drawn conclusions. They weren’t trying to deliberately hide things from the public, but they weren’t at the point where they felt that they could speak intelligently publicly with sort of firm conclusions. And what we learned from that was, you know, it’s OK if we don’t know the answer, but if we’re investigating something, if we have a question, we should tell the public, “you know what, we have some indication there could be this risk. Based on what we know, we don’t think that there’s a causal relationship between the drug and the risk. But to be certain, we’re going to be doing X, Y, and Z and we’re going to have a firm answer by this date.”
And if you’re very clear with the public about what you think, what you’re doing to try to get an answer, what you know, and you don’t know when you’re going to have an answer, most people will say, OK, I’m going to continue using the drug if they should. And when the agency knows about it, they’re going to tell me, and then I’ll be able to make a different decision at that point.
And so, it taught us you have to be much more transparent about what you’re thinking, what you’re doing. And if you’re transparent, you’re not going to influence a whole bunch of behavior in a bad way. People are smart and they do rational things, and they’ll work alongside you if you will. Or they’ll follow your advice as long as they know they’re going to get an answer.
And I think during COVID, there was a lot of hesitation about evidencing too much uncertainty when we, when people had uncertainty. And then talking about public health officials more broadly for fear that it would discourage actions that people wouldn’t get vaccinated, that people wouldn’t wear masks, so they wouldn’t self-distance. And that was wrong. And this isn’t just Monday morning quarterbacking. I was having this debate publicly at the time as well with a lot of public health officials and talking about this on TV that that we needed to talk about our doubts a little bit more with the public. And I think coming out of COVID, we now, we really should have firmly learned that lesson.
I kind of learned that lesson in the early 2000s with these drug withdrawals when we realized, you know what? We need to be communicating with the public more about these things. And if as long as we’re communicating and getting answers and telling people when we’re going to get answers, they’ll follow guidance. And we, I think more broadly, the public health community didn’t do that well during COVID. And I think now we need to think about how to really kind of inculcate these sort of learnings and this culture into medicine.
Courtney Collen:
So much to learn from and thank you for that insight. I have to go back to AI for a second. AI in health care, Dr. Gottlieb, is it overhyped or real? Where do you stand?
Dr. Scott Gottlieb:
Well, I certainly don’t think it’s overhyped. I think it’s going to have a profound impact on drug discovery. Not just on making the process more efficient but opening up opportunities to develop drugs that just wouldn’t have been achievable in conventional systems.
And I work at a venture capital firm. We made a big investment in a company called Cero Therapeutics that is looking at developing novel antibody-based drugs, and AI modeling systems. And we’re looking at developing antibodies that just aren’t, can’t be developed through traditional tools. Typically, we develop antibodies in in vivo systems, in mice models, sometimes in human models, but you can’t develop the full sweep of antibodies that might be achievable against targets, biological targets.
If you can’t develop it in a mouse, you can’t find it in a mouse system. And there’s a lot of things that you can’t do in those kinds of systems. And so on a model, on an AI model, you can generate a much broader sweep of a diversity of human biology that you wouldn’t be able to do in any in vivo system.
But I think probably the most profound application could be on the delivery side, where these tools are really adept. We’ve done a number of studies testing the aptitude of the different AI systems, particularly ChatGPT and ChatGPT IO, the new version of ChatGPT that they have that’s supposed to have an IQ of 120. And its clinical aptitude is mesmerizing. I mean, that’s the best word to describe it.
We have fed it complex clinical vignettes that physicians get wrong 60% of the time. So we’ve gone to banks of questions and it’s not only scoring near perfect on these tests that we’re administering and we’re going to, we publish some of these results. We’re going to be publishing more of them soon. But it annotates why it arrived at certain answers, and its clinical reasoning is very sound. So, you know, will it replace the doctor? I think in the future for certain low-risk encounters, it can and maybe should because it’s going to help improve productivity quite substantially.
But certainly if you have a complex case and you’re not querying one of these systems I think you’re kind of shortchanging. Shortchanging yourself as a provider, but right now they’re not that accessible if you want to do it in a HIPAA-compliant way. Not every system’s deployed an instance of ChatGPT that doctors can use. And so, you know, if they’re using it, they’re using it in a way they’re probably being told not to. So I think systems need to think about how to deploy these tools so doctors can start to query them in clinical practice. Not to, you know, replace their own clinical judgment, but certainly to augment it.
Courtney Collen:
Sure. Thank you. An author yourself of a New York Times bestseller, I’m curious what book you’re reading. What’s at the top of your list right now? And then I also want to know what has had the biggest impact on your career? I know you’re writing a book as well. We look forward to that hitting the market.
Dr. Scott Gottlieb:
Yeah. So the books I’m reading right now are the books that I’m reading for the book I’m writing. So I’m writing a book on the history of the development of cell therapy in the oncology setting, and then how do we extend those achievements into regenerative medicine.
So I’ve read books like Walter Isaacson’s book “The Innovators,” which I think really has been a good model for me because my book, I want my book to be about the story of how innovation happens in the life sciences space. And he does a really good job telling that story in, not necessarily in life sciences, but in the consumer tech world and so it’s been a good model for how to do that well.
So, I’ve looked at his writing and others, and I’m going to be reading his book on Jennifer Doudna next, just a biography of Jennifer who pioneered CRISPR therapeutics.
In terms of just my own career, I think the thing that’s had the most positive impact has been being able to write – hopefully well – I was a writer before I was anything else. I was, I used to work for newspapers. And I think being able to express ideas allowed me to – it opened up a lot of doors for me.
So, it allowed me to certainly get noticed inside Washington and allowed me to parlay that into the policy jobs I’ve had. And then just in terms of strategic communications and policy communications, it was a big part of what I focused on when I was in government jobs, because I think policy communications is a key to getting policy enacted. So, I was always very focused on that and always focused on writing my own statements and speeches to make sure that the messaging was consistent and was being articulated in a way that I thought was going to help us achieve what we were trying to do. So that’s probably been the most important kind of ingredient to what I’ve done.
Courtney Collen:
What an impressive career, Dr. Gottlieb. Thank you so much. And one quick pivot to our final question. What do you love most about what you do? It’s not in the script. What do you love most about what you do?
Dr. Scott Gottlieb:
Yeah, it’s a great question. I mean, the answer to that question is different, at different points in time. I mean, I really loved working in the government and the impact you’re able to have in trying to implement good policy and feeling like I was protecting the prerogatives of FDA, an important public health institution, and representing the agency well. So, that was an energizing job.
I don’t practice medicine anymore. I stopped when my youngest baby was born, shortly after she was born. So it’s been about nine years since I practiced. But I used to love going into the hospital and doing shifts on weekends. … I was a hospitalist. And I love the kind of intensity of in-hospital care.
I think what I love doing most right now, still wading in on policy debates through writing, but I really like the work I’m doing with new ventures and startup companies and new technology. Trying to find the next thing that’s going to be disruptive in health care and help it get financed and help the company through the bumps that you always hit in drug development.
And one of the companies I’ve financed is a company called Comanche Biopharma, which is developing a novel therapeutic for the treatment of preeclampsia, which there are no effective available treatments. We haven’t had new innovation in decades. We’re still using the same things that we used probably when my father was in medical school. And this drug could be potentially disruptive. I mean, it’s a very novel mechanism. The biology of it seems very plausible. You can create a very cogent argument why it should work in this clinical setting.
And if it works, it could be really disruptive because this is an extreme cause of morbidity and mortality in early pregnancy, particularly in developing markets where you don’t have access to intensive care for, you don’t have NICUs and other forms of acute care and intensive care for both the mom and the baby. And so this is a really serious life-threatening condition in those regions where you can’t deliver the pregnancy early and you can’t get NICU care for a baby that’s born premature. And so I think that this is going to have a really profound public health effect if it works.
I think we looked at it, a lot of venture firms looked at it, and I think a lot of people just were nervous about doing anything in this setting. Anytime you’re giving a therapeutic to a pregnant mom, there’s all kinds of other things you worry about in that setting. And so, you know, they struggled a little bit to find the financing and find venture firms that wanted to step up. We did. And Google’s in it, also invested in it. Atlas Ventures and Fidelity … so those are the four investors.
And, you know, I feel like it did take a certain amount of courage to do it. But it was really important. And finding those opportunities, that’s really, that feels rewarding, where you find something that really looks promising have a huge public health impact. And it was the kind of thing that maybe others might’ve been a little reluctant to do. But because I worked at FDA and I know that world, I think I was able to get comfortable with it.
Courtney Collen:
Well, we really look forward to seeing what’s next with you, Dr. Gottlieb. Thank you so much for joining us for an episode of “Reimagining Rural Health,” a podcast series by Sanford Health. A thought-provoking conversation for sure. Thank you so much.
Dr. Scott Gottlieb:
Thanks a lot.
Alan Helgeson:
You’ve been listening to “Reimagining Rural Health,” a podcast series brought to you by Sanford Health. Hear more episodes in this series or other Sanford Health series on Apple, Spotify, and news.sanfordhealth.org.
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