When the government fails to take a practical regulatory approach, we not only raise costs on innovators and patients, we also diminish the quality and availability of care.
As Prepared for Delivery
Thank you for that introduction, Cyndi [Zagieboylo].
Good afternoon everyone, and thank you for inviting me here today to talk about an issue that is so close to all of our hearts: advancing the quality of healthcare in America.
Whether you’re a private sector innovator, a nonprofit advocate, or a representative of healthcare providers, you play an integral role in keeping our country’s healthcare system at the cutting edge of innovation and quality.
So I want to talk to you a little today about how this administration envisions continuing those efforts, toward ever better and more affordable healthcare, and why we believe it’s so important to work with you in this endeavor.
First, I want to discuss two big picture issues that cut across the healthcare space: this administration’s regulatory reform efforts and our view of how to incentivize and encourage innovation.
Then I want to discuss the specifics of how we’re tackling one of America’s major public health challenges, our crisis of opioid addiction and overdose, because our approach to that issue reflects some of the broader principles we follow.
I’ll start off with regulatory reform, and you’ll understand why if I explain a little more about myself: This is my second time around at HHS, and during the Bush Administration, I served as HHS’s deputy general counsel for regulations and the chief regulatory officer of HHS. I’ve also taught administrative law and healthcare regulations as a law professor and worked as a regulatory lawyer at my former law firm.
In other words, getting regulation right is my passion. But it ought to be an important cause for every American who cares about our healthcare system.
The stakes for regulation at HHS are huge: The work of the Centers for Medicare & Medicaid Services, in one way or another, affects fully one-sixth of our economy.
Meanwhile, the Food and Drug Administration oversees products that make up 20 cents of every dollar spent by American consumers.
But the importance here is not just measured in dollars and cents. The stakeholders affected by our regulations are equally broad:
- Every American who hits the age of 65, in a way, becomes a customer and a stakeholder of ours, through Medicare.
- Tens of millions of other Americans receive services through Medicaid, CHIP, HHS mental health and substance abuse programs, and more.
- Then there are America’s millions of healthcare providers, from major hospital networks and insurers all the way to single-physician offices and your family doctor or nurse practitioner.
- We also have private sector firms: drug makers, medical device manufacturers, health IT companies, and the like.
- There are also many intermediaries who work with HHS to provide services: states, counties, municipalities, tribes, civil society groups, and faith-based and community organizations.
These are deeply valued stakeholders — crucial players not just in our healthcare system but also in our economy and our society at large.
So that suggests two helpful guidelines for our regulatory work. One, because the stakes are so high, we ought to be humble in the work we do, mindful of the costs of our actions and the potential for unintended consequences.
Second, because of those high stakes, we should be taking seriously the views of our stakeholders, including all of you.
From the White House on down, this administration has been deeply committed to stakeholder engagement in the regulatory space.
Each component of HHS has its own regulatory reform officer and has put together a stakeholder engagement plan of its own for engaging the firms, organizations and people it regulates.
On just the provider front alone, the department has held listening sessions with hundreds of groups representing hundreds of thousands of healthcare providers.
As you heard a bit about from Ms. [Amy] Bassano just before me, the new payment rules from the Centers for Medicare & Medicaid Services we are issuing each include an RFI to solicit input from stakeholders and the public.
The responses to these requests have been enthusiastic and encouraging.
Similarly, each center at FDA has issued its own RFI, seeking input on how to reduce burden on the community it regulates.
As these RFI opportunities arise, I urge every one of you and the organizations you lead to look into them—we are taking this feedback very seriously.
Stakeholder engagement has been just one piece of our broader efforts to reduce unnecessary burdens on America’s healthcare providers and improve the quality of care for patients.
We’re going to have new numbers on this from across the administration soon, but broadly speaking, this is the first time since President Reagan that we’re not increasing regulatory burdens on the economy, and have actually been able to roll them back.
In the first five months since President Trump took office, this administration cut 16 regulations for every one it issued. Total regulatory burden on the economy actually decreased in the first five months of this year,
Looking forward at HHS, we have identified hundreds of different areas that demand our attention. Many of them fall under CMS, where Administrator Seema Verma has made these efforts part of their “Patients Over Paperwork” initiative.
As any of you who are practicing physicians in this room can attest, we just don’t do a very good job of putting patients over paperwork today.
We’ve already taken a number of significant actions. As just one example:
- In the 2018 Quality Payment Program rule we finalized in November, CMS raised the threshold significantly for excluding clinicians from the MIPS reporting requirements and payment adjustment under MACRA, taking the threshold from $30,000 in Medicare billing or 100 patients to $90,000 in billing or 200 patients.
- We are committed to increasing the emphasis on quality and value within the Medicaid program, but in many cases, the scale of small practitioners means that they spend a great deal of time complying with the reporting requirements without actually generating reliable performance data.
- A bigger exemption means a fairer field of play between bigger practices and small ones—always a key priority when it comes to examining regulatory burdens.
In many cases, the costs of the burdens we are looking at modifying or eliminating run into the tens of thousands of dollars for physicians’ practices. That could be the difference between being able to hire a new nurse, who will actually be able to care for patients, instead of pushing more paperwork.
Beyond regulations on providers, we are interested in ways to push the Medicare and Medicaid systems in a more patient-focused, competition-driven direction.
Changes Congress made to the Medicare Advantage program in the Bush Administration resulted in the program exploding in popularity in recent years. We are looking at ways we can build on that success, and partner with states on innovation in their Medicaid programs as well.
One example of successful competition within Medicare is the Medicare Part D prescription drug program, which has come in tens of billions of dollars under its projected cost.
As you know, “under projected cost” is not a phrase that gets thrown around much in Washington.
I am happy, having been part of the Part D implementation team, to see that government can indeed be made to work, and to work even better than anticipated.
Part D has succeeded by harnessing strong competition in the generic drug market and giving seniors an incentive not just to shop among competitive plans but also to select lower-cost drugs.
Those lessons undergird our general approach to the question of supporting innovation.
Under the leadership of Commissioner [Scott] Gottlieb, FDA has unveiled a drug competition action plan, which includes a number of avenues for encouraging the development of, and speeding approval of, biosimilars and generic drugs, including complex generics, which will increase competition and help keep drug prices down.
We are already seeing progress, thanks to the hard work of the folks at FDA: They approved a record number of generic drugs in Fiscal Year 2017, and achieved a record share of first-cycle approvals for generics, too.
FDA’s efforts go beyond pharmaceuticals: Just yesterday, we unveiled plans for a new voluntary, alternative pathway to clearance of medical devices, updating a framework that is decades old and now way out of date.
Updating frameworks like this is so important when the world of healthcare, technology and innovation is changing so rapidly.
When the government fails to take a practical regulatory approach, we not only raise costs on innovators and patients, we also diminish the quality and availability of care.
One of the perverse aspects of this issue is that there is a suspicion, to which all of us fall prey occasionally, that innovation in healthcare just doesn’t work like other industries, that new lifesaving technology actually drives costs inevitably up, rather than down.
Of course, when we consider the stunning benefits in quality of life and years lived that can come from advanced healthcare technology, cost may seem like it ought to be no object at all.
But it’s also worth remembering that healthcare innovation often does drive down costs while improving the standard of care.
One interesting example is, I’m sorry, not the best lunch topic, but it’s an interesting story: how we treat stomach ulcers.
As many of you may know, throughout most of the era of modern medicine, we thought stomach ulcers were caused by excess acid in the stomach or by stress.
So the treatments we had were things like drink milk, go easy on the spicy food, and take medications that would reduce stomach acid.
This didn’t work terribly well, so it was not uncommon for the ulcer to worsen and require expensive surgery.
All of this changed in the 1980s when two Australian scientists, Dr. Robin Warren and Dr. Barry Marshall, discovered an association between ulcers and a bacterium, Helicobacter pylori. With that information, they realized, most ulcers could actually be treated with antibiotics.
It took a little while for the idea to catch on, but once it did, we now had an effective, relatively low-cost treatment that could actually heal ulcers.
HHS did its part to spread awareness of this new treatment, through a campaign in the 1990s from the Centers for Disease Control and Prevention.
Dr. Warren and Dr. Marshall went on to win the Nobel Prize for their discovery in 2005.
The maintenance therapy once used to keep ulcers in check cost thousands of dollars over the course of years, and if the ulcer got even worse, surgery was necessary, costing even more. The standard antibiotic treatment now lasts a couple weeks and costs several hundred dollars.
All in all, it’s a fascinating example of how technological advances in healthcare can lower costs, improve outcomes, and generally improve our lives.
This really should be no surprise, but we need to be doing all we can to encourage these innovations, not holding them back with burdensome regulation or micromanagement.
On a broader level, we have seen a virtuous lower cost, better outcomes cycle in areas of payments and delivery, too.
Take, for instance, the rise of more complicated procedures being done in ambulatory, non-hospital settings.
Not only can procedures be performed in outpatient clinics at a much lower cost than they would in a hospital, but patient outcomes and satisfaction can often be much higher, thanks to spending less time in bed and more time at home.
There are ways we can encourage this development within the programs we run, but generally, we believe in encouraging shifts like this through putting patients in charge and ensuring they are aware of choices and the potential benefits of a lower-cost setting.
There are real risks, as I mentioned earlier, to policy overreach and to having government put too heavy a hand on the scales.
One tragic example of this is the rise of the opioid epidemic in our country, which in part traces back to efforts to treat pain aggressively while failing to understand the addictive nature of prescription opioids.
A number of positive developments in the healthcare space came together to create the pain revolution we saw: In many cases the price of pain pills came down, thanks to competition, while emphasis on patient satisfaction went up. Some in the medical community believed that the new classes of opioids were significantly less addictive. Meanwhile, doctors were, for good reason, intent on taking the issue of pain more seriously than they had in the past.
So we welcomed each of these developments individually. Who wants drugs to be more expensive? Who wants to say patients should not be listened to? Who wants to ignore the latest results from top researchers?
Yet all of them together, assembled in a certain way, alongside other factors that surely we will continue to understand better as we work on this crisis, led to the tragic situation we have today.
Few individual physicians themselves would have dove headfirst into aggressive opioid prescribing without being confidently told, against their own better judgment, that it was the only way to treat their patients properly.
So HHS’s approach to this crisis recognizes the folly of centralized action, and instead focuses on getting the right information and resources to the heroes on the ground, those on the frontlines.
Earlier this year, we unveiled a comprehensive strategy for our department on opioids, with the following five points:
- Better data on the epidemic.
- Better pain management.
- Better research into pain and addiction.
- Better targeting of overdose reversing drugs.
- Better prevention, treatment and recovery services.
The work on these fronts extends across our department, from research at NIH, technical assistance and grants at SAMHSA, and new approaches to risk assessment at FDA to data-gathering at CDC and policy and incentive reforms at CMS.
Untangling the factors that led to this crisis, and getting the system to work correctly without undoing the advances we have made, is an immense challenge.
It is complicated, even daunting. After all, we face a drug crisis without precedent in American history.
It demands an ambitious response, which is what we’ve given it, from our declaration of a historic nationwide public health emergency at President Trump’s direction to the convening of an unprecedented opioids cabinet of all the principals of the operating divisions within HHS.
But at the same time we are ambitious in our aims, we strive to be humble in our methods: We at HHS cannot solve this crisis, or any of the other healthcare challenges we face, without the contributions of the private sector and the nonprofit world.
And we will serve patients poorly if we assume that Washington knows best, rather than listening to those who provide care and develop innovations themselves.
So, in short, on all of the issues I’ve raised today, we want to hear from you and we want to collaborate with you.
Together, we’ll overcome the challenges we face, and build on the already great accomplishment that is American healthcare.
Thank you very much.
