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Pharmacy Benefits

If you are like most employers, your health plan is getting crushed by high-cost prescription drugs. If it’s not yet, I assure you the storm is coming. One thing I can tell you for certain is that even if it’s not impacting your plan now, your employees are feeling it. The copays for these drugs are the highest on your plan and if you offer an HDHP, your employees may be avoiding getting a prescription filled because they can’t afford the deductible.

You might be asking yourself, is there anything that can be done about it? The answer is YES! Included in this newsletter is a webinar that explains how these drugs are impacting your plan. By watching this webinar, you will learn how to control your high-cost prescription drugs and do it in a way that rewards your employees.

Well, hey wanted to thank you everybody for joining.Today's webinar. You sawme last time. I'm your general contractor andhost Mike Krupa and I also lead ouranalytics here at Connor and Gallagher. Andtoday we're allreally last episode as thisis part of an overall series.We we did an intro to remodel Healthconstructed the framework of remodelhealth and the remaining episodes arereally going to focus on some of thesubcontractors who all own various different partsof a remodeled Health Plan.And so along with me today is NathanGebhart. I'm excited founder oftrue scripts. They are a pharmacy benefit manager inthis space who is doing something a little bit different andI'm excited to talk about Pharmacytoday becausewhen you're carving out your Pharmacy it isit's a pretty invisible type ofchange to the members. Although it canhave one of the biggest impacts on theplan overall.And you know by the end of the day todayor by the end of this webinar whatI'm what I'm really hoping that you have a better idea onis is how prescription drug costs couldbe impacting your plan today and we wantto leave you with understanding some of the ways.That your members can actually save moneythroughout this process. And so, youknow before we dig into the world of Pharmacy, youknow, let's talk about whyyou decided to join the webinar today and justdo a very very quick refresh of remodel health.Various audience today, you might be an HR CEOCFO, but you'reyou're probably looking at your health plan today and it lookslike the one on the left for those who attended lasttime, you know, that that's my bathroom a couple of years ago and things werefalling apart. There was a lot of leaks wedidn't have a lot of functional space me and my wifeand as I started to kind of take this thingapart, I started to understand why I washaving some of those problems and it really helpedme to understand how tomake this better. And andthat's that's what we did. The picture on the right is the isthe final product and you know, we bothlove it. I got a happy wife.andYou know as as we talk about this remodel Healthprocess this this series I want to I wantto stress a few things here again, andI'll do this every time but first as you got to understandwhy things are not workingthe way that you want. That's when the solutions thatwe present will start to actually makesense. And you know, there's a ton of remodelingyou can do on your health plan. You got to loveit at the end of the day you have to feel good about it, and youdon't need to remodel your health plan allat once.Some of you are going to want to do that. Some of you aregoing to want to take it one step at a time. Today is isa really good step to take if ifyou're if you're diving into this.And and this is really is probably the the lowesthanging fruit on the plan.So let's let's talk aboutThere's really three three key things and then onereally big thing that we're gonna stress first is control andfor the employers on the phone. That means you need tobe self-funded. That's the mechanism the vehicle that'sgoing to allow you to do these types of things.But the second and why we're why we'reinterviewing subcontractors is you have to align yourhealth plan with the with the right Partners. Alot of that is is how that they'repaid. You want to make sure that they have the best your bestinterests in mind.And then finally for for yoursake for your employees sake you got tofind ways to reward members and the best way todo that is making things free and there's alot of opportunity to do that in this inthis type of environment.But none of this none of this workswithout education and that's the whole part.Of this series. That's why we're focusing on education. Ifyou miss this part, the the successrate just just goes down and you know,you you have to get educated as an employer. You got to getleadership buying across the board and then yougot to work your way down to the members who are actually goingto be utilizing this plan.And at the end of the day, you should expecta happier employees free usuallygets people happy their costsare going to be lower your costs as an organizationare going to be lower and at the end of the day ifyou start remodeling a piece or altogether, you'regonna you're gonna start to get this confidence that you didn'thave before that you that you're doing the right things.And so with that really, you know,I wanted to to introduce Nathan hereNathan we sat down.Probably a couple months ago and it two hoursfelt like five minutes. It was it wasawesome. And I think what I appreciated morethan anything was was just getting getting toknow you before I got to know, you know,the ins and outset a true scripts and I'd liketo afford the audience that that same typeof thing. And so before we get into you know,the nitty-gritty of the pharmacy world,I think would you mind you know quick introand telling us a little bit about like what makes you tick. Yeah.Sure Mike appreciate that and you're rightthat the coffee we had and in Chicago.Yeah, it was too hours and I thinkit was one of the the smallest expense items that Ihad that month. So it was it's weird how that works thatjust it's the time spent with someone and weprobably spent 90% of the time just to get to know each otherbecause I really is the core of what makes me tick andthat's working with folks that have similar.similar morals similar integritybecause if you don't sound surround yourself with those type offolks, then you're going to be like those you surround yourselfwith so, you know, thank you for that timethat you spent with me. So just a brief background Ipharmacist I went to PurdueUniversity graduated in 98. I hadthe the privilege of becoming reallyinvolved in the pharmacy professionalism incollege and it was either happened stanceor just coincidence. But whatever it wasit was something that definitely changed that your trajectory inmy life and I was able to become a national officerfor the Academy of students at Pharmacy, which therewas only five in the entire nationof 87,000 Pharmacy students. So it wassomething that was it was very privileged to have andit really set the motion of my career on onyou know high speed. So the amountof folks I was able to interact with and just the the accessI had wasRemarkable. I was loud that allowed meto work at Walgreens headquarters for a summer. So I saw the end of workingsof how I changed Pharmacy works and then that reallyled me to my true passion, which was Independent Pharmacy. I cameback home to my hometown to do myinternships, which is your last year of pharmacy school.You have to do your rotations and I justfell in love with a local Hometown Pharmacy. So Iwas the only Walgreens intern theyselected one a year. I was the onlyone in history to turn down their job offer. And andI remember they said they always callme Rick and they said Rick when you're first check balanceis give us a call.And I still have their phone number, but I've not made that call yet.So so I came home fell in love with the Independent Pharmacy. Theysaid look you come on board with us. We're gonnabuild another store so fast forward we wereable to grow that chain for two stores to thank yourbackground 12 when I left and then I was ableto get extremely involved in the state Pharmacy associations.So I served as president of the community pharmacies Alliancethe community pharmacies inIndiana. I serve as president of that for four yearsand then I also simultaneously service president of theIndiana pharmacist Alliance.I had the privilege of being the only one in history toserve president both at the same time. So very involvedwith the pharmacy profession loved thepharmacy profession. Just love serving others. Iwas a first-generation college kid and Igrew up in the wrong side of town grew up on welfarefour brothers and sisters.Single parent family, you know, I was thekid that just you know, this wasn't gonna makeit so to speak the folks that we kind of ride off toprematurely today, but I knew there was somethinggreater in my life. So I went to Purdueand and then fast forward when weare pharmacist.We really we set in the position where we are The Messengersto all of our patients.Will tell on them what their insurance would cover and what their insurance wouldnot cover. We know the cost. We know the clinicaleffectiveness of these drugs and we saw firsthandback in the early 2000s whenpbms started buying pharmacies thatthe writing was onthe wall.The inherent conflict of interest in how fastforward today. Obviously we see the damages thatpbms can cause to membersby having misaligned incentive.So what makes me tick is one isjust being a servant leader.I conducting myself as if God's alwayswatching and I I fail daily with frustrationand impatience and being unkind orwhatever. So the definitely a farfrom being perfect, but that allows me to try harder and weexpect our team to try harder and wewant to begivers and not takers and we truly want tohelp our members.Get the best medication at the lowest possible costand that's ultimately why we get up everyday.Now that's that's good background. It sounds like Pharmacy isis pretty ingrained inin your bloodstream overall.How did you ultimately how didyou ultimately find found that the company truescripts? What was the I feellike I feel like in this world, you know, I'm on I'mon the consultant side all you know,I'm a consultant side. I feellike everybody that is doing something differenthas this kind of aha moment like all right.This is what kind of pushed me over the edge. I have I havemy own that's like hey, okay that happened. I Igot to start going down a different path interms of these Solutions. What was what was your aha moment.Wow, I got to do something different. Yes. Ireally started back in the early 2000s when I seeyes care more and care more about CVS Pharmacy.We had Mark midco at thetime which was a PBM and then theyown the mail order pharmacy, and then they were both owned by a drugand you that sure.And we started assault seeing this consolidation where PBM issupposed to be a fiduciary agent in my opinionacting on the best behalf of the client. It'sbecause ultimately that's who we work for is the client and wewant to make sure that we're providing the best access tomedication the lowest possible cost. So we wehave two big functions and one is to negotiatethepharmacy discounts because we obviously do notwant to pay retail price because if you remove thePBM from the equation your Pharmacy cost for an increase 40%I know one can afford retail costs. So thepeople that might my pharmacist friends out there saying weneed to abolish pbms that there is beinga little a little hyperbolic because we cannotafford the retail prices. So what did it forme?Was really in the early 2000s when we were having the anthrax scare.So those of us are over 40, maybe rememberthat but a number of folks were getting awhite powder mailed to them.And Cipro was the drug of choice Ciprowas a pretty expensive antibiotic, but itwas prophylactically used for the anthrax wasCipro engineering can it was a$4 drug at Walmart and then lo and behold like a month latera new drug came out called Pro Quinn.Well Pro Quinn was just a specially coded Cipro tablet.That now had no generic because of itscoding.Well, the coding really had no therapeutic value tothe drug. So now we had all these insurance companiesrequiring Pro Quinn.And allowing it to go through on their.Plan as a formulary drug whenever wehad a four dollar ciprofloxacin sittingright there. That was the exact same chemical entityas this $500 program.And we knew then that obviously manufacturers werepaying pdms a pretty high fee forproduct placement and no different thanyour grocery stores. If you get an eye level shelf or a floorlevel shelf. There's a different price you pay thatgrocery store because of visibility one of PBMworld. If your drug is not covered morethan likely you're not going to get it and ifwe all think about just in our own practical lives how manytimes have we gone to the pharmacy the drugs not coveredthe pharmacy tells us it's 500 dollars andwe just automatically with that our debit card.I mean that almost net when my 20 years and practicing Pharmacy.It happens zero time. It's always whatis can you call the doctor and switch it as long asit's the same who cares so the pbms had atremendous amount of control. So that's when we knew we had to dosomething because when they created the CVS Caremark merger, theythey had a maintenance Choice program.And the maintenance Choice program was you canget your chronic medication go to any pharmacy twice.And that was your that was the choice and then after thatyou had to use CBS.It was automatic. So we knew the writingis on the wall or these pvms who aresupposed to be protecting the client are now steering businessto their pharmacies.And so in 2006 my neighbor.Said hey, look I know you're wanting to start a PBM. I'm extremelyupset with our PBM which is one of those big threeand he brought me in his paper invoices becausethe PBM bills the client for thedrug costs the client pays the PBM and that'sall the client knows. Well, he brought me in isactually invoices. This is back in 2005.I was able to pull my checks from that PBM.And match up those exact claims becausehe had no idea what the PBM wasturning around and paying me.And I had no idea what the PBM wasbilling the client because we work on two differentsilence.So I reviewed thousands of medications there are medicationswhere he was build 800 dollars morethan I was paid.And it was wasn't on every claim. But ifyou averaged it based off all the claims, I reviewed itwas around $15 a claim that they wereovercharging we call that Max spread today,but in that time Max spread that terminology neverexisted.So that's when we knew we're gonna start a PBM.But we knew so little about the PBM industry.I thought it stood for prescription benefit managers. It'sbuilt to this day. That's aterminology in our mission statement because I want ourteam to remain humble now that we process hundreds ofmillions of dollars of drug costs.I want our team to remain humble that wedidn't know what PBM stood for when we started but weknew why we were doing it. So that was our first client September 15th2007 and we brought him onboard mid month on a Saturday. It made since deaths at the time and thenWe're Off to the Races.You know, that's awesome. I I think it's Ithink it's a pretty good segue to into something.I want to dig into which iswhich is these ways that they're makingmoney all I'm gonna I'm gonna flip here is just kindof something in the background butYou know most employers I'd saystill like the vast majority of employers, you know,if they're with Blue Cross Blue Cross owns, youknow, the PBM United Healthcare owns a PBMCBS actually owns Aetna, whichis crazy in and of itself, but they're all youknow, you got this this vertical integration and youhave employers that are paying this per employee permonth admin fee and they assumethat that's how the carrier is ismaking their money and that per employee per month.Admin fee is really, you know, a lotof that is Medical but you just assume all in that that's coverand everything. I think what would beinteresting to to hear your perspective onis like where where are other some ofthe other ways that that they're making money kind of likeyou said there in the background on spread pricing, butI mean, you know, I want to arm the audience too withsome things that they can go back andStart to ask their PBM or start to ask their broker toask their pbms. How are they making money?Now good great question and everything that I mentioned today atrue scripts could do these exact same things. They're not it'snot illegal for us to do. So, I always like to tell our partners.Look here's what we can do and I need you tokeep us honest. And here's the tools. I'm going to give you to keepus on because we could do this exact same thing. So butfrom a 30,000 foot perspective, there's onlythree sources of revenue that the PBMcan generate and that's the client and Drugmanufacturers are pharmacys. So thoseare the three sources. So if the client does notknow what they are paying their PBM fortheir services, they need to find out because it'son this the CEOs and the SeaSuite how many how many vendors haveyou ever hired? If someone came to mow your your lawnat your office and they saidit's free.Most of us would probably not allow them to mowour lawn because what's the catch?Or you know, there's a there's still a cost right? They're stillpaying for the gas. They're still they're still labor. They're stilldoing something unless it's a charity thing or but you know,or you're you're electricity or just your your cleaning youroffices all the various services that wepay for who which one of those wouldwould we actually allow the curve forfree but in the PBM world, there's this myth thatwell, they're generating their money from the adminfee or something like that. And that's traditionally not where theygenerate their money from that advent goes to the medical sidegoes to the carrier. So they're not charging you a disclosedPBM rxp, because the medical side and thecarrier the carrier in the pharmacy.They're two different silos.The carriers in the anthems of the world and Atlas theymaintain your medical Network.We maintain your Pharmacy Network. So it'stoo so totally different companies and then wetransfer data and this carbon carve outis just a myth mythical terminology to tryto make people think that there's some sort of abrasionthat happens when you use a different PBA.Companies that have a data feed. Well, we all use thedata the same data format.So whether you use Caremark or true scripts or one on the other 50 pbmsout there as long as we know the data format thatdata comes across just like it does with care Mark. There isno additional.Cost. So that's a myth trying to prevent financiallyforce you to stay put so oftentimes whatwill happen the majority of the money comes from the drug manufacturers.because again if the drug isitso that's usually a big source ofRevenue and then also pharmacies.I'm most pvms own theirown Pharmacy just to give you a little bit of contacts. I'm still alicensed pharmacist. I've created a number of pharmacies in mycareer.It's a fairly Standard Process. I could create a specialty pharmacyand only service true scriptsmembers.Of on our specialty drugs and provide the same coststo our client where it's net neutral to the client. IfI did that I could generate another five million dollarsin net income just by processing those those prescriptionsand house. Well, that justmakes me look that much more like my competitors.So we took a vow that we will never ownany pharmacies and our solar source of Revenue will be from theclient because ultimately that's who you work for us. Whoever ispaying you.So on the drug manufacturer side, we're going through it right nowon these rebates. We're in anRFP on our everydays and now there's a new termthat's that popped up on one of the rfps caughtmanufacture administration feefor MAF.And that's not a rebate.So on it's about 10% of the overall rebatevalue that they said. Okay where youwant the math to go if we're successful I'm winningyour business. I say what's got to goback to the client because that's just a rebate.But now there's these offshore gpos that these big threepbms created and that they don't have to abide by statelaw.Is so it's they're just splintering the rebates off.So the client thinks they're getting the rebate, butultimately they're only getting infraction.Sothe the largest PBM out there generated 180 billiondollars in 2020.and then incomeand in the clients have no idea how much they wereactually charged with the disclosed adminant thing.yeah, and I you know the problem with that rightis thatI think what most don't realize even from anindividual perspective maybe from an employer perspective toois that all works its wayinto the actual cost of a prescriptiondrug. These are all the things when they'remaking money that meansEverybody who's getting a drug is actually ispaying more for that. Right and it hasa significant impact.You're exactly right. It's a Net Zero gamewe're playing. So therefore if the PBM is generating another10 or 15 dollars per claim or if they'recarrier is getting paid eight bucks a claim from the PBM tobe a preferred partner or whatever crazy things we'veseen in the marketplace. There's only two people whofund the system and that's the client and themember.No other party. I mean I don't put any moneyinto the system. You don't put any money into thesystem Anthem does it no other consultants and analytics nobodyputs money into the system.So any thing any dollar that any vendormakes comes from the client and the member?And regardless of how high of discounts you think you're getting.What's your net plan paid for memberper month cost? And is itincreasing or decreasing?And if you're with one of the vertically integrated companies item wasguarantee. You're increasing year over year and yourdiscounts are increasing year over year. Sothey should be indirectly proportional higherthe discount the lower yourcost.But it's a higher discount off of a higher price drug.And that's where the manufacturer and the PBM gerrymander thesystem because of the PBM wants 10% morerebate. The manufacturer just increases the cost 12percent. They give 10 away they keep two andthen and the employer may get five percent discount higherother net costs will increasesso only the cloud money inYou know, it's it's interesting. You know, I gotdown this different path probably about three years ago ofjust alternate ideas and reallytrying to change the Healthcare System. But thatmeans I also did you know I did some things wrongin the beginning right? I didn't even I didn't even knowwhat I had my blinders on and I rememberyou know in in previous lives carving outthe pharmacy but moving it to one of the big three andit was interesting because everytime you threw this on a spreadsheet whichthe industry right they need, we allneed a spreadsheet to see something to be able tocompare it every time you threw it on a spreadsheet before aplan went live it always saved money.But I can't recall a moment with those big threewhere I saw a negative Trend the followingyear. It always continued atthat nine percent and I never could understand that. Why whywhen we're when we're doing this and you'reshowing such a big savings? Why is thetrend not going in the opposite direction? It's just never worked out that way.If you're right, I mean there's an assumption that the prescriptionsthat you would that you adjudicate. That'sthat's what we call it the prescriptions thatyou adjudicate on your plan. There's a generalassumption that those will be the exact same prescription medications regardlessof who your PDM is because that's whatthe doctors prescribed.Well, we know that that's not reality because thedoctors what they prescribe and what the patient gets. It'sgot to go through the PBS formulary first.So whenever someone reprices us for instance, thoseare all sterilized claims that went throughour our formulary guard program and all ofour other programs to ensure. It's the right drug for the right patient atthe right time. So if another PB and price those theycould probably get a lower net cost.But the problem is those are not their preferred drugs becausethey're low rebate drinks.So therefore whenever you convert to another PBM yourdrug utilization changes.So you never feel even if you stay with the same PBM yearover year your drug utilization never Remains theSame. So it's so easy to gerrymander thatand then there's no accountability. I mean,we could hyper inflate our rebates or increase ourdiscounts and where we appear really competitiveon spreadsheets, but we choosenot to do that and we say look we may become number. We may be numberthree on the spreadsheet.That will assure you if you come on board.Your results are going to be much different.And with true scripts and other pbm's too is notjust us. You can fire us within 60 with a60 day notice with any reason with noFinancial consequences.And we have a 98% client retention rate.So it takes us longer to get clients because we don't paythe carriers eight dollars a claim and we don't pay the top brokeragecompanies two or three dollars a claim to beon their preferred PBM list.So we got to work harder and longer, butonce we get a client, we typically don't lose them.Yeah, you set up you set a few things that were were reallyinteresting one. I wantto leave the audience with I know we're gonna we're gonna keep going here alittle bit. But you know agood question for the audience to ask is just howyou know, how are all the parties getting paid? Whenwhen I talk about aligning Partners in the remodel Healthprocess. That's that's always one of the first questions. I'm curiousabout because that starts tolead you to the answers if theyhave your your best interests in mind or not, butyou mentioned something right on the rebates andthis is exactly what would happen in these carveout scenarios and my my former lives is you wouldsee these big rebate checks coming in right they werebigger than they were before and it feelsgood to get a big rebate check. It's justmoney coming back money coming back, but you know,you know what I didn't realize at the timeand sure the employers didn't realizeis thatThe cost you know, that's that's why the costs are goingup. They're going up. They're going up. It feels good because you're gettinga good rebate check in on the back end but at theend of the day when you net it all together, you're not you're notreally saving any money.Yeah, that's a great point. You gotta look at that number because theytake $100 out of your left pocket and put $50 in yourright pocket. And you think you're $50 ahead and webuild our company off of 5th grade math in common senseand those two things will get you a long wayin life.I love the way that you term this next slide herethe dumb drugs. We talkedactually in our last webinar aboutabout duexis. It was itwas one of the things that we talked about one of the questions I had for youyou threw out a few examples here do access beingone of them one of the questions I had for you andand just like quick refresher for the audience do accessis literally nothing more than Ibuprofen and and pepsidthat you can get over the counter for almost nothing butyou combine it together and you could be paying upwards at2400 dollars on on your planNathan. My question for you is like you got twomore examples here how rampant it are thesetypes of dumb drugs on employers plans.How often is this happening? I wouldsay it's less than five percent of your total clean count.And then probably 10% of eight fiveto ten percent of your total cost.So it's a low volume of clean count because ifthey do a two often, obviously, they know they canonly extort their clients to a certain degree beforethey catch on.And that's that's just the sickness in this in thisindustry. It's how much can we extort beforethey start putting pressure on us?And that's the bad thing about these vertically integrated companies. Let's sayyou get sick of your PBM that's vertically integrate.And you want you and you want your the rebatesto double that's just make it justmake this up. Well, then that all the PBM has to dois give you all their revenue and then they just look overat their sister company and say okay now you stick it to them over thereso that we're net neutral as an organization and it'sjust like squeezing a balloon. They're goingthere are publicly traded company. They're going to generate theprofit off your account that they need or you will not be a clientfor them.So these are used to be extremely rampant untilmore and more independent transparentpbm's got sickup.And a lot of them are pharmacists started so it doesn'ttake many of these to really rack up the cost and theseare some of the older ones but there's probably a hundred a hundredand fifty drugs that we would classify as dumb drugs. So whatwe have done is we've built this in to point a salewhere the dumb drugs get rejected at point of saleso, it's Error.and there's a prior authorization and then we call theprescriber and once we tell the prescriber what they cost isthey're usually pretty upset with the drug because thedrug rep never tells theThat that's been one of the interesting things. I I've been kind offinding out through through this journey of just differentmodels and Healthcare is that look mywife's a provider. I do I think providers atthe end of the day they all have, youknow a goal which is like they're just tryingto help out their patients. They don'tknow that these things are necessarily going on behindthe scenes. They don't know that these drugs that they're prescribing areeven a dumb drugand and that was surprising to me. I just figured because they'reso kind of involved in the process that thatthey were educated about this I was I wassurprised to find out that a lot of times they didn'teven know there was a generic equivalent for adrug the system stacked against them what typically happensis when they drag manufacturer creates a drug like thisbefore it goes to the market. They had all the industry data geographically.So they know in Southern Indiana who are the major employers who'sthe carriers? What's the co-pays what's the status? Who'sthe pbms? So before this drugs evenlaunched these drug manufacturers already go to these pbms andthese geographical areas get on theirpreferred drug list. They know the patients average copay becauseyou can buy that data then they come up with these coup these copaycards.That drug groups then go into to your wifeand they say hey in the Chicago area. Here's a10 major employers. They all covered duxisaverage co-pays fifty dollars It's veryeffective for arthritis and preventing upset stomach andhere's some copay cards. So there's no prior authorizations.The patient's going to pay zero andit's effective treating the arthritis. Your wife'sgonna say sign me up.And because she treated that patient.What happens is is that's fifty dollarsof the 24 85.And then the employer pays the rest. Well, the member has noidea that provider has no idea.And then when the employer comes backto the PBM and say hey, why am I paying 2400 dollarsfor duxis? They're going to say well wegave you 20% off awp true scriptsis only 18% of awp.So you would have paid 2% more of a true Scripts.If you spreadsheet them.So this system that's where you have to get through all themeth and all the smoke and say okay. How are you making yourmoney? And do you own any pharmacies? And are yousolely working on my bed?Totally totally agree,man. Hey I want toshift gears a little bitI I really do.want to talk about this concept of freefor the members what has beenso intriguing to mewithSpecial Point Solutions and I wouldn't even callthis a point solution. You are a full replacement PDM hasbeen that there is so much money onthe table that if you are willing to try somethingdifferent and something as invisible even as a,you know, Carbon out your Pharmacy.There there are things that you can do to offerfree benefits for for members andand that's what gets people talking ifwe're gonna change this Healthcare System.That's what's going to get us there is getting membershappy and and you dohave some some pretty unique programs. We touched onon patient assistance programs in inthe last webinar, but, you knowcurious if you can touch on some ofthese like one.Given we defined what a patient assistance program was inthe in the last webinar.I'd be more Curious to hear your opinion of why can'tyou do this?With Optum or CBS orESI? That's a question. I often getfrom employers.So, I think it's a goodgreat question. So it goes back toWho who is paying who?Because at the end of the day, the drug manufacturers arefunding these programs the patient assistance. The co-payprograms are specially CARE program. The manufacturers arefunding these programs now, they're also increase in theoverall cost. So theoretically ifthese programs could just go away and they give us that net costat point of sale. That would be the best butthat's not happening anytime soon. So here'swhy happens when a PBM intrue scripts could do the exact same thing go disclosure.When we're generating money from drug manufacturers.It is determined on how much ofthat drug cost is the plan pain.Because they know that they get the plan parametersand they know it's an 80/20 or $100 flat orwhatever fixed copay and that allows them to dotheir analytics to say. Okay. Well on average we're going to generate thismuch in Revenue. Well, if that PBM is maximizing thatpatient Assistance or copay card program. It'sfunded by the manufacturer that's money out of themanufacturer's pocket.So then they come back to the PBM like opt themand they say look you cost us 30% in margins.So therefore we decrease in the rebate, wepay you by 30% because you'reviolating our agreement that you can't over utilize theseprograms because if we don't generate money.As a manufacturer, you're not going to generate moneyas it provider.So it's inherently a conflict of interest to them becausethe the less the manufacturer makes.The less money they have to pay the PBM soit hurts the pbm's profits.So that's why the PBM pushes andmakes it sound so much more difficult. But ultimately theydon't have any way to offset that Revenue. They're goingto lose from the manufacturer.Yeah, and who loses in that scenario, right the member,I mean, this is one of the ways that you can offer.Something to a member for free when you can takeadvantage of these types of programs and they're not afforded thatopportunity when this particular case reallythe the employer typically isthe one that always loses the member occasionallyloses because the copay portion ifthey're just running through a normal plan plan parameter copay.Then those copay cards are usually very minimum.If you're on if you're on a PPO plan or just acopay black copay plan, you know, you're probably paying 50 toa hundred dollar copay for a brand name drug. Well, they'llhave a copay card that will subsidize that for the member butwhat they also but behind the Left Behindthe Scenes, they'll pay for a much higher portionof that drug cost.If the plan parameters are set according.And that's what pbm's like mine have done really we've donesince 2008. So we probably won the first ones in theindustry and we didn't know it wasn't patient assistance program.We just knew it was assistance provided by the manufacturers. Theywere trying to get Congress off their back because of these highco-pays and they basically took Congress look we'll payfor the patient's co-pay or a hundred percent of ourdrug costs. Whichever.But they had they did the wording where the patient's co-payonce they got maxed out. Then that was the maximum fundingand they knew the average copay wasaround a hundred dollars.So it was just on paper that they would pay for 100% ofthe drugs. They knew no plan was set up to chargethe member. So that's when we said let's havea hundred percent. Okay.And let's see if that's then that happened with a drug called cleavage. Weran it through the manufacturer said they'd pay50 percent which is 5,000. This is back in 2008.So we just went in on that one claim. We changethe plan parameters just to see what would happen and I'llbe darn they paid 5,000 and the member paid five.And I said, I think we got a program here.And then we looked and yeah, there was hundreds of right and you get youget paid different you get paid and for the audience right juston a per on a per script fee, right?That's your that's your source of Revenue. AndI think that's that's one of the takeaways here isishow you're paid really dictates?If you have their best interests in mind becauseif if you're paid tofill higher cost drugs, like why wouldyou as a PBM want to implement a patientassistance program or or do Internationalsourcing you just you just wouldn't it's gonna eatinto your Revenue. But if you eliminate that conflict of interest,that's where there's just aThere's a there's a ton of opportunity.And we're yeah, go ahead Mike. Sorry. No,no, go ahead finish your thought please I'm justgonna say, you know if I own pharmacysEspecially drugs go to my pharmacies. Well, ifI use these patient Assistance or copay card programs occasionallythe drugs come directly from the manufacturer.So we're agnostic because we don't own any pharmacies butif our competitors own pharmacies, they're gonnabe less apt to use these programs because they're gonnalose that claim and their Pharmacy. It's gonna go tothe manufacturer the drugs can be shipped for free and then there's no revenue fortheir Pharmacy and that's where these conflictof interest even if you work with good pvms these conflict of interestare always there.Yeah, and this was we highlighted Humira Ibring this up one last time because this is a drug. Youknow, I see on 99 clients outof out of a hundred and you know,also with with this whole remodel Health process. We're tryingto highlight things that you can do to offer freebenefits and you know patientassistance program is a huge savingsobviously from 67 to $50,000free for the number Internationalsourcing.Ask the cost to get this from Canada.Free for the members so there's just that's whyyou can do free because when you're saving 32,000on a drug, it's pretty easyto say. Hey member we're gonnaget rid of your your hundred dollar copay, but you haveto be with the PBM employers out there. That's that's gonnaallow you to do these things Nathan aswe wrap up.You know.Just your feedback on like what'son the horizon what gives you hope thatyou know?things will change, you know, I saw something yesterday in thenews which whichstarts to give me hope on the on the pharmacy side,but I'm curious from from your perspective. Like what doyou see on the horizon? What gives you hope that this is gonnaeventually go on the right direction, you know, I guess myhope is really lies in humanity. I mean as humans,I mean we obviously are very cognitively Superior. Andagain, I keep going back to the common sense and Ithink people are finally waking up and saying, okay, how canthis be? It just doesn't feel right doesn't lookright doesn't sound right and more people now are following theirdebt. And then once they make these those get decisions it typicallyworks out well, but you know what gives me a littlebit of Hope and you like Senator Mike Braun who's who's a party list20 miles from from where I live at times inhis office just a few weeks ago and he's always had a passionfor pbms. And even before he was even a state rephe and I spoke often about PBMso obviously him and Chuck Grassley are very involvedand the good news is he actually has a sourceto legitimate.Nation and not just some talking points depending onif it's your election year.So I do think he has a good heart where he'swanting to get to the root cause I do feel these vertically integrated companiesare going to be so big and so heavy they're goingto start to implode on each other and I just know with ourgrowth strategy and the growth experiencing mepeople are catching on I mean you want to work with people, youknow, like and Trustand you want to have honest relationships soSo that's what gets me what gives me hope and then and isa whole nother podcast, but you know, 74% ofall Healthcare expenses according to Hardware orpreventable with just you know, some lifestyle modificationslike Humira the all sorts ofcolitis and irritable bowel and most of that's caused by leaky gut,which is caused by what we put into our body.And so a lot of the stuff is preventable and I think we're taking alot of this. We're taking a lot of the control back intoyour own personal lives and says look, I want tobe the best version of myself mentally physically spiritually financiallyand we're not waiting for some government program tocome in and fix us. So I do see a greater senseof that but there's many more PMS liketrue scripts that's sick and tired of beingsick and tired and they're going to do something aboutOr you know appreciate that perspective and look wanna.Thank you. It's been apleasure getting to to know you. I'm excited to continue toget to know you more. I'm glad the audience got toknow you a little bit today. Thank youforThanks for joining the webinar today and and participating quitea bit. I appreciate it. Thank you. Mike ismy pleasure.

About the Author

Mike Kroupa, Self-Funding Insurance Expert

I grew up in a house that was constantly under construction and the experience helped me uncover one of my passions, remodeling. After running a successful remodeling business with my brother during college, I decided I wanted to keep this as a hobby. Instead, I took my advisor’s recommendation and started down the actuarial path, which ultimately led me to insurance.
Since then, I have focused my career teaching employers how to better manage their health insurance plans. I found myself frustrated year after year of doing the same thing because it didn’t feel like I was making an impact. Healthcare costs were continuing to increase, and it felt like the only options employers were left with was increasing deductibles, increasing contributions, and switching carriers.

There was a turning point for me in 2020 as I found Health Rosetta, an ecosystem for scaling adoption of practical fixes to our health care system. As my clients started adopting these fixes, I found myself getting passionate about what I was doing for the first time. Then I realized my hobby of remodeling was driving the passion because I was remodeling health plans. Even better, I was having an impact because patients (employees, spouses and children) were getting the best care they ever have and saving a lot of money in the process.

Get in contact with Mike: 

Phone: 630.738.1835     Email: mkroupa@gocgo.com     LinkedIn: Mike Kroupa

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