So I don't know what exactly was going on, you know, I don't have a right, nor do I have
access to the contract, that's really something that happens at the benefits committee level.
But certainly for patients, we are either responsible for the list price of a medication.
So if we look at the list price that basically never pays, our health plan could be getting
a price reduction called a rebate or a discount or fee, whatever you want to call it.
And our co-insurance will still be based, or, you know, particularly in a co-insurance
situation, not so much on a co-pay, although I have a story for you on that, our co-insurance
is based on the list price, not the reduced price of the medication.
So it becomes really problematic because at times, health plans can make significant
money off of their sickest patients.
So there's a really great gap graph by Antonio Cicada out of 46 Brooklyn, and he actually
has an example where the plan makes $1,000 off of the patient because they're paying
the full price, so they're paying 20% of the full price, but in this case, the drug is
discounted so heavily at $69, but the original price is 403.
And so at the end of the year, the plan has actually made money.
And a lot of plan sponsors don't actually consider that a problem.
I would urge them to think about and consult a lawyer about whether or not that's a prohibited
transaction.
So prohibited transactions mean that the plan and the people who are affiliated with the
plan can't actually make money off of the participants.
And for a self-funded plan, for example, who would be retaining that money?
Is it the pharmacy benefit manager, or is it the employer who is taking on the risk
of its employees?
Yeah, so that's a great question.
It depends on how the contract is structured.
In Antonio's example, it is the employer and the plan that is retaining that money.
Is a big part of the complication and the interactivity between PBMs and people, is
the relationship between PBMs and self-funded plans, or does this happen with health insurance
as well?
So that's a health insurance problem that actually employers would be in a much better
situation to address that and say, we're going to make your copay 20% of whatever we're
paying.
That doesn't seem to have taken hold quite yet as an answer, but really, from the employer
perspective, I know I'm being a little bit hard on them, from the employer perspective,
they see it as equalizing the field for people who have high cost conditions, and then the
rest of the pool, because they are paying more, I'm aware of that.
I still wonder if it's very ethical to do that, but what's great about Antonio's example
is, so in Antonio's example, where there's no sort of clawing back of the patient assistance
or whatever, assuming that somebody does that, is some of these paying $400 every month,
and so assuming a $1,200 or a $1,600 deductible, they meet their deductible in four months,
let's say it's a $1,600 deductible, I think that's the minimum for a high deductible
health plan.
They meet it in four months, and then the plan starts to have to pay, and so while the plan
is paying less initially, but you can think of this as sort of your minority rebate situation,
where maybe the price is already inflated, and you have to wait until you mail in the
rebate, and you have to meet a bunch of other conditions in order to get this discount to
$9.
The person then meets their maximum amount of pocket and a few more months, and then everything
becomes free, which is a stupid saying, but yes, everything is quote free, even though
somebody is always paying, so it really disincentivizes any type of really thoughtful approach.
If you think, and then he has a great example of a rebateless model, where the person is
paying $69 every month, which I think we can agree is a lot better than $400 in the initial
phases, and then 20% of $400 as we go on, the person never meets their deductible in this
situation, and so the plan actually never starts to pay for that medication.
And so that's, I think the twist that we need to start thinking about as a country
and as insurance, but if we actually share this and reduce the cost to what people might
be paying, insurance would actually be paying less than they are now, I mean, they wouldn't
necessarily be profiting, but you know, if you think somebody is complex patient, it's
not just the drug costs that's expensive, and yeah, that might be a lot, but they're
going to the doctor, they're maybe getting MRIs, they're getting lab tests, etc, etc.
If we reduce the cost of the medication and they're not meeting their deductible, I mean,
I don't think people tend to go super crazy with the healthcare, that's just a personal
opinion, but they're still going to do other things, and they may be less concerned about
going to the hospital for their lab tests that maybe could be several times more than
an outpatient lab location, and so all of these start to add up to develop very poorly,
very poor shoppers that are not very invested in saving the plan money, because the plan
is not invested in saving them money.
Can you say that last part again, and just explain it a little bit more?
Yeah, so there are these perverse incentives that turn the plan against the patient, the
beneficiary, right, so if you have a situation where a plan is demanding that a patient overpay
for their drugs, they have, I think it's fair to say, demonstrated a disinterest in helping
that person save money, but also, so if they're required to pay 20% of a list price of a drug
that the plan is not seeing at all, the plan is not helping that person save money, and
they're going to meet their maximum amount of pocket, they're going to meet all of these
things that really makes people poor shoppers, because then you just say, I mean, many people
will just say, well, it's free, and I mean, I've heard it from my doctor, oh, well, don't worry
about it, you've hit your maximum amount of pocket, it's free, and you have this disincentive
to save the plan money, because you're like, well, I paid so much, why, like, why do I care?
And the plan is hurting, because they maybe have recouped some cost on the drug side, but
then they have this person who maybe is not a very savvy shopper, because the plan isn't
incentivizing them or helping them to save money by saying, hey, let's give you this
notch, like, I use the direct primary care, and going to get laps from her is, I think,
like, a tenth of the cost as going to my local academic hospital, and so I actually called
this morning, I wasn't feeling well, I want to do a panel of laps, said, hey, can I come
whereas, like, some people would just call their specialist at the hospital and say, hey, you
know, I need an appointment, blah, blah, blah, like, can I come in, then the labs are ordered,
it's like 800 dollars for the labs, and so that's where this push and pull between plans,
like a plan responsibility, and maybe looking to make money off of the drug side, and so
charging people more, but then creating really bad consumers, because the plan isn't actually
helping them become good consumers and save money. So, to the best of my ability, I was trying to
understand a little bit more about how this works, and there was a Brookings article that said,
where patients face excessive cost sharing, the main cause is likely deeper market or regulatory
failures, such as consumer difficulties in choosing insurance plans and adverse selection,
addressing those issues is likely to require solutions targeted at those broader problems,
such as directly regulating how much cost sharing insurance plans can impose,
subsidizing more generous coverage, or improving risk adjustments, not solutions specific to
rebates or PBMs. Well, I haven't read that article. My initial gut reaction is
I get very concerned when we start to demand more, particularly in the employer market, because
employers have what's called a minimum value standard, and so the minimum value standard is
they have to cover at least 60% of the cost for an average population, so CMS has a whole table.
Now, getting to that minimum value with a high deductible health plan is very, very difficult,
so to their point, regulating how much is happening. What we're starting to see is some employers
are becoming very savvy, and they're recognizing that investing in primary care,
specialty care, and so removing any type of cost sharing there,
it starts to become very attractive, because as people develop relationships with their primary,
they will more likely do what I did earlier today, which is reach out to the primary,
go to the lowest cost location of care, get services, and then triage with them whether or not
it makes sense to go see a specialist, and if so, which specialist am I pantheon,
the specialist is appropriate for me to see at that particular time.
As employers invest more on the medical side, fundamentally the medical side makes up 70%
of all costs, maximum. I mean, if you've got a really big plan, medications likely look more
in the 10 to 20, sorry, 15 to 20% of total plan costs for smaller plans, that's going to be higher.
So as employers invest in the pool of 70%, and maybe direct to a place in outpatient orthopedic
center for a knee replacement or a joint replacement that's significantly cheaper,
so they cover it at 100%, that minimum value standard becomes very easy to achieve
with just outpatient care, or even some inpatient, but you can achieve it through the medical side
alone. So I become concerned when we start talking about the requirement to cover,
or cover at a higher rate, because I do believe fundamentally we already all pay enough
that there is enough coverage to go around, but how we allocate that, for example,
a woman approached me in September, and I got this phone call and said, hey,
what do you think of this situation? I am paying $20 for medication, my plan is paying
$1,500, and I learned that I could order it off of Mark Cuban's for $9.
So in this case, I'm not sure it's a market failure, I'm not sure that requiring her plan to cover
more of that cost, which I mean, she's on a copay plan, so it's already reasonably restrained,
but if she was not, and she was paying 20% of this $1,500, to me, we need to help employers
understand, we need to help them become more savvy shoppers, and I think we need to start pressing
the matter of how patients interact with the system and what the duties to these patients are
from employers. I tend to lean towards less regulatory involvement because you do start to see
a cascade of things that maybe are not fully anticipated when you start
regulating things, and so I would very much like to see, you know, the topic of discount, I mean,
first of all, I would have absolutely no problem with removing discounts rebates and fees as incentives
because I do believe that they distort the market, and I would love to see what the market in the
U.S. looks like without them, and once we have that conversation, once we kind of pull back the
curtain into the APAC and sort of black box that is essentially for unsuitable pricing,
I would love to see what patients are paying and then determine whether or not further action is
necessary. And so kind of relating to everything that we've talked about in this black box,
I mean, it's very, very complicated and is that intentional?
How do you mean intentional?
I can't be an informed customer if I don't understand what's happening.
Yes, so I would say there are very large companies with billions of dollars at stake.
I mean, that's not an underestimate. That's very conservative.
So I do believe, I always believe that sunshine is the best disinfectant, and so I do tend to believe
that right now the system is built for, you know, to keep it sort of a black box at this point
because it does serve companies that are making money off of it.
I'll never forget. Okay, so my job at this large manufacturer, a lot of it was to talk about the
problem of discounts rebates and fees and how the impacted patients and all of this. And so
I went and came back from the alliance, this employer group, and you know, I got some guys
and they're like, okay, so you've been showing up. Okay, well, we'll start to talk to you a little
bit and one guy's like, so what are we just going to get lower prices? Like, I'm sick of this
rebate thing. I would never do this in any other supply chain. Like, you know, I know when I go
to Menards and they have their 11% sale, it's it's 11% over what I could go find basically
anywhere else and I could get the same product. And so I said, okay, I'm going to go do a
presentation on how bad discounts rebates and fees are saying we lose 53 cents on every dollar,
et cetera, et cetera. So in my brilliant idea, I went to a senior director in my group and I said,
so why did we just publish the price? It seems like a new brainer. Well, Anne, then everybody
would know of the lowest price that we would allow and we don't allow that right now. So why
would we do that? Well, if we're losing this much money already, like, why wouldn't you just say
the 50 cents price or maybe the 35% price or whatever? Because the silly part about that is that
the Medicaid prices, the 340B prices, like the really steep discounts that are available here were
a Medicaid plan, maybe paying a penny or at this point, possibly even less, are already publicly
available. And so we know what those prices are, what we don't know, the prices that are paid
are really in relation to these private plans where I really do believe employers want to do
the right thing for their employees and offer this coverage and be good. But I don't know how
as an employer, I would be able to say, I've done an appropriate fiduciary process and been able to
you know, confirm that I know that I'm getting a good quality, a good price and all of that
in an area that's just a total black box. Do you want to take a break? Yeah, well look, my husband