Exploring the Opaque World of Drug Pricing | Eric Pachman, ChE, MBA, Founder of 46brooklyn Research

Transcript Disclaimer: This transcript is generated using speech-to-text technology and is intended to capture the essence of the conversation. However, please note that it may contain multiple spelling errors and inaccuracies. It should not be relied upon as an exact or comprehensive record of the discussion.

Mike Koelzer, Host: [00:00:00] Well, hello, Eric. 

Eric Pachman, ChE, MBA: Hello, Mike. How are you? 

Mike Koelzer, Host: I'm doing well. Thank you. Thanks for joining us today. 

Eric Pachman, ChE, MBA: Yeah, no, I'm very happy to be here for those that haven't come 

Mike Koelzer, Host: across you online. Introduce yourself to the listeners and tell them what's hot. Why we talking 

Eric Pachman, ChE, MBA: today? Yeah. So my name is Eric Pachman. I'm the president of a nonprofit drug pricing research shop called 46 Brooklyn Research.

And I'm also the president of 3 Axis Advisors. Our mission at 46 Brooklyn is really just to provide, uh, as much transparency into drug pricing, data that's out there. We really, very much feel like this should be living in the public domain. And so we do everything we possibly can in order to clean it up and to allow people to use it within public visualizations.

Mike Koelzer, Host: I've done a little research on you because you've got such an interesting history. We would spend an hour just catching up to how you got here. but let me share with the listeners this, it was 

Eric Pachman, ChE, MBA: not planned 

Mike Koelzer, Host: no, let me share with the listeners this somehow you went from running a railroad to all of a sudden being the manager.

22 pharmacies. Yeah. How in the world did that jump happen? 

Eric Pachman, ChE, MBA: uh, you have to, I, I thank my wife for that one. and just kind of chance, you know, um, it's kind of, kind of who, you know, right. And who you meet, uh, throughout, throughout, uh, this, this varied life that I've led. Um, I met an individual, uh, when I was at, at CSX, the railroad that I was working for, I wasn't running the railroad, as you say, but I was, you know, contributing as best as I possibly could.

And, um, this individual, uh, he, I had gone to Harvard business school several years before him. He left, uh, went to Harvard business school, came back and had to, it happened to have a connection within the Dayton Ohio area, which is where my wife is from. And, and I had, as I, as I tell people, I had been, um, basically crushing her dreams for the better part of a decade, telling her that there was no way I was ever gonna find a job in Dayton, Ohio.

Yeah. And I thought that was true. Um, just so happens that, that my good friend who had gone to Harvard business school came back to CSX for a little bit and then left to go run a, a pharmaceutical wholesaler. and they had a series of, you know, or a group of, of, uh, 22 community pharmacies. And he had been threatening for about a year, year and a half that Eric, I, I need someone, you know, to bring some operational discipline yeah.

To, to, to help run these. I don't necessarily care if you, if you know the pharmacy world, I had studied many, many industries throughout my career. And so I, I never really believed him that he was gonna call and ask me to make the jump. And, uh, but I always had it in the back of my mind because I knew if I could get my wife back to Dayton, Ohio area, which is where she grew up, then that would make all of us, the whole family.

Very, very happy. So, um, One day he called and he said, it's time. And literally within a month I was, I was out and Dayton digging through the bowels of our, of our data, trying to put everything together, trying to understand all these contracts that I thought all these pharmacists are struggling with right now.

Um, I was in the throes of it very, very quickly. And, and I tell people, Mike, that, um, had I known what this was all about. I would have never left my job in the railroad. 

Mike Koelzer, Host: All right. So Eric, a lot of the listeners are in pharmacy through nepotism of, uh, you know, a good percentage, more than maybe other other industries.

You had your chemical engineering degree. When you had your site set on a Harvard MBA, what were you thinking you would be doing 10 years after getting outta 

Eric Pachman, ChE, MBA: Harvard? Back then I was, I was pretty naive as far as what I, you know, would want to do with my life. Yeah. I wanted to go to wall street. I wanted to be an investment banker.

I wanted to be a, you know, equity research analyst. I wanted to eventually go into the private equity, hedge fund world, that kind of stuff. Um, but I say that probably a little too confidently or too strongly, like, I didn't really know that. I, I just knew that, Hey, if Harvard's gonna accept some Schmo that went to a state school like me, then I'm gonna go, you know, and

And so I, I really just applied to, um, three of the top business schools and told myself and told my wife at the time, if I get into any of them, I'm gonna go. And then we're gonna figure out where, where I go from there. Um, I knew I needed some sort of change. I thought it was wall street. And so that's why I went 

Mike Koelzer, Host: why'd you need the change from 

Eric Pachman, ChE, MBA: chemical engineering.

I knew that I was interested in business management. Gotcha. I, I thought again, I thought it was wall street at the time, and it's very difficult to make the jump from chemical engineering. What they say about business schools. The best reason to go is if you wanna press the reset button. Yeah. And so I was looking to press the reset button at that time.

I was looking for two years. I [00:05:00] shouldn't say off because Harvard is not taking two years off. It was very difficult for me, but, um, I was looking to kind of just explore and, and see what was out there. But I was too anchored to the whole wall street path going in. And that's where I ended up. 

Mike Koelzer, Host: Did you see something in chemical engineering, I'm working as an engineer and I wanna run a company like this, or were you like, I want to get out of this area.

I 

Eric Pachman, ChE, MBA: probably wasn't Mike. I really wasn't thinking that much about it. I mean, I knew that I wanted more exposure to the management side of things and I knew what, what better place to get it than a Wharton or a Harvard or something like that. And you know, what was, I was like 20, 25 at the time, 24 at the time.

I, I, you know, my brain's not even fully developed at that point in time. so you just kind of say, oh, Harvard, not that either of ours are now though. well, no, but I, I think at one point in time, it was, and now I'm on the down, I'm on the down slope of that, you know, I always say 

Mike Koelzer, Host: That too. I think I was more mature and a better thinker back then.

I don't know what the hell happened to me, but so you were looking onward and then you said, Hey, I'm gonna do this and I'm gonna beat wall street. And then. Wall street sucked or New York sucked? No, 

Eric Pachman, ChE, MBA: no, no, not, I, I should not say that at all. 

Mike Koelzer, Host: Or another podcast. There's the, there's the, the lovers. That's 

Eric Pachman, ChE, MBA: right.

They're not lovers of New York. Yes. You love it. Or hate it. You know, my, my great uncle, he would never step foot outta that place. He, every, the whole world was, was just atrocious compared to New York city. But, um, but for me it was, it was very difficult. We had, you know, a little boy at the time and, uh, you know, my wife was commuting two hours.

One way I was commuting an hour and a half the other way. Um, or just people everywhere. It's a rat race. It's, it's just, uh, it, it wears on you. It wears on you. So you have to love just absolutely love and live and breathe the game there. And, and we just. As into it as we needed to be, you know, 

Mike Koelzer, Host: wasn't that movie about you?

The Wolf of wall street. 

Eric Pachman, ChE, MBA: oh gosh. I hope not. were you doing that 

Mike Koelzer, Host: kind of stuff? I mean, not the sales, but were you doing the, you were doing the computer crunching at, at a company like, like that, or? I don't mean like that, of course, but I mean, you were doing. Bold stock 

Eric Pachman, ChE, MBA: market stuff. Yeah, yeah, yeah. It was all with the stock market.

Um, I'd say that movie's a little embellished, a little relative to how it actually is there but, um, the job and, and I, I think a lot of your listeners may not, you know, understand this part of the world because I certainly didn't until I got into it, but it's called a sell side, as opposed to the buy side buy side are people that are actually buying stocks.

Those are true. Investors, sales side are, are investment banks like Goldman Sachs, JP Morgan, Morgan Stanley. Um, so I worked for one of those banks and I produced research, um, which actually is where I fell in love with the stuff that I'm doing now. Um, I didn't love exactly why I was doing all of it back then.

It's like, wasn't the best intentions. Um, so to speak when you're on wall street, but, um, I loved the research process and we did some, I worked for a fantastic guy. We did some really, really, um, deep dive investigative type stuff, which, um, the whole game on wall street is to differentiate yourself. From the other analysts, because you got like 25, 26 analysts that are covering the same exact company, like with ExxonMobil or something, which is, I used to be in the energy industry.

When you have 30 people covering the same company, you gotta say something different, right. Otherwise, you know, nobody's gonna call your bank. Nobody's gonna wander your research. No, one's gonna trade with you. And ultimately that's how the investment bank makes money. So, we really dug deep and, and did a lot of things like what I considered to be very high quality research, which I learned about all of that while I was there.

And now I've kind of taken it to what I do now. What do you mean by research? 

Mike Koelzer, Host: I mean, was it like, I mean, it's not like you were, um, you know, like national treasure going to the archives. I mean, are these computer deep dives? And did you like the research or did you like the numbers, like the Tableau stuff?

You know, making it look pretty? What did you love so much about it that you said I wanna do 

Eric Pachman, ChE, MBA: more of this? Well, I think that in chemical engineering, What you learn more than anything else is problem solving. And so I loved solving problems. I loved coming up with answers, fact bases that, that, that I could then use and apply to solve problems when you get to wall street and you're provi, and you're doing a research function, should I buy, sell, or hold this one stock, you have to come up with a thesis on that.

And then you have to do deeper research than anybody else is doing to come up with some differentiated opinion that hopefully will work. You know? So when, when we were researching certain companies, we were going through. All of their historical SEC filings, we were doing market analysis. So if you think about the pharmacy market and you think about something that Adam fine puts out where he does, like these very long comprehensive reports on the pharmacy marketplace, like that's the kind of stuff that we were doing.

Those, those are actually called the white papers or primers or something like that. We were doing those, but then applied to a certain company because ultimately what you're trying to figure out is, um, you [00:10:00] know, what did the market miss? So the stock is trading for a certain price. What is the market missing either?

Or bad. And if you figure that out first and you buy the stock, then you'll make money. If you don't, then you won't. So the one thing you should be learning from this entire discussion is don't be an active investor, unless you're really doing this stuff because, because other people are doing this, I was one of them that was doing this on the other side.

Mike Koelzer, Host: So people think that I'm gonna beat the stock market because they're just looking at this, but I've got these little research ideas. I'm gonna look in this magazine and see what they said back then and all that. But the problem is there's already people like you doing that. 

Eric Pachman, ChE, MBA: Yeah. Lots and lots and lots of people doing that all across the world.

And, and honestly, even though all those people are doing it, most of them are still pretty average as well. So typically someone's doing it from home. It's like, um, you know, The saying, if you put like a thousand monkeys in a room and you know, one of those monkeys is gonna, like, if you flip a coin, they're gonna get heads every single time, you know?

And that's more than likely, it's kind of the selection bias where after the fact it looks like, oh, wow, I got all these. Right. But it could have just been luck. So I'm not saying that there are people that are talented, that, that out there that don't have to do all the work that we would do. But the one thing about wall street is like, you know, we're working till two, three in the morning, I'm working every Sunday.

And so, yeah, just, just be careful for, for listeners. 

Mike Koelzer, Host: anecdotally, what might you have found from research that the computer models or something we're not finding, what's an example of something you came up with that you thought was different, more different than the average. Company 

Eric Pachman, ChE, MBA: or person found a lot of the stuff that we did with was with energy.

And so if you think about oil prices yeah. If you have the oil prices are what drives basically the stock price of all energy companies, for the most part I'm oversimplifying, but, but that's the main call. What's called a key debate or thesis is like, what is the oil price going to be? So if you came up with some sort of model or you were, you had some view on some geopolitical situation or something, and you could predict what oil prices were going to do or not going to do back then, there was a whole movement.

I don't know if you're familiar with this called, um, shale oil. So there was shale oil and gas where all of a sudden, there's this energy revolution where we're doing fracking. You may have heard of the term fracking where you're, you're busting open the rock and, and gas is coming out. Well, this was like not a new thing, but the technology just evolved so much so quickly.

And so there was a thesis that. Like look, this technology is so good and it's gonna get so much better that oil and gas prices are gonna drop to rock bottom, and they're gonna stay there for a very long time. That was a very differentiated, not common, almost contrarian thesis back in 2008, 2009, when I was doing that.

Gotcha. Or you could have figured that out and informed a pretty strong view on that by simply understanding the technology. So it wasn't data per se. It's very different from what I do right now. Well, not very different because we do some of this stuff, but it was more of like really understanding the inner workings of the technology, the science of the technology.

And, and then coming up with a view that like, look, this is only the first or second inning of this, you know, the oil futures market thinks that it's gonna shoot back to a hundred dollars, a barrel that ain't ever happening. And if that's not happening, I'm selling all these stocks and getting outta here.

And then that's, that's, that's what you, we, the kind of stuff that we would do being 

Mike Koelzer, Host: familiar enough, the industry you can say, oh, this equipment came out. But we know that people are still learning. It, it it's, it's in its first or second generation. We know it's really gonna be good equipment and it's really gonna be able to be used.

So we think, because we know that we think that this is gonna 

Eric Pachman, ChE, MBA: happen then. Yeah. It's still an educated guess. If you're aware of the background, the inner workings behind the technology, and you come up with a view that you think that the next generation is gonna be better, that the market is underestimating how good this technology is, but you don't actually have any knowledge of any of that stuff.

That's just good research. 

Mike Koelzer, Host: What did you think you were headed into with the 22 pharmacies? I had no idea 

Eric Pachman, ChE, MBA: I had absolutely no clue what I was getting myself into. I was, um, you were just a happy wife, happy life, happy wife, happy life. Um, I was, uh, you know, ignorance is bliss, whatever, whatever the saying is, right.

Yeah. I mean, it really was because I was quite happy, um, knowing absolutely nothing at that point in time. But, um, when I got into the data, um, Basically what I went in, just knowing that I could only do so much. And I also went in knowing and seeing this through 17 years or at the time it was 15 years in corporate America type jobs that you can't have 10 priorities.

It just doesn't work. You accomplish zero goals, if you have 10 goals. So I needed to have, you know, a handful yeah. Maybe two or three, and then, and then prioritize and see what was the most important ones. Yeah. And I spent, you know, most of my wall street career updating financial models. So I knew what the most, most important economic drivers are.

I could figure that out pretty quickly with any, with any business. [00:15:00] So I immediately came in and, and, you know, saw, and it was, um, you were getting into the Ohio story here, but very quickly saw a steep drop off in our gross margins. And I was just wondering, how could this happen? You know, I've never seen a drop off 

Mike Koelzer, Host: from a few years prior to that.

Eric Pachman, ChE, MBA: From one month to the next it was, I think it was July of 2018. And it into August, 2018, or you picked the 

Mike Koelzer, Host: certain year where they were, where they were dropping, like a rock every 

Eric Pachman, ChE, MBA: month. No, 20 16, 20 16. Apologize. Yeah. I'm losing track of time. Mm-hmm I didn't pick anything. This is all just fate. Your fate drops me in the middle.

Whatever you wanna call it. Sure. I just randomly get dropped, right. Luckily or unluckily. right, exactly. That story hasn't played out yet. Get dropped in the middle of, um, of Dayton in 2016, August 1st, 2016 was when I started. That is exactly the same time when Medicaid, uh, Mac rate started getting compressed.

Gotcha. I had no clue what a Mac grade was. I had no clue what Medicaid was. I didn't know what anything was back then. Did you know what a pharmacy was? I, I, I had been to one before.

I learned quickly though. yes, yes, yes. So, so yeah, so I, I, I saw this very steep drop and, and I realized very quickly, this was gonna be my top priority is figuring out what in the world just happened between. I think it was July and August, literally the month. One of when I started, or maybe it was June to July.

I can't remember 

Mike Koelzer, Host: Now they didn't hire you because of this drop. That was just coincidental that you came right then 

Eric Pachman, ChE, MBA: when it started dropping. Totally coincidence. No, I mean, they hired me because it, it, because as you said, it's not fun and quite difficult for me in 22 pharmacies. so just, just from the sheer.

Operational discipline compliance, like all of that kind of stuff, inventory management, like that was the kind of stuff that they hired me in. And, and I actually, we did a ton of that stuff. I mean, that was, you know, a tie for number one priority is to do all that kind of stuff, but it ended up that it didn't really matter how much of that you did.

It was going to create a better pharmacy, a better patient experience. Um, those were the things that you did, and those were absolutely necessary. Um, inventory management clearly creates, you know, cash on the bottom line, but, um, but that didn't matter relative to the, the, how fast reimbursements were dropping, rearranging the chairs and the Titanic.

We had a lot of overhead that I had to figure out, how do we work this down? How do we, how do we better use technology? But I mean, again, ignorance is bliss. I didn't know. It was impossible at the time. , I mean, the math just doesn't work on it. We got so far, we took the organization so much further than I think we could have just because I had no clue that it wasn't possible 

Mike Koelzer, Host: when you talk accounting and all that stuff, you were in charge 

Eric Pachman, ChE, MBA: of everything.

Yeah, I was, but it, but it's not fair to give the impression that, you know, I was doing all of this. Um, I inherited an amazing team. 

Mike Koelzer, Host: How many full-time positions were there that were not. Part of the working in the pharmacies, would 

Eric Pachman, ChE, MBA: you say? I don't remember the exact number now, but it was probably like 15, 

Mike Koelzer, Host: 15 and you guys had an 

Eric Pachman, ChE, MBA: office or something.

Oh yeah. Yeah. We had a small office headquarters or whatever mm-hmm yeah. Gotcha. But we were, you know, you know how it is, we, we were always out on the road. Yeah. Right. You know, you, you can't, you can't manage remotely when it comes to this. So we were all out on the road. We had pharmacies all the way from, you know, the, the, the Easternmost side of, of, of Ohio to Indianapolis.

Gotcha. Okay. And all the way up close to Cleveland as well. So we, we were just always, yeah. Driving around. And at one point, 

Mike Koelzer, Host: did you wanna say I'm getting off of this thing at what point did you say this was, this was a bad decision for Eric. Was there a point of. 

Eric Pachman, ChE, MBA: No. I mean, uh, to be honest, no, because we were in Dayton, right.

That's, you know, I, I, I had, I had realized that not only was this giving me the opportunity to actually run something, which is what I always wanted. Yeah. But it was a big move for my family. Yeah. And, and like, yes, I could have just picked up and moved us again, but I, I don't know if I'd be married right now.

right. I like to think that we, I would've I'm joking, but, um, that was a very, very important part. I mean, making the move for my family was very important to me. Yeah. So I was gonna go through and, and tough this out as much as I needed to. And, plus the problem was so fascinating. I mean, I didn't realize the futility of trying to run 22 pharmacies with 40,000 scripts per pharmacy.

But I didn't realize the futility until after a year, year and a half banging my head against it, you know, um, maybe two years, something like that, because we were trying everything, there were so many things to fix and every one of them was making a difference. So there was never time to kind of step back and reflect on that.

I always think it'd be kind 

Mike Koelzer, Host: of fun to come over as like. Oh, what's that, you know, that guy on TV, the profit or something like that, because, you know, you didn't come in and [00:20:00] cause any of that stuff, it's almost cool to come in and see that there's problems because you know that you're starting kind of in the hole instead of something way up here where a business is at the top ever.

And all you can do is go down. 

Eric Pachman, ChE, MBA: Yeah. That, that, that is true, I guess, from a development standpoint. But, um, I'll tell you when, when you were reporting to a board of directors and, and an owner of the company, the problem quickly becomes yours. And so, um, I had to take ownership of that problem very quickly.

I mean, maybe you get like a three to six month kind of honeymoon phase and that's my problem to fix and if I didn't fix it, which I didn't, I fail. Look, if it's just me I could like, I'm just basically reporting out to myself. Hey, like they're they smashed out reimbursements again. Oh, okay. Yeah. Yeah. You.

When I gonna fire myself, 

Mike Koelzer, Host: we have to have a board of directors meeting, you know, I said, well, Mike then said to Mike, and then Mike returned to Mike and said, you know, , 

Eric Pachman, ChE, MBA: that's all we get. So I knew that we needed to turn things around faster and yeah, and, and it felt more and more futile because you know, of the whole Mac rate setting process and, and, and, you know, I, I just didn't fully appreciate it, I appreciate it all.

Like when I came in, that the numbers are not contractually set at all and they have, they're just completely made up. And so, you know, when you were in the middle of something like that, that initial really steep drop, um, you just never knew when you were gonna see the bottom of it. And I imagine that listeners are, are probably saying, yeah, we're still in it.

And, and, you know, we see a lot of the data. We know that we are, but it's like, you can't go much lower than zero. 

Mike Koelzer, Host: Right. Right. Exactly. When you knew it was going down, how much time of the crossover between this and you thinking. I may not be here within 18 months because I might be doing my own thing.

Where does, how does that cross over 

Eric Pachman, ChE, MBA: then? I really did not think about that until. Almost the very end because it's, it's, it's hard to put yourself back in my shoes with, again, a family that was very, very tied to the Dayton area. Right. And no other job prospects. Yeah. Um, so this very much needed to, to, to work out.

And so, and when, when you're saying like the going down part of it, it's very easy in hindsight to be like, oh yeah, they were just gonna keep slashing reimbursement. Mm-hmm slash slashing Mac rates to, to the point where it was gonna make a 40,000 script per year pharmacy not viable. You know, it's very easy to say that now.

I didn't know that in the middle of it. I, I really didn't. I, I, I guess I suspected that this is why, why like they turning up the dial on this thing, like, this is getting harder and harder. It's like, it's, whackamole you, you know, you hit one and two others pop out. And that's what it felt like. But, um, I, I, I guess it was.

it was less of that. I expected something to be going down. I knew it was getting more and more difficult, but I knew we were getting better as well. It was more of, I felt like, you know, you know, and, and, and you, you know, Antonio O Chacha he's he's, um, you know, one of the most amazing people I've ever met my colleague now at 46, Brooklyn and, and, and three axis for the listeners 

Mike Koelzer, Host: and Antonio was very, is, or was very involved in the Ohio pharmacist association.

Yes. And yes, he. Came to you or you came to him at some point and said what the hell's going on here in the state of Ohio. 

Eric Pachman, ChE, MBA: Yeah. So that's a good story. So I'll tell you really quickly, um, this goes back to the kind of, you know, uh, September-ish of 2016. Yeah. And right after I had figured out what was going on within Medicaid, I had pinned it all down to one bin PCN and the groups were all the different Medicaid plans that were all run by Caremark at the time.

Um, and all of the Mac rates were basically at the exact same time, just crashed and cratered out. Yeah. And, and so, and then I did all this analytics on, uh, looking at our data and I saw that like, this was the only. Being in PCN, they were responsible for a large portion of our claims. Um, but it was the only one that was experiencing this.

So, you know, once I figured out that that was our Medicaid program, managed care Medicaid in Ohio, I, um, I talked to some of the people that worked with me and they were like, you should really reach out to Antonio and talk to him. Um, you know, he's this powerhouse pit bull of a guy that's working for OPA.

Um, you know, and, and, and he was just like, you know, get this information into the right hands. And so I called him, we talked, it was a great conversation. Um, I don't think we talked for like another month after that, but in the meantime, I had called at the time who was the director of, of, um, pharmacy and Medicaid, Margaret Scott, I had called her and I had told her, look, I will send you all of our data.

You know, I'm, I just, you know, I will, or as much as I possibly can or you'll allow me to send you, but I wanted to show her that the exact same, because what I was able to do is I was able to drill down to the exact same substitutable, generic drug and say, well, this one. From this [00:25:00] month to this month, it went down by 60%.

Whereas in fee fee for service, which is state Ru Medicaid, rather than managed care Medicaid, it was there's no change. And then I would show the ingredient costs. Um, you know, we could show our own, we could show NETEC, you can show whatever you want. And basically saying like, there is no ingredient, cost movement.

There is no movement in your own state run program explaining to me why managed care dropped this by so much. And so I was very transparent with her on what happened and after an hour, she's like, you know what you need to do. You need to call Antonio Chacha. 

Mike Koelzer, Host: isn't it sad that a Harvard MBA had to do hours and hours just to see.

Oh, we're paying this for that. It'd be like any other, well, maybe not, maybe I'm just on my soapbox, but it seems like any other thing that you would be selling. It's like, I'm a hardware store. We're paying the supplier $12 for a hammer. Oh, I can see it right here. But it took 

Eric Pachman, ChE, MBA: like Mike preaches. 

Mike Koelzer, Host: It, it, it took all of you paying these wholesalers and stuff.

Millions and millions and millions of dollars. It took a Harvard MBA to say, this is what we're really paying for something. You know, the smoke and mirrors are disgusting. 

Eric Pachman, ChE, MBA: I mean, everybody knew this like, or not. I shouldn't say everybody, but most pharmacy owners knew this was going on. Um, but nobody else did.

Yeah. You know, and, and Antonio says this better than I can, but, uh, or better than I do, but pharmacy has has. Um, and I don't mean this to sound negative to pharmacy in any way, but like any group that's advocating on behalf of themselves, there's always going to be something to complain about.

There's always going to be underwater claims. There's always gonna be that kind of stuff. And so going back over time, um, within advocacy for pharmacy, there were always complaints about we're not getting paid enough. We're not getting paid enough. We're not getting paid enough. And then all of a sudden one day it was like, oh, we're not getting paid enough.

you know, it was, it was more of like, I want more money too. Holy crap. We're gonna have to shut down. And it went so fast that lawmakers weren't gonna just take the anecdotes anymore. You know, they're like, I've heard this story before, but the, the, the, the, the extra level of panic didn't register. And so that's what we started doing.

You know, working with Antonio, we started. Visualizing the story. And so we started creating these visuals to kind of say, you know, here's what we're getting paid in commercial, you know, all highly, highly aggregated de-identified, you know, people didn't even know who their company was at the time or anything like there's we had to be very, very careful with all of this.

But here's what we're getting paid for: the exact same mix of drugs, exact same utilization, everything. How come I'm getting paid this amount in commercials, this amount in part D this was before part, uh, DIR got so bad and, and this amount in Medicaid. And then even if you think like, oh, you should be accepting less in Medicaid.

How come that wasn't the case like four months ago and it is now. And so you start giving that to lawmakers or showing that to lawmakers, and they're like, this makes no sense. And then they start asking questions and it's like pulling this thread on this giant ball of rotten yarn and, and you get to like, oh, well the contracts technically, you know, we have this Mac rate that we can change at any point in time.

Oh, in the contracts basically only take the O overall discount to average wholesale price over an entire year long period. So any individual transaction, it doesn't really even matter what we charge you for, we just have to meet our annual guarantee. And they're, and, and lawmakers are like, what is, what is up with this market?

And with this space, it just, and, and I kept. Saying that like, you know, I had not seen anything like this until I got the pharmacy in all, in 

Mike Koelzer, Host: all of your case studies you did for MBA and all this stuff, you didn't see anything 

Eric Pachman, ChE, MBA: close to this. It wasn't just that, like, when I worked on wall street, I studied.

30 to 50 different companies. And then when I went and I worked for a hedge fund, a family hedge fund, my portfolio manager, and I didn't love this at the time because it was a heck of a project every single quarter, when these companies released their earnings, I went through hundreds of companies to understand, get a pulse of kind of like the economy.

Like what are companies actually saying? Not as what is, what is GDP doing or whatever, what does the media say? No, what are companies directly saying? And so I had studied dozens and dozens, if not, you know, probably in hundreds, but dozens and dozens of industries, hundred. If not a thousand companies, by the time I got to pharmacy and I came into this market and I was like, this is the most screwed up one.

I have ever seen Barna 

Mike Koelzer, Host: you never saw anything as screwed up as 

pharmacy? 

Eric Pachman, ChE, MBA: No. No, I, I, I never did the only time 

and this, this, I may have to explain this a little bit 

When I got to Wall Street, this was right as the world was falling. There was one really nasty 

deal or 

thing going on with investment banks where the investment bank side of the house, the ones that were 

trying to 

launching IPOs, 

You know, an IPO is an initial public offering. A company goes [00:30:00] public, and we gotta sell it, make as much money as possible, sell it to the public.

Well, 

The other arm of the investment bank would be the one that was publishing the research. 

Oh geez. And back before Elliot Spitzer, they would communicate with one another or at least this is the allegation. 

And then they would, they would, before they were launching the IPO or right when they were, they would launch coverage at like, you gotta go buy this.

And so that was blatantly illegal and, and they put up what's called firewalls between the two of them. And so that whole thing actually went to bed, was put to bed. After that, if you were an investment banker talking to someone in my job, you had to have a lawyer on the phone with you. The point of the story is I would tell people.

The pharmacy marketplace and I mean, drug pricing and everything. Reminds me of that. It reminded me of investment banking in the pre Elliot Spitzer days where it was just like, it was a free for all like PBMs can buy a specialty pharmacy and then, you know, mandate that you use their specialty pharmacy and then set the price for the drug as well in the contract in the client had no has no clue that this is going on.

So like that is the kind of stuff that the investment banking industry was cleansed of. So I'm telling you that this industry to me is worse than investment banking, which says something . 

Mike Koelzer, Host: So Eric, you work with Antonio at some point, you give the benefit to your company of what you've done here, but you also found out that you're able to turn either 46, Brooklyn or three axes into enough money to.

Feed your family. When did that crossover happen? 

Eric Pachman, ChE, MBA: Well, when I started thinking about leaving and I have to give a major kudos to the owner of the company who actually let me out of my contract to go because he saw the passion that I had for doing this was when we started learning about all of the public data that was available to help us tell the spread pricing story.

So, and that's the data that we launched 46 Brooklyn with this data that you get from data.medicaid.gov CMS. Um, you can connect though, when we realize that you can connect that data with NADAC to see these massive divergences in what states are paying within Medicaid programs and the cost of the drug.

I had basically sat on that for about three, four months. And I was showing everybody that would look at it basically before the days of zoom scheduling calls to kinda show people, meeting with them in Starbucks, look at this. Can you 

Mike Koelzer, Host: Believe this? What kind of people, just friends to tell you that you weren't nuts or were you working with pharmacy 

Eric Pachman, ChE, MBA: industry people?

I was working with some pharmacy industry people there. There were several people in Columbus that I was used to, to illustrate like, look, you don't have to look at pharmacy data. Like this can all be public. Cause Columbus is where, um, oh yes, cover my meds or something. Cover my meds. Is there cover for my meds?

Is there? Yeah, just coincidentally. Yep. 

Mike Koelzer, Host: You're not a hotbed of pharmacy lines there or anything. I don't know if there is such thing, but so you're showing all the people, this, 

Eric Pachman, ChE, MBA: I put this together and it's sitting on my laptop at this stage of the story. It's on our website. You can go look at, you know, my, my whole personal story, but on January 3rd, 2018, my mom passed away from pancreatic cancer.

Mm. And, and so. I had just come to learn about all this public data before then. I was just starting to kind of form this idea in my mind of like, there's something bigger to be done with this. Yeah. Um, then, you know, just kind of have it on my laptop and try to help a company of 22 pharmacies. Right. And, when my mom passed, well, I shouldn't say it's unexpected, but it's always too soon when it's, you know, it's cancer.

She had been sick for 

Mike Koelzer, Host: 18 months. 

Eric Pachman, ChE, MBA: She's 18 months. She was 71 at the time, which is quite, 

Mike Koelzer, Host: quite long for pancreatic cancer. Isn't it? 

Eric Pachman, ChE, MBA: Yeah, it is. She, she was a fighter. She had a Whip, I mean, she was like 90 pounds at the end. The Whipp just like devastated her body. I mean, that, that is that surgery is no joke.

I would never wish that on anyone, the surgery for the pancrea. Yeah. The, if you've looked up or, you know, ever heard of a Whipple surgery, it's like one of the most intense and invasive surgeries, like known to man is what I'm told the pancreas is like right 

Mike Koelzer, Host: in the middle of everything. Right. 

Oh, 

Eric Pachman, ChE, MBA: but they remove it because the pancreas spreads so much.

Oh. Um, they remove a large part of your intestinal tract. Um, and so, and they have to stitch everything back together in, in some cases, it, it, you know, it, it, it it's terrible. I mean, it was better than doing nothing. I guess, you know, you always second guess it, but, um, but anyway, that's the decision that we made to move forward.

And then it was just like, her body never really recovered from that. And then, and then the cancer really never even went away and yeah. And, and eventually she went and, um, and when she did, it was just one of those light bulbs of like, What am I doing? You know, like this could happen at any moment. Life's too short.

Life's too short. I don't really care, I don't have enough money in savings because if you have X number of months, you're always gonna want X plus two, right? I mean, it's, you never have [00:35:00] the right amount of money to leave and do something on your own. And plus I'm, I'm a pretty, I'm in you, pretty risk averse person, or at least I used to be.

And so I always think, well, my, who cares about my ideas? Like, no, one's gonna care about my ideas. They're stupid ideas anyway. And so I never really had the confidence until you're faced with death. At that point in time, it still took me another six months before I finally worked up the courage to do it.

But at that point in time, I. I just, um, you know, I went to the owner, he graciously let me on my contract. He wished me the best. And he saw the value that I, that he thought I could add to pharmacy as a whole. And so he was, he was awesome about that. And I left with no job, you know, and, and there was, trust me, it's very difficult to find operational funding for a nonprofit

Nobody wanted to fund 46 Brooklyn at all. And so. I really just did not care. I, I, I had, you know, an LLC set up on the side, but I wasn't doing anything related to this. I was like, people knew, I knew, I knew how to work with data. And so I was playing around with data, helping do some analytics for some people I was getting by month to month, each month.

But, but what. People don't know that they have been through this, which I mean, a lot of your listeners have started their own business. But, um, it was like one of the most fun, greatest times I was the happiest I've been in my life, you know, because every month it doesn't, if you're making enough money to put food on the table, but you're doing what you want and you don't have a boss or anything, it was, it just feels like 

Mike Koelzer, Host: you're free.

I've been kicked. It seems so many times in pharmacy that I always seem to operate from the, from the sense of anxiety. And then that usually turns into depression cuz you wake up day after day and you're anxious about something. When you were saying that you left without a job, I was gonna question and say, well, were you under depression?

You know, is that why you left? Because you couldn't do your job anymore at the pharmacy and you needed to get out. But it sounds like 

Eric Pachman, ChE, MBA: the opposite. Absolutely not. I was on cloud nine. all the stuff that I was doing on nights and weekends, you know, playing with data. I was now able to do that full time.

And you 

Mike Koelzer, Host: said you were bringing in some money from different companies by doing a little research for them on something else or whatever. So yeah. You knew you could maybe at least live or at least for a while on this. 

Eric Pachman, ChE, MBA: Yeah, it was. So it was 2018. That's what I left at the end of June. I left. And then within one month we created everything in launch 46, Brooklyn named after your.

Named after my mom. Yeah. She was born in 1946 in Brooklyn. And I remember that the password to her computer was 46 Brooklyn. And so when I typed that, I'm like, that sounds really cool. And then by the way, like whenever I form a company that nobody will ever know exists because I really don't care because I, I just wanted to do kind of some side consulting data, work, that kind of stuff to kind of get by from month to month, I'm just gonna call it 46 Brooklyn, but I'll never have to explain what it means.

No one's ever gonna ask me and 

Mike Koelzer, Host: no one's gonna file for a trademark infringement or something. You're, you're just like a little tiny thing. 

Eric Pachman, ChE, MBA: Yeah. Well that, that didn't end up working out that way. Um, that's largely thanks to Antonio because he has so many media connections. So when we were putting everything together and we launched that, that first report on Leveck or generic Leveck and the first set of visualizations that were really the impetus for.

Uh, you know, me leaving, which was the difference between, you know, what the drug is, uh, getting paid for by, by, by CMS, uh, by Medicaid and what it costs. When, uh, when we put that out there, Bob Herman had Axios, uh, Antonio got in touch with him and he was fascinated by it. And he pulled us out of complete obscurity on day one and slapped us in vitals.

And thousands of people came to the website on the first day. So you made 

Mike Koelzer, Host: it on Axios. And is this like one of those things, Eric, were you. There's always a point like where somebody goes to sleep and they wake up and if something has blown up in a good way, is this one of those stories? 

Eric Pachman, ChE, MBA: No, no, it is. Oh, geez.

I'm sorry. It was, it was we, because if you go back and you look at our page, which by the way, as a little plug here, we just launched a redesign 46 Brooklyn page. I saw it today. It looks fabulous. It's beautiful. Oh, thank you. Thank you so much. If you go back to 2018, the second half of 2018, since I had no job.

The benefit of having no job doesn't last forever. We were so prolific. I didn't have time to be like, oh my God, Axios picked this up because we were already writing the hydroxychloroquine piece. And the funny thing is like, now of course hydroxychloroquine everybody knows what that is. Right. nobody knew what that was when we wrote about it, because we were writing about this roller coaster pricing wave that hydroxychloroquine was on and how PBMs weren't passing through the savings on that.

But when COVID came about and hydroxychloroquine was all the rage that it could be a potential treatment. Yeah. That was our most red piece at 46 Brooklyn, really? Like, yeah, everybody was going back and reading this like super nerdy drug pricing piece about PBMs and hydroxychloroquine historical pricing and ran backy and, and like, you know, all the, the, the games that were played with, with that drug and the import restrictions.

There's a whole amazing story. I'd urge you to read it if you [00:40:00] haven't to 

Mike Koelzer, Host: slow this down for a listener, because we kind of started in the middle of things. Yeah. 46 Brooklyn. What that does is that's gonna take a hidden, difficult information. You guys research it, you put it into a beautiful article, but also beautiful graphics.

Yep. And then the average person, especially the average politician who might have had their eyes crossed. Yeah. When someone goes and talks to me about this stuff, hopefully it helps. You're finally able to bridge that gap and. People understand what's happening in a cool hip. Very nice visual way. Did I miss anything on that?

No, 

Eric Pachman, ChE, MBA: no, you didn't. The only thing that I think that you've missed is that we are nowhere near where we want to be as far as really being able to do that. So clearly pharmacists can understand what we're writing. Yeah. Policy makers, wall street, people, they can understand what we're writing, but we have not succeeded until the general public understands what we're writing.

Mm-hmm and, and we don't write to that level. It's just not how we naturally write. We're writing for people that wanna understand the inner workings and wanna spend 30 minutes kind of with a deep dive into this, like kind of, they want to tinker with the whole thing, politicians, but. Well, not the politicians, but they're, they're their staff and the people that are actually writing the policy are not the politicians.

They're, , they're, they're the committee members and stuff like that. They're the ones that are digesting, like this kind of stuff. 

Mike Koelzer, Host: That's a hidden world that we don't know, but they've got all these people writing, all this stuff 

Eric Pachman, ChE, MBA: and, and just, just so you know, They are the hardest working, most brilliant people that I've ever worked with.

And I've had a chance to work with them through my work in three axes and to sit down with them, to help educate them and through the work in 46, Brooklyn. And I am, I felt a lot better about government, at least that portion of it at the end of the day, there's politics and there's policy politics right now, especially, but tend to get in the way of good policy, but the people that are actually writing the policy, especially in the healthcare arena in DC, they are super, super smart and amazingly just dedicated to what they're doing.

And probably just as frustrated as we all are that good policy isn't actually getting through. 

Mike Koelzer, Host: Michael ho the president of the American pharmacist association was just on the program today and we were talking. Pharmacists called the offices of these politicians and he made it clear. He said, yes, do that.

But the politicians aren't gonna be answering the phone, you know? And now you're telling me that the politicians don't do any of the bill writing and stuff. And so I think I'm right, that they don't do a 

Eric Pachman, ChE, MBA: damn thing. They're different types of politicians. There are politicians that they're gonna listen to a bunch of angry calls and they're gonna be like, do this

And so that is very valuable for pharmacists to call those types of politicians. And, they really should kind of talk to either, you know, the APHAs of the world, um, the N CPAs of the world, their buying groups and their legislative groups, because they will know what types of politicians are, what types of politicians.

And so certain types will, will be, there'll be more bang for your buck when you pick, pick up the phone and call them one after the next and say, here's this, this like sob story, this anecdote, this, whatever that will work other types, they're gonna wanna see the data, other types. They're just not gonna vote against the president, or they're not gonna vote against whatever they think, you know?

So there, there, there are different types of politicians that are out there and you have to, you have a different targeted approach for, for the different ones, um, on how you're communicating with them. And I was joking about 

Mike Koelzer, Host: the politicians are not doing anything, but in actuality, they really should be doing what they do best.

And that's making deals, I guess, with. Other 

Eric Pachman, ChE, MBA: politicians. I mean, honestly, I don't think I've talked to one politician since I've been doing this work. Yeah. When I'm in DC, I lay out the education on how things work and, and responsive to answer questions for people that are basically on committees or staffers.

And I'm like, look, you know, you can have any view you want. And more than likely, you're gonna have a lot of different groups that are coming in here advocating. That's not my role in this. My role is really to just provide all of the facts. Now, if you are a pharmacist today, the facts are in your favor.

If you're a pharmacist 20 years ago, the facts probably weren't in your favor because the PBMs weren't there to take all the spread between AWP and, and, and the acquisition cost. But today the facts are very, very much in your favor. And that's all I do is, is go in there and, and try to lay them out because they look bad 

Mike Koelzer, Host: and they're available and you're putting them out for people to understand.

Yeah. All right. So. We got Brooklyn 46 going your three, an axis to say, I want to use this. I'm gonna do some business stuff in my mind. It's like a way to make direct money with direct companies. Is that right? Well, so 

Eric Pachman, ChE, MBA: yeah, so the, the, and that story is not well known. So I'm very glad that you asked that question.

So what happened was after about five months, [00:45:00] I realized that 46 Brooklyn wasn't going to last for much longer. Um, and I had a lot of job offers at that point in time. It wasn't gonna last 

Mike Koelzer, Host: because you were getting popular, but not enough money from it. Well, there was 

Eric Pachman, ChE, MBA: no money from it. We have not taken any money from 46, Brooklyn as salary, since we started, this is it's all been volunteer work.

The only money that we've taken are the donations that we have gotten. We've invested in freelance designers, which you'll see in a report that we're about to put out this week, which we're trying to create artwork so we can, people don't have to read the reports. They can just look at it, infographic. Um, that website development costs money , you know, stuff like that.

We're paying freelancers to help us, you know, better. You know, amplify our message. And then we're also buying data. You could as a nonprofit, 

Mike Koelzer, Host: But you're not taking any for sure. Any nonprofit seller 

Eric Pachman, ChE, MBA: even. And, and that's what I wanted back in the day when we started, I just wanted the nonprofit. That's all I wanted, but I had, again, you know, with being a brand new nonprofit, I had no way or knowledge on how to get operational funding at the time.

You know, it was basically like, oh, we'll pay you a little bit of money for this one project, but I'm like, no, I don't want anyone to have any editorial control over 46, Brooklyn. This is purely the stuff that comes out of the minds of Eric Antonio and Ben now. And I don't want any funding that has strings attached, you know?

And so they're like, well, okay, but we're not gonna provide you with just a blank check. You've only been in business for three, four months. And so I realized at the time that either I had to get a. which we know jobs aren't nine to five, right. So I had to go to work and then go back to doing this nights and weekends, or I had to start my own consulting firm and, um, and actually look to bring in a little bit more funding.

Yeah. Uh, uh, it, a little bit more work. Right. And, and get this balance where we were the ones that could control how much time we spent on 46 Brooklyn. So this, as an example right now, this month, and last month we have been spending probably 75% of all of our time. My clients, uh, three Xs won't like this, but this is true.

We've been spending probably 75% of our time on 46 Brooklyn, because there are a couple massive pieces that we're about to release in August. And they've, they've, it's the most in-depth data analysis and data management that we've done to create these databases. And so they've taken a really, really long time, but they're, they're, they're necessary.

And had I been working a real job for another employer, I wouldn't have been able to tell, you know, Ben and Antonio, whatever. Nope. Whatever, like we have more important work to do for 46 Brooklyn. And so we have clients that are very patient. They understand how we work. And so they're willing to wait a little bit longer in some cases.

And so we, we, we have the flexibility to put things aside for 46, Brooklyn, 

Mike Koelzer, Host: what's an example of a three axis customer or, 

Eric Pachman, ChE, MBA: or project. Yeah. So we did a report. Um, what I, which actually, I don't think a lot of people read, but I'm very proud of on Nexium. We basically did. The entire, and not, not just NEX XM though.

Merool molecule, which then of course was the product top Toso Merool. But, um, we did the entire history of what is now 40-50 years of history of this one molecule. And the goal was to take it through chronologically to show. How did it become Prilosec? How much money was made off of Prilosec? All of the patent games that go around the product top the OTC launches, which basically is just another way of extending monopolies for certain drugs.

And then eventually how they basically executed what's called the shark fin strategy is what the AstraZeneca team actually called it to stave off generic competition, which they were able to do very successfully for Nexium and then Nexium the healing purple pill, which is no different than Prilosec turned into a $60 billion franchise.

Um, so we wrote the entire story in 80 to a hundred pages and were very grateful that, you know, we were able to get support from Waxman strategies. And Arnold ventures. So this is John Arnold's, um, uh, philanthropic foundation. He supported us in that, like we went to him with this idea and he said, we'd love that.

That is, that is the perfect example of a three axis project is something that we'll propose. We'll get funded by somebody. They still don't have any editorial control over anything that we do. It's a long project. That project probably took us like nine months from start to finish. But it is a very, very granular, deep dive way, deeper than anything we can go into on 46 Brooklyn and ideally something that our clients will let us publish free to the public so everybody can read it.

So gotcha. If you, if you look at our website right now, every. I mean, we do some, you know, advisory work and stuff that doesn't result in published written reports, but the vast majority of our work results in published written 

Mike Koelzer, Host: reports, some of your customers, there is like a private company that wants information on this or something.

That's like a consulting thing. You'll do some of that, but other ones are bigger, like a, what would you call it? A grant kind of thing, 

Eric Pachman, ChE, MBA: or a it's kind of like, yeah, it's exactly what it's like. It's more like a project grant. And so we've done, we've done work for, uh, The, uh, pharmacy association in New York for the pharmacy association [00:50:00] in, um, Illinois, Michigan, Florida was a beast of a report that was over 200 pages, but I highly encourage you and readers to scan through that because you'll see some things, which I do not know why people, you know, we talked about.

Investment banking and how rotten of an industry that is, well, this is 10 times worse than what we found in Florida, because that was the first, that was the first opportunity where we actually got claims detail from the state. Um, there was a public records request that was done. Foyer request. Yeah.

And, and that we, we actually got literally every individual claim and then we were able to analyze how much CVS pharmacy got paid on a Caremark run plan. Wow. Versus like, that's, that's affiliated with Centine versus how much did Publix get paid in Florida on that same plan for the same drug on the same day.

Wow. And we published all of that. When you 

Mike Koelzer, Host: mentioned that these, like, let's just say grant companies, when you mentioned that they gave to this, and then you published a story, are those companies at an arm's length enough away? To do a report in 46 Brooklyn, or would you say I'm still not comfortable?

Let's go to the three axes. What will be your determining factor of how arm's length they have to be away? The grant let's say before you do one finally, to make some, well, will you ever take funding for 46 Brooklyn or will it always be a grant? You know, I'm, I'm doing that in quotes. Cause I dunno if that's the exact term, will it always be a grant in three axis that they give you permission 

Eric Pachman, ChE, MBA: to use?

Yeah. Yeah. What three axes right now are designed to do is to give us the flexibility to, to work on our passion project, which is 46 Brooklyn. And I think it becomes very important to define the missions of the companies. So 46 Brooklyn's mission really is all about, and we've drawn like a very tight, tight box about this to provide these data visualizations.

Or a database or a spreadsheet that does analytics or something that is educational, that is not hiding the data. We can't necessarily do that with private data that we receive at three axes, right? But at 46, Brooklyn, everything is public. And so we can take multiple public databases, actually combine it with some databases that we've now purchased at 46 Brooklyn, but kind of do a bunch of, you know, as if you do enough work, we are allowed to actually go ahead, put that together into a visualization and then give that away.

And then all the research reports are for it simply as like and hopefully. Fun to read educational and somewhat snarky and sarcastic tutorials and, and, and case studies. So we put out a report on the launch prices of drugs at the end of last year. It's the first one that comes to mind. There is a visualization and a tremendous amount of data work to show that the launch prices are increasing exponentially on new brand name, drugs, and the whole report written around that is the context and our takeaways since basically, Hey, since we got the floor, we're just gonna tell you what we think, but don't believe us go use the visualizations and put together your own story.

Go do your own slew thing. We're not experts on this. You know, I wasn't trained to be a database manager or anything. If I can do it, you can do it. We're trying to get you started. And then also give you some of our opinions while we have 

Mike Koelzer, Host: the floor. Okay, wait a minute. The light bulb just went on for me.

And that doesn't mean an idea. That just means, uh, I remembered something. I had in my mind this whole time, we were talking sort of that you guys have these articles, and then you were talking a little bit ago about having these graphics, you know, but I remember today when I was on your site in your article, you're like, well, yeah, Mike, that's what I've been talking about for an

But the whole thing is you have a beautiful functioning spreadsheet slash database, right? Yeah. You've got this article, but you can take all the data and you can sort it right. And do this and look up this that's the whole basis of this, 

Eric Pachman, ChE, MBA: right. That's the basis. And so where we draw the line is, if we can provide something to the public based on free public data, that can be visualized.

Yeah. It's a 46 Brooklyn project. And, and if we, if we. Basically, if there is somebody that comes and says, Hey, you know, I, I'm looking to, um, you know, better understand the history of Nexium. Yeah. Look, I'm better. I'm looking to, and, and that's gonna be a hundred page report, you know, I wouldn't publish that on 46 Brooklyn.

Um, and there also wouldn't be any interactive data visualizations. It will be more of like just a, a, a typical consultancy, you know, type research report. Um, if there is a pharmacy or in Florida, that was saying like, we wanna understand spread pricing and specialty pharmacy steering, then we will go ahead and like any consultancy will, you know, scope out the work.

And, and then we'll, we'll largely, probably do five times that amount of scope. we, we, we have a hard time staying within scope with our, with our consulting work or really anything we do. But then, [00:55:00] then we. You know, you know, hand that report over to them and let them do whatever they want with 

Mike Koelzer, Host: it. Yeah. So your thing was really cool.

And I remember now, even though it was, believe it or not, even though it's three hours ago, I still remember, but you've got these cool graphs and databases that you can plug different stuff in and beautifully it's artwork. Basically. You can see what all this stuff is happening yeah. On this beautiful layout that you guys made that we can use.

Eric Pachman, ChE, MBA: Yep. Really cool. Yeah. And that was the, the, the main reason, and this probably sums the things up. I just had a gut feel that I wanted 46 Brooklyn to be a nonprofit. And it's not because. Of any tax reasons or anything like we've, we've gotten such a pitiful amount of donation since we've started. that there's no, and we've spent all of it, um, until just recently.

So, but we're about to, on, on some, some more data and, and visualizations and videos and stuff like that. But the main reason was because of the whole concept of a nonprofit is that I, Antonio, then we don't own it. Yeah. The public owns it. Yeah. And I did not want, I mean, I, I had, I guess I had kind of some suspicions that there could be something here.

I did not want bad Eric in the future to try to monetize it in any way, because I, you know, I, 15 years of just seeing how industry can kind of manipulate that corporate America can kind of manipulate different situations and stuff like that. And all the intermediaries in the healthcare space and everything and all these data aggregators.

And I just didn't want to be another one of them. Right. You know, I wanted all this data to be free and I didn't want to own it at all. And so. Yeah. I mean, like we have, we have control over what, what ideas come to our heads and what we wanna publish, but we try to do as good of a job as we can to be as transparent about how we're thinking about things.

We have some strong opinions and we express them and then also back it up with all the data and give the data away and don't own it. And that was the intent of 46 Brooklyn from the very beginning. And the thing 

Mike Koelzer, Host: I think that people appreciate that more and more if you're compiling a corrupt industry.

So if you're compiling a corrupt industry where you are a for-profit business, people have to question, they say, well, are you adding to the corruption with the nonprofit? It's like, no, I'm just putting it out there. Like we see it. So Eric, 10 years from now what's happened. And what are you doing with three axes?

With 46 Brooklyn or what other project, if any, I used to kind of 

Eric Pachman, ChE, MBA: stumble on the question 10 years from now, but ever since my mom passed, I really try to live in the present as much as possible. um, I think that's the only way that, you know, we got to where we are right now. If you would've told me that we were gonna build something where we've had, you know, a hundred thousand different viewers of our visualizations, I would've told you it was impossible.

I am very strongly of the view that it is our job to put ourselves out of business. Mm. I'm not saying this because I'm extraordinarily idealistic or anything. I paid a lot of money. And worked hard to get into Harvard. Right now, I look at that as the greatest insurance policy I could possibly ever have, because I can go get employment somewhere if I need to, you know, but I really believe that, like, we cannot pull any punches on what we do.

You know, if we, if the right policy, the right market forces come together to create transparent PBMs that are doing this the right way that, um, we're, we're pharmacists are better integrated directly with payers and creating value directly for them where the ingredient costs, aren't being manipulated anymore, all the stuff that's going on.

If we can have any part of our education that we're providing. Eliminating that completely, there will be no need for us anymore. And we are fully aware of that and excited about that. And frankly, you know, there are a whole lot of problems out there. I, I, I tell people like I don't have any like a story.

Like my dad was a pharmacist. My grandfather was a pharmacist, so and so forth. I don't have any ties to this profession, but when my mom passed, I knew I needed to do something meaningful with my life. And this was just laying right there, like this, this giant problem that was. I inherited it in whatever possible way I can to help fix it.

And if this problem becomes fixed, like there's, there's a slew of other problems that are out there right now. And they're only growing. And so hopefully I'll get to participate in helping with something else. After that, I would, I would, if 10 years from now, I'm still doing what I've done right now.

We've failed. Yeah. Like I don't want this consultancy to be big. I don't, I'm not good at managing people. I don't, um, I don't like it. I don't like spending my time like that. I like spending my time playing with data and we have a nice small team. That's, uh, we all work great together and we'll do as much as we can.

And, and hopefully will put ourselves out of business here less than 10 years from now. The 

Mike Koelzer, Host: Industry needs someone like you, who they can look at and say, where is Eric's bias? Well, does he own a pharmacy or does his family. This or that? No. Well, is [01:00:00] he, is he owned by the PBMs or this or that? No, he's doing this for, for some reasons that don't seem to be connected to a benefit right up front for him.

And the industry needs that because especially with the data you're putting together data, you don't have a dog in the fight. That's a pretty powerful discussion topic. 

Eric Pachman, ChE, MBA: Let's say people can find bias wherever they're looking for. Yeah, I suppose. Right, right. They really can. We have clients in pharmacy at three axes that see the value in what we do for them.

And since we are not looking to maximize our profits, we're looking to maximize our disposable time to play in the 46 Brooklyn sandbox. We have time to do that. And so. Yeah. If I write something negative about pharmacies, you know, are they gonna get upset? Well, maybe a little bit, but we've done that.

We've done that several times already. I mean, you've read through our 46 Brooklyn stuff. We air all the dirty laundry. I mean, about, about not all of it, but I mean, all the stuff that we know about that we know to be factual and accurate, the reason why it works and the reason why they don't fire us right after that is because when you're a pharmacy.

Generally the story overall is very much in your favor right now. The story overall is with all the warts, all of like the little, you know, any, you know, yes, there are a handful of pharmacists that are out there that are, you know, trying to work around the typical wholesale PBM kind of structure in scheme and find some obscure man manufacturer that set their AWP really high.

So you could, we know all about that. And we talk about that all the time. Right. But that is, that is the minority. That is the minority of what's going on out there right now around the fringes. And, and I can't even. Like, look, I don't know which one of those pharmacies are gonna go outta business next month.

And so they're only doing that so they can continue to serve their community. So who am I to judge? So the whole system is the problem. It's the way the pharmacies are incentivized. It's the fact that they even have the incentive to go out and do that. Like, that's what we're going after. And I think that if you're a pharmacy and you just want to get paid a good amount of money or a living wage enough money, um, in order to serve your patients, then you're exactly in line with what our bias is like.

That is our bias, that there should be no ingredient, cost manipulation games. It should just be about serving the patient and getting better outcomes. And all of the incentives throughout the entire system should be aligned to do exactly that for the payer and for the patient. Well, Eric, 

Mike Koelzer, Host: such a pleasure having you on.

Eric Pachman, ChE, MBA: Thank you now. Thanks for having me. This was wonderful. Any way that you 

Mike Koelzer, Host: can turn something like this into facts and not have to depend. Only on. Emotions are okay, but do not have to depend only on emotions and anecdotes. Yep. It really helps. So you're, you're doing a, um, and I don't even wanna say you're doing a tremendous job for pharmacy cuz pharmacists aren't looking for any favors.

Really? They're just looking to have the information out there and to have a level playing field. Yeah, 

Eric Pachman, ChE, MBA: exactly. The truth will set us free. Uh, we need transparency. We need better incentives. That's what we're all about writing about incentives, because we believe that's a lot of the research processes. We talked about analyzing economic incentives and you will be able to predict the outcome.

Yeah. One thing that I would ask for anyone that's interested, um, clearly all of this is free, but if you scroll down to the bottom of our website, there's just a little subscribe button. You can enter your email address, click subscribe, and we don't blast out things weekly. We only send you stuff when it's original research that we've published.

So, uh, we don't really comment. It's another thing 46 Brooklyn does. Uh, doesn't do we, we don't comment on what's going on in the industry, all that kind of stuff, which is the, a great thing about you having these podcasts, because it gives me the ability to kind of like talk a little bit about that, but we don't do that on 46 Brooklyn.

We really just focus on original research and data. So if you're interested in any of that, just go ahead and sign up and you'll get something once or twice a month. Good 

Mike Koelzer, Host: stuff. Good stuff. Well, thanks, 

Eric Pachman, ChE, MBA: Eric. Yeah. Thanks so much.