Driving Healthcare Innovation and Access with Dr. Scott Howell

Melanie Marcus: Dr. Scott Howell has a view on healthcare from virtually every angle, or at least the angles that matter most when it comes to these two words: better access.

Today’s guest began his career as a general internist, and what he saw—the inefficiencies, the misaligned incentives, the barriers to care—all pulled him toward the many business and leadership roles he has had in healthcare.

And it made him the mission-oriented person that he is today.

But what do the words “better access” really mean? And how do we make it happen?

Better access is our focus on today’s episode, but I’ll tell you now that it means getting patients the care they need, including the groundbreaking medications coming from innovation in pharmacy and life sciences.

And I should note that better access doesn’t happen in a vacuum, with every man, woman and healthcare organization in it for themselves.

Better access happens systemically, across healthcare, everyone in it together, and this is something Scott knows about as well as anyone. So, with that, let’s dive in.

Welcome, Scott. It is great to have you here with us today.

Scott Howell: Thanks. My pleasure to join you.

Marcus: Now, when I think of the term “Renaissance man,” I think of you, Scott, in terms of what you've done in healthcare.

You were a general internist early on in your career, caring for patients in North Carolina and Ohio. Later you moved into patient access and the work of getting groundbreaking medications into patients' hands. And then, like any true renaissance man or woman, you've had a variety of passion projects like teaching at UC Berkeley.

So you began your career in direct patient care as a doctor, but you must have also seen something compelling in the broader world of healthcare. What did you see? What inspired your transition from patient care to business and leadership roles in life sciences and patient access?

Howell: I don't think I would ever refer to myself as a Renaissance person, but my early experience practicing medicine was that, even then—in the 1990s—there were lots of inefficiencies in the way that we did it due to the way the system was designed, and that seemed curious to me.

It was my first experience within the health system, I'll say. You're kind of sheltered from that as a medical student and resident, but once you start practice, you see it every day. And I just got curious about that and wanted to learn more about it.

Marcus: That's interesting. The early phase of [your] medical career, you could already see the incredible inefficiencies.

So what sparked your interest in medicine and healthcare?

Howell: It was fortuitous, I think. It was almost coincidental. I grew up in a family [where] my mom was a teacher. Which I think inspired my love of learning and my curiosity. And then my dad was kind of an engineer businessman, and he owned and operated a small machine shop.

We repaired coal mining equipment. And my brothers and I grew up working in the machine shop. And I went off to Notre Dame for college thinking I was going to kind of follow that path. I started off in engineering and thought maybe someday I'd combine that with business or something. And freshman engineering classes convinced me that I wasn't really cut out to be an engineer.

I came home and worked up the courage to tell my parents I didn't think I wanted to be an engineer. And I had really loved my freshman English and literature classes. And I said, “I think I wanna be an English major.” And my parents hardly missed a beat. They replied, “There is no way we're paying for you to go back to Notre Dame to be an English major. Go think some more.” And so I went away and thought about it for a few days. I said, “Well, how about pre-med?” And they said, “You may return to Notre Dame.”

Marcus: What are some of the stories that you encountered that made you go back and get your MBA?

Howell: I had met and married a classmate in medical school at Ohio State. We trained together in internal medicine at Duke, and then we did something very uncommon for Duke. We decided to go into private practice, general internal medicine. Joined a small group practice there in a really beautiful community in the mountains. And I remember one patient in particular, one day he had a stroke and he wound up in the emergency room at the hospital and I was called to come see him.

And he had a bunch of complications going on and plus he had the stroke. And so we admitted him to the intensive care unit. I took care of him for like the next 24, 36 hours. Spent most of that time kind of at the bedside or in the ICU with him.

And for the first day—I don't remember the particulars now—but for the first day of that ICU care, I got a hundred dollars. And then for every day I saw him in the hospital after that, taking care of all those complications, like at $25 or whatever. And then the physical therapist and the respiratory therapists see him and they do their initial assessments, which take 45 minutes or whatever, and they charge $150.

They get 150, and then every day they see him for 15 to 30 minutes of activities and we're collecting $50 or $75. And I just thought, “Well, this whole thing's backwards. This is nutty. This doesn't encourage people to do the right thing and spend the right amount of time on things.”

Caught my attention and moreover made me curious about what was going on with the system, whether or not that could be improved.

Marcus: Right. And that's when you went back to get your business degree.

Howell: Yeah, that's right. I had some great senior partners who were very active in medical societies and things like that. And they encouraged me to learn to pursue my curiosity about how the system worked.

Marcus: All right. So a big question then, because obviously you've done a lot since being in private practice. When it comes to innovation in healthcare, where are the opportunities? Where's the low-hanging fruit?

Howell: Anybody that works in healthcare knows there's low-hanging fruit everywhere. In fact, there's fruit on the ground but the rule is you can't touch it.

So, it is everywhere and it is kind of off limits. The reality is there are lots of things that are suboptimized in healthcare. We and everyone that works in it knows that. But it's not for no reason. They're done the way they are largely because of the rules of the game. Regulations, finances, reimbursement, and business relationships, I think, typically are the big drivers.

If it's important for a regulatory reason or if it's important because it gets reimbursed this way, not that way, or if it's important because we have a business relationship with these people and not those people or whatever, then, you know, those things kind of drive what gets done. And we've all been operating in that same complex gain for decades, and everyone has sort of optimized their position of where they are, how they operate, what they prioritize, how they behave, what they value—all those things—for who they are and how they relate to the other stakeholders in the ecosystem.

So we're all locked in. We're all like, “I've optimized my spot and if I take a step in any direction, I give up something and I don't wanna do that.”

Marcus: That is well said. Well, if you had to choose just one tough problem to solve, what would it be?

Howell: The one I'm working on most now is the biotech and pharma industry. The industry over time has developed structural challenges in the way its business operates that put the financing of the innovation ecosystem that has worked so well for 30, 40 years or whatever for the industry. But also for us all, the development of innovation now that is widely, broadly available and in the vast majority of cases, very inexpensive, is generic medicines. It’s now failing and coming apart. And it's clear to me it's not going to sustain the next 30 years the same way. And what the world needs is a radically more efficient drug company.

Marcus: So when you say a radically more efficient drug company, what do you mean? Where are the areas that you're talking about and focused on?

Howell: You can split this stuff lots of different ways, but I would split it in two big buckets. One is R&D yield drug discovery and development successfully to product on the market. The yield, even for products that make it into human trials, the yield of making it to registration is about 10% on average. So it's low and it's not improving. It hasn't improved in decades.

And so lots of money is spent on the blind alleys that are investigated until you learn that it's a blind alley. And so if we could increase the yield of R&D from that 10% figure, let's say, to 15 or 20 or 40 or whatever, you could make a really big difference in the economics and therefore, the sustainability of the innovation and access for patients to the medicines.

And then secondly, business operations are not as efficient and as effective as they can be. And so there's an opportunity to just do kind of old fashioned OpEx on clinical trials, on drug manufacturing, on commercialization, distribution, all the elements.

And it's not to say people haven't been doing that for a long time. They have been. We're in a new era of new opportunity with artificial intelligence and so rethinking the operational side of the industry is part of it as well.

Marcus: Right. Interesting. Well, as the former chief strategy officer in the U.S. at Novartis, what lessons did you learn about leading change in innovation in a large pharmaceutical company?

Howell: Change in innovation. It's both attractive and scary. I think many organizations aren't really designed to innovate. They're designed to optimize this thing we deliver kind of every day, efficiently, at a high quality, reproducibly, over and over and over.

And when you're trying to maintain that kind of system, newness is the enemy. New thoughts interrupt our efficient delivery.

So then if it's innovation within that framework, like if you got an idea about a process or something that can make us do that faster, better, cheaper, then great, we'll embrace it. But if it's bigger than that, then it's kind of not our responsibility. In fact, it may be a risk for us to think about that.

I think particularly in healthcare, and this goes for life sciences companies, but I think it goes broadly. Thinking through where desirable innovation fits in an organization and how it can be achieved. And as we talked about earlier in the regulatory reimbursement business relationship world that we have, how do you do meaningful innovation that adds value but then fits all of those things? So it's complicated, right? It's hard.

Marcus: Yeah. Well, I should note that Novartis wasn't your first go-around when it comes to pharmaceutical and life sciences. For our listeners, you worked at five other organizations before Novartis, including Genentech and Glaxo Smith Klein—or GSK as it's known today—and the throughline in your career at these organizations has been market access.

Help our listeners understand what market access is, and is it the same as patient access?

Howell: Sure, so market access in a drug company is the activities they undertake to make the medicine available broadly within a given market. And usually that's country geography is a way to think about that.

And so for example, here in the U.S. that would include things like pricing, contracting, negotiations with payers and PBMs, channel relationships with distributors and GPOs and specialty pharmacies and the like. And those are all kind of like big levers because the U.S. reimbursement environment is highly consolidated as you well know. And so, if you get those things right writ large, you can get 80% or 90% of the access to the market achieved by having good strategies and tactics for those things.

But then, even though you've largely gotten it right, let's say, and you've solved market access in the big picture. The reality beneath that day-to-day is still very complicated and hard for both patients and practices to navigate.

And so there are still lots of hurdles for patients getting connected to their medicines. And so it's worth it, particularly in an environment now where the drug companies have mostly migrated from the primary care markets, which were large—hypertension and cholesterol and depression, diabetes. And had millions and millions of Americans, and therefore low per patient prices, relatively speaking. They've migrated. Now those have all gone generic, and it's really hard to launch a new antihypertensive that's going to be a line of therapy.

And so more and more of the research now is on smaller specialty conditions that don't have nearly as many patients. All the different kinds of cancers, for example. But then, because you have many fewer patients, the prices have to be much higher. And so, in that model where it's fewer patients and higher prices, it is worth it for the pharmaceutical companies to try to help solve some of those access challenges that are left over. The patients and doctors have [been] navigating even for patients who have good insurance.

And so, the manufacturers then all provide patient support services to help. And in the career I've had, it's been both. It's been working on the pricing, contracting.

Marcus: Right, right. That was one of the best descriptions of it that I've heard, so thank you for that.

You are a thought leader around value-based pricing, so how do you define that and how does that fit into the puzzle?

Howell: I had a period of reflection. What struck me was that everybody wants more affordability and that makes perfectly good sense. And the industry needs to make profit.

And in-between we have insurance companies and PBMs trying to make it all fit. And so the way that we make it fit, especially in this low-volume, high-price environment, is aggressive use of formulary limitations and to extract as deep a rebate discount as we can.

And then, even if you’re listed and preferred, it's still expensive and it's still a target for utilization management. And so even then, lots of prior authorizations and step edits and increasing patient cost shares, whatever. And what has happened over time is it's all logical, all predictable.

And so we give pharmaceutical companies patents purposely to inspire them to take these risks. And create products for us that help us with our immunologic disease. And we give them pricing power on purpose for a period of time. And so the logic—if you just extend this gain—the logic is, I'll say a PBM is going to reduce formulary access, get deep rebates.

And then the manufacturer's going to say, “OK, that's fine. I've gotta just charge more.” And so you get price increases, or you get list prices for new launches that are higher. And so then the PBM doubles down and says, “Well then, we're gonna meet that with more formulary exclusions and our PAs are gonna get a lot harder and we're gonna use more of 'em.”

And so then the manufacturer says, “Well, that's fine. I can hire more people in my contact center. We can do more benefits investigations for patients and navigation and all that sort of thing.” And then the PBM says, “Well, patient cost shares have to go up. That's what we're gonna do next.” And the manufacturer says, “Well, that's fine. I've got my copay cards,” and whatever. And so it's just this tit for tat.

One of my academic colleagues at Berkeley calls it the “war of all against all.” With doctors and patients caught in the middle, unfortunately. But I think it's true, and I think we actually don't reduce our net spending at all on drugs. I think we'd be in the same spot net whether we did all this or not. But what we do is we do create a ton of friction and a ton of expense in navigating all this stuff.

And mostly in a world of specialty medicine, it's not all that helpful. Like MS patients are being taken care of mostly by just MS doctors. Like, they’re not even going to like general neurologists. They're going to MS subspecialists. This is what they do all day long and they're mostly at academic and other great, renowned institutions. And none of those patients are taking an MS medicine just because. It's not a medicine of abuse and no doctor is prescribing them [when] they don't think it’s going to benefit a patient.

The utility of putting a prior authorization on an MS medicine is pretty limited. But we put a PA on all of them, whether they’re branded [or not]. And so all those people, all patients and families and doctors and nurses get put through the ringer. And not just once, but you know, every year.

We need sort of bilateral de-escalation. And I think what one side wants is pricing moderation. And what the other side wants is better access. And we ought to be able to do a trade. A trade of pricing moderation for better access ought to be possible.

So when I think of value-based pricing, that's what I think. I think of a fair price that society feels that it can live with in exchange for fair access for patients and doctors.

Marcus: That makes sense. Would there be any policy change associated with making that happen?

Howell: It may require policy change. And in theory, the private market could do this. And in practice it's incredibly stuck on that current model. The people that have built competitive advantage in operating that system want to take advantage of that competitive advantage. They don't want to turn it over and give it up.

Marcus: Let's turn to your work as co-founder and as an advisor to some startups and venture capital. What is Synapse Sciences, a company you co-founded in 2023?

Howell: This is back to the idea of a radically more efficient pharmaceutical company for the future.

I think what the world is signaling to the industry is we're not going to continue to pay the same way we have. We're in an era of declining global reimbursement for drugs. Most other countries outside the U.S. have been in that space for a decade or so now, and the U.S. has gotten there now. And I started worrying about this stuff like if you play this out, the system that has sustained innovation for so long financially isn't going to continue to do it. And I think we're definitely experiencing that.

So I started researching and writing about and talking about this stuff a few years ago, and a colleague of mine in Europe started worrying about this stuff too, based on the European experience. Every year they pay less. Every year it takes longer to get through the reimbursement cycles. He decided to go back to school and get a Ph.D. in fintech and wanted to explore [if] there were other ways to think about this and do it. And so he was looking for a thought partner. And so we've been doing this now for a bunch of years. We've been researching the biotech innovation and funding ecosystem, thinking about ways to do it much more efficiently.

So we've created a little company to hold these ideas and to try to nurture them. And so we're out talking to other parties who share this perspective, share the belief that a radically more efficient future is both needed, but also possible.

Marcus: When it comes to the future of biotech and artificial intelligence, which you brought up, what are the emerging technologies, business models that have you excited?

Howell: Yeah, there's so much going on there. You mentioned earlier, I do some advisory services. And I'm mostly working with the health tech companies and most of them are AI enabled. AI is real and it's going to be a big deal and it's going to make a big difference.

And a lot of these activities that we have created and tried to solve for in highly manual processes are going to be able to be automated for the future. And be able to be done much more efficiently. I'm seeing the tip of the iceberg. I know for sure. And so fundamentally, what I've come to believe is that the future's different than I thought it was going to be a few years ago.

The world's on a path that I couldn't have imagined like three or four years ago. It's going to be fantastic, but it's also going to have some disruptive and scary parts, too.

Marcus: That's exciting and we see it too. We feel it. We're working on it. Very exciting time to be in healthcare IT.

When you think about the problems that we've been trying to solve for so long, that might actually be solvable, I'd like to zoom out a bit and look at your other projects and roles specifically in academia. We've been talking about this, but what do you enjoy most about teaching life sciences strategy to MBA and MPH students?

Howell: I love being with students or being with the entrepreneurs. And I learned, when you're teaching this stuff to other folks, it does force you to step back and examine not only the little things you know about—what you're doing and what you believe and why—but then also, as we've said a couple times, this zooming out and kind of rethinking the big picture as well.

And so for me, it's been very synergistic with my work. So every time I have to prepare myself for class or a course, I get smarter and better at something that makes a difference in my work.

Marcus: Yeah, maybe you just answered it for me. Because I've always wondered, how do you keep the curriculum up to date and relevant in an industry that's moving this fast?

Howell: It does take a level of personal dedication to do that. But the other thing I've learned is we rely on amazing guests to come. And I think we did our best MBA course on key trends in biotech and pharma industry this past spring semester with my MBA program collaborator, who's fantastic.

But it was because we had such amazing guests. We had unbelievable people who came in and graciously gave us some time and took some questions and talked to the students. And I mean, I was inspired and I know the students were. It was amazing.

Marcus: Well, what advice do you give to young physicians, scientists, business people going into healthcare and how they can make an impact?

Howell: I remind them how first, how incredibly important it is, what they're working on. And they know this. But you know, when you're studying for finals or trying to do a paper or a project or whatever, it's easy to lose track of it day to day.

But the reality is people still deserve better answers and better solutions, and we need the next generation to be inspired about these things, to want to work on them and to apply their creativity and their focus and their energy to it.

Marcus: Great. Well now it's time for my favorite part of the podcast. We look at the world through rose-colored glasses and we leave with some inspiration.

If you could snap your fingers and have one major issue in healthcare solved, what would it be and why?

Howell: I think right now it would be that value-based pricing for value-based access deal. Fair prices for fair access. Sounds pretty good to me. And you get rid of a bunch of friction and a bunch of unneeded costs in the middle.

We did a paper on the unneeded costs. It's over a hundred billion dollars a year on navigating prescription. I think it's probably closer to 200 because there's not good data on all of it. On $400 billion of spend. It's nutty, it's just totally nutty. And then you throw in all the trap dollars in the ecosystem with all the different parties taking a slice and all that. And so anyway, I think value-based pricing and access, the two I think have to travel together. Fair prices for fair access. That's how the patients get a good deal out of it, too. I think it would be a really big deal.

And if we could get Medicare or whoever to say, “I'm gonna have the courage to try it,” I think. But the other thing that I think about when I think about that question is the issue of affordability generally. It is the biggest healthcare challenge of my career, of my time in healthcare.

There are lots of challenges. I'm not trying to belittle any of them. But writ large, like the one that society's really having a hard time digesting, is the cost, the affordability problem. What too many of us in healthcare do is instead of working on that, we work on optimizing our spot in the reimbursement regulatory business relationship environment, right?

And so I'm trying to do the best I can for me and my company, my people, my shareholders and all that. And there’s a logic to that. I'm not judging it. But in doing that, when we all optimize our spots, we don't get to the most affordable solution for the most people. And it seems odd to me that no medical school in the U.S. has committed its curriculum to the problem of affordability.

I would launch a medical school or repurpose a medical school on solving the challenge of affordability. And I'd operate the medical center with that in mind.

Marcus: That's amazing, amazing insight.

What gives you hope and inspiration that healthcare can heal itself?

Howell: It's incredibly important and it does have really great people committed to the cause and working on it. Now we all sooner or later get trapped by reimbursement regulation and business relationships. And so we need more people who have the wherewithal and the courage to excuse themselves from those traps.

So that's the thing that gives me hope. That there's a pipeline full of people that want to do that. In fact, almost everybody in the industry wants to do that. There's a revolution to be had if someone can just figure out how to kick it off.

Marcus: Well said. Well, it's been great talking with you today, Scott. Thank you so much for joining us and shedding some light on these important areas. Healthcare does have opportunity and lots of good things to come with people like you working on it.

Howell: Well, thanks. You're very kind. It's been fun for me as well, and if I ever can be of any help to you, please call on me.

Marcus: That was Dr. Scott Howell—physician, educator and business leader, to name just a few things. He shared with us an invaluable perspective on what we can do to make healthcare better for all.

From his early days treating patients in North Carolina and Ohio as an internist, to leading strategy at one of the world’s largest pharmaceutical companies, making healthcare better has always been Scott’s focus.

But it’s not just about making healthcare work better for patients. To do that, we must think broadly. We must think systemically. We must work together across the board, from providers to payers to pharmaceutical and life sciences companies.

Whether it’s rethinking drug pricing, or improving access to the fruits of healthcare innovation, or mentoring the next generation of leaders in business and medicine, Scott’s work is grounded in systems thinking and ingrained with a sense of mission.

When I asked Scott my signature question—what he’d fix in healthcare with a snap of his fingers—his answer was clear: value-based pricing to enable market access and eliminate unnecessary friction and costs.

But his vision goes beyond innovation in pricing and access.

Scott imagines, for example, a medical school dedicated in part to solving affordability. Because as he puts it, that’s the biggest healthcare challenge of our time.

It was a pleasure speaking with you today, Scott, and many thanks to our listeners for tuning in.