Open Letters to the Incoming Trump Administration: Cutting Out the Middle Man*
*with medical devices
The Frontier Psychiatrists is a daily health-themed newsletter. We tackle the intersection of humor, policy, healthcare economics, novel treatments, and whatever strikes my fancy. One of the underlying themes of the newsletter and my career is that medical devices will matter in the future.
Today, I was surprised to see President-Elect Donald Trump agree with me! OK, so I'm not sure it's him agreeing with me, although I have written several letters to his incoming administration, including Dr. Oz on deck for CMS, as well as RFK on the topic of the pending appointment of Dr. Drew to SAMSHA, and Dr. Makary at FDA. But I hope it's clear that I've been advocating against Pharmacy benefit managers, taking up all the money and healthcare, and in favor of medical devices, particularly as they apply to the treatment of neuropsychiatric disorders.
Today, Mr. Trump seemed to be listening:
"The horrible middleman that makes more money, frankly, than the drug companies, and they don't do anything except they're a middleman," Trump said on Monday, at a news conference at his Mar-a-Lago club in Palm Beach, Florida.
"I don't know who these middlemen are, [emphasis mine] but they are rich," he said.
Referring to his dinner earlier this month with key executives of drugmakers Pfizer (NYSE:PFE) and Eli Lilly (NYSE:LLY), as well as industry lobbying group PhRMA, Trump said he spent much of it talking about the high costs of drugs and how the U.S. pays much more than other countries.
"We're going to knock out the middleman. We're going to get drug costs down at levels that nobody has ever seen before," Trump said.
If Mr. Trump is interested in getting rid of Pharmacy benefit managers, we are on the same page in that regard, at least. You might not know “who these middlemen are,” and unfortunately, I have some news to tell you about how they're the same companies that have been contributing to the political campaigns of everyone in Congress for many years…It’s OptumRx (part of UnitedHealth Group), Express Scripts (part of Cigna), and CVS/Caremark (part of CVS Health).
The markup, Mr. Trump, is coming from inside the house! They are on both sides of the negotiating table. I'm sorry to be the one to tell you. It's gonna be hard to blow up that $500 billion+ a year industry—growing at an 8.8% CAGR—without them causing a ruckus.
It's probably worth mentioning that the CEOs of all three of those Pharmacy Benefit Managers testified in front of Congress and were accused of committing perjury by the congressional oversight committee in question, which is led by a Republican!
I know— this is all startling news, Mr. Soon-to-be President. I know how much you're a fan of big American companies doing big American things. It's also very upsetting to report that some companies, like UnitedHealth Group, outsource jobs to other countries. Countries that are not America. This newsletter reported on that, previously here.
To be clear, those devices matter now, but what about the future? I'll lay it out today as it applies to mental health:
Just looking at antidepressant drugs alone, we can see that there are billions upon billions spent and projected to grow:
The vertical axis? The units are in billions. That's a lot of money, and the big Pharmacy Benefit Managers are getting rebates on those drugs as well. Rebates are like kickbacks, but they're legal-ish because of a Safe Harbor law. I say legal-ish, but because it might also be a breach of fiduciary duty on the part of plan sponsors to pay more for those drugs—but that's another series of articles about ERISA entirely.
Medical devices don't go through a pharmacy benefit manager. They're paid as either part of the medical benefit, part of the behavioral health carve-out to the medical benefit, or as durable medical equipment. Sometimes, it says part of hospital admission, but overwhelmingly, it's not a separate bill that goes through a pharmacy benefit manager. And that is the opportunity to have America cut out the middleman— when it comes to therapeutics in psychiatry.
Imagine a whole class of treatments that could address depression, OCD, anxiety, ADHD, and none of those things were drugs. And now you can stop imagining because those things already exist and are having a tough time getting paid for because so many of the middlemen, that is, Pharmacy Benefit Managers, have prioritized their contracts above the well-being of patients.
Transcranial magnetic stimulation for depression, for example, has been demonstrated to be cost-effective in every study on the topic. And yet, most Medicaid plans don't cover it for the most vulnerable people. Many commercial plans don't cover the treatment until you've taken a lot of drugs first. Those drugs that all have middlemen that need to be cut out.
Instead of getting into a huge fight with health plans about their PBM's, which the administration may be doing anyway, and I couldn't stop if I wanted to, I'm recommending you start paying for things that prevent the use of drugs—and cut out the middleman that way. What if people never had to take an antidepressant? What if they never ingested an antipsychotic?
What if they were well because a medical device changed their brain? This is the future that I think is already here and getting better every day. You, the incoming administration, should pass a law or sign an executive order or something that mandates the payments for these things in every possible setting.
Pay for something that cuts out the middleman, do that first, and get into a big fight with the most profitable companies on earth involved in healthcare as a next step? Let's get some easy wins under our belt, shall we? Yes, we shall. Here's hoping, anyway.
Here's a concise list of medical devices. We should decide to pay for under Medicare and then do whatever we need to do, like tax incentives, public/private partnerships, and the like, to make sure commercial plans pay for them.
Accelerated TMS (it’s done in a matter of days!)
Nightware (It’s an AI watch that treats nightmare disorder!)
PRISM EEG-Neurofeedback for PTSD
And more is coming— like tFUS for anxiety and nVNS for PTSD and Migraine, as well as VNS for Rheumatoid Arthritis Pain.
These treatments—and exciting psychedelic medicines!—are coming. We should cut out the middleman by paying for them. This is a bold plan. I agree. Let’s do it.