Breaking Away from PBMs | Kyle McCormick, PharmD Owner, Blueberry Pharmacy

This transcript was generated automatically. Its accuracy may vary.

Mike: Kyle, introduce yourself to our listeners.

Kyle McCormick: my name is Kyle McCormick. I'm the owner of Blueberry Pharmacy. Along with my business partner, Ravi Patel, also works at University of Pittsburgh School of [00:01:00] Pharmacy. We've owned Blueberry Pharmacy for five years. 2025 will be our fifth year anniversary, but we opened it as a cost plus model. One of, if not the only one, kind of in existence back in 2020. So it's just a pricing philosophy. So the thing that made us a little different would be, there probably were other pharmacies back in 2020 that were using cost plus pricing philosophy. We weren't involving insurance whatsoever. So our model was completely insurance free and also using a cost plus pricing philosophy. seen a lot in the independent space working for four different independent pharmacies before opening up blueberry pharmacy and has now helped pharmacies across the country with membership models, cost plus models, branding, marketing, all kinds of different things.

Mike: Also, uh, one of my favorite things about my bio would be that Mark Cuban has called me a troll. Is it a fair statement 

Kyle McCormick: I think he's not true in how he describes things. but one truth is that I do like to troll him. [00:02:00] So, 

Mike: Did he reply to himself that you were trolling? Cause he sees you enough.

Kyle McCormick: This is to a reporter, a local Pittsburgh newspaper had our story about the Cosmos model and how we were doing it first back in 2020, how things that we do differently and actually how it is a true Cosmos model, a true insurance free model. Cuban is a PBM and they just supply pricing to whether it's other independents in their car network or, there are two mail order fulfillment centers.

They just are the price setter. So there is a PBM for that, for those pharmacies. So I was describing that to the newspaper and they reached out to Cuban for a comment and he just apparently refused to comment other than, McCormick is a troll.

Mike: dig Into that a little bit, Kyle. You say that a PBM.

But let me ask you when we first started talking about this years ago, one of the thoughts I had is customers can kind of just come and get prices. I [00:03:00] think the beauty of cost plus is that you're able to give this to a whole company and say, trust me, I'm not going to give you different price lists and things like that.

Because customers can find out what the price is. the companies. Often don't do that because they're not going to go through every single line item each time. So it's kind of a trust factor. Now, if you're doing that for a company, then somewhat the PBM because you're price setting and things like that.

So let me go around the back door on this. Kyle, have you done any of that for companies said, Hey, you're a local company, you got X thousand people. Why are you spending this? We're going to guarantee that we're this much over cost trust us. And we become your little PBM. But you said that it was a complaint against Cuban's thing.

Kyle McCormick: Yeah. I would say the complaint against Cuban's is that they launched with the premise of eliminating middlemen. And [00:04:00] so though, they are neither the manufacturer, which they claim to have launched nor the pharmacy fulfillment, which is either a healthy dying true pill or any of the number of independent pharmacies that take the team Cuban card. So they only are everything in between.

Mike: Turned into a PBM, but they didn't start as a PBM on either of those ends. Right.

Kyle McCormick: Right. Yeah. Yeah. so that's my main criticism of Mark Cuban of Cuban's Cosmos drug. In April of

Last year, 2024, we did launch, A B2B business, offering our costless model. And so that's where we go to different, local businesses and say, Hey, this isn't insurance.

What we're offering you is a, basically carve out for generics for your employees. We can show you, line by line, how much it will save you. And so we do have a contract with a local business for that. We have about 73 lives. covered lives as part of that. The difference that I would say would not make us a PBM per se, I think a PBM would be [00:05:00] an entity that would network, for different multiple locations and whatnot. We're the only pharmacy affiliated with that contract though.

 insurance. They can use any pharmacy they want to. But if they want the lowest co-pays, if they want the, to save the employer the money, then they can fulfill it at our pharmacy. So we're more of a pharmacy than a PBM in my mind. And maybe that's just me wanting to not have the name PBM associated with

Mike: Well, I don't, I don't blame you. I don't blame you. 

Kyle McCormick: The more I think about it, your comment

When we talked in the past, isn't this something you could take to an employer? I really just want us to have a free and open marketplace [00:06:00] for generic medications. I think if you empower a consumer to act as a consumer in their own health care. They can find the best pharmacy at the best price that works for them. and we do some consulting where we do work with other pharmacies that are Cosplus Pharmacies, but really don't like the idea of ever creating a network of Cosplus Pharmacies and then taking that to a bunch of, nationwide employers.

Like, that's just not My goal, because then you do have to become a PBM. I have to say,

if we run a network of cost plus pharmacies that here's the cost plus rate, right,

And that rate may not work well in certain areas as it does in

 You can set yours at Cost Plus 8, I can set mine at Cost Plus 10, and a consumer is like, well, I like the service at this Cost Plus 10 pharmacy better, and that price is agreeable to me, we've, we just had a free and open marketplace to decide that transaction versus an employer and their PBM contract.

Mike: They would get [00:07:00] then reimbursed from their company, something like that.

Kyle McCormick: I think in my ideal world, how Cosmos operates, this is an open marketplace for generic drugs. If an employer or a Medicaid plan wants to offer some benefits for generics. To their employees or taxpayers or citizens or whatever, they could do it in the form of an HSA FSA or something like that, or a pay and then get reimbursed type model generics are so cheap, 

Mike: We don't do this for Tylenol. I mean, Medicaid does. But outside of that, like, FSA HSA we just need a payment processing layer. That's all. The tax benefit for medical expenses is the reason that employers do it. and so just when I say it offers coverage for generics because there's not really a reason to. you could just equip somebody with an HSA FSA and say, hey, go find the pharmacy that works best for you. And that reimbursement model looks very straightforward. They pay with Visa or MasterCard. And I don't mean to press this point, but there could be something that kicks in at a certain level, you [00:08:00] don't get it with generics, 

Kyle McCormick: Yeah, you don't hit it. And even brands, right, if we, if we eliminate rebates from brands,

Kyle McCormick: the international prices are kind of what our prices would be if you just eliminated the rebate.

Even brands would be affordable. that an FSA HSA, you just cover that. You just equip them with some money, 2, 000 a year to cover all their generics. I just saw that FSAs can cover, now, Eight sleep mattresses now. And I'm like, 

Mike: Kyle, we got to unfold some of this stuff. First of all, your beef with Cuban. It's not with what he does, but he leads with the story of where a manufacturer we're going to cut costs that way. And so on. Right.

Kyle McCormick: was the initial story back in 2021. When they launched 

Mike: I had Alex, their CEO on here and that was her goal at the time. 

Kyle McCormick: Actually, that's a goal that I would applaud them for. If they could reshore some manufacturing, our supply chain is not as flimsy.

but I think that they've realized that that's a hard thing to do outside of maybe doing some,

IV bags for hospitals, and shortage and stuff like that. It's actually really [00:09:00] hard to compete with manufacturing. We have one of the lowest costs, generic drug supply chains in the world, 

some developing countries. So

outcompete that. I think the, we were talking, a radiologist enters the pharmacy space and looks and says albendazole is, 80 a tablet WAC and 70 a tablet NADAC and can make it for a tablet and sell it for 30 a tablet.

And that was the premise that they launched on and then they didn't realize that WAC and NADAC are not actual prices.

Mike: Someone's probably even doing it cheaper than their dollar. Whatever. They just don't see that in the market. All right. So there's one beef with Cuban. 

They said, we're going to manufacture this. And they don't, the next one is. We're going to help supply this. And they don't because they're not a pharmacy. They use other fulfillment. So basically they're a, PBM 

Kyle McCormick: launched middlemen and

purely they've [00:10:00] become every single middleman. 

Mike: They're purely the middleman. Now, Kyle, do we still see that everywhere on their stuff? or can we say, Kyle, hang it up. That was in the past. Now they're this, or are they still claiming we're going to manufacture and we're going to help this or that

Do you still have beef with them?

Or are you just pissed from the past?

Kyle McCormick: Their website does still lead with no middlemen. No price

Mike: That doesn't sound good. Cause they are is a middleman then

Kyle McCormick: Exactly. 

My only existing beef is if you've noticed this, all the Mark Cuban commentary has changed to not be anti PBM. been pro transparent PBM. Because they've actually been called out from people like me that they are a PBM.

In fact, I think they use RxSense as their PBM, which actually is a member of PCMA. 

Mike: Wait a minute. So not only are they not their own pharmacy, they're not even their own PBM. They just set a price for the PBM. So they're nothing.

Kyle McCormick: I don't think they are their own PBM yet. No, they're not their own wholesaler from my understanding.

I think they use graphite for [00:11:00] that, which is just an amalgamation of things like, hopper X and things like that. So they're an aggregator of marketing. they're a marketing company. They use

name as marketing for many different entities.

Mike: So what they're doing basically is they're coming in. As a smaller, more nimble price setter. But as soon as they get the numbers I always talk about the big three PBMs, if they ever got the numbers and took, you know, percent of that or something like that, that's big money, and then they can start.

Pushing people around like anybody else can because of their numbers.

Kyle McCormick: A couple of things I do give them credit for is one, they've brought a lot of publicity to the pharmacy space.

Prior to Mark Cuban, there was very little talk in the media about it. I think it was naturally going to happen. not to the scale that it did just because of how dire things had gone, and then the other big thing is that, know, they do [00:12:00] listen to pharmacy, Even from the beginning, talking, Alex Oshmansky talking to myself, talking to you, that drug pricing is the problem, not manufacturing, learning that, Their initial was cost plus, I believe, 5 for their Team Cuban card, and that, 5 is not going to cut it for most independent pharmacies. Then they moved it, eight, and I might be getting these numbers wrong, but I think it's now up to 12. So, unlike most PBMs that don't listen, is that something that would stay with them long term? I think that over time, they're probably a better PBM than nearly any PBM out there. But I think my biggest beef with it is that they're doing it under the premise of not being a middleman or a PBM whenever that's what they are. 

Mike: Well, Kyle, this isn't your only beef with them because now I'm thinking back to your other posts here, as I think back on LinkedIn, I think you had one saying that, you know, their X dollar shipping is per bottle [00:13:00] per vial versus per shipment. 

Kyle McCormick: Yeah. I think that was a

Mike: That wasn't true. you were just making up trolling then, or what?

Kyle McCormick: wasn't purposely making something up. it was unclear on their website.

Mike: Well,

Kyle McCormick: maybe, a couple into their launch, just because on their, I mean, on their website, they used to not, they used to explicitly say, we won't transfer prescriptions. Now they will transfer prescriptions. So like, they've been called out on a lot of things like this, this is a faux pas in space. 

I think it might have been initially 5 per shipment, but, yeah, no, that's not the case anymore, 

Mike: You're not saying you're just reposting it. 

Kyle McCormick: which works out to be more than the pharmacy dispense fee in most cases. So if you think of one of the top drugs in the cost plus space is probably abiraterone, which is about 100 drugs. And so the, [00:14:00] the PBM Mark Cuban or whatever you want to call it. taking 15%. That's 15, whereas the amount to the independent pharmacies, 12, the amount to health dine, slash true pill is five. So in that transaction, Cuban's making three times the amount of the pharmacy fulfilling a mail order and 3 more than the independent pharmacy. And what have they done in that transaction? Right? They're just a website that people have

A percentage based model for a PBM is a lot like we call out other PBMs for, because you're really not aligned to get the lowest price for patients at that point,

And this is something that Loyokano of CapitalRx talks about a 

Percentages are really bad misalignments, to do anything within healthcare because then you're looking to increase the cost of care because

 of [00:15:00] that. So

We don't like the fee for service, but really, A dispensing fee or an administrative fee, which is what capital Rx uses, is the most logical way.

And, probably you could argue the most ethical way of actually costs in healthcare.

Mike: I've had Jan a couple of times, I saw on AJ's post last week, basically saying you should not make money on the drug. You know, it shouldn't just be what you were saying there about it.

Kyle McCormick: You should not make money on, yeah, the drug. I think to counter the Visa MasterCard, I think that they're taking a capital risk. so it is a proportional to the amount

Mike: when they guarantee.

Kyle McCormick: So I think it's a guarantee on that whereas

PBM. No, they're I mean, there's money

you know, ACH is not

The

the risk it's gonna be paid out.

there's not gonna be fraud There's not gonna be so yeah, they don't need a percentage base. It's an [00:16:00] administrative thing. 

Mike: All right. So Kyle, you get your chance to bitch about Cuban. I know that you're very involved with education, internships and things like that. And I get to bitch about people that I have to teach. I just hate teaching. This isn't teaching because the podcast listeners hear it, I don't redo it.

 it's heard in perpetuity, I'm not doing it each time. I'm just griping about something once and then moving on. But I hate it. Sometimes I would have to hire a few people in a week when a few people quit because they're pissed at me or something. So I had to hire a few in a row and I hated that.

I just hate teaching, but you don't mind it.

Kyle McCormick: No, I love teaching. Yeah, I think it's partly my, my mom was a first grade teacher. She's now retired. probably one of the hardest, I would imagine, ages to teach. Because that truly isn't teaching. It's like, more [00:17:00] like corralling and herding, 

Mike: Well, you say that, but my son is an English teacher. And sometimes that's the same case. Unfortunately, these days 

Kyle McCormick: yeah, One, because they're either checked out because they're, 12th graders are probably half of them are checked out. And then, in the first grade, they're checked out because they're, their brains are off in other worlds.

Mike: What do you find in teaching you like, is it, the aha that shows up on the. People's faces I don't get. I don't see what you would like in teaching. So what do you like about it

Kyle McCormick: I think it's the fresh perspectives. I often say that I learned just as much from students as they learned from me.

Mike: From them? You're getting it from them because they know all the newfangled stuff and all that.

Kyle McCormick: Yeah, and they hold me, accountable, to keep me up to date with things. I think if I wasn't teaching and precepting and stuff, I would probably Not know some of the latest literature, 

Mike: Yeah.

Kyle McCormick: The most recent example was somebody, this is embarrassing almost [00:18:00] to put out into the world, but I know that other people don't know it.

So I'll share that, I didn't realize that Suva statin should be renally dosed. Um, and so, 

Mike: I don't even know what the hell that even meant. No, I know Rosuvastatin. I see that a lot. What drug is that? Crestor. but we can't talk about that here. No medicine names on here, Kyle. See, you're off in your teaching mode. We can't do that here.

Kyle McCormick: so, just the fresh perspective is the keeping up to date, but it's really, I think a lot of teaching is looked at with just written memorization or just completing assignments.

I often say to students, my goal isn't for you to just check boxes.

one of the assignments I have them do is basically come up with one improvement to the pharmacy or patient experience , five weeks here, come up with it, something to improve it and we'll actually implement it. And, the one student most recently was like, how many of these, do you actually implement? And I was like, we try to implement them all. 

but some of the best, our [00:19:00] workflows or our. Patient facing messaging or,

physical things that we have here in the pharmacy are purely out of students saying, Hey, I think this is a better

 So yeah, it's just a fun way to engage each other. and I think we all learn by doing so.

Mike: So here's what I do. Kyle was a student. I do it with my kids. Actually, I'll be saying something at and as soon as I find out they're smarter than me you just pretend like it was a given. Like, well, yeah, of course that I didn't mention that. But I'm at a deeper level right now.

 Kyle, You mentioned George Zorich on the show. George is one of my favorite guests because he's got a lot of opinions. He's very opinionated. You've heard me gripe a couple of times about college length, being too long and a money grab and all that.

What's your take on that?

Yeah. And all my academic friends and colleagues probably shouldn't listen to this podcast. just like whether pharmacy owners shouldn't have listened to me saying, take a look at importing stuff from, uh, uh, [00:20:00] Israel, you know?

Kyle McCormick: But yeah, I think, I think that we over credentialized and that a lot of pharmacy could be an apprenticeship. and I think that you kind of hit that with, George's, podcast as well. But if I think back to several students that come through rotation, I've learned more here in the last five weeks than I learned about community pharmacy. Six years. Like, what kind of statement is that? I don't think we're doing anything super exceptional here. It's very basic stuff. And so, the fact that they feel like that's more than they learned about community pharmacy and just even about medicare. teach about it. Reimbursement. And I often say the pharmacy calculations that's not taught is about the math related to D. R. fees, G. R. fees, B. R. fees, reimbursements. Like, how do you actually make a paycheck in a pharmacy? An important thing that students should understand is how that works. There's certain fundamentals of pharmacy that are often shied away from. and I think that's important. and also [00:21:00] there's a lot to be learned about drugs just by practicing and counseling patients. I think one of

biggest, and the state of Pennsylvania, at least the biggest. Things over the past five years that I would say hurt education was actually removing the hours requirement for interns.

thinking back to my intern experience, 1500 hours, I think 750 of them had to be on my own. I had to go out and acquire those hours. Had I not done that, It's one thing to learn about amlodipine in class, norvasc, but it's another thing to have, like, filled it every day and looked at it and said,

this is for, and start, blood pressure, okay, and I see that they're also usually on hydrochlorothiazide. You may be less than a pro. All these things I just pick up just by filling the medication and just by interacting with patients about their medications. I can go learn the theory of it in the classroom or here's how a calcium channel blocker works. all that baseline knowledge I gained purely through internship, and then I actually had [00:22:00] the fundamentals of how a calcium channel blocker drilled into me in the classroom. I think if we look at NAPFLAG scores or even just overall sentiment of how colleges are doing and students are doing, I think some of that has to do with the fact that we've got away from that, the field learning experience. 

Mike: And I think that, they maybe could argue they being the schools can maybe argue and say, well, who's opening an independent, why do they have to learn that? And the answer to that is, well, yeah, maybe there, but how about entrepreneurship from a pharmacy student?

I mean, what a better way to. Teach that think of it as a little lemonade stand size, and that's how you teach the bigger concepts of business. And so, Yeah, that's missing 

Kyle McCormick: I think about leading measures and lagging measures. I think leading measures in academia are like NAPLEX scores and progression along this scale. What's the overarching goal of outputting pharmacists?

Is it [00:23:00] to create new? realms for pharmacists to practice in. and if that's the case, one of our best metrics for a school of pharmacy should be how many entrepreneurs did we put into the world? Like how many new businesses

How many of our alumni are owners of their own business and want to work for other people? But I think that entrepreneurship has definitely left the field of pharmacy. you 

Mike: Get a profession where nearly everyone coming out is going to follow. And my beef about pharmacists is that. somebody with a crap load of degrees behind their name, still kind of, I hope no one listens to this.

It's just you and I here, Kyle. So I'm going to say it, you're kind of kissing up to the doctor. I mean, they still are putting their stamp on everything. So here you've gone to school for eight years, and you're not really doing something without clearance. And people will say, well, no, you give rates and this and this and that it's like, yeah, but it still has to go.

[00:24:00] Through somebody. And so my thought is you get a program that is basically all employees, not too many employers. And then you get a profession for that. What decisions are they really making? And you're creating a world of followers. How long can the profession do that?

And that's a bold statement. I don't stand behind that completely because I don't know. I'm just spouting off here. But, when you think about it , can you have a full profession based on the following? I don't know if you can or not.

Kyle McCormick: I think, what I've often been saying now about, academia is pharmacy especially has to do with what is A pharmacist. What is pharmacy?

because I think a lot of students will ask, a lot of peers will ask, what kind of clinical services are you doing?

And are you doing point of care testing? Are you doing All this stuff? And I'm like, well, if I look at what a pharmacist [00:25:00] is licensed uniquely to do a lot of times in a lot of states, it's our unique license. What makes us unique is sure medication is safe and effective for a patient.

 If we want to have more of that clinical aspect, I think pharmacy schools would actually be better off dual degree PharmD 

I think why not PharmD NP, uh, PharmD PA, you're equipping somebody to either go out and dispense. And, or prescribe, in that scenario, why are we fighting for prescriber status or provider status whenever we could just go credentialize NPs or PAs, but I think it's because we're afraid of tying ourselves to the product, but I have nothing wrong with that. We know more about drugs than any other profession does. Why don't we redefine the dispensing process to not be just putting pills in a bottle. actually having meaningful conversations about whether or not medications are safe and effective for patients.

and I love checks and balances. The beauty of our government has checks and balances. And I think that, if we give [00:26:00] pharmacists prescriptive authority and too much to any extent, then we lose that check and balance. 

and so I think that, a lot of, in my mind, the education in general should be, what are our goal outcomes? What do we want the professional pharmacy to be? And if it is more of that clinical sense, then why aren't we dual degreeing with other degrees that already have those abilities?

 Why are we recreating something within the pharm D degree?

Mike: , I'm right with you on that. 

you teach people something that the world needs. You don't, hoping the world's going to need it because you have more degrees and. I'm the same way with all that stuff. I mean, some people can call me lazy, but I say to my kids, Hey, listen, I'm not a triage nurse. I'm not a vaccinator. I'm not all this stuff, you know, I'm product based and safety based and so on. if that's only a one year [00:27:00] program in college and you take a year of that and, you know, three years off. PA or, or whatever, then so be it, but let's not make this into something more than it is.

And that said, there's 5 percent of the people that need everything that's being taught to them right now. But 90 percent of them, 95 percent of them don't need it. 

Kyle McCormick: There's something that needs everything. That's to be 

Mike: All right. I'm being, I'm being generous, but you know what I mean? There's, there's a certain percentage that's doing this

Kyle McCormick: Right.

Mike: I've determined it's in my mind, it's keeping the system going. It's building the new rec center and the pool and the, this and that for the colleges. But what's it doing? I mean, where's the end of this?

Kyle McCormick: Even vaccines, I think, are a great example of that. It's like we should get vaccinators back whenever pharmacists get that it was a rallying cry and it's gonna, allow us to take these appointment based things that [00:28:00] people don't get and just, give it right to them whenever they're picking up their prescriptions.

And, if we look at what we've created now, it's appointment based, And it's not even done by a pharmacist. The higher volume places that do vaccines, they're hiring PAs and nurses and farm techs do it. So it's like what we were rallying and crying for pharmacists to do. We've now realized it is below a pharmacist. just like,

Mike: There you go. is below a pharmacist. You don't need years to stick something in someone's arm.

Kyle McCormick: It just doesn't fit in the workflow. It really doesn't, The reality was that it pulled a pharmacist out every 15 minutes pulling them out from their focus of dispensing.

Then we had other people do it. So does it fit in a pharmacy? Yeah, sure. You can do it in a pharmacy, but does it have to be done by a pharmacist? No. so do we need to teach it in pharmacy school? it should be, apprenticeship, 

Mike: So Kyle, what does the curriculum and the number of years look like for someone coming out of high school? if you had to come up with a tight new fangled. [00:29:00] System where you're going to teach pharmacists what they need to know. And it's going to be one of these, you know, Google things where it's so many months and you've seen them, for coding and things like that.

So pretend you're in the shoes of a company like that, that is going to make this as tight as it can, but do it, that it's still a service, a good service to the community. What does it look like? What's that going to look like

Oh, it's definitely a four year degree or less. Two years, redoing everything that was done in high school, or do you mean

Kyle McCormick: no.

Mike: if that was out of there, would it just be two years total

Kyle McCormick: Yeah, pharmacy itself could be two years.

 Let's say somebody comes out of high school and they know. Everything there is to know, least at that level about history and, you know, English and all that kind of stuff. Don't do that in college and let's make pharmacy a two year degree.

Mike: So you could have people coming out of pharmacy school when they're 20, basically,

Kyle McCormick: Yeah, with like an apprenticeship, component of it, 

Mike: maybe after that,

Kyle McCormick: No, no during

Mike: Oh, during. 

Kyle McCormick: Why it as you're doing it. 

Mike: [00:30:00] two years total.

Kyle McCormick: Yeah. 

Mike: pharmacy

schools are

not going to be a fan of yours.

many people aren't fans of me already? don't worry about Cuba. Just don't worry about that. Kyle,

Kyle McCormick: about you. 

Mike: Who else isn't a fan of yours?

Kyle McCormick: people that make money under the existing model.

especially pharmacies. even some of our peers who think that it shouldn't change that insurance is the way of the future. And 

Mike: You know me, Kyle, you said three years ago, you said, Hey, Mike, you're not doing brand names. Why are you still doing insurance? I haven't changed that I'm still doing insurance. 

Kyle McCormick: Why? Why are you still endowing insurance?

Mike: Partly, I don't have much time left.

I'm not dying. I mean, I've got only so many years left in pharmacy. Well, I am dying, but not at a rate that anybody would be concerned about. We're all dying, but I don't know why. It's like we've made moves. We've got, you know, volume things. And like we had someone come in last week and she said, Hey, I'm sorry.

I got to leave you after all these [00:31:00] years. And the guy on my team said, well, why, who you're with , we're with such and such. Oh, well, we can do so much for this and that. And besides it not hitting your deductible, cause here we are at the end of the year and your deductible has not been met.

So we're picking up customers with non insurance stuff. I don't know if I would just say to all of our customers, like we're not taking your insurance anymore, because if I can maybe sit down with all of them, not me, but somebody who knows what they're talking about, if you could sit down with all of them and say, Hey, here's how you can do this and stay with us.

Well, maybe we'd pick up 70 percent of those people, but I don't have that faith in our skills that I would just say to somebody once we're already set up, we're just not doing it period anymore. It would take a lot of marketing and a lot of proactive thinking.

Kyle McCormick: Yeah. And a lot of, a lot of what I'm going to say or ask is Medicaid aside, uh, cause I think Medicaid reform has to happen anyhow. because it is an important component, but I, I think the insurance based model for [00:32:00] that is going to stay in place for some time at least, have you ever run the calculations in terms of, patients with copays, percentage of those are the full amount paid to you?

Mike: I haven't, but you're saying that if it is a full amount, 

Kyle McCormick: insurance

Yeah,

Mike: can probably save them money on top of that. 

Kyle McCormick: Yeah, some people have analyzed that and things with copays I think Medicaid aside and then not zero dollar copays obviously so things with copayslike 80%, like that's your full, basically your full reimbursed amount. no, that's on the high end. and then the other thing to look at too is, those patients what percentage of your actual claims are filled above your cost to dispense? And so, and a lot of stores that's

So you're basically not making enough money to dispense products 70 to 80 percent of the time. [00:33:00] And so you're relying on the last 20 to 30 percent of claims to actually make up the difference. So you're worried about losing some patients and whatnot. You can

a sustainable pharmacy with less patients. because you've eliminated a decent number or, or moved over a decent number of patients who were previously costing you. and I think back to your comment on the podcast as well, maybe it was with me, but I think it was actually with somebody else who you were worried about, Mrs. Smith, who I think this was why you got rid of brands where you were losing money on the brand. And you started to be like in the back of your head, I don't have much time to spend with you because I don't make money on your prescription and then you

thought experiment.

Like, I need to

everybody equally. I can't like, not like my patients that are on eloquence

they're eloquent. but in reality that's happening. Not on a loss per se, but I make more money, what's already happening in pharmacies, I make more money on shots.

So I'm just going to focus heavily on

and I don't spend [00:34:00] any time counseling somebody on their metformin, because I make pennies on that

Mike: To your point, Kyle, In a way we've done that with brand names. You know, it was like, we're not carrying brand names. we could have switched all those brand name people over to cash. I mean, we couldn't still have it in the store contractually and all that kind of stuff.

But in essence, with the brand names, we said, we're not using insurance. I mean, we took them out of the store, but in essence, it's like, we're not going to bill your insurance for that too. That's a big part of it. 

Are we selling for a loss? What is the full amount that they're not even touching? And I agree. It's probably a lot. it would almost be a sit down with each person to explain it to them versus just not doing it at this point. Because I'm confused about it, a lot of people are.

Kyle McCormick: If patients ask, They'll get referred to us because of cost savings and whatnot. They'll say, that's only 13 here. They're like, wow.

And do you need my insurance card? and I was like, no, that's the price here. [00:35:00] And so, they get all concerned then, well, surely you need the insurance card though to bill it. And I'm like, no, that's just our price. Well, how come it was X amount more elsewhere? and so we've actually learned to just basically avoid the whole insurance conversation altogether. and what I mean by that is whenever patients get referred here. We just tell them the price and if they say something like, do you need my insurance card? we just say no, versus like we don't bill your insurance here or anything like that. , this is our price.

The price is the same for everybody. but a lot of patients just want to feel heard they have insurance, so they'll say, Oh, I have insurance. And we just say, that's great. 

Mike: don't have the whole long conversation with them. People don't care. They just want to know if you need it or not. And they're happy with the price.

Kyle McCormick: Afraid to talk prices with patients. As a profession, one of my newest challenges to students is to tell me how much they think they're worth. when you start talking to students, you say, well, if you're gonna do an hour long CMR, how much are you gonna charge them? Most students say like, 50 bucks. And I'm like, [00:36:00] well, how are you gonna pay yourself this hourly that you would like to make on 50 bucks?

And then not only that, but your employer has to make money, and profit on top of that. But, your technician might be doing work that doesn't directly, they might be scheduling those CMRs or doing something that doesn't

revenue.

So you've got to account for that, your technician's salary as well. And that hourly rate. at the end of the day, you gotta be charging 120 an hour. And they're like, well, I can't do that. I'm like, well, why

A lot of students will say I wouldn't pay that. And I'm like, and it sounds like you have a bad product 

so then I challenged them. Why is it a bad product? It's because, It's a 20 page document that nobody ever reads. It's, medication action plan that they have to follow up with themselves that that you don't have with them.

You don't do any follow up with the physician, it's done on your schedule, not theirs. it's you cold calling them in the middle of the day saying, Hey, let's talk about your meds because your insurance told us to, It's not them coming into the pharmacy with a list of questions [00:37:00] that you answer. So

a lot of ways to make the product better. and so I think we're really bad about talking about prices in pharmacies. We're afraid of assigning value to ourselves, about assigning value to what we do, even to where a lot of pharmacies don't. Think about, oh, how much did I cost?

Plus, if be, it's like how much you need to make on each prescription in order to make a profit. How much is the cost of the value of dispensing? How much is that worth? even to the extent of like, clinical questions. do you charge if somebody, 

if you want to figure it out on your own, just go, Google, I don't know if it is, I doubt it was epic.

It was probably like Entrusted or something like that. You [00:38:00] Google it and follow up with the other pharmacy or if you want us to take care of it for you, only take us about 10 minutes. We charge $20 for 10 minutes. we'll get that coordinated. So we said, we're going to get your EpiPen for $15. So, we said, we'll coordinate everything with your other pharmacy and, we'll get it reduced to just 15, and probably take 10 minutes. So it'd be 20 for us if we do that. Oh, I'll just pay you 20. Go ahead. And so we

whole coupon service, help the other pharmacy, have them apply the coupon, make sure it actually adjudicates to 15. All of the patients say, Hey, it's ready for pickup. It's 15 and give us your credit card. Because that was a 20 coupon navigation fee. And the student was

You know, I used to work at Rite Aid and patients have cost issues. We just throw up our hands and say, there's nothing that we can do. And here you are, like actually doing things and charging for it on top. Yeah, you have to have a price and patients are willing to pay for your service. If you have a line item for that service.

Mike: In [00:39:00] the years before COVID we were wasting a lot of money at our pharmacy through DIRs, I had too much staff.

We were just losing money. And on top of that, I had lost my faith in pharmacy as far as, why are we doing this? I mean, they're paying us a nickel. What are we worth? And so I happened to go back during COVID. It wasn't because of COVID, but that's when I thinned out the staff and I went back and I thought.

Holy smoke, what the hell would these people do without me? You know, the stuff, our store, the stuff we were doing, you'd go in and find this lady flat on the ground dead for 72 hours. If it wasn't for the things we have done, you know, whether it's answering something or even the medicine, you know, if we let all these people just out on their own, these people would really die.

I think the problem with that though, is like, how do you prove that? What's the cost of that? If they call you one time and you say, Hey, let's put easy open caps on your bottle Well, that's, [00:40:00] that's a nickel. If you do something else, it might be worth 50, 000 because you saved their life or kept them out of the ER, things like that.

I think so. The trick though, for me would be, where is that in the process and how do you get money for it? And, if you don't get money for it, are you going to let them die? And if you're not going to let them die, you're going to save them anyway. Then why should anybody pay you for it?

Kyle McCormick: I think that it's not wrong to refuse service for no payment. I think it's actually more harmful to do. The other thing is to always give stuff away for free.

Mike: I don't have any problem letting her die. I have no problem with that. It's not my responsibility to make sure all these people live. My problem is I'm already stuck in this contract.

I can't divide it. I can't drop some people, this and that. So I agree [00:41:00] completely. You should get paid or else you lose the pride of that and so on. And the person is going to. Be lying there dead. I don't really have a problem with that. It's just, I don't know how to get paid when I do save them a lot.

Kyle McCormick: I think it's having a set procedure such that, when people are asking questions that are above and beyond a OBRA 90 counseling session, we counsel on every single prescription that's part of our cost plus dispensing fee.

So whenever it's above and beyond that, because it's about other drugs that we don't fill, it's because it's, about, A long, intense question about their disease state or whatever we say, that's a great question, in order to provide you with the best answer to make sure that it's fully researched, based on your past medical history, other medications that we don't dispense here, et cetera, it's going to take time and we do offer the service where we sit down with you, go over those questions.

Thanks. It's [00:42:00] just going to be 20 for 10 minutes. The question you asked probably would only take 15 minutes of time. So you'd be looking at a 30, copay for that. Is that okay with you? 

Mike: That can be done on top of any insurance contract. Cause you can just say that's an extra service.

Kyle McCormick: yeah, exactly. know we're not talking to insurance with you, but I mean, in general,

I actually piloted this concept with my previous pharmacy where I was at, a pharmacy in Indiana, Pennsylvania. The one that sticks out to me was a patient called from the aisles of Walmart saying, Hey, I wanted to make sure this medication wouldn't interact with anything I'm taking. And I said, we don't feel anything here for you. Like, why are you calling me? It's because I trust you. I heard good things about your pharmacy and I had this question. I said, well, I'd be happy to help you with this, but our time is valuable. And also, we're six year degreed professionals.

That's how I'm able to answer this question safely for you. And it also requires some time in making sure that I understand what all you take and how, what the product in your hand at Walmart actually is. So that I can tell you about [00:43:00] it. so I have to charge you for that. Now, back then, I wasn't charging 20 for 10 minutes.

I said, it'll just be 5 consultations. And the patient was like, yeah, that's perfect. I'll go ahead and pay for it. And so, just took credit card information over the phone, and rang him out for a fee. From then on, I wasn't afraid to start charging patients for my clinical knowledge. 

your

I don't answer the question, this patient might die. a reality, but probably less than 0. 001 percent of the time will me not answering the question actually correlate with their death, 

Mike: Let me think about this, Kyle. So I said, if I don't do this for the person, they're going to die. And I'm okay with that. My point is. 

I'm going to probably do that anyway, because I do that for everybody in that pharmacy benefit manager group, I do it for them and let's see. So if I don't do something extra [00:44:00] for them, they're going to die and I have to charge them for that. I'm good with that. I just, I think my point I was trying to make is I don't know what is saving them.

I don't know what is not having them die. it's hundreds of things we do for the person. I don't know which one is making them not die, but I know the hundred things we do, they're not lying on their floor dead. I just don't know which one it is. And if I did, I would charge for it, I suppose.

Mike: Here's the thing.

There's hundreds of things we do for a patient and. The little things that we do, almost nobody would pay more than a buck or two, I can't read that last digit. What is that? Or, what's the imprint on this tablet? It's too dark for me to see, or hold on my, you know, My phone's out of batteries. Can you call me back in 20 minutes? [00:45:00] This kind of stuff. All right. There's hundreds of these and I can't put them on something. I can't say, all right, it's 29 to read that tablet score because nobody's going to pay for it. Maybe somebody would, but in general, it's too small even for you to charge for it. But across the board, then out of those hundred things. That's the reason they're not lying on the floor dead, but I can't price any of those hundred things appropriately. And maybe that comes down to then a fee, a subscription to even deal with me, individual basis. It's not going to work because none of them are worth a dime, altogether they're going to die if I don't help them.

Kyle McCormick: This is the beauty of a membership model. 

Mike: And you have that.

Yeah, we have a membership model. Why the hell didn't you tell me that half an hour ago? We wouldn't have to have this conversation.

I forgot 

Kyle McCormick: that is

It's a lot better.

Mike: I forgot about that.

Kyle McCormick: This is the beauty of a hybrid model [00:46:00] where, I was a big proponent of fee for service, but you're kind of right in that like, there's a set amount just to have a patient be part of your patient profile, 

there's,

associated with just having a patient be a patient at your pharmacy, 

so the fee for service doesn't account for that, whereas a membership model does.

I truly believe the best model for pharmacy is a membership model paired with fee for service. What I mean by 

 In our hybrid model, we do cost plus 10 for non members and cost plus 3 for members.

So it's a 7 savings per prescription, of markup, in exchange, it's a, it's a 60 per year membership. And so what that essentially is saying is we're going to front load the cost of caring for this patient. I got a 60 today, but every future is filled. We now charge less because I know a lot more about that patient, and I'm getting paid for filling little things that we do on a daily basis for patients for [00:47:00] members. that I otherwise have no way of getting payment for.

so that's the idea of the membership model. And I think every pharmacy should have a membership model. it realigns nearly every incentive with the patient. if you think

membership model for, for patients. Currently, in a fee for service model, I only make money whenever I'm filling prescriptions, aka. The more prescriptions I fill, the more money I make, aka, the more unhealthy my patients are, the more money I make.

sound great for, actually changing and being impactful as a pharmacist and reducing health burdens for patients.

So, the only way to do that is to either charge some kind of deep prescribing fee or have a membership model such that, I can optimize your care, the more I can get you on the right medications at the right time, the more I can synchronize your medication. So you're not making as many trips here, the more money I actually make because I get more profit from your membership then. [00:48:00] Because I'm doing 

healthcare. Now, you still need a fee for service there. Otherwise. Your membership model just gets filled up with high utilizers that are saving a ton of money because they don't have any kind of cost tied to utilization, we really have to have a cost tied to some kind of utilization.

Otherwise, we'll just get bogged down with tons of questions and whatnot. So that's why you still need that fee for service associated with it. But, basically, the answer to your question is a membership model.

Mike: I think you're right. Well, damn it, Kyle. Now we're out of time. You should have brought that up in the first 10 minutes. 

So Kyle, you and I now this is our third time, I believe. And we kind of talked at the beginning and then a year or two into it. Now another couple of years, how are we doing?

[00:49:00] Yeah. 

Kyle McCormick: over on target for about 1. 2 million in revenue this year, 40 percent gross profit margins. We now have a full time pharmacist, a full time technician. I think the business model is proving to be a. viable business model. The biggest question we get from peers is like, well, is it profitable yet?

Are you profitable? I used to get so annoyed by that question and be like, we're a year into business. Like, it took years to be profitable.

we are four years, five years in the business and I can soundly say that it is a profitable business 

all along I felt that it [00:50:00] is the most to be profitable because we actually can control our profit margins of like, unlike any other form of pharmacy

We talked a little bit about insurance and being afraid to say no to contracts and whatnot, because we really have to stand up for what the value of our profession is.

if we're not able to do that, then other people dictate it for us. 

Some of it is a leap of faith, but also staying status quo is a leap of faith, basically putting the direction of your business in the hands of others, whether that be the PBM, the legislators, et cetera.

by saying no to things, it's actually putting the business in your hands. Which is actually probably people's biggest fear. 

to say, I'll allow legislators. I think that they'll make a change. Lena Khan's doing great things. Eventually something will come of it. reality is that the only person that cares about your [00:51:00] business is you.

scary. That's scary. We want other people to care, but nobody will care as much about your business as you will. I've been screaming it from the rooftops that Cost Plus is the future. Insurance free is the future for generic marketplace, drugs will be bought and sold in an open, transparent marketplace.

You already hit on this with your guest brand names being bought in a transparent marketplace.

generics anymore. This is

Full

We have more time to spend with patients because we don't have to spend 30 to 40 percent of our day phone calls with insurance companies answering, why is this prior auth? Why is that prior auth? Doctor's offices love us because we tell them there is no such thing as prior authorization in our world. basically every frustration that comes from being a pharmacist. [00:52:00] I can tie to being a pharmacist in a PBM based model. once you eliminate the PBM, there's basically no frustrations anymore in the pharmacy space other

is hearing, well, I could get that for zero somewhere else.

And they're like, well, my biggest competition right now is pharmacies willing to accept losses, pharmacies willing to accept

that doesn't value them as a professional.

That's my competition right now. My competition isn't. optum or, or, you

scripts. Honestly, they're the best marketers for my business because of how greedy and how incompetent they are at

patient care.

 My biggest competition is pharmacies accepting the status quo.

Mike: Golly. Kyle. Fantastic information. , can't imagine somebody listening to this and not wanting to check some of this out. Blueberry Pharmacy. com pharmacy plus pharmacies. com is a way for pharmacies to go in and [00:53:00] their special link and have their own price list and so on.

 Kyle. Fun hanging out again.

you're busy. Thanks for your time.

I appreciate it. The listeners appreciate it. Great having you on.

Kyle McCormick: look forward to talking to you sometime around, the 52nd anniversary of the Kelser family, Turkey bowl. 

Mike: We have a family football game. If you're interested, go on YouTube , just look up my last name and look up football. You'll see our 50 year tradition of tap football. That was fun this year, thanks for mentioning that.

family tradition. Keep it up. And I look forward to talking to you in the future.All right, Kyle. We'll talk soon.

Kyle McCormick: Take care, Mike. 

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