What’s the Business Value of the VA to Eli Lilly?
Musk misunderstands a national asset.
There are some things money can’t buy, but these days, not many.
Today, almost everything is up for negotiation within the context of a business deal. The bigger the business deal, and the more disruptive it is to the status quo, the better aligned its value proposition will be to the new world disorder.
“President Trump approaches diplomacy and engages in a very transactional manner, with economics as the foundation and driving force behind international affairs,” retired Lt. Gen. Keith Kellogg, the president’s special envoy to Ukraine and Russia, explained at an event in Washington this past week.
For Trump, it’s about leverage, not friendship; dollars as much as values.
Former Chief of MI6, Sir Alex Younger speaking on BBC NewsNight about the “dawn of a new era” where decades of policy and international relations aren’t going to be determined by conventional rules of engagement, but by playing a completely different game, defined as"strong men and deals" made through the lens of market power, leverage and control:
"I don't think we're going back to the one we had before," he says. "The entry ticket to this conversation is about hard power, and the category challenge" is how to develop that power to get a seat at the negotiating table.
And there are no bigger business deals to be made than the ones that invent new economic systems (‘ecosystem-centered market strategy’), the kind with 'gravitational pull' to displace or degrade current structures and orientations, that have the power to snap things into a whole new orbit for competition.
Stephen Miran is Senior Strategist at Hudson Bay Capital. He is also Donald Trump’s nominee to be the president’s chief economic adviser. In November, he published A User’s Guide to Restructuring the Global Trading System, basically “a catalogue of the available tools for reshaping economic systems” and “a path by which [Trump] can reconfigure the global trading and financial systems to America’s benefit.” (Though variously dubbed “outlandish” and “utterly mad,” the big money players are now taking such a radical plan seriously, if for no other reason than risk management: Apollo’s chief economist reviewed it on Sunday, and MarketWatch reported that “major banks and research shops” are evaluating its feasibility and impact.)
Everything is on the table for a world that has turned upside down practically overnight, a place where market thinking and market relationships define every human activity. There are no moral limits in what money can’t buy. And so, in the end, the question of markets is really a question about how we want to live together.
Which isn’t inherently “wrong” — “profit” isn’t a dirty word.
“With market triumphalism at a high tide, its defenders articulate a new precept of market faith that has emerged with the age of finance: not only are markets the most efficient mechanism for producing and allocating goods and services; they are also the best way of aggregating information and predicting the future,” writes Michael J. Sandel, the Anne T. and Robert M. Bass Professor of Government at Harvard University, in What Money Can't Buy: The Moral Limits of Markets.
The real question is whether turning literally everything into a business transaction, positioning market-based strategies ahead of moral-based ones, will improve or impair the game.
And there's no bigger market to ask that question than healthcare.
The Next Hundred Billion in Growth
Healthcare in the United States -- what Andreessen Horowitz calls "the mother of all markets" -- is governed by the logic of fragmentation, a zero-sum view of competition in a non-zero sum game. It is kinetically-trapped by a massive, and ultimately unknowable, complex of feedback loops, a flywheel that defines "innovation" in terms of producing new technologies, instead of 'producing health' for the most people.
The System is disfigured. It is aggressively anti-common sense.
It is disorganized around infinite inputs making infinite niche impacts. It is being managed by obsolete forms of measuring (and negotiating) economic value -- look no further than the quality-adjusted life year (QALY), a metric developed in the 1970s that is used to assess how effective medical treatments are at improving patients' lives....so long as that patient is covered by some form of commercial insurance (presumably, "patient" also covers "family").
You could make the case that the stunningly bad EBITDA the United States is getting from investing nearly 20 percent of GDP in healthcare is because of acturarial tables based on the fuzzy, short-term math of QALY. You could also make the case that QALY is one reason why Pfizer couldn’t find demand for its gene therapy, why Roche has "completely written off" Spark Therapeutics, with a full impairment charge of $2.4 billion in goodwill, and why the longevity potential of GLP-1s will take far too long time to materialize. (For more on this, see Ozempic’s New Frontier: The War on Aging, in today's Wall Street Journal.)
The Veterans Affairs Department announced last week that it’s laying off 80,000 workers as part of an agency- wide reorganization. While the precise total of veterans who’ll lose their jobs hasn’t yet been announced, it stands to reason that the number will be significant: Veterans make up a disproportionate share of federal employees in general, and at the VA, the percentage is even higher.
The White House's Alina Habba told reporters that military veterans affected by the DOGE-led layoffs may not be “fit to have a job at this moment.”
As it turns out, she wasn’t the only member of Trump’s team making controversial comments about veterans headed for the unemployment line. NBC News reported on Veterans Affairs Secretary Doug Collins, who released a video via social media, sharing his perspective on the developments.
“Now, we regret anyone who loses their job, and it’s extraordinarily difficult for me, especially as a VA leader and your secretary, to make these types of decisions,” Collins said in the video. “But the federal government does not exist to employ people. It exists to serve people.”
Any large system is going to be operating in failure mode most of the time. And that mode of failure is mostly determined by how the system is structured, its 'center-of-gravity'.
In many ways the VA is a natural target for The Big Chop — it's a bureaucratic behemoth with roughly 480,000 employees, some 90,000 contracts (i.e., 'the market' in "government contracting") and a history of waste and inefficiency.
Which is not unusual and not surprising in a $5 trillion industrial complex.
So it’s not hard to understand the operational urge by executive leaders — at UnitedHealthcare (offering buyouts to employees, probably pursuing layoffs); at CVS Health (laying off 3000 in an overhaul to revitalize its market position); at Walgreens (taking itself private after losing more than 90 percent of its value, unable to navigate its way out of structural collapse in its market); at Pfizer (on a $4 billion cost-cutting drive); Mass General Brigham (two rounds of layoffs this year already) — to take a chain saw to ‘the business’ to juice profits, to reorganize, restructure and reconfigure things in the spirit of shareholder value.
But you never cut your way to growth.
The Market-Making Potential of the VA
As the only national health infrastructure in the United States -- and with a longitudinal data set that could make all the OpenAI humanity-saving fantasies come true -- I would argue the Veteran’s Health Administration is a unique and untapped American asset to lead the next cycle of evolution in the business and economics of healthcare, not only for Veteran’s and their families, but for the United States as a whole.
Starting with the 'production of cardiometablic health' and 'continuous health engagement' as pistons in the engine for big market innovation and big dealmaking, the kind that can power an "economic boom like no other" for the most Americans at the same time.
Starting not with a "government" lens as the way to think about the VA, but with a market-making one. Starting with the VA's capacity as an evidence-making machine around which to the pharmaceutical industry can "reconfigure the financial system" -- and the practice of medicine -- to its benefit. To wit the potential from a comprehensive new study by the VA that confirmed that GLP-1s have even more health benefits than previously thought.
Analyzing the medical records of roughly 2.5 million patients within the VA system, researchers at the Department of Veterans Affairs found that GLP-1 weight-loss drugs have an impact on a whopping 175 diseases and conditions.
"The study bolsters other research that found GLP-1 medications aid in the treatment and prevention of Alzheimer’s disease disease by reducing inflammation and in curtailing substance abuse by influencing dopamine levels in the brain. But some of the results were unexpected, including how these drugs can help with things like blood clotting and infections.
The study was published in the the journal Nature Medicine. Findings show that GLP-1 drugs are associated with a reduced risk of psychotic disorders, seizures and heart conditions like heart attack and stroke.
“We tend to think of drugs as surgically designed to do only one thing. But the reality is almost never like this,” said Ziyad Al-Aly, a co-author of the paper and chief of research for the VA St. Louis Health Care System.
GLP-1s are being called “era-defining.” According to predictions, these obesity medications will become a $100 billion market, with Morgan Stanley predicting that 9 percent of the U.S. population will be on a weight-loss drug by 2030. If Morgan Stanley’s estimation is on target, and that nearly one in ten Americans are about to have their consumptive desires heavily suppressed, if not outright decimated, then it’d be easy to see the enormous knock-on effect this would have on the larger global economy, besides boosting Denmark’s GDP.
In broad terms, the “Ozempic economy” refers to the various downstream effects of this new generation of prescription weight loss drugs.
It encompasses not only shifts in consumer behaviors, preferences, and lifestyles but also the extensive adjustments (read “strategic fit”) many other markets, brands and businesses will need to make in response. Which is why David Ricks, CEO of Eli Lilly, says he's been getting nervous calls from leaders of food, diet, and fitness companies, asking for advice (more interesting, perhaps, is that these calls are not about collaborating with Lilly on economic innovation).
Positioning the VA for Big Deal-Making
Eli Lilly said it will invest at least $27 billion to build four new manufacturing sites in the U.S. as demand for its weight loss and diabetes injections soars. “The move comes as companies work to build goodwill with President Donald Trump, who has emphasized re-shoring manufacturing to the U.S. and reducing reliance on foreign supply chains,” reported CNBC last week.
The thing to keep in mind is that this investment in manufacturing capacity is based on a market forecast. That market forecast is in turn is based on Lilly (and Novo and Amgen and AbbVie) managing a pipeline of new GLP-1s, drugs whose storyline of value comes from data to make promotional claims. That data that comes from clinical studies. Like the one the VA just completed.
What Musk seems to misunderstand about the healthcare market generally, and about the VA uniquely, is that there’s a lot of money to be made thinking of the VA as a market-maker, almost as consumer brand, repositioning it as a keystone partner with industry to do big deal-making, the kind with the power to reshape economic systems around the ‘production of cardiometabolic health’ as a meta-market around which $142 trillion in global GDP is linked and flows.
And the foundation for the kind of big system disruption that new executive management team of the United States desires.
“There are many people complaining about the changes we’re making at the V.A.,” Collins said. “But what most of them are really saying is, ‘Let’s just keep doing the same thing that the V.A. has always done.’” He later added, “We’ll be making major changes, so get used to it. The days of kicking the can down the road are over. We owe America’s Veterans solutions!"
In the spirit of novel, status-quo-busting solutions for America's 16 million veterans and 1.5 million active duty troops, here's five bullet points for Secretary Collins to consider sending in an email to Musk next Monday:
Working on business deal with OpenAI to give every veteran a cut of future revenue from every product developed from their data
Working on a business deal with USAA to replace QALY as a standard to negotiate the value of gene therapies
Working on a business deal with Epic to design a 'specialized EMR' for cardiometabolic health
Working on a business deal with JP Morgan to create a new stock exchange for healthcare
Working with the Business Roundtable to position healthcare as the real wealth of nations
Change Change Management
As the only national health infrastructure in the country, the VA is uniquely positioned to change the character, commerce and direction of a market-based health economy.
But you won’t get there by taking a chainsaw to the business.
/ jgs
John G. Singer is Executive Director of Blue Spoon, the global leader in positioning strategy at a system level. To position a modern strategy story: john@bluespoonconsulting.com.