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Robert Popovian, PharmD, works for Pfizer. He is a clinical pharmacist, health economist, and a truth teller.
Transcript Disclaimer: This transcript is generated using speech-to-text technology and may contain errors or inaccuracies.
Mike Koelzer, Host: [00:00:00] Robert for those who haven't come across you online, tell us your name and tell our listeners why we're talking today.
Robert Popovian, PharmD: My name is Robert Popovian. I am a clinical pharmacist with training and I have a degree in pharmaceutical economics and policy. I've been, uh, dealing with healthcare policy issues and healthcare economic issues for the last 20 plus years.
I'm currently employed at Pfizer as a vice president for the US government relations team. And really what we wanna discuss today is drug pricing, spending affordability and access, which is all intertwined, but something that is extremely OPEC and very difficult for both policymakers, as well as consumers and patients and employers, to understand
Mike Koelzer, Host: you're looking at it from the side of ultimately the people that would price the drug.
Robert Popovian, PharmD: Right? Absolutely. And you're correct. I mean, the manufacturer definitely prices the drug, but what people don't understand commonly is that there's a lot that goes into pricing. Then just setting the price. And, um, that there's a lot of choices that are made external to the pharmaceutical industry, external to the manufacturer that influences the price.
And the reason being is that when you look at the drug pricing and spending and spending issue in the United States, a lot of people benefit from the drug prices that are set. It's not just the manufacturer. So the manufacturer sets the price and gets the lion share of that price. But 50%. Go somewhere else.
So people like hospitals, insurers, pharmacy benefit managers, uh, pharmacies, wholesalers, physicians, um, you know, agents, uh, brokers, all of these people benefit from the price that is set. So every time a price increase takes place, all of those parties that I mentioned make more money. Yeah.
Mike Koelzer, Host: And including stockholders, right?
Robert Popovian, PharmD: Absolutely. And shareholders, which is part of pharma. That's why I meant like the pharmaceutical industry takes the lion share. That's I considered the shareholders as part of the pharmaceutical industry
Mike Koelzer, Host: from the most basic view. When I think about somebody setting a price, let's say that I am going to be selling a new widget out in the market.
It seems to me that I'm gonna be comparing that price to. Other similar products mm-hmm and that I'm gonna hope to price it somewhere in there where maybe I can make it a little bit more attractive or give it more benefits to make it more attractive mm-hmm and then hopefully make a profit. But a lot of it doesn't seem to have to do with my costs.
It really seems to do with where I can situate that in the market. And if I get to situate it in a good place, that's great. Cuz I can make more profit then. A percentage of the cost, is that right? It's kind of the old supply in demand. It
Robert Popovian, PharmD: is, it should be it theoretically, it should be that right. And that's what economists believe that that's how you set prices is that you capitalize on the market and basically maximize your profitability, unfortunately, in the pharmaceutical industry.
And it's just not the pharmaceutical industry in the healthcare industry. We have third parties that sort of mitigate those prices and influence those prices. And in the case of pharmaceutical industries, the pharmacy benefits managers and the insurers, and generally speaking, if a price is set in the marketplace, then consumers.
Which happens to be patients or employers or, you know, they, they analyze and decide which price is the best. And they take the, the, the product that they want in the pharmaceutical industry is a little bit complicated because you have two learned intermediaries between the consumer and the pharmaceutical industry.
You have the physician who prescribes the drug, and then you have the pharmacist who dispenses the drug. So those are the learning intermediaries. And then you have a third party, which is a contracting intermediary between the consumer's price and individual, what individual pays and that's the pharmacy benefit manager or the insurer.
So it makes things complicated and he becomes even more complicated by the contracting tactics that are employed, uh, by, uh, the pharmacy benefit managers and insurers. So instead of contracting, just based on a net price, which is like you negotiate a price and that's the price you pay, they negotiate based on a rebate.
And how much kickback and concessions they receive. And really, if you look at the industry, the placement within formularies and your, your audience is probably familiar with formularies is really dependent on how much rebates you give the insurer or the pharmacy benefit manager has little to do with the price of the medicine, actually.
Mike Koelzer, Host: All right. So Robert, when people think about pricing, then [00:05:00] everybody always wants to complain about something. People don't seem to want to complain about movie prices or car prices. They wanna complain about medical prices because they don't wanna spend it in all the roles that you have had. Who do you find yourself?
Defending the most. And who do you find yourself making the bad guy the most?
Robert Popovian, PharmD: So there
There's no bad guy here or a good guy. I think what you have is a very complicated system. That's been set up by intermediaries between. The consumer and the pharmaceutical industry with regards to pricing because of profit max maximizing capabilities.
So it's really a tactic that's being employed. I don't necessarily think there's a bad or bad guy or a good guy. It's the tactics that are being employed by certain parties who don't bring any kind of value to the system, but maximize on the profitability of certain prices that are
set,
Mike Koelzer, Host: if it's legal and it's, well, people have different views of what ethics are.
But if it's,
let's say that it's legal, people are gonna tend to wanna make as much money as they can. That's the American way.
Robert Popovian, PharmD: And nobody's doing anything illegal here. What they're doing is there, uh, taking advantage of the system, therefore, hence it's important for the government to step in and eliminate some of the loopholes that exist.
And they tried right. Two years ago, the federal government to health and human services, and Alex a are tried to eliminate. Rebate contracting, which is to me, the starting point of what, what you need to do to really address drug pricing in the United States. And what he tried to do is to call it, remove the, the protection as a kickback from being a rebate.
So they, uh, initially when rebate contracting was put in place, they had some protection from Medicare as from the anti kickback statute. And what Alex AAR tried to do is remove that protection and make a kickback and make it illegal to do rebate contracting. And in fact, there were a lot of other things that he was trying to do to fix the system.
It's a starting point, and nobody says that rebates go away that you're gonna have a better system. I think what it is, it's the first step into creating a less OPEC pricing
Mike Koelzer, Host: mechanism. When you have rebates you're able to pull. A lot of money into the system still you're able to maybe keep copays high and maybe keep insurance premiums high and maybe have the employer still put money in there.
So it gets the money in there. But then the rebates allow that extra money in the system to go to certain places. It
Robert Popovian, PharmD: seems right. The best way to think about it is that if you have a drug that is a hundred dollars net, right. Versus a drug that is $200 net, but the $200 drug gives a 50% rebate. The insurer, the PBM is always gonna.
Benefit from utilizing the 200 with the 50% rebate to their benefit, even though the net cost is the same, then the hundred dollar net. The reason being is that one, they keep a percentage of that rebate. However, minuscule we wanna make it, you know, 3%, 4%, 5%, whatever you wanna make it, but in addition, as soon as you start doing rebate contracting, there's another phenomenon that takes place, which is fees and everything else comes into play.
So they start charging fees for placement of formularies or data sharing. Some of them are legitimate fees and some of 'em are illegitimate fees. And that also they keep a hundred percent of that. So that's very important for people to know. So when a pharmacy benefit manager or an insurer says, look, we share 99.5% of the rebates with the employers or.
Uh, whoever the plan sponsor happens to be, they're actually telling the truth. The problem is that there's a slew of fees and everything else. And chargebacks that go in behind the scenes that are accompanying the rebates, and those are kept a hundred percent by the pharmacy benefit manager and not shared with the third parties.
And that influences the pharmacy world, the retail pharmacy world through DIR fees. That's what part of that is also is the fees that they charge. And if you believe the data and you look at, for example, the data that was published by, uh, uh, a think tank in Washington, DC, think tank the fees actually have been increasing faster as a growth than the rebates.
Rebates are flat as a percentage. What happens is that the rebate, the fees are going up and in that case, none of those dollar amounts are shared with the plan sponsor. And that's why, that's why you see Michael, a lot of states and the federal government trying to pass legisla. To say they want accountability of every single dollar and concession that is given by pharma companies to the third parties.
And [00:10:00] a lot of states have passed these laws and it's becoming Le more and more evident that not all of these dollars are being shared back with the plan sponsors.
Mike Koelzer, Host: It's kind of like when I go to buy a car and, and the car place says, we're gonna sell to you at invoice cost. It's like, we know you're making something on this.
You can call it whatever you want to. I ain't no genius Robert, but it seems simple enough that instead of. Years ago saying we want there to be more clear, less opaque rebates. It seems like they would've known that the PBMs would simply just change the name. All right. We're not gonna call it rebates.
We're gonna call it fees. All right. All right. Well, you can't have fees. Okay. Well, it's no longer called fees. It's called, you know, some other name. Why do they think now that just by expanding the language to call it everything, not just rebates. Weren't they smart? 10 years ago to include it to say, all right, we're not just talking rebates, we're talking.
Anything that comes back was like a surprise that the PBMs were gonna call it something else and try to get around it?
Robert Popovian, PharmD: Uh, I don't think it was a surprise, but I don't think anybody anticipated that it would get so out of control. And the reason it's gotten out of control is two twofold. One is genericizing of the market.
So if you think about it, When I started in the pharmaceutical industry in the late nineties, um, generics only constituted about 60% of the market, you know, six out of 10 prescriptions were generic today. It's about above 90%. So nine outta 10 prescriptions are generic. So there's less money to be made from the pharma end, right?
Because the consolidation on the you're basically making your money on 10% of the prescriptions now, rather than 40% of the prescriptions. The second thing is that there's consolidation on the pharmacy benefit manager side, where there used to be multiple pharmacy benefit managers. When I started in this industry, now there's the big three or four that almost control 80 or 90% of the market.
So because of those two reasons, they're able to rewrite the rules and also to expand the rules. In addition, you know, as the employers got wiser about pharmacy benefits and they demanded that. PBMs share or give them an accounting or share all of the rebates. They simply started redefining these terms.
So they don't have to share all those dollar amounts with them. So I think people were aware of it, but they didn't realize how it would progress. So. So much
Mike Koelzer, Host: Now, why won't they do that again though? Why won't they say all right, Robert and Mike came up with this great list of all these different descriptions of what we're gonna call it.
Won't they just switch it again? Won't they just find some
Robert Popovian, PharmD: another way to do it. Sure they would. And that's why I said it's the first step to make it less opaque. It's not the, it's not the end B all. And you know, Alex AAR and health and human services to their credit. If you looked at what the rule was trying to do last two years ago, when they introduced it, one, it was gonna eliminate rebate contracting.
But more importantly, because what it was gonna do is basically remove the anti kickback statute from it. But more importantly, it was gonna require that the fees are a set fee, not a percentage. That's another problem right now, the fees that are charged. Just like DIRs are a percentage of the retail price of the medicine, which makes no sense, right?
Because nobody pays the retail price, but it is a percentage of retail price. And secondly, what, and the third thing he was trying to do through that regulation, and most importantly, was trying to identify what are the fees and only allow legitimate fees to move forward. So you had to actually put forward fees that you were charging the pharmaceutical industry or pharmacies that were legitimate and not just call it a fee for any reason, pharmacists
Mike Koelzer, Host: are used to not even having percentages of just having open fees, like these contracts, that pharmacists sign it's like, we'll call it a fee, but it'll be whatever we want.
Robert Popovian, PharmD: You'll find out six months
Mike Koelzer, Host: Later, it's like the old healthcare bill that the big, uh, affordable care act when they said, ah, just sign it and you'll find out later you'll find out later what's inside of it. Absolutely. So Robert, just to make it clear for me, mm-hmm and. For our listeners, although they're smarter than I am.
We said there's not good guys and bad guys, but let's maybe define it this way. Who seems to be scoring more points in this current system. and who seems to be not scoring as many points. The pharmacists seem to be losing the mm-hmm the little old ladies seem to be losing the PBM, seem to be on the winning side right now.
Where do you [00:15:00] think people are falling in this game of pricing
Robert Popovian, PharmD: right now? Well, let's start with who's losing, um, patients are com absolutely certain patients are absolutely being. By the current system they're way overpaying for their medicines. If a patient has a co-insurance or a deductible, which is based on the retail price of the medicine, uh, like most of us do now in our pharmacy benefits, you walk into a pharmacy right now, your insurance co-insurance, which is a percentage, uh, of what you pay for the price of the medicine or your deductible is based on the retail price, not the negotiated price.
And Michael that's important to note because in every other segment of the healthcare system, that's not the case. When you walk into a hospital or I walk into an optometry office or dentist's office or, uh, physician's office. And if I have a coinsurance or deductible, my coinsurance or deductible is based on a negotiated price that's been done on my.
By the third party that I'm paying a premium to, which is the insurer or the Pharmac, uh, insurer. In this case, this is an anomaly that they've convinced everyone that this cannot happen in the pharmacy. And then it's not true. It absolutely can happen. So that's number one. So the patients are absolutely being hurt and there's certain patients, not everybody
Mike Koelzer, Host: That stumps me a little bit, because it seems when the patient comes in that they are paying the negotiated price, but it's an absurd price because it's negotiated at this high retail price.
And doesn't take into account any of the rebates and things like that. That's what you're saying. It's not exactly like that. It's not like the pharmacists are just charging, whatever they want. They're charging the patient. This in quotes agreed upon price, but it's high and the right PBMs are never gonna pay that because that's where the rebates come then.
Absolutely.
Robert Popovian, PharmD: Let me, let me give you a real world example that happened to me about two years ago, I went to get some dental work done. And when I showed up to the counter to pay my co-insurance, because it's a percentage, it required a percentage of the fee. So there were three prices. It was the price that the dentist charges normally for some procedure, and the second price was the negotiated price that the dentist had done with Delta dental at that point.
And then my out of pocket cost was a percentage of that negotiated price. Not. The customary price of what they were being charged. So that's what happened in the dentist and that's how it should work in the pharmacy side, the patient shows up and has a percentage they have to pay as a coinsurance or deductible to fit.
They pay that customary retail charge, which is significantly higher than the negotiated price. As we know,
Mike Koelzer, Host: it's higher than the negotiated price because of the rebates, is that
Robert Popovian, PharmD: right? Rebates, fees, concessions, everything they're
Mike Koelzer, Host: paying a fake negotiated price, basically,
Robert Popovian, PharmD: right? It's not even negotiated. I call it a retail price.
It's basically anybody that walks in that they can get that price. You know, it's, it's basically paying MSRP on a car rather than the invoice price. Like you mention. You know, as a percentage or, or paying for it. So that's the patients. And I wanna make this clear, not every patient's being hurt. Actually, if you look at out-of -pocket costs for the general population, out -of -pocket costs for medicines have been dropping over the last 10 years in real dollars.
That means you and I today are paying less on average, on average, out of pocket for medicines than we were paying 10, 15 years ago. And that's primarily driven because of the genericizing of the market, you know, uh, think about it. I'm at a station right now. And if I was paying for a statin 10 years ago, where they were all branded medicines, I would've paid more out of pocket than today where they're all generics and I pay less.
So, uh, that's one example. So genericizing, the market has helped that, but there's a small percentage of patients that require more expensive medicines and not necessarily their sicker. It's just a different disease state that requires a medicine that is not generic. Majority of patients are doing fine is the small percentage of patients that are really being hurt.
And those are those that require these more expensive brand name medicines right now through the system. So that's who's being hurt is the patient. The second group that's being absolutely hurt are the real payers in the marketplace. So there are three payers in the marketplace. Currently patients who open their wallets and pay for their medicines and pay for premiums.
The second party is the employers because employers provide more than 50 or close to 50% of the coverage for healthcare in the United States. And then it's the government, it's the federal government [00:20:00] basically. And, uh, and the state governments who pay for it, insurers and PBMs are not payers.
We misidentify, middlemen and really, uh, paper pushers as payers. They're not players, they're just the intermediaries and that's all they are. And the real payers are the patients, the employers, and. Uh, the, the government itself, because those are the ones that actually open their wallets and open their checkbooks and open their budgets and pay for a healthcare system.
Mike Koelzer, Host: People mistake insurers as payers. If someone has a huge cancer bill at a company there's a slight chance that they might pay out a little bit extra this year, but you'll be sure that they're going to raise their premiums to pay that next year. They might put out a temporary loan, but they're not taking a hit ever.
Robert Popovian, PharmD: It's not coming out of their pockets. It's not coming out of their budgets. It's not coming out of anything. So patients are being hurt. Employers are being hurt significantly because they don't know where every dollar goes either. You know, that's what, that's what they want. Accounting of every single dollar that's collected as a concession and a fee from the pharmaceutical industry.
And they wanna know exactly where that money goes. Uh, and the same thing applies to states and the federal government. They don't have it either. They assume they do, because what they see is the numbers that are given to them by the pharmacy benefit managers and the insurers. But they're not a hundred percent sure about that.
And I can guarantee you even if, because remember pharmacy in the pharmacy world exists in two levels of coverage, one is the retail pharmacy is what you walk into a, uh, you know, community pharmacy or chain drugstore, pick up your medicine. That's what we call outpatient retail pharmacy. Then there's this whole pharmaceutical business that is more the infusion business, the hospital, uh, infusion the physician infusion business, which is, is covered through medical policy.
It's not even covered through pharmacy policy, pharmacy benefits, and we don't even know what's going on in there. And employers are frustrated and they wanna know where it's going. So the same thing applies to, uh, the government doesn't know where they're going, whether they're getting all the concessions or not.
And, uh, that's why a lot of states are passing legislation. Georgia did the last year, Louisiana did a couple of years ago to get an accounting of every single dollar collected and every single dollar that's passed through to the plan sponsor. And that includes the state governments.
Mike Koelzer, Host: Okay. So those are the losers.
Robert Popovian, PharmD: The winners are basically the intermediaries that benefit from the system and you see how adamant they are about not changing the system currently. Uh, it's the pharmacy benefit managers as the insurers are the brokers because a lot of people don't understand a lot of broker fees are based on how much rebate contracting is negotiated.
So brokers are also involved in this and, um, I don't wanna toot my horn, but I wrote an article, uh, about two months ago that said the 12 steps that employers can take to protect their employees from overpaying. And one of them is about brokers. What are your broker fees set up? Because when the broker shows up to the employer's office and tries to pitch them on an idea about, uh, benefit, uh, you know, to an X, Y, and Z insurer or pharmacy benefit manager, you should ask the employer or the broker, how are you being compensated?
Because I can tell you, uh, and for full disclosure, I am on a board of advisors for a pharmacy benefit manager. That's why I said there are no good guys and bad guys. There are good PBMs out there that are trying to do the right thing. And I am on the board of advisors of one of those pharmacy benefit managers.
They're multiple ones, but they can't get their foot through the door through these brokers because they don't pay the exorbitant broker fees or they don't negotiate just like the big three PBMs do with the brokers to get them through the door. So they never get any air time. But when you talk individually with these pharmacy benefit managers, you realize, and this is a, a normal, uh, a word that a lot of your listeners were no, her member per month, they have the, one of the lowest costs in the pharmacy world, but they, they, they don't get any coverage.
Nobody talks to them because the brokers don't represent them because they don't
Mike Koelzer, Host: pay the fees. When pharmacies look at PBMs. We look at them like there's only three, but the truth of it is we should look at the PBMs. Like we want our customers to look at pharmacy choices. There's more than just the three or four big chains.
There's all kinds of independence, but the PBMs want you thinking that there's only, you know, three
Robert Popovian, PharmD: of 'em. Yeah. And the brokers do a good job of, uh, representing that because they get paid higher fees and negotiated fees based on how they represent. And the two, three PBMs that are trying to do the right thing and really streamline the process and have [00:25:00] the patient's benefit.
And they do a hundred percent pass through. That means that every co dollar date they collect, they pass it back to the plan sponsor without. And they do it based on a flat fee, which is reasonable because you should charge a fee for a service. I mean, nobody's saying they shouldn't be charging a fee, uh, but they do it based on a flat fee.
So
Mike Koelzer, Host: where does the manufacturers fit in
Robert Popovian, PharmD: this? Then? About 10 years ago, manufacturers were able to set their prices and they would demand those prices because there was little or very little competition in the marketplace and there, and now, because of what I said, the consolidation on the pharmacy benefit manager side, and also genericizing the market.
They have very little to do with pharma. In fact, for every dollar sold on average, by the pharmaceutical industry they collect only 54 cents or 60, uh, 55 cents out of the dollar, the 45 cents disappears in the supply chain, wherever that goes. So what is the manufacturer's role is to be more transparent and honest about how they price their medicines?
I don't think we've done a good enough job of explaining how we price our medicines. And I think that's also given birth to a whole slew of businesses out there that are trying to define what the price should be such as ISER. Nice EWI in Germany. These entities exist only because the pharmaceutical industry has not done a good job of explaining their pricing methodology in a transparent manner.
Mike Koelzer, Host: Let me play devil's advocate for the manufacturers. I don't really care about the manufacturers. Price their medicine, as long as there's clarity of what they're truly charging. You know, because if a drug company wants to charge a million dollars for a tablet and truly charge a million dollars per tablet, I kind of think the market will take care of itself by maybe formularies, not choosing them.
And, you know, insurance is not choosing them. And so on as long as that's a real price. So for me, it seems like the more important matter is not so much how drugs are priced, but are they priced that way across the board or at least priced across the board? Allowing for bulk purchases. If someone purchases more, I think they are allowed to have a discount and so on, but the rebates I think is the problem.
So that devil's advocate on the side of the manufacturer.
Robert Popovian, PharmD: Yeah. And you're right. But I think manufacturers have a responsibility to explain how they came up with the price, because if not, if they don't do that, the problem is that other parties then will step in and do it for them. And the reason being I go back to our original comment is because healthcare and pharmaceuticals in the United States is not paid by the consumer directly.
Right. It's paid by a third party intermediary. And the third party intermediary can be the insurer PBM, but most often it's the government and the employer too. Right. We don't have the truth. Marketplace like television sets, where you walk into Costco and buy the television set that you desire and the prices, the price you wanna pay, and you either negotiate or you price compare that doesn't exist in the healthcare system.
So because of that reason, I think there's been, uh, and the lack of understanding of how medicines are priced and being transparent about that discussion. Uh, you see that there are third parties that exist now that are saying, well, well, no, no, the price is not, shouldn't be a thousand dollars. It should be $995.
And nobody can explain why 9 95 or why a thousand, you know? And so we need to do a better job on our end to be able to have a less OPEX system. And I have to tell you, I mean, the net pricing or net price contracting exists in the marketplace currently, we're not talking about some, uh, you know, uh, reattaching new Rons here or UFOs coming from third, third world.
As I said, in other entities within the healthcare system, like everything else, patients and consumers pay based on the net price or the negotiated price. But the same thing exists on the insurer's side. There are insurers out there besides pharmacy benefit managers that actually negotiate based on net price.
They don't rebate. Contracting. Kaiser Permanente is one of them. They don't have a pharmacy benefit manager that they employ. They don't do rebate contracting. They just do net price contracting and it works out. So it can be done if willingness is to be done, but there's too much money being made currently in the system for people to change that, uh, their desire of changing the model.
And I can guarantee Kaiser Permanente probably gets the lowest prices of any pharma company [00:30:00] from any of the pharma companies. And, you know, they don't need rebate contracting to get to that net price. They negotiate based on a net price. They just say, I don't want rebates. I'm not gonna pay you fees.
Just gimme I'm gonna pay you a hundred dollars for this $200 medicine. That's it. I'm not gonna, I'm not gonna give you 200 and you rebate back to me hundred. And then I charge a bunch of fees because of all this back and forth, they just say, I'm just gonna take $400 and that's it. Kaiser, they're insurance or a PBM.
Well, they're both, they're not really a PBM, they're an insurer and a staff model insurer, but they're also a, uh, provider at the same time. But the trick is that Kaiser also basically has a network of pharmacies outside Kaiser that patients can go retail, pharmacies, both community, and also chain pharmacies that patients can go and get their.
for those medicines. They're not paying anymore. If the patient ends up going to the retail pharmacies, it's a negotiated price that they reimburse those pharmacies and it's a net price. So there are no DRR fees and all this other nonsense that goes on. So Mike, my point is we can do it if we, the willingness was there to do it, you know, because we know it can be done in other parts of the healthcare system.
We know that there are good PBMs out there trying to do the right thing. We know there are insurers that don't necessarily need to negotiate based on rebate contracting. So the model exists. It's just, are we willing to change the model to benefit the patients and the real payers, which are the patients, employers and the government.
Tell us
Mike Koelzer, Host: again, your role at
Robert Popovian, PharmD: Pfizer. I currently work with Pfizer as government relations, but government relations is government affairs is such an ambiguous term, right? It's such a, what I, what I tell people is that. I'm the person who communicates externally with audiences, with regards to what policy issues and drug pricing and policy issues.
And the reason that individuals like talking to me is because I can bring the conversation from multiple angles. I can bring it from a policy angle because I have a policy background. I can bring it from an economics angle because I have an economics degree, but I'm also a clinician. I was a pharmacist and a clinical clinically trained pharmacist.
So I know how patients have taken care of patients, not for a long time, but have. Dealt with that. I was in medical affairs, so I've done clinical trials. I've done research so I can talk about it. And the biggest benefit that pharmacists have, and most, most of your audience or pharmacists would understand this is that we are trained to make things simpler for patients.
That's why people like talking to me because I have a tendency to talk and make complex issues. Very simple. Even
Mike Koelzer, Host: I can understand them. I think we're not done here yet, but when you talk to people, what people in your role at Pfizer mm-hmm who are you talking to? For example?
Robert Popovian, PharmD: I talk to everyone. I talk to legislators, policy makers, state, and federal.
Uh, I talk to patient organizations, provider groups, which includes pharmacy associations, medical societies. Uh, I talk to P uh, think tanks, uh, which I don't know if you know what a think tank is, but they do a lot of the policy work behind the scenes, both on the federal and the state level. I, so I communicate with a wide array of people and organizations and individuals, and I'm very active on, uh, social media, and also both on Twitter and on LinkedIn.
And, um, you know, I do a lot of public publications. I have a, uh, I try to keep up a monthly column in morning consult, uh, that I talk about policy issues relevant to the pharmaceutical industry. And, um, So I write and publish a lot of papers. We just published a paper. I just published a paper with a co-author of mine, Wayne wine garden from the Pacific Research Institute, looking at rebate contracting and an impact on patients out of pocket costs.
Uh, and we're trying to submit that now to a journal, a peer review journal was published to Pacific research Institute. So I do a lot of different, uh, discussions and I'm able, I'm quickly switch from being a clinician to an economist, to a policy expert, to a patient advocate. And that helps
Mike Koelzer, Host: as simply as you can put it.
Why is Pfizer paying you
Robert Popovian, PharmD: is because it's gotten to a point that, uh, as I always said, I would not have any kind of, um, sympathy for the industry if they were collecting a hundred percent of the revenue. So for every dollar, they were collecting 90, 95, a hundred percent. Um, but the pharmaceutical industry is the point that they're collecting about 50% of the revenue, but getting a hundred percent of the political pushback.
The [00:35:00] reality is that that was true about 10, 15, 20 years ago when I started in industry. And you know, at that point, you put on your big boy pants and you know, you get all of the revenue. If you, you were getting it and you tried to justify it, but now it's unjustifiable because they're not getting it.
And they're getting a hundred percent of the politicians coming after them, uh, saying they're the problem. And, uh, really, it's not just the politicians. There's a misunderstanding among the provider community in the pharmacy community, especially in the medical community, in the patient organizations. They don't understand this stuff because all they see is the pharma industry increasing prices by seven to 10%.
And when you peel the onion, you realize. Most companies in the last four or five years, they've had negative growth on their pricing. So for every percentage of the increase, the price, actually, it's a negative that they gain from that price increase because they're giving more weight in concessions.
They're giving more weight in rebates. They're giving more weighing fees. They're expanding their patient assistance program, which is a whole other area that pharma pharma companies didn't anticipate happening. Uh, until a few years ago with the, uh, with programs like accumulators and maximizers that exist now in the marketplace.
So that's why Pfizer pays
Mike Koelzer, Host: me. So Robert, you're basically doing what pharmacists do all day and it goes something like this, where the customer comes in and says, boy, I should own stock in this pharmacy. I'm here so much. Boy, it must be nice taking all my money. Well, then the pharmacists. Are good at this first.
They, they laugh. Yeah. We're taking all your money. That's why I'm talking to you here instead of Hawaii. And that's why you're gonna see my, my old Chevy out in our parking lot instead of my fancy, uh, Bugatti. And so basically you're trying to put realism into people and saying we're doing our best or we're, we're trying to be fair.
And we're all in this together. We're on your side. Yeah,
Robert Popovian, PharmD: I think so. I think pharmacists and physicians get a bad rap. And so those pharmaceutical industry, I think in some cases it's deserve, in some cases, it's not because there are definitely both on the physician pharmacist and pharmaceutical industry side, they're bad actors that take advantage of the market and they do bad things and they should be called out and they should be punished, but more or less, I think physicians pharmacists in the pharmaceutical industry is doing, trying to do the right thing.
And whether it's innovate, take care of patients. Uh, and get medicines out to the market that are really gonna make a difference in the patient's lives. But, uh, you, you are absolutely correct. They're, they're getting the short end of the stick because they're the ones that are facing the patients, whether it's the pharmacist or the physician or the pharmaceutical industry for all of the things, and nobody understands how this happened and it didn't happen overnight.
Michael, this thing took time. It's just that, what I say is that everybody was comfortable. There's still people comfortable with the current system. They're making a lot of money and they didn't want any changes to be done to it. But the reality is that patients are hurting and the real pairs, which are the patients, employers and the, and the government is really, uh, not benefiting from the current system.
Mike Koelzer, Host: I imagine, uh, Robert that you, as a manufacturer, Are also a target because it seems like nowadays no one usually makes the pharmacist the target anymore. They see them working hard and in the community and that kind of stuff, most people don't target the doctors. Most people are probably unfair. They do not target the brokers because the brokers they know and things like that, they probably don't target the insurance companies because they do their marketing and they show how we're gonna take care of you and all that kind of stuff and help you join a gym and all this kind of stuff.
And the average person doesn't really know who the PBM is. And so they can't target them. And if they did target them, the PBMs would turn around and point. Their finger at you guys, you know? So you guys are an easy target and the biggest arrows coming your way, I imagine, is from the PBMs, do they try to throw rocks at you guys?
And what are those rocks and how do you respond to those? Well,
Robert Popovian, PharmD: the way they say it, and it's true, they say that the pharmaceutical industry sets the price that everybody pays for. Right. And that's absolutely true. We set the price. I mean, there's no doubt about it. You can go up and down sideways, we set the price, but I think what the pharmaceutical industry doesn't do a good [00:40:00] job is exactly what I was talking about to explain how that price was set.
You know, we just don't pull this price out of the thin air, right. And put it into, uh, as the product price. There's a lot of work that's done to evaluate the market. That evaluates a lot of the, um, competition, the patient accessibility, but there's. How much rebates we have to pay, how many, uh, competitors are there.
So the rebates keep going up, how much fees we have to pay, uh, how many prior authorizations and step therapies we have to face before the product gets used. So there's a lot more that goes into it. And I blame the pharmaceutical industry to a certain effect that they haven't done a good job of explaining how they came up with the price that they do, you know, and that's, what's opened up the door for the PBM industry, rightfully saying, you set the price.
So we need to be, yeah, we set the price, but this is how the price was set. And there's more to it than just a hundred percent. Uh, profit maximizing seems
Mike Koelzer, Host: like if I'm a manufacturer, I mean, the reason I'm paying my pharmacist. X thousand dollars a year is because the competition's paying them X thousand a year.
And the reason I have my aspirin priced at such and such is because the competition has that such and such. So if I'm a manufacturer, probably the easiest example I can think of is if I'm coming out with a smoking cessation tablet, some miracle drug, and I know cigarettes are 12 bucks a day. If you smoke a couple packs, something like that.
Well, it doesn't take a rocket scientist. I'm gonna make my price probably about. 10 to $14 a day for my smoking cessation aid. So it seems like that is almost like a no brainer, I guess, where you have to come in is like, well, sometimes it's not 12 to 14. Sometimes it's $30 for that smoking cessation aid.
And that's where a lot of that baloney comes in of the fees and the rebates and the prior authorization problems and things like
Robert Popovian, PharmD: that. Exactly. And that's why the market doesn't work because right now the market is set up the way it's set up. Right. It benefits people who come up with high prices and higher rebates than vice versa.
So there are multiple examples of companies that are out there that have brought out products that are lower priced compared to the competition. I'm not talking about 5%, either 20, 30, 40, 50% lower prices. And they can get a light a day because all they hear from the pharmacy benefit managers and the insurers is that go increase your prices, gimme more rebates.
Then we can talk because that's what drives placement on formulas. It's not really the price, the net price of these medicines. It's really how much rebates they're collecting. So I'll give you an example. This is you can go to, to research yourself, Hep C drugs, which you know, it was, it was groundbreaking.
Innovative medicine that came out about five, six years ago. That really changed the way we, uh, we treated hepatitis C patients and it was a cure. So Gilead got a lot of accolades for bringing it out and also a lot of grief for pricing it as they did. But the reality was that within a year, when competition came out from other companies, the price that people were quoting, which was $84,000, I think for the treatment course was really not 84,000 because we knew that they were rebated about 50% of the back.
So it was really half the price, but yearly had gone a step further. About two years ago, three years ago, they came out with what they called an authorized generic, which they priced at about 75% less than the brand name medicine. So now you assume in a regular marketplace, this is an authorized generic coming out of the same pharmaceutical company.
Would be preferred by the insurers and the pharmacy benefit managers compared to the brand name drug. That's not the case. If you look at the formularies that are set for 20, 21 and 2020, by a couple of the larger PBMs in this country, what you will notice is that they exclude the authorized generic coverage that they're not covered while they cover a brand in medicine.
It just doesn't make inherent
Mike Koelzer, Host: sense. It doesn't make sense. And the problem is, as I think you were saying earlier, when someone has either not hit their deductible or they're in the donut hole, it's at least 75% more than it should be because there's an authorized generic. And the patient directly is suffering [00:45:00] when they're paying it on their own.
And then it turns to the employer. The patient is gonna suffer too by maybe not getting a raise or not getting money put in the retirement or maybe losing their job.
Robert Popovian, PharmD: Exactly. And the assumption is from the employer that let's say, let's bring up the Hep C example, right? So you're a patient that has a coinsurance or deductible.
You walk to the pharmacy and your co-insurance deductible will be based on $84,000. Forget about the auto generic, we're not even talking about the auto generic, but yours will be based on 84,000 rather than the negotiated one, which is closer to probably the price of the auto generic, right.
Which is about $24,000. So that's the number one you're overpaying as a. That's right there. The second assumption is that the employer will then collect the difference, right? Between 84,007 25,000. That's not true because we know, even though they may get 90 plus percent of the rebates, they're not getting all the fees and everything else.
And we know that the fees are becoming a larger percentage of the concessions. Therefore they're not even benefiting from it. What you're saying,
Mike Koelzer, Host: Robert is sometimes the employer who would get that rebate. They
Robert Popovian, PharmD: would get it most often they do. If it was a rebate. Yeah. If it was a rebate, truly rebate. So that's why I say when the pharmacy benefit managers stand up, And testify and they say, we pass on 99% of the rebates.
They're actually being truthful. They're trying to tell the truth. They are passing the rebates, but not everything else that they collect and that everything else is growing at a faster pace than the rebates are. That's the problem. So employers are not benefiting from it. So who's benefiting is really the people who are in the middle, the more OPEC you make, the more complicated you make the system.
There's more ability to make money off of the system where
Mike Koelzer, Host: There's mystery, there's margin.
Robert Popovian, PharmD: Exactly. So the less, that's why people don't like net price contracting. That's why people like Kaiser, who don't work that way. They don't have a pharmacy benefit manager who doesn't have a middleman. They're the insurer and the provider at the same time, they just say, gimme the net price.
That's it. I'm just gonna contract based on the net price of the drug, not all these other nonsense of rebate fees and everything else.
Mike Koelzer, Host: If you could have one job. Anywhere in the world, whether it's the president of a certain company, the president of the United States, the head of commerce, I don't even know what I'm talking about.
I mean, if you could do anything you wanted to do, what job would you take for a year to try to make the most impact? And number two, what would you do? Well,
Robert Popovian, PharmD: I, I would like to be in a position that we can change the model, the way we price and contract drugs in the United States. So clearly it's, it starts with the health and human services because the government is the, one of the largest payers.
So working for health and human services is really to do, uh, be the drug pricing C area or somebody who understands drug pricing to be able to change the model because you have to do HHS first and then the private sector will follow. You need to do both, but you need to start somewhere. And the government has the big bully pulp.
Uh, to be able to do it. Uh, what I would do is start off with eliminating what, what secretary AZA wants to do, which is eliminate rebate contracting. That's the starting point. That's where we start for me. It's other things that need to be done. Patients need to know what they're gonna pay out of pocket. The minute they walk into any kind of service that they are getting.
And, you know, I get the pushback always publicly that, well, if you have an aneurysm, you're not gonna shop around, you know, you're gonna go to the emergency room. I get that there are services that clearly the patient is never gonna shop around. They're not gonna look around for it, but there are other alternative services such as, you know, when you need to do.
Joint replacement, or you need to get a certain medicine that you can shop around. If you know, your out of pocket cost is gonna be, and you can go to a, to a different pharmacy or different provider and get those services done. So that's another thing that I would do is to make sure that patients, the consumer knows upfront what their out of pocket costs are gonna be.
Period, no mystery, nothing else. They will. They know exactly what they're gonna pay for the medicine.
Mike Koelzer, Host: In your definition of that, would you define pharmacy patients as knowing that in a community setting or is that like only after the fact?
Robert Popovian, PharmD: No, it has to be upfront. It has to be upfront. The patient needs to know what they're gonna pay out of pocket before they walk into a pharmacy to pick up their medicine.
Mike Koelzer, Host: You're saying by the time that they're standing at the counter and you say, well, do you want this for $500 or don't you that's too late.
Robert Popovian, PharmD: That's too late. It's too late. The other thing that we need to do in this [00:50:00] marketplace with pharmaceuticals is that. We have a very competitive generic market, and this is where pharmacies come in and I've tweeted on this and I've written about it quite a bit on LinkedIn.
And I get a lot of positive feedback from retail pharmacies, especially community pharmacies. In this country. We have a very competitive generic market. We have one of the lowest generic prices anywhere in the world because we have an open competition where there is no floor for pricing versus other countries in XUS.
They actually have floors for their generics. We need to have a transparent competitive cash marketplace for generic medicines. And we don't have one good RX is not the answer, nor are any of these programs like Amazon bought out last week. Hopefully they'll go further. That's going to, to do that. There are a couple of examples out there.
Uh, that does competitive cash pricing, including some community pharmacists who have shifted their entire business to a cash business. And what happens is that, and I'm convinced of this, that the healthcare system will pay less. The patient will pay less and the pharmacists and the people who are providing the pro, they will make more money.
So it's a win, win, win situation where people pay less, the system pays less, but people that actually are U dispensing the medicines and utilizing the medicines are gonna make more money off of it. We don't have that, and we need to create that. And there's two reasons why we need to create it. Number one, because of the savings that I just mentioned.
But secondly, we need to take that generic part out of the benefit design for insurance to give more head headway for other more pricey stuff to be covered. Because right now, if you think about it, Michael in pharmaceuticals recovers everything that is cheap. Hundred percent you walk in your generic is covered.
Everything is very low payment, blah, blah, blah. And personally, I think you're probably overpaying for your generics. If you pay cash, you probably will pay less using your insurance card most often. And that's been proven through research. But the second thing is that we don't pay, we don't cover pharmaceuticals, things that are expensive at a high level.
So it's the opposite of what insurance should be. Insurance is intended to pay for expensive sorts of procedures and things that are anomalies rather than your routine. People who are taking a statin per day for the cholesterol type of a thing, but we've flipped it on thes head. And we've created a marketplace that, uh, an insurance model that pays for everything that's cheap and nothing that's expensive, and we need to change.
Mike Koelzer, Host: With your car insurance, they don't pay for your gas. They don't pay for your windshield wiper fluid. They don't pay for your new tires. You cover that because it's a known expense. It's not an anomaly. It's not really insurance. Now. Here's another thought though. Maybe if they do pay for some things, I don't know if this argument's any good, but let's just say that car insurance paid for windshield wiper fluid or something because people were getting into crashes because there's windshields were dirty and it's so cheap that let's kind of throw that in there as a bonus.
But yeah, mainly on that first point, I agree. It's like they're ensuring stuff. That's not meant to be insured really.
Robert Popovian, PharmD: So let me give you an example, the car, uh, so the insurance, most car insurances actually cover. If you have, uh, Like window shattered, right? If you're window shattered, they actually pay for that.
And they have somebody that comes in. The reason they do that is because it's a safety concern, right? Because if you're driving with a shattered window that could fall off, something can be damaged. Something you can talk about. Maybe what we need to think about is that stuff that is communicable diseases.
For example, vaccines are a good example, right? If we pay for vaccines because taking a vaccine, just doesn. Impact you as an individual, it impacts your neighbor, impacts your family. Because if you don't have the infection, you're not passing it on to others. Maybe we need to think about it in those terms, but cholesterol medicine is a perfect example.
If you don't take your cholesterol medicine, the only person you're hurting is yourself and the system itself, but it's really harming yourself. It's not a communicable disease, right? So you can't make some exceptions that we just talked about, like the crack windshield versus the, uh, vaccine for a communicable disease.
And maybe we can cover some of those things. But in general, I believe in generic medicines. If you take the 100 top 100 generic medicines in the United States that are prescribed, they make up about 80% of the prescriptions in the us. [00:55:00] I guarantee you that if we take that out of the insurance model and put it in a cash competitive where you have an app on your phone, Let's say you're prescribed a generic statin and you can go scroll down and find out which pharmacies give it to you for cash for cheaper and go to that pharmacy.
And your, you know, depending on your driving habits or how far you wanna drive, that's what I want to do is take it out of the insurance and put it into a cash model that patients pay cash for. And at the end of the day, what it will do is that first of all, the patients will realize that they have more choices.
What you started talking about just like a regular consumer to shop around. And secondly, they can then decide. I can decide if I want to pay $5 and drive five hours to get it, or I wanna pay $7 and go to my community pharmacist or the, I feel better to go to the community pharmacist down the street because you know, I know Michael, who's the pharmacist, and I want to go see Michael.
And talk to him about other things that I may have. And I, and, and I appreciate his service. So I wanna pay a couple of dollars extra, but that becomes a consumer choice right now. Everybody pays the same for generics. You walk into a generic, you pay 20, $20, 15, $20 copayment. And more often than not that generic medicine is less expensive if you paid for cash in a competitor market.
And it's happened to every one of us, it's happened to every single one of us. It happened to me twice, both for my wife and my daughter. Uh, most recently my wife needed a generic nonsteroidal, which is for her back pain. So she called me from the pharmacy and said, look, our co-payment for generics through my benefit design is $20.
So she called me and she said, look, the pharmacist saying they don't have our insurance information in their system. So I have to pay cash. And the cash price that they offer is $20 or something, or $22. And then she said, but good RX, which is not really a cash price is really what the good RX companies do type of companies do is just, they provide the cash price that an a PBM would offer, you know, good RX is giving to me for $18.
I said time out, because I knew Pfizer's benefit has a provision in there, which by the way, 50% of employers don't have this provision in their benefit design that I pay what the pharmacist is being reimbursed for that medicine. Okay. If it's below my copyright. So if my copayment is $20 and the price of the reimbursement to the pharmacist is $22, I pay $20.
But if it's below that, I pay what he's being, he or she's being reimbursed. And I told him, ask the person, the pharmacist to put the information into the system. She ended up paying like $3 walks outta the pharmacy. So she would've overpaid. She would've overpaid. Uh, by paying the co-payment. If we didn't have that provision in our benefit design, she would've overpaid by using good, but at the end of the day, really what the pharmacist was being reimbursed for that medicine was $3 and she ended up paying $3 and walking out of the pharmacy.
It's one of the things that I recommended in my papers is one of the 12 steps that employers should take is to protect their employees from overpaying, for their prescription
Mike Koelzer, Host: medicines. I don't disagree with your thought about let's get rid of the insurance for these low paying things. Is that just to get rid of the layers of the paperwork, the sending, sending money, what's the reason for that in your mind?
Robert Popovian, PharmD: Two reasons. Number one, I truly believe that if they have a transparent cash marketplace for generics, the top 100 generics that patients would pay less out of pocket for those medicines, pharmacists would make more money and the healthcare system overall will save more money. So that's the number one thing.
And the reason being is that remember PBMs, pharmacy benefit managers, to make it very simple, make money in two ways, they make money by managing drug benefits, to rebate contracting all these formulary designs and things like that. But they also make money from processing prescriptions. Okay. So for every pro prescription that they price, they charge, it's not, it's not a lot, but they charge money.
So if we remove that from the system, that's less expense that needs to be taken up by employers and employees to be able to put in, but we need a transparent system. First, we need to create something that, you know, upfront what the cash price of this medicine is. And then you decide whether to use your insurance or not.
That doesn't exist right now in a, in a, in a, in a competition. There are a couple of 'em out there. A couple of pharmacies, online pharmacies, and one actually is a retail pharmacy that does this. And you can actually find out what the cash price is before you use your insurance card. One is [01:00:00] row.com, which is part of Roman.
Uh, they started an online pharmacy and it's all cash based. And more often than not, the patient is gonna pay less to their pharmacy by paying cash than using their insurance card for the generic medicine. They do generic dispensing only. The second part is Costco, which is a retail slash online pharmacy too.
Costco does this as well. They have a very competitive cash price marketplace that you can find out online. You can go to Google, like what I've done. It recently just found out what my cash price of the generic would be for, uh, picking up at my local Costco. And we need that, but we need all the pharmacies participating.
So then you can really have a competitive marketplace that is transparent and the patient can pick and choose where to go. Even though generic prices have plummeted about 70% in the last 10 years, consumers only have benefited by about 50% reduction. So 20% of it has disappeared somewhere. And that's what I want to get to is that why can't consumers benefit from the 70% reduction?
And we know they can, and it's not the manufacturer as much because the manufacturer of the generics is pretty much competitive and it's rock bottom pricing. It's all the layers you add that makes the generics more expensive. So if we get rid of the layers and where the pharmacist is able to provide a cash transparent price to the patient without the fear, and this is why most Pharmac.
Are unable to do it. And I'll tell you why because they're worried about if, if your mic's pharmacy and you give the price that is cash that is below what you're charging the PBM, then you are worried your PBM reimbursement will cut. Be cut for that generic. If we remove that completely where there is no coverage by the PBM for the cash market for pharmaceuticals, then there is no fear.
You, Mike , can decide what your cash price is for that medicine based on no retaliation, no fear, nothing else. And be able to just put it out there and compete with Robert POV's pharmacy down the street, or with Walgreens or with CVS. And at the end of the that's what we want for
Mike Koelzer, Host: consumers, because the insurance isn't paying for that anyways.
Exactly. And then the higher price drugs. Probably nobody would be able to afford it. You don't really have to set a cash price because most people aren't gonna probably buy it for cash. Anyways, then you solve that system. That's a good idea. And you've given
Robert Popovian, PharmD: more headway or leeway for insurance to cover those medicines because now you're not covering all these other stuff that really doesn't require coverage.
I have to tell you, there are pharmacies out there that I know personally, that have gone away completely from taking insurance. They just do cash, generic cash, and they're making more money. They're making more money. The consumer walks in paying less, but they make more money because they're getting rid of all this middle nonsense.
Mike Koelzer, Host: We do that for home medical equipment at our pharmacy. Basically what I've done in our store with medical equipment is we carry mainly stuff. That's under a hundred dollars. Kind of cash and carry. As soon as they're dealing with insurance, they've gotta get this. They gotta get that. They're paying triple for it.
We haven't done that in our pharmacy part, but we've done that in our medical equipment part. And it's easier to do because there's not as much competition in town. So people can't say, well, I'm gonna go to Joe's across the street because Joe's might exist as a pharmacy, but it doesn't exist as a medical equipment
Robert Popovian, PharmD: store the best way to look at it.
I mean, and going back to our initial conversation, there are no bad or good guys in this. I look at the system, the healthcare, the pharmaceutical system that's been set up is just like a parent. When a child does something wrong, who's younger, I'm not talking about teenagers, but when they're younger, you can't blame the child.
You usually blame the parents. And that's why I don't blame the PBMs or the insurers or the brokers or the pharmacies or the pharmaceutical industry. Because the way that the rules are set up with rebate contracting to start off with, it's been set up by the federal government to allow this type of activity.
So they are the parents and they need to step up and they tried, but it didn't work. They've tried again through this now executive order and really fix the model. And when the model gets fixed, obviously, Michael, that's not gonna be the panacea. It's not gonna solve everything. We need to still look out for other things that will come up.
But at least it's a starting point to fix the
Mike Koelzer, Host: model. Tell me again, what you would see as a strong marker. Of change. Is it just the executive order continuing, or is it gonna be a new law or what are we looking for that I can say Robert wanted this and I can sit there and smile because we got what Robert said we should get.
What is that that I'm looking for for that success? Marker.
Robert Popovian, PharmD: I think the success marker comes in from the [01:05:00] executive order that was signed, but it really goes back to the original regulation that HHS had in mind to the Institute that was initially put out and then withdrawn. I think we need to go back to that because, uh, the original one really eliminated rebate, contracting it, fixed the fees issue, which is extremely important and also legitimized, uh, the fees issue.
Not only not to be a percentage of the retail price, but more importantly, that it would. Uh, legitimate fees that they can charge. So it did three things that people the other for the last two sort of fell on the radar. Everybody talked about the rebate contracting, but really was fixing a lot of different things.
So going back to your, that would be, it is to go back. The executive order is the right, like sort of first foray into it, but more needs to be
Mike Koelzer, Host: done, but it'd be going back and putting more language in. And
Robert Popovian, PharmD: then let me give you another one. And people didn't pay any attention to this. When the regulation was proposed about two years ago, Senator bra from Indiana actually introduced legislation to fix it on the commercial side, and do the same thing on the commercial end.
So both of 'em need to be done. And I would say if that would be the point that we can see the tide shifting and really fixing the OPEC of
Mike Koelzer, Host: the current pricing model, and I'm, I'm pretty crappy on government stuff, but basically I know this much, that, and executive order is. Terribly strong because that can be changed by the next administration.
Would the stuff that you're talking about be recommended by HHS and then would it go to both houses and then finally be voted on? Is that the process this needs to
Robert Popovian, PharmD: take no, the regulation. So the initial regulation that was introduced was gonna just change the way that Medicare part D contracting is done.
They can do that through regulation. They don't need legislation. Obviously doing it through legislation is much better. The executive order is even a step further from a regulation is really trying to Institute the regulation. So it's like two steps back, but legislation you're absolutely right.
The best way to fix the system once and for all is through legislation. And that's why Senator bra had introduced the legislation to fix it on the commercial side, because you can't do it to regulation, right? Because the government is not regulating the commercial. Payers or private
Mike Koelzer, Host: sector.
Oh, I see. So to hit the commercial side, if
Robert Popovian, PharmD: they're dealing with the federal government, you can, right. So if they're part of part Medicare, part D or Medicaid, you can, but you can't do deal with when they're, now you can put parameters on how they do it, but this is what center bronze legislation was trying
Mike Koelzer, Host: to do.
Don't do some of these places, and again, I'm coming at this from no knowledge of this. Don't some of these places need licenses to do things like licenses, to be a PBM and do regulations affect licenses. Even though you're not doing it for Medicare or Medicaid, it's still a license to perform as a PBM.
Could that be a regulation or is still a law better?
Robert Popovian, PharmD: Uh, law is always better than a regulation because it's harder to turn back laws and also the, uh, regulation can be interpreted differently. And so the, so could laws, I mean, when they're applying the law,
Mike Koelzer, Host: But if a regulation's different, then you might just get here.
You're not doing this.
Robert Popovian, PharmD: Right. So legislation is much more certain. There's much more certainty around legislation than
Mike Koelzer, Host: regulation. And you said that this is in the works to try to do that for commercial
Robert Popovian, PharmD: too. Yeah. If it was, if it got withdrawn, when the regulation got withdrawn two years ago, then Senator bra just dropped pursuing the bill because there was no point of just doing it on the commercial side, on
Mike Koelzer, Host: private side, because if the government's not even gonna do it, then you're not gonna get the commercial to do it at all.
Robert Popovian, PharmD: And you need both of 'em. And this is going back to last February in 2019, when the CEOs testified in the Senate finance hearing, if you notice, they all said we will lower the retail prices of our medicines, if both commercial. Government changed the tactic of rebate contracting.
Mike Koelzer, Host: Yeah, because what we're seeing in a pharmacy in my mind, at least I'm thinking, well, if they change it on the government side, they're probably gonna get it back somehow on the
Robert Popovian, PharmD: the commercial side.
That's why you need to do both. You always need to do both. My dad used to
Mike Koelzer, Host: Say, it's like, when you were building a house, you know, it's like he said, why would I take out three windows? Am I only saving $600, but when I wanna put three windows in, it's costing me $1,500, they're gonna get it back someplace.
Right. You're absolutely
Robert Popovian, PharmD: right. That's why you always need to do both ends because it's transferable. Right? So for example, if, if a government mandates, you know, price controls on what Medicare or Medicaid pay. Well, the [01:10:00] pharmaceutical industry will just charge more money on the commercial side, right. And make more money and same thing with insurers.
And if the insurers have to give more concessions to the government to cover Medicare patients, they're gonna make money on the employer
Mike Koelzer, Host: side, gonna get back somewhere else. Well, Robert boy, thank you so much for that information. It's so cool to get it from, uh, your side being in the industry. And that was really, really fascinating.
Robert Popovian, PharmD: Well, I'm happy to have helped out. I mean, this is a complicated issue, but it's complicated for a reason because people make it complicated when you actually go through it and try to explain it. It's being created in a complicated manner because people make money off of complicated situations.
Mike Koelzer, Host: Well, I've said that for years, with our primary wholesaler, I'll pick up a bottle of, let's say ibuprofen, you know, 800 milligram, you know, 500 count, however many pounds that is.
And I'll say, I'll say to my post, I'll say this is such a crime that I'm paying you guys X million dollars a year. And you cannot tell me how much this bottle costs me. Every time I ask you, you have to say, well, if we do this and do this, and then we get this rebate and all this kind of stuff, and I said, pharmacists aren't stupid.
You guys are doing this to complicate things and to throw up smoking mirrors. And the more you do that, the more we don't really know what we're paying. And we just go ahead
Robert Popovian, PharmD: and do it. Most healthcare professionals, physicians, pharmacists, we've all had to go through organic chemistry. If you've gone through organic chemistry and past that class, I think you can pretty much understand anything in the world.
We know what's
Mike Koelzer, Host: happening. All right, Robert, it was fun talking and I look forward to staying in touch with you.
Robert Popovian, PharmD: Same here. Bye Mike. All right. Thanks Robert. Take care. Bye.
