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About the firm

The name has roots.

Birch trees and glacier-formed lakes are defining features of the Finnish landscape, long associated with renewal and resilience. The firm takes its name from that heritage, carried to America by a father and son who founded Birch & Lake Partners in 2014.

2014Firm founded
50+Transactions

Tailored advisory for biopharmaceutical
companies and investors.

Life sciences is an unusually demanding business. As a boutique, we may carry less name recognition than the international consultancies and investment banks. What we offer instead is tailored guidance for select projects, rooted in experience and judgment; we take pride in our work as if your company were our own.

Birch & Lake works across corporate and business development, from strategic guidance through to operational execution.

The team

Jyrki Mattila, M.D., Ph.D., M.B.A.

Partner

Jyrki has spent more than 40 years in pharmaceuticals and biotechnology, having served in leadership roles across general management, business development, and research and development. He has negotiated and closed more than 50 transactions, spanning licensing, acquisitions, co-marketing, and research and development partnerships.

He served as president of a multibillion-dollar public pharmaceutical company, where he helped lead the global development and commercialization of Comtan and Stalevo for Parkinson's disease and Simdax for acute heart failure. He then helped build Auxilium Pharmaceuticals from a private startup into the public specialty company behind Testim and XIAFLEX, the latter a transaction he identified and led. He has served on multiple corporate boards.

Jyrki holds an M.D. and a Ph.D. in pharmacology from the University of Helsinki and an M.B.A. from the Helsinki School of Economics.

jyrki@birchandlake.com

Henri Mattila, M.B.A.

Partner

Henri's experience spans biopharmaceutical corporate and business development and life sciences venture capital. He leads the firm's transaction analysis, from valuation and financial modeling through diligence and deal structuring, and the advanced analytics and AI tools that support it.

Henri holds an M.B.A. in Health Care Management from the Wharton School and a B.S. in Applied Economics and Management from Cornell University's Dyson School.

henri@birchandlake.com

Advisors

Behind the partnership sits a global bench we draw on engagement by engagement, across drug development, regulatory, market access, commercialization, and finance.

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Market access

Two lines on the track record that matters here—payers, pricing, reimbursement.

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Commercialization

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Finance

Two lines on the track record that matters here—capital raised, transactions closed.

Have an asset or a company you believe would benefit from Birch & Lake?

Write to inquiry@birchandlake.com. We review every opportunity and decide whether it is the right fit for an initial conversation. Either way, you will hear from us within five business days.

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Perspectives

Featured interview

Funding Medicines for Lasting Impact

Vikas Goyal, Venture Partner, Longwood Fund · December 2024

Latest interview

NIH Director on the Second Scientific Revolution

Dr. Jay Bhattacharya, Director, National Institutes of Health · February 2026

Insights

Perspectives for the biopharma community.

Articles and interviews with thought-leaders in our network.

Feb 2026 Interview
Dr. Jay Bhattacharya, Director of the National Institutes of Health

The physician and economist, formerly a professor at Stanford, now leads the world’s largest funder of biomedical research.

Biomedical R&DNIH fundingVaccinesScience policyPublic trust
Dec 2024 Interview
Funding Medicines for Lasting Impact: A Conversation with Vikas Goyal, Venture Partner at the Longwood Fund

On the harder path of biotech investing, why medicines endure, and what actually bottlenecks AI in drug discovery.

BiotechVenture capitalDrug discoveryDealmakingAI
Dec 2024 Interview
Policy Research for the Common Good: A Conversation with Lovisa Gustafsson, Vice President at the Commonwealth Fund

How a philanthropy shapes health policy without advocating for it, and where affordability and transparency go next.

Drug pricingPBMsPharma policyAffordabilityHealth policy
May 2024 Interview
Dr. Geeta Nayyar: How Does the CMO of Salesforce Think?

A leader at the intersection of technology and healthcare on the promise and peril of social media, artificial intelligence, and the misinformation that travels faster than the facts.

Health techAIDigital healthMisinformation
Feb 2024 Interview
Godmother of Consumer-Driven Healthcare: Regina Herzlinger of Harvard Business School

On growing up amid war, why healthcare has no equivalent of a nutrition label, and what it would take to hand the money back to the people who already pay for it.

Healthcare costsConsumer-driven carePolicyAcademia
Sep 2022 Interview
Innovation and Drug Pricing: A Conversation with Dr. Jonathan Darrow of Harvard Medical School

For all the attention paid to America’s fading competitiveness in a globalized economy, there is one sector where the United States still reigns supreme.

Drug pricingPharmaPatentsGenericsInnovation

Interview · February 2026

Dr. Jay Bhattacharya, Director of the National Institutes of Health

The physician and economist, formerly a professor at Stanford, now leads the world’s largest funder of biomedical research.

Dr. Jay BhattacharyaDirector, National Institutes of Health

Dr. Jay Bhattacharya is a physician and economist, a former professor at Stanford University, and Director of the National Institutes of Health, the world’s largest funder of biomedical research. In February 2026, Dheeraj Baji spoke with Dr. Bhattacharya about his philosophical beliefs and his ambition to spark a new scientific revolution.

What does moral courage in medicine mean to you, at an individual level and an institutional level?

It’s a really interesting question to start with. I think in medicine there’s some safety in saying the same things that everyone else says. You have professional norms in medicine, and most of the time those professional norms are correct. There’s a sort of correct way to treat a patient with a certain kind of heart disease, and you should basically follow that.

At the same time, for much of medicine, there’s deep uncertainty. The reality is that we don’t know how the human body works to the full. We learned a lot over the past many centuries, especially the last century, but there’s a lot that’s not known, and there is an art to medicine.

The problem is that the scientific establishment and the medical establishment often take very strong positions on topics where there is still considerable scientific uncertainty. Moral courage in medicine, from a scientific point of view, means saying that the scientific evidence isn’t solid when the scientific evidence isn’t solid, on a topic where the medical professionals have already taken a stance.

You risk excommunication. You risk losing your license. You risk all kinds of reputational harm. It takes a lot of courage to say, “No, I think what you’re saying is not correct.”

It’s difficult. Medicine, at least modern medicine, is consensus-driven, and yet we admire people who speak up against the consensus in medicine and turn out to be right in retrospect. We put them through a lot of suffering.

A great example of that would be Robin Warren and Barry Marshall, who discovered and won a Nobel Prize for the fact that stomach ulcers are caused by bacteria. Two scientists from Western Australia—no one believed them for a decade. Barry Marshall was a student of Robin Warren, and he drank a slurry of H. pylori, causing himself an ulcer, a chronic ulcer, proving that the hypothesis was correct. Now we valorize them, and they won a Nobel Prize.

Werner Forssmann, in 1929, was a cardiologist in Germany and decided that he could put a tube into his own heart, or people’s hearts, a cardiac catheter. He tried to get permission from his hospital to be able to put it in. They said, “No. Are you crazy? Why would you put a tube in your heart? You’re going to kill yourself. You’re going to kill patients.”

He sat in front of a fluoroscope alone, did it, stuck a catheter into his own heart that he made, and then published a paper on it. He was immediately fired, and then decades later won a Nobel Prize.

At the same time, there are lots and lots of examples of people who are just wrong, and the consensus is correct. But medicine discouraging real, honest debate, honest acknowledgment of uncertainty when there is uncertainty, does nobody a service.

That is an amazing pivot point. The follow-up I want to ask is: On one side, you’re talking about being honest about uncertainty toward the public. That’s what science needs, and eventually it will catch up in terms of its credibility. But what is the right balance between encouraging debate in science and communicating a clear, trustworthy message to the public? If it seems like scientists are not in consensus, how can you give the public a message? What do you think is the right balance?

You’d be hard-pressed to find any really important topic in science where there isn’t legitimate intellectual disagreement. Even some of the most well-established things such as gravity, for example, or the nature of gravity and how it links to quantum mechanics...there’s fundamental uncertainty.

In medicine, there’s even more uncertainty. Science is a tremendously powerful tool for discovering how the physical world works, but it absolutely requires an acceptance that there are things we don’t know and don’t understand; when we look at them systematically and scientifically, we may change our minds pretty fundamentally.

The problem happens when you have to make a decision. Do we close the schools when a new respiratory virus emerges? You have to make a decision, and if you’re going to make an extraordinary decision like that, you better be pretty darn certain that you’re right.

And what if there are people who disagree? What do you do with them? That’s the issue. Science, if it doesn’t embrace uncertainty, is not actually science. Science is systematic investigation, with the standard method of hypothesis, experiment, and revision, that results in better knowledge about the way the world works.

If you’re going to convey it to the public, or anybody, you have to convey that uncertainty. You’re really conveying science. If you’re conveying certainty where there isn’t certainty, you’re not conveying science; you’re conveying something else.

If you’re conveying certainty where there isn’t certainty, you’re not conveying science; you’re conveying something else.Jay Bhattacharya

That’s a really powerful statement, and I definitely agree with you on that point about communicating. I want to go a little deeper on that. In January of 2024, the Pew Research Center published a report on public trust in science. It found that 76 percent of Americans still trust science and medical research establishments. But there was also a question about whether scientists are good at communicating their science to the public. Even though 76 percent say they trust scientists, only 45 percent agree that scientists are good at communicating. Do you see a better way for scientists, individually and institutionally, to communicate, given that communication seems foundational to building trust?

A couple of notes on that Pew survey. One, that 76% number sounds good, but the flip side is that one in four Americans do not trust that scientists have their best interest at heart. One in four.

Before the pandemic, it was more like one in seven, or one in eight, or one in nine. There’s been a big increase in that number since the pandemic. The distrust that Americans have that scientists have the well-being of the public in mind is a serious problem.

Science needs to hold itself to very high standards. This is not politics. If one in four Americans don’t trust the good-faith nature of scientists to do good for Americans, then science is failing. It’s not politics where “fifty plus one” means you’re a successful politician. It should be close to 100%. Seventy-six percent is too low a bar.

The communication point is absolutely true. I’m surprised it’s as high as it is. It’s clear that scientists are very bad at communicating. Most scientists are not trained to communicate effectively outside the narrow scientific communities they operate in.

In fact, we valorize it: the scientist you can’t understand, that’s unique genius. We have sitcoms about it, like The Big Bang Theory; people who are stuck in their own world so much so that no one can understand them.

What that means is there’s a disconnect when you have to make a decision that requires scientific knowledge and you need non-scientists to access it. There’s often no common language.

Now, I don’t think this is the reason for the worsening of trust in scientists during the pandemic. Poor communication is standard, and it’s been true for a long time.

The reason was that science ventured into areas it is not well equipped to enter: moral and ethical decisions about human life that are not the sole province of scientists but of many other people with other kinds of expertise: theologians, philosophers, ethicists, economists, sociologists, anthropologists, and millions of regular people: business people, workers, children, teachers, all of whom have a stake in what those decisions should have been.

And science was one input into decisions about lockdowns, school closures, vaccine mandates, and so on. It’s not even necessarily the most important input.

The issue was epistemic trespassing. Some scientists, especially prominent scientists, ventured to make recommendations for the ordering of society, far beyond the capacity of the scientific fields they were drawing on to take all the trade-offs and considerations into account. It violated the freedoms of millions and harmed the lives of millions as a result of the lockdowns, school closures, and so on.

I want to ask you about the institutional question. For our magazine and in general, is the mission of NIH primarily to discover truth, to improve outcomes, or to preserve public trust?

Those are directly linked. The NIH mission is to support scientific research, the purpose of which is to discover truths about the physical world, about medicine and health and to use those truths to improve the health and longevity of the American people. That’s the mission of NIH.

That’s a mission that I think is universally shared. I don’t know a single person that doesn’t want scientific research supported if it improves their health and longevity.

If we achieve that mission, that’s not epistemic trespassing, that’s within the capacity of science to discover cures for diseases that don’t have cures, better treatments, better ways to prevent. It’s certainly within the capacity of biomedical sciences. If we do that, then there will be public trust in us.

If we don’t do that, and if instead we do science that pretends to be certain when certainty doesn’t exist, interferes, or enters topics while pretending to have expertise it doesn’t have—and that leads to worse health, worse outcomes, and worse lives for people—then you have the loss of public trust.

I want to take you on a path of a little bit of controversy. Not you personally but the topic. Bioethical issues like research involving fetal tissue become so politicized that scientific argument itself can disappear. How does NIH view current restrictions on the use of human fetal tissue, meaning not using it in biomedical research?

Aborted human fetal tissue. What we did is we banned the use of aborted human fetal tissue.

Yes, aborted fetal tissue. Is it a redirection toward alternative technologies? Because what if it unintentionally limits progress for specific disease research? Does NIH have mechanisms to ensure that doesn’t happen?

Yes. Before we made this decision, we wanted to make sure we could answer that question. We didn’t want to harm human health.

A couple of things. If you look at our portfolio during the last four years, during the Biden administration, when it was completely open, and even before that, it was completely open to use human fetal tissue in research. In fact, scientists themselves started using it at much lower rates. They stopped using it because there were alternatives for scientific progress to be made without using aborted human fetal tissue. As a part of a portfolio, it plummeted. The scientific hit from saying no more of that is very, very little.

Especially since we’re saying aborted human fetal tissue. Human fetal tissue that comes from other sources for instance miscarriages is not prohibited. Umbilical cord cells, umbilical cord blood, induced pluripotent stem cells (iPSCs) from adults; there’s a whole host of other sources of tissue that serve the purpose. You can see it in how the scientific community has been acting. Even when they had access to it, they used it less and less.

Second, we have an obligation that the products of our science improve the health of everybody. If we support science where a large part of the population believes it is ethically conflicted, sort of “fruit of the poison tree” and they won’t use it, then what good is our scientific investment?

You saw this to some extent during the pandemic. Some COVID vaccines were produced using fetal embryonic stem cells, and there were significant religious populations that said, “No, we won’t take this because it’s ethically conflicted.” Publicly funded science needs to be acceptable, morally acceptable, to basically most of the population, and our investment should be focused on that.

This brings to mind what you said about COVID vaccine hesitation. In one of your talks, you mentioned that Denmark has fewer mandates on vaccination and still has high acceptance. How does that work?

They have no mandates.

Most European countries do not have mandates on vaccines. The central element is public trust.

People say, “Denmark’s a small country, that’s why, they’re homogeneous,” or “They have a different health care system.” No. They’re missing the point. The real reason Denmark has no mandates and yet has high vaccine uptake is that their public health authorities are widely trusted by the public.

A lot of the complaints about using Denmark as a model for vaccine policy in the U.S. stem from the idea that the U.S. is a heterogeneous society and “we’re not trustworthy enough,” as if the public is not trustworthy enough, and so they need a mandate to force them to do what they ought to be doing.

In fact, the reality is that public health in America threw away public trust during the pandemic. That’s why we’re seeing a lowering of MMR vaccine uptake. The problem is not the trustworthiness of the public, and the solution is not mandates. The problem is the trustworthiness of public health, and the solution is making public health more worthy of public trust.

That’s part of your idea of a “second scientific revolution.” What do you mean by that? Using the word “revolution” is quite powerful.

Let me justify it.

First, think about what the first scientific revolution actually was. It was a displacement of the ability of ecclesiastical authorities to decide physical truth. Instead of high ecclesiastical authorities deciding, “Do the moons of Jupiter move?” you have people with telescopes that get to decide that. It was a displacement of authority, a democratization of the ability to decide physical truth: a social recognition of physical truth—that’s the first scientific revolution.

Now we have a situation where, in order for our society to acknowledge scientific truth, it has to be published in some top peer-reviewed scientific journal. Yet there’s strong evidence going back decades that publication in top peer-reviewed scientific journals is very far from a marker of knowledge of physical truth.

There are many articles published in top scientific journals that, when independent teams look at the same phenomenon, find a different answer. It’s called the replication crisis. It’s not necessarily because of fraud. It’s because science is hard. Learning physical truth is difficult; it takes the collaborative act of scientists to find it.

Yet we’ve enshrined, sociologically—the press always does this: If it’s published in a top peer-reviewed journal, and you have a top scientist in a top institution, they get to decide what’s true, even if it’s not necessarily true.

So, the second scientific revolution is displacing that sociological truth-making capacity with replication as the basis for deciding what scientific truth is. It’s a democratization of the power to decide physical truth, completely analogous to the first scientific revolution.

It’s a solution to the replication crisis. It puts it back in the hands of scientists who may not be at a top institution, who may have trouble getting their work published in top scientific journals but nevertheless have insight into the truth that high authorities don’t have.

Thank you very much for pointing out the replication crisis. Before we end our conversation, I want to ask: At the individual level, what motivates you to keep doing the work? Where do you draw inspiration, especially when the pressures are intense?
I ask because the last time we met, you said, “We are not mere biohazards to one another but made in the image of God to love one another.”
So, I’m curious: As a physician, scientist, economist, and now leader of the largest biomedical research organization, why is faith in God so important to you?

For me personally, I don’t think I could know what I should do with my life if I didn’t have this faith. It gives me a sense of mission to help people, to help others is what love one another means to me: Use whatever talents that God gave me for that purpose. I’m not going to do it perfectly, but that’s the sense of mission I have.

I don’t know how I ended up in this job. It’s not the path I ever sought, and I’m actually astonished that I’m here.

But while I’m here, I should use whatever levers I have to make life better for people. The only real lever I have is to accomplish the mission of NIH. That’s the primary mission I want to pursue.

I want to use the real genius of science and American science, and the tremendous resources the American people give NIH, and use it to help people live healthier, longer lives. That is the purpose for why I’m here, and that’s what’s been motivating me.

Thank you very much indeed, Dr. Bhattacharya. It’s very nice seeing you, and thanks for your time. I look forward to continuing the conversation in the future.

I appreciate it. I really appreciate this. It was fun to talk with you.

Interviewed by Dheeraj Baji, February 2026. Originally published by Merion West. The transcript has been lightly edited for clarity.

Interview · December 2024

Funding Medicines for Lasting Impact: A Conversation with Vikas Goyal, Venture Partner at the Longwood Fund

On the harder path of biotech investing, why medicines endure, and what actually bottlenecks AI in drug discovery.

Vikas GoyalVenture Partner, Longwood Fund

Vikas Goyal is a Venture Partner at the health care venture capital firm, Longwood Fund. Vikas has over 20 years of experience in the biotech industry, including in corporate strategy, capital formation, corporate partnerships, and mergers and acquisitions for early-stage therapeutics companies. Vikas earned an MBA in Health Care Management from the Wharton School of the University of Pennsylvania and an A.B. in Neurobiology from Harvard College. He is a board member of the Wharton Health Care Alumni Association.

Can you tell me about your career journey and how you ended up at the Longwood Fund?

I’ve always been interested in science. Both my parents were physicians, so I grew up surrounded by medical journals, and biology was something that just made sense to me. I started working in labs during high school and continued throughout college. After college, I transitioned to the business side of science, joining McKinsey as a consultant. There, I worked with large pharma companies and learned about the biotech industry for the first time. That exposure made me realize I wanted to work in biotech.

In 2003, I started looking for a job in Boston and landed at a small biotech company called Extera Partners in 2004. That role gave me my first real look at the challenges of building innovative products for people with serious illnesses. I learned a lot about business development, transactions, and fundraising. Both of Extera’s founders had MBAs, and after five years, I decided business school was the right next step for me.

A Wharton alum encouraged me to meet June Kinney, who runs the Wharton Health Care Program. She understood my background and career goals, and with her guidance, I joined the program. During my time at Wharton, I interned at SR One, the corporate venture fund of GlaxoSmithKline, and joined them full-time after graduating. At SR One, I gained more experience in biotech venture capital, focusing on building and financing companies, forming corporate partnerships, and navigating the challenges of growing startups.

After 10 years at SR One, one of my portfolio companies, Pandion Therapeutics, needed help with business development. I had been on the board for a few years and really liked the company, so in 2019, I joined the management team. Over the next two years, we closed a partnership with Astellas, advanced our lead program into the clinic, and built a strong relationship with Merck, which acquired Pandion in 2021.

After Pandion, I wanted to figure out my next move. I enjoyed both working in biotech companies and investing. I decided to pursue the harder path: biotech investing. I spent a couple of years trying to build my own venture capital fund, but it proved incredibly challenging, and I wasn’t successful. Then, in the summer of 2024, I joined Longwood Fund, a biotech investing group founded 15 years ago by a team of experienced investors and entrepreneurs.

Why do you find biotech investing so challenging?

Biotech investing is difficult because of the long timelines and the inherent uncertainty. As an investor in early-stage companies, your most significant moment of influence comes when you make that initial investment. But you’re making that decision based on limited information, and it could be three to seven years before you know if it was the right call.

In private markets, the pace is slower, and you’re exposed to fewer companies compared to public markets. This makes learning a slower process. On top of that, being a biotech investor isn’t just about allocating capital—it’s about helping build the companies you invest in. You’re involved in shaping strategy, making key decisions, and supporting their growth. It’s a complex balance between decision-making and active engagement, which makes it both rewarding and challenging.

Medicines endure because they consistently provide value.Vikas Goyal

What is Longwood Fund’s investment strategy?

Longwood Fund combines company creation with traditional venture investing. We focus on early-stage biotech, investing in projects ranging from ideas still on paper to companies with early clinical data. We support this strategy with two separate funds tailored to these different stages.

We define early-stage broadly, covering everything from drug discovery concepts to early clinical development. Our expertise lies in helping private companies during the most formative stages of their development, which is where we can add the most value.

Why focus on private companies instead of public markets?

Our team prefers working at the earliest stages of a company’s life, where hands-on involvement can have the greatest impact. Everyone at Longwood has experience as an executive, entrepreneur, or operator in biotech. Many of us have built companies from scratch. This operational expertise is most useful in private companies, where the focus is on setting up a strong foundation.

The 2025 conference theme is “Building Lasting Healthcare Transformation Beyond Disruption.” How does your work fit into that vision?

What I love about biotech is that the medicines we create can have a lasting impact. Once a medicine is proven effective, it becomes part of the health care system until something better comes along. Unlike other parts of health care—like infrastructure or surgical techniques, which may become obsolete—medicines endure because they consistently provide value.

Biotech is inherently disruptive because we’re always trying to improve. A new therapy replaces an older one, and the cycle continues. This process drives lasting transformation, as the innovations we develop today will continue to benefit patients for decades to come.

There’s increasing debate around drug pricing in the U.S. How do you view these discussions?

I have mixed feelings. On one hand, lower prices mean more people can access the medicines we develop, which is incredibly rewarding. On the other hand, we need to generate financial returns to fund future innovation. Without those returns, the pipeline for new medicines would dry up.

Globally, drug prices often correlate with overall health care costs, including physician salaries and infrastructure. As populations age, managing these costs becomes harder, so I think some changes are inevitable. From an early-stage investor’s perspective, pricing reform is just one of many risks we consider. Ultimately, medicines that deliver real value will continue to succeed, as their ability to improve lives drives widespread adoption.

How do you see artificial intelligence impacting drug development?

AI has been part of drug discovery for years, though we used to call it computational chemistry or structure-based drug design. My first investment, Nimbus Therapeutics, used these tools back in 2011. At the time, we had to build specialized infrastructure to support these models. Today, AI tools are much more accessible, which is accelerating innovation across the industry.

The current bottleneck isn’t the technology—it’s data. Training AI systems requires high-quality, well-organized data. The most successful companies are those that combine computational expertise with strong biology and chemistry foundations. They run experiments, analyze the results, and use that data to refine their drug discovery processes. AI is now a standard part of drug development, and the focus has shifted from whether to use it, to how to use it most effectively.

What advice would you give people interested in biotech venture capital? Do you need a biomedical background to succeed?

You absolutely don’t need a biomedical background. I’m not a scientist—I haven’t worked in a lab since college. What matters is building the right skills and gaining relevant experience.

First, recognize that the current macroeconomic environment is tough for startups. This isn’t personal; it’s a reflection of broader economic trends. Second, venture capital, especially in biotech, often involves operational work. Roles in business development, R&D strategy, or even public investing can provide valuable skills.

Finally, be open to unexpected opportunities. My venture capital career began with an internship at SR One that I hadn’t planned for. Flexibility and a willingness to learn are essential for success in this field.

Interviewed by Henri Mattila, December 2024. Originally published in The Pulse, the journal of the Wharton Health Care Business Conference.

Interview · December 2024

Policy Research for the Common Good: A Conversation with Lovisa Gustafsson, Vice President at the Commonwealth Fund

How a philanthropy shapes health policy without advocating for it, and where affordability and transparency go next.

Lovisa GustafssonVice President, the Commonwealth Fund

Lovisa Gustafsson is a Vice President at the Commonwealth Fund, a philanthropic organization, where she leads the Controlling Health Care Costs program. The Fund is a private foundation dedicated to providing a high-caliber health care system, with a particular focus on the most vulnerable. The philanthropy funds research and provides grants to improve health care policy and practice. Ms. Gustafsson earned an MBA in Health Care Management from the Wharton School at the University of Pennsylvania and an A.B. in Sociology from Harvard College.

Can you begin by giving some color on the Commonwealth Fund and tell me a bit more about your career journey?

The Commonwealth Fund is a philanthropic foundation that focuses on creating a health care system that is equitable, affordable, and accessible for everyone.

We often describe ourselves as a mix between a think tank and a grant-making organization. We conduct in-house research and publications while also funding external grantees to explore solutions to pressing health care issues. Our focus areas include insurance coverage, affordability, delivery models that provide higher value, and strengthening primary care. While our mission has remained constant, our specific areas of focus shift with the evolving health care landscape and policy dynamics. This helps us address the most urgent and impactful issues at any given time.

I joined the Commonwealth Fund eight years ago. Before that, I worked in a variety of roles that intersected policy and business. I spent several years in health care consulting, focusing on regulatory and strategy issues, and worked briefly with MassHealth, Massachusetts’ Medicaid program. After business school, I joined McKesson, and through these roles, I gained experience across the private, public, and non-profit sectors. This varied background has given me a well-rounded understanding of health care and its key stakeholders.

I had always admired the Commonwealth Fund. As an undergraduate at Harvard studying health policy, I often encountered their research in my coursework. When a position that matched my skills and experience became available, it felt like the perfect opportunity to join an organization whose mission I had long respected.

The Commonwealth Fund has a long and storied history. Could you share more about its origins and evolution?

The Commonwealth Fund was founded in 1918 and is one of the first foundations established by a woman. Its original mission was broadly defined as “doing something good for mankind.” Over time, it has contributed significantly to the health care field through transformative initiatives. For example, it funded the development of the Pap smear and its subsequent dissemination, supported the first pilot of hospice care in the U.S., and invested in building hospitals and medical schools, including HBCUs, to foster a more diverse health care workforce.

In its early years, the foundation took on a wide range of projects, but over the past 30 years, we’ve focused exclusively on health care. Today, our work falls into three broad areas: leadership development, policy research, and improving the delivery of care. Leadership development includes fellowships that bring international experts to the U.S. and programs at institutions like Harvard and Yale to support equity and minority leaders in health care. On the policy side, we study issues like health care costs, inequities, and potential solutions, while our practice work focuses on improving how care is delivered, such as advancing value-based payment models.

How does the Commonwealth Fund influence policy without engaging in advocacy?

As a 501(c)(3) organization, we don’t advocate for specific legislation. Instead, we see our role as providing evidence that highlights critical health care issues, explores potential solutions, and assesses their implications. This involves both conducting our own research and funding external studies on topics like cost trends, insurance coverage, and inequities in the health care system.

Our goal is to help policymakers and stakeholders understand the challenges and options available. For example, if health care spending is unsustainable, we might highlight the potential benefits of value-based payment models. When a “policy window” opens—such as a moment when stakeholders agree there’s a problem to address—our research helps inform the debate and guide decisions. While much of our focus is federal, we also work at the state level, which often serves as a testing ground for innovative policies that can later scale nationally.

Are there particular areas where the U.S. could make significant strides in health care?

Affordability is a critical issue across the board—whether for individuals, employers, or government payers like Medicare and Medicaid. Prescription drug pricing is a major concern, but affordability extends beyond medications to include broader health care costs. Policymakers are also interested in consolidation, private equity’s growing role in health care, and the value being delivered to patients versus profits.

Transparency is another area of focus, as inefficiencies in the system often obscure where money is going and why. For example, there’s growing scrutiny of intermediaries like pharmacy benefit managers (PBMs) and how their practices impact pricing and access. Policymakers from both parties are showing interest in addressing these inefficiencies, particularly when they put profits ahead of patient outcomes.

High prices aren’t necessarily a problem if they correspond to significant improvements in patient outcomes.Lovisa Gustafsson

Do you see opportunities for meaningful change under the new administration?

It’s too early to say for sure. Much depends on key appointments and the administration’s specific health care priorities. That said, health care is always a significant focus for policymakers because it represents such a large portion of federal and state budgets. Medicaid, Medicare, prescription drug pricing, and reforms targeting intermediaries like PBMs will likely remain high on the agenda.

Federal opportunities often hinge on legislative vehicles that can carry these reforms forward. However, even in the absence of federal action, states can play a crucial role in piloting innovative approaches that might later be scaled nationally.

This year’s conference theme is “Beyond disruption: Building lasting health care transformation.” How does this resonate with you?

Sustainable innovation is about delivering real value. High prices aren’t necessarily a problem if they correspond to significant improvements in patient outcomes, such as addressing unmet needs or reducing hospitalizations. However, we often see cases where new products enter the market with higher prices, but no added benefit compared to existing options. These inefficiencies undermine trust in the system and discourage meaningful innovation.

At the Commonwealth Fund, we focus on reducing low-value spending and reinvesting those resources into areas that truly benefit patients. By incentivizing meaningful innovation—products and services that improve outcomes and lower overall costs—we can create a more sustainable health care system.

What advice would you give to students interested in public policy or academic roles in health care?

You don’t need to choose between public and private sectors. Gaining experience in both can make you a more well-rounded professional and a more effective contributor to the health care ecosystem. Policy is a major driver in health care because the government is the largest payer, and private sector practices often follow public policy trends.

Some of my most successful business school peers started their careers in government, gaining invaluable insights into how the system works. This experience allowed them to transition back to private roles with a unique perspective that enhanced their impact. I encourage students to explore opportunities in public policy, even if just for an internship or a few years after graduation. It can be rewarding work, and you might find it aligns with your long-term goals.

Interviewed by Henri Mattila, December 2024. Originally published in The Pulse, the journal of the Wharton Health Care Business Conference.

Interview · May 2024

Dr. Geeta Nayyar: How Does the CMO of Salesforce Think?

A leader at the intersection of technology and healthcare on the promise and peril of social media, artificial intelligence, and the misinformation that travels faster than the facts.

Dr. Geeta NayyarChief Medical Officer, Radiant Graph

Dr. Geeta Nayyar currently serves as Chief Medical Officer at Radiant Graph, a company focused on intelligent personalization for consumer health engagement, and sits on the board of the American Telemedicine Association. Previously, she has held the role of Chief Medical Officer at both Salesforce and AT&T. She received her medical degree at the University of Miami Miller School of Medicine.

Dr. Nayyar is the author of the 2023 book Dead Wrong: Diagnosing and Treating Healthcare’s Misinformation Illness, which examines the spread of myths and disinformation in healthcare.

When we talk about healthcare in the United States, I have found that the conversation virtually always goes to talking about everything that is wrong with the system. I would like to break this pattern by starting with the following: What are some victories that Americans should be proud about with regards to their healthcare system?

Oh, wow. You’re the first person to ask that, and that’s a good question. One of the first things we can be proud of—and I’ll come at this from a post-pandemic reflection—is that we innovate. Compared to the rest of the world, we are a country of innovation. Perhaps the only silver lining of the pandemic is what we saw happen with telemedicine; overnight, we were able to take our hospitals and our clinics into a telemedicine environment very quickly. We were able to open up both legislation and reimbursement that made that possible. As a result, hybrid medicine—the idea that you can do telemedicine but also brick-and-mortar medicine—is definitely here to stay. And we’ll continue to innovate in that space.

We also have terrific technology. We have CT scans, MRIs, etc. We have all kinds of technology from a diagnostic therapeutic standpoint, while others can’t say the same. We have terrific specialty care; you can get a specialist within a specialty. We also have centers of academic excellence in medicine, whether we’re talking about the Mayo Clinic, the Cleveland Clinic, and many others. To the extent someone is able to see the world specialist in X, Y, or Z, typically the world specialist is sitting in the United States, and that begets research, more innovation, better diagnostics, and better therapeutics. I think that will continue to happen. I think that will continue to flourish. Those are all wins of American healthcare that are indisputable.

America also leads the world in drug development innovation since this is the place where most of the funding happens and the greatest commercial opportunity lies.

Turning to your professional background: When I hear the title Chief Medical Officer—or CMO—my mind conjures images of hospitals or drug developers, not technology giants like AT&T and Salesforce. Could you shed some color on the nature of that position?

Pandemic aside, the typical CMO role, particularly in a healthcare or health tech company, is someone who has deep expertise in healthcare, clinical medicine, and technology. It’s someone who can sit at the intersection of business, medicine, and technology. In reality, this means helping the tech teams and product teams build good, clinically relevant products that will lead to efficiencies and better workflows for physicians, nurses, and patients. It also involves articulating that vision to the industry, stakeholders, customers, and clients. It’s about speaking both languages, clinical and tech, and realizing the business development opportunities that come with it.

There are some CMOs, while the title is the same, who are more focused. You can have a CMO that strictly does product, and all they do is sit with the product teams and build good health tech products, but they’re not necessarily articulate or able to bring credibility or confidence to the market. Then you have some that might be really good at doing the external work but aren’t good at sitting down with the engineers and building products. My role has always been both, but you can have some CMOs that do one or the other.

What do you see as the role of non-government entities in American healthcare today?

It’s funny because I would say that employer health is public health in America. Your health insurance is mandated by your employer, so that is a huge role for private enterprises, which effectively employ special employees to take care of their workforce’s healthcare. It’s a tremendous responsibility.

It’s a rather bizarre arrangement in my mind. Earlier this year, I spoke with Harvard Business School professor Regina Herzlinger, and she believes the employer should be taken out of the equation of healthcare management. What’s your first reaction to that?

Theoretically, that makes sense, but it’s been done for so long in the United States. At this point, that’s just our way of life. The amount of knowledge that employers have, particularly the Fortune 500 companies—I think they’re really good at it now. Whether they should have had to develop that muscle or not is a much bigger question. What you’re getting at is: Was the system even set up correctly? That’s an absolutely fair debate, but I think, at this point, they have the most experience out of anyone.

Because the system is already set up this way, it’s very tough to change—but perhaps incrementally, over a very long period of time?

That’s right. I also think that we, in the private sector, just see the disruption and the innovation happening. I think that’s another space for innovation, certainly from the health tech standpoint. Any number of startups are looking to disrupt the system, and I think it’s terrific.

Can you give examples of startups or technologies that you’re particularly excited about?

I’m currently the CMO for a company called Radiant Graph. Essentially, what we do is intelligent personalization for the consumer to personalize the engagement between the consumer and the health plan to the point that they feel that they have a trusted source of knowledge, but they’re also inspired (and motivated) to take action, such as getting that mammogram or scheduling that doctor’s visit. So much of where we fall down in healthcare is in the compliance part.

For example, it’s in knowing our patients well enough to know when they go quiet and stop coming to the doctor. We saw this during COVID. People stopped going to the doctor. How do you get those patients back? And how do you get them back to make sure that they’re doing daily preventative things? That’s just one example.

We’ve seen it with telemedicine. Telemedicine is now a mainstay in the industry, and these technologies all began as startups. We see it now with everyone having a smartwatch or ring: Everyone’s measuring something, and that all originated in the startup space.

Myths and disinformation are traveling six times faster than the facts.Geeta Nayyar

There are concerns that telemedicine might be a fine alternative for some particular conditions or treatments. However, there’s no substitute for in-person meetings. The cynic would say that the whole system and the healthcare establishment love telemedicine because it saves money and is more efficient. What are your reactions to that view?

It all depends on the type of visit. There are certain types of visits like a counseling visit. If I’ve gotten lab results back or I want to go over mammogram results that are relatively benign, a telemedicine visit is probably more efficient since the patient does not have to drive in traffic or sit in the waiting room. Doctors can also do this quickly in between patient sites.

The intangibles that you miss with the telemedicine visit are if you have to do a physical exam, if you have to palpate something. If you do a procedure, there’s no substitute for doing those things in person. There are also intangibles where you’re picking up on someone’s body language, wanting to comfort a patient by a gesture, holding their hand, or giving a patient a tissue. These are all things that build trust and build a relationship. The patient-physician relationship is one of the most intimate relationships you can have because a person is coming to you in some sort of crisis or with some sort of very personal concern.

You want that to be a trusted relationship. You trust someone when you are able to have access to them; they show up for you; they know you; and you know that they care about you. Sometimes it’s hard to express that over a telemedicine visit. If you think of your own relationship with friends or family, it’s so nice when we get together in person. We always say that, like, “Oh, it’s so nice to see you, as opposed to Zoom you.” But if the alternative is not seeing the person or having to wait nine months for a visit, telemedicine is certainly a good substitute.

So you see them as complements?

They’re complementary; one can’t substitute completely for the other. When we only had in-person visits, it was hard to get an appointment; people had to take off half a day at work to go to the doctor, and they would often put it off. There is a role for both. Hybrid medicine is certainly here to stay.

Indeed, much like hybrid work seems to be for white-collar jobs.

Same idea. If you try to put the genie back in the bottle, no one’s going to work for you.

You wrote the bestseller Dead Wrong: Diagnosing and Treating Healthcare’s Misinformation Illness. I think “misinformation” and “disinformation” are ambiguous terms; what exactly are you referring to?

The book is a look at myths and disinformation in healthcare, particularly during the pandemic. The issue of myths and disinformation is not a new one. It’s been around since the Black Plague. What has changed is the era of technology we’re living in. Because of the era of technology we’re living in—whether it’s social media or AI—myths and disinformation are traveling six times faster than the facts.

The call to action in the book is largely because the misfits that are promoting disinformation profit from it. Definitions are important here. Disinformation is the intentional manipulation of facts and data to manipulate people, whether to buy something or to have some action, like a vote, for example. Misinformation is just when you get the facts wrong, like you misunderstood something, or you heard it, kind of like a rumor, but there was never a pretense that it was coming to you as if from a journal article or something like that. The call to action in the book is to say that we need healthcare leaders to pay attention to this issue and own the narrative because so many people are profiting off of our patients.

Inevitably, at the end of the “myth and disinformation train” are doctors and nurses cleaning up the mess in the emergency room. There is a potion or snake oil for every ailment, from skincare to curing baldness, whether you drank the Clorox or decided on the supplement for $29.99 to cure cancer. This is a call to action to say that healthcare has left this gap because we haven’t taken the microphone and taken the time to use the same technology for good (i.e., to propagate the facts), we’ve left an open space for others to profit off of the consumer.

Based on my experience on social media and TikTok, this is indeed a widespread phenomenon. Is this activity just profit-driven?

They can just want your subscription or following. I don’t say that to vilify social media or artificial intelligence. I’m pro-technology, but when used correctly and for the betterment of humanity. We haven’t—in healthcare—paid attention to it. We’ve accepted that we operate in a world where myths and disinformation exist, instead of saying that our hospital should have a TikTok channel, and every one of our doctors should be paid to be on it, and we should be inspiring people to take care of their health.

Of course, we should be accountable for what we say because we’re giving out advice. But if something goes wrong, people can come and make an appointment. Whereas these other TikTok influencers—most of them are not real. They’re not real doctors, not real scientists, and don’t have a license that could be in jeopardy. There’s no accountability.

It sounds like where you stand is—more or less—that the solution is not to try to get rid of social media but, rather, for the institutions and the professionals to step into those spaces and reach the patients and consumers directly.

That’s right. Because we regulate healthcare so much, doctors and clinicians are afraid to use social media. So, part of this is how we regulate it. At the same time, social media right now is largely regulated by the social media companies. We haven’t put the healthcare regulation in the right place. As we think about artificial intelligence, we want to be mindful while we take some of the lessons we’ve learned to date from technology and apply them to these new emerging technologies to make sure we’re safeguarding people’s health.

To clarify: Are medical professionals afraid because they believe they are going to get in trouble because the compliance standards are so high and the legal repercussions loom so large?

The biggest concern is always medical liability. We have to create safeguards at the same time to protect physicians who want to build trust back into science. We also have to look at how we regulate social media. As institutions, whether we’re life science companies, providers, or payers, we want to encourage physicians. We want to make it easy for true healthcare leaders to be out in the world talking science, which we saw during the pandemic. The other fear is that many people, particularly those talking about vaccines, have received death threats, as have their families. It’s all of those things that create fear.

I started the conversation by asking you about some of the historic wins of our healthcare system. Is there anything in particular that excites you most about the future?

Artificial intelligence is a buzzword, but I would say it is exciting when you think about some of the mundane, routine, repetitive tasks that we have in healthcare—whether from documenting notes to prior authorization, etc. There are mundane tasks that are burning out the workforce. Physician burnout is a real issue. Care team burnout is a real issue. To the extent we can unburden physicians and nurses to take better care of patients and put the humanity back in medicine…that’s the most exciting thing that I see ahead. When we think about also applying artificial intelligence for better diagnostics and better therapeutics, the sky is the limit. On the flip side, we need to understand the technology. We need to understand the good, the bad, and the ugly and make sure we’re intentional about how we apply it in healthcare. The opportunity is truly limitless to transform clinical medicine. There’s no doubt in my mind.

I’m sure we’ll be talking and hearing about artificial intelligence a lot for the years to come. Thank you for joining me here today, Dr. Nayyar.

Thank you so much.

Interviewed by Henri Mattila, May 2024. Originally published by Merion West. Lightly edited for clarity.

Interview · February 2024

Godmother of Consumer-Driven Healthcare: Regina Herzlinger of Harvard Business School

On growing up amid war, why healthcare has no equivalent of a nutrition label, and what it would take to hand the money back to the people who already pay for it.

Regina E. HerzlingerNancy R. McPherson Professor of Business Administration, Harvard Business School

Active in formulating national policy, Professor Herzlinger drafted Senator John McCain’s presidential healthcare platform and has also consulted for both the United States Congress and the President’s office on healthcare policy. She established the HBS Health Care Initiative and received the inaugural HBS Student Association Faculty Award for her excellence in accounting education.

Among numerous private sector engagements, Professor Herzlinger co-founded two firms in medical technology and served on several corporate boards, including Cardinal Health and John Deere.

Her new book Innovating in Healthcare: Creating Breakthrough Services, Products, and Business Models will be available later this year.

Regina, thank you for joining me here today.

My pleasure.

The West is experiencing something it has not in a long time: grappling with the reality of violent conflict, from the Russia-Ukraine war to the ongoing crisis in Israel. But you’re not unfamiliar with the reality of war, having grown up in Israel during the War of Independence. How did that experience shape you?

Well, it was Palestine at the time, and it was a very violent war. I would see dead bodies in the streets almost every day, and I was just a little child. I felt immortal because I was so young. I would go to my home, which, like many homes in the Mediterranean area, is covered with stucco. And I would see bullets creating furrows down the stucco. I was really fascinated by the path of the bullet because I was a child and thought I was immortal. I didn’t think that furrow could be inside me.

So, the war made me, I think, very strong, resilient to horrific events. And I believe I’m not alone in that response. War is terrible. But children who survive it, if they can remain psychologically intact, may become stronger than those who haven’t gone through such experiences.

Indeed, there is no shortage of examples of children who grew up in wartime, such as World War II, which produced some of the greatest minds and leaders of the 20th century.

Yes.

Now, speaking of influence and leadership, you’ve been dubbed the “godmother of consumer-driven healthcare.” Can you describe what consumer-driven healthcare means to you?

Most healthcare is purchased by governments or by our employers in the United States and many developed countries, offering us very limited choice. However, it’s our money that funds it, either through taxes for government healthcare or through less apparent deductions from our salary for employer-provided healthcare. Our employers are not gifting us healthcare; they’re using our money to provide us with healthcare options.

In any consumer-driven market, there are numerous choices, whether it’s cars, vacuum cleaners, or even yogurt at the supermarket, where there are nearly a hundred varieties. This choice creates competition, which typically improves quality and lowers prices. Unfortunately, we don’t see this in healthcare. Costs keep climbing, and the quality is uncertain. We’re told it’s good, but there are no data to prove it. For example, with a container of yogurt, I know its price, calories, calcium content, and vitamin content. But if I need a hip replacement, I have no data to judge the quality of the physician, hospital, or other sites where the surgery might be performed.

The idea of consumer-driven healthcare is to give us back our money. If we had the money, instead of our employers or government, we would create incentives for more choices, as it’s a significant amount of money. The average family insurance policy costs $22,000 this year. If I had $22,000 to spend on healthcare, I would have a broad range of choices. For example, if I had diabetes, I wouldn’t just be looking for diabetes care; I’d be looking for care covering the 34 common comorbidities with diabetes. With my $22,000, I’d shop for an insurance plan that has credible data showing they’re excellent in treating diabetics like me. Currently, I don’t have that choice or that money, even though it is technically my money. And if I find something costing less than $22,000, I should keep the difference.

Consumer-driven healthcare essentially gives people back their money, creating more choices, competition, and transparency about the quality of services.

For decades, you’ve been a staunch advocate for this type of approach, whether in the private sector, academia, or instituting policy in Washington, D.C. However, there still seems to be a march toward more government influence in healthcare, as seen recently with the Inflation Reduction Act. Now, for the first time, there will be government-mandated price negotiations for certain prescription drugs. Having advocated for a more consumer-centric approach for so long, what do you see as the biggest obstacles to realizing your vision?

The biggest obstacle is the status quo. Big hospital systems have revenues of $20 billion, and insurance companies have revenues over $200 billion. It’s very hard for consumers to fight against these giants. Employers, who could be a force, don’t want to get involved. They think they have businesses or non-profits to run, which is certainly true. Healthcare is complicated, and shifting to a consumer-driven system is a complex process. They would rather maintain the status quo.

As you mentioned, things aren’t getting any better; in fact, they’re getting worse. I hope that in my lifetime, things will become so bad that the consensus will be that we’ve tried everything else – single-payer systems like in the UK, government interventions in various market aspects, but costs continue to rise, and quality remains unknown and unimproved. Maybe then, we’ll give consumer-driven healthcare a try.

In terms of improving the system, if you were giving advice to the next generation of like-minded advocates, would you recommend a more incremental approach consisting of small legislative victories in the right direction—or, considering the current system is far from optimal in your view—is it better to start from scratch and try to completely overhaul the system?

I think consumer-driven healthcare is not as monumental a task as it may seem. It’s certainly not as significant as the wars and the plight of children experiencing them. It’s simply a matter of giving the money back to those who pay for healthcare.

The government’s intrusion into pharmaceutical pricing through the Inflation Reduction Act is a grave mistake. The 21st century is poised to be a period when medicine becomes truly powerful. Right now, medicine is mostly idiopathic, meaning doctors often don’t know what’s causing a condition. The unraveling of the genome and the technology to detect and correct mutant genes will profoundly transform medicine. This technology is expensive. If the government begins setting prices, the capital markets funding this technology will become apprehensive. For instance, a genetic drug costing $2 million can potentially stop blindness in children with specific gene mutations. If venture capitalists or private equity firms fear government price control, their willingness to invest in this risky technology might wane.

Another concern in the U.S. is the increasing consolidation of hospitals, leading to reduced choice and competition, resulting in higher prices. Insurers have also consolidated to bargain against these powerful hospital systems. Again, this results in less choice, less competition, and neither is conducive to controlling costs or improving quality.

I’ve never aspired to be part of the crowd. I’ve always aimed to be an independent thinker.Regina Herzlinger

Switching gears, your mere presence in academia, particularly at an elite institution like Harvard, is remarkable and unexpected in many circles. There’s a growing perception—especially among more conservative Americans—that professors at universities are notoriously leftist, both fiscally and socially. You would be clearly and exception to them with regards to the former. Furthermore, today, there is increasing focus on the lack of accommodation for more right-of-center viewpoints at elite university campuses like Harvard. How has your experience been as a more heterodox thinker?

It’s been great. I’ve never aspired to be part of the crowd. I’ve always aimed to be an independent thinker.

By the way, I’m not sure what “conservative” means. To me, I’m certainly on the side of the consumer regarding money, ensuring they have choice and control. But socially, I’m very liberal. I support anything consenting adults wish to do. Regarding Harvard, I’m known as a right-winger on the other side of the river (Harvard Business School is on the opposite side of the Charles River from the main Harvard campus). I don’t consider myself a right-winger. I see myself as a consumer advocate. But being different is okay with me. From the start, I’ve been different, often the first woman to achieve many of my accomplishments. That’s my mentality, being different.

There was a recent Fraser Institute poll that found 43% of young people in the U.S. have a preference for socialism over capitalism as their preferred economic system. Considering your extensive interactions with the younger generation—and while acknowledging Harvard Business School might not be representative—have you noticed any shifts in their attitudes towards economic and healthcare matters after they’ve been exposed to your viewpoints, especially those who might have started off as skeptics?

I’m not just an academic; I’m an entrepreneur. I’ve launched several businesses, thankfully mostly successful, and have been on the boards of various organizations. So, my exposure isn’t limited to just Harvard Business School students. My observation is that young people tend to lean towards socialism. This has been a consistent trend for many years, at least until they start earning their living. That’s when the allure of capitalism often becomes evident to them. This tendency varies, especially in economies with minimal private sector opportunities, where government jobs are seen as the pinnacle of success.

For example, during my travels in Thailand, I asked a local guide about his aspirations for his child. His immediate response was a government job, a reflection of the limited private industry options available there at the time. So, coming back to the Fraser Institute’s findings, my substantial experience has shown me that young people’s socialist leanings often evolve into a different perspective once they’re responsible for their own or their family’s livelihood.

It has been great speaking and learning from you. Thank you for joining.

My pleasure, and thank you for having me.

Interviewed by Henri Mattila, February 2024. Originally published by Merion West. Lightly edited for clarity.

Interview · September 2022

Innovation and Drug Pricing: A Conversation with Dr. Jonathan Darrow of Harvard Medical School

For all the attention paid to America’s fading competitiveness in a globalized economy, there is one sector where the United States still reigns supreme.

Dr. Jonathan DarrowHarvard Medical School

Dr. Jonathan Darrow is an assistant professor at Harvard Medical School and a faculty member at the school’s Center for Bioethics. Prior to that, he served as a senior law clerk at the U.S. Court of Appeals for the Federal Circuit and has worked in private practice at the law firms Cooley LLP and Wiley Rein LLP.

On the Global Biotechnology Innovation Scorecard, which rates countries from 0 to 100 on their capacity to foster an innovation ecosystem, the gaps are striking. Japan, long a powerhouse, scores 46; the United Kingdom, 53; China, for all its technological progress, just 26. The United States scores 80—and to my eye, even that understates how far ahead the American system really is.

Much of the reason comes down to incentives. It costs one to two billion dollars and takes roughly a decade to move a drug from the pipeline to the pharmacy, with no guarantee of demand once it arrives—an expensive way to learn there was no market. Few would fund something so costly and uncertain unless the reward justified it. The United States supplies that reward through a window of monopoly pricing power after approval, in which a company recoups its costs and, ideally, earns the profit that funds the next therapy.

But we know where that leads: notoriously high American drug prices, with some gene therapies now exceeding a million dollars, and mounting pressure—increasingly bipartisan—to rein them in. To make sense of that tension, I spoke with Dr. Jonathan Darrow, an expert on the intersection of law and pharmaceutical innovation.

To begin, what are your thoughts on the claim that the U.S.'s friendly drug-pricing regulatory regime is the primary driver of innovation within the biopharma industry?

Certainly, having the ability to charge an unlimited amount of money would be an incentive for any business. There could as well be a number of other factors, such as the robust venture capital market in the United States that also contribute. The substantial amount of money that is funded through the National Institutes of Health and other government organizations provides basic research funding that can then be picked up by industry, as well as certain laws that allow private industry to patent and profit from inventions that at the early stage were originally funded by the government. Those are a few reasons that I might cite for why the U.S. has strong innovation in the biotech sector.

Do pharmaceutical companies have to pay any royalties to the U.S. government—and effectively the taxpayer—for the foundational research they leverage?

There is a law called the 1980 Bayh-Dole Act that governs the relationship between public funding and the ability of private entities to patent and profit from the research that was funded by that money. That does reserve some rights to the federal government, including the right to make and use the invention—although the government rarely, if ever, uses those rights. I think in part because they're concerned that if the ability to profit is undermined by government use, it would deter collaboration or willingness to accept government funding in the future. But there are rights that the government has vis-à-vis the inventions that it funds.

So the government isn't very aggressive in collecting fees that might be owed if it had been a private partner providing research?

In terms of an actual royalty paid to the government, that is something that had been proposed, but I don't believe that's ever been enacted into law. There is no obligation to pay the government royalties out of the profits that flow from government-funded inventions under the Bayh-Dole Act. Instead, the rights held by the government are in the form of a fully paid-up license for the federal government to use the invention, and also a “march-in right” to make sure the invention is being used if the company that has the rights is not adequately developing it and making it accessible to the public.

Regarding private funding—isn't the robust U.S. venture capital landscape directly linked to the ability to charge high prices and cash out handsomely if a drug is approved?

I think that's true. Venture capitalists certainly expect a high rate of return on average, although some of their investments fail to produce any return at all. The ones that do produce a return, they're expecting quite a high return in order to justify their investment. One other important aspect is to what extent the U.S. market is separate from the rest of the world. To some extent, it is a single market; if you create a product, you can try to extract revenue around the world. I don't know that all of the factors I mentioned fully explain why the U.S. market has been so robust. It could also depend on the presence of numerous institutes of higher education where foundational research occurs, combined with government funding, and the tradition of entrepreneurship—all in a context where people can profit through the patent system and generate revenues not only in the United States but globally. It is increasingly a single global market for pharmaceuticals.

A rule of thumb for some pharmaceutical companies is to project that 50% of profits will come from the U.S., despite it having only 5% of the global population. Doesn't that make the U.S. the “golden goose” for drug companies?

I think that's certainly true. The large share of profits comes from the United States, in part due to the lack of price caps on drugs. But again, you could be a company starting in China or India or any other country and choose to sell your product in the United States and still have access to that market. I don't know that that fully explains why more companies originate in the United States. There has been increasing innovation in other regions of the world. China has become important particularly in the active pharmaceutical ingredient market. India has become increasingly important in creating finished drug products—especially since the 1995 TRIPS agreement, under which it created intellectual property rights. Latin America has also risen in importance. There is reason for increasing democratization of pharmaceutical innovation. It's not clear that the United States will retain its number one spot, or for how long.

We have a free-market system of pricing and a socialist system of paying for drugs.Jonathan Darrow

The Inflation Reduction Act allows the U.S. government to negotiate Medicare drug prices for the first time. What do you make of this change in policy?

I have not looked at that law in detail, so I can't comment specifically on the language, but I can say a couple of things in general. Even prior to that law, individual plans under Medicare were already able to negotiate prices. The negotiation at the higher level of Medicare, in theory, will give it more leverage, and advocates hope that will allow the government to reduce expenditures. I think that may be overly optimistic, because whenever you negotiate, there has to be a basis for negotiation—there has to be an alternative. Having a large volume gives you a powerful position if you can walk away. However, under U.S. law, Medicare must cover certain prescription drugs across six categories regardless of cost. If you can't walk away from the table, it's not clear that negotiation will result in a lower price.

Suppliers who choose not to negotiate face a severe tax penalty. Doesn't that force them to the table and give the government the upper hand—more a forced hybrid than a true private-sector negotiation?

If there's a tax penalty, it sounds like that would force them to the table to negotiate—but it doesn't sound like that would necessarily produce any particular result, which is really the important part from a price standpoint.

The industry worries this is a slippery slope toward a system like Canada's, where government negotiation guarantees lower prices for patients but reduces profits and potentially stifles innovation.

If a company is generating the majority of its revenue from the United States, and the potential revenue and profits drop, that certainly could affect willingness to invest and the number and types of products that result. No one knows exactly how big that impact would be, but there is a concern that there would be a reduction in innovation. Right now, although the U.S. funds much of that innovation through higher prices, the benefits redound to the world as a whole. In some sense, the world is free-riding on the profits of the United States. A more level playing field could be considered more equitable—either by increasing companies' ability to generate profits in other countries, or reducing their ability in the United States.

Let me also say, related to high drug prices in the U.S., we have a system that is internally inconsistent. On the one hand, we view healthcare as a right, so we have insurance that helps pay for drugs to ensure access. From the company's perspective, that guarantees volume won't decrease. In business, if you know you can raise the price and volume won't decrease, you will raise the price. We have this free-market system of pricing and a socialist system of paying for drugs. We're straddling these positions trying to make everyone happy, and the result is entirely predictable: prices will continue to rise. Increased negotiation by Medicare may be a small step away from the free market toward the socialist side. The other way would be an entirely free-market system. I won't take a position on which is better—but if we continue straddling, I predict prices will continue to skyrocket.

Pharmaceutical companies often argue the net price paid by consumers is much lower than the gross price, blaming Pharmacy Benefit Managers for pocketing the difference. What is your view?

One of the challenges of the U.S. system is that it is so complicated it is difficult for the free market to work. You don't know how much drugs actually cost. You often see claims about drug-price trends using list prices instead of actual prices, so you have to take those conclusions with a grain of salt. At the same time, the benefits of the drug are not clearly disclosed or frequently discussed. Imagine going to a gas station and saying, “Give me some gas, I don't care how much it costs or how big the benefit is.” It's very difficult for a free market to function in that context. Drug prices haven't risen as dramatically as some headlines state, exactly because of rebates and disguised discounts. To me, this is an issue of transparency. Without transparency, how can a market function? I would love to see legislators mandate increased price transparency.

Didn't the Trump administration make an effort to require hospital price transparency?

Yes—a regulation required hospitals to disclose their charge master, the list of prices they charge. Unfortunately, when we looked at this six months after implementation, a large share of hospitals had not complied. It's a step in the right direction. Hospitals are one place where high drug prices are especially non-transparent, because you don't know how much of the price was from the manufacturer and how much was a hospital markup. An industry-funded study claims that more than half the cost of hospital-administered drugs are hospital markups. And the increasing use of biologics, which generally have to be administered in a healthcare setting, means a larger share of the drug market is administered in hospitals—potentially with these steep markups.

Unlike buying a car or an iPhone, we can't easily price-compare healthcare. Tools like GoodRx have helped with prescription transparency—why did it take so long for something like GoodRx to emerge?

I don't know the answer to that, or where they get their data on prices. GoodRx is a substantial advance in transparency for cash drug prices, though it's more complicated if you have insurance, and it doesn't work for hospital-administered drugs. One limitation is that it isn't very good at helping you discover lower-priced alternative medicines. A solution we've proposed is for state legislators to grant greater authority to pharmacists to substitute alternative drugs. Pharmacists have tremendous knowledge of drugs and often know the prices patients face. It would be great to see legislators grant pharmacists greater discretion to substitute—like swapping a very expensive combination product for its identical, cheap generic components as two separate pills. That could save quite a lot of money.

That's an interesting idea. In the interest of time, Jonathan—it's been a pleasure. Thank you for sharing your expertise.

Thank you.

Interviewed by Henri Mattila, September 2022. Originally published by Merion West. Lightly edited for length and clarity.

DealTrace is built and maintained by Birch & Lake Partners, a biopharmaceutical business development advisory founded in 2014.
BETA

Transaction benchmarks and deal library.

Beta dataset: figures are under active source audit and may change as deal records are reconciled.

01 What are you benchmarking? (select one)

02 Narrow the comparable set Therapeutic area, stage and modality are exact. Indication is fuzzy—if too few comps share it, the match widens to your other filters.

External benchmark check

DealTrace measured against published market data

Every DealTrace figure below is calculated from the current public library when this page loads, so these comparisons move as the library grows. Every external figure is transcribed from the publication cited in the notes, with that provider's own scope kept intact.

Supporting comparisons

What DealTrace does not cover

Counts diverge far more than values across every provider because each one draws the boundary of a "deal" differently, while the large disclosed transactions that carry most of the money are the ones everybody records.

Upfront as a share of total value

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    DealTrace is a curated set of biopharmaceutical licensing deals in which every number is traceable to a public source. Describe a deal by stage, modality, therapeutic area, and geography, and it returns percentile economics drawn from comparable transactions, with the full comps table available to download.

    We built it because the comparables that shape real negotiations are usually locked inside subscription databases or a dealmaker's memory. DealTrace puts a transparent version in the open, at no cost.

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    DealTrace analytics

    Two markets, counted separately.

    M&A and partnering price different things and are never combined in a figure on this page. Every number is a disclosed, sourced value—nothing is estimated into a blank. Library snapshot 2026-07-27, 370 M&A transactions.

    Part A

    Mergers & acquisitions

    Whole-company and asset acquisitions only. No licensing, option, co-development or research-collaboration row enters any figure in this part.

    A1  Upfront

    Consideration payable at closing

    The cash and stock changing hands at close—the explicit upfront where the deal was structured with a CVR, otherwise the full announced price, because a deal without contingent value pays everything at closing.

    Average M&A upfront by announcement year — USD millions
    201820192020202120222023202420252026YTD
    M&A deals in library242630384345496253
      economics undisclosed000000000
    Deals priced into the average242630374344496252
    Average upfront4,6207,4613,6511,8091,8063,2841,0632,0672,691
    Median upfront6341,1809907503009768008621,350
    Aggregate upfront110,878193,992109,54266,92277,666144,48952,083128,168139,940

    USD millions. Counts sit above the averages so the denominator is always visible.

    A2  Including contingent value

    Total consideration, CVRs included

    The same transactions at maximum potential—upfront plus the full CVR or earnout, whether or not it is ever earned. The gap against A1 is the milestone risk buyers pushed onto sellers.

    Average M&A total consideration incl. CVRs — USD millions
    201820192020202120222023202420252026YTD
    M&A deals in library242630384345496253
    Deals priced into the average242630384345496253
      carrying a CVR / earnout30744651014
    Average total consideration4,7037,4613,7661,8211,8933,2661,1142,1832,907
    Median total consideration6341,1801,1508253009528509501,550
    Aggregate total consideration112,870193,992112,98669,19281,392146,97754,593135,318154,065
    Aggregate contingent (CVR) value1,99203,4431,2703,7262,3882,5107,15013,325

    USD millions. Deals whose economics were explicitly not disclosed are counted in the library row but excluded from every average.

    A3  Stage mix

    Share of M&A by target company stage at acquisition

    Share of transactions, not of value—a company is bought whole, so its price cannot be attributed to one programme. The figure above each column is stage coverage: the share of that year's deals for which the library carries a target stage.

    61%
    22%
    13%
    13%
    22%
    26%
    202123 of 38
    44%
    16%
    16%
    21%
    21%
    26%
    202219 of 43
    42%
    11%
    21%
    26%
    37%
    202319 of 45
    33%
    12%
    31%
    31%
    19%
    202416 of 49
    52%
    9%
    22%
    38%
    31%
    202532 of 62
    70%
    19%
    35%
    14%
    8%
    22%
    2026YTD37 of 53
    Platform / discoveryPreclinicalPhase IPhase IIPhase IIIApproved

    Table view — share of staged transactions

    Target stage202120222023202420252026 YTD
    Platform / discovery4%n 10%n 05%n 10%n 00%n 03%n 1
    Preclinical22%n 516%n 30%n 012%n 29%n 319%n 7
    Phase I13%n 316%n 311%n 231%n 522%n 735%n 13
    Phase II13%n 321%n 421%n 431%n 50%n 014%n 5
    Phase III22%n 521%n 426%n 56%n 138%n 128%n 3
    Approved26%n 626%n 537%n 719%n 331%n 1022%n 8

    Coverage caveat. Target stage is not a published field: the library records a stage only where a primary source pins the transaction to a named lead asset, and company acquisitions usually are not sourced that way. These columns use the internal proposed-stage annotation, which is not evidence-gated, and each column is drawn only on the deals where one exists. 2024 is the weakest at 33% coverage and should not be read as a market share.

    A4  Price by stage

    Median M&A upfront by target company stage, 2021 to 2026

    Upfront cash and equity at close, pooled across the period so each stage has a usable sample. Median rather than mean—one $60Bn acquisition would otherwise set the whole bar.

    $650M
    Platform / discoveryn = 3
    $327M
    Preclinicaln = 20
    $1.4Bn
    Phase In = 33
    $2.2Bn
    Phase IIn = 21
    $1.2Bn
    Phase IIIn = 30
    $3.7Bn
    Approvedn = 39
    Target stage Median $MMean $M Deals
    Platform / discovery6501,3533
    Preclinical32769420
    Phase I1,4502,10433
    Phase II2,2003,19721
    Phase III1,2252,56030
    Approved3,7006,18839
    Price rises with maturity across most of the curve—median upfront runs from $327M for preclinical targets to $3.7Bn for approved ones. The exception is Phase III, which sits below Phase II here: this library covers the whole buy-side, and the Phase III sample carries several small single-asset acquisitions that a large-cap-only cut would exclude.

    Bars drawn on fewer than five priced deals are dimmed—they are shown so nothing is silently dropped, not because they are benchmarks. Same stage-coverage caveat as A3.

    A5  Upfront as a share of the headline

    How much of the announced price is paid at close

    Each bar is one year of announced M&A value, split into what changed hands at closing and what was held back in a CVR or earnout. Most acquisitions pay everything at close, so the bar moves only when a large contingent structure lands.

    201898.2%24 deals · 3 with a CVR
    2019100.0%26 deals · no CVRs
    202097.0%30 deals · 7 with a CVR
    202198.1%37 deals · 4 with a CVR
    202295.4%4.6%43 deals · 4 with a CVR
    202398.4%44 deals · 6 with a CVR
    202495.4%4.6%49 deals · 5 with a CVR
    202594.7%5.3%62 deals · 10 with a CVR
    2026YTD91.3%8.7%52 deals · 14 with a CVR
    Paid at closeContingent (CVR / earnout)
    2026 is the most back-loaded year in the library: 91.3% of announced value paid at close, against 94.7% at the contingent-heaviest prior point in 2025. Buyers are not paying less—they are paying later, and only if the asset delivers.

    Part B

    Licensing & partnering

    Licences, option-licences, co-development, research collaborations and asset acquisitions. No M&A row enters any figure in this part, and no figure below is comparable to Part A—partnering headline value is a maximum-potential biodollar number, not a price paid.

    B1  Stage mix of value

    Where partnering money goes in the pipeline

    Share of each year's announced partnering value by the development stage of the lead asset at signing. Value share works here because a partnering deal is struck over an identified asset, which is exactly what makes the same cut impossible on the M&A side.

    $80Bn
    46%
    24%
    9%
    18%
    202177 deals
    $100Bn
    67%
    13%
    8%
    7%
    202273 deals
    $112Bn
    55%
    24%
    8%
    9%
    202379 deals
    $77Bn
    54%
    24%
    10%
    7%
    202471 deals
    $199Bn
    48%
    25%
    15%
    9%
    2025122 deals
    $95Bn
    54%
    13%
    22%
    2026YTD55 deals
    PreclinicalPhase IPhase IIPhase IIIFiled / approved
    In 2025, 73% of partnering value went to assets at Phase I or earlier and 12% to Phase III or later—the mirror image of Part A, where the count mix skews to Phase II and later. Partnering buys optionality; M&A buys de-risked assets.

    Table view — share of aggregate deal value

    Stage at signing202120222023202420252026 YTD
    Preclinical45.9%21 · $36.7Bn67.1%39 · $67.0Bn55.1%34 · $61.5Bn53.6%37 · $41.0Bn47.7%64 · $94.7Bn54.5%26 · $51.9Bn
    Phase I23.6%17 · $18.9Bn12.8%9 · $12.8Bn24.1%20 · $26.9Bn23.6%11 · $18.1Bn25.4%33 · $50.4Bn13.4%9 · $12.8Bn
    Phase II9.1%13 · $7.3Bn4.3%7 · $4.3Bn7.7%10 · $8.6Bn10.4%5 · $8.0Bn15.1%10 · $30.0Bn22.5%10 · $21.4Bn
    Phase III18.4%17 · $14.7Bn8.5%7 · $8.5Bn8.5%5 · $9.5Bn4.9%8 · $3.8Bn9.1%10 · $18.0Bn4.4%5 · $4.2Bn
    Filed / approved3.0%9 · $2.4Bn7.3%11 · $7.3Bn4.6%10 · $5.1Bn7.4%10 · $5.6Bn2.7%5 · $5.5Bn5.3%5 · $5.0Bn

    Stage here is the published field and is evidence-gated, so this panel carries no coverage caveat—only deals with both a supported stage and a disclosed value are included.

    B2  Upfront by stage

    What a partner actually pays on signing

    Headline biodollars are a ceiling. The upfront is the money that moves whatever happens next, and it is the only figure in a partnering deal that is certain.

    $94MMedian upfront, 202648 deals
    8.8%Of headline value, paid upfront46 deals
    4.4% → 15.9%Upfront share, preclinical to late stage2021–2026
    $45M
    Preclinicaln = 213
    $70M
    Phase In = 91
    $50M
    Phase IIn = 59
    $60M
    Phase IIIn = 53
    $55M
    Filed / approvedn = 57

    And the same deals as a share of the headline

    Median of each deal's own upfront-to-total ratio, not one aggregate divided by another—a single multi-billion biodollar collaboration would otherwise decide the answer for everybody.

    4.4%
    Preclinicaln = 181
    7.2%
    Phase In = 86
    10.2%
    Phase IIn = 53
    15.7%
    Phase IIIn = 47
    15.9%
    Filed / approvedn = 47
    The upfront share climbs with the asset: 4.4% of headline value at preclinical, 15.9% by filed / approved. Early-stage partnering is bought almost entirely on contingency; late-stage partners have to put real money down.
    Stage at signing Median $MMean $M Median % of totalDeals
    Preclinical45984.4%213
    Phase I701567.2%91
    Phase II5024810.2%59
    Phase III6014415.7%53
    Filed / approved5518815.9%57

    B3  Upfront over time

    Bigger cheques, smaller share

    Two measures on two scales, so they are two charts rather than one with a second axis. Read them together: the cash going in has risen while the fraction of the announced number it represents has not.

    Median upfront, USD millions

    $24M
    2018
    $25M
    2019
    $50M
    2020
    $35M
    2021
    $38M
    2022
    $50M
    2023
    $50M
    2024
    $55M
    2025
    $94M
    2026YTD

    Median upfront as % of headline value

    7.5%
    2018
    8.8%
    2019
    11.1%
    2020
    9.5%
    2021
    5.1%
    2022
    6.3%
    2023
    6.7%
    2024
    5.2%
    2025
    8.8%
    2026YTD
    Median upfront went from $24M in 2018 to $94M in 2026—while the median share of headline value fell from 7.5% to 8.8%. Announced totals have inflated faster than the money behind them.

    B4  Stage by year

    Median upfront, every stage and every year

    The two cuts above, crossed. Darker is a larger median upfront; the deal count sits in each cell because several are thin enough that one transaction moves them.

    Stage at signing202120222023202420252026 YTD
    Preclinical$35n 25$38n 36$45n 37$45n 37$47n 59$60n 19
    Phase I$48n 18$50n 11$72n 18$50n 12$80n 23$180n 9
    Phase II$40n 15$32n 8$15n 10$100n 7$200n 9$79n 10
    Phase III$35n 17$35n 8$60n 5$60n 8$80n 9$85n 6
    Filed / approved$12n 9$30n 13$70n 14$90n 11$118n 6$218n 4
    $12M$218Mmedian upfront

    Cells are medians of the deals in that stage and year, so a cell with n < 5 is an observation, not a benchmark. Blank means no partnering deal in the library carries both that stage and a disclosed upfront.

    Method

    Economics from the published DealTrace library, snapshot 2026-07-27; figures generated 2026-08-14 by scripts/build_site_analytics.py. Averages are unweighted means across transactions with a disclosed figure; medians run alongside because a single megadeal moves a mean by billions. M&A upfront follows the library's field mapping—the stated upfront where the source splits it out, otherwise the announced total where no CVR exists. Totals recorded only as a maximum-potential figure are excluded from the upfront series and kept in the total-consideration series. Rows with no announcement date, and rows an M&A source states were undisclosed, never enter an average. Upfront as a share of headline value is a median of per-deal ratios across deals that disclose both figures, except in A5, where the split of one year's announced value is by definition an aggregate. Target stage in A3 and A4 is the internal proposed annotation and is not evidence-gated; coverage is printed on every column and in the table.

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