Podcast Episode Recommendation: Our Curious Amalgam Podcast Episode 212

My followers may be forgiven for their lack of awareness, but on October 23, 2022, the man who lead the PBM known as Express Scripts (owned by commercial healthcare insurance company Cigna since 2018) named George Paz died at relatively young age of 67. Mr. Paz began at Express Scripts in 1998 as CFO. By 2003, he was president and by 2005, CEO. Paz retired as CEO in 2016, although he remained chairman until Express Scripts was acquired by Cigna in December 2018. The local newspaper, the St. Louis Post-Dispatch published his obituary HERE). While he was an admired business leader in St. Louis, one of the things his company became best known for was opacity and non-disclosure of what it actually did behind closed doors. That paved the way for rivals including Caremark (later CVS Health/Caremark/Aetna), and United Healthcare's PBM OptumRx to do the exact same thing. Collectively, the three largest PBM's now handle claims for some 80% of all prescription drugs sold in the U.S. today.

But today's post isn't about George Paz, but the unraveling the opacity the company he led made a core business strategy. I will admit there was once a time I actually respected the role of PBM's. The reason is because they once did what they now claim the industry does without providing any proof, which was to save the healthcare system (and patients) money on prescription drugs. 

However, over time, that ceased to be a reality. 

I believe that the PBM industry falsely presumed that their entrenched practice of non-dislosure and withholding information would somehow always protect them from scrutiny, and that was true ... for a while. But over time, greed from PBM's had become so egregious that it simply became hard for ordinary people not to notice. Consider insulin, which had become the poster-child for how broken the system had become. Everywhere else on earth, the price for a vial of insulin is around $40 or so. But, in the U.S., it was not uncommon for patients to be charged prices in excess of $250 for a single vial of insulin.

Hence, in spite of vertically-integrated PBMs' best efforts, its natural that ANY TIME some entity tries to hide more than a quarter of a trillion dollars ($236 billion as of 2021 according to the Drug Channels Institute, see https://www.drugchannels.net/2022/03/warped-incentives-update-gross-to-net.html for the source of that information), people are GOING TO NOTICE. Along with that, came the expected deserved scrutiny (including from academia) of what was really happening behind that supposed curtain of opacity.

Today, the biggest three players in PBM industry have de-volved to the point where any illusive savings they claim to create simply pads the bottom lines of their parent companies, but usually does not flow to covered patients. That has created business opportunities for startups including GoodRx and Mark Cuban Cost Plus Drug Company.

That's why some industry observers, including Pembroke Consulting's Adam J. Fein, who in several posts about how GoodRx profits from the broken U.S. pharmacy pricing "system", described the situation in one post this way (see HERE):

"Incredibly, three out of four consumers who used GoodRx already had commercial, Medicare, or Medicaid insurance. This means that someone—the consumer, their employer, and/or the government—paid insurance premiums for a pharmacy benefit managed by a PBM. Yet it was still worthwhile for people to bypass their plan's out-of-pocket costs and PBM network rates in favor of a different PBM's rates. As I explain below, such arbitrage creates potent conflicts between PBMs and their plan sponsor clients.

Don't blame GoodRx for this mess. I give it credit for helping consumers navigate a crazy system that incentivizes people to bypass their own insurance plans. But it’s hard not to dislike a system that enables these games."

Anyway, in my opinion, the PBM game is over. As I very recently blogged in a post entitled "The Insulin-PBM Rebate Kickback Scheme Appears to Be Coming to an End" about how the biggest insulin-makers doing business in the U.S. today seem to have concluded the PBM commercialization channel, at least for patent-expired insulin varieties, is no longer a viable option. It took a variety of factors for us to get to that point, but that day appears to have arrived. I anticipate Sanofi (the maker of Lantus insulin) will eventually do exactly the same thing Lilly and Novo Nordisk already have announced because they will have no choice.

Which brings me to today's post.

Today, I'm sharing a particular podcast episode from the Antitrust Law section of the American Bar Association called "Our Curious Amalgam". Specifically, today, I am recommending a listen to one of their most recent podcast episodes entitled:

Episode "#212 A Sickness or a Cure for High Drug Prices? Why PBMs Are Under the Antitrust Microscope" 

Dr. Erin Trish, USC

In this particular episode, she interviews Dr. Erin Trish, who is Co-Director, Schaeffer Center for Health Policy & Economics at University of Southern California. A key point of discussion in the conversation is insulin. I believe this provides an excellent explainer for what's happening and why the FTC study announced last summer on the PBM industry. Hence, I think this episode provides a great explainer for what is happening with the insulin market and the broader U.S. pharmaceutical market generally.

This particular episode's web page is https://ourcuriousamalgam.com/episode/212-high-drug-prices-pbm/