176. Pills, Profits, and Power: The Fight to Reform Big Pharma | Vinay Patel, PharmD

Welcome to Medicine Redefined, a podcast focusing on helping you reclaim ownership of your health. I'm Dr. Darsha, and I'm Dr. Altamasharaja, where your hosts, hair to challenge conventional practices and uncover the stories behind pioneers shaping the future of medicine. Our conversations not only focus on the individual level to dissect common practices for health optimization, but also zoom out to enhance systemic change. Join us as we look to break the status quo, move the needle forward, and put the help back in health care. Our guest today is Vene Patel, a pharmacist, health care innovator and founder of MekoRx. With decades of experience across pharmacy practice, academia, and health system management, Vene has been at the forefront of challenging the inefficiencies in the US health care and pharmaceutical system. His work focuses on cutting through the complexity of drug pricing and pharmacy benefit managers or PBMs for short, in order to create transparent, patient-first solutions. So in this episode, we are going to deep dive into the shadowy world of PBMs, the hidden middlemen influencing your drug costs, and uncover why the price you pay at the pharmacy counter is often far from what it should be. Vene unpacks how PBMs evolved, why drug prices are skyrocketing, the problem with vertical integration and how new models like cost plus pricing are shaking up the system. If you've ever wondered why health care feels broken and more importantly, how it can be fixed, this conversation will leave you informed, empowered, and ready to rethink the way we access medicine. Enjoy. Vene, I want to dive right into it. There are three letters that a lot of people have been learning about that have been scary them, and these letters are PBM, right, I think a lot of people are learning these things because RFK is now part of the White House. Mori Vicaria is written a book that I'll touch on a high of red, it's called The Price We Pay. And so, tell us what these three letters stand for and why people are afraid of them. Excellent question, Darsh. So PBM stands for Pharmacy Benefit Manager, and these are the hidden middlemen when you get medications out of pharmacy. You don't know they're involved, they're just a logo on your insurance card, and the funny thing is these middlemen have a tremendous amount of control in which medications you're allowed to get, that your doctor's allowed to prescribe, how much you pay for those medications and really importantly, where you get those medications. We think we have free will and free choice when it comes to pharmacy and health care in the U.S., but really there is a middlemen group. Of industry controls a lot of what we get, what we have access to in health care. Tell us a little bit about how PBMs came to be, what is the point of having them? So we go back all the way to the Stone Age as my kids tell me I'm from in the 90s when yeah, it was late, probably 80s, late 80s, 90s, drug companies, manufacturers said, look, we got all these drugs, but we have more and more people that are getting, that need these medications. We need to assist to put together to so that we know what the pharmacy paid for the drug and how much we can pay them. And so essentially these drug companies are the ones that started these pharmacy benefit companies to help standardize medication, call us reimbursement, and it wasn't that many drugs that the country wasn't taking a ton of drugs at that time. And so it was just let's put this system to get essentially these pharmacy benefit companies would adjudicate a claim. So before, before you had an electronic system to process a medication claim, you had these paper records, these pharmacists would keep all these records and then they would mail these paper records into the insurance company or to the government to pay. And now that all went away with this electronic system that was put in place, where in real time a person comes in with a prescription, you run it in the system, it tells you if that patient is eligible for that medication or if they're in the system and how much you need to charge that for that drug. And then of course, how much the pharmacy is going to get. And then the government got really scared and said, if you're going to make the drugs and you're going to own the system to manage payment and costs and all that, we were afraid that you're going to take advantage of that system and get carried away with costs. And so they decided you need to break them up. So all of these drug companies then decided to divest their ownership in these pharmacy benefit companies. They were independent entities at that time. And then they just expanded from there in 2003. You had the medication, the Medicare modernization that started Medicare Part D, which allowed all senior citizens out of have access to a drug plan that gives them access to medications. And they said, okay, that's new business. We're going to take on that new business and not these PBMs are going to administer the plan. A lot of the Part D or drug coverage in Medicare is privately administered through these private pharmacy benefit companies and insurance companies that work these pharmacy benefit companies. And then from there, they just even more after the affordable care went into place, even more people had drug coverage. They started doing plant administration for Medicaid, which is state coverage for healthcare. And then private employers and they just got bigger and bigger. And then in the middle of 2015, or in the middle of the 2010s, everything got vertically integrated. So these PBMs were bought up by these large health insurance companies, and a SIGNAT owns express groups. CVS owns ethnic and CVS care mark is a PBM itself, and then United Healthcare bought opt-ins. And now they're all vertically integrated in these insurance companies and they have more control and power than ever. These big three control 80% of all prescriptions that get filled in the country at any given time. That help explained giving enough context or yeah, and it also opens up another 30 questions talk about a conflict of interest, right? And nobody's or the amount of disclosures these actually they're not doing. That's the problem. Curious, what about the rest 20% are those? What are those names? Would we have heard of those? They're much smaller, there was about I'd say about 65 to 70 total pharmacy benefit companies in the country. And the three again, big three own 80% so now it's divided up all this 20 small 20% less than 20% now is divided up among these other 60 or so players in the market. There was a really, if you pay attention to healthcare news, there was a sentinel event that occurred around January last year where a small PBM called right way actually won the business for Tyson Foods. And then this year that also 7-Eleven and another large company has also broken away from these large three large three PBMs and gone with smaller PBMs. So there's several you probably wouldn't know unless you look really closely at your health insurance card of the these companies are. Yeah, such a messy thing. I think the analogy that's stuck with me, Darshan talked about Marty McCarrie and his bookie. I hope I get this right. If I'm remembering correctly, he gives the analogy of Girl Scout cookies and he says that you have the father, you've got the Girl Scouts which are the pharmacies and the CEO which is the employer. And so, you know, you're charging the CEO maybe $40 at a 20% discount, mind you, and that's why you're setting up certain contracts. So Optum is with my health plan is Optum, my wife's CVS Caramore, and so given a 20% discount, you charge $40 for Girl Scouts cookies. You sell those Girl Scout cookies to the pharmacy at a whole sale price of $250 and then the employee pays $2 and really the pharmacies happy because they've made a 50 cent profit. But really you have this crazy spread in between and the employer thinks that they're paying a discount, but just this price markup. And that begs a question though, is like, where is the regulation of this? You did mention at some point the government expressed concern that hey, someone's going to get fishy here if you're owning like the interest to the actual drugs as well as the management of the pricing structure. But then you also mentioned later on, you had the vertical integration. And so since then has the government stepped in and I know RFK is putting this on the forefront, but where were the checks and balances with this for the last 20 years there? The anti-trust enforcement in healthcare has been pretty lax over the last 25 years. Part of the reason why healthcare has gotten healthcare companies, health insurance companies have gotten so big over the last 20 years and the pinnacle moment is this vertical integration that happened in the mid 2010s. And then you have the first Trump administration and there's been since 2016, you have a lot of focus around anti-trust and regulating the health insurance industry now because cost has gotten way out of control. Another outcome of the Affordable Care Act is the acceleration of the number of people on high deductible plans. These are plans that many regular Americans just can't afford because when they go to access healthcare, they have to pay 100% of the cost before they actually get the insurance to kick in and pay for stuff. And because of this situation, because drugs have gotten so much more expensive and we have the rise of specialty medications now, which are these ultra expensive medications that you typically will probably see on TV, any drug add you saw during the Super Bowl, it was a very expensive drug, tens of thousands of dollars a month that someone's paying for whether it's employers or the government. And so that's really where the first sort of inkling, okay, we got to regulate the industry started from, there was this crazy, I'd give you this crazy story before, and this was another, the Trump administration actually passed a law prohibiting this. So before this law called, there was a gag clause in the contracts that pharmacy signed with these insurance companies that prohibited the pharmacist from telling a patient, telling anyone that comes into their pharmacy that there's a lower cost option or that there's a low, that there's a cash option that you could pay for this medication that would be cheaper for you. So they actually gagged all these pharmacists from talking to these patients about lower cost alternatives to the medications that they were getting. And again, the Trump administration put in a law right before that the first term was over to eliminate gag clauses from these contracts. And so here, there's two camps now. And so now the conversation's only gotten more heated. Everyone in the country is talking about it at the federal level, at the state level, there's been a lot of legislation to try to regulate these pharmacy benefit companies and these insurance companies. But my opinion, my personal opinion is that these companies stayed ahead of the curve two or three steps ahead of federal and state governments to really have any effect by the time a law is written, they're already moving, they've moved ahead and they blew poles, they found ways around the regulation. Really, I think that the only way and the other camp in the federal government is Elizabeth Warren, Josh Hawley, they have advocated for breaking up the large insurance carriers from divesting ownership in the PBM. So I think that breaking them up into smaller entities is the only way that we'll get fair competition and get these prices to come back down. So with respect to this law, am I understanding this correctly, that let's say circa 2015, if I was to go to the pharmacy and the medication was just something that did not seem to afford well with my insurance, the pharmacist couldn't tell me about Godorex. That's right. They weren't allowed. If you had insurance, the insurance contract prohibited the pharmacist from telling you that there's a cheaper alternative or cheaper way to get as medication, that's right. You had to go find it on your own and tell the pharmacist that I want to use Godorex. But then they have to honor it. Of course. Yeah, they would still honor it. That's right. Actually, this is perfectly. We were actually ponding this question the yesterday. I remember having a conversation with the pharmacist where the same exact scenario actually happened where it had insurance, it was approved and the price was more than what it would have been with Godorex if I didn't use insurance. But then after they ran it through the insurance, I don't know, let's just say it was $100, Godorex. It was like $70. I was like, I'm just going to use this and they said, no, you have insurance so we can't use Godorex. Is that? Is that by looking at your face that they seem like I got some bad information at that point? Yeah. Every pharmacy is very particular about the policies that they have and, of course, the national pharmacies have one policy from corporate. But if you go to a small local pharmacy, their pharmacies are really afraid of the retribution that they would get from insurance companies if they didn't follow all the rules and so that's part of the reason that makes them say, okay, look, if you have insurance, I want to make sure I run it or they may get a penalty or dinged from insurance company for not using the insurance. And every insurance contract is a little bit different and so they like to, it's really depends on each pharmacy and how come about the, similar about the retribution? What are the penalties that they might face? What are they scared about? Pharmacies for the last really an earnest 15 years have been under duress in terms of reimbursements from these insurance companies. So what started out, and this is primarily in Medicare, pharmacies will every quarter get a clawback from these insurance companies or have to give a clawback to these insurance companies for drugs that they were paid for. So if you went into the pharmacy in January, picked up a medication, you received the medication, you paid the pharmacy, what was out? The pharmacy received a reimbursement from the claim that they submitted electronically, how much they were going to get paid by the insurance company. That insurance company within three months later come back and say, you didn't meet all of the requirements you needed to for patient outcomes or various different criteria that they said or adherence metrics. And the insurance company will literally go back in and take money from all those medication dispensing from the pharmacy. So now instead of making a couple dollars, they lost upwards, sometimes hundreds of dollars on these brand medications or otherwise. Also, pharmacies now are getting reimbursed. So there was another role that went into place where any of these clobics could not be taken retroactively. They had to now be disclosed upfront in Medicare as of the beginning of this year so that you would see exactly how much money you would make or lose as a pharmacy. And so now they're seeing on third upwards, around 30 to 40% of drugs that get dispensed at any pharmacy in the country, they're seeing that there's a loss on a medication. They're just not getting a cost to buy that drug. And they're seeing this across a very popular set of drugs known as GFB1 medications with weight loss, where they're losing $150 to every dispensing of that medication. They're having to tell patients to go to other pharmacies because they can't afford it. Not just a couple of these. Gotcha. You mentioned cost a couple of times now, right? And it seems like that's the name of the game. It comes to insurance when it comes to PBMs, when it comes to just a lot of these corporations. And if I may say the collision or corruption that takes place in this industry, I know one of the things that a lot of people are probably interested in is how are these drug prices that I remember, what was it, maybe a couple of years ago? We had farmer bro in the court case, and then you had Mark Cuban come out after that with cost plus. And then these are the things that we'll all get into, but if we can at least just break it down for the listeners and just start from the basics, who sets the price of these drugs? And where does this take off from that point? So you've probably asked a question that we could spend the whole hour talking to that here's the, I'll give you the gist of it. There isn't one price for a drug, unfortunately, because it depends on who's paying that determines that price. And then there's a different price that the patient pays or the patient knows about. And there's a different price that the pharmacy gets reimbursed on the drug. And then there's a different price that the employer or the government entity paying for these medications gets charged for medication. But all depends on what type of coverage you have. So depending on if your cash pay versus Medicare versus a deductible plan and a copay plan, you have employer-sponsored insurance, you have federal employee health benefits, all of those different payers, so to speak, or you have ACA insurance, so and so forth, help you or they're the one, the insurance companies in essence are the pay, the healthcare coverage that you have is actually what's determining the price for that medication. So in essence, these insurance companies are setting the prices for these medications, which is why you see 10 different prices for a drug. That's on the contracting side. That's on the, I'm a patient and I need to go get medication. What is it going to cost me? It's going to depend on that insurance card that you have in your wallet. That's going to determine the price, quote unquote, for that drug. And the price you pay can sometimes be different than the price that the employer or the payer in this sentence pays for that medication. And that's that spread that we were referring to earlier in the conversation. But on the supply chain side, there is one price. That's the, and the supply chain side is there's a drug manufacturer, they make the medication, they manufactured and factories all over the world, and they distribute these medicines to wholesalers. These are drug wholesalers that then warehouse drugs, dozens of pallets of these medications so that when a pharmacy needs to order one bottle or one patient that they got a prescription for, they order from their wholesaler and they get that medication from the wholesaler. So in the, in the drug supply chain side, there is a one price that the manufacturer sets for the wholesaler to pay for that drug, and that's sometimes hidden, but then there's one price at the pharmacy pays for a drug to purchase that medication to have it unstock and inventory. And then when they go to sell the drug, there's about eight or ten different prices depending on which insurance that patient is. So when people blame big pharma, are we blame the right people when it comes to drug prices? Are they trying to set a price knowing that insurance is going to be at this middle manager level to where they say there's contracts and that goes down to them, the patients? And probably I have a hot take on this, everyone in healthcare, all healthcare stakeholders should acknowledge that they have a role to play in why drug prices are the way they are. I'm talking about everyone from pharma to wholesalers to pharmacy benefit companies to insurance, to employers and government entities and payers and pharmacies to some small extent and patients to the smallest extent that we've allowed or let the system become what it is today. But nonetheless, the point being is that drug prices aren't high because of one villain in this story. Drug prices are high because there was a confluence of events, confluence of healthcare stakeholders that came together that said, we're going to allow this to happen and it only got worse. The example I like to make is it feels like many things in healthcare are like a Mexican standoff. There's three people and the patients in the middle and they're all holding a gun to each other and saying, are you going to flinch or are you going to flinch? And no one ends up flinching and we just end up backing away slowly over the years and the system's just gotten really bad. You have this play out with between pharmacies and wholesalers and PBMs. You have this being played out between employers and drug companies and the manufacturers and the PBMs and employers. There's these three way triangles that occur in different segments depending on where you're looking in pharmacy. And so to answer your question, oh, drug companies have to set a price knowing that they're going to pay a rebate. We can talk more about what the rebate is and where it gets paid. They have to offer a discount to pharmacy benefit companies so that they can get access to the members or the patients that these insurance companies have on the other side. So you buy insurance through an insurance company and they have a pharmacy benefit company and they've aggregated the top three insurance companies that aggregated over a hundred million lives. And so now the drug companies want market share and the only way to access that market share in the US is by going through the insurance companies and to go through the insurance companies mean that you have to pay a rebate or pay a discount on your drug to the insurance company so that they can give you favorable access on their formula or list of drugs that the patients have access to and that there's no barriers to that medication so they can have the widest access when we've seen this play out, especially in the GLP one market here in North Carolina with the state health plan and in terms of getting creative and trying to get them get their members access to GLP ones but they could it because of rebates and because of the contract or relationships pharmacy benefit companies have with these drug companies. So their list prices have only gotten higher and higher because they've had to pay more and more rebates to make sure that their drugs have access through these pharmacy benefit companies and insurance companies when that's part of the reason there's probably a couple of the reasons and why we have this system set up so that no one really knows what the net price of these drugs are but someone does and it's really hidden and inclusive and so that price has gone down actually if you look at the net prices the discount you get at all discounts included for a drug price price has steadily gone down over the last 10 15 years but the list price which is price that everyone sees at the pharmacy a really expensive price that continued to go because of this gross to net bubble if you will. What's the current flow of drug delivery? So you mentioned a couple of big players, you mentioned the standoff so we've got pharmaceutical companies, we've got the actual pharmacies, we've got the consumers, the hospitals, we've got the PBMs in there as well at the FDA which is supposed to be overseeing it and probably comes in early on from that drug development R&D stage and then before it actually goes on to market so what's the current flow of the system and I guess we've all agreed the PBMs can be taken out but wanted to hear that from you. So you've actually hidden pretty square there in terms of there's a tons, there's a lot of R&D investment from drug companies, drug manufacturers, Pfizer, GSK, Lillie, Novelin, Nordist, and Dodson's various different drug manufacturers working in different segments of therapeutic areas where they're putting in millions of dollars in R&D, getting molecules, manufacturing drugs and then testing to make sure they're safe, effective in the general population and the FDA reviews all that clinical data and then decides whether a drug is eligible to go to market here in the US or not and then one thing that the US does differently after that point then the rest of the world or most of the rest of the world is that we don't have a national negotiation on the drug price. We've left that up to all of these different private entities, insurance companies and PBMs to negotiate the price of medication with the drug companies but essentially that price gets negotiated instead of being done at the national level centrally like many countries or almost all the countries in Europe do where they say okay this is drug, this is a drug our population needs and because we're going to give you access to our population we need the best price possible and then they set price. Here in the US these drug companies after they make it to distribute the medication has to be these drugs get distributed to to actually again three big wholesalers that exist in the country where a majority of pharmaceuticals are purchased through and then those wholesalers distribute to pharmacies to get the drug to a patient just the physical supply chain of medication and then on the other side of the contracting supply chain which is negotiating access and prices for what different payers and patients will pay. Is that how? Yeah, I don't know where I recently heard this and this might be maybe a really trivial question but I think that this one podcast I was talking about how the United States at least and certainly the GLP market is subsidizing the rest of the world's drug costs. It seems like you're touching on some of that. Can you maybe say that another way and particularly that statement that I just said to you is how are we doing that in the US versus other countries where medications seem to be a lot cheaper? Partly because we don't negotiate centrally for these medications for with one entity that can say look this is the price we're going to pay for these drugs even if they set the price centrally and have the system distributed among all of the private entities to get access to those drugs. That doesn't just not happen so what ends up happening is we're paying the highest price for these medications here in the US relative these are all the other countries and the world that again negotiate for these drugs on a population level. This is the population we have here's what you're going to negotiate one price for the drug company for access to these drugs and that's the price that everyone in the that the country is going to pay access these medications and so because we pay the most highest prices for these drugs relative to most other almost other all other countries in the world we're essentially subsidizing price that the other countries get a deep discount on for these medications. How do compounding pharmacy fit into this? So great segue you mentioned GLP once and that's been a compounding pharmacies have come to light because this GLP1 craze if you will get to the first GLP1 to come to market that was mainstream was a Zembek in 2018 it was marketed to help diabetic patients with diabetes control their diabetes and they found it as a side effect it helped people lose a significant amount of weight because of the way that the medication works in the system in the body the pandemic hits and then right after the pandemic I'd say late 21 you have celebrities start talking about these GLP1 medications and all of a sudden they blow up on the scene and everyone wants access to these drugs as Zembek, Wikovi, Wenzharos, Epibound to help with weight loss outside of the diabetes treatment it was originally market before so now that you have such great demand you create we've created a shortage of these GLP1 medications and because there was a shortage the FDA maintains a list of drugs that are in short supply for various different reasons the compounding pharmacies these are licensed accredited pharmacies two different types of company pharmacies pharmacies that can do non sterile compounding which are drugs that you take orally or put a patch on your skin or nasal spray so on so forth they don't have to be made in a sterile environment and then there's another group of company pharmacies that can do sterile compound those are drugs you would inject or IV administer into a patient or into your body so these sterile compounding pharmacies said okay since there's shortage of Wenzharos and Wikovi and Wenzharos we are allowed to this rule federal rule that company pharmacies can help supply help manage a shortage situation by compounding these medications and the active ingredient of Wenzharos and Wenzharos was freely available that wasn't why it was actually in short supply and so they started manufacturing this and they said okay we're going to significantly less than what you could pay for this medication in the healthcare market and there was again now this interest in compounding pharmacy you see these telehealth companies partner with compounding pharmacies to get access to these medications in the last two to two and a half years while this drug was in short supply now the FDA says that was under pressure from these large manufacturing companies to get them off the shortages they reported that they have enough supply for the demand that's currently out there and that there's no need for it for these drugs to continue to be on the short supply list so they take them off FDA removes them from the short supply list and a Zempik Wenzharos and so on and so forth and now the company pharmacies have received notification that they are on they shouldn't they are they're barred from manufacturing compounding this medication for the public use and so now you see companies like Hins and hers that tank essentially stock because they were utilizing compounded compounding pharmacies to source really inexpensive medication and forth patients that needed them there's a workaround for that though right like a lot of these compounding pharmacies my understanding is well they'll attach a one more molecule and now it's a different medication are you seeing a lot yes we've seen several pharmacies several compounding pharmacies adopt this methodology where they'll put vitamin B6 or they'll put some other inocious vitamin in addition to the active ingredient in these GLP1 medications that is one tact that we've seen continue to play out now it remains to be seen if how aggressively these drug manufacturing companies like Lillian Ovid Nordus will go after these compounding pharmacies to even stop at practice yeah it's it's interesting because Darshan what was the podcast that you sent me the other day on no the guest on modern wisdom where you've come in on compounding pharmacies yeah I forget what the guest was but it was a recent guest that maybe about a week ago was talking about even as a very conspiracy theorist type vibe that he was given okay look compounding pharmacies are actually really great and they have really strong in in the United States and FDA regulated and that kind of stuff and there are some nuances to that yeah I found that to be a little misleading because I've actually had conversations personally with several different compounding pharmacies and I think medscape actually not too long ago sent I think it was an article talking about that if you are going to be resourcing medications from these compounding pharmacies there are certain criteria you should look for right whether what their state board regulations are they certified that kind of stuff they give you a certificate of analysis that kind of stuff and the ones that I've talked to they're very reluctant they're like oh yeah we can get that stuff to you and then they just never forward that and so that to me is a big red flag and so what are other things that you think that we can maybe give to the listener that if you are going to be getting these medications or just providers actually a lot of physicians are still working with compounding pharmacies what are things that they should be looking for that will assure better quality control and that we are giving the best product and you know nothing that's going to potentially harm the patients that's a great question there's and a couple things this isn't full proof but it can help start to identify whether a pharmacy just some red flags up front so one is like you mentioned are they doing quality control on the batches of medication that they manufacture from the compounding pharmacy if they are can you get access to what that means in some of the analytical data that comes out of that quality control is the pharmacy licensed by the state the compounding pharmacy licensed by the state and then there's a accreditation that they can receive that's outside of licensing that sort of again conforms to standard practices of sterile compounding and you know that if they have an accreditation that they would that they meet a certain standard of quality for all the drugs at the manufacturer if they work with other institutions like health systems in their area the health system has also vetted them and you can ensure that they're also abiding by good manufacturing practices that will ensure that patient safety and then it's not just the safety and manufacturing appropriately but then also the efficacy and that's where the quality control comes in is that is there is the drug that you say in there is that in the right concentrations for that we I've recommended a site called Alliance for pharmacy compounding that lists pharmacies that have gone through a process that can join that association and they've met certain criteria to to be a part of that group. Awesome thanks for all that input on compound pharmacies I think that's something that's been of an interest of Altwatch's mind too as even as physicians start to look into building their own practices and really try to look at the workarounds and how to get the proper medications especially when we talk about longevity and those types of medications we're always here about these physicians working with compound pharmacies so definitely appreciate your input on that to switch topics a little bit now again trying to bring it back to drug prices one of the things that people have heard about is Mark Cuban really coming out on this and proposing a solution called cost plus now I always thought that was just his company name but it seems like this might be a catch all term for a solution can you explain to us what cost plus means yeah that's a great question there's so we talked about all these different prices for a medication and it's basically these insurance companies setting these prices there is actually a cost basis for these medications and the federal government and state Medicaid agencies have been using this since I'd say roughly 2012 2013 is when it first started and it's called NADAC NADAC stands for national average drug acquisition costs it's publicly available data it's maintained by the centers from Medicare and Medicaid services and there is a survey that goes out to pharmacies all over the country where I believe every single pharmacy retail pharmacy receives this survey that says tell us about your top 100 drugs and how much you're buying them or just the invoice prices that you're paying for these medications and at all that data gets sent to an accounting firm that aggregates that data and comes up with this national average price by drug of what pharmacies are essentially paying for that medication and that's updated there's a full update monthly that happens on those prices of medication so that's really a true cost basis for those drugs when Mark Cuban puts together his Mark Cuban cost plus drug company he's basing it off of the cost he's buying it directly from either wholesalers or manufacturing it and he's telling you okay this is our cost basis for the medication they're fully transparent in that and then they have a markup in shipping in a markup in certain in terms of margin to get it out to the consumer and but in terms of administration of a pharmacy benefits program that goes beyond any other transparency you could utilize this cost bench mark again that public well no one has any influence over except for all these pharmacies reporting you know what they're buying these drugs for as unbiased independent third-party source for the cost basis of these medications yeah so I was actually thinking this publicly available right anybody can look at this yeah that's pretty cool the state Medicaid agencies have been again using this for more than 13 years now the data has become really robust unfortunately a lot there aren't every pharmacies and participating and so that affects some of the of the pricing but the more pharmacies that do can participate the more robust the data is and the better accuracy we can get around right so it's not necessarily a required survey like you it's a voluntary thing I can see lots of CVS would not be incentivized CVS always when I look at a good Rx CVS always seems to be higher than any right aid is not doing a good job because right aid is the cheapest out of all of them and maybe nobody ever goes there but it's got me wondering why considering all the heat that PBMs have been under for the last couple of years for the last decade it almost feels like you mentioned that towards the end of the Trump administration maybe five years ago I are more people not shifting to this type of cost plus program is it because just consumers are handcuffed and we have to go to whatever our employer tells us the pharmacies we have to fill a medication is that the reason that's a big part of the reason 156 million people in the country get their health benefits through an employer that more than half of the country get all their health care benefits through an employer based insurance plan and so essentially it's out of the consumers out of the consumers control or say or input on how these medicines are price because they have they believe they think that they need to go through their insurance company to get the best price from medication and as you've mentioned there are some most of the time or a majority of the time sometimes paying cash gives you a better price than your insurance company does and there's no incentive for these companies meaning the insurance companies and the pharmacy benefit companies as all the big three are publicly traded they have to find new revenue every single quarter to continue to maintain stock price and exceed expectations for Wall Street and return value to their shareholder and so they need to make sure that this isn't publicly of that a majority of the industry goes this way because it would essentially eliminate a lot of their profits but it's a good tool and going back to these employers if they're the more they're aware and understand if they have access to their drug data how much they're being overcharged on these medications by utilizing tools like this would be extremely viable to get them to make different decisions instead of using the big three using smaller transparent pbms or or holding the existing contracts that they have accountable to using this kind of model that this is all you'd pay and that would be what all that the employer would be responsible for in terms of when they're negotiating with these insurance companies yeah change takes time though huh yeah a lot of time you know this is a conversation that has got me thinking about a long time ago I remember listening to Katherine Eban on Peter T.S. and of lies you familiar with the book great book yeah and I remember being pretty shaken up afterwards considering almost always any medication that I can think about for my parents they're almost always getting the generic version of it and we were talking about good RX and just lower alternatives in terms of cost when you use one of those coupons you are certainly not getting the brand medication I guess unless you explicitly ask for it but that's not what's the first thing is going to pop up and can you talk a little bit about what maybe just the premise of that book for those who are not familiar or maybe just her investigative journalist career and what that conspiracy was and then I guess from a pharmacist your perspective I'm also curious to see if there's something if that's something we should be concerned about in terms of prescribing for our patients brand versus generic and maybe even as consumers is that something that we should pay a lot of attention to so you just on a lot of different things that I'll try to get to all of them one is drug manufacturing for the most part does not happen in this country almost all medications come from overseas a large part comes from India a large part also comes China too yeah and a lot of the key starting ingredients for these medications come from China and India as well and the manufacturing takes place there the premise of the book is really that you have these big name drug companies Johnson Johnson GSK Lily Nova Nordes they have their own factories they manufacture they hold these manufacturing plants to very high standards when it comes to their medications once a medication is off patent then you have all the generic manufacturers that enter the marketplace that can manufacture or a copycat version of that drug and they essentially have to show the food and drug administration that their drug has the same active ingredient of the same concentration and that in the body it reaches the same levels that the brand equivalent drug did as well so the inactive ingredients can be different the composition of the medication otherwise essentially the same and it works it should work in the body the same theoretically the same way but because manufacturing has moved out of the country generic drug manufacturing has moved out of the country the FDA has a much harder time regulating these generic manufacturers so that they can hold them to the same high standards that manufacturers here in the US were being held to in terms of generic drug manufacturing and again there's a entire manufacturing supply chain that needs to be taken into consideration the environment that they live in this is not to justify anything that's that's happening in the marketplace but the reason why the the environment that exists and why they're responding to this is that there is extremely high volatility in the volume of medication that they would that they were being asked to manufacture so one one quarter you could be asked to do a million units of a medication the next quarter it goes down to 500,000 and then unilateral contracts where health system grouped together into these group purchasing organizations they go and they purchase these medications and they contract with these manufacturers and they tell them essentially if we find another manufacturer that can make it for a penny less per unit than you can we are going to stop ordering from you and go switch to that other drug manufacturer and essentially cutting them off at any time they don't have any recourse or any set or any stability in that marketplace and then of course razor thin margins they're operating on one to two percent and sort of volumes the best way to accommodate for that but they can't even rely on the volume so the environments really is really cutthroat and it doesn't take it takes a lot of investment in in these manufacturing lines to set them up to make sure they're operating correctly to check on the quality control to do all that data testing on these medications and just switching a line from one drug to another isn't trivial it takes a lot of work to clean out those machines and the staff trained and so on so and so anyway a lot of cost investment not a ton of margin and the other and what contractual environment constraints allow for this kind of situation or certain generic drugs so when you take a brand name or give an example lipitor is a brand name cholesterol medication that went that has been generic since since the early 2000s and the generic name is a torvostat there is multiple manufacturers of a torvostat and what Catherine Eben in the book bottle of lies found that one manufacturer when comparing manufacturer to manufacturer of these of these medications these generic medications they could be highly variable in the terms in terms of active ingredient and the way that they work in the body because of that so what do you do now is a real question to your point some people and as a pharmacist dispensing these medications we I used to be very skeptical if there would be patients that come into the pharmacy that say look doc I need to get the blue pills the blue pills are the only ones I work for me and sometimes these are mental health patients and you'd always second guess yourself you think they got to be out of their mind these medicines we were taught in school that they should all be the same they should all work the same and and it used to be like that but now it's become more of the world west and one manufacturer may not work as well as another manufacturer for these medications and that's why patients ask for specific meds you can do that for meds that you know really affect how you feel but for other medications like cholesterol medicines you really don't know if they're working or not and it really comes down to making sure the medications that you're taking are working for you by either getting blood work done or just verifying if it's creating any side effects or issues for you and then how well it may be perceived to be working for you and then if it doesn't go into the pharmacy ask them if you can the next time you get a refill ask them for another manufacturer or check to make sure that it isn't the same drug manufacturer that you got last time and that's a conversation to have with the pharmacist and with your doctor to make sure that all these things are aligned but there there there are there isn't one company that you should always avoid there isn't there isn't a hard and fast rule that you just have to work it out between you yourself and the doctor and the pharmacy now as physicians we have the opportunity when we're prescribing I think most people do that we can click that little box it says brand only I imagine that it would not be we can't make blankets it and telling people to do that because lots of insurers lots of prescription plans don't even cover brand and they only cover the fabric so now that the patient's left but I guess the question that I would ask of you is that a conversation I should be having with my patients that say that hey I would like you to take the brand and you can I have no idea whether your insurance company is going to pay for the brand versus generic but if you get there there is a little calculation you might have to do and decide we certainly don't want to put people in a position where they're stuck but it's much I'm a big proponent of shared and formed decision-making and so given the findings of that book given some of this conversation and that that hesitancy for those people who have the luxury of being going to pay a couple extra bucks out of their pocket is that something that's worth considering as a blanket statement I would say that would be very cost prohibitive again if we're talking about and in some cases the brands aren't even available anymore for drugs been available as generic for several years now the primary drug manufacturer will stop manufacturing the brand drug and you won't even the pharmacy won't even be able to order it I know the flip side to your point on coverage excess and then cost there's going to be a lot of hurdles hoops that the patient's going to jump through to get access to the drug at the end of the day the insurance company may not cover it and we're talking about drugs that on the brand side could cost hundreds of dollars versus tens of dollars for the generic and easier access I think for the prescribers here the providers you have access to all the data is all a meaning in the sense that you have patients coming to you and as you notice that there are patients stating that either drugs aren't working as well or not as effective you can make note of and say I see a pattern with this drug company for this specific medication and so then you can put a note in that says when I prescribe specific blood pressure cholesterol diabetes medications and they are generic I would like the pharmacy to consider not dispensing this manufacturer or you can ask the pharmacy to avoid this manufacturer when dispensing the medication to the patient but that's only after you have enough patients coming to you and you have you've noticed a pattern that says for this medication and this manufacture there's a link that I've noticed so can make sure that this patient my patient doesn't get this manufacturer yeah we don't have access to the drug company right unless the patient brings a bottle in and we can look at the manufacturer exactly and I think you would be you would get tipped off when you see the lab results come back and they're way off and the patient says I've been taking this every day I've been taking the same medication every while your labs are for why are you feeling as well as you did and why are you having more seizures so and so forth and that's really where you'll get the pattern of information you can just then ask the patient or you can call the pharmacy and say hey can you tell me the NDC or the drug company that was dispensed for the patient the last time and that's where you can collect some information you're absolutely right yeah when you have biomarkers to track it makes it far simpler I think in our line of work we treat a lot of pain we try to treat a lot of mental health and those type of physical elements where you have the subjective experience that you have to rely on and those can be very challenging when you're just cycling through all these medications when managing pain we don't have any really good medications aside from opioids which are not good medications they've got their own problems and so we're forced to borrow from neurology with the anti-epileptics like avapentin or psychiatry with the TCA's and what have you and yeah but that's good to know that that's interesting I think we can just look for pattern recognition let's talk about some solutions we've been talking about a lot of problems so let's let's shift gears to talk about some solutions and maybe look forward towards a brighter future and talk a little bit about make Rx and how do we look forward to a brighter future it's going to take every one of us to change this system that's broken for the people who need it the most which is our patients and it starts with information and education and I think over the last five to ten years a lot more people have become aware and informed that there's a problem because I believe we've reached a tipping point that it's just unaffordable inaccessible to frustrating to access health care when you do access health care it's not a fine of quality where providers are given enough time with patients to help solve and get deeper into solving these problems so in continuing that awareness information education so that people can dig into these issues get deeper into why is it the way it is but then once everyone has access to that information we have to make different choices we have to figure out a way how we can change who we're utilizing for health care services and that probably means a lot of people need to have conversations with the HR departments in their company to say it isn't working for me I want to tell you what I know how I understand it and share my lived experience so that if enough people do that then the real change will we believe will come from a large swath of employers saying deciding and moving either to a different model different company insurance company pharmacy benefits company or enforcing the rules that are already there in terms of access to data transparency and then holding them accountable so that when they renew they can tell them this is how it's going to work we're going to dictate the terms of this agreement there's it's very intertwined it's really complex but having those conversations and making them aware making your legislators aware I'm going through this issue pharmacies have made a lot of federal and state level legislators aware of the issues that are going through it we need to stand as a unit together as health care saying it's not just a pharmacy issue it's not just a provider issue it's not just a nursing issue this is a health care problem and in this we're united in the fact that it against maybe the insurance companies or the health care system itself that we need to challenge that status quo and so it's going to take all of us really to make that change and there's I'm hopeful there's a lot of good momentum there's a lot of activity and there's a lot of activism that's going towards that that movement but there's a lot of resources that we're up against as well on the other side so make or acts I was able to go onto your website and navigate a little bit and see the services guys provide but for those who haven't had that opportunity yet tell us a little bit about the company tell us a little bit about the background of how you decided with this idea and we'll love to hear as well about your background and how you really came to this concept of it so I'm a pharmacist as you guys mentioned I've been a pharmacist for about 20 longer than I cared it meant so far in practicing in various different areas of pharmacy retail pharmacy health systems I've taught at pharmacy schools and medical residents and medical students and pharmacy residents worked inside of medical offices as well setting up pharmacy services and throughout all of this and I'm sure you guys have a similar experience it didn't matter where you practice it didn't matter what you did or where you did it the invisible hand of the pharmacy benefit company followed you everywhere and we heard and I heard similar stories from different patients in different parts of the country doc I got to make a decision am I going to be able to forward my food this month or housing this month or can I take my medication and it was devastating to hear that from patients and then of course we heard it from the other side where employers are decrying or we're see on these pharmacy claims how much these employers are pending for these medications been being overcharged and throughout all of that we said and then at that time this was in the middle of the 2010s again we saw this opportunity that these Medicaid state Medicaid agencies were using this benchmark for cost plus pricing to pharmacies it was really beneficial it was a fair reimbursement of pharmacies we said why can't we take that to the commercial market so a group of us myself and some other pharmacists came together and said let's bring a cost plus solution to the employer market that didn't exist before this was before Mark Cuban woke up and decided he wanted to create cost plus drugs and so we were one of the first I believe the first one of the first to create a cost plus reimbursement model for pharmacies transparency access to the employers to this cost plus reimbursement and then we looked at the marketplace and said look if there's chocolate and vanilla that exists out there we want to be strawberry we want to do something completely different that hasn't been done before if the status quo is maximize your formula for these brand drugs really expensive medications that I'm sure you guys are familiar with like due axis that's ridiculous that drug exists but it does which is essentially an approximate and a PPI put together and the cost employers twelve hundred dollars a month when you can get those individual agents for 20 or 30 bucks over the counter at the pharmacy and look if this is if the formulas are stacked this way we're going to create a formula that's net cost if there's a generic available at the time when we launched had our first employer group started late 2020 after the pandemic scare was over at the time very few I'd say less than three percent of the insurance companies in the country were offering generic insulin we said generic insulin's been available for about a year and a half now let's make that available to our patients so that it's more affordable for them at the pharmacy and the savings get passed on up front to these employers instead of having to wait for these rebate dollars we systematically put together this model and said at any point if we see an opportunity to say patients and employers money we'll couldn't go ahead and take advantage of that and create a model that optimizes for savings to patients to plans that utilizes formulary management have a clinical pharmacist on the team that that members can actually reach out to they talk to either myself or someone on my team with questions issues problems at the pharmacy and we can get it resolved for them typically within 72 hours you just don't get with insurance companies and some of these other corporate structures that have layers and layers of bureaucracy that prevent sort of some of the efficiency we can execute and so that's how we went to market today we've actually transitioned from offering cost plus pharmacy benefit solutions to now providing clinical services and savings programs to employers so it doesn't have to be our pharmacy benefits company in fact that's legacy business for us and we've gone to market to help get to more employers by saying you can utilize savings programs that we offer that we don't have to be the pvm4 we'll just show you how you can save money on these drugs by going outside of the health plan to access some of these savings have you got a lot of pushback oh tremendous I can tell you we failed a thousand times over the last five or six years they are tremendous amounts of barriers to accessing employers employer health benefit plans between third party administrators these pharmacy benefit companies and insurance companies to health consultants that continue there's a lot of money flowing through the system a lot of money flowing to a lot of these different entities to keep the way that things are just exactly the way they are and so we ran into several barriers even though employers like the concept they thought it was a great idea we ran into at least four or five different barriers trying to implement it yeah you're taking money out of their pot I can imagine them coming after you yeah what what's been a successful strategy hopefully we can inspire some people to look into this more what are things that have worked that you've been able to overcome those barriers that's a really interesting question I'd say that there's been three really key components to the success where we've been able to get to today and that's one is our people choose our partner our patients our mutual patients that we share with these companies these employers and three it's been our partners and so I'll start with the third one is that our partners have really like combining our strengths and working with people that are outside the status quo and trying to find innovative creative solutions that are not in our swim lane we work with entities that are complimentary to what we do and we say let's go to market together and figure out how we can change this by working as as a coalition that's really helped it found some really great partners that have allowed us to be successful because they're offering strengths that we don't have and together looks like a more comprehensive solution than just going to get going to market as just a pharmacy benefit solution and then it really takes some really good people on our team that are smart innovative creative and really wily they come up with some really cool solutions for patients that I would have never thought of every day and it's really the base take care of the patient in front of you first when there's an issue that comes up and without their strength we again we couldn't have made it as far to do what we're doing so today I curious about understanding the future now of pharmacy as well right a lot of people have been talking about the input now of artificial intelligence when it comes to drug discovery how much faster it will be to figure out the solutions of different problems that arise I think we're now entering a world where we solve for something there's a trade off and then that trade off gets solved for something which has another trade off right and I think it almost seems like pharmacies in the middle of that pharmaceuticals at least tell me a little bit about what you think about the future of pharmaceuticals looks like at least from the standpoint of the system of it and its role that it will play in health care but also maybe the detailed version of how drugs will come up to be and how this might even affect what you do I really think AI is going to accelerate drug discovery and drug development I think I just looked at a headline the other day that said look it's an Alzheimer's problem and they're like AI figured this thing out in a matter of hours that researchers haven't been able to figure out in decades and so I really think that drug discovery and drug development will be accelerated significantly with the continued expansion implementation of AI. I don't know much I don't I'm afraid to prognosticate much beyond that because AI is just a beast in and of itself it's going to do things that we can't even imagine today and a part of me scared it for what's in that to come but a part of me is really excited too and health health care from a pharmacy perspective I don't think we'll be influenced just yet they say that the hardest thing that AI will won't be able to touch or will be able to touch last is some of its blue collar work and its manual labor and physical labor and things like skilled trades and it's going to go after some of this white collar work mind work that it will be able to take care really quickly. What that means is I think that asking the right questions will be the key differentiator here and when as we move forward in health care and I think that pharmacists have huge value value role to play in taking care of patients people right now person to person just seems like the best type of care a patient can get versus a machine to patient in most regards and in numbers I really think the future is embedding pharmacy pharmacist or pharmacy services into the care team not just the pharmacist is there in the community and they're down the street or whatever it's between all of the care team providers specialists primary care and then the patient resides in the middle with pharmacy being the drug expertise alternatives have you tried have you thought about this here's some other ideas here's some other uses for drugs that you may not be using typically or regularly that could help solve some of these problems side effect management so and so forth there's a huge role to be played in that and I think there as we go more into value-based care and capitating the expenses of patients that they'll be a role for that pharmacy it's pharmacist pharmacy pharmacy T to play on the care team to integrate and embed into care patients for optimal outcomes that would be fantastic I'm an inpatient rehab provider and so I'm always starting new medications on my patients that I see for a week or two and while we do have pharmacists there's this gap when it comes to discharging the patient and it's really a guessing game to say hey is this going to be covered is it something that their insurance will cover or not and so bridging that gap and being able to have like you said that pharmacist part of the care team and again I'm going to use the word again but bridging that gap is so critical because I use a lot of AI but using chat GPT to just try to fill in those blanks and it's much easier when you have a person who understands the ins and outs of that so I totally understand what you're saying there I know it's been an hour now about talking about the ins and outs of a lot of big pharma and the solutions and the issues but we have a lot of providers who listen to this and as they go through this they might be synthesizing exactly what kind of takeaways they can use in their practice or even share with their family and friends looking back now at this episode what are maybe some of the key takeaways that you wish providers should take away great question continued to educate and inform your patients that there is a pharmacist that's taking care of them wherever they may be and to leverage that resource whether that's a provider and a pharmacist provider clinician communication reaching out and saying hey I got this patient I got this issue I know that across the healthcare spectrum we have less and less time to do these very important conversations but the more that happens direct the better it'll be for the patients to if a clinician needs to reach out it usually has to go through a medical assistant or a nurse to communicate that to the pharmacy which usually has a pharmacy technician that relates to a pharmacist or there's messages left back and forth I think that if we can have more either direct clinician pharmacist communication it's going to be better patient care and then also reminding patients that they you have a great drug resource in the community and that's your pharmacist please ask them questions ask them to look over your medicines review them make sure that they're not causing you any unnecessary side effects and provide some recommendations to you the patient to communicate back to the doctor during a visit is key is vital it's needed it's much more much more needed now than ever and then advocacy we just need more activism and advocacy to help change this very broken system that we have and then partnerships right in this thinking about fine people that are doing interesting things collaborate with them to help change the system it's going to take all of us to really change this and it's going to require a lot more working together than working because we're going against a unified front big team effort love it Vinay let's bring this one home where can our listeners learn more about what it is that you're doing how can they connect with you providers if they have more questions they want to get involved what's the best way so folks can find me on LinkedIn happy to connect with anyone that's listened to this episode that wants to just share ideas and connect and see I have stream of consciousness on LinkedIn that I'll share from time to time they're welcome to go to our website makeorx.com they can reach out there's a form there to reach out to our team they can there's a phone number on there they can email me directly then avi.patel.atl at makeorx.com happy to source and field questions from providers and anyone in your community that audience that's listening that just wants to learn more have a discussion like this and share ideas awesome well thank you so much this has been entertaining this has been highly educational and I'm sure the listeners will agree with that and so your wealth of knowledge and really appreciate it and more importantly thank you for the work that you're doing I love the fact that more people are starting to understand what this is whatever your politics are and however you feel about the current administration at the very least putting a big spotlight on these moments in malpractices when it comes to just the price gouging I think is a good thing in general and so just the good work that you're doing other people that are doing similar good work I think that's that that's it's gonna make it better for everybody downstream so thank you for that the last maybe the most important question that we'd like to ask all of our guests is we're big about putting the health back into health care and so from your lens from everything from being a pharmacist from being an entrepreneur certainly I'm sure being a patient at some point how do you think we do that if we can this is a lofty goal but if we can simplify the system if we can simplify health care so that it can get back to a relationship between a provider and a patient and strengthening that relationship with between all providers primary care specialty whoever's involved in a patient's care if they have the time and the willingness which I think most clinicians do to hear out their patients and really help them out will be that'll be the one thing that helps bring back health into health care it's going to take some change for that but simplifying the system can help do that because what we've seen like for example in direct primary care where they can spend as much time as they want with patients as as led to better outcomes and independent primary care physicians and so on so forth is it starts by simplifying health care taking out a lot of this unnecessary bureaucracy and complexity love it thanks for that thank you so much for having me it's been an honor you guys are doing great work as well thank you thanks for listening to another episode of medicine redefine if you enjoyed this episode please be sure to check out some of the additional resources in the show notes please also check out our social media platforms where you can find more content like this you can follow us on instagram twitter and tiktok at med redefine we also want to thank our team for the production of this podcast or wita yippurian social media zanablegmani our research and sarahan for newsletter oh and if you want to get similar bite-sized information delivered to your inbox every Sunday please be sure to sign up for our newsletter also if you enjoyed the show please be sure to subscribe review and share with anyone who you think will gain value from this as well now time for the ever so important disclaimer this podcast is intended for general public use and is for educational purposes only it does not constitute the practice of medicine nor should be construed as a medical advice no physician patient relationship is formed and anything discussed in this podcast does not represent the views of our failures we recommend that you seek the guidance of your personal position regarding any specific health related issues