Exposing What PBMs Won’t Tell You Shane | Garduno, MBA Vice President, PBM Practice at Xevant

This transcript was generated automatically. Its accuracy may vary.

Mike Koelzer, Host: Shane, introduce yourself to our listeners.

Shane Garduno: Yeah, Shane Garduno, Vice President of PBM Practice. I work for a company called Xevant, based out of Utah. We're a company that gives employers the tools to look for ways to help to control prescription drug costs while enhancing employee health outcomes. So we're able to proactively identify issues or opportunities for employers to really save money and look for opportunities for members to find cheaper drug alternatives.

And so [00:13:00] really our goal is to help both the employer and employee to save money and give them the tools to be able to do so.

Mike Koelzer, Host: All right Shane, so we've seen a lot of the congressional stuff and the FTC reports and that kind of thing, and the big PBMs get up there stonewalling and things, but one of my biggest complaints, I think, in the industry, and I've never dealt with these people because I don't have a big enough business to Worry about my drug spend, but I always complain about the brokers cause I know enough sales people, and it always seems like, Hey, Bob, don't worry about this.

Look, you're saving 30 percent and what I steer you wrong. I mean, I didn't steer you wrong when I helped you line up your putt yesterday. And I didn't steer you wrong when we got that drink together from our trip to Hawaii that I sponsored. So just trust me and everything's going to be fine for me.

I think that's kind of the link between the [00:14:00] employer. And the PBM. It's so smoky, there's so much obfuscation, so many mirrors, that I think that's where the breakdown happens. And hearing your stuff, it sounds like you're right in the middle of that to kind of clear this up a little bit for people.

Shane Garduno: Yeah, no, that's exactly true. 

Our platform gives people the ability to get better visibility and hold each of those players accountable. Say the consultant and broker. Sometimes if you don't understand how the PBM industry works, which in my opinion, it's one of the most complex industries out there.

And in general, you can't Google how this stuff works. Cause it's not out there

Mike Koelzer, Host: You can't Google it! No!

Shane Garduno: no, you cannot find this information on how certain concepts work and what they mean and really the ins and outs of it. And so you rely on a consultant to interpret and translate what this stuff means and give you sound guidance.

That's important if you have their trust, but you still should just have the right tools to be able to look and [00:15:00] see, is that information correct? And, a lot of ways you can do that is to try to figure out. 

If they say your costs are going down, do you have a tool that gives you visibility and transparency and to see if that's really true?

Cause you know, a lot of times what happens in this industry, between any of these players, there's presentations and meetings where, you'll go out quarterly and you'll say, here's what's happening to drug costs, it's going up or down, usually up. And sometimes what happens is those presentations do get adjusted.

So that certain things aren't shown just because they may know it's a hot button issue or something they can't explain. And so, I would recommend really having some sort of analytics tool that helps you to understand what they're telling me is true. Is it something I should be digging into?

Do I know, what's really change if my costs went up? Say if they've gone up 10 percent and. Consult says maybe they should have gone up 20%, but I did X. Well, did that really work? Is that the reason [00:16:00] why? Or did you have a bunch of sick members drop off your plan? Or, did you actually get members to switch to maybe cheaper alternatives, which is better for everybody

really. So those are the types of things that I think it's important that, if you have trust of your consultant or you have trust of your PBM, you still have to hold them accountable and make sure that you have this ability as well. And try to make it so that you can understand what's going on out there without having to spend years and years in this industry to understand what the language is and how the concepts work,

Mike Koelzer, Host: Yeah,

Shane Garduno: That will make it even easier.

Mike Koelzer, Host: see the thing is Shane I'm so damn untrusting being in the industry that I figure that if I was buying this for a big Corporation and not me But somebody who hasn't spent as much time in it as I have someone in HR that kind of stuff I'm imagining I would look at your program.

I would get all this good information and Now I'm untrusting, I already told you this. I'd bring it to the broker or the consultant, I 

Mike Koelzer, Host 9/11: would question something

Mike Koelzer, Host: And just [00:17:00] like that. Big PBMs in front of Congress. I feel like my broker or consultant would say something and then I'd be back to the same position.

I'd say, well, now what do I do? Because they've even though it may not be, they say my figures are wrong and 

so I think the value of your thing, I imagine, is dumbing it down. . If someone's trying to push you in a way that right on the screen is not showing it.

Shane Garduno: Yeah.

You have to pressure test this stuff because it, to your point, if a consultant were to say, no, it really works this way and they can talk over your heads a little bit. You've got to pressure test it. And what you can do with a tool like ours is we figured out a way to simplify it in a way that you don't have to know the ins and outs of how this works.

If you know a little bit of, basic math, like what are percentages and how much of a percentage of your drug costs is represented in Humira, you can get all the detail you need to be able to look at it and just understand no different than you would with your normal financials in your business, look at it and say, okay, yeah, I agree with that.

Then you'll be able to see. How many more members are we talking about if your costs went [00:18:00] up? So say you have more members taking Humira, five more members, and say, it's, 1, 500 a script for every single month. And your costs are going up 000 a month. You can figure out how many more members, how many more scripts are they taking?

You have six more members. Are they taking six more scripts a month? Cause it's one time a month. You can start to get into that level of detail quickly. So I could be on a call. Get into one of these, a tool like ours and be able to get those answers very clearly while I'm on that discussion and be able to ask more pointed questions to pressure test what I'm being told.

So, just really making sure that what they say you can trust and you're seeing with your own eyes and asking the questions of what you don't know so that when they tell you some of those answers, you can start to look at it and say, yep. That lines up with what I'm seeing. So I agree, I trust it.

And then asking enough questions about what you don't know so that they have to explain it in a way that's not just high level and boilerplate, but diving into here's why that makes sense. This is why it's this way. This is why we decided this. This is why we recommended it [00:19:00] this way. You kind of go down that path.

You start to get a sense of what's right and what's wrong and really kind of, a tool like ours would really simplify it because of the PDM reporting you might get, it could be pretty complex. And somebody that really understands it has to kind of walk through what's the story and pull out the pieces, but there's a lot of back end.

Analytics and information that really drives what you're seeing in the summary level detail,

Mike Koelzer, Host: What's amazing to me, Shane, is I'm just a little corner business and we don't have enough employees. I think maybe it's like 50 is the break or something. We're well below that for buying 

Mike Koelzer, Host 9/11: self-funded 

Mike Koelzer, Host: insurance and so on. And we seem to go through like, I don't know, the chamber of commerce or something like that.

We're in it just for that reason. And we never. Had to look at the cost of medicine because I think it's more of a big kitty sort of with the chamber maybe. And so if our drug costs go up, we're not paying for the actual drug [00:20:00] that went up. We're paying for 

Shane Garduno: the premium.

Mike Koelzer, Host: the whole premium of all the companies that use this one here, but the bigger corporations, they're actually paying.

For the medicine, right? It's not just the premium that goes up. They're actually paying for the medicine. Penny for penny.

Shane Garduno: Yeah, no, that's a self funded scenario where they're paying for every medication that's being filled. And if they're not working with their PBM or their consultant to control drug costs. Then what happens is they're going to be raising the premiums for their employees.

So say if I'm paying a million dollars in just pharmacy, not medical, but just pharmacy as a company. And to your point, if I'm a self funded group, which really means I'm going to pay for every single drug that's being filled, basically out of my pocket. And I'm going to assume the risk that there's not going to be somebody that's going to take a drug that's a 2 million drug.

Zolgen Ma is a drug out there that costs two million dollars every time it's filled. You're [00:21:00] taking on that risk, but you need somebody to have an eye on happening with your costs. Are they going up? How are they trending? What are you doing to make sure that they're going down? Are there drugs that have generic alternatives?

Cholesterol drugs are a good example. Lipitor for a long time was the biggest selling drug in the world. It's 150 per script per month. And there's now a direct generic, Atorvastatin, that's 20 a month. So most people can take the generic. Are we doing enough to get members to switch to the generic?

The manufacturers are pushing a lot of direct to consumer marketing to keep you on the brand. you've got to look at those things to figure out what's happening. At an employee level, you're going to see your premiums go up if somebody's not really managing your drug costs.

Mike Koelzer, Host: Well, that's a huge shame because about three, four years ago, we stopped selling brand names at our pharmacy. We were getting reimbursed 90 percent on our hundred percent purchase. We're not even talking profit here. And the way that I was able to explain it well to the customer, so [00:22:00] they would still depend on us for their generic spend and the people, maybe they have a brand name they would go somewhere else. And then a lot of them would be back but what's really easy for me to show them is to pick up a 500 brand name when I still had some on the shelf.

And I say, look, this is 500. The generic right next to it is 100, but your plan wants you on the 500. For various reasons, the PBM gets the rebate and this and that. And the sad part about that is that, do these people even know about it to your point? It's like, that's where all the flashy Rep slash broker slash consultants come in because they can say, look, we're going to save you 18 percent on this brand name, this and that.

But how many employers know that there's a generic out there for 20 percent of the price. 

If I'm buying for my company, if I'm, I don't know who does it at a company, HR, or some of the [00:23:00] accountants, whoever makes these decisions up, do they know the PBM is pushing the generic out of the way? Do they know when they say, we're going to get you a great deal on this brand name drug, that there's a generic out there.

And I think that's where your program helps that out. I imagine.

Shane Garduno: Yeah, and then a lot of times they won't know they're gonna have to rely on their consultant or software like ours that will help you to understand. Is there a generic out there? Because otherwise, you're really just gonna have to hope that somebody's telling you and the PBM side a lot of times money is made in the generics and in the rebates Now a lot of times what you need to do is look at what we call net drug cost So what is the actual cost of a drug, minus maybe the rebate?

So if we have 150 brand drugs that have 100 rebates, if you as an employer get a hundred percent of that rebate Then you're only gonna be paying 50 And then really subtracting out the member costs. So say they cover 20 in the end, you cover 30. So you would need a [00:24:00] consultant to really try to break down.

What am I actually paying for a drug that maybe has a rebate .

Mike Koelzer, Host: But the problem Shane is that's okay with, what do they call it? I don't know, clean rebates or total pass through or something like that..

But there's also times where let's say that there's a 500 drug and the 100 drug and the corporation's happy because they're buying it for 400 and they don't even know there's a generic, but the rebate of. Let's say a hundred is going to the corporation, but let's say 200 or something is hidden and that's going to the PBM.

Shane Garduno: Yeah, so the question really being understanding that rebate arrangement and how do you trust that you're getting

Mike Koelzer, Host: Well, because some places will say We're passing all the rebates through to the company. But there's some, I imagine that don't pass all that through because how else then would the company, [00:25:00] unless they don't know, how would they ever. agreed to not get a generic instead of the brand name if they're paying more for the brand name, I always figure it's because the PBM is keeping more of the rebate than anybody knows.

Shane Garduno: Yeah, that's a really good point. What I would say is, if I were the employer, I would start with the contract that I have with the PBM and look at the language. And what you want to do is, the way PBM contracts are laid out with rebates, you will typically get a minimum guarantee by channel. rebate guarantees are typically only for 

Rebate eligible brand drugs. and when I say channel, that's retail 30 retail 90 male specialty. So you're going to get a guarantee, say a hundred dollars for a retail 30 brand drug for every brand drug that's filled. There's also an exclusion list. Typically OTCs vaccines, you don't get rebates for those.

So those don't get a rebate minimum guarantee.

Mike Koelzer, Host: I always kind of thought rebates were like once in a while you get a rebate on your, I don't know, tennis shoes or something like that, but rebates are for like every drug typically [00:26:00] that's on the list.

Shane Garduno: Yeah, brand drugs

Mike Koelzer, Host: Brand drugs, 

Shane Garduno: brand drugs. So you'll get a rebate but you get that minimum guarantee and that basically says you're gonna get that, 100 for that Retail 30 brand that qualifies no matter what, whether the PBM collects enough or not. Then what I would do is look at the language to say, is that all I'm getting or do I get 100 percent of the rebates?

And if I get 100 percent of the rebates to your point and this is where a consultant can really help you kind of figure out and unwind this. But if you get 100 percent of the rebates, maybe that rebate was 300. So you're not really getting a hundred dollars. You get 300 because it's going to be more than a hundred dollars.

And then you're going to subtract that from the cost of the 500 drugs. To figure out, is this really cheaper? So maybe it really is 200 when we call it net drug cost.

And so you would want to really have somebody help you understand how that really works? Now there are other rebate arrangements where you're not getting a hundred percent.

So they may say, we're going to give you 80%. Or the guarantee, whichever is greater. So it could be the 100 or it could be 80%. [00:27:00] Maybe it's like 200, the 80 percent of the total rebate, that maybe they're collecting for the manufacturer. So then you're going to get 200. So you have to really understand what is your rebate arrangement with your PBM?

Cause if you don't understand that you don't have kind of the visibility or some reporting that tells you that. You're not going to be able to figure out what am I actually paying for this drug? And is it cheaper than maybe a generic alternative? I will say generic alternatives for the most part are going to be cheaper regardless of the rebate.

So you have to have an eye on those areas, a good area to pay attention to is the specialty category because there's a lot of biosimilars that are starting to come out to market. And so rebates are really high on specialty because those drugs are so expensive. So you got to just really look at your arrangement to figure out, is this PBM passing through 100%? Are they passing through less? What are they saying qualifies? And just really uh, make sure you understand those pieces.

Mike Koelzer, Host: And then, of course, nowadays, Shane, As soon as people agree what the rebate is in that language, then that transfers over to, well, it's a [00:28:00] special fee. as a PBM, we charge the manufacturer or something like that. It's not a rebate, it's a fee and it's our fee.

So we're not going to tell you how much the fee is, but that's 

where a lot of that stuff, a lot of clouds in there still, how they name different things.

Shane Garduno: Now, that's right. Usually in your contract language with the PBM, there's going to be some language around admin fees, rebate admin fees is what they're called. Some PBM arrangements will say you've got to pass through the admin fee. And when you have a pass through rebate arrangement, that doesn't always mean the admin fee is included. And so you have to kind of understand what that means. There's also price protection. Manufacturers will have agreements in some cases for some drugs where if you raise the price of that drug beyond a certain amount, so call it inflation, then the manufacturer will pay anything over that cap. And that could be, that's not considered necessarily a rebate in the language that you'll see in your contracts, but that's an amount that gets paid back to the PBM.

Some contracts with PBMs are negotiated to say, you're going to pass through price protection as [00:29:00] well. So there's three components to your point, rebates, admin fees, and price protection. And your contract will state whether or not you're getting 100 percent of your rebates, admin fee, or price protection.

So you have to just really understand how those work. 

Mike Koelzer, Host: let's say the company negotiates best on all those three, let's say they're in the driver's seat on all of those, I imagine there's some PBMs that are squeaky clean passing through. I mean, it's totally transparent. And I imagine there's some that even with those. Contractual languages are still going to try to find some loopholes or something in that.

Would that be correct? Even if they say all of it's coming your way, there's some real good ones and there's probably some ones that are still looking for their loopholes.

Shane Garduno: No, I think that's 100 percent true. Um, That's part of why you need some transparency and expertise to look for those. But you can get negotiated in your contract to do rebate audits. To be able to confirm whether or not what you agreed to in the [00:30:00] contract is what's being delivered. And if I were on the employer's side, I would say you'd want to have that language in there and do regular audits to ensure that you're getting what you agreed to.

Because a lot of times this stuff is so complex, even on the PBM side that it can be difficult for them to manage as well. And they may miss something. So you could be missing out on money that maybe you shouldn't have. Typically consultants will do this work.

I think they charge for it, but, and it is a lot of analysis work to figure out are you getting what you've agreed to or what they've agreed to give you on your rebates? And sometimes they're not. Sometimes, those consultants may want to look at. Everything that was excluded in your contract from rebates.

So call it OTCs and vaccines. You don't get rebates for those, but it has to be defined in the contract. And so they may, in some cases, either by mistake or on purpose exclude some claims that are not defined in the contract as excluded from rebates. And so if I said only OTCs and vaccines are excluded from rebates in my contract, but they also excluded.

[00:31:00] Biosimilars,

I should expect a rebate guarantee on a biosimilar if it wasn't called out and the contract is excluded. And so I would want to have somebody validate that because I could be missing money that should be owed to me if an audit wasn't conducted and if I didn't have somebody kind of oversee what's happening there.

Mike Koelzer, Host: unbeknownst to me, Am I just doing a great sales pitch for your product? Because this is what your product is doing, right? All this stuff that we talked about. watching it and helping people that even think they know, but don't know.

Shane Garduno: Yeah, that's it. Our product will help give people better visibility into what's going on both on the rebate side, as well as just kind of your drug utilization. And then even for the consulting side. There's requests for proposals that go out, but I'm an employer and I want to pick a new PBM to work with.

You usually hire a consultant that will evaluate those and they need a tool that will help them to figure out what they are, everybody submits their own deal. Every PBM will [00:32:00] submit their offer. You have to evaluate those offers and really untangle some of what we're talking about to make it an even playing field, to give a good evaluation on Are you going to save what we think you're going to save?

you don't want to go down the path of saying we think you're going to save a million dollars if you switch to this PBM. Then it turns out there's a bunch of caveats you missed and you're not actually going to save that. So our tool will help with that.

Mike Koelzer, Host: I find it unbelievable. Now, years ago Shane, you're not going to believe this, but it used to. It Costs money to make long distance phone calls. Are you old enough for that?

Shane Garduno: Yeah. I remember the long distance, but we could never use it.

Mike Koelzer, Host: Yeah. Okay. You remember, my wife and I, at the time, my girlfriend, the same person, the long distance calls were down to the penny and they were so much more before 5 p. m. and after 11 and we would have this. talk. I forget our system, but something like if we had to go to bed before 11, we couldn't stay up.

We would let the phone ring once and twice. I mean, we [00:33:00] had this whole code down, so we didn't have to spend this. But the thing is, is when the phone company would say, It's 20 percent more or something like this. And I forget if they use percentages or rates or something like that, but you could tell the next month, this big bill came and you could see exactly down to the penny and it would list hundreds of calls.

You'd go down each call, you could find out exactly what it costs. And I was really stunned when people told me through my years on the program here that these companies, a lot of them. Aren't even seeing penny for penny what they're paying for. In other words, some of the PBMs might say, well, here's what you're paying for the top 10, but the rest 90%, we're going to throw them all in a big thing.

And you're getting a discount on that. Don't worry about it. Let's move on. I mean, they don't go to the penny, do they?

Shane Garduno: No, a lot of times they don't, and a tool like ours will help you to be proactive in [00:34:00] monitoring those types of things. So one thing I haven't mentioned is that our tool does alerts. To let You know, you could set it to say, okay, I want to know if my costs you know, a certain percentage or a certain dollar amount.

I want to know if there's a new expensive drug that was filled. Say, the drug I mentioned before is an organization. If that happens to hit my utilization, I want an alert when that happens because Many times, especially if you're in HR, if you're an employer or whoever, you can't pull reports every single day and try to go through this.

 So you can have a tool like ours, just do the analytics and let you know when that happens. And so you can hold your PBM accountable to making sure that. To your point, a lot of times you go out, there's these quarterly meetings that happen between the PBM, the employer that talks about, Hey, last quarter and say, this is usually 90 days after the quarter.

Here's what happened with your costs. They've gone up. You have these new drugs. We're only gonna look at the top 15 because those are the most impactful, but you don't get to see the whole list. And so many times you want to kind of look at what's happening. And if you look further down that top 15, [00:35:00] maybe in your top 50, you could see some trends that are starting to creep up that will show up in your top 15 later on.

And so, tools like this can really pay attention to what's happening, let you know when that's starting to happen so that you can get ahead of it. 

Mike Koelzer, Host: So Shane,you're kind of looking at trends and things like this, but I imagine there's new trends coming out. You look at the weight loss drugs and things like that. And you hear some of the companies that say we're very proactive in people's health and we're going to nip diseases in the bud before they get out of hand and so on.

And then they're like, Wait, how much does that weight drug cost? Oh, we're not going to do that. So there's things that are changing. And I imagine you guys have to keep on top of that stuff too.

Shane Garduno: Yeah, absolutely. And GOP1, so these weight loss drugs, this is by far the fastest growing This is a segment pharmacy. Usually it's specialty drugs, but right now it's GOP1s because of these weight loss drugs, people are looking for a way to get them and employers are trying to evaluate whether or not they should cover them.

Recently the Wall Street Journal [00:36:00] reported that there was, A 65 percent approval rating, meaning that when you wanted to get one of those drugs, you had to request a prior authorization. So your doctor fills out documentation saying why you need the drug. The PBM evaluates it and says, yep, you can get it.

They authorize it for a period of time, six months, a year. That's reduced down to now 25%. A lot of what has happened there is because now those PBMs have better criteria to evaluate whether or not you should take those drugs for weight loss or for diabetes is what, like say Ozempics only approved for diabetes, not weight loss.

And so we've been tracking those trends and looking for a way to really help educate people on what's happening with this class because it is having a big impact on drug costs. So we recently released a GLP 1 dashboard. That will give people a breakdown for that specific class of how many more members are new to therapy.

Are there new members for whatever period of time now taking these drugs? What drugs are they taking? Could it be Ozempic? Could it be Monjaro? Could it be Widovi? How many more prescriptions are being filled during that [00:37:00] period of time? Then we can look at where the spikes over, say, a 12 month period of time is.

Are we starting to see more people take it in June or July? January? Who knows? You can also look at the age band. So what age band are taking these drugs? Is it younger? Is it older people? whichever it could be. And then what gender? So then you can start to figure out, through that information, how do you target those groups and give them the right support?

What do you do to make sure that not only are they getting that drug, but maybe they should be looking at what they can do to get some care management.

We actually have a program that we released as well in partnership with I Veem, which is a company that gives care management to help people not only lose the weight using those medications, but sustain the weight loss.

And so we're helping employers to get connected. It's an employer level solution for this right now. But we've got this dashboard that helps give you the analytics to figure out what's going on there. 

The other thing the dashboard does is it monitors and tracks what's happening with the inflation of the cost of [00:38:00] those drugs.

So every year in January, manufacturers raise the price of medications. We call it price inflation. That is something that we track on a regular basis. This is the area where all the manufacturers are starting to make their money. You're going to see a lot of investment and a lot of new drugs coming out in this class. And I bet you in January, you're going to see Ozempic, Quigovi,Manjaro, all the big ones are going to go up in price. What the manufacturers typically do is they try to limit those increases to 5 percent or less, because if they do it more than that, they get a lot of negative attention from Washington and others.

And so this dashboard tracks what's happening with those drugs. And if the price is going up, then what you can do is try to figure out, are there other alternatives? Should we be taking that drug? Ozempic is on, you see a lot of direct to consumer advertising for that drug. And so should you do something to maybe get people on Wegoby instead or Monjaro or what's happening with their costs?

And why is that changing? 

Because what's going to happen is as this gains popularity, this could increase premiums for members. It'll [00:39:00] increase employer costs. We talked about self-funding earlier. They'll end up paying more for these drugs. 

And so they're gonna have to figure out a way to manage that because without maybe a care management Part of this, employers are having to weigh, do we cover these drugs indefinitely?

So if somebody takes these drugs, they're going to have to take it to sustain the weight

loss. So you have to figure out what's happening.

 Well, yeah with those two, there are some. Psychological things you just don't know.

Mike Koelzer, Host: Like I hear people come off of it just because they're not getting the pleasure they once did from food, so they're getting the pleasure of people saying, Oh boy, you look good. And so on. And maybe not. Suffering to try to avoid the food, but when you used to have five or 10 things during the day pop up, a little dopamine hit from reading something online.

And part of that was that food reward you would get. And now, like I say, they're not suffering for the food, but that little game that they wanted. [00:40:00] And then the food came in, but it wasn't there. And so there's some people giving stuff up for that. So even companies. Pay for this stuff and they know they have to do it long term.

Will the people keep doing it? But people are people, aren't they? They're fickle.

Shane Garduno: No that's absolutely true. They might end up looking for something else because maybe this problem is all for the time being while they take that medication. So, I think it's important to, you know, weigh one way or the other, whether or not it makes sense for employers to cover these medications, because there's a lot of different factors there.

Mike Koelzer, Host: Shane, it seems. The biggest thing on this for me, and again, that's watching the Congress hearing and all that. It seems the biggest thing is you can throw as many percents as you want around, but until you get to the price of something, how much that phone call cost me to call Margaret at 1105 at night, 30 years [00:41:00] ago.

It would seem something that's really valuable for a company two things Show exactly what a pharmacy is getting paid I don't know how you would do it if there's some way to have pharmacists reporting back or something like that, maybe even Anonymously or something 

and then how much the PBM exactly is charging the company for that medicine, because there's all kinds of, percentages, this and that. But until someone says, look, you paid the pharmacy 2 and 22 cents. You charge the company 200 and 22 cents. You can say anything you want to about fees and discounts and all that kind of stuff.

But. Show me those numbers. I imagine that's difficult to do because you have to get into some more of the stuff about what pharmacies are doing and stuff. But I think laying it all out there with the price versus discount talk, it's probably something that would be, well, valuable [00:42:00] for pharmacies, probably valuable for Plan sponsors.

And that would really clear the air instead of all this percentage talk.

And I guess that raises the question, Shane, it sounds like there's nobody you're protecting.

I mean, if you can get the information. The more you can share, and things get hopefully more and more transparent. I imagine that's better for you, right? To keep saying that we're getting more transparent.

There's no one you have to protect.

Shane Garduno: Yeah, that's exactly it. Because we're independent of PBMs and pharmacies, which is pretty rare in this industry. And so there isn't anybody we're trying to protect. What we're trying to help is employers and consumers really get the visibility they need. Because this industry is. It's Very difficult to understand and limited with information on how things work and many of the things we've talked about here.

We want to bring some level of transparency to help everybody really understand what's going on with the cost and what to do about it so that we can really lower overall. Pharmacy costs at this point and hopefully [00:43:00] influence healthcare costs. So that's absolutely our goal.

Mike Koelzer, Host: yeah. I've got a number of kids and a couple of them already. They say this isn't hereditary, but it's gotta be. A couple of them have rheumatoid arthritis. Juvenile. It came on not until they were 13 or 14 with different signs. And now I might have a third daughter going into that too.

 When we would pick out these Blue Cross plans, my son would help me pick them out. And there'd be like a 30, 000 deductible or 20, 000 or something like that. And Then the companies would have a coupon. for that, and then our deductible was hit already, so we saved a ton of it. So I've been kind of, surveying my other children. It's like, are you sure all your joints feel good? 

I'm hoping to be the first parent with 10 kids with juvenile arthritis. And then all of a sudden when they're off my plan, I'm going to say they get healed, but I kind of feel guilty doing it, but I [00:44:00] don't know, there's got to be some reasons . So what is all that with the.

Discount coupons and all that kind of stuff.

Shane Garduno: Yeah. 

So it's important to understand with um, manufactured coupons, what the strategy is behind making those available. So manufacturers do not make those available just out of the goodness of their hearts, as funny as that might sound. Um, What they actually do is they put those out there because they know if you use a coupon, you see the drug being advertised on TV, you're more likely to want to stay on that branded drug.

And so those branded drugs are worth billions of dollars. So it's well worth their time and their money to be able to make it a little bit cheaper for somebody to get a coupon and reduce the cost of those drugs. And so what's important to know about that on the PBM side is for people that use those coupons, you have to understand whether or not those coupons are included.

To count toward your deductible and [00:45:00] whether or not they count toward your out of pocket. So when people hit their out of pocket max, if I'm an employee and I fill my drugs and I hit my out of pocket max, then I no longer have to pay anything. Usually the employer, the insurance covers a hundred percent of everything over the out of pocket.

And so there are programs that PBNs have put out there now where they will exclude anything filled with a coupon from the deductible and the out of pocket. And so, yes, you'll get your copay reduced at that point in time, but you expect that it'll be counted toward your deductible and out of pocket.

Now, here's the reason why they do that is because on the employer's side, If you are getting credit for money that you didn't spend, that really the manufacturer gave you to help cover the cost of that drug, and they end up, say you hit, your out of pocket. 

Then what happens is they have to make a decision later. Do I bring up my premium 

because their costs are going up. And so one way to kind of slow all of that down and give you credit for what you're spending out of your own pocket, not out of your pocket [00:46:00] plus the manufacturer's is to exclude those amounts from deductibles and out of pockets.

And so, I think an argument can be made either way, whether that makes sense. And so there's those discussions that are out there, but as a consumer or whoever, you have to kind of understand what can happen out there. And so if you use a coupon, it may not count toward the deductible or out of pocket.

You just have to really understand if, do they have that program in place? And if they don't, then it may count towards it, which is good as long as not everybody does it and everybody's costs go up or they could exclude it just to try to help control costs. So that's a newer program that PBMs have been putting out there for the last maybe 2 or 3 years to combat those costs going up and trying to figure out creative ways to drive those.

The other thing they'll do too is manufacturers will put out Uh, amount, Maybe it's 1, 000 for a year. And so they can, in the adjudication system, raise your copay. You'll never see this as a consumer, but they raise your copy. Maybe a couple hundred dollars when that claim is being filled. So when you go to the pharmacy and it's billing your insurance, this is all in hundreds [00:47:00] of a second, they will raise copay and take some of those manufacturer dollars against what your employer will actually pay.

So they're pieces of it. So if you have 200 drugs, my copay is 50. It'll help reduce the 150 my employer would have to cover after my company. So they'll do that too to try to help take some of those manufacturer dollars and reduce your employer's costs so that they're not having to take so much and then really taking some of that money out of the manufacturer's side.

Of course, manufacturers don't like this. So now they're starting to combat it and come up with creative ways to make sure that doesn't happen. But it's sort of a game between the PBM and the manufacturer to figure out how you kind of. Look for creative ways to control costs or how you make money and things like that.

Mike Koelzer, Host: You'd think that I would know exactly what's going on with my daughters so that I knew, this twenty thousand is going to count here or there. With the history and the pharmacy and this show? And I still feel like I don't know what the hell's going on with all this stuff. It's just, it's confusing.

Shane Garduno: It's very [00:48:00] complex. Even being inside of PBM, it's hard to learn. You almost have to just kind of really be in the weeds of figuring it out, kind of be in the fire to really understand it. That's why it's so hard for people outside to know what this is, how it works. Each of these topics are very complex and you can't go read a book, you can't Google it, you can't watch a YouTube video to figure it out.

You have to kind of understand the ins and outs and then be out there in the marketplace talking to people about it and putting these things in place to really understand how they work, where the pitfalls are and what things you need to consider. And so, you're not alone. I mean, somebody in this industry, if you're new to the industry, a lot of times it takes people five to 10 years to really understand how all this works.

And that's in maybe an account management role. Where they have to kind of know a little bit of everything.

Mike Koelzer, Host: How many employees at some of these companies are dealing with this stuff? And I know it's probably across the board, but how many people in the company are doing this? Do they have a [00:49:00] full time staff that's comparing stuff?

Or is it just someone that blows off the cobwebs on the three ring binder every half a year and looks at this stuff? What are we talking about? 

Shane Garduno: Yeah, so smaller companies so let's say, 50 to 200 or 500 size companies, they are usually relying on a consultant to do this sort of work and help inform them on what's going on because they're really dealing with the medical vendor. 

they really don't have the time to dive into these types of things.

Mike Koelzer, Host: and when you say a consultant, that's not necessarily a fee-for-service consultant. This could be more like a broker who's making a certain amount of money from certain insurances if they sell that. are there some of both probably?

Shane Garduno: Yeah, so there's both. there'll be a broker or a consultant. They are trying to help employers and companies to try to figure out what's happening with these costs and lowering those costs. And they do make money from services and they do make some money possibly through [00:50:00] agreements with the PBM. A lot of times in the PBM world, people leave the PBM world and go to the consulting world because now you have the expertise on how the PBM works. Yeah. So then you go on the consulting side and then you can hold the PBMs accountable to what's happening, what you expect and be able to dive into these details because you've lived the ins and outs.

And so then you can give expertise and guidance to. Employers and then when you get done with the consulting world you go back in the PBM side cause then you get to see all The PBMs cause you've been a consultant and you 

Mike Koelzer, Host: Sure. 

Yeah, exactly. 

Now the consultant, so Would this be like financial guys where some guys are selling the plans, but are there some that are actually just independent that are not selling anything? They're just selling their advice, kind of like your program is. 

Shane Garduno: There are now they're almost always independent and They're never employed by the PBM. 

they're usually selling advice and guidance and some of them are on retainer . Some of them get maybe a certain fee . A lot of times they are trying to just add value to the employers to [00:51:00] say, Hey, here's some things that we're doing.

Some of them do have their own tools or some things they're trying to sell into it. Maybe it could be a wellness program they vetted, something like that. And sometimes they just do that to make sure they add value because, the name of the game here for the consultant for the PBM is client retention. That is the number one goal for everybody and it's long term relationships. And so that definitely happens out there.

 Now your health plans, they also work with PVM. So your Blue Cross Blue Shields of whoever, or, any health plan, name them. They will have an entire pharmacy department. within their company that understands these things.

And a lot of times these guys understand it as well as the PBM does. And so they may or may not have a consultant. Sometimes they don't need it because they really know what's going on. They understand everything we've talked about, understand the discounts, they have the access to all of the claims data is what we call it.

So it's every prescription being filled and all the data tied to that. And they know how to break that data down and figure out if the PBM is doing enough to really save on my [00:52:00] prescription costs. Did they do what they said they were going to do? Is it working? They definitely have that level of expertise, but if you're an employer, whether it's kind of a smaller or bigger one, it's very tough to get into this unless you've been close to it for a long time or been on this side of the business.

Mike Koelzer, Host: It's interesting about the insurers, the blue crosses and stuff, having the in house part of that. And it makes me feel good for a minute because you're like, Oh good. Someone's watching it, but they're not a consumer group. I mean, they're watching it for their purposes of lowering costs to them, but not necessarily Lowering costs to the consumers because that's supply and demand competition.

 Everything they say from the PBM doesn't necessarily go through to the end user.

Shane Garduno: Now that's true too because what they have to do is balance that with the medical side of the equation. Because a lot of these health plans are really medical insurance companies. that has a pharmacy department. 

If you have the pharmacy and the [00:53:00] medical together we call that carving in.

So you have both of those with one company, both pharmacy and medical. 

Shane Garduno: Then they will offer one premium that covers both. And as far as the health plan goes, they have to balance what they're going to charge. So if you're saving a lot on the pharmacy side, the medical bill is going up.

You're Balancing that piece.

Now, if you carve it out and your pharmacies with a different company than your medical, then that's handled differently, of course, because they're looked at separately you don't have to balance the two. So within health plans, a lot of times that's what they're trying to do is figure out how that all works.

Mike Koelzer, Host: Could that be the case too, where You kind of have a loss leader. In other words, let's say the PBM cost is so much and the healthcare so much and the PBM, really raise their prices, but they don't want to make it look like the PBM raise their prices so much because people might try to have a carve out, and so they'll keep that down.

Maybe they'll raise up the health side of it to kind of bail out the [00:54:00] other side? Is there some of that? And then secondly, that's when you do the carve outs let's say you demand a carve out of the pharmacy. Well, then your insurance might go up, 50 percent because they were,

Subsidizing that part of it.

Shane Garduno: Yeah, no that's true too. That's the balance that, if I'm an employer or if I'm working with a consultant, that's what you have to kind of look for and have oversight of because that is true. So, one part of this equation that we've sort of talked about is rebates.

Now, Health plans may take some of the rebates they're getting from the pharmacy side and help offset that premium or lower the premium by keeping some of the rebate, and so it's one of the levers they use to try to figure out when they underwrite your deal, what is actually going to be paid.

And so if you have it all with one, health plan. They may be doing that. Or if you carve it out to your point, medical fees may go up because now we're only covering medical expenses and we don't get the savings from the pharmacy side. And more and more in this industry, pharmacy is starting to get close to, if not already there at 50 percent of the total healthcare spend.

So you got to really pay attention to [00:55:00] because it used to just be medical. But now pharmacy is continuing to grow and maybe even overtake the medical side. 

So it's important to kind of understand how those things work.

Mike Koelzer, Host: I still have a lot to learn Shane. a few years ago I went and got, I think it was, a migraine medicine or something. Maybe it was something for one of my daughters that I said was sick. I'm gonna have Munchausen's by proxy, right? You've heard of that, haven't you? where the parents have their kids sick all the time.

There was this movie where this gal, mom put her in a wheelchair the whole time. The girl didn't even know she could really walk. And the parents do it for attention and things like that. Not so much for money, just for attention. and 18 years later, the girl could walk.

and realize she has everything wrong with her, but there's some of that out there, but I don't have that. I don't have that. But I had some medicine. It was like, uh, I tried to get it and I work in the damn business, but I said, Hey doc , the insurance isn't going to give me this because they didn't say prior was needed. They just said it's [00:56:00] not covered. And she said, well, did they say it twice? I'm like, what do you mean twice? They said, well, until you get to it's not covered, it's not covered but the first one doesn't mean anything. I I didn't know that. 

 So Shane, who is your customer for this? Basically our listening group, it's, pharmacies and people interested in, well, the business of pharmacy, hopefully. Who would be a customer of this program for you?

Shane Garduno: Yeah. A lot of our customers are consultants and brokers. We have a part of our platform that helps them evaluate RFPs, making it simple. A lot of times these things are done via spreadsheet. It can be difficult to analyze and a lot of times a person doing the work doesn't always understand how these RFPs work and what to look out for, how pricing may work or rebates.

So we simplify that for the consultant brokers. We also have a tool that works for PBMs as well. So giving them better analytics to help them help employers to control their costs, be [00:57:00] more proactive through our alerts. And then we have A module that helps with rebates and gives better transparency and information around what's being billed, what's being paid, what's eligible for a rebate.

And then of course, we have a plan review module as well. So a lot of times there's quarterly reviews where meetings will happen with the employer, whether it's the PBM or the consultant. And putting a presentation together to say, well, here's a summary of what's going on during a certain period of time, what's happening with their drug costs, why and what to do about it.

Mike Koelzer, Host: So we have a part of our module that does that work for the user as well? The user being the corporation that's actually buying this stuff

Shane Garduno: Yeah, it could be the employer themselves. It could be the PBM or the consultant broker. Those are the target markets that we work with. 

Mike Koelzer, Host: Well, golly, Shane, thanks for your time today. After sitting through some of that congressional stuff, I haven't watched it all yet. It's like four or five hours. I'm waiting for the gray curves on YouTube where you can go to where people are [00:58:00] watching most of it.

Usually when they're getting slapped by one of the senators, those are the most fun to watch. But we needed a Kind of a nice bath after sitting through that committee stuff with these guys obfuscating everything and the walls they put up so I feel like you've kind of helped us cleanse our palate a little bit and there's still some sanity out there.

So great having you on Shane and pleasure talking to you.

Shane Garduno: Yeah. Thanks for having me. Appreciate it.

You've been listening to the Business of Pharmacy podcast with me, your host, Mike Kelser. Please subscribe for all future episodes.