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Transparency, Auditing, and the PBM Shell Game | PBM Reform Podcast · Pharmacy Podcast Network

0:05
Speaker 1: You are listening to the global network of podcasters dedicated
0:09
Speaker 1: to the pharmacy profession.
0:10
Speaker 2: Welcome to the Pharmacy Podcast Network.
0:33
Speaker 3: Welcome to the PBM Reform Podcast, where we dive deep
0:37
Speaker 3: into the world of pharmaceutical benefit management, cutting through the
0:40
Speaker 3: noise to uncover the truth. Since twenty nineteen, we've been
0:45
Speaker 3: your go to source for the latest on how PBMs
0:48
Speaker 3: impact patient care, drug pricing, and the very future of pharmacy.
0:53
Speaker 3: Here we champion the role of pharmacists, the.
0:56
Speaker 4: Most knowledgeable advocates for medication safety and exse. Join us
1:02
Speaker 4: as we expose and generate discussions that are reshaping healthcare
1:06
Speaker 4: and explore how we build a better payment system which
1:09
Speaker 4: focuses on advancing pharmacy care.
1:17
Speaker 5: Hey, welcome back to the PBM Reform Podcast.
1:20
Speaker 6: My name's Todd.
1:21
Speaker 5: You're a founder of the Pharmacy Podcast Network. We're thrilled
1:25
Speaker 5: that Greg Ribolt has taken over the PBM Reform Podcast
1:29
Speaker 5: dug into some major superstars in our industry. A shout
1:32
Speaker 5: out to mister Tony with the Tennessee Pharmacy Association. If
1:38
Speaker 5: you haven't heard the last episode, you have to go
1:41
Speaker 5: out to your favorite podcast outlet. Whether that's Spotify or
1:45
Speaker 5: Apple and take a look. It was Tennessee PBM Reform
1:49
Speaker 5: win and boy was it a big win. And it's
1:52
Speaker 5: just continuing. Greg, welcome back to the PBM Reform Podcast.
1:57
Speaker 5: I can't wait for you to share with our listeners
2:01
Speaker 5: today of who our special guest is.
2:03
Speaker 6: Yes, Yes, thank you Todd.
2:05
Speaker 2: I always always enjoy the opportunity to share some time
2:09
Speaker 2: with you, and I'm excited about this one. I'd like
2:11
Speaker 2: to welcome Josh Golden to PBM Reform Podcast today. And
2:15
Speaker 2: Josh is the senior vice president of Strategy for Capital
2:19
Speaker 2: RX and this is going to be just, I think,
2:21
Speaker 2: just a dynamic powerhouse of a conversation. Josh, thank you
2:25
Speaker 2: so much for joining.
2:26
Speaker 1: It's my pleasure to be here. Thanks Greg.
2:28
Speaker 2: Now, now Josh and I go back, Boy, you know
2:31
Speaker 2: the years we were just talking about the months click by,
2:33
Speaker 2: the years click by. I think we go back to
2:35
Speaker 2: probably like January twenty twenty, where there is some Georgia legislation.
2:38
Speaker 2: I think is when we first our paths first first crossed.
2:43
Speaker 2: And you know, there was a lot of conversations at
2:45
Speaker 2: that time center around date AC and we can circle
2:47
Speaker 2: to that at some point in this discussion. But Josh,
2:51
Speaker 2: if you could just just tell our listeners a little
2:53
Speaker 2: bit about yourself, your background, and then about cap r X,
2:58
Speaker 2: because you guys have some just exciting exciting things going on,
3:01
Speaker 2: leading on all sorts of fronts. I think software platforms, technology, transparency, lowering,
3:08
Speaker 2: drug casts. You guys are doing a lot of exciting stuff.
3:11
Speaker 2: So I'll kick it over to you.
3:12
Speaker 6: Yeah.
3:13
Speaker 1: Thanks. So my background actually as a healthcare consultant, So
3:16
Speaker 1: prior to joining Capital Arcs in twenty nineteen, I spent
3:20
Speaker 1: about twenty years as a pharmacy benefits consultant advocating for
3:25
Speaker 1: large employers, benefit planed sponsors, essentially fortune five hundred companies,
3:30
Speaker 1: large labor unions, health plans, health systems, et cetera. These
3:34
Speaker 1: were groups that are largely the payers of healthcare. They're
3:37
Speaker 1: shouldering the financial burden of healthcare here in the United
3:40
Speaker 1: States under employer sponsored healthcare arrangements. So they were my
3:44
Speaker 1: clients and they were faced with an industry that frankly
3:47
Speaker 1: was impossible to decipher and understand. Right, they had to
3:50
Speaker 1: negotiate contracts with PBMs full of opacity, full of hidden
3:55
Speaker 1: revenue streams, all sorts of misaligned interests things like that
3:58
Speaker 1: I don't believe it. Yeah, no, I believe it or not,
4:02
Speaker 1: And so I would step in, help them with contracting,
4:04
Speaker 1: help them with auditing, help them negotiating. So I've really
4:08
Speaker 1: seen these arrangements from a number of different angles and
4:11
Speaker 1: spend a lot of time, frankly, banging my head against
4:13
Speaker 1: the wall around how these arrangements were structured. I was
4:16
Speaker 1: an early advocate for PBM transparency after seeing how these
4:21
Speaker 1: misaligned interests were playing out day to day. And that's
4:25
Speaker 1: ultimately what brought me to Capital RX. It was it's
4:28
Speaker 1: a clean sheet PBM. We started with a blank sheet
4:30
Speaker 1: of paper and ultimately built the PBM that avoids all
4:34
Speaker 1: of the misalignment that we're probably going to talk pretty
4:38
Speaker 1: candidly about today. And so that's been a real fantastic
4:43
Speaker 1: sort of destination for me to arrive at, and we've
4:46
Speaker 1: experienced a period of pretty tremendous growth as the industry
4:49
Speaker 1: is I think waking up right now to a lot
4:53
Speaker 1: of these challenges that frankly, I have been screaming about
4:55
Speaker 1: for years.
4:55
Speaker 2: So yeah, and you I mean, but boy, when you
4:57
Speaker 2: talk about sort of like one of the original like
5:00
Speaker 2: you know, I would say, PBM interests who were actually
5:04
Speaker 2: like literally screaming for transparency and fighting, you know, on
5:09
Speaker 2: the front line for transparency back before maybe it was
5:13
Speaker 2: cool if you will, right, I mean you were you
5:16
Speaker 2: were there and and and.
5:18
Speaker 6: And cap r X was there.
5:19
Speaker 2: Now you you all have experienced some some really really
5:23
Speaker 2: significant growth over you know, over what a period of
5:28
Speaker 2: several years, Like lives covered.
5:31
Speaker 6: Now, what do you ballpark? Do you have a ballpark? Figure?
5:35
Speaker 1: Yeah, we're around five million covered lives that we directly manage.
5:39
Speaker 1: And we also have an infrastructure component to our business model,
5:43
Speaker 1: so we are we have a platform for administration of
5:47
Speaker 1: pharmacy claims. So really there's two problems we're trying to
5:51
Speaker 1: solve simultaneously. One is the financial infrastructure problem, the problem
5:56
Speaker 1: with the misaligned interest the way that PBMs make money
5:59
Speaker 1: and how that influences their behavior in ways that work
6:03
Speaker 1: against the interest of plan sponsors. That's issue number one.
6:06
Speaker 1: Issue number two and we learned this very early on
6:08
Speaker 1: in our journey is we couldn't solve for issue number
6:11
Speaker 1: one unless we had modern tech that can do things differently,
6:14
Speaker 1: that can adapt. So we built a platform. We call
6:17
Speaker 1: her Judy, which is short for adjudication, which is the
6:21
Speaker 1: nerdy way of explaining how a claim is processed, right,
6:25
Speaker 1: received from a pharmacy determined, the pricing is determined, the
6:29
Speaker 1: cost share is determined, and ultimately people get built and
6:33
Speaker 1: pharmacies get paid. So that is at the heart of
6:36
Speaker 1: what we do from a tech standpoint, And so we
6:39
Speaker 1: also have an element of the business that is leasing
6:42
Speaker 1: that technology now to other large PBMs.
6:44
Speaker 2: Okay, wow, so you are offering that technology to other
6:49
Speaker 2: PBMs to leverage so five and only lives. Something that
6:52
Speaker 2: stood out to me is sort of some of the
6:54
Speaker 2: breadth of where your clients are coming from. You have
6:57
Speaker 2: some fortune five hundred clients, you have some some union clients,
7:01
Speaker 2: some government clients. Talk to us a little bit about
7:03
Speaker 2: client mix, and I'd be interested to know your thoughts
7:07
Speaker 2: on what is like what would you attribute to the
7:10
Speaker 2: rapid growth, Right, Is it the transparency? Is there sort
7:14
Speaker 2: of this thirst for increased transparency and pharmacy benefits and
7:18
Speaker 2: is that driving the growth or is it something else?
7:20
Speaker 1: Yeah, it's a combination of the two things we've already mentioned.
7:24
Speaker 1: Number one, a frustration with the old world PBM financial
7:28
Speaker 1: models and a realization that you know, these clients, these
7:32
Speaker 1: large employers, labor unions, health plans would go out to
7:36
Speaker 1: RFP year after year, you know, the typically RFP and
7:40
Speaker 1: three year cycles for their PBM relationship, and the RFP
7:43
Speaker 1: would show this massive savings opportunity that they've been able
7:46
Speaker 1: to negotiate, and then the next year they would implement
7:49
Speaker 1: that new PBM and costs would go up. They trend
7:51
Speaker 1: would just increase it. Costs would go up, and these
7:55
Speaker 1: clients were left scratching their head saying, I thought we
7:56
Speaker 1: were going to get savings here, and it turns out
7:59
Speaker 1: it was the behavior year of the PBM that was
8:02
Speaker 1: driving those cost increases. Plenty of examples I can give you,
8:05
Speaker 1: but just the steerage of patients, for example, towards higher
8:09
Speaker 1: cost drugs that generate a higher rebate because as you
8:12
Speaker 1: may know, PBMs quietly retain a portion of that rebate
8:15
Speaker 1: revenue stream as part of the profit model. So all
8:19
Speaker 1: of that, this sort of like repeated abuse if you will,
8:23
Speaker 1: that these employers were suffering from those employers became our
8:29
Speaker 1: biggest opportunity, and frankly, we didn't even have to hunt
8:33
Speaker 1: them down. These were large employers, Fortune and five hundred
8:36
Speaker 1: companies that came knocking at our door once they heard
8:39
Speaker 1: about our business model and learned that we were doing
8:41
Speaker 1: things meaningfully differently. That that became, frankly an organic pipeline
8:46
Speaker 1: for us that we haven't had to really struggle, frankly
8:50
Speaker 1: to find new opportunities. They're kind of come and looking
8:52
Speaker 1: for us.
8:53
Speaker 6: They're coming. Wow, that's exciting.
8:55
Speaker 2: So you mentioned rebates, and something that's that struck me
9:00
Speaker 2: just just reviewing your you know, some of your materials
9:03
Speaker 2: and your website is a lot of folks throw out transparency, right,
9:08
Speaker 2: and I want to talk about what what the difference is.
9:10
Speaker 2: But something that struck me is you're one of the
9:12
Speaker 2: only PBMs that I've seen that literally on your website
9:16
Speaker 2: note that not only do you have rebate passed through,
9:19
Speaker 2: but you include all revenue from drug manufacturers.
9:22
Speaker 3: Right.
9:22
Speaker 2: One of the things as you look at some of
9:24
Speaker 2: these evolving government contracts with PBMs and other contracts is
9:28
Speaker 2: you know, they may have this, you know, a provision
9:30
Speaker 2: that says, hey, we're going to pass through hundred percent.
9:33
Speaker 6: Of rebates, but then they exclude from the definition of rebates. Right.
9:36
Speaker 2: They have these really narrow contractual definitions of what a
9:41
Speaker 2: rebate is, and so aggregate discounts may be excluded, or rebates,
9:45
Speaker 2: negoti fees from manufacturers for other services may be excluded,
9:50
Speaker 2: or rebates from rebate aggregators. So it just struck me
9:53
Speaker 2: just you say it, right, you say it plain as day. Hey, Right,
9:58
Speaker 2: we're going to pass through all rebates and dollars coming
10:01
Speaker 2: from drug manufacturers.
10:02
Speaker 1: Any revenue. Yeah, it really be all encompassing because this
10:05
Speaker 1: industry really has a long and sorted history of maneuvering
10:09
Speaker 1: this money around this bucket of what we casually call rebates.
10:13
Speaker 1: But when you got to understand that when a PBM,
10:16
Speaker 1: a large PBM, sits in front of Congress and testifies
10:19
Speaker 1: or looks at their client in the eye and says
10:21
Speaker 1: we're going to give you one hundred percent of rebates,
10:23
Speaker 1: you have to picture that word rebate with a capital R,
10:26
Speaker 1: because that is, to your point, a defined term in
10:29
Speaker 1: the contract that intentionally excludes or omits all sorts of
10:34
Speaker 1: other answer revenue streams that are continuing to evolve. Give
10:37
Speaker 1: an example right now, there's a pretty dramatic increase that
10:40
Speaker 1: we're tracking around value based contracts that operate and behave
10:45
Speaker 1: a lot like rebates. They are basically rebate value rebucketed
10:49
Speaker 1: into a different format. Right under value based type arrangements
10:52
Speaker 1: for certain products, those moneies flow through to us as
10:56
Speaker 1: a PBM, they flow through to other PBMs as well.
10:59
Speaker 1: Trust me, this is an industry wide phenomenon. The question
11:02
Speaker 1: is does that does each PBM then choose to pass
11:06
Speaker 1: that revenue on to their plan sponsor clients or do
11:08
Speaker 1: they say that's not a rebate as we define it,
11:11
Speaker 1: So we're going to go ahead and quietly retain that.
11:14
Speaker 1: So these are questions that plan sponsors need to be
11:16
Speaker 1: vigilant on. Unfortunately, today's value based contract is tomorrow's question
11:21
Speaker 1: mark and who knows what it's going to be called
11:23
Speaker 1: involves Yeah, yeah, And this has happened historically multiple times
11:28
Speaker 1: through this industry. We saw it happen with what are
11:30
Speaker 1: called rebate admin fees or formula administration fees. We see
11:34
Speaker 1: it on the network side with network fees, where a
11:37
Speaker 1: PBM will charge pharmacies for the pleasure of being part
11:41
Speaker 1: of their network. Right and in most cases that PBM
11:45
Speaker 1: is quietly retaining that revenue, not passing that onto the plan.
11:49
Speaker 2: Interesting you say that, I don't know if you saw
11:51
Speaker 2: the most recent Office of Inspector General Audit report in
11:54
Speaker 2: connection with a federal employee health benefit plan. But it
11:57
Speaker 2: was something like half a billion dollars in being charged
12:01
Speaker 2: to pharmacies that weren't passed through despite the existence of
12:05
Speaker 2: a quote.
12:05
Speaker 6: Pass through contract.
12:07
Speaker 2: And to your point about sort of evolution in the
12:09
Speaker 2: way that these things do change, I also think on
12:12
Speaker 2: the pharmacy side, Recall like when our good friend Antonio Chaca,
12:15
Speaker 2: right when he sort of blew up spread pricing in
12:19
Speaker 2: Ohio and State started to hone in on this practice
12:22
Speaker 2: of traditional spread where you know, the pharmacy is reimbursed
12:25
Speaker 2: low and you know this governmental program is charged much higher.
12:30
Speaker 2: And as State started raining in on that, we started
12:33
Speaker 2: seeing shifts to you know where really the spread is
12:35
Speaker 2: on the back end via effective rate recoupments things like that.
12:39
Speaker 6: Right, But it's sort of similar. It's the same game.
12:41
Speaker 2: On the pharmacy side as three baits. It's evolving and
12:46
Speaker 2: some of these larger PBMs find ways to continue to
12:49
Speaker 2: extract the value they want. It may just instead of
12:53
Speaker 2: on the front end of the pharmacy transaction, maybe now
12:56
Speaker 2: it's on the back end of the pharmacy transaction.
12:58
Speaker 1: But very similar, Yeah, Yeah, that's right, that's right, and
13:01
Speaker 1: these are this is just a peak, if you will.
13:06
Speaker 1: This is just a small sliver of the vast, diverse
13:11
Speaker 1: set of revenue streams, opaque revenue streams that traditional PBMs
13:14
Speaker 1: have relied on. And it brings us to this really
13:19
Speaker 1: fascinating existential moment for the old world PBMs that we're
13:23
Speaker 1: talking about because in the face of looming transparency requirements
13:29
Speaker 1: right ca. Twenty twenty six, the original CIA DOL requirements.
13:35
Speaker 1: Now these new layers of disclosure are creeping, are trying
13:41
Speaker 1: trying to attempting to shed light into some of these
13:44
Speaker 1: dark corners of profitability for the PBM. But that creates
13:48
Speaker 1: a very interesting problem for the old world PBM. And
13:51
Speaker 1: what is that, Well, it becomes a problem of move
13:58
Speaker 1: it or lose it. And by that I mean the
14:01
Speaker 1: PBM really has two options when faced with the with
14:05
Speaker 1: enforced transparency, like the transparency we're now seeing through regulation
14:10
Speaker 1: and legislation. Their first option is to is to follow
14:15
Speaker 1: the spirit of this legislation and start revealing these these
14:19
Speaker 1: these layered revenue streams, put them out on the table
14:22
Speaker 1: for clients to scrutinize. Move to a true fee only model,
14:25
Speaker 1: which is what which is we we provide a sort
14:29
Speaker 1: of an example of that model. So we will do
14:31
Speaker 1: any of the all the back end revenue streams we've
14:33
Speaker 1: been talking about, we don't do any of that. We
14:34
Speaker 1: survive as a PBM by charging a fee to our
14:37
Speaker 1: clients for the service we provide. Right, It's it's a
14:40
Speaker 1: one sentence profit model. I say you, If it takes
14:43
Speaker 1: longer than one sentence, you've got a problem with your PVM.
14:46
Speaker 1: So anyway, that's our one sentence proposal for how we
14:49
Speaker 1: want to make money. Other PBMs it takes you know,
14:52
Speaker 1: ten pages of text to explain how to that stuff
14:55
Speaker 1: were to come to the surface, then it would be
14:58
Speaker 1: an uncomfortable reckoning. We can administer a claim. We can
15:01
Speaker 1: administer a benefit for a client, a large fortune five
15:05
Speaker 1: hundred client for something on the order of you know,
15:07
Speaker 1: four or five bucks acclaim. Most traditional PBMs are pulling
15:11
Speaker 1: in retain revenue on the order of fifteen bucks acclaim
15:15
Speaker 1: or north of that. In some cases, on smaller accounts,
15:18
Speaker 1: it could be twenty bucks a claim. So what kind
15:22
Speaker 1: of uncomfortable questions are kind of going to come up
15:24
Speaker 1: when the PBM has to surface all of that fee
15:26
Speaker 1: structure onto the table for clients to scrutinize. Right, why
15:33
Speaker 1: does it take you three x the retained revenue to
15:36
Speaker 1: administer this benefit when this other ven, these other vendors
15:39
Speaker 1: over year can do it for five bucks a click.
15:41
Speaker 1: And that to me represents a competitive pressure that these
15:46
Speaker 1: companies cannot deal with. Right, So it is it is
15:51
Speaker 1: a margin compression to the point that I think that
15:55
Speaker 1: they would potentially even be exposed to fiduciary lawsuits on
15:59
Speaker 1: the shareholder side.
16:01
Speaker 6: Okay, well that's a big deal.
16:04
Speaker 2: So you know that shareholder pressure point is is significant.
16:09
Speaker 2: And you know you mentioned Consolidated Appropriations Act. You know,
16:12
Speaker 2: there's some interesting sort of industry speculation since the passage
16:16
Speaker 2: of this year's Consolidated Appropriation Act, which which has some
16:19
Speaker 2: delinking concepts and has some i would say, some material
16:23
Speaker 2: transparency reporting within medicare as well as within the commercial
16:28
Speaker 2: market and sort of what.
16:29
Speaker 6: Is the impact.
16:30
Speaker 2: I would also note that it seems like some of
16:32
Speaker 2: the larger, sort of old old world PBMs are trying
16:35
Speaker 2: to get out in front by marketing themselves as moving
16:38
Speaker 2: to sort of these front facing transparency models, something that
16:42
Speaker 2: has has struck me and I'd be interested in your thoughts.
16:45
Speaker 2: Is you know, for me, Capital r acts is very
16:47
Speaker 2: much transparency and implementation, right, it's not retrospective reporting, use
16:51
Speaker 2: a transparent pricing index on the drug side. You're passing
16:55
Speaker 2: through rebates on the other side. And you know, I'd
17:00
Speaker 2: love your thoughts on if you really think that this
17:02
Speaker 2: the Consolidated Appropriation Act, is going to genuinely change the
17:05
Speaker 2: PBM business model or if it's more sort of putting
17:08
Speaker 2: putting lipstick on it and making it look transparent.
17:11
Speaker 6: I can tell you something that that struck me.
17:13
Speaker 2: As you know, you said you guys are essentially feed based,
17:16
Speaker 2: service based, and some of the d linking legislation that
17:19
Speaker 2: did pass and become law to me is in certain
17:22
Speaker 2: ways trying to emulate that, right, sort of emulate the
17:25
Speaker 2: model that you all set. But that said detail in
17:28
Speaker 2: legislation matters, and so you know it has Hey, PBMs
17:32
Speaker 2: are going to earn a bona fide service fee and
17:34
Speaker 2: part D for example. But yet there's a rule of
17:36
Speaker 2: construction exception that the rebates can be passed through to
17:40
Speaker 2: the to the prescription drug plan, which oftentimes is the
17:44
Speaker 2: insure that either owns the PBM or that the PBM owns. Right,
17:48
Speaker 2: So if you know, so, if the PBM can't keep
17:51
Speaker 2: those rebates, but they're passing it back to an affiliated
17:54
Speaker 2: vertically integrated entity, you just went in a big circle.
17:58
Speaker 1: Yeah, well it's the cheese, right. And there's plenty of
18:01
Speaker 1: dark corners within the LLC. Outside of the LLC United Healthcare,
18:06
Speaker 1: I had to single out, you know, a single a
18:08
Speaker 1: particular big vendor, but they have over two thousand LLCs
18:11
Speaker 1: to two thousands subsidiaries. There's plenty of there's plenty of
18:14
Speaker 1: dark corners remaining where these PBMs can tuck away hidden margin.
18:19
Speaker 1: Look at, for example, the white label, the sort of
18:22
Speaker 1: the co labeling structures that they've created for biosimilars and
18:26
Speaker 1: in some cases generic drugs. You've got Quality Qualant pharmaceuticals,
18:29
Speaker 1: and the Cayman Islands. Uh, you know, you've got Cordavis
18:33
Speaker 1: with CBS. This is all essentially an opportunity for them
18:36
Speaker 1: to take what has historically been rebate revenue or other
18:39
Speaker 1: retained spread and move it up upstream, right up up
18:43
Speaker 1: the supply chain to an entity that they still control
18:46
Speaker 1: and enjoy the profitability from. So I don't have a
18:49
Speaker 1: lot of faith in the PBMs following through on the
18:52
Speaker 1: true spirit of the transparency requirements that are coming out.
18:56
Speaker 1: I think what you're going to see is a mad
18:57
Speaker 1: scramble for the shadows, and I think there's still plenty
19:00
Speaker 1: of dark shadows for them to hide.
19:02
Speaker 6: Margin it.
19:04
Speaker 1: The tap dancing is in full effect, and I do
19:07
Speaker 1: appreciate that, and to some extent I like to see
19:10
Speaker 1: that because it's at least us now starting to have
19:12
Speaker 1: a real discussion about what does transparency and what does
19:15
Speaker 1: alignment mean?
19:17
Speaker 6: Right?
19:18
Speaker 1: But looks like a sheep growls like a wolf. That
19:23
Speaker 1: to me is kind of how I kind of characterize
19:26
Speaker 1: a lot of what I have seen so far coming
19:28
Speaker 1: out of the big PBMs.
19:29
Speaker 2: Yeah, and so I mean, would it be fair to
19:31
Speaker 2: say a lot of sort of their posturing in light
19:33
Speaker 2: of the passage of consolidate appropriations and just the microscope
19:37
Speaker 2: and the scrutiny of some of the Old World PBMs,
19:40
Speaker 2: is it like, do you sense that there are legitimate
19:44
Speaker 2: and again I think it's a separate conversation of where
19:46
Speaker 2: they can to adhere to the spirit of these laws.
19:48
Speaker 2: But do you think there's a genuine move by some
19:50
Speaker 2: of the Old World PBMs to transparency, and do you
19:53
Speaker 2: perceive that as a threat to a true transparent PBM
19:57
Speaker 2: or do you think it's more marketing and trying to
19:59
Speaker 2: get out in front of it and sort of manage
20:01
Speaker 2: the public relations.
20:04
Speaker 1: So I have a couple comments on that. First of all,
20:07
Speaker 1: it's not a threat if clients understand what they're buying.
20:10
Speaker 1: It's a threat to the extent that it muddies the
20:13
Speaker 1: waters from a messaging standpoint, because we continue to do
20:17
Speaker 1: things meaningfully different, different even compared to what these new
20:21
Speaker 1: sort of you know, quasi transparent type of marketing efforts are.
20:25
Speaker 1: But it makes the conversation more complex. Now clients need
20:29
Speaker 1: to start peeling the onion and really understand the layers
20:31
Speaker 1: that are at play here. And it's already challenging for
20:34
Speaker 1: employers and buyers to understand this market, so you know
20:38
Speaker 1: it's going to it's going to continue to be challenging.
20:42
Speaker 1: But we do have to also acknowledge something really interesting
20:45
Speaker 1: about this, and that is that this is all happening
20:47
Speaker 1: at the same time that there is this phenomenon around
20:51
Speaker 1: cash pay price offerings and what I call sort of
20:55
Speaker 1: cash pay price neutrality which is starting to emerge. That
20:59
Speaker 1: is to say, sorically, prices, list prices under benefit plans
21:03
Speaker 1: have been sky high, right as all those big rebates, right,
21:06
Speaker 1: and then the cash price for a product quietly could
21:09
Speaker 1: be obtained for much lower. But now we're seeing that
21:12
Speaker 1: cash price move into the public forum, right, We're seeing
21:15
Speaker 1: direct offers from Lilianovo on GLP one. Other pharmaceutical manufacturers
21:20
Speaker 1: are following suit, saying, oh wait a second, like, we
21:23
Speaker 1: can just show, we can show patients what the real
21:26
Speaker 1: cost of this drug is, right and start having a
21:28
Speaker 1: real conversation about drug prices. To me, that creates an
21:32
Speaker 1: interesting another interesting challenge for the big PBMs, which is
21:35
Speaker 1: that for so long they have claimed that our size
21:39
Speaker 1: matters because we're bigger, we can haggle on pricing here
21:43
Speaker 1: and get a better deal for you on the union
21:45
Speaker 1: cost of these medications. But when we achievest cash price neutrality,
21:50
Speaker 1: when everyone is using the same language for price and
21:52
Speaker 1: finally like prices just out there for a drug like
21:55
Speaker 1: a GLP one, then the size matters less. The size
21:59
Speaker 1: and scale for purchasing power is less significant. I think
22:02
Speaker 1: a lot of that landscape starts to flatten, and that
22:05
Speaker 1: I think eliminates probably the one historical advantage that these
22:09
Speaker 1: bigger players have had. So now we're yeah, it's scale,
22:13
Speaker 1: and now we're left with bigger questions, which is like,
22:15
Speaker 1: so what does an employer or a buyer really get
22:17
Speaker 1: from a PBM. And it comes down, I think, to
22:19
Speaker 1: service an efficiency and so that's that's what I think
22:22
Speaker 1: employers are starting to ask, is are these big PBMs
22:25
Speaker 1: truly more efficient than a small PBM with a modern platform.
22:29
Speaker 1: Are these big PBMs delivering better service? Or are they
22:32
Speaker 1: you know, farming all our calls out to you know,
22:36
Speaker 1: to another country because it's cheaper, you know, are they
22:38
Speaker 1: they thirty minute average speed of answer? You know those
22:42
Speaker 1: kind of things. So, you know, those are the real
22:45
Speaker 1: questions I think that get to now the patient experience.
22:49
Speaker 1: Let's we we've been on this call for almost thirty minutes.
22:53
Speaker 1: We haven't mentioned the patient yet. The patients at the
22:55
Speaker 1: center of all of this, right, notwithstanding transparency and all
23:00
Speaker 1: these PBM deals, what's best for the patient And so
23:04
Speaker 1: that really is a part of the other challenge that
23:07
Speaker 1: we're focused on solving very.
23:09
Speaker 2: Good and you know, you mentioned efficiency, you mentioned technology,
23:13
Speaker 2: and Judy, I'm interested to hear your thoughts on this.
23:17
Speaker 2: I'm certainly not a technology person, but what I've heard
23:21
Speaker 2: is sort of the old world PBMs are also like
23:23
Speaker 2: using very like antiquated technology on the administration side. Is
23:30
Speaker 2: that I mean, is that accurate because I've heard that.
23:34
Speaker 6: I don't know.
23:35
Speaker 1: Yeah, the vast the majority of the industry, as you know,
23:38
Speaker 1: the more the majority of volume for our industry is
23:41
Speaker 1: concentrated among the big three PBMs. The three largest control
23:45
Speaker 1: about three quarters of the market right now. All of
23:49
Speaker 1: those claims for all three PBMs run on platforms that
23:53
Speaker 1: are at this point decades old, the largest of decades old,
23:56
Speaker 1: really the largest of those. The codebase for the large
24:00
Speaker 1: of the platforms that manages that transacts the most claims
24:03
Speaker 1: in the country right now, the codebase was written in
24:06
Speaker 1: the early nineteen nineties and nineteen ninety three originally.
24:09
Speaker 2: So it's like from a technology perspective, they're playing pong?
24:12
Speaker 2: Is that is that fair?
24:13
Speaker 6: It is?
24:15
Speaker 1: Let's be clear, like it's from it's pre Internet. This
24:18
Speaker 1: is pre Internet technology. These are these are server based
24:22
Speaker 1: platforms that I mean imagine like literally servers in closets
24:27
Speaker 1: that these companies have to maintain. They have engineers, they
24:30
Speaker 1: have coders that are probably at this point sixty seven
24:33
Speaker 1: years old that they're keeping on just because these are
24:35
Speaker 1: the folks that are the only ones that understand this,
24:37
Speaker 1: these old world languages, and so they are really really
24:40
Speaker 1: struggling where we see them struggle. I can tell you
24:43
Speaker 1: tons of examples from clients that have come to us
24:46
Speaker 1: and they're just like shocked at how quickly we can
24:49
Speaker 1: get things done. They go to their old PBM and
24:51
Speaker 1: they say, I need to change the cope for this
24:54
Speaker 1: drug because this new regulation came out requiring me to
24:56
Speaker 1: offer a zero dollar copay on COVID's medication something like that. Right,
25:01
Speaker 1: let's say there was something that happened in market. The
25:04
Speaker 1: PBM will come and then say we could do that,
25:06
Speaker 1: but it's going to take about ninety days for us
25:08
Speaker 1: to recode that in the system. And then they come
25:11
Speaker 1: to a capital RX. We're cloud based modern when I
25:14
Speaker 1: mentioned Judy earlier on cloud based you know modern language,
25:18
Speaker 1: you know human user interface, that's very intuitive that come
25:21
Speaker 1: to us to say we need to change copey and
25:22
Speaker 1: our answer is like, do you want that done like
25:25
Speaker 1: in the next hour or do you want us to
25:26
Speaker 1: hold off and wow, schedule it for tomorrow? And yeah,
25:30
Speaker 1: I mean it's it's that these it's not that we're
25:33
Speaker 1: necessarily faster than the speed of business right now, it's
25:36
Speaker 1: that the rest of the industry is running on rusty
25:38
Speaker 1: rails that.
25:39
Speaker 2: Are really interesting. And I think the point you make
25:42
Speaker 2: is counterintuitive. There was a misquote, but I think that
25:45
Speaker 2: there was some a post or an article from Drug
25:49
Speaker 2: Drug Channels just this week that seemed to sort of
25:52
Speaker 2: speculate that the that the larger PBMs are actually better
25:56
Speaker 2: positioned to adapt quickly to regulations and industry changes. And
26:02
Speaker 2: I know that not all smaller PBMs are transparent, and
26:05
Speaker 2: I know that not all smaller PBMs are equal, right,
26:09
Speaker 2: but it sounds to me like sort of with you know,
26:13
Speaker 2: sort of you are able to leverage your technology and
26:16
Speaker 2: leverage duty in a way that you are able to
26:19
Speaker 2: implement and adapt faster than the Big three when it
26:22
Speaker 2: comes to the technology side.
26:25
Speaker 1: We're fairly uniquely positioned in the uh. You know, if
26:28
Speaker 1: you put us in the bucket of like sort of
26:30
Speaker 1: challenger PBMs, if you will PBMs that are challenging the
26:33
Speaker 1: status quo, that are moved, that have moved, that are
26:35
Speaker 1: already living in an aligned model. The good news for
26:38
Speaker 1: us is twofold for Capital r X and Judy Health
26:41
Speaker 1: specifically is twofold number one. All of this wave of
26:45
Speaker 1: REGs and legislation that's come out, our lawyers are you know,
26:49
Speaker 1: our compliance experts have looked at this. It has zero
26:53
Speaker 1: impact on our model. We have not encountered any REGs
26:56
Speaker 1: or new requirements that have imposed anything meaningful that changes
27:00
Speaker 1: are the way we're already doing business. So where this
27:03
Speaker 1: legislation and regulation is dragging the rest of the industry
27:06
Speaker 1: kicking and screaming, we're already kind of there saying welcome
27:09
Speaker 1: to the party. We've been doing it this way for
27:11
Speaker 1: you know, seven years. So that to us is a
27:14
Speaker 1: benefit because we don't have every new way, every new
27:17
Speaker 1: reg that comes out. We don't have to overhaul our
27:19
Speaker 1: systems to like, you know, to comply with it. But
27:24
Speaker 1: but I would say even more importantly is that we're
27:29
Speaker 1: already at the destination of where healthcare needs to be
27:31
Speaker 1: from a tech standpoint, and that that's a distinction for
27:35
Speaker 1: us as a challenger PBM, because there's a lot of
27:37
Speaker 1: other really great PBMs out there that frankly, are operating
27:40
Speaker 1: in a transparent manner, fully aligned, doing things the way
27:44
Speaker 1: I would want them to do as an advocate for
27:46
Speaker 1: plan sponsors, But they don't necessarily have an infrastructure play.
27:49
Speaker 1: They don't have a platform that allows them to also
27:53
Speaker 1: be nimble aJile. They're maybe renting a platform from an
27:56
Speaker 1: older PBM, and so that is a put us in
28:00
Speaker 1: a you know, I don't want to brag, but it
28:02
Speaker 1: puts us in a relatively unique position.
28:04
Speaker 6: Yeah, yeah, that's interesting.
28:05
Speaker 2: You know, congress Wan Auchincloss, who's you know, a big
28:08
Speaker 2: advocate for PBM reform at the federal level, he uses
28:11
Speaker 2: an expression, you know, he wants to move where the
28:13
Speaker 2: puck is going, And it sounds to me like you
28:16
Speaker 2: feel very much like Capparacts is positioned already.
28:18
Speaker 6: You're already where the puck is going. That's right.
28:21
Speaker 1: From a technology perspective, that's right. You know, we we
28:24
Speaker 1: have kind of a tagline around this. What we say
28:27
Speaker 1: is we're trying to build the infrastructure that this country
28:30
Speaker 1: needs for the healthcare that this that our people deserve. Right,
28:34
Speaker 1: I mean the administration of claims technology has become a
28:39
Speaker 1: barrier to care. How long does it take to get
28:42
Speaker 1: a PA decision? Seven days? Ten days for a pharmacy claim?
28:48
Speaker 1: That's absurd that a patient has to sit for seven
28:51
Speaker 1: days wondering whether they're going to get access to a
28:54
Speaker 1: to a prescription. Right, absolutely, so again, invest in tech
28:59
Speaker 1: AI intake of the forms a lot of a lot
29:01
Speaker 1: of efficiency you can gain if you have modern tech.
29:03
Speaker 1: We can get that down to three days or less.
29:06
Speaker 1: So that's where technology translates into a better patient patient experience.
29:13
Speaker 2: Okay, technology, but also melded with practices, right, because you
29:17
Speaker 2: did mention things like the you know, the rebate driven
29:20
Speaker 2: formularies and driving patients to more expensive medications and they're
29:24
Speaker 2: not getting the benefit of necessarily those those financial decisions
29:29
Speaker 2: at the pharmacy counter. So it really sounds like it's
29:32
Speaker 2: it's a mix, right, It's it's the technology as well
29:35
Speaker 2: as the transparent practices that are aligning and converging to
29:39
Speaker 2: give that patient a better experience.
29:42
Speaker 6: That's right.
29:43
Speaker 1: Both elements need to be there for a successful for
29:47
Speaker 1: for success in this industry.
29:49
Speaker 2: Yeah yeah, Now you said something and you know, for
29:52
Speaker 2: folks who maybe don't know you well or haven't worked
29:54
Speaker 2: with with cap r X, you know, you sort of said, hey,
29:57
Speaker 2: there's there's essentially zero impact, right as some of these
30:01
Speaker 2: transparency efforts are moving forward to the federal level. And
30:04
Speaker 2: I can say like you were the first PBM that
30:07
Speaker 2: I've ever seen that showed up in a state and
30:10
Speaker 2: there was an effort for NADEK legislation, right, and there's
30:13
Speaker 2: a big federal push now there's some states. But it was, hey,
30:16
Speaker 2: let's move to a transparent, you know, a transparent drug
30:19
Speaker 2: pricing market based index. And while sort of the you know,
30:24
Speaker 2: the old world PBMs were losing their collective minds, you
30:27
Speaker 2: showed up and you said, hey, look we're already aligned
30:30
Speaker 2: with this, and you know, this is good for transparency
30:34
Speaker 2: and it's good for drug prices. And you showed up
30:37
Speaker 2: and you set it. As I recall, you actually did
30:39
Speaker 2: a magnificent job testifying and in some hearings as well.
30:44
Speaker 2: But you know, money where your mouth is, right, it's
30:46
Speaker 2: easy for somebody to go on a podcast and say, hey,
30:48
Speaker 2: there's no impact, or hey this is.
30:50
Speaker 6: Where we were going already. But that was I mean,
30:53
Speaker 6: that was back in twenty twenty, that's right.
30:55
Speaker 1: Yeah, and I'm still out there shouting the same stuff
30:57
Speaker 1: from podiums, so you know, I haven't changed my rhetoric
30:59
Speaker 1: at all. But but it is interesting. There's a lot
31:03
Speaker 1: of sky is falling, Chicken little tactics going on right
31:06
Speaker 1: now amongst the old world PBMs. Yes, you know, if
31:10
Speaker 1: you move to a to Nadak, you know it's somehow
31:13
Speaker 1: the world's going to end. Or if you make us
31:15
Speaker 1: show you what our rebates are that we're receiving, we
31:18
Speaker 1: lose our competitive advantage. This is absurdist rhetoric to me,
31:23
Speaker 1: Like there is there is never a situation where secrecy
31:26
Speaker 1: and exclusive access provides better price.
31:30
Speaker 6: Right.
31:31
Speaker 1: Always an open ecosystem for competition drives price down. Look
31:36
Speaker 1: at gas Look at gasoline. It is the most open market.
31:40
Speaker 1: You got a gas station here on one side of
31:42
Speaker 1: the street and a gas station here on the other
31:43
Speaker 1: side of the street. Both of them post their prices
31:46
Speaker 1: literally on a sign in massive thought, and those prices
31:49
Speaker 1: are always within pennies of each other. It is a
31:53
Speaker 1: hyper competitive supply chain because the buyers have full visibility
31:58
Speaker 1: into the economics. They understand and what they're paying for,
32:01
Speaker 1: and they understand what the cost is. Ask any go
32:05
Speaker 1: ahead and call up a traditional PBM and ask them
32:07
Speaker 1: what is the price of a maxicillin and their answer
32:10
Speaker 1: will be, well, that depends. We have about four thousand
32:13
Speaker 1: prices for that drug depending on who the client is,
32:16
Speaker 1: who the patient is, what pharmacy it's, at, what time
32:18
Speaker 1: of day it is, whether we feel like increasing or
32:21
Speaker 1: decreasing it on the MAC list.
32:22
Speaker 2: I'm load that you brought that up, so you know,
32:24
Speaker 2: we've done a little work on this, but forty six
32:27
Speaker 2: Brooklyn has done i think an excellent job, like pointing
32:29
Speaker 2: out in some of their you know, en three axis,
32:32
Speaker 2: you know, putting out in some of some of their
32:33
Speaker 2: studies that like a drug with no nate Act change
32:37
Speaker 2: that maybe like three dollars, may have hundreds upon hundreds
32:41
Speaker 2: of different drug prices over this period of twelve months,
32:44
Speaker 2: sometimes even over the period of a month, you know,
32:48
Speaker 2: within the Medicare program or within certain commercial markets. Right
32:51
Speaker 2: like the same PBM administering the same claim on the
32:55
Speaker 2: same day, right Like, just just massive variability throughout a day,
32:59
Speaker 2: throughout a month, throughout a year, when during that same
33:02
Speaker 2: period of time the nate Act was essentially unmoved.
33:07
Speaker 1: Yeah, this is by design. I'm not sure if if
33:09
Speaker 1: you know this, but this is how much of a
33:11
Speaker 1: super geek I am around pharmacy supply chain. I literally
33:14
Speaker 1: will go and look at patent applications and approved patents
33:19
Speaker 1: by some of the large established vendors, just kind of
33:21
Speaker 1: see what they're What kind of solutions are they work on.
33:24
Speaker 1: Are they developing a new platform? Maybe they are that
33:27
Speaker 1: actually would be welcome. Right, here's what they've invested in.
33:31
Speaker 1: One of the biggest currently the largest PBM in industry.
33:35
Speaker 1: I'm not going to name names, but I'm sure you
33:36
Speaker 1: can kind of figure out, has a patent for a
33:40
Speaker 1: maclist management software application that actually manages and manipulates Mac
33:45
Speaker 1: price on a claim by claim basis, so they see
33:48
Speaker 1: the claim come in, they compare it against how their
33:50
Speaker 1: performance is on their network contracts and on their client contracts,
33:53
Speaker 1: which by the way, are two totally separate ledgers, and
33:56
Speaker 1: we could talk about single ledger versus dual ledger in
33:59
Speaker 1: a moment. But it compares its performance and adjusts the
34:03
Speaker 1: price in real time on the drug to hit an
34:08
Speaker 1: optimal mix of performance for the PBM so that they
34:11
Speaker 1: can hit the network contract but still earn money on
34:14
Speaker 1: the client const That.
34:15
Speaker 6: Is that is unbelievable.
34:17
Speaker 1: Wow, I mean this is literally real time Mac management.
34:20
Speaker 1: It used to be. The way they used to do it,
34:22
Speaker 1: I can tell you is they had a room full
34:24
Speaker 1: of analysts, a room full of MAC managers, maclist managers,
34:28
Speaker 1: crunching these numbers and changing them as quickly as they could,
34:30
Speaker 1: usually daily. But now when they move to this, we're
34:33
Speaker 1: now seeing minute by minute manipulation of macliss And that
34:37
Speaker 1: is why when a patient goes into a pharmacy it
34:40
Speaker 1: feels like the price of drugs changes.
34:41
Speaker 6: Yeah, but just two.
34:43
Speaker 2: Level set that right in a period where these these
34:46
Speaker 2: old world PBMs are essentially saying, hey, we're moving towards transparency,
34:52
Speaker 2: and we're moving towards at that same time that they're
34:56
Speaker 2: having these conversations in these public facing positioning, they're literally
35:00
Speaker 2: like going all in on some new technology that allows
35:04
Speaker 2: further manipulation of drug price on a claim by claim basis.
35:08
Speaker 1: Real time, real time price manipulate, real.
35:10
Speaker 2: Time pricing manipulation. That's I mean, that's that is that
35:13
Speaker 2: is stunning. I mean to me, that's like deep dive
35:16
Speaker 2: article worthy stuff.
35:18
Speaker 1: I think it's again, Wow, I'm an I'm an uber nerd,
35:21
Speaker 1: so I will live and breathe this stuff all day.
35:24
Speaker 6: But it also the details, it's the details right like that.
35:28
Speaker 1: It gets back to what we what we said, right,
35:30
Speaker 1: It looks like a sheep brows like a wolf. So
35:32
Speaker 1: you you really do have to have to peel the
35:34
Speaker 1: onion here.
35:35
Speaker 2: So so wow, I mean, that's that's amazing to me.
35:38
Speaker 2: But this is this is really relevant, right, there's a
35:40
Speaker 2: lot of there's still pushes to move to sort of
35:42
Speaker 2: a transparent market based index.
35:44
Speaker 6: Cap r X utilizes an eight.
35:46
Speaker 2: Act more at more than more than I think any
35:49
Speaker 2: you know, probably any PBM, certainly that I'm aware of
35:52
Speaker 2: one of the things and I want to you and
35:55
Speaker 2: I got our start in Georgia. I don't know if
35:57
Speaker 2: you followed, but about two years ago there's a big
35:59
Speaker 2: push to use NADAK for state health benefit plan in Georgia,
36:03
Speaker 2: and the PBM there was ministering claims came in and
36:05
Speaker 2: they said, yeah, you know, naate act may lower and
36:08
Speaker 2: we got all this through open records and nad ACT
36:10
Speaker 2: may lower the ingredient cost, but the dispensing fee is
36:12
Speaker 2: going to drive costs, you know up, it's going to
36:14
Speaker 2: cost upwards of seventeen million. The thing that was interesting
36:17
Speaker 2: in Georgia is the math actually got done right. They like,
36:20
Speaker 2: the math actually got done. They did a claims repricing
36:23
Speaker 2: and even adding on increased dispensing fee. There was like,
36:26
Speaker 2: I think around just about eleven million in savings. According
36:29
Speaker 2: to their maths.
36:30
Speaker 1: It's essentially cost neutral too, Yeah, it.
36:32
Speaker 6: Was essentially Yeah, I mean I think it's probably aw.
36:35
Speaker 1: MAC based arrangement.
36:37
Speaker 6: But what the go ahead?
36:38
Speaker 2: Yeah, what I what I want to ask you is
36:40
Speaker 2: what the PBM then came back with was, oh, but
36:42
Speaker 2: to administer Nadeak, the costs are going to go through right,
36:46
Speaker 2: like to administer Dadak, it's going to increase costs. So
36:50
Speaker 2: the actual savings about you know which which which Again
36:53
Speaker 2: what wasn't like earth shattering, but there's probably about a
36:55
Speaker 2: thirty million swing between what they said it was going
36:57
Speaker 2: to cost and the actual saving is by capping their
37:00
Speaker 2: ability to mark up with their affiliated specialty pharmacies. But
37:04
Speaker 2: what they then said is, oh, well, even if it
37:06
Speaker 2: saves money, it's still going to cost the state more
37:09
Speaker 2: because it's going to be more expensive to us to
37:11
Speaker 2: administer using an index base model.
37:13
Speaker 6: Does that drive network? What's your what's your reception to that?
37:16
Speaker 1: That's a red hearing When they say increased cost to administer,
37:19
Speaker 1: what they're saying is recapture of lost margin for you.
37:23
Speaker 7: Yes, So they they are enjoying a certain level of
37:29
Speaker 7: hidden margin associated with spread based arrangements awp MAC and if.
37:34
Speaker 1: They lose that, there is a cost to them, a
37:37
Speaker 1: lost revenue cost that they need to recoup, and that
37:40
Speaker 1: is recouped typically through an increased fee. This is exactly
37:43
Speaker 1: what I'm talking about, this phenomenon of when you get
37:45
Speaker 1: the fees on the table, it creates a very uncomfortable
37:48
Speaker 1: moment for the traditional PBM because they have to acknowledge,
37:53
Speaker 1: we want, we want to keep this revenue. And it
37:55
Speaker 1: was fifteen bucks a claim or ten bucks or twenty
37:58
Speaker 1: bucks of claim and now it's this now becomes existential
38:03
Speaker 1: for them.
38:03
Speaker 2: So okay, yeah, want to pivot quickly to see if
38:08
Speaker 2: this is an issue for you because again you indicated
38:11
Speaker 2: that that yes, like you're not even having to necessarily
38:14
Speaker 2: market in the traditional sense. Right, It's a lot of
38:16
Speaker 2: your growth is organic. You know, fortune five hundred companies
38:20
Speaker 2: are coming to you. Are you something that pharmacy independent
38:24
Speaker 2: pharmacy You have represented you know, proudly for years in
38:28
Speaker 2: various settings.
38:29
Speaker 6: Right, they are.
38:30
Speaker 2: Certainly susceptible to some what I would say, are you know,
38:32
Speaker 2: unfair methods of competition? Right, like just legitimately anti competitive behavior.
38:37
Speaker 2: Do you run into, Hey, you know, there's a large
38:40
Speaker 2: employer or there's a there's a large client or potential
38:43
Speaker 2: client who wants to use cap rx, But like, do
38:46
Speaker 2: you hit like anti competitive roadblocks? Is it difficult for
38:50
Speaker 2: you even when you have a client who wants to
38:52
Speaker 2: use you in this world of vertical integration? Do you
38:56
Speaker 2: do you run into sort of what you would feel
38:58
Speaker 2: are unfair or anti competitive practices that keep folks from
39:03
Speaker 2: moving over to Is that?
39:04
Speaker 1: Is that a problem for the occasionally Now we've got
39:07
Speaker 1: five million lives, so we've already climbed a lot of
39:09
Speaker 1: these hills and gained data exchange capabilities with all the
39:14
Speaker 1: big vendors. But especially in our early days, we found
39:18
Speaker 1: that there was a blocking and tackling technique that the
39:20
Speaker 1: vertically integrated vendors would use very frequently. And this comes
39:24
Speaker 1: from this is sort of a weird little nuance that
39:28
Speaker 1: actually stems from Obamacare, from the ACA and the fact
39:32
Speaker 1: that a lot of deductible plans right now high deductible
39:35
Speaker 1: plans actually integrate the deductible between medical and pharmacy coverage,
39:39
Speaker 1: which means that the medical plan and the pharmacy plan
39:42
Speaker 1: have to have a handshake on a regular basis. They
39:44
Speaker 1: have to have exchange of data that says, what do
39:46
Speaker 1: you think the deductible is? Oh, okay, well let me
39:48
Speaker 1: sync up with your deductible and make sure that we're
39:50
Speaker 1: tracking consistently.
39:51
Speaker 6: Right.
39:52
Speaker 1: That handshake for us is very easy. It's called open API.
39:56
Speaker 1: We're built for integration and a modern cloud setup. But
40:02
Speaker 1: like I said, these old world platforms they really struggle
40:04
Speaker 1: with this, and so for them there's a cost burden.
40:07
Speaker 1: And also they realized, well, hang on a second, we
40:10
Speaker 1: could use this as a way to discourage clients from
40:13
Speaker 1: leaving a carved in type of arrangement where the carrier
40:16
Speaker 1: and the PBM are the same entity vertically integrated. So
40:20
Speaker 1: what we ended up encountering was a client that wanted
40:22
Speaker 1: to move to us on a pharmacy benefit arrangement, but
40:25
Speaker 1: they wanted to keep their medical plan with a large
40:27
Speaker 1: carrier that owned a PBM, right, and that carrier would say, okay,
40:31
Speaker 1: well you can carve out, but we're going to have
40:33
Speaker 1: to charge you four hundred thousand dollars to create this
40:37
Speaker 1: data feed where we send the deductible information to the
40:40
Speaker 1: pharmacy which is egregious and very obviously an anti competitive
40:46
Speaker 1: tactic to discourage the client from pursuing what they want
40:52
Speaker 1: to do as a fiduciary that they think is in
40:54
Speaker 1: their best interest, and so we had to fight out.
40:57
Speaker 1: We frankly, have had to fight a lot of those battles.
41:00
Speaker 1: Some cases even had to just sort of pay to
41:01
Speaker 1: make it go away out of our pockets in the
41:04
Speaker 1: interest of getting these clients on board and getting them
41:06
Speaker 1: to the model that they want.
41:08
Speaker 2: Okay, and you mentioned the word fiduciary a couple of times,
41:13
Speaker 2: you know, and you mentioned sort of fiduciary to and
41:15
Speaker 2: potential fiduciary suits from ultimately shareholders. Fiduciary suits from employees
41:22
Speaker 2: against employers is something that we're starting to see emerge
41:25
Speaker 2: as well. Right do you do you think what would
41:29
Speaker 2: your message be to employers? Right Like, do you think
41:30
Speaker 2: from an employer perspective that this is something that that
41:34
Speaker 2: should be of concern, right like doing things the right way,
41:37
Speaker 2: moving to a transparent PBM that isn't engaging, that isn't
41:39
Speaker 2: engaging in sort of some of the old world practices
41:42
Speaker 2: and leveraging some of the old tricks and new tricks
41:46
Speaker 2: like is it an employer's best interest to move to
41:51
Speaker 2: a PBM that administers claims transparency efficiently, efficiently, et cetera.
41:56
Speaker 1: Yeah, fiduciary concerns are at the actually at the very
42:01
Speaker 1: core of what's driving plan sponsors worries about this industry
42:05
Speaker 1: right now. There are class action lawsuits to be sure, right,
42:10
Speaker 1: Johnson and Johnson, JP Morgan, Chase, Wells Fargo some examples.
42:15
Speaker 1: These are in various stages of dismissal or reconsideration or
42:18
Speaker 1: appeal whatever. You Yeah, it looks like it looks like
42:21
Speaker 1: the JPMC one might have likes to go to trial
42:23
Speaker 1: or at least is headed that way. And so these
42:26
Speaker 1: are real fascinating litmus tests to me of the problem
42:30
Speaker 1: of misalignment within the supply chain, right and they I'm
42:34
Speaker 1: old enough, I've got enough gray hair to think back
42:36
Speaker 1: and remember in the early two thousands we went through
42:39
Speaker 1: this whole thing on the retirement plan side. I don't
42:42
Speaker 1: know if you're aware of this, but historically the retirement
42:45
Speaker 1: industry four one K and pension fund industry was riddled
42:49
Speaker 1: with hidden fees and intermediaries that were driving a lot
42:51
Speaker 1: of profit in ways that didn't always work in the
42:54
Speaker 1: best interest of the fiduciary for the benefit plan, the
42:58
Speaker 1: pension fund, or the K plan, and ultimately it was
43:02
Speaker 1: that fiduciary pressure that forced lawsuits against some large employers
43:06
Speaker 1: and labor unions. And that's that's what turned the tide
43:10
Speaker 1: on the retirement fund industry. And that's why now we
43:13
Speaker 1: have essentially all these funds are now just fee based.
43:16
Speaker 1: All the fees are transparent. We got things that basically
43:19
Speaker 1: mandate that appropriate level of transparency, so we don't have
43:22
Speaker 1: the distortion of interests there that the misalign interest makes sense.
43:27
Speaker 1: This is what's happening here in the world of class
43:30
Speaker 1: action lawsuits and ARISA. Fiduciary responsibility is a direct echo
43:34
Speaker 1: of that same movement that happened in the retirement industry
43:37
Speaker 1: twenty some odd years ago. And the attorneys, the class
43:41
Speaker 1: action attorneys are pulling from the exact same playbook because
43:44
Speaker 1: they realize this is as bad or worse than the
43:47
Speaker 1: misalignment that existed back in four oh one k Land
43:50
Speaker 1: in two thousand.
43:51
Speaker 6: Yes, absolutely, yeah.
43:53
Speaker 1: And so yeah, employers are highly concerned, and so yeah.
43:57
Speaker 1: That has created frankly, a massive tailwind for us because
44:01
Speaker 1: we can very easily demonstrate that we align with fiduciary
44:04
Speaker 1: interests you talk about. You mentioned dlinking. We're already delinked.
44:09
Speaker 1: We don't make profit from the dispensing of drugs. We
44:12
Speaker 1: leave that up to the pharmacies. Let them run their operations,
44:15
Speaker 1: let them make the profit they need to be sustainable.
44:18
Speaker 1: We're just administrators here, right, and we try to just
44:22
Speaker 1: be as efficient as we can on that front. And
44:24
Speaker 1: so to us, like all of these new world concepts,
44:27
Speaker 1: delinking all that stuff is just create the awareness of
44:32
Speaker 1: that as a need in industry is just created a
44:34
Speaker 1: massive tailwind for us. So yeah, I would say the
44:38
Speaker 1: focus on fiduciary responsibility is part of what's driven the
44:44
Speaker 1: big interest in our model.
44:45
Speaker 6: Got it, Very good? Very good? Well listen.
44:48
Speaker 2: I think one last question for you, and this is
44:51
Speaker 2: maybe to our independent pharmacy audience, some of those that
44:54
Speaker 2: are listening. But I'm as guilty of this as anyone, right,
44:58
Speaker 2: But I do think the independent pharmacy world there could
45:02
Speaker 2: be a tendency to talk in echo chambers, right and
45:05
Speaker 2: sort of talking to ourselves. Do you think it's worth
45:09
Speaker 2: sort of working to bridge gaps, get outside the echo chamber,
45:13
Speaker 2: you know, work or start better communicating with employers, creating
45:17
Speaker 2: more synergies there, Like do you think there's opportunity for
45:20
Speaker 2: pharmacy to better engage with and work with employers.
45:27
Speaker 1: Yes, if they're the right intermediaries are in place. I
45:31
Speaker 1: don't think you're going to find that in an old
45:33
Speaker 1: world PBM model. I think that is intentionally confrontational, antagonistic
45:40
Speaker 1: to the community pharmacy mission. Agree, but you know, a
45:44
Speaker 1: model like ours you mentioned NADAK. One of the reasons
45:47
Speaker 1: we chose a cost plus index published you know, published
45:52
Speaker 1: index like NADAK, is because we realize that there is
45:54
Speaker 1: a sustainability issue in community pharmacy right now, and that
45:58
Speaker 1: community pharmacies are pushed to the brink and they're starting
46:00
Speaker 1: to fail patience right and from a care delivery standpoint,
46:04
Speaker 1: because they just don't have sustainable revenue models. And so
46:07
Speaker 1: we saw this, We saw the writing on the wall
46:09
Speaker 1: frankly ten years ago on this seven years ago, and
46:12
Speaker 1: it's one of the things that pushed us to NADEK
46:14
Speaker 1: because while you mentioned overall reimbursements to pharmacies are more
46:19
Speaker 1: or less comparable, the reimbursement pattern is stabilized because you've
46:24
Speaker 1: got that dispensing fee in a more consistent delivery of
46:27
Speaker 1: the community pharmacy allows them to predict cost and profit
46:32
Speaker 1: a little easier and to create a more sustainable pattern
46:36
Speaker 1: of service delivery. So for us that was important because
46:40
Speaker 1: you know, we're seeing it now pharmacy deserts, closures of
46:43
Speaker 1: community pharmacies, especially rural and inner city areas, where all
46:47
Speaker 1: of that is avoidable. If you create a sustainable economic
46:50
Speaker 1: for these pharmacies, and you can do that without necessarily
46:54
Speaker 1: driving costs up, you just have to be smart about it.
46:56
Speaker 6: Yeah, it works out.
46:57
Speaker 1: Yeah, So I didn't mean to cut you off, But
47:00
Speaker 1: to the extent that these pharmacies want to start having
47:02
Speaker 1: dialogue with employers, I think that's great. And frankly, there
47:06
Speaker 1: are some high cost providers in the ecosystem that probably
47:10
Speaker 1: it would make sense to start moving utilization to lower
47:12
Speaker 1: cost community pharmacies if they're able to demonstrate that value.
47:16
Speaker 2: Yeah, and I get I do think that obviously there's
47:18
Speaker 2: benefits to cost plus transparent index based pricing on the
47:23
Speaker 2: pharmacy side. But I also you know when you talk
47:25
Speaker 2: about sort of these patents for real time MAC manipulation
47:28
Speaker 2: that you know we're using a transparent based index from
47:31
Speaker 2: my perspective, right, there's the price is the same for everybody, right,
47:35
Speaker 2: and it's public, and you guys have leaned into that
47:39
Speaker 2: really in many ways from the beginning.
47:42
Speaker 1: Yeah, wouldn't it be crazy if every drug just had
47:45
Speaker 1: a price, just had a price. It turns out it
47:48
Speaker 1: does not. Everyone wants to use it.
47:51
Speaker 6: Very good.
47:52
Speaker 2: Well, this has been amazing. Can't thank you enough for
47:55
Speaker 2: coming on and open invitation anytime you want to. This
47:58
Speaker 2: is really, I think, an exciting perspective to hear, so
48:02
Speaker 2: just greatly appreciate you coming on and thank you.
48:04
Speaker 1: Yeah, I'm glad to be here and appreciate the dialogue.
48:07
Speaker 1: It's been great. Thanks, great, Thanks