EP422: Some Indie Pharmacy Upshots That Surprised Me—and I Thought I Was Pretty in the Know, With Benjamin Jolley, PharmD

[00:00:00] [SPEAKER_00]: Episode 422, Some Indie Pharmacy Upshots That Surprised Me, And I Thought I Was Pretty in the Know.

[00:00:09] [SPEAKER_00]: Today I speak with Benjamin Jolley.

[00:00:20] [SPEAKER_01]: American healthcare entrepreneurs and executives you want to know, talking,

[00:00:26] [SPEAKER_01]: relentlessly seeking value.

[00:00:28] [SPEAKER_00]: What would you do if you owned an independent pharmacy and you discovered

[00:00:33] [SPEAKER_00]: that your profit was coming from dispensing 10% of prescriptions?

[00:00:37] [SPEAKER_00]: That if you just stopped filling 90% of the drugs, fired all your staff except like one person and

[00:00:44] [SPEAKER_00]: just filled the drugs that you made money on? If you did this, you would actually make more

[00:00:48] [SPEAKER_00]: money in the pharmacy than you're currently making filling every single prescription.

[00:00:52] [SPEAKER_00]: What would you do? This is the math that Benjamin Jolley, my guest today and a multi-generational

[00:00:58] [SPEAKER_00]: pharmacy leader and consultant to other pharmacies discovered and wrestles with on the show today.

[00:01:03] [SPEAKER_00]: And oh by the way, a pharmacy is not going to make it up in extra toilet paper sales or chewing gum

[00:01:07] [SPEAKER_00]: sales when patients come into the pharmacy to pick up their meds. I asked Benjamin this and he

[00:01:11] [SPEAKER_00]: basically laughed at me. So turning our attention now to how to lose money in the pharmacy

[00:01:16] [SPEAKER_00]: business. There's two ways to lose money either outright losing money because the acquisition

[00:01:22] [SPEAKER_00]: costs of the meds are actually more than the PBM mandates that indie pharmacy can charge

[00:01:29] [SPEAKER_00]: its insured members. So that's one way to lose money. A second way to lose money as an indie

[00:01:34] [SPEAKER_00]: pharmacy is because generics are so cheap the cost of providing the pill bottle might exceed the

[00:01:40] [SPEAKER_00]: profits on a 47 cent generic even if the profit margin is 100%. Again, because the PBM sets the

[00:01:47] [SPEAKER_00]: price now you might be thinking the same thing I was thinking when Benjamin Jolley talked about

[00:01:52] [SPEAKER_00]: this like okay well maybe we want the patient to save money here so question mark. Here's the

[00:02:00] [SPEAKER_00]: really big point that Benjamin Jolley knows because he sees this every day what the patient pays and

[00:02:07] [SPEAKER_00]: what the pharmacy gets paid has no relationship to each other or to what an employer plan may

[00:02:13] [SPEAKER_00]: or may not pay. So if the patient slash member pays more and the independent community pharmacy

[00:02:20] [SPEAKER_00]: gets paid less that doesn't mean it will be a better deal for the employer. It doesn't mean it

[00:02:26] [SPEAKER_00]: would be a better deal for the patient. Why? Because there's a PBM in the middle. G. Bi talks about

[00:02:31] [SPEAKER_00]: this in episode 419 for every $100 that is spent on generic drugs $41 goes to the PBM.

[00:02:40] [SPEAKER_00]: 79% of the time if a plan member is in their deductible phase it's cheaper to pay cash

[00:02:45] [SPEAKER_00]: than to use the insurance that member is paying for. As someone said on LinkedIn the other day

[00:02:50] [SPEAKER_00]: talking about patients paying premiums and paying more for generics than if they'd just

[00:02:54] [SPEAKER_00]: gone and paid cash here's the quote. You can pay more to pay more. With so many deductibles as high

[00:03:00] [SPEAKER_00]: as they are and with so many people who never reach their deductibles as Benjamin Jolley says

[00:03:05] [SPEAKER_00]: during the show today we're giving this third party a lot of control over a transaction that

[00:03:10] [SPEAKER_00]: they literally have nothing to do with something like three out of four times that any

[00:03:14] [SPEAKER_00]: given patient picks up their generic med. How did we get here as a society? It's weird.

[00:03:20] [SPEAKER_00]: If you've listened to most of the shows that I've been doing lately largely spiraling around the whole

[00:03:25] [SPEAKER_00]: what's going on with the prices that patients slash members are paying for generic drugs.

[00:03:31] [SPEAKER_00]: You might be thinking the same thing I am it's such an egregious situation

[00:03:35] [SPEAKER_00]: that it becomes an opportunity because the bar is so darn low and so many in the supply

[00:03:42] [SPEAKER_00]: chain or the demand chain are getting royally screwed by the PBMs not just patients. I mean

[00:03:47] [SPEAKER_00]: there's a lot of possible win-win collaborations at least situationally local pharmacies and local

[00:03:53] [SPEAKER_00]: businesses for example would seem to have a natural alliance. I'm reminded of the collaboration

[00:03:58] [SPEAKER_00]: from a couple of years ago that Drew Leatherbury and Dan Strauss talked about in episode 313.

[00:04:04] [SPEAKER_00]: I'm super sure that you in the Relentless Health Value Tribe has or could come up with

[00:04:08] [SPEAKER_00]: all kinds of innovative collaborations to help patients get affordable generic drugs and I'd be

[00:04:13] [SPEAKER_00]: super psyched to hear about them. Benjamin Jolly is a pharmacist by training his pharmacy consulting

[00:04:18] [SPEAKER_00]: company is Apex Pharmacy Consulting. Mentioned on the show today is G. Bi, Mark Cuban, Kyle

[00:04:25] [SPEAKER_00]: transparently kicking PBM ass McCormick and his pharmacy blueberry pharmacy in Pittsburgh

[00:04:31] [SPEAKER_00]: also C P E S N. My name is Stacy Richter. This podcast is sponsored by Aventria Health Group.

[00:04:38] [SPEAKER_00]: Benjamin Jolly, welcome to Relentless Health Value.

[00:04:41] [SPEAKER_01]: Thank you so much. I'm excited. I really enjoyed listening to G's show.

[00:04:45] [SPEAKER_00]: G is amazing. We're talking about G Bi. You recently you created a spreadsheet

[00:04:50] [SPEAKER_00]: evaluating drugs your pharmacy and you know you consult with other pharmacies as well.

[00:04:56] [SPEAKER_00]: You evaluated I guess the financials on the back ends of the drugs that were being

[00:05:01] [SPEAKER_00]: dispensed and I understand that you had an eye-opening revelation.

[00:05:05] [SPEAKER_01]: I took all the prescriptions we filled for anybody in the pharmacy for the last year

[00:05:11] [SPEAKER_01]: and just put them in order from most profitable to least profitable then said okay now how much

[00:05:16] [SPEAKER_01]: of our profit comes from this percentage of the prescriptions basically a Pareto analysis

[00:05:20] [SPEAKER_01]: and this is the 80-20 rule. This is the Pareto principle right?

[00:05:24] [SPEAKER_01]: Yeah, this was the 90-10 rule 90% of the profitability of the pharmacy came from 10%

[00:05:29] [SPEAKER_01]: of the prescriptions that we felt it's crazy like it's so concentrated the profitability

[00:05:33] [SPEAKER_01]: of the pharmacy that like if I were to go and just be some profit maximizing ideal

[00:05:41] [SPEAKER_01]: capitalist what I would do is fire everybody in the pharmacy. We've got 22 employees fire

[00:05:47] [SPEAKER_01]: 21 of them have one person fill 10% of the prescriptions that we currently do and make

[00:05:53] [SPEAKER_00]: more money. It's stupid. Just restating like if you're dispensing 100 prescriptions 90 of them

[00:06:00] [SPEAKER_00]: you're either not making any money or potentially losing money and it is the 10 prescriptions

[00:06:07] [SPEAKER_00]: that you fill that actually fund the operations of the whole pharmacy. Exactly. So talk about

[00:06:15] [SPEAKER_01]: these 10 drugs then what 10 are they? They're all drugs that anyone who has ever looked at a

[00:06:19] [SPEAKER_01]: high cost claims report will be familiar with. It's like Truvada and Dimethyl fumarate and oh what else

[00:06:28] [SPEAKER_01]: in Matinib I'm sure. Yeah it's all of these drugs that are what the industry calls specialty

[00:06:35] [SPEAKER_01]: drugs that have gone generic that's where all of the money was. It's not the brand name

[00:06:39] [SPEAKER_01]: specialty because we don't make any money on those. It's the generic drugs of these specialty

[00:06:44] [SPEAKER_01]: drugs that have you know AWPs in the stratosphere five figures that's where all of the money was.

[00:06:50] [SPEAKER_00]: It's wild. Okay so I'm definitely going to dig in on that because what a coincidence that these

[00:06:57] [SPEAKER_00]: drugs are exactly the drugs the PBMs and their narrow network specialty pharmacies that they've

[00:07:03] [SPEAKER_00]: purchased are the only ones that can distribute and I say that it's a coincidence in air quotes there

[00:07:10] [SPEAKER_00]: but what about these 90 is it just pretty much everything else or is there drugs that are

[00:07:17] [SPEAKER_01]: particularly troublesome? We're a standard community pharmacy we fill everything under

[00:07:22] [SPEAKER_01]: the sun right. We've got your blood pressure medicine, your diabetes medicines, your you

[00:07:26] [SPEAKER_01]: know ridiculously cheap stuff to to eloquence that's probably the most expensive item that

[00:07:31] [SPEAKER_01]: we consistently dispense and the general trend is that if the drug is a brand name drug

[00:07:35] [SPEAKER_01]: we tend to lose money on it like our cost of goods is say 500 bucks we get paid 490 for it

[00:07:42] [SPEAKER_01]: and then there's all of the very commonly prescribed the star rating drugs that Medicare

[00:07:48] [SPEAKER_01]: cares a lot about like a torvastatin or psilostatin your statins, your asinhibitors, your ARBs,

[00:07:54] [SPEAKER_01]: your oral diabetes products where Medicare finds that like for every 1% increase in

[00:08:01] [SPEAKER_01]: an adherence in the population to those drugs overall health spending drops by about a tenth

[00:08:08] [SPEAKER_01]: of a percent you know they control blood pressure, they control diabetes which are the root causes

[00:08:12] [SPEAKER_01]: of the really high cost claims that we see for heart attacks and strokes that are these huge

[00:08:19] [SPEAKER_01]: hospitalization bills and so those items are the ones where just as a anecdote here like

[00:08:25] [SPEAKER_01]: lecinepryl costs us about 49 cents and a prescription that I won't forget we got paid 89 cents on it

[00:08:33] [SPEAKER_01]: in total that's it like here you go take care of this person and make sure that they don't

[00:08:38] [SPEAKER_01]: have angioedema and make sure that their blood pressure is controlled here's your 89 cents to

[00:08:42] [SPEAKER_00]: do that it's just incredible and we're not saying that the patient paid 89 cents we're saying that's

[00:08:50] [SPEAKER_01]: how much you got paid correct I think the patient in this case actually did pay all of it the PBM

[00:08:55] [SPEAKER_01]: reimbursed zero to the pharmacy and just said hey collect 89 cents from the patient it's like

[00:09:00] [SPEAKER_01]: okay cool and everyone pays with credit cards so I guess we're incurring a swipe fee for

[00:09:07] [SPEAKER_01]: 89 cents it's so low on a lot of these drugs that it's to the point of just being laughable for 89

[00:09:13] [SPEAKER_01]: cents to get a pharmacist professional time and medication that like literally prevents heart

[00:09:20] [SPEAKER_00]: attacks so what I'm understanding is of that 90 you're either losing money as you said that

[00:09:25] [SPEAKER_00]: it's frequent for these branded drugs that you're actually losing money patient comes in

[00:09:31] [SPEAKER_00]: and they get eloquence or they get any of these brands and despite the fact that it would seem that

[00:09:36] [SPEAKER_00]: there's a lot of money at play here because the drug cost maybe $500 or whatnot because this is not

[00:09:44] [SPEAKER_00]: like a cost plus model here where you have the acquisition costs and then you add some money

[00:09:49] [SPEAKER_00]: and that's what you're charging the patient or that's what you're getting paid in this particular

[00:09:53] [SPEAKER_00]: case the PBM is controlling the reimbursement which is completely this is just so weird which

[00:09:59] [SPEAKER_00]: completely has nothing to do with the cost of goods so that's why you wind up with this weird

[00:10:03] [SPEAKER_00]: situation where your acquisition costs can actually be higher than what the PBM says you

[00:10:08] [SPEAKER_00]: can charge for it and then the pharmacy winds up losing money so let's just say that's the

[00:10:13] [SPEAKER_00]: situation with all or most branded drugs then you've got this other situation with

[00:10:21] [SPEAKER_00]: generics where you could not be losing money but because it's so cheap you know if you're

[00:10:29] [SPEAKER_00]: making 13 cents it's just it's tough to sustain a big staff or do counseling or whatever because

[00:10:36] [SPEAKER_00]: you're still if you add in the labor you're probably losing money still right even if we

[00:10:41] [SPEAKER_01]: don't account for labor there are fixed costs in repackaging your prescription right

[00:10:45] [SPEAKER_01]: if i'm taking some thousand count bottle and i'm pouring 30 pills into a bottle for someone

[00:10:51] [SPEAKER_01]: i'm giving them a bottle i'm giving them a cap i'm putting a label on it the cost of that right

[00:10:55] [SPEAKER_01]: there is probably about 20 cents and so we don't even need to get into the labor cost to say yeah

[00:11:00] [SPEAKER_01]: the pharmacy's losing money even if they're supposedly making 13 cents and so when we talk

[00:11:06] [SPEAKER_01]: about like cost analysis of or cost of dispensing in pharmacies there's an average cost of

[00:11:11] [SPEAKER_01]: dispensing that like builds in all of the costs of operating pharmacy the rent the lights

[00:11:15] [SPEAKER_01]: software and the labor costs and then there's the dead net marginal cost of filling prescription

[00:11:20] [SPEAKER_01]: because if i'm operating a pharmacy the rent is the rent the labor is probably the labor if i

[00:11:26] [SPEAKER_01]: have a technician not technicians on staff whether we fill 100 prescriptions or we fill

[00:11:31] [SPEAKER_01]: 500 prescriptions or we fill one prescription today that person's still on staff it's not

[00:11:35] [SPEAKER_01]: an uber model where they get paid per prescription that we fill and so those costs are built into

[00:11:40] [SPEAKER_01]: the the cost structure of the pharmacy but just just the bare minimum marginal cost to fill one

[00:11:46] [SPEAKER_01]: additional prescription is probably about a buck 50 and so if i'm getting paid my cost of goods

[00:11:54] [SPEAKER_01]: plus a dollar 50 then i'm not paying for any of the overhead any of the labor at all i'm just

[00:11:59] [SPEAKER_01]: paying for like the plastic that i'm using and the transactional fees that everybody in the

[00:12:04] [SPEAKER_00]: system seems to be able to charge this is what i'm wrestling with right now we often talk about

[00:12:09] [SPEAKER_00]: how it's so important that patients can afford their meds and if we're talking about these generic

[00:12:15] [SPEAKER_00]: meds a lot of times the generic meds are they're cheap you know you're talking about a 49 cent

[00:12:20] [SPEAKER_00]: or a couple of bucks you can buy on amazon i think you can pay five bucks and get as many

[00:12:26] [SPEAKER_00]: generics as you can take a month for that so like these are inexpensive products on the other

[00:12:33] [SPEAKER_00]: hand obviously we have people in the supply chain such as the pharmacy that actually is providing

[00:12:41] [SPEAKER_00]: some value here right and i don't necessarily know that we need to get into this but you

[00:12:46] [SPEAKER_00]: have oftentimes especially in rural areas where the pharmacist is the trusted medical profession

[00:12:51] [SPEAKER_00]: for the community like i think you probably know these stats better than me but the health of

[00:12:56] [SPEAKER_00]: the community diminishes when the pharmacy goes out so you have this entity in the supply chain

[00:13:01] [SPEAKER_00]: that is finding it very difficult to maintain a business model i mean there's other people

[00:13:06] [SPEAKER_00]: who are making tons of money in this chain but it makes me wonder whether there is a fundamental

[00:13:13] [SPEAKER_00]: issue where you're trying to make it as cheap as possible for the patient for some of these

[00:13:16] [SPEAKER_00]: generics while at the same time the operations of a pharmacy can't sustain those super cheap

[00:13:22] [SPEAKER_01]: prices do you want to respond to that i think that if we want to have a world where people

[00:13:28] [SPEAKER_01]: can have a pharmacist in their community that they can go in and talk to face to face there is

[00:13:34] [SPEAKER_01]: a minimum price that has to be paid you can't have that service for free and the way that the

[00:13:40] [SPEAKER_01]: world has evolved since the 80s when pbms first started to enter the pharmacy space

[00:13:47] [SPEAKER_01]: the price of medications has gone through the ceiling and we've taken the money that used

[00:13:53] [SPEAKER_01]: to flow to the pharmacy and we've decided to overfeed our middlemen like pharmacy operations

[00:14:01] [SPEAKER_01]: might actually be losing money in a lot of cases to me it's a fundamental question of what do we

[00:14:06] [SPEAKER_01]: want our society to look like do we want to have medications at the absolute dead net price

[00:14:12] [SPEAKER_01]: and no pharmacists in the community and you get everything from mail order or do you want

[00:14:17] [SPEAKER_01]: to have someone who's in your community that you can actually talk to face to face and again

[00:14:21] [SPEAKER_01]: if we want to do that that comes with a price tag training a pharmacist just intuition costs for a

[00:14:27] [SPEAKER_01]: typical pharmacist is like $150,000 that has to be recouped somewhere you can't expect people

[00:14:35] [SPEAKER_01]: to go to pharmacy school for four years and not have not have a payment the day that like

[00:14:40] [SPEAKER_00]: i got to eat right well okay so here's one way that this could work there's 90 scripts out

[00:14:46] [SPEAKER_00]: of 100 that are somewhere slightly below or slightly above the no profit line and then

[00:14:53] [SPEAKER_00]: 10 of the scripts pay for the 100 it's not like a unit cost analysis it's in the aggregate cost

[00:15:01] [SPEAKER_00]: analysis and like maybe we're functional here if you can basically afford to run a pharmacy on those

[00:15:07] [SPEAKER_00]: 10 scripts what's flawed about what i just said so the problem is that those 10 scripts

[00:15:13] [SPEAKER_01]: are inconsistent and constantly channeled to pbm moment specialty pharmacies

[00:15:20] [SPEAKER_01]: constantly channeled away from the community pharmacy to a mail order or to a chain pharmacy

[00:15:27] [SPEAKER_00]: and when you say constantly channeled away from what you mean is if a pharmacy if a community

[00:15:32] [SPEAKER_00]: pharmacy can manage to hold on to those scripts it's probably because those scripts fell off

[00:15:39] [SPEAKER_00]: somebody's radar like as soon as they come back on the pbm's radar the patient is going to get a

[00:15:44] [SPEAKER_00]: nasty gram that they have to get their drug through mail order right it's either a there's

[00:15:49] [SPEAKER_01]: some kind of regulation in place stopping pbm from taking all the business which i'll be frank

[00:15:53] [SPEAKER_01]: here most of those 10 prescriptions are medicare prescriptions that's not a mistake

[00:15:59] [SPEAKER_01]: there's a block in place if it's a employer group plan there's a block in place at the pbm

[00:16:05] [SPEAKER_00]: level to say this has to go through the mail order is it cheaper for employers like what's the

[00:16:10] [SPEAKER_00]: difference between what's going on in medicare and what's going on with the employer sponsored

[00:16:16] [SPEAKER_01]: health care here the cms and their regulations does not allow the channeling of medications to

[00:16:22] [SPEAKER_01]: a specific pharmacy you can have preferred pharmacies you can have cost sharing reductions

[00:16:27] [SPEAKER_01]: to go to wallgreens or cvs or a credo specialty pharmacy you can have cost sharing reductions

[00:16:33] [SPEAKER_01]: for that they have the preferred pharmacy thing but you can't say you cannot get your medication at

[00:16:40] [SPEAKER_01]: community pharmacy at jolly's pharmacy for example you might pay 10 bucks instead of zero to get

[00:16:45] [SPEAKER_01]: your medicine at jolly's if it's a tier one generic but the pbm is not allowed under

[00:16:50] [SPEAKER_01]: part d law to just say nope this medicine has to be filled at our pharmacy it's just not covered

[00:16:58] [SPEAKER_01]: whereas in employer sponsored plans i would wager that the majority of plans today

[00:17:05] [SPEAKER_01]: that are managed certainly by the big three pbms have blocks in place for the specialty

[00:17:10] [SPEAKER_01]: generics at the very first fill it'll say pharmacy not authorized to the expense i bill a claim to

[00:17:16] [SPEAKER_01]: express groups or cvs care marker optom rx and it'll come back with reject code i think it's

[00:17:22] [SPEAKER_01]: for x that says pharmacy not authorized to dispense must go through specialty and then i'm faced with

[00:17:28] [SPEAKER_01]: okay i guess the doctor needs to send this prescription to a credo specialty pharmacy or cvs

[00:17:32] [SPEAKER_01]: specialty or optum specialty because the pbm will not pay for it at my pharmacy full stop there's

[00:17:39] [SPEAKER_01]: just no opportunity for me to even try to be a part of that competitive market but this applies

[00:17:45] [SPEAKER_01]: not just to the specialty generics this applies to like the licenter pearls and the lipid tours

[00:17:49] [SPEAKER_01]: i will get messages frequently that come back with refills not covered and then it'll have a message

[00:17:55] [SPEAKER_01]: that says patient can get two fills at retail then must go to cvs or then must go to wall grains or

[00:18:01] [SPEAKER_01]: something to that effect why that is to be honest with you i think that it's in part that

[00:18:07] [SPEAKER_01]: employers aren't reading through their contracts but like i don't want to say that employers

[00:18:11] [SPEAKER_01]: are not savvy some of them aren't some of them are very savvy but i think it's largely

[00:18:16] [SPEAKER_01]: honestly that some of the largest brokerages have preferred relationships with the largest pbms

[00:18:23] [SPEAKER_01]: and they receive a payment from the pbm as like a an override or whatever that says that if you can

[00:18:31] [SPEAKER_01]: get someone to agree to these terms we will give you a dollar per prescription fee or whatever it is

[00:18:38] [SPEAKER_01]: they advise their clients to to do so and most folks trust their brokers it's crazy to me when

[00:18:45] [SPEAKER_01]: i look at the world and see how much money people are getting overcharged for these items

[00:18:50] [SPEAKER_00]: there is a show with a j loyacano from 2022 i believe where where he talks about this exact same

[00:18:58] [SPEAKER_00]: thing where you have employee benefit consultants and brokers who are taking overrides on every

[00:19:04] [SPEAKER_00]: pharmacy script and he wasn't talking a one dollar override he was talking he seven dollars 13

[00:19:09] [SPEAKER_00]: dollars there is also just a big lawsuit in florida a school system sued their ebc who was taking

[00:19:17] [SPEAKER_00]: millions of dollars a year in overrides because exactly what you just said their benjamin was

[00:19:24] [SPEAKER_00]: happening i was going to say well you know maybe for the employer it's somehow less expensive

[00:19:29] [SPEAKER_00]: to go this way but it just sounds like there's i mean is it less expensive i don't know i don't

[00:19:37] [SPEAKER_01]: trust the big guys at all so i don't think so but if we take this from the perspective of i'm a

[00:19:44] [SPEAKER_01]: really large employer i'm like microsoft or something and i use a big three pbm even if jolly's were to

[00:19:49] [SPEAKER_01]: fill those prescriptions and the pbm pays me like 50 bucks or something that's there's no guarantee

[00:19:56] [SPEAKER_01]: in my contract that the 50 bucks is what microsoft then gets charged and so i might get paid

[00:20:03] [SPEAKER_01]: 50 dollars for an amatoneb where cvs specialty might pay them sell four thousand for the same item

[00:20:09] [SPEAKER_01]: but it's possible in the context of i'm going to stay with cvs caremark as my pbm or i'm going to

[00:20:14] [SPEAKER_01]: stay with express scripts as my pbm that express scripts gives a discount on the price that they

[00:20:20] [SPEAKER_01]: charge microsoft or whoever the large employer is if they allow me to force the business into

[00:20:27] [SPEAKER_01]: my own pharmacy because they might pay me 50 bucks but then they might turn around and charge

[00:20:33] [SPEAKER_01]: microsoft 4500 dollars through the pbm but if they are able to fill it in house they only

[00:20:38] [SPEAKER_01]: charge them four thousand so it's possible that it is cheaper to the employer to do this

[00:20:44] [SPEAKER_01]: but i think that smoke and mirrors if you will yeah i was just gonna say it could very well

[00:20:49] [SPEAKER_00]: be smoke and mirrors because if we're talking about amatoneb that's the example that you know

[00:20:52] [SPEAKER_00]: that everybody uses it's the classic example right because like they were charging employers

[00:20:57] [SPEAKER_00]: nine thousand dollars a month and saying that it was this huge discount because the branded

[00:21:02] [SPEAKER_00]: jug was 27 thousand dollars so they're like oh you're saving 18 thousand dollars meanwhile

[00:21:08] [SPEAKER_00]: amatoneb mark cuban made it available for 13 dollars 1313 13,000 13 like no zeros after

[00:21:16] [SPEAKER_00]: that number right yeah so you know when you start playing the discount game that's when things go

[00:21:21] [SPEAKER_00]: horribly right because like a discount off of what like it's just anytime i've had multiple

[00:21:26] [SPEAKER_00]: guests on the show basically say the same thing like anyone anyone who trats in and starts touting

[00:21:31] [SPEAKER_00]: their discounts as opposed to talking about what the absolute price is of something like discounts

[00:21:38] [SPEAKER_00]: are just a way that somebody in the middle is making money and like again in the context of

[00:21:43] [SPEAKER_01]: a contract that i as large employer have with large bbm my contract is a discount right and so

[00:21:51] [SPEAKER_01]: maybe i get a better discount if i force people to go to mail order in the context of that insane

[00:21:57] [SPEAKER_01]: contract that does not make sense in a rational like a whole economic world but in the context

[00:22:03] [SPEAKER_01]: of that insane system i do save money by by making everyone go to mail order well you're

[00:22:09] [SPEAKER_00]: making money because the middle man who stands to gain more when you use their vertically integrated

[00:22:16] [SPEAKER_00]: downstream entity right like their own pharmacies so the middle man wants to incent its customers

[00:22:23] [SPEAKER_00]: to choose the option where they maximize their revenue right so like yeah they're going to make

[00:22:28] [SPEAKER_00]: it slightly cheaper because they give away 10 percent but make 90 percent more of the

[00:22:34] [SPEAKER_00]: total sale or whatever you know that's what it sounds like it's happening there right we just

[00:22:38] [SPEAKER_00]: talked about this kind of misalignment here right like it's not in a pbm's best interest to share any

[00:22:45] [SPEAKER_00]: of its profit with you independent pharmacy or community pharmacy and obviously because they're

[00:22:51] [SPEAKER_00]: controlling the customer they're the ones with the direct relationship to the employer plans or

[00:22:57] [SPEAKER_00]: medicare you know whoever's ultimately paying the bill here one of the things pbms and pharmacies

[00:23:03] [SPEAKER_01]: don't often talk about is most generic medications these cheap ones they're a patient paid benefit

[00:23:08] [SPEAKER_01]: they're a member paid benefit they're not actually like when you ask me to bill your insurance they're

[00:23:13] [SPEAKER_01]: not paying anything most of the time do you have a large deductible they're not paying anything ever

[00:23:17] [SPEAKER_01]: you're never going to reach your deductible and so why should i give this pbm the authority to

[00:23:25] [SPEAKER_01]: do all of this stuff if they're not paying anything anyways why why do we societally do

[00:23:31] [SPEAKER_01]: this and like this is why good rx exists people realize you know they're not actually giving

[00:23:35] [SPEAKER_01]: you the best price if i pay out of pocket even if i'm paying this other middle man i actually

[00:23:40] [SPEAKER_01]: still end up paying less money for my medicines yeah which gbi um did talk about and then the

[00:23:47] [SPEAKER_00]: other thing that i think bears mention here is that hsas are potentially a way to still have

[00:23:54] [SPEAKER_00]: the employer pay so that the employees aren't on the hook for i mean if somebody's taking a

[00:24:01] [SPEAKER_00]: number of these drugs it can add up but if there's a relatively simple way to do an hsa then

[00:24:09] [SPEAKER_00]: there could be these direct contracts and the employee still can get reimbursed it's actually

[00:24:13] [SPEAKER_01]: funny you mentioned that a good friend of mine is kindle McCormick owns blueberry pharmacy in

[00:24:18] [SPEAKER_01]: pittsburgh he's like the guy that started the whole cost plus concept mark cuban gets a lot of

[00:24:23] [SPEAKER_01]: the credit for it they're doing the same thing but he posts all of his prices online so

[00:24:29] [SPEAKER_01]: if you want to know how much this drug costs you go to price dot blueberry pharmacy calm

[00:24:34] [SPEAKER_01]: and it'll say this is the price he only operates in the pittsburgh market though but he has received

[00:24:40] [SPEAKER_01]: a whole bunch of phone calls from various people saying hey my employer told me to call you and

[00:24:46] [SPEAKER_01]: get my a mat nib from you or to get my dimethyl fumerite from you or to get my whatever

[00:24:51] [SPEAKER_01]: specialty drug from you and then they would pay me back because the price he has listed is that

[00:24:57] [SPEAKER_01]: 13 to like $50 price and so the funniest thing was he actually got a call from someone that's a

[00:25:05] [SPEAKER_01]: mile away from me here in salt lake city saying hey the utah public employees health plan told me to

[00:25:11] [SPEAKER_01]: get my mat nib from you and he's like well i'm not licensed in utah but you know if you go to

[00:25:17] [SPEAKER_01]: jollies they can probably get you hooked up so we went and filled this prescription for this guy

[00:25:21] [SPEAKER_01]: for the same price that kyle was offering because we can buy it at the same price as he does

[00:25:26] [SPEAKER_01]: and then they submitted a receipt to the public employees health plan this is not coming from

[00:25:32] [SPEAKER_01]: their pbm this is coming from the health plan who's looking at the claims and saying we are paying

[00:25:36] [SPEAKER_01]: an enormous amount for this drug when we buy it through our pbm but if we send it to an out of

[00:25:42] [SPEAKER_01]: network pharmacy and then just do a direct member reimbursement on it we actually save like

[00:25:47] [SPEAKER_01]: a couple thousand bucks every fill anyway it was just a really bizarre moment for me of

[00:25:53] [SPEAKER_01]: realizing you know the whole pbm system like it becomes really efficient for claims administration

[00:25:58] [SPEAKER_01]: but it's really inefficient in terms of the price of the products this is the public employees plan

[00:26:05] [SPEAKER_01]: so this is like taxes that i am paying to my state are paying for that pbm to make like that

[00:26:11] [SPEAKER_01]: specialty pharmacy to make that that thousands of dollars so it's a moment of oh that doesn't

[00:26:16] [SPEAKER_00]: feel great okay well that's one thing an employer plan can do find members taking these specialty

[00:26:22] [SPEAKER_00]: generics and tell them to go to jollies or blueberry pharmacy or another local pharmacy in that club

[00:26:28] [SPEAKER_00]: and save thousands it's just a little ad hoc and slightly labor intensive but also yeah you can

[00:26:34] [SPEAKER_00]: start now and not have to do any new contracts but what else can you do how else might you suggest

[00:26:40] [SPEAKER_00]: creating a win win so patients are not getting overcharged you know patients are paying a fair

[00:26:46] [SPEAKER_00]: price there are employers or medicare taxpayers are paying a fair price but at the same time

[00:26:51] [SPEAKER_00]: community pharmacies keep the money locally in the community be a part of the community also

[00:26:56] [SPEAKER_00]: don't wind up getting squeezed out of the picture here through all kinds of financial maneuvering

[00:27:01] [SPEAKER_00]: and incentives that drain money from the pharmacies i think the real solution here is to make the

[00:27:08] [SPEAKER_01]: question of the employer saving money in the context of that pbm relationship irrelevant that

[00:27:14] [SPEAKER_01]: to me is the is the real answer here from an employer's perspective there's value in having a

[00:27:18] [SPEAKER_01]: when we're talking about your ridiculously expensive hepatitis c drugs because they can then

[00:27:25] [SPEAKER_01]: play with the formulary and play the cure a pack against harvoni and get the net price

[00:27:31] [SPEAKER_01]: dramatically down and the reason there there's value there is that you know these drugs cost

[00:27:35] [SPEAKER_01]: a hundred thousand dollars per course of therapy without any kind of negotiation whereas when

[00:27:40] [SPEAKER_01]: we're talking about all these drugs that i'm talking about you know imatinib that is

[00:27:44] [SPEAKER_01]: thirteen dollars from mark cuban there's really not much room to negotiate that down and so the

[00:27:50] [SPEAKER_01]: question becomes to me like how do i make the pbm's irrelevant to my practice because i know that

[00:27:57] [SPEAKER_01]: just the way the world is i'm never going to be able to mess with those ridiculously high

[00:28:02] [SPEAKER_01]: cost therapies in my day-to-day practice and so if i set them aside and just say okay

[00:28:07] [SPEAKER_01]: that's the pbms world they can play with those really high cost drugs and then i start looking

[00:28:12] [SPEAKER_01]: at the low cost stuff i start to think okay well if i'm a pharmacy and this drug literally costs me

[00:28:20] [SPEAKER_01]: you know a buck fifty for a year's supply of medicine why am i charging someone on a transactional

[00:28:26] [SPEAKER_01]: basis to receive this every 30 days by doing so i am adding cost to the system maybe there's

[00:28:34] [SPEAKER_01]: some value there in terms of like i can make sure that they're actually taking it maybe

[00:28:38] [SPEAKER_01]: there's some value in terms of i can make sure that they're not gonna have side effects

[00:28:41] [SPEAKER_01]: but if i'm participating in the pbm system and i'm getting paid 15 cents to do that then in reality

[00:28:47] [SPEAKER_01]: all of that like you know pharmacy school ethical stuff that like yeah we pharmacists are great because

[00:28:54] [SPEAKER_01]: we do this and that's all of that gets pushed to the side if i'm getting paid 13 cents a

[00:28:57] [SPEAKER_01]: prescription and it's just how do i get as many prescriptions out the door as fast as i can

[00:29:02] [SPEAKER_01]: and where can i cut corners so i started to think about this and say you know what if i moved

[00:29:07] [SPEAKER_01]: to something like a direct primary care model and i've written about this on my blog for the last

[00:29:12] [SPEAKER_01]: three years this concept of direct pharmacy care and so if i'm amazon and i charge you five bucks

[00:29:18] [SPEAKER_01]: a month to get you know as many generics as you want if amazon can do that i think i can do it

[00:29:24] [SPEAKER_01]: i think their price point is maybe just a little too low and their model doesn't make sense

[00:29:29] [SPEAKER_01]: because the fixed cost of shipping and medication from amazon's warehouse or pharmacy to you

[00:29:35] [SPEAKER_01]: is probably more than five bucks a month so there's no way they're actually making money on that process

[00:29:40] [SPEAKER_01]: but the cost of me getting the medication to someone who walks into my pharmacy there's no

[00:29:45] [SPEAKER_01]: shipping cost involved right and so i really think that there's an opportunity to have a like a

[00:29:50] [SPEAKER_01]: membership type of deal like a netflix price point to say look if you pay me 15 bucks a month

[00:29:56] [SPEAKER_01]: that 15 bucks a month if i can get a large enough portion of my patient population to say

[00:30:01] [SPEAKER_01]: hey i'll pay a membership then that covers all of those labor costs and rent costs and so forth

[00:30:07] [SPEAKER_01]: and the medications themselves are really cheap and so i can say look we're covering all of our

[00:30:13] [SPEAKER_01]: costs on this price point like for the little employer in my town who currently doesn't offer

[00:30:18] [SPEAKER_01]: health insurance because it's too expensive but they want to offer something to their employees

[00:30:23] [SPEAKER_01]: like i say hey look you've got 30 employees if you pay me 15 bucks a month per employee

[00:30:27] [SPEAKER_01]: then i'll give them this whole list of drugs at no additional cost i really think that there's

[00:30:33] [SPEAKER_00]: something there so what i'm understanding you say is similarly to how direct primary care

[00:30:39] [SPEAKER_00]: what they are doing is charging us it's like a capitated rate really pay a per member per month

[00:30:44] [SPEAKER_00]: and then you get effectively here's the list of meds whatever you're prescribed if it's on

[00:30:50] [SPEAKER_00]: that list you get it for your your subscription fee like i can see where you're headed there

[00:30:56] [SPEAKER_00]: because what's the value really of a pharmacy in the community it's the idea that you can ask

[00:31:04] [SPEAKER_00]: questions it's the idea that the pharmacist can be consulted it's the let's talk about these side

[00:31:10] [SPEAKER_00]: effects right this is the value that a trusted pharmacist that has a relationship with patient

[00:31:16] [SPEAKER_00]: can provide so if you do something like this payment model that you're talking about

[00:31:23] [SPEAKER_00]: what it enables the pharmacist to do is actually rise to the occasion and provide that support

[00:31:30] [SPEAKER_00]: whereas you know trying to hard scrabble it 62 cents at a time and at any given moment the

[00:31:37] [SPEAKER_00]: pbm can snatch away the scripts it's just it's a unpredictable revenue stream which is difficult

[00:31:44] [SPEAKER_00]: for almost any business and it definitely also sounds like this is something that if an employer

[00:31:52] [SPEAKER_00]: is in a local community and has some employees who would value this interaction because like you know

[00:31:59] [SPEAKER_00]: the different strokes for different folks right like some people really like to have

[00:32:02] [SPEAKER_00]: things delivered to their house but other people really like to go out and have that interaction

[00:32:09] [SPEAKER_01]: even to that point though like we can deliver to people's houses we do we have for 50 years

[00:32:15] [SPEAKER_01]: every little small business pharmacy i've ever talked to has a employee delivery driver or

[00:32:21] [SPEAKER_01]: courier service that they will go and deliver to someone's house if we're talking a small business

[00:32:25] [SPEAKER_01]: employer if i'm talking like microsoft there's no way i'm going to be able to deliver to everybody

[00:32:30] [SPEAKER_00]: in that company well you know the issue is with a lot of these larger employers they've got people

[00:32:36] [SPEAKER_00]: scattered around throughout the country so you know they may have 800 employees in a certain

[00:32:42] [SPEAKER_00]: local market i mean the challenge for them is going to be it's inefficient because now we

[00:32:48] [SPEAKER_00]: have to negotiate all these individual contracts and all these local communities but you know at

[00:32:53] [SPEAKER_00]: the same time it's kind of like healthcare is local so trying to do things at the national level

[00:32:58] [SPEAKER_00]: you'll wind up with oh hey gigantic pbms that are doing all the stuff that they're doing so i guess

[00:33:05] [SPEAKER_00]: it's kind of a choice do you get a little inefficient as far as your operations go in

[00:33:10] [SPEAKER_00]: order to actually drive better outcomes for patients or do you get real efficient and then

[00:33:16] [SPEAKER_00]: lower the opportunities for patients to potentially get the care that they need you save some time

[00:33:22] [SPEAKER_01]: but it'll cost you a lot of money to do so that exact issue actually is one that

[00:33:27] [SPEAKER_01]: the small business pharmacy community has been aware of and i am a part of a so-called clinically

[00:33:32] [SPEAKER_01]: integrated network called the community pharmacy enhanced services network that comprises

[00:33:37] [SPEAKER_01]: 3,500 small business pharmacies located in 48 different states that can sign a single agreement

[00:33:44] [SPEAKER_01]: with a large employer to provide this type of service cpsn has provided during covid vaccination

[00:33:51] [SPEAKER_01]: services across large employers at a whole bunch of different sites the difference here between

[00:33:56] [SPEAKER_01]: this and an express grips or a cbs or an opt-in or any other pbm is that the network is owned

[00:34:02] [SPEAKER_01]: operated and the board of directors are the pharmacists that run the pharmacies i think

[00:34:09] [SPEAKER_00]: it just kind of goes back to you know healthcare is 30% of the national economy and often

[00:34:14] [SPEAKER_00]: something similar within local markets if you're paying that money toward a big consolidated

[00:34:20] [SPEAKER_00]: entity then that money is draining out of the community so if you're working with an organization

[00:34:25] [SPEAKER_00]: like cpesn you also have the money staying local which is especially in certain communities not

[00:34:31] [SPEAKER_00]: to be an underestimated plus is there anything that you want to add the other potential

[00:34:37] [SPEAKER_01]: solution here is honestly just competent regulation or departments of insurance but that's really hard

[00:34:43] [SPEAKER_01]: and it goes state by state so i don't think that the solution lies in asking congress or my state

[00:34:51] [SPEAKER_01]: department of insurance to solve my problems it's to make the competition irrelevant by saying look

[00:34:57] [SPEAKER_01]: you can go buy the giant pbms services for the price tag that it comes with or you can pay

[00:35:05] [SPEAKER_01]: 15 bucks pmpm and get 90% of the medications for no marginal cost there's all of these regulations

[00:35:12] [SPEAKER_01]: that exist in the market right now that make it difficult to make that value prop easy but i think

[00:35:20] [SPEAKER_01]: the way that makes sense to pay for medication is to pay the pharmacy directly and not have a

[00:35:27] [SPEAKER_01]: giant middleman in the middle who takes most of the value and who apparently is able to pay

[00:35:32] [SPEAKER_01]: a broker an override that is more than what they're paying the pharmacy per prescription

[00:35:36] [SPEAKER_01]: so a broker is receiving more per prescription than the pharmacy is even inclusive of cost of goods

[00:35:42] [SPEAKER_00]: which is insane that's one way to put it benjamin jolly where can people learn more about your

[00:35:49] [SPEAKER_01]: work and what's the web address of your blog sure my blog it's a sub stack so it's just my

[00:35:54] [SPEAKER_01]: name benjamin jolly dot sub stack dot com i'm also available through my consulting company apex

[00:36:01] [SPEAKER_01]: pharmacy consulting dot com i'm also on linkedin find me there benjamin jolly benjamin jolly thank

[00:36:07] [SPEAKER_00]: you so much for being on relentless health by you today thank you so much good talking with you sacy

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