Pfizer Reversing Price Hikes After Trump Bullying Won’t Last

going to shift his focus to lowering drug prices. It appears to be that the time is now and joining us as Max Neeson Biotech, pharma and healthcare columnists for Bloomberg Opinion, our oracle of the pharmaceutical industry and all things healthcare. Max, so just lay out what happened with Fiser and President Trump's involvement here. Well, as it always is with drug pricing, there there's more uh, and there appears to be on the surface so UM as it

usually does kind of on a six month basis. Um Fightser raised drug prices on on a number of Medica a number of its medications. The President took to Twitter to criticize them for that on July nine, and then yesterday evening he announced that after speaking to the to Fightser CEO on the phone with the Health and Human Services sectary alex as R, they had agreed to roll back the price hikes they had planned to take, probably

sometime in the next few weeks, but not permanently. It's either until January one or until the President's Drug Price Blueprint is enacted, though no difficient definition of enacted there so, UM it is a temporary rollback of prices opposed to something permanent or drastic max. Is this really what the pharmaceutical industry is looking for, which is an ad hoc kind of strategy on the part of the administration to deal with drug prices? Um? You know, I don't think

this is how they really prefer to to operate. UM. Just kind of unilateral public negotiations UM in kind of the public sphere and then just kind of the President using the bully probed on an individual basis. I think that's what they've been scared up for a long time, which is probably why Fiser kind of chose to engage in this way. But I think they actually got a decent deal out of it. They kind of remove themselves from criticism without really giving up all that much. There.

The reason I asked you is because maybe this is the way to do it. I mean, maybe this is the way to avoid having the back and forth of lobby interests in the Congress trying to manipulate or to massage the let potential legislation that would create some kind

of consistent plan. And maybe this is the way that the President has decided to go at it because he doesn't want to have to do with the special interest groups or the pressure that's been previously applied to drug price that that actually makes a lot of sense in the sense you give the president kind of a big

public victory. He gets to play um master negotiator, which is a favorite role of his, and and you know, have this sort of talking point like, look at me, I brought drug prices down, um, even though the actual impact on you know, fiser, on patients, on the drug

pricing problem at all is actually quite minimal. Well, okay, so President Trump is one part of this, and fightser is certainly a specific story, but more broadly, there were a number of drug makers that lowered their prices in response to a new California law that aims to provide

more transparency to the pharmaceutical industry. So even if President Trump is taking that out ad hoc approach, states are being more systematic in this case California absolutely, and um, you know, it's difficult to tell exactly how much of those price rollbacks are are ascribable to the law as opposed to whether we just happen to find out about them, because of the way that the laws of structure. Basically it requires drug makers to to kind of report and

justify price increases that are of a certain magnitude. But it's pretty clear that the transparency has some effect. Having to let health plans know in advance, um, which gives them time to kind of push back, to react, and then having all that sort of in the public sphere clearly has an effect. And that's sort of um kind of a blueprinted other states or potential the government can follow, um if they actually want to have kind of a a sustained impact as opposed to this kind of one time,

short duration sort of thing. Max. Has there been any discussion about the way in which healthcare is delivered? I don't mean drug prices, but the actual healthcare And the reason I ask is because yesterday we had a segment in which we focused on innovation in healthcare delivery having to do with hospitals. For example, where some hospitals would specialize in heart surgery, other hospitals would specialize in other

kinds of surgical procedures or services. Right now, you have no idea how much they cost from hospital to hospital, so every hospital ends up almost duplicating the services and they compete with each other rather than delivering uh, what would be called efficient healthcare. So I think the lack of price transparency and the lack of UM really prices and healthcare that are just available or interpretable to the average consumer is really one of the most difficult things.

It's it's basically impossible to comparison shop UM with any kind of like real pricing data or real data on

outcomes on quality UM. The the data is bad. Hospitals usually for the most part, are interested in obfuscating that data about what something costs and why, which is why you hear about those bills where you have you know, thous and dollar charges for for aspirin, for for minor care UM just because you know they that's not the real price the one they negotiate with your insurance, the real price, but it's impossible to find the real price

and compare it. So yeah, it's a miserable situation. Well, and and trying to to fix the entire healthcare system is a heavy one and one that we could spend

hours on. Uh. There are some things that are going on right now though with respect to Obamacare, which is sort of heralded as a solution but has been uh really kind of tried to at least the attempt has been to try to pare it back in the recent few years, and the latest events have to do with reducing the payments to high risk pools as well as President Trump cutting some of the grants that help consumers

get Obamacare. How significant are these developments in your view? Um, You know, for the most part, it depends on particularly the major one, which is the risk corridors or the sorry, the risk adjustments. Basically that UM ensures that have the sickest population UM they get paid back to a certain extent by insurers that have a healthier population UM. It helps them kind of stay in business and just adjust

and and make basically ensuring those sacre patients more viable. Um, it's I bet like that it's likely that those payments will resume at some point. It was due to kind of just this weird, quirky New Mexico court case. But um, and even though that's going on just today or last night, rather we just got news that another insurer was expanding

in a couple of A markets. So even though things are kind of still uncertain and and kind of prone to shake up and and prone to what many would call sabotage, um, there are still people interested in this market, as opposed to years past where everyone's just kind of fleeing. Well, but this is actually fascinating to me. And one thing that I'm wondering. As insures expand in a c A expand their Obamacare coverage, does that mean that people still

like this program? Does that mean that the program is being made more lucrative for the health insurers? Um. I think it's a little bit of both. The in the sense that insurers are are a little bit more experienced with what it takes to be profitable in this market, even though it keeps changing and getting weird every year. But um, as for the consumer experience, it's very much

bifurcated between people that get subsidies and people that don't. UM. For someone who gets a subsidy, you can get relatively affordable insurance without paying that much. But because of the fact that the law has been sort of systematically undermined um or at the very least not helped as in um. You know, things that could be done to improve it have have just not happened because of the administration Congress.

Um premiums have gone up for people that have just aren't in that kind of income cut off the lots some good subsidies, so it's it's really terrible for them, but but still good for a good chunk of the market, which is more than that to its subsidies. Max. You know, one of the things that happens when you have the healthcare reform debate is always here about the cost of end of life care and how much that is outsized.

That turns out to not necessarily be so. I mean, there's an estimate that between eleven to of total health care spending is on that end of life time for patients. Is is the focus should the focus then be on chronic long term conditions? Is that really where the bulk of the money goes. I mean, if if there's anywhere that you can move the dial just sort of in the largest possible population that requires, um the greatest amount of healthcare spending over the longer term and has the

most benefit if you can kind of manage those conditions. Well, UM, it's definitely that population. And for the most part, it's something that's that's not done especially well unless you're lucky enough to have UM, you know, series of healthcare providers that are are really engaged or UM un employer that's kind of actively engaging and managing those costs. Otherwise you kind of just get left alone. And you know, it's, uh, it's not easy without kind of expert advice and input

and monitoring and on all of that. And we're only just starting to get better than that. And uh that that's something where there's a lot of very for improvement. Just real quick. I do want to note that the SMP five Healthcare index has fallen nearly a percentage point today and that this a lot of people are attributing this to what happened with Visor. Do you expect President Trump to take a similar tap with other pharmacy companies

in the near future. Um, you know, now now that he's gotten the sense that if he gets uh gets a CEO on on the phone and and uh jets them a while, that they might actually do something, he may very well give it, give it a shot again, especially because you know we're we're in this is drug price hike season middle of the year July one, so there are a number of other kind of prominent firms

that have increased prices. He may give it a shot. Um, you know I would have even if it happens, even if the entire drug industry rolls back this round of drug price increases. You have to keep in mind that every single price hike that they've done for the past decade is still there. So this is really uh, at the end of the day. On the margins, Um, I'm hopeful that some something more materialized, but you know, this

might stick shake stocks in the near term. I don't think it's going to be a wait for the long term, like a fig leaf, I guess you could describe it. Thanks very much, Max Neeson, Bloomberg Opinion columnists for all things related to healthcare. Of course, we appreciate your comments and your thoughts. You can follow Max on Twitter at Max Neeson. Our next guest is here in Reality. He is budget art. He is the co founder and president

of hi A Technologies. They're based in Los Angeles. And the reason why I say object that you are here in reality is because you are focused on the world of artificial intelligence and avatars and creating the software and the platforms to actually have meaningful conversations with machines exactly. This is a technology that has been used through the the Institute of Creative Technologies at USC the un University of Southern California and the West Coast, and it was

a military funded research. Forty million dollars went into it, and um, we're the first ones to commercialize this outside of the institute. They use it for military training and avatar interacting with humans to to test out certain situations with them and more specifically PTSD therapy Teumatic stress disorders therapy, right,

so UM veterans with PTSD. It turns out respond to avatars much better in the in terms of opening up and revealing more about themselves, feeling more comfortable, taking more time to be interviewed than psychiatrists. So they had some famous papers published on this and it's been a couple of years, but now it's the technology has come to a point that it's cloud based, you know, client server, it's very easily transported to mobile devices, et cetera. So

we decided to commercialize it. We have an exclusive license from USC and we're going to use it for HR and specifically in recruiting. We will conduct pre screening interviews for companies that hire large numbers of people and find itficult to do a good job in screening candidates and

finding the right kind of people. Can we just talk a little bit about the concept of replicating a conversation in real time with a computer, Because when you have Alexa, for example, and you ask her a question, so give you a response based on an Internet search, but it's not carrying on a conversation. So how how does that work? Is that? Is that incredibly complicated to make happen? It is complicated, and it starts out with a lot of manual work. You have to script these conversations. But the

magical thing behind it is the machine learning. It learns from its experiences and then it gets better and better over time. It gets better much quicker than humans get better in anything. So um, yes, it is complex, but UM, you know you you you have to start with a base product. For example, UM, in interviewing, we have these

job modules. It's a question and answer module. So for a junior accountant position, there is a set of twenty questions that the company has decided to ask their potential employees. And uh, these are crafted by combination of our experts that we found and they're specific questions. So the questions are listed and then there's buckets of answers for each question. What we do is we listen to the answer. We assign what we heard to a particular bucket. Okay, can

can avatars be funny? Yes? So there's an algorithm for for humor. Yes, And you have to understand we have to be very careful in applying that to situations like this. So we have actually tested that you know, uh, people UM do not take it lightly. And this is this happened in Syrie and Alexa as well. UM, the majority of the people do not think it's funny enough, or

it's it's it's it's appropriate. So what we decided to do, literally in this particular case, since it's a an enterprise sale for us, we decided to stay on the safe side and not quite go there, and we just go very polite and very curious, and we just we just don't go there. But it's definitely possible. Tell us a little bit about how you got involved in this, because you have a wide ranging career in technology in Silicon Valley. Uh, Fabricate Labs for example of micro Fabrica is another one

of the companies. I believe that you were uh involved with your You seem to have this sort of perspective of turning what is sort of almost mundane thing, you know, concepts into something uh precious and and and you know driven by technology. Yeah. Um, you know, pioneering brand new ideas um is my passion and uh that is a

pattern in my background to some of those ideas. Some of the pioneering efforts have not been that successful, but it is what I like and changing paradigms, changing the way things are done today, um, disrupting the way things are done today, especially when it comes to making people more productive, um, and making people more accurate in the way they do things. Well what we do for example,

let me say analogy is an Excel sheet. You know, Uh, we didn't Excel sheet did not dislodge accountants from their jobs. It's a tool and it doesn't you know, much like Ai is Budget. I could spend the next hour speaking with you, probably more. Thank you so much for being here. It was really great having you A have to have you back. Budget A rat is co founder and president of hi A Technologies in Los Angeles, creating technology that

will soon replace me. When we talk about trade skirmishes between China and the US, many are quick to point out that China's imports from the US aren't large enough to match Trump's tariffs taller for dollar, meaning that they're unable to hit back really with the same force that the U s is. But is that true? Joining us now, Carl Weinberg, He's chief economist high Frequency Economics in New York. Carl, thank you so much for being here. So let's just

start there. I mean, is it true that China really can't hit back dollar for dollar just due to the fact that isn't import enough from the US. High Lisa, good morning, Thanks for having me on your program. Um, China has a lot of weapons that can use that aren't strictly tariffs that could be engaged in the trade war. The most likely that we are that we are prone to see and perhaps have already started to see, are

just boycotts against American branded goods. Um. You know, US automobile makers reported drop in sales in May of U S branded vehicles. That we've seen the Chinese do this before, boycotting brands from Japan and South Korea when tensions have risen on the political front against those nations. UM. The US companies have about a hundred billion dollars of direct investment in in China in projects to make goods for Chinese consumers in China, and every one of those companies

is vulnerable. And there's some of our biggest corporate names, Carl Weinberg as an example. BMW says it will build more of its SUVs overseas and not in South Carolina be because of China's retaliation in the auto industry. Do you believe that? Sorry, go ahead exactly, Tim, And we just reported on Bloomberg the story yesterday of Tesla promising to build a plant there to build half a million vehicles per year in China. We don't know how real

that is, but the intention is certainly real. And if Tesla can do it, others can do it GM right now. According to an article I read on Bloomberg a few weeks ago, produces more cars in China under ten joint ventures and two direct investments than it does in the United States. So big companies are vulnerable, and some companies get a great proportion of their profit, does not most

of them from transactions in China. So, Carl, how much of this is being priced in that China will retaliate in the manner that you say, with sort of boycotting or discriminating against US companies they're doing business in China. Lisa, I wish I could give you an answer to that. There's no way to know. We've never really seen anything like this before. The only prior that we can point two is that when China has engaged in a spat with Japan, Japanese brands were boycotted. When they engaged in

a spat with Korea, Korean brands were boycotted. And this can be a very very effective counter tool in any case. You know the name of the game here. The objective of the Trump tariffs is to try to short circuit China's Made in China program, and that's worth about a trillion dollars a year to China's economy forever once they

succeeded it, and I think they will. And whatever pain that China feels on tariffs and on this trade war is peanuts compared to the potential gains from China, all right, So that is one way that China could hit back is through some of the measures that could take against US companies. What about its treasury holdings, I mean, do you expect that that to be on the table with China potentially liquidating it's holdings. Well, there's a risk of that at any time that China could decide to let go.

Of course, they do have their own capital invested in those bonds, so that if they undermine the market, they do undermine the present value of their portfolio. But if they're planning on holding to maturity, then they can finesse the capital losses and they can probably make a profit

on the bonds that they sell. So I would say that there is a risk, but I would say it's a tail risk right now, mainly because China sees itself as a world player and its future is involved in globalism, and to undermine the U S Treasury market would undermine the world economy, and that's not in China's interest. It has more focused tools at its disposal that it can use. Carl or about using currency as a weapon in this war, Well,

it would seem, you know almost that they are. You know, we see the yuan getting cheaper, and um, you know that certainly is one way to offset the impact of tariffs. The thing is they don't really have to go that route. I'm writing tonight from our customers at High Frequency Economics, where our readers hear a story about trade diversion and alternative sources for goods, and um, China can can really escape through this tariff war with very little effect on

its domestic economy. Um, the losses that they would face on sales to the US would be minimal, and the impact on their consumers of the tariffs the US is proposing would be I think negligible. Thank you very much for spending time with us. Carl Weinberg is the chief economist for High Frequency Economics. You can follow Carl on Twitter at c B Weinberg. The topic tariffs and President

Donald Trump's trade war and retaliation from China. Fake accounts, Yes, fake accounts at Twitter, potentially fake accounts at Facebook, fake accounts almost everywhere. Here to tell us more about social media and advertising is David Garrity. He is the chief executive of g v A Research and you can of course follow David as we do on Twitter at a g v A Research. David always a pleasure, Thanks for coming into the studio. Uh, you're not a fake account.

But how do we know that there isn't someone out there on social media impersonating David Garrity? Um, apart from the fact of you know, my own activity and those of people who basically host my social media activities, you know, trying to make sure that nobody's out there squatting. Uh. So there's a certain amount of self policing that takes place.

But clearly we have a circumstance here with social media platforms, you know, not necessarily subscribing to the good business practices you know, traditional um news organizations and or other technology companies had subscribed to in terms of verifying users identities. Clearly, you know, we're seeing a belated response on the part of Twitter to suddenly go out and purge one out

of every five of their user accounts. As at the end of March, I mean, the number of seventy million was somewhat staggering, especially when you consider that they have

seventy million users in the US alone. Now, clearly we don't know what the geographic you know, dispersion was or distribution was of these seventy million accounts that were being acted by Twitter, but it would be very interesting to go through and see, you know, these accounts, what kind of social positions into or political positions were they espousing to what extent was that basically a very clear measure of manipulation of public opinion through Twitter, you know, And

the question really is begged here if this is what they've done, now, what are they going to be going to do on an ongoing basis? What's Facebook going to be doing? You know, do we have a consensus potentially in Congress, or do we have a consensus overseas, say within the EU to make sure that these practices are being that the bars being raised. So what I'm trying to understand is also what are the consequences consequences from a corporate standpoint of some of these social media companies

actually taking action? I mean, Twitter, yes, we know that they're going to be culling about one fifth of all of their active monthly users calling them fake bots are impersonating uh impersonating identities, but their shares are still up more than this here. No, I mean, certainly one could say on the flip side that they're gonna be able to come back to advertisers and say, look, okay, we've

gone through, we've vetted our accounts. You're really dealing with real people here, and from that standpoint, we can justify our ad rates. And you know, we've we've you know, come to the altar, we've confessed our sins, you know, absolve us and let us go forward. And the question really boils down to, from a social and from a policy endpoint, is that good enough? My view would be no, because you know, what happened once clearly could happen again.

I think that this might be an interesting opportunity to apply it a new technology, say blockchain, to verify user identity when it counts are opened, and also to update that record as new posts are being added. Hold on a second, I'm sorry, because people use blockchain and a lot of liberal ways and and they're sort of almost a joke in the newsroom that you know, if you have a problem, Just say blockchain and it will go away.

Are you basically saying that everybody should have a digital fingerprint and that basically is used to sort of peg their social media presences? In reality? Is that that type of thing and that the blockchain technology will be used to give everyone that digital fingerprint? Or is it? My concept here would be say that for Twitter themselves, they could develop a utility token, which, you know, in which users would have to employ in order to access their platform.

You know, if what Twitter wants to be able to put forward, absent the imposition of regulation and oversaw, if they wanted to adopt a solution that might allow a better tracking and verification, um, you know, around what activities are taking place on their site. Blockchain in this case

actually is something of possible application and value. And I think it's something where you would have a distributed network because you have many people, many parties, who are actually interested in establishing and confirming and upholding the veracity of what's going across social media platforms. You know, this is

possible for Twitter to consider a blockchain application. David Garty, I just want to bring in the concept of a middleman or middle person, right, and I understand that blockchain and bitcoin and a lot of cryptocurrencies, why we sometimes shouldn't conflate them. It is the goal to get rid of the costs, the friction cost that exists in the

middle of transactions. Would that be accurate? No, entirely, okay, And until such time as we actually have technologies developed to support blockchain applications that have faster transaction times and lower transaction costs than existing centralized providers, you know, those are obstacles to blockchain adoption long term. Okay, let me just see if I can strike a blow for the

middle person. You know, in the world of book selling, they used to be this concept that a publisher would ship a certain amount of books to a retail establishment. What the retail establishment didn't sell, they were allowed and then send back to the bookseller to the publisher. In another model, the book publisher sent books to the retailer

and they didn't take anything back. When the New York Times went to look at best seller lists, they decided that it was more important to look at those organizations that could send the books back that were unsold, because they had no reason to fake the results. You had retailers who were faking results by saying, oh yeah, this was a best seller and it became a self fulfilling prophecy. So I'm wondering who would that middle person be in

these kinds of transactions. In the middle person in case of this example might very well be a consortium that would be formed between the publishers and those retailers who

would agree to participate. Um, you know, arguably, assuming that there is you know, frictionless application, you know, low cost or transactions or loss for processing, you know, you could potentially apply a blockchain tracker to each book that was going out and being sold, and then you could use you know, barcode readers that potentially update the related block chains and the distributed nodes that would be supporting the application.

This blockchain would be operated by the consortium of these different organizations. Would that work for social media as well? Well? Potentially, yes, I think in the case here looking at it, or if one of the problems that we have is the ease with which these fake accounts can be opened. Impersonating myself, for impersonating you are God forbid impersonating Lisa exactly. But Lisa Brahma wits one. By the way, precisely, not too

three or four exactly. But um, from that standpoint, you know, if we can find the platform that technology can be used to help to enable this kind of verification of identity and veracity of content. Arguably, given all that we have suffered, if you will, as a society because of the manipulation of social media, we would all benefit. David Garrity, the one and only, the non impersonatable David Garritty, the chief executive of g v A Research here in our

eleven three oh studios. Thank you so much. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm pim Fox. I'm on Twitter at pim Fox. I'm on Twitter at Lisa Abramo wits one. Before the podcast, you can always catch us worldwide on Bloomberg Radio.