Latest / Becker’s Payer Issues Podcast / Matt Gibbs, Senior Vice President and Chief Pharmacy Officer at Blue Shield of California

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Matt Gibbs, Senior Vice President and Chief Pharmacy Officer at Blue Shield of California · Becker’s Payer Issues Podcast

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  Hello, everyone. This is Jacob Emerson with the
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  Becker's Payor Issues podcast. Thrilled today to be
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  joined by a special guest. Matt Gibbs is
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  senior vice president and chief pharmacy officer at
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  Blue Shield of California.
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  Matt, thanks so much for taking the time
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  to be with me on the podcast today.
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  Hey, Jacob. Thanks for having me. Yeah. Absolutely.
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  And before we dive into everything we wanna
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  talk with you about, can you tell us
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  a little bit more about yourself, your career
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  background in health care, and what it is
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  that you're doing today at Blue Shield?
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  Sure. Happy to.
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  My name is Matt Gibbs, and I'm a
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  pharmacist by background.
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  I've been kind of in non traditional pharmacy
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  roles, for the last twenty seven years. I
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  can't believe I can say that.
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  And have mainly been in the pharmacy benefit
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  management or PBM space for majority of my
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  career. So, was there in the early days
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  when there were
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  what are called PBMs,
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  around called PCS
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  and Medco and all those old names and
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  have recently spent time in the mid market
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  transparent PBM space, both at EnvisionRx
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  and at Capital Rx. And most recently here,
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  I've been at Blue Shield of California for
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  about a year and had initial responsibilities
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  for launching the pharmacy care reimagine
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  offering and, getting that stood up for the
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  Blue Shield
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  plan itself. And now as chief pharmacy officer
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  having oversight for all of pharmacy services and
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  transformation as we move forward into the rest
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  of 2025.
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  Fantastic. Well, let's talk a little bit about
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  transformation, Matt. Obviously, there's been a lot happening
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  at Blue Shield of California
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  earlier this year. There's the creation of Ascendiant,
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  a new parent company.
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  So a lot of major changes happening across
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  the enterprise.
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  In that vein, what's your vision for pharmacy
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  care for your members
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  moving forward?
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  No, good question. And while our corporate structure
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  is interesting, I think the goal with what
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  we wanna provide
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  to members is the same.
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  So,
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  I look at it at pharmacy care reimagine
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  this way.
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  You can have the best member digital tools,
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  you can have the best decision support, you
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  can present, you know, hundreds of options to
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  a patient or member in terms of how
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  they can,
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  have more informed healthcare decisions.
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  But those tools are only as good as
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  the data that goes in. And I think
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  what has been missing in pharmacy for so
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  long, at least in my entire career, is
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  that the information presented to a patient or
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  member is often mired
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  with other,
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  forces
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  that don't necessarily
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  present accurate information,
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  meaning the actual cost of a drug. Are
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  you actually seeing what a drug costs as
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  a certain pharmacy on a certain day? Are
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  you seeing what
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  your PBM or insurance plan is presenting to
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  you? So our goal is to break that
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  apart to say, if we really wanna leverage
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  these great digital assets,
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  we need and we owe
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  the member
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  the actual information that
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  is based on the cost basis of a
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  drug itself. So then they can make an
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  informed decision
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  without any other interested parties saying, Hey, this
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  may be more expensive, but you should use
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  mail service because we own the dispensing facility.
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  Or, Hey, this is your specialty drug, but
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  we want you to use this one because
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  there's a higher rebate on it for us
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  as a pharmacy benefit manager.
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  Stripping all that away so that you can
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  really give the net cost to a member
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  is our ultimate goal. That shouldn't be hard
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  because we don't do that anywhere else in
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  our economy, except in drugs where you never
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  actually see the price of a drug as
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  consumer.
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  And our goal is to break that down.
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  So just like when you make a decision
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  over a certain potato chip brand or another,
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  the price is in front of you at
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  the grocery and you can make a decision.
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  It's not this fictitious number that leads you
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  down a path for some other interested party
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  to make money
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  on your back. So that is our goal.
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  It sounds simple, but it's revolutionary
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  because again, this is one part of The
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  US economy where real price is rarely presented
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  to the consumer.
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  Absolutely. So you're really advocating for transparency
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  on behalf of the member, Matt. And and
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  I will say we've spoken with many Blue
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  Shield leaders in the past, and they always
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  emphasize
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  the need for systemic reforms within the pharmacy
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  space to improve transparency and accessibility
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  to to drugs.
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  So so what strategies or initiatives are you
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  prioritizing
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  as you've come into this new role to
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  drive these changes?
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  Right. So the the first thing that had
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  to be done was, as a health plan,
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  take back
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  our management of pharmacy.
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  Health plans throughout the country have outsourced
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  their pharmacy
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  department, their services, even their clinical reviews
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  to pharmacy benefit managers. And now they're scratching
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  their heads saying, gosh, why are my costs
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  going up? Why do I not have flexibility
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  in what drugs I cover? Why does my
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  PBM always want to change my contract when
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  I want to do something maybe direct with
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  a manufacturer, or maybe I want to work
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  with a different pharmacy?
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  And health plans are waking up to the
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  fact that pharmacy is no longer 10% of
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  your, of your total healthcare spend. It's 30,
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  it's 50%.
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  And taking control of that function is key
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  to your future existence as a health plan,
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  no matter how big or small you are.
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  And you saw the big health plans early
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  on, the Uniteds, the Cigna's, the Aetna's, they
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  all merged with big PBMs because they saw
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  it coming. They knew that pharmacy had to
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  be an owned and controlled asset if you
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  wanted to control your healthcare destiny.
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  And Blue Shield is right behind that saying,
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  Hey, we wanna do that too, but we
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  don't wanna be owned by or own a
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  big BBM because we know there's lots of
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  problems there. We wanna break it apart
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  and kinda go back to the way that
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  things were in the nineties when health plans
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  owned and managed their own pharmacy,
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  benefit and department. And so Blue Shield is
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  ahead of the curve on that saying, we're
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  gonna blow the traditional PBM model away. We
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  did that in '24 by dismantling certain parts.
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  And we use five different service providers
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  to uniquely contract and supplement our pharmacy offering,
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  where we own the relationship, we own the
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  contract. So, I have a mail service relationship
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  with Amazon Pharmacy.
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  I have a retail network relationship with Navitus
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  Health Solutions. I have a claims adjudication
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  relationship with Abarca Health, and I have a
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  specialty relationship with CVS Health. All these combined
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  don't allow what happens in a vertically integrated
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  PBM in terms of, you know, taking from
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  an area point from another. I'll give you
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  a good rebate, but maybe I'm going to
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  make more money at mail service. There's all
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  these levers that are pulled on you as
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  a health plan And then downstream to our
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  employers
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  that don't necessarily work when
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  you have all those vested interests in one
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  entity. So pulling that apart, separate P and
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  Ls,
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  they're operating separately.
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  Amazon doesn't care what Abarca is making. Abarca
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  doesn't care what Navitus is making.
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  And that allows me to negotiate in a
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  much more linear fashion
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  and also really describe the services they're providing
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  and give me the flexibility in the contracts
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  that allow me to get to this more
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  transparent net price. So pulling it apart, removing
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  the vested interest is key. And until you
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  do that, you can't do all the transparency
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  things that you wanna accomplish.
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  No. It's it's fascinating to hear you talk
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  about this. And and, obviously, Blue Shield made
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  national headlines
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  a few years ago when the company decided
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  to to, as you said, match, shake up
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  the traditional PBM model and partner with companies
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  like like Amazon and Mark Cuban's cost plus.
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  So so since that partnership went into place,
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  any updates to share in terms of how
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  how that's all, worked out, what you're hearing
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  from members,
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  actual health outcomes resulting from from these partnerships?
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  Any updates to share about this?
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  Sure. So most of our updates right now
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  are operational because we're not even sixty days
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  past go live and you could argue yeah.
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  And you could argue January for even if
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  we weren't changing things, everything changes in January
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  because you have formulary changes, you have benefit
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  changes, you have cost share changes. And so
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  you really don't want to evaluate your financial
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  impact until probably slightly after the first quarter,
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  because there's a lot of nuances, flu season,
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  a whole bunch of things. So, but early
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  indications on the operational side
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  are excellent.
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  We've literally just had our launch party in
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  three of our California offices,
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  yesterday.
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  And we were able to celebrate many things.
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  You know, one of which was we we
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  launched in in green status with an initiative
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  this big, which is very rare.
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  And we were able to close out most
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  of our incident issues. We're down to a
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  normal what we have our normal kind of
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  business as usual incidents, meaning things that may
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  have been built incorrectly,
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  benefit designs that maybe needed to be tweaked
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  after testing. We are already at what we
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  call our our regular business operations, and we've
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  removed daily,
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  command centers, which were leveraged to make sure
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  that everything was working in January.
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  You know, like anything, you have your challenges,
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  but a lot of the things we experienced
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  really had nothing to do with our modular
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  approach and the complexities that are involved around
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  that. It had more to do with other
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  market changes that happen. You know, some retail
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  network changes around,
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  cost plus networks, which are coming out. Many
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  states that now have minimum reimbursement standards that
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  went into to place around using national average
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  drug acquisition costs plus the dispensing fee. So
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  there were many things that happened, just
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  industry wide, which definitely impacted
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  our launch, But very few are related to
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  the actual fact that we dismantled the fully
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  integrated PBM and went to the route of
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  a modular solution approach.
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  Probably the most staggering piece is that we
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  integrated five unique vendors
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  and 18 different data systems all within our
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  experience cube.
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  So that's what's unique about our model. Blue
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  Shield built an experience cube where all the
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  data comes in from our service providers and
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  we bifurcate it back out. We don't want
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  a PBM at the center of that doing
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  that work, because then what's the point? You're
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  basically back in the same model that we're
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  trying to move away from. So what that
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  allows me to do is at any time,
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  if somebody goes out of business, if we're
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  not happy with their service, maybe I have
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  a client that doesn't want to use one
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  of our service providers,
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  I'm able to leverage that experience cube and
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  those same APIs
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  and redirect to another provider. So this flexible
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  solution allows me to be flexible, not only
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  for Blue Shields, but hopefully for other loose
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  plans to come.
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  Absolutely. Well, clearly, a lot of innovative work
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  happening at Blue Shield. So we look forward
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  to all the updates there, Matt, and the
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  partnerships,
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  about about that those those updates.
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  But one last trend that I wanted to
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  ask you about is is something that we're
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  seeing with insurers all over the country when
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  they report their earnings,
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  and when they publish,
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  financial data.
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  And often and we're hearing about this on
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  the health system side too from CFOs
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  in terms of
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  managing high specialty drug costs.
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  And that includes GLP ones, which are often
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  specifically called out by name. So what's your
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  perspective on this ongoing
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  cost trend and and the future of,
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  managing these these high cost specialty medications moving
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  forward?
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  Right. So if you look at the, there's
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  a nephron study, which shows
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  the
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  areas where fully integrated PBMs make their money.
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  And everybody is obsessed with talking about rebates
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  or what they call retail spread, meaning they
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  pay the pharmacies one thing and build their
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  clients another.
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  But the lion's share of revenue made by
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  any PBM today, 39%
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  of their revenue profit is actually coming from
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  specialty pharmacy.
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  And that causes a pause for me as
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  a health plan.
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  Because now their biggest revenue driver to their
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  earnings is based on the highest trend item
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  for me as a health plan. And that
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  does not align very well. So what you
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  have to do, it really two things. One
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  is you want to make sure that your
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  specialty arrangement is a cost plus arrangement, meaning
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  that you're getting acquisition cost at the specialty
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  pharmacy, plus the dispensing fee at every drug
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  level. Many health plans will contract across all
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  their specialty drugs, and there's an average and
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  all these games are played. And, you know,
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  unfortunately they get taken advantage of.
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  The second piece that you really want to
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  make sure you nail down on the specialty
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  side,
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  outside of
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  the nuanced acquisition part
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  I mentioned, is that you have the ability
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  to do direct contracting on certain specialty drugs.
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  And what I mean by that is we
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  went to market,
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  for biosimilar Humira
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  and it was in a Bloomberg article where
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  they showed our price of $5.25,
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  lowest
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  in the market anywhere. And why? We waited
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  a little bit because we knew there were
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  several launching
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  in mid or early to mid twenty twenty
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  four,
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  some other health plans and the larger PBMs
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  either leverage their quote unquote white labeled,
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  branded
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  products.
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  And we knew that that ultimately wasn't the
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  best idea because you're not taking away that
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  motivation of I make money the more
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  drugs I dispense as a PBM and we
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  don't want that dynamic. So we went out
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  and contracted
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  along with our partner Evio.
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  And we were able to secure with Fresenius
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  Colby,
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  what's called unbranded Adacio, which is a biosimilar
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  for Humira, the world's most expensive drug. And
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  we are at $5.25 a month, significantly
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  below
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  the big PBMs who are well over a
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  thousand dollars a month. So it's just fascinating
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  to me. We now have one example, we're
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  gonna have more examples as we go into
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  2025, as we look at other biosimilars in
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  particular,
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  where,
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  this is why the costs are going up
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  because the hand is still in the basket,
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  whether they're manufacturing,
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  white labeling,
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  house branded biosimilar, whatever you call it, it's
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  all a motivation
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  for profit. And it's not typically in the
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  best interest of the health plan consumer or
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  our downstream employer clients, or most importantly, our
• 14:22
  members. So we're cleaning that up as much
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  as we can. It's one drug at a
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  time, but you have to have that flexibility
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  in your contract or you can't even perform
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  those those functions.
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  Sure. Sure. Well, that's an amazing example you
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  shared there with Humira. So I appreciate you
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  sharing that with us, Matt.
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  Before we go, what else are we missing?
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  I mean, you've got a lot of health
• 14:40
  plan leaders listening in right now. Any other
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  final thoughts or bits of advice you wanna
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  offer them?
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  Definitely.
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  And I I think every pharmacy director, chief
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  pharmacy officer, VP of pharmacy
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  out there at any size health plan,
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  I hope I'm hoping is shaking their head.
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  Yes. When I say this is that
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  health plans need to wake up and understand
• 15:05
  that pharmacy
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  is the future. Whether it's gene therapy, more
• 15:09
  specialty drugs,
• 15:11
  you gone are gonna be the day of
• 15:12
  testing and surgery. We're already seeing it in
• 15:15
  many areas.
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  And I hate to break it to everyone
• 15:18
  at the executive team at every health plan.
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  If you don't have somebody in pharmacy,
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  either on your senior team or on your
• 15:25
  executive team,
• 15:26
  you don't have the right voice at the
• 15:28
  right level.
• 15:29
  And it's critical, even more critical that you
• 15:32
  don't have diluted data coming to leaders within
• 15:35
  a health plan where you don't have the
• 15:37
  subject matter expert talking about the business of
• 15:40
  pharmacy and the clinical aspects.
• 15:43
  And I really applaud Blue Shield for elevating
• 15:45
  pharmacy to where it belongs.
• 15:47
  Sadly,
• 15:48
  that's not the case in a lot of
• 15:49
  health plans. And they wonder why their pharmacy
• 15:51
  spend is out of control because they haven't
• 15:53
  prioritized it. So I'll get off my soapbox,
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  but the answer is very obvious. It's just
• 15:59
  getting the attention and understanding what you need
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  to do structurally,
• 16:02
  what you need to do from a talent
• 16:04
  acquisition standpoint, and what you need to do
• 16:06
  from a member readiness standpoint to really position
• 16:09
  your success in pharmacy moving forward.
• 16:12
  Well, it's great soapbox advice for our audience.
• 16:15
  So Matt, I wanna thank you for taking
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  the time to sit down with us and
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  for sharing your insights with our listeners. We
• 16:20
  really appreciate it. It was a pleasure. Thanks,
• 16:22
  Jacob. If you'd like to listen to more
• 16:24
  podcasts from Becker's Healthcare, you can visit beckershospitalreview.com.