How Do We Meaningfully Lower Healthcare Spending in the Next Decade?

Ashish Jha: 00:00:05

Hey everybody. Ashish Jha, here from Providence, Rhode Island, where it is yet another sunny afternoon. It has been brought up to me by several listeners that we have a lot of sunny afternoons in Providence. And it's true, it's a pretty sunny place starting to get a little bit cooler fall starting to set in, but Welcome back. Welcome back to the show a moment in health where we talk about a data point, a research study, and then ask a question, and I want to jump right in. And the data point I want to talk about today is 51% 51% is the proportion of older of Americans, not older Americans, of Americans, of adults who are have obesity or are overweight with one or more chronic conditions. And when we talk about the study of the week, this will become particularly relevant. But about that comes out to about 126 million Americans. About half of all adults in America are either obese or have a BMI above 27 so clearly overweight, with one or more chronic conditions like hypertension, diabetes, hyperlipidemia, something that puts them at increased risk of cardiovascular disease, heart attacks and strokes. So that's your number of the week. 51% or about 125 million Americans.

Unknown: 00:01:20

You okay,

Ashish Jha: 00:01:27

let's talk about the study of the week, and that is where this number becomes more interesting. The study of the week is lifetime health effects and cost effectiveness of tirzepatide and semaglutide in US adults. This is published in JAMA Health Forum on March 14 of this year of 2025 so about six months ago now, we've talked about these GLP one drugs, terzepatide and semaglutide before. This was a really interesting study that actually looked at how cost effective are they. And let's just be very clear on what we mean by cost effective. Because what do we know about these drugs? They're wildly effective in lots and lots of different ways, but they're also costly. They're expensive. And what we also know is that in super high risk people, people with known cardiovascular disease, who are overweight, these things are so incredibly effective that they're all that most of much of the data out there says people should be on it. But what if you took a more expanded look at the population, you said, anyone who's obese and anyone who's overweight with one or more chronic conditions, would it be cost effective to give them terzepatide, known as Zink bound, or semaglutide, known popularly as ozempic. And what they found was that these drugs, if people who are overweight or obese got them, would be really quite effective at preventing a lot of cases of diabetes, a lot of cases of high blood pressure, a lot of cases of heart attacks and strokes. So that's great, and you would think we could stop there and just okay, that alone should justify using this. But these drugs are expensive, and if you want to do a cost effectiveness analysis, they did one and said, Well, based on current costs of these drugs, would it make sense? And what they found was that Zep bound perceptit costs about $200,000 per quality adjusted life year saved. You know, that's a that's a big number. It's not an astronomically crazy number. We we actually cover lots of

Ashish Jha: 00:03:28

drugs that have that kind of a quality adjusted life year saved. And then they found that the other drug, semaglutide, also known as Zink, its quality adjusted life year saved, cost is actually much higher. You're spending about $467,000 per quality adjusted life year. Why is that? Because ozempic is not as effective as zepbound. They're both equally expensive, but zepbound is just more effective. But let's actually take a step back and ask this question. Is $200,000 for quality adjusted life year saved? Cost effective? I have two points on this. One is, when you look at cost effectiveness studies, people tend to use $100,000 threshold. By that measure, zepbound is not cost effective. It's too expensive. Obviously, if you could reduce the cost of zebound substantially, cut in about a third to a half, you'd get right into that range of cost effectiveness. There are other people who say $100,000 is an arbitrary number, and if we're going to prevent a lot of die going to prevent a lot of diabetes and high blood pressure and heart attacks and strokes, I'm willing to pay more. That's a that's a societal decision. The last point I'll make on this is I do expect these drugs to become cheaper over time as more drugs come on the market. So while this analysis is interesting over time, it may, in fact, become less relevant, because as the drugs get cheaper and these drugs get more effective, they will, by definition, become more and more cost effective. They're really remarkable drugs, and we should be using them more

Ashish Jha: 00:04:55

widely, all right. And now for the question of the week, I have a very special guest. Asked who's shown up in T shirt and jeans? I'm kidding. My my colleague, my colleague and friend, Andy Ryan, professor of health services, policy and practice, Director of the Center for Advancing Health Policy through research, Andy, thanks so much for being here.

Andy Ryan: 00:05:15

My pleasure. She's excellent.

Ashish Jha: 00:05:17

So I'm gonna ask you the big question. Yeah, the big question, and I'm gonna set it up in the following way, depending on which estimate you look at, we are on track to spend between 65 and 70 trillion, with a T trillion dollars on healthcare in America over the next decade. That is a ginormous amount of money. And the implications of that are it's going to be much harder to control deficits, or it's much harder to invest in education. It's just going to have large effects on our society. And the one place where I think there is bipartisan consensus is we got to find a way to lower health care spending. So if you could wave a magic wand and do one thing Andy, just meaningfully lower healthcare spending over the next decade. What would it be?

Andy Ryan: 00:06:05

Well, I'll say that it's really two things. Oh, one, two things are closely linked, and that has to do with coverage and pricing policy, okay, in the United States. So I guess I'll set it up this way. Sheesh, that I think we, we all know, and I think there's few people in general who would dispute the fact that long term spending growth in the United States and everywhere is really driven by the new things that we do in healthcare, new tests, the new procedures, and recently, the new drugs, some of which are awesome, some, many of which are awesome, for sure, but this is where all the spending happens. And so, you know, I think that the reason why we're we, I think, want to keep spending under control. Is this sense that we're maybe not getting as much out of what we're spending as we should. If we're spending $70 trillion and life expectancy is increasing by 10 years. Are we really going to be upset about that? Probably not feel fine about it. This is this notion that there isn't, we're not getting the so called welfare gains that we should be getting. And so it comes back to my initial comment that I think the problem here is us covering things at prices that are higher than they're worth. Okay, and so we really need a reappraisal, more of a national strategy around being making a more rigorous approach towards the types of the types of healthcare technology that would cover how we do it and how we set prices.

Ashish Jha: 00:08:01

Okay, so is this like, are you think about nice like the the National Institute for Clinical Excellence in the UK? Do you think that America needs one of those and that's gonna substantially lower healthcare spending

Andy Ryan: 00:08:10

in America? I think it's a great model. It's a great model. Because I think what nice has done is been very kind of explicit around trade offs and saying that if we have a new medical technology that meets an established threshold that we think is worth it, then we'll decide to pay for it, and otherwise we won't. And now there's exceptions, and there's, there's, there's various ways that, you know, United Kingdom can introduce other priorities into the decision making process, but it's fundamentally a rational choice, a decision making process where trade offs are considered explicitly. And I'm

Ashish Jha: 00:08:49

going to push back please, yeah, drugs, which is primarily what nice evaluates, represents 10 to 15% of health care spending, even if pharmaceutical pricing and spending goes up substantially, it'll be to 15 to 20% you're leaving 80 to 85% of healthcare out of this equation. Let's say we cut drug spending in half. It's gonna make a modest difference. You just don't think we can do anything about the other 85% or what do you think?

Andy Ryan: 00:09:22

No. First of all, it's interesting. Like that number has always been in my head too, that kind of, what do you say? 15% Yeah, on drugs, in commercial, it's actually quite a bit higher. So potentially, honestly, numbers I've seen recently, it's more like double that. And, you know, we know that these, there are these really, really extraordinary increases, expected increases in insurance coverages, isn't on the exchanges that employers will be facing, and a large part of that is, is drugs. So, you know, I'm just going to say that that. A, maybe a bigger part now than it has been historically. But, and I think that drugs, in many ways, are that the the easiest way to think about these coverage decisions, because the prices are quite, you know, frankly, more transparent, the kind of okay, if we, if someone's on this drug for this period of time, we would expect to spend X or whatever, whereas, with other types of procedures, it's the kind of like the episodes of care, when you start the clock, you know, the whole how it's caught up in other care processes, makes it a little more difficult that that notwithstanding, I think that we still need same kind of processes. There's there's all kinds of it's not there's things that come on the physician fee schedule that get priced into facility fees that routinely, kind of continue to seep into modern payment that ends up making a big making a big deal. So it's not just drugs, it's other stefanieshish, and I'll just tell you that to me, this is really a minute. It has to start with Medicare. You know, Medicare is the place that you know, a lot of the the other payers just follow, and they set the terms of what gets covered at what price, and many and very frequently, commercial payers just straightforwardly copy these decisions with some kind of markup factor, yeah. And so that's one big point. A second point is that, you know, private insurers, they're not going to set up their own, you know, this is,

Andy Ryan: 00:11:37

this is complicated, it's costly,

Ashish Jha: 00:11:40

yeah? So to have to be done at a national level, you don't want every insurance company doing their own version of nice.

Andy Ryan: 00:11:45

You don't. You don't. And I think the thing that's honestly kind of remarkable to me is this idea that an FDA approved something, that this thing, the implication is it should just enter the fee schedule. If this is something that physicians want to do, it should just go on. If it's safe, it's if it's effective in some way, it should just enter the fee schedule and be paid for that, to me, is an unbelievable expectation. It's kind of hard to fathom that that's how we manage kind of coverage decisions in the United States. And these, these could be things that are that are quite dubious from a cost effectiveness perspective, but, you know, for whatever reason, there could be a physician preference to do so and so so anyway, and through this process, we end up paying for all kinds of things that, frankly, we shouldn't, and then, because Medicare leads the way, and private insurers to follow, it just moves downstream.

Ashish Jha: 00:12:50

Okay? So fundamentally, your thing is, we spend a lot of money, we don't get a great bang for our buck, and we need a process by which we start evaluating the bang for the buck, focus primarily on drugs, maybe some procedures as well, and use that to drive down prices and make sure that we're only using things that are fundamentally high value. In a word yes captures the idea, yes. Excellent. Anne Ryan, thanks so much for coming by. My pleasure. You.

Ashish Jha: 00:13:25

Okay, so there you have it. Another episode of a moment in health where we talked about one data point, 51% about half of all adults in America are either obese or overweight with one or more chronic conditions. We talked about one study which looked at that population, about 25 million Americans, half of all adults. And ask the question, are Zink bound and ozempic, trizepatide and semaglutide? Are they cost effective for these people, for people who are overweight or obese, and depending on how you want to look at it, they came in. The cost came in a little high. But what I would say as a bottom line is it's prevented a lot of diabetes, a lot of situations, of hypertension, a lot of heart disease. And as these drug prices come down a little bit, I think they're going to be well within the cost effectiveness range. And then we asked one question, and I talked to my friend and colleague, Andy Ryan, who runs the Center for Advancing Health Policy through research here at the Brown School of Public Health. And health, Andy is one of the sort of premier health policy researchers in the country, and asked him, What would you do to reduce health care spending in America? And he went straight to the heart of the issue of value, arguing that we spend a lot, we don't get as much as we want out of healthcare, and that what we really should be doing is focusing on the price, quality trade off, that we should be pushing to get prices lower for miracle drugs, but doesn't have to be stopped at drugs could be devices, could be other things, and we should be making sure that we're paying for things that are. Delivering in terms of value on health care. And he brought up a cost effectiveness analysis. Some places call them health technology assessments. The UK is it's the most famous example. They do this through something called nice, the National Institute for Clinical Excellence. It's been pretty controversial, because what it means is that for some expensive things

Ashish Jha: 00:15:18

that might be effective, it wouldn't be covered, and that has not been part of US policy so far, but Andy was advocating for it anyway. All right, so thanks so much for listening. That was another episode of a moment in health. I'll be back next week to talk about another data point, discuss a study and answer a question. Thanks so much for listening, everybody.

Unknown: 00:15:42

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