Hello, all you Relentless Tribe members. If you have listened to this show for any length of time, you know one of our favorite truths around here, which is where there's mystery, there's margin. But today, we aren't just here to point out the mystery. We're here to look towards figuring out how to solve for it.
If we wanna build a healthcare system that actually works for patients and plan sponsors, then we have to transition from being passive price takers to active, highly informed decision makers. And to do that, we really need to understand the actual operational mechanics of how, for example, the pharmacy supply chain is put together.
For a full transcript of this episode, click here.
If you enjoy this podcast, be sure to subscribe to the free weekly newsletter to be a member of the Relentless Tribe.
My guests today are two absolute titans who are leading this charge from different angles, and having them sit down together is an absolute master class in how to dismantle the complexity.
First, we have Cora Opsahl. Cora is a brilliant, deeply sophisticated expert in how to be a jumbo plan sponsor, and she's legendary in our community for actually reading the fine print; asking the tough questions in, for example, RFPs; and negotiating contracts that protect members' dollars.
And then sitting across from her, we have Mark Cuban, the co-founder of Mark Cuban Cost Plus Drug Company. Mark did not just look at the high cost of generic drugs and complain. He rolled up his sleeves and built a transparent alternative that proves medicine does not have to be a black box.
What happens when you bring a sophisticated purchaser and a disrupter together? Well, you have a wild conversation with lots of tangents, and the show today—being a tangent from the original show with Cora and Mark, which aired last fall—it is actually a really, I'm gonna say, empowering 301-/401-level conversation.
So today, Cora and Mark are gonna help us trace the drug dollar. We walk through the actual operational friction points, like the old generic compliance ratio that forces, for example, independent pharmacies to buy high from a consolidated wholesaler.
We also dig into the discount theater, as Benjamin Jolley, PharmD (EP422) talked about at great length in the episode with him from a couple of years ago. There's a lot of discount theater with, for example, the old classic imatinib example, which is a generic drug, a generic "specialty" drug that cash-pay pharmacies can sell for, like, $25 but which can end up costing an employer thousands of dollars through a traditional PBM, all while being touted as a massive discount off an inflated reference price.
There's a reason why AWP is called Ain't What's Paid. There's a reason why WAC has the reputation that it has. Do go back and listen to the episode with Luke Slindee, PharmD (EP429) for 45 minutes on this topic, which is actually really important.
To help you take action on your next RFP, Cora and Mark break down some of the mechanics of pass-through PBM contracts. I think it's one thing to know the facts, and it's another thing to realize what those facts add up to. So, we talk about the realities of pass-through PBM contracts.
And much like Chris Crawford (EP465) in the episode with him has warned us, pass-through PBM may pay the pharmacy using one secret algorithm while charging the plan using a completely different formula.
I am reminded of what Stan Schwartz, MD (EP486) from ZERO.health said on the episode with him. He said, "So much of what we call expense in medicine is simply pricing failure." And this is probably another example of that.
And probably, I'm gonna say, most of this conversation with Cora and Mark that follows is about knowing enough about that pricing failure to start to figure out how to solve for it.
A plan might want to consider walking through this with their broker, or if you're a broker, consider walking through this with your plan or PBM or consultant or tech partner in a policy meeting.
It sort of defines what transparency means to a certain extent relative to contract terms, which enables you to demand it and protects plan assets, members, patients, constituents. Yeah, we have a lot of decision makers and change makers across many lines of work who listen to the show.
This is Relentless Health Value. This podcast's founding sponsor is Aventria Health Group.
Also, I would like to thank our series underwriter in 2026, Payerset, which is a leader in price transparency. Go over to their Web site and check out what they are up to over there.
I also really would like to thank Patient Rights Advocate, which is a nonprofit advocating for the rights of patients and also transparency. They have a bunch of free resources also on their Web site. Check out what they're doing, and I would like to thank all of these sponsors so very much for providing the financial support to keep this show on the air.
With all of that, here is my conversation with Mark Cuban and with Cora Opsahl. It is an outtake from our earlier conversation (EP488) and go back and listen to the whole thing if you like. It aired last fall.
Also mentioned in this episode are Mark Cuban Cost Plus Drug Company; Peterson Health Analytics; Benjamin Jolley, PharmD; Luke Slindee, PharmD; Chris Crawford; Stan Schwartz, MD; ZERO.health; Aventria Health Group; Payerset; and Patient Rights Advocate.
For a list of healthcare industry acronyms and terms that may be unfamiliar to you, click here.
You can learn more at markcubancompanies.com and costplusdrugs.com and follow Mark on LinkedIn, Bluesky, Threads, and X.
You can also learn more at petersonanalytics.com and follow Cora on LinkedIn.
Mark Cuban, a native of Pittsburgh, PA; a graduate of Indiana University; and now a Dallas, TX, resident, has always been an entrepreneur.
From selling and trading baseball cards, selling garbage bags and magazines door-to-door, to starting a business buying and selling stamps at age 16, there have been few years in his life when he wasn't starting or running a business.
He got a job at one of Dallas's first retail software stores, Your Business Software. He spent nine months doing everything from learning how to code, supporting and installing every type of business software, and of course, making sure the store opened on time. That went well until he made the executive decision to turn over the store opening duties to a peer so he could pick up a check for a sale.
He was fired.
Mark decided it was time to start on his own. The next day, MicroSolutions was founded. Over the next seven years, MicroSolutions became a national leader in Systems Integration and custom applications for local and wide area networks.
Growing to 80 employees, never having a losing month of operations and nearly $36M in annualized sales, in 1990, MicroSolutions was sold to CompuServe.
At that point Mark "retired" to investing in public and private companies. His knowledge of the networking industry led to success and brought returns of 80% and more each year.
Mark purchased the Dallas Mavericks for $285M. The Mavs would have the second-best record in the NBA during his ownership tenure. Mark sold majority control of the Mavs in 2023 but continues to be actively involved with the team.
He first appeared as a "Shark" on ABC's Emmy Award–winning hit business show Shark Tank in 2011 and quickly established himself as one of the most popular and tough Sharks, investing millions of dollars in hundreds of small businesses. He's been nominated nine times for an Emmy for Shark Tank. His last appearance on the program was during season 16 in May 2025.
In 2019, Mark co-founded costplusdrugs.com. Its launch on January 19, 2022, with transparent pricing and a limited markup, has fundamentally changed the pricing of medications in the United States.
Cora Opsahl is the managing director of Peterson Health Analytics (PHA), a public benefit corporation, created by Peterson Philanthropies to empower employers with independent, actionable data analysis of healthcare costs and quality. PHA combines price transparency data, employer claims data, and independent quality and safety ratings to enable employers to benchmark and reset their healthcare spending to deliver more affordable and higher-quality care for workers and their families.
Prior to joining PHA, Cora was the director of the 32BJ Health Fund, a self-insured Taft-Hartley benefit fund. While there, she prioritized a data-driven approach with a focus on reducing trend. During her six years, she oversaw over $240M in benefit savings from bold benefit design decisions, innovative RFPs, and implementing the largest direct healthcare contract of its kind with a health system.
Cora previously worked at Express Scripts, where she held a variety of roles, ranging from Medicare Part D to operations, strategy, and acquisitions. She earned an MBA from Saint Louis University.
00:00 Introduction to this episode.
03:33 EP429 with Luke Slindee, PharmD.
03:43 An overview of today's conversation.
05:50 EP488 with Mark Cuban and Cora Opsahl.
05:59 Today's conversation with Mark Cuban and Cora Opsahl.
07:17 EP422 with Benjamin Jolley, PharmD.
07:25 Why discounts are meaningless without knowing the absolute price.
09:29 What a generic compliance ratio does.
12:28 Thinking about the demand side for employers.
13:58 EP465 with Chris Crawford.
15:00 The complication of a pass-through contract.
17:48 Why too much of healthcare comes down to a negotiation.
19:16 EP486 with Stan Schwartz, MD.
Recent past interviews:
Click a guest's name for their latest RHV episode!
Dr Cristin Dickerson, John Quinn, Dr Suhas Gondi, Ge Bai, Andrew Tsang, Stacey Richter (EP520), Dr Lisa Rosenbaum, Claire Brockbank
NOTE This file was generated by Descript
00:00:00 --> 00:00:02 Episode 526.
00:00:03 --> 00:00:08 Generic Compliance Ratios, Pass Through Contracts and Other Pharmacy Plumbing.
00:00:09 --> 00:00:12 Today I am speaking with Mark Cuban and Cora Opsahl.
00:00:21 --> 00:00:24 American Healthcare Entrepreneurs and Executives You Want to Know, Talking.
00:00:27 --> 00:00:28 Relentlessly Seeking Value.
00:00:32 --> 00:00:34 Hello, all you Relentless Tribe members.
00:00:34 --> 00:00:39 If you have listened to this show for any length of time, you know one of our
00:00:39 --> 00:00:45 favorite truths around here, which is where there's mystery, there's margin.
00:00:45 --> 00:00:48 But today we aren't just here to point out the mystery.
00:00:48 --> 00:00:52 We're here to look towards figuring out how to solve for it.
00:00:53 --> 00:00:57 If we wanna build a healthcare system that actually works for patients and
00:00:57 --> 00:01:04 plan sponsors, then we have to transition from being passive price takers to
00:01:04 --> 00:01:08 active, highly informed decision makers.
00:01:08 --> 00:01:12 And to do that, we really need to understand the actual operational
00:01:12 --> 00:01:16 mechanics of how, for example, the pharmacy supply chain is put together.
00:01:17 --> 00:01:22 My guests today are two absolute titans who are leading this charge from
00:01:22 --> 00:01:26 different angles, and having them sit down together is an absolute masterclass
00:01:26 --> 00:01:28 in how to dismantle the complexity.
00:01:29 --> 00:01:30 First, we have Cora Opsahl.
00:01:30 --> 00:01:36 Cora is a brilliant, deeply sophisticated expert in how to be a jumbo plan
00:01:36 --> 00:01:41 sponsor, and she's legendary in our community for actually reading the
00:01:41 --> 00:01:45 fine print, asking the tough questions in, for example, RFPs and negotiating
00:01:45 --> 00:01:48 contracts that protect members dollars.
00:01:48 --> 00:01:52 And then sitting across from her, we have Mark Cuban, the co-founder of
00:01:52 --> 00:01:54 Mark Cuban Cost Plus Drug company.
00:01:54 --> 00:01:58 Mark did not just look at the high cost of generic drugs and complain,
00:01:58 --> 00:02:02 he rolled up his sleeves and built a transparent alternative that proves
00:02:02 --> 00:02:04 medicine does not have to be a black box.
00:02:05 --> 00:02:08 What happens when you bring a sophisticated purchaser
00:02:08 --> 00:02:10 and a disruptor together?
00:02:10 --> 00:02:17 Well, you have a wild conversation with lots of tangents, and the show today being
00:02:17 --> 00:02:24 a tangent from the original show with Cora and Mark, which aired last fall.
00:02:24 --> 00:02:30 It is actually a really, I'm gonna say empowering, 301-401 level conversation.
00:02:31 --> 00:02:34 So today, Cora and Mark are gonna help us trace the drug dollar.
00:02:34 --> 00:02:38 We walk through the actual operational friction points, like the old generic
00:02:38 --> 00:02:44 compliance ratio that forces, for example, independent pharmacies to buy
00:02:44 --> 00:02:47 high from a consolidated wholesaler.
00:02:47 --> 00:02:52 We also dig into the discount theater, as Benjamin Jolley talked about at
00:02:52 --> 00:02:56 great length in the episode with him from a couple of years ago.
00:02:56 --> 00:03:00 We'll put the link in the show notes, but there's a lot of discount theater with,
00:03:00 --> 00:03:05 for example, the old classic Imatinib example, which is a generic drug, a
00:03:05 --> 00:03:12 generic specialty in our quotes, drug that cash pay pharmacies can sell for like $25.
00:03:13 --> 00:03:19 $25. But which can end up costing an employer thousands of dollars
00:03:19 --> 00:03:23 through a traditional PBM all while being touted as a massive discount,
00:03:23 --> 00:03:25 off an inflated reference price.
00:03:25 --> 00:03:28 There's a reason why AWP is called Ain't What's Paid.
00:03:29 --> 00:03:33 There's a reason why WAC has the reputation that it has.
00:03:34 --> 00:03:40 Do go back and listen to the episode with Luke Slindee for 45 minutes on this
00:03:41 --> 00:03:42 topic, which is actually really important.
00:03:43 --> 00:03:48 To help you take action on your next RFP, Cora and Mark, break down some of the
00:03:48 --> 00:03:52 mechanics of pass through PBM contracts.
00:03:52 --> 00:03:55 I think it's one thing to know the facts and it's another thing to
00:03:55 --> 00:03:57 realize what those facts add up to.
00:03:58 --> 00:04:02 So we talk about the realities of pass through PBM contracts.
00:04:02 --> 00:04:06 And much like Chris Crawford in the episode with him again, link in the show
00:04:06 --> 00:04:11 notes has warned us pass through PBM may pay the pharmacy using one secret
00:04:11 --> 00:04:15 algorithm while charging the plan, using a completely different formula.
00:04:15 --> 00:04:19 I am reminded of what Dr. Stan Schwartz from Zero Health
00:04:19 --> 00:04:22 said on the episode with him.
00:04:22 --> 00:04:26 He said, so much of what we call expense in medicine is simply pricing failure.
00:04:26 --> 00:04:28 And this is probably another example of that.
00:04:28 --> 00:04:33 And probably, I'm gonna say most of this conversation with Cora and Mark
00:04:33 --> 00:04:38 that follows is about knowing enough about that pricing failure to start
00:04:38 --> 00:04:39 to figure out how to solve for it.
00:04:39 --> 00:04:44 A plan might want to consider walking through this with their broker, or if
00:04:44 --> 00:04:48 you're a broker, consider walking through this with your plan or PBM or consultant
00:04:48 --> 00:04:50 or tech partner in a policy meeting.
00:04:51 --> 00:04:55 It sort of defines what transparency means to a certain extent relative to
00:04:55 --> 00:05:00 contract terms, which enables you to demand it and protects plan assets,
00:05:00 --> 00:05:02 members, patients, constituents.
00:05:02 --> 00:05:02 Yeah.
00:05:02 --> 00:05:05 We have a lot of decision makers and change makers across many lines
00:05:05 --> 00:05:06 of work who listen to the show.
00:05:07 --> 00:05:08 I'm Stacey Richter.
00:05:08 --> 00:05:10 This is Relentless Health Value.
00:05:10 --> 00:05:14 This podcast's founding sponsor is Aventria Health Group.
00:05:15 --> 00:05:19 Also, I would like to thank our Series Underwriter in 2026, Payerset, which
00:05:19 --> 00:05:21 is a leader in price transparency.
00:05:21 --> 00:05:24 Go over to their website and check out what they are up to over there.
00:05:24 --> 00:05:28 I also really would like to thank Patient Rights Advocate, which is a
00:05:28 --> 00:05:33 nonprofit advocating for the rights of patients and also transparency.
00:05:33 --> 00:05:35 They have a bunch of free resources also on their website.
00:05:35 --> 00:05:39 Check out what they're doing, and I would like to thank all of these sponsors so
00:05:39 --> 00:05:44 very much for providing the financial support to keep this show on the air.
00:05:45 --> 00:05:50 With all of that, here is my conversation with Mark Cuban and with Cora Opsahl.
00:05:50 --> 00:05:53 It is an outtake from our earlier conversation and go back and listen
00:05:53 --> 00:05:54 to the whole thing if you like.
00:05:54 --> 00:05:57 It aired last fall.
00:05:57 --> 00:05:59 All these links are in the show notes.
00:06:00 --> 00:06:00 Yeah.
00:06:00 --> 00:06:03 And, and, and the pharmacy side, it gets even worse, right?
00:06:03 --> 00:06:08 There's three major drug wholesalers in the country, and the pharmacies
00:06:09 --> 00:06:13 pick one of them typically to be their primary supplier.
00:06:13 --> 00:06:16 What happens with the pharmacies, particularly the small pharmacies,
00:06:16 --> 00:06:21 they have to buy at wholesale acquisition costs minus a few points.
00:06:21 --> 00:06:25 And then when a patient comes in, they run the claim through the
00:06:25 --> 00:06:27 TPA for that insurance company.
00:06:27 --> 00:06:32 But the insurance company via their PBM, doesn't reimburse them for the full
00:06:32 --> 00:06:34 amount that they paid to the wholesaler.
00:06:34 --> 00:06:40 It is so, if you know Department of Justice, antitrust ripe.
00:06:40 --> 00:06:44 But nobody, like literally, I didn't understand how all these pieces worked
00:06:44 --> 00:06:49 together with the wholesalers until they sat down with a wholesaler and
00:06:49 --> 00:06:53 had a secondary wholesaler and had them explain, but wait, there's more too.
00:06:53 --> 00:06:54 Right?
00:06:54 --> 00:06:59 So let's just say you're a pharmacy and you have a patient that uses
00:06:59 --> 00:07:04 Imatinib, which has, it varies what the wholesale acquisition cost is,
00:07:04 --> 00:07:08 but let's just say your primary wholesaler sells it to you for $200.
00:07:09 --> 00:07:14 You realize that Cost Plus Drugs sells it for $25 and you want to buy
00:07:14 --> 00:07:15 it through Cost Plus Marketplace.
00:07:17 --> 00:07:25 Benjamin Jolley in episode 422 references the classic Imatinib example directly.
00:07:25 --> 00:07:31 The figures that he discusses are that branded Gleevec costs $27 a
00:07:31 --> 00:07:32 month, or that's what it used to cost.
00:07:33 --> 00:07:39 Generic Imatinib, which is the generic for Gleevec through a traditional PBM
00:07:39 --> 00:07:44 slash insurance channel, at least at the time when I interviewed Benjamin
00:07:44 --> 00:07:50 Jolley, was $9 a month, which the PBMs would tout as massive savings.
00:07:50 --> 00:07:56 Like, look, you're saving $18 a month off the original branded Gleevec.
00:07:57 --> 00:08:05 Now Mark Cuban's Cost Plus Drugs cash price is $25 a month, not $9 a month.
00:08:05 --> 00:08:07 $25, not $2.
00:08:08 --> 00:08:11 $25 a month compared to $9.
00:08:11 --> 00:08:15 So what was happening was PBMs were charging employers and plan
00:08:15 --> 00:08:19 sponsors literally $9 a month for a generic drug that a cash pay
00:08:19 --> 00:08:21 pharmacy was selling for 25 bucks.
00:08:22 --> 00:08:26 And they had the audacity obviously, to frame the $9 as a deal because it was
00:08:26 --> 00:08:29 discounted off the $27 branded price.
00:08:30 --> 00:08:36 This is exactly why situations like this, probably 150 guests on Relentless
00:08:36 --> 00:08:40 Health Value have hammered the point that discounts are meaningless
00:08:40 --> 00:08:41 without knowing the absolute price.
00:08:41 --> 00:08:47 A discount, off inflated made up reference price is just theater and
00:08:47 --> 00:08:55 WAC, wholesale acquisition costs an AWP, average wholesale price are theater.
00:08:55 --> 00:09:00 They are prices that are set by either manufacturers or generic manufacturers.
00:09:00 --> 00:09:02 I mean, there's a reason why AWP is called Ain't What's Paid.
00:09:02 --> 00:09:07 Anyone who trots in and starts touting their discounts as opposed to talking
00:09:07 --> 00:09:11 about what the absolute price is, discounts are just a way that somebody
00:09:11 --> 00:09:13 in the middle is making money.
00:09:13 --> 00:09:16 Again, going back to our classic Where There's Mystery, There's
00:09:16 --> 00:09:21 Margin, and if you're wondering why pharmacies often don't just buy
00:09:21 --> 00:09:26 from Cost Plus or directly from a manufacturer, et cetera, themselves.
00:09:26 --> 00:09:27 Here's Mark explaining why.
00:09:29 --> 00:09:34 Well, there's this thing called Generic Compliance Ratio that the wholesalers
00:09:34 --> 00:09:39 create for pharmacies, and they say to them, typically, you have to buy at least
00:09:39 --> 00:09:44 92% of your generics from us because we're your primary wholesaler, and if you
00:09:44 --> 00:09:49 don't, we're gonna hit you with all these chargebacks and fees which is going to
00:09:49 --> 00:09:51 eliminate what little margin you have.
00:09:52 --> 00:09:56 And so now, because that pharmacy is having to pay a premium from their
00:09:56 --> 00:10:01 primary wholesaler because they're afraid of not making their generic compliance
00:10:01 --> 00:10:06 ratio, when you have a high deductible plan and you walk in the door, if it's a
00:10:06 --> 00:10:11 brand, well, the whole pricing is based off of the WAC, that's effectively what
00:10:11 --> 00:10:15 the patient pays when they walk in if they have a thousand dollars deductible.
00:10:15 --> 00:10:18 If they're getting Imatinib and they don't know about Cost Plus Drugs and our
00:10:18 --> 00:10:24 price, they're going to the local pharmacy who paid a premium to the wholesaler so
00:10:24 --> 00:10:27 they don't get hit with chargebacks and meet their Generic Compliance Ratio.
00:10:27 --> 00:10:33 And so now we've seen, Imatinib patients pay thousands of dollars because it's
00:10:33 --> 00:10:37 less than their deductible and they had no choice but to pay it before
00:10:37 --> 00:10:39 they got into their insurance part.
00:10:40 --> 00:10:43 But then it still gets worse because they have this thing called
00:10:43 --> 00:10:47 specialty tiering that apply to just specialty generics as well.
00:10:47 --> 00:10:49 And we're talking just about pills here.
00:10:49 --> 00:10:52 There's nothing special about them, but because it's a specialty
00:10:52 --> 00:10:57 tiering, they have to do co-insurance based off of the WAC price.
00:10:57 --> 00:11:03 So they're paying 25% of this inflated price that the wholesalers initiated
00:11:03 --> 00:11:08 in collusion with the PBMs that are owned or owned the insurance companies,
00:11:09 --> 00:11:12 so that the insurance companies can then game the whole system against
00:11:12 --> 00:11:16 their Medical Loss Ratio, against the reports they're sending to states
00:11:16 --> 00:11:18 against what they're doing for Medicare.
00:11:18 --> 00:11:19 And so who pays?
00:11:20 --> 00:11:21 Who gets hit the worst?
00:11:21 --> 00:11:22 The patients.
00:11:23 --> 00:11:27 And so when we talk about high deductibles, it's not even as much can
00:11:27 --> 00:11:31 they afford the amount of money in a country where 37% of people have $400
00:11:31 --> 00:11:38 or less, it's just also that the entire system is gerry rigged gerrymandered
00:11:38 --> 00:11:40 to use a common word these days, right?
00:11:40 --> 00:11:46 So that the PBMs that own or owned by the insurance companies can set the retail
00:11:46 --> 00:11:54 price known as WAC so that the patients have to pay even more and have less chance
00:11:54 --> 00:11:56 of being able to afford their deductible.
00:11:57 --> 00:12:01 So if you think about this like a pharmacy, there certainly is the
00:12:01 --> 00:12:07 potential there for a pharmacy to fill a script and lose money.
00:12:07 --> 00:12:11 The pharmacy who's trying to figure out how to not blow
00:12:11 --> 00:12:13 their generic compliance ratio.
00:12:13 --> 00:12:16 So they're gonna continue buying from the wholesaler.
00:12:16 --> 00:12:20 They're sort of locked into buying from the wholesaler, while at the same time
00:12:20 --> 00:12:25 you have patients, with a GoodRx coupon, trying to minimize their out of pocket.
00:12:25 --> 00:12:27 And now we have the potential for issues.
00:12:28 --> 00:12:31 Now, let's think about the demand side being the employers
00:12:31 --> 00:12:32 who are going out to RFP.
00:12:33 --> 00:12:34 They go out for request for proposal.
00:12:35 --> 00:12:37 Again, goes back to hiring a consultant.
00:12:37 --> 00:12:39 Because the math is hard.
00:12:39 --> 00:12:40 It shouldn't be.
00:12:40 --> 00:12:42 And I think Mark and I have had this conversation.
00:12:42 --> 00:12:43 The math should not be as hard as it is.
00:12:44 --> 00:12:47 But now I'm going to get a bid, and I'm gonna get a bid that gives
00:12:47 --> 00:12:51 you the AWP discount, which is your average wholesale price, which by the
00:12:51 --> 00:12:52 way, doesn't match your WAC price.
00:12:53 --> 00:12:56 So they're buying over here and they're actually, by the way, I've learned,
00:12:56 --> 00:13:00 and I think, Mark, you probably know this too, I've learned that
00:13:00 --> 00:13:03 the PBMs are not reimbursing at AWP.
00:13:03 --> 00:13:05 They're not reimbursing at AWP.
00:13:05 --> 00:13:07 They actually, their contracts are probably reimbursing at
00:13:07 --> 00:13:09 an acquisition plus model.
00:13:09 --> 00:13:14 Meanwhile, they're charging the employers at an average wholesale price discount.
00:13:14 --> 00:13:20 So they're reimbursing the pharmacies who want at WAC minus some amount they're
00:13:20 --> 00:13:23 reimbursing underneath that amount.
00:13:23 --> 00:13:26 For brands, for generics, it varies, right?
00:13:26 --> 00:13:31 But for brands, they'll underpay pharmacies by $130 on a GLP-1,
00:13:32 --> 00:13:35 and pharmacies just say, I'm not taking those scripts anymore.
00:13:35 --> 00:13:36 But so you're right.
00:13:36 --> 00:13:37 So they're doing that.
00:13:37 --> 00:13:40 Meanwhile they're over here charging the employer and functionally the
00:13:40 --> 00:13:43 patient at a different price mechanism.
00:13:43 --> 00:13:46 So then this is how you end up with your guarantees that are really
00:13:46 --> 00:13:52 just, you know, functionally a black box of math to protect the margins.
00:13:52 --> 00:13:53 Tell everybody what guarantees are and how they work.
00:13:54 --> 00:13:55 Well.
00:13:55 --> 00:13:57 I only have snarky answers first.
00:13:58 --> 00:14:01 We did have Chris Crawford on talking about this topic, but go for it, Cora.
00:14:01 --> 00:14:02 Yes.
00:14:02 --> 00:14:05 I mean, I think the, the thing is all guarantees do, it says you're
00:14:05 --> 00:14:07 gonna pay a little bit more, you're gonna pay a little bit less.
00:14:07 --> 00:14:09 We're gonna just put it all together at the end of the year.
00:14:09 --> 00:14:10 By therapeutic category.
00:14:10 --> 00:14:14 And so don't be fooled, by the way, folks out there, you're not actually paying,
00:14:14 --> 00:14:19 and I had this big discussion in my RFP for A PBM recently about this and
00:14:19 --> 00:14:25 I said, so you are guaranteeing me AWP minus, we'll make up a number minus 50.
00:14:25 --> 00:14:27 Because that way I can't get in trouble for anything that
00:14:27 --> 00:14:29 might look like my contract.
00:14:29 --> 00:14:31 But what are you reimbursing them?
00:14:31 --> 00:14:33 Well, we're reimbursing them our contract.
00:14:33 --> 00:14:35 Okay, so, but it's a pass through deal.
00:14:35 --> 00:14:37 So what are you actually reimbursing them?
00:14:38 --> 00:14:40 They're reimbursing them a dollar amount.
00:14:40 --> 00:14:43 That might be their acquisition cost plus a dispensing fee plus something
00:14:43 --> 00:14:45 else and equals whatever it is.
00:14:45 --> 00:14:49 Then they have to take it and put it into a computer, do some sort of
00:14:49 --> 00:14:53 fancy magical mumbo jumbo and put it out to have it be, oh, well that
00:14:53 --> 00:14:58 was AWP minus 49, but the contract for that drug is not AWP minus 50.
00:15:00 --> 00:15:04 How interesting is this and the point Cora is making, just to underline it.
00:15:04 --> 00:15:08 Is that if A PBM says that they are a pass through PBM, that
00:15:08 --> 00:15:10 might sound like it's easy math.
00:15:10 --> 00:15:13 Just pay the pharmacy and then charge the employer the same amount.
00:15:13 --> 00:15:14 But it doesn't work that way.
00:15:15 --> 00:15:18 The PBM is paying the pharmacy using one formula and then they're
00:15:18 --> 00:15:21 charging the employer plan sponsor using a whole different formula.
00:15:23 --> 00:15:27 That contract is acquisition cost plus some sort of fancy schmancy algorithm.
00:15:28 --> 00:15:31 And so what we're doing is, again, introducing additional complexity
00:15:31 --> 00:15:37 and asking an employer as senior manager in HR to figure this out.
00:15:37 --> 00:15:43 When Mark, you have become a PBM expert, I'm arguably a PBM expert and
00:15:43 --> 00:15:45 I can't even clearly articulate this.
00:15:46 --> 00:15:50 And yeah, so you have the PBM paying the pharmacy using one formula, charging
00:15:50 --> 00:15:52 the employer using another formula.
00:15:52 --> 00:15:57 And meanwhile, the pharmacy is buying the drug through a completely other channel
00:15:57 --> 00:16:00 that is totally another math problem.
00:16:01 --> 00:16:05 Back to Mark here, talking about employers trying to figure out a PBM contract.
00:16:06 --> 00:16:09 Because the IT does, the math doesn't math, right?
00:16:09 --> 00:16:13 They go to a consultant who they have a relationship with and the consultant
00:16:13 --> 00:16:17 says, well, this is better than, this is only up 4% or 6% from last year.
00:16:18 --> 00:16:18 So generally
00:16:19 --> 00:16:19 Only.
00:16:19 --> 00:16:20 Only.
00:16:20 --> 00:16:20 Right?
00:16:20 --> 00:16:21 And it's just.
00:16:21 --> 00:16:24 And you know, and they have a relationship and it's not even
00:16:24 --> 00:16:28 that, like there are times when the big PBMs will pay the consultants
00:16:29 --> 00:16:32 for every RFP that they complete.
00:16:32 --> 00:16:34 And God forbid you try to audit.
00:16:34 --> 00:16:37 I mean, Cora, what happens if you try to audit your claims?
00:16:37 --> 00:16:42 You know, or just get the claims data for a lot of companies to be able to audit it.
00:16:42 --> 00:16:46 I've never heard of a company who did an audit and found out that their rebates
00:16:46 --> 00:16:52 or other, the math balanced out and they weren't ripped off by a good 30, 40%.
00:16:52 --> 00:16:56 I mean, I will say on the PBM side, every audit, whether it's a rebate
00:16:56 --> 00:16:59 audit or a pricing audit, somehow results in me getting more money.
00:17:00 --> 00:17:02 Every single time.
00:17:03 --> 00:17:08 If every single time results in, you know, checks written to me, that means
00:17:08 --> 00:17:11 they've been holding onto money that belongs to me in the first place.
00:17:11 --> 00:17:11 Oh, yeah.
00:17:11 --> 00:17:14 And on top of that, when you ask to audit, they'll say, okay,
00:17:14 --> 00:17:15 we'll have somebody do it for you.
00:17:15 --> 00:17:17 On a pre-approved list.
00:17:17 --> 00:17:17 Mind you.
00:17:17 --> 00:17:17 Yeah.
00:17:17 --> 00:17:18 Pre-approved list.
00:17:18 --> 00:17:20 Of, of drugs and claims, right?
00:17:21 --> 00:17:22 250 claims.
00:17:22 --> 00:17:28 The fact that the standard in a health contract for a jumbo client of my size is
00:17:28 --> 00:17:33 250 claims on a medical benefit for, to make it a statistically significant, and
00:17:33 --> 00:17:37 there's probably a one or two asterisks that say you cannot actually apply
00:17:37 --> 00:17:39 that to cross your book of business.
00:17:39 --> 00:17:41 You could only do a so far look back.
00:17:41 --> 00:17:42 And look.
00:17:42 --> 00:17:46 We're a sophisticated purchaser, and I've got a template contract
00:17:46 --> 00:17:48 out there that tells you that you should get more than that.
00:17:48 --> 00:17:51 But in the end, it's too much of healthcare comes down to a negotiation
00:17:52 --> 00:17:54 where I have to fight and negotiate.
00:17:55 --> 00:17:58 I have to sit across the table and negotiate with a PBM or an insurance
00:17:58 --> 00:18:03 carrier for the right to see my data, the right to understand what the
00:18:03 --> 00:18:05 allowed amount is, the right to rebates.
00:18:05 --> 00:18:08 Like let's not even, I mean, that's a whole different kettle of fish.
00:18:09 --> 00:18:13 But I should not have to fight to be able to see the data and then be able to
00:18:13 --> 00:18:17 validate that it's correct and the fact that I have to hire someone else 'cause
00:18:17 --> 00:18:19 they still don't want me to see it.
00:18:19 --> 00:18:23 The fact that you have to hire an auditor to do your auditing,
00:18:23 --> 00:18:27 that I can't do it myself because it would violate my contract.
00:18:27 --> 00:18:30 And what's even worse, the fact that, you know, you need to hire an audit
00:18:30 --> 00:18:32 means you shouldn't and can't trust them.
00:18:33 --> 00:18:34 That's the whole point.
00:18:34 --> 00:18:38 And if you want to get bigger rebates, the easiest way to get bigger rebates
00:18:38 --> 00:18:42 and better terms, just make part of the RFP require that Cost Plus Drugs
00:18:42 --> 00:18:46 as part of the network and they will immediately give you a better deal to
00:18:46 --> 00:18:48 try to exclude us from the network.
00:18:48 --> 00:18:49 I may have been there, Mark.
00:18:49 --> 00:18:50 I may have been there.
00:18:51 --> 00:18:55 So I just want to jump in here and say, we started out talking
00:18:55 --> 00:18:59 about, and I think we have ended in a place which validates this.
00:18:59 --> 00:19:06 That if you start getting multiple vendors in the middle to solve complexity, you
00:19:06 --> 00:19:11 wind up adding additional complexity because what you wind up actually
00:19:11 --> 00:19:14 doing is putting more parties in between the buyers and the sellers.
00:19:14 --> 00:19:16 You wind up getting all these.
00:19:16 --> 00:19:19 Dr. Stan Schwartz was on the pod and one of the things that he said, which
00:19:19 --> 00:19:23 I think is very apropos here, he said, so much of what we call expense in
00:19:23 --> 00:19:25 medicine is simply pricing failure.
00:19:26 --> 00:19:28 And that is what we're talking about.
00:19:28 --> 00:19:32 And when we say pricing failure, you just named 17 different pricing
00:19:33 --> 00:19:37 mechanisms and now we basically have to have an exchange rate or something
00:19:37 --> 00:19:39 to try to figure out, it's like a Rosetta Stone to figure out this price.
00:19:39 --> 00:19:40 It's that right?
00:19:40 --> 00:19:41 It doesn't have to be that way.
00:19:41 --> 00:19:43 You don't have to work with the big PBMs.
00:19:44 --> 00:19:46 Mark Cuban and Core Opsahl, I'll thank you so much for being on
00:19:46 --> 00:19:47 Relentless Health Value today.
00:19:48 --> 00:19:48 Thanks so much, Stacey.
00:19:48 --> 00:19:49 Great as always.
00:19:49 --> 00:19:50 Thank you Stacey.
00:19:50 --> 00:19:51 Thanks Cora.
00:19:51 --> 00:19:52 Thanks, Mark.
00:19:52 --> 00:19:55 Hi, this is Mark Cuban of costplusdrugs.com, and not only
00:19:55 --> 00:19:59 do I listen to every episode of Relentless Healthcare Value, but it
00:19:59 --> 00:20:04 is the most incredible, stupendous, amazing healthcare podcast in the
00:20:04 --> 00:20:07 history of all healthcare podcasts.
00:20:07 --> 00:20:09 So make sure to listen every single time.