April 28, 2025 • 27 mins
Big changes are happening in healthcare! 🚨 In this episode, Matt Hoff, CEO of A-S Medication Solutions, joins us to unpack Arkansas' new law banning PBMs from owning pharmacies—and what it could mean for DPC clinics, pharmacies, and patients nationwide. We explore how DPC practices can prepare, why physician dispensing is crucial, and why this battle is just getting started.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Wayne LowryWhat part of America are you in today?
(00:02):
Matt HoffI am in Havana North. I'm in Miami, FL. So it's a beautiful time to be here. I've been here for a conference and the weather couldn't be better, so I decided to spend my time inside talking on a podcast.
Wayne LowryOh wow.
(00:29):
Wayne LowryWelcome back to the Best DPC Podcast, your go-to for everything Direct Primary Care. I'm your host, Wayne Lowry. I'm not a doctor, but I can confirm he in fact is dead, Jim.
Wayne LowryLittle Star Trek reference for all you people out there today, we have our friend of the pod, Matt Hoff, who is the CEO of A-S Medication Solutions.
(00:54):
Wayne LowryHe is coming to us from sunny Florida. He could be outside enjoying that weather, but instead he is coming here to help us unpack some news of the week. We're unpacking a brand new first in the nation, Arkansas law that forces PBM's to divest their pharmacies.
(01:15):
Wayne LowryWhat drove it? Who wins? Who loses? And what does this mean for DPC practices everywhere? Thankfully, we have the expert, our friend of the pod here with us today, Matt Hoff, to give us a deep dive.
Wayne LowrySo, Matt just to jump right into it, why in the world are you talking to me today?
(01:39):
Matt HoffOther than I have nothing better to do. No, it's an interesting time in the healthcare space, especially around pharmacies. So there's been a lot of action and activity in the last couple months.
Matt HoffNone of it's been really positive from a patient care perspective and then you see what's going on with Arkansas and a couple of other states, actually 36 other states that have had their attorneys general send in letters to Congress hoping for similar action at the federal level.
(02:15):
Matt HoffAnd it could cause a cataclysmic shift. So really the–
Wayne LowryWow.
Wayne LowryWell, so let's start with that Arkansas law that's the framework of this conversation. Tell us a little bit about it and what does it actually do?
Matt HoffSure.
Matt HoffSo it's House Bill 1150 and it was signed by Governor Sanders about a week ago and the simplest way to say it is it prevents PBM's, Pharmacy Benefits Managers from owning pharmacies.
(02:47):
Matt HoffAnd at a high level, when you think about that, it sort of makes sense and you can understand the argument is the people who control what's paid to the pharmacies can't also own their own pharmacies. It's preventing a vertical monopoly.
Matt HoffIt's preventing an organization like Caremark, from incentivizing their own pharmacy over the expense of Walmart or Walgreens or an independent pharmacy. And the pharmacy–
(03:19):
Wayne LowrySo, just so we can for our audience give them some definitions. So for those of you that don't know, I mean everybody knows what pharmacy is. We're used to that concept. That's where you go get, you know, a Coca-Cola with chocolate syrup in it, right? That's where you go to the pharmacy.
Wayne LowryI want to take a quick break to talk about BestDPC.com. Are you a doctor looking to break free from the headaches of insurance and take control of your practice? Or maybe you're an employer searching for an affordable healthcare solution that actually works?
(03:50):
Wayne LowryAt BestDPC.com we cut through the noise and connect you with the country's best direct primary care clinics. Whether you're a patient tired of surprise medical bills or. A physician ready to build a thriving membership based practice. We've got the tools and resources you need.
Wayne LowryFind the Best DPC doctors near you. Get expert advice and take the first step towards a better healthcare visit BestDPC.com today and see why direct primary care is the future of medicine. That's BestDPC.com because great healthcare should be simple, affordable and built around you.
(04:26):
Wayne LowrySo tell me, tell me what is a PBM?
Matt HoffSo a PBM is a pharmacy benefits manager and a pharmacy benefits manager has the responsibility to make sure that a certain plan design is enforced so they work with the employers to control what medications are covered, what co-pays are, what different plans are.
(04:48):
Matt HoffThey negotiate rates so, they negotiate what reimbursements are, they negotiate what's paid to the pharmacy. So the PBM sits in the middle and they say what is and isn't covered.
Matt HoffWhat is and isn't covered under what circumstances? How much an employer is getting billed? and how much a pharmacy is getting paid for it?
(05:10):
Matt HoffSo if you look at the Arkansas law where it's really focused at is because they're in the middle and they can control those reimbursements to the pharmacy. It's inappropriate for a PBM to also own pharmacies because you have an inherent conflict of interest.
Wayne LowrySo with that being said, so the idea here is if you are directing the plan and you are saying, hey, we're supposed to be independent as a PBM, independently serving our client. But if we also own the pharmacy and we're sending all the business to a particular pharmacy and that's where the conflict of interest comes in. Is that correct?
(05:50):
Matt HoffAbsolutely. And if you think about it from a doctor's perspective, this is almost like a stark law argument where you shouldn't be able to give incentive to refer to 1 certain place or another, or to do a self referral.
Matt HoffThis is basically the PBM doing a self-referral to a pharmacy. So you can understand the point of that law at a high level, you want to make sure that you're not giving one organization too much power to steer a member, or to steer a patient to a specific pharmacy at the expense of another one.
(06:26):
Wayne LowrySo what about carve outs? Is there any carve outs in this law that we need to be aware of? or is it pretty narrow? or are there a lot of real exceptions to this that may carried on?
Matt HoffWell, let me let me say it this way. I don't think CVS is going to go down without swinging a little bit. There's 36 states attorney generals who have written letters asking for similar laws and for a federal law that mirrors this.
(06:59):
Matt HoffSo there is a long legal battle ahead of this, there's a lot of legislation ahead of this and it's, you know, PBM's are very large and very powerful. I don't see them going down without a fight.
Matt HoffIn terms of specific, the Arkansas bill, and I know we still have some folks that are experts digesting it, but the Arkansas bill is more gray than it is black and white in my opinion. So where it gets enforced, how it gets enforced, and what the interpretation is, is still pretty out there.
(07:36):
Matt HoffYou know the baseline of it is CVS is owned by, or. CVS owns Caremark. Caremark is a PBM. This bill would force all of CVS. All CVS locations in Arkansas to either close down or to be sold off to somebody else.
Matt HoffAnd that is a pretty massive change. So where's the gray? You know, you look at things like if they sunk, burn it off into its own entity, that they still owned by the same stockholders.
(08:09):
Matt HoffIf it was a joint venture, if there were all sorts of different avenues and mechanisms. Boy, there's some lawyers right now that are really excited about this bill. I'll just leave it.
Wayne LowryChomping at the bit.
Matt HoffYeah, chomping at the bit. Wayne Lowry Yeah, yeah, they're ready to jump in. And so with that, you expect pushback, obviously. So CVS, you've got CVS. Are there other large brands that kind of fall in that same category as a CVS?
(08:30):
Matt HoffMm-hmm.
Matt HoffNothing at the level of the CVS, but it comes down to you know what is the definition of a PBM in this sense? So if you look at every PBM for the most part owns their own mail order pharmacy, and most of those are going to be out of state. But are they not allowed to serve Arkansas patients?
(09:01):
Matt HoffIt's not clear. You know, there's some other brands where there could be affiliation between ownership structures and investors in one group that are investors in another, so pick a private equity group.
Matt HoffIf they own X percentage of Kroger who has their own pharmacies, but they also own, Y percentage of a group like Express Scripts? Does that violate it? Yeah. In my opinion, we had an expression in the army that was called good initiative, bad judgment.
(09:30):
Wayne LowryAll of a sudden.
Matt HoffThis seems like a good initiative, bad judgment. It makes sense to try to keep that to lessen that PBM control, but if you're shutting down pharmacies and accelerating that, that's hurting patients and it's hurting doctors and that's you know that I think everybody knows what my company does and we're sort of an avenue around pharmacies.
(10:04):
Matt HoffBut even I have to sit here and shake my head and say making access harder is not what we're about, especially in a place like Arkansas.
Wayne LowrySo.
Wayne LowryYeah. So would you expect then that there's going to be? Well, I mean, obviously if CVS has to make the choice. It's going to expose a couple of things.
Wayne LowryOne, it's going to expose where the profit margin? Is the profit margin in owning the PBM? Or is it having brick and mortar retail locations that sell gallons of milk and also, on top of that, does drug orders?
(10:41):
Wayne LowryOr are they going to like you say, is this going to be a shutdown CVS and how is that going to affect the mom and pop or small pharmacies or local pharmacies, how might that affect those organizations?
Matt HoffYou know it's abundantly clear where the money is made. It's on the PBM side, so any rational business owner, given the choice between retail pharmacy, which generally is losing money.
(11:13):
Matt HoffYou know, I think the biggest WOW stat that I could give is 70% of independent pharmacies opts to not carry GLP ones. How to shrug out there? They decide not to carry it because they lose so much money every time they dispense it.
Matt HoffSo it's a hard, hard road to climb for a pharmacy right now. They generally lose or barely break even on most drugs they dispense. And like you said, they're relying on the gallon of milk in the greeting card to make money.
(11:48):
Wayne LowryYeah.
Matt HoffSo, there's been a huge closure of independent pharmacies and I think part of the, not to get too into speculation, but part of the reason for this bill was to help bolster the independent pharmacy community in Arkansas, which is a great intent but someone's going to suffer for that and that's patients.
(12:10):
Wayne LowryYeah. So let me ask, does this provide then an opportunity for people in Arkansas and maybe explain the dispensing laws in Arkansas too for on site dispensing for you see how might that affect that?
Matt HoffSo Arkansas has some of the worst dispensing laws in the country. Wayne, your state still is #1.
(12:36):
Wayne LowryI live in Texas. I live in Texas, so is it worse than us?
Matt HoffThey are not worse than you. You guys are still—Texas and Massachusetts, the only thing they have in common is…
Wayne LowryWe're number one, baby.
Matt HoffCo-worst dispensing laws, you guys are skipping hands in hands with how bad you guys are for that
(12:58):
Wayne LowryAnd Alex Bregman, we've covered that.
Matt HoffThere is a bill that's going to get brought to a subcommittee next week that could help ease some of it, but it is so restrictive that it's half of a drop of water into an ocean, it really is not going to be much of a solution, but Arkansas—
Wayne LowryYou're talking about in Arkansas or Texas?
(13:20):
Matt HoffIn Texas. In Arkansas—
Wayne LowryOK, I'm gonna put a pin in that we're going to circle back on that one.
Matt HoffYeah, this is what happens when we record on a Friday afternoon. I'm in a million directions.
Matt HoffBut in Arkansas, their dispensing laws are very strict. There's limits on day's supply. There's limits on who can dispense. There's limits on what fills they can do. You know, if you want more details on that, please reach out to the A-S meds team and we're happy to go walk you through it.
(13:53):
Matt HoffBut Arkansas already has some of the hardest laws around physician dispensing, meaning Arkansas patients are at a disadvantage compared to their neighboring states, besides Texas in terms of being able to access drugs, then you throw a law on top of this that makes the largest pharmacy chain have to make a tough choice between exiting the state or ceasing operations or selling off their business.
(14:21):
Matt HoffI don't see how that helps patients in the slightest.
Wayne LowryYeah. Well, so DPC's that are listening to this and considering how this might affect their patients, what are some of the things—now obviously like you mentioned, this is starting in Arkansas, but there are 36 other attorney generals that are looking at this, there's a push for federal action on this,
(14:49):
Wayne LowrySo this is likely to impact every DPC in America if we're going to be honest. So, if you're a DPC in America, what are some of the things that you can do right now in preparation to this case in Arkansas?
Matt HoffThe first thing is start dispensing. Take control of your patients, control of your future into your own hands. If you're able to begin that process, develop your policies. Start getting your patients used to having a better service and getting their medications right on site.
(15:26):
Matt HoffYou're going to be one step ahead of the game because you're already going to have that alternative in place as your status quo, if something is going to happen.
Matt HoffYou know, predicting red legislation these days is pretty impossible. There's another pharmacy bill that Arkansas was a first mover on—
Wayne LowryBreaking news: we're now going to put a tariff on the last statement you made.
(15:50):
Matt HoffYeah, they're putting a tariff on Arkansas.
Wayne LowryI just tear up your statement.
Matt HoffYeah. Arkansas put the most harshest tariff on CVS that there is.
Matt HoffBut I think that the number one thing is start dispensing so you can take control of patients in your own hands. This will have ripple effects across pharmacies across the country. So whether you're in Alaska or Florida or anywhere in between, there's going to be a high level service disruption or high level what's going to happen long term for the pharmacy that’s seeing my patient because these different organizations are going to make choices.
(16:35):
Matt HoffPharmacies are continuing to close at a rapid rate.
Matt HoffI feel like this is going to accelerate it, so start having that plan in place now and then come what may, you'll see what happens. if you're in a state where you can't dispense, or if you're in a state that has more restrictive dispensing laws, states that clamp down on your delegative authority to any mid level you may employ, start getting active. Start saying look at what's happening out there.
(17:08):
Matt HoffWe as a medical organization, we as a medical society, as a cohort of doctors, have an obligation to take care of patients and we need to make sure that come worst case scenario we can get the treatments that patients need into their hands.
Matt HoffAnd I know drugs have some bad reps around them right now, but if this was physical therapy or casts for broken arms or any other part of a common treatment plan, you would be up in arms about this.
(17:43):
Wayne LowrySo if you were to put—I don't know if you're a gambling man—but let's just say, hypothetically, we're going to put a wager on one of those many different online betting portals.
Wayne LowryHow likely it is that Congress would pass a sweeping federal bill versus the states taking this on one by one, where would you put where? Where's the smart money going?
(18:07):
Matt HoffI would go all in on states doing this one by one.
Matt HoffWhat you've seen from Congress is they have different priorities and it's been very interesting to see the mess that is Washington, DC. And that's not a new thing that's been that way for a while. I don't think you have—with the exception of the few fairly educated people who come from pharmacy or that are doctors, people who are really focusing on this issue the way that we hope they would.
(18:46):
Matt HoffIf you go back to the fall, there were billboards around Washington, DC talking about PBM reform. And I think PBM reform is something that's still on the docket..
Matt HoffBut the pharmacy, the PBM interaction, I see is something that's very unlikely to have any notice at a federal level. And then if you look, Arkansas passed a first in the nation bill about pharmacy reimbursements a couple years ago.
(19:14):
Matt HoffAnd since then you've seen copycat bills and around tenish states with some that have passed in some form or fashion. I think this will take the same path.
Matt HoffAnd it kind of spreads E across the SEC. If you want to think about that. So it kind of goes to Tennessee and works its way up to some of those states. But I I think that those states that are sort of politically aligned will see this as a really good idea bill.
(19:45):
Matt HoffAnd try to do something similar without thinking of the 2nd and 3rd order effects.
Wayne LowryNow, if you were waving your magic wand on what you would recommend? Like, what would you do as far as the uniform standard across all those states if the feds aren't going to do it and I've elected you, supreme ruler of all things pharmacy, what's the first thing you're doing, Matt?
(20:09):
Matt HoffWell, obviously physician dispensing for you know any—physician dispensing is not an increase of what scope of practice is.
Matt HoffIf you can write the prescription, you should be able to do basically something as complicated as self-checkout at a grocery store, grab a pre-packaged bottle medication, scan it, label it, and hand it out to the patient.
(20:35):
Matt HoffYou know you're restricting the thing that you can trust most 12-year-olds to do harder than you're restricting the act of writing a prescription, which you have to become a doctor or nurse practitioner or PA for.
Matt HoffSo that's obviously number one. I think this is a question, Wayne, which is “what is the root cause problem?” and the root cause problem is that pharmacies are going out of business because they are not making money selling their core products which are pharmaceuticals .
(21:10):
Matt HoffSo let's look at ways that we can fix that that don't affect patients. So I mentioned earlier that there was a mandatory minimum dispense fee law, which was great. The National Association of Change Drug Stores did a study prior to COVID that said it costs about $12.95 for a pharmacy to dispense a bottle of air.
(21:34):
Matt HoffYet most of the time the dispense fee that a PBM is charging them back is less than 5 bucks. So they started passing laws that said mandatory minimum dispense fees were $13. That's great. The pharmacies passed that cost on to either the patient or to the employer. So that second order effect of a bill that would have had a really good intention either hurt the payer, the government—if it's a government paid program or the patient themselves,
(22:03):
Matt Hoffand if you take a really cheap antibiotic and add $13 on top of it, you put it in the realm where people can't afford it. So I love the mandatory minimum dispense fee law. What they also need to do is clarify or cap or specify that this can't come out of the patient's copay and can't just get billed back to the employer.
(22:26):
Matt HoffThe PBM should be the one paying it, so you're not inappropriately punishing a patient or their employer, since that's where healthcare costs are rising. If he intends to take it out of the PBM's margin, then take it out of the PBM's margin. Nate Act laws, which are becoming really common—especially for pass-through pricing I think that's another fantastic solution there.
(22:52):
Matt HoffAnd you should look at—and I think the world would want to look at—doing a smart NADAC model that specifies a structure for what reimbursement should be.
Matt HoffThose are probably the two most impactful things that I would do day one with the exception of dispensing, which shouldn't require supreme being to make that a necessity.
(23:14):
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(23:36):
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(23:59):
Wayne LowryOK, Matt. So we've talked about the patients, the doctors, the big chains. What about the mom and pops? How will this affect the small independent pharmacy in Arkansas and other states that choose to adopt this same structure?
Matt HoffIndependent pharmacies have had a rough time the last few years and we have a I personally have a pretty deep connection to one our sister company was founded out of a mom and pop pharmacy in rural Nebraska which…
(24:30):
Matt HoffIt's a situation that looks a lot like most of the pharmacies we're talking about in Arkansas.
Matt HoffI have a lot of sympathy for those pharmacies and they are closing at a rapid rate without really being replaced with another viable option. So especially for rural patients, they have a really hard time getting access to care because if the nearest pharmacy was two hours away and it closes down, you might be driving 3 or 4 to the next one that's still open.
(24:58):
Matt HoffMy thought is, you know, decreased competition always has a positive market effect for little folks.
Matt HoffBut the little folks are still going to be dealing with the same problems with reimbursement, the same problems with economy of scale, the same issues with lack of pharmacists. You know, CVS will not just take their ball and go home. I'm sure they'll try to spin it off or sell it off to somebody who is able to stay in business.
(25:34):
Matt HoffSo, I don't think you're going to see a full one-to-one replacement. I just don't see it creating enough space for them, and it's not solving their fundamental problem. So if this was the goal—to help those guys stay in business—I think it's another misguided effort.
Wayne LowryAwesome. Well, thanks, Matt. I want to say to everyone listening: Matt is a great expert in this field. We're really glad to have him on the pod today. So, huge thanks to my friend—the friend of the pod—Matt Hoff. This was eye-opening.
(26:08):
Wayne LowryIf you want to learn more about his company A-S Medication Solutions, go over to a-smeds.com. I hear they have a new blog. You might want to check that out.
Wayne LowryYou can find Matt on LinkedIn, his link to his profile will be on the show notes as well as their company LinkedIn account and other social media handles. For more DPC goodness, head over to bestdbc.com. Make sure to follow us on social media and subscribe to our YouTube channel.
(26:44):
Wayne LowryMake sure you like this channel and also share it with your friends. If you're just listening to the podcast, make sure you subscribe and leave us five stars on any channel that allows you to do such.
Wayne LowryUntil next time, remember your health matters. Demand the best with direct primary care. Bye bye.
Wayne LowryWhat part of America are you in today?
(00:02):
Matt HoffI am in Havana North. I'm in Miami, FL. So it's a beautiful time to be here. I've been here for a conference and the weather couldn't be better, so I decided to spend my time inside talking on a podcast.
Wayne LowryOh wow.
(00:29):
Wayne LowryWelcome back to the Best DPC Podcast, your go-to for everything Direct Primary Care. I'm your host, Wayne Lowry. I'm not a doctor, but I can confirm he in fact is dead, Jim.
Wayne LowryLittle Star Trek reference for all you people out there today, we have our friend of the pod, Matt Hoff, who is the CEO of A-S Medication Solutions.
(00:54):
Wayne LowryHe is coming to us from sunny Florida. He could be outside enjoying that weather, but instead he is coming here to help us unpack some news of the week. We're unpacking a brand new first in the nation, Arkansas law that forces PBM's to divest their pharmacies.
(01:15):
Wayne LowryWhat drove it? Who wins? Who loses? And what does this mean for DPC practices everywhere? Thankfully, we have the expert, our friend of the pod here with us today, Matt Hoff, to give us a deep dive.
Wayne LowrySo, Matt just to jump right into it, why in the world are you talking to me today?
(01:39):
Matt HoffOther than I have nothing better to do. No, it's an interesting time in the healthcare space, especially around pharmacies. So there's been a lot of action and activity in the last couple months.
Matt HoffNone of it's been really positive from a patient care perspective and then you see what's going on with Arkansas and a couple of other states, actually 36 other states that have had their attorneys general send in letters to Congress hoping for similar action at the federal level.
(02:15):
Matt HoffAnd it could cause a cataclysmic shift. So really the–
Wayne LowryWow.
Wayne LowryWell, so let's start with that Arkansas law that's the framework of this conversation. Tell us a little bit about it and what does it actually do?
Matt HoffSure.
Matt HoffSo it's House Bill 1150 and it was signed by Governor Sanders about a week ago and the simplest way to say it is it prevents PBM's, Pharmacy Benefits Managers from owning pharmacies.
(02:47):
Matt HoffAnd at a high level, when you think about that, it sort of makes sense and you can understand the argument is the people who control what's paid to the pharmacies can't also own their own pharmacies. It's preventing a vertical monopoly.
Matt HoffIt's preventing an organization like Caremark, from incentivizing their own pharmacy over the expense of Walmart or Walgreens or an independent pharmacy. And the pharmacy–
(03:19):
Wayne LowrySo, just so we can for our audience give them some definitions. So for those of you that don't know, I mean everybody knows what pharmacy is. We're used to that concept. That's where you go get, you know, a Coca-Cola with chocolate syrup in it, right? That's where you go to the pharmacy.
Wayne LowryI want to take a quick break to talk about BestDPC.com. Are you a doctor looking to break free from the headaches of insurance and take control of your practice? Or maybe you're an employer searching for an affordable healthcare solution that actually works?
(03:50):
Wayne LowryAt BestDPC.com we cut through the noise and connect you with the country's best direct primary care clinics. Whether you're a patient tired of surprise medical bills or. A physician ready to build a thriving membership based practice. We've got the tools and resources you need.
Wayne LowryFind the Best DPC doctors near you. Get expert advice and take the first step towards a better healthcare visit BestDPC.com today and see why direct primary care is the future of medicine. That's BestDPC.com because great healthcare should be simple, affordable and built around you.
(04:26):
Wayne LowrySo tell me, tell me what is a PBM?
Matt HoffSo a PBM is a pharmacy benefits manager and a pharmacy benefits manager has the responsibility to make sure that a certain plan design is enforced so they work with the employers to control what medications are covered, what co-pays are, what different plans are.
(04:48):
Matt HoffThey negotiate rates so, they negotiate what reimbursements are, they negotiate what's paid to the pharmacy. So the PBM sits in the middle and they say what is and isn't covered.
Matt HoffWhat is and isn't covered under what circumstances? How much an employer is getting billed? and how much a pharmacy is getting paid for it?
(05:10):
Matt HoffSo if you look at the Arkansas law where it's really focused at is because they're in the middle and they can control those reimbursements to the pharmacy. It's inappropriate for a PBM to also own pharmacies because you have an inherent conflict of interest.
Wayne LowrySo with that being said, so the idea here is if you are directing the plan and you are saying, hey, we're supposed to be independent as a PBM, independently serving our client. But if we also own the pharmacy and we're sending all the business to a particular pharmacy and that's where the conflict of interest comes in. Is that correct?
(05:50):
Matt HoffAbsolutely. And if you think about it from a doctor's perspective, this is almost like a stark law argument where you shouldn't be able to give incentive to refer to 1 certain place or another, or to do a self referral.
Matt HoffThis is basically the PBM doing a self-referral to a pharmacy. So you can understand the point of that law at a high level, you want to make sure that you're not giving one organization too much power to steer a member, or to steer a patient to a specific pharmacy at the expense of another one.
(06:26):
Wayne LowrySo what about carve outs? Is there any carve outs in this law that we need to be aware of? or is it pretty narrow? or are there a lot of real exceptions to this that may carried on?
Matt HoffWell, let me let me say it this way. I don't think CVS is going to go down without swinging a little bit. There's 36 states attorney generals who have written letters asking for similar laws and for a federal law that mirrors this.
(06:59):
Matt HoffSo there is a long legal battle ahead of this, there's a lot of legislation ahead of this and it's, you know, PBM's are very large and very powerful. I don't see them going down without a fight.
Matt HoffIn terms of specific, the Arkansas bill, and I know we still have some folks that are experts digesting it, but the Arkansas bill is more gray than it is black and white in my opinion. So where it gets enforced, how it gets enforced, and what the interpretation is, is still pretty out there.
(07:36):
Matt HoffYou know the baseline of it is CVS is owned by, or. CVS owns Caremark. Caremark is a PBM. This bill would force all of CVS. All CVS locations in Arkansas to either close down or to be sold off to somebody else.
Matt HoffAnd that is a pretty massive change. So where's the gray? You know, you look at things like if they sunk, burn it off into its own entity, that they still owned by the same stockholders.
(08:09):
Matt HoffIf it was a joint venture, if there were all sorts of different avenues and mechanisms. Boy, there's some lawyers right now that are really excited about this bill. I'll just leave it.
Wayne LowryChomping at the bit.
Matt HoffYeah, chomping at the bit. Wayne Lowry Yeah, yeah, they're ready to jump in. And so with that, you expect pushback, obviously. So CVS, you've got CVS. Are there other large brands that kind of fall in that same category as a CVS?
(08:30):
Matt HoffMm-hmm.
Matt HoffNothing at the level of the CVS, but it comes down to you know what is the definition of a PBM in this sense? So if you look at every PBM for the most part owns their own mail order pharmacy, and most of those are going to be out of state. But are they not allowed to serve Arkansas patients?
(09:01):
Matt HoffIt's not clear. You know, there's some other brands where there could be affiliation between ownership structures and investors in one group that are investors in another, so pick a private equity group.
Matt HoffIf they own X percentage of Kroger who has their own pharmacies, but they also own, Y percentage of a group like Express Scripts? Does that violate it? Yeah. In my opinion, we had an expression in the army that was called good initiative, bad judgment.
(09:30):
Wayne LowryAll of a sudden.
Matt HoffThis seems like a good initiative, bad judgment. It makes sense to try to keep that to lessen that PBM control, but if you're shutting down pharmacies and accelerating that, that's hurting patients and it's hurting doctors and that's you know that I think everybody knows what my company does and we're sort of an avenue around pharmacies.
(10:04):
Matt HoffBut even I have to sit here and shake my head and say making access harder is not what we're about, especially in a place like Arkansas.
Wayne LowrySo.
Wayne LowryYeah. So would you expect then that there's going to be? Well, I mean, obviously if CVS has to make the choice. It's going to expose a couple of things.
Wayne LowryOne, it's going to expose where the profit margin? Is the profit margin in owning the PBM? Or is it having brick and mortar retail locations that sell gallons of milk and also, on top of that, does drug orders?
(10:41):
Wayne LowryOr are they going to like you say, is this going to be a shutdown CVS and how is that going to affect the mom and pop or small pharmacies or local pharmacies, how might that affect those organizations?
Matt HoffYou know it's abundantly clear where the money is made. It's on the PBM side, so any rational business owner, given the choice between retail pharmacy, which generally is losing money.
(11:13):
Matt HoffYou know, I think the biggest WOW stat that I could give is 70% of independent pharmacies opts to not carry GLP ones. How to shrug out there? They decide not to carry it because they lose so much money every time they dispense it.
Matt HoffSo it's a hard, hard road to climb for a pharmacy right now. They generally lose or barely break even on most drugs they dispense. And like you said, they're relying on the gallon of milk in the greeting card to make money.
(11:48):
Wayne LowryYeah.
Matt HoffSo, there's been a huge closure of independent pharmacies and I think part of the, not to get too into speculation, but part of the reason for this bill was to help bolster the independent pharmacy community in Arkansas, which is a great intent but someone's going to suffer for that and that's patients.
(12:10):
Wayne LowryYeah. So let me ask, does this provide then an opportunity for people in Arkansas and maybe explain the dispensing laws in Arkansas too for on site dispensing for you see how might that affect that?
Matt HoffSo Arkansas has some of the worst dispensing laws in the country. Wayne, your state still is #1.
(12:36):
Wayne LowryI live in Texas. I live in Texas, so is it worse than us?
Matt HoffThey are not worse than you. You guys are still—Texas and Massachusetts, the only thing they have in common is…
Wayne LowryWe're number one, baby.
Matt HoffCo-worst dispensing laws, you guys are skipping hands in hands with how bad you guys are for that
(12:58):
Wayne LowryAnd Alex Bregman, we've covered that.
Matt HoffThere is a bill that's going to get brought to a subcommittee next week that could help ease some of it, but it is so restrictive that it's half of a drop of water into an ocean, it really is not going to be much of a solution, but Arkansas—
Wayne LowryYou're talking about in Arkansas or Texas?
(13:20):
Matt HoffIn Texas. In Arkansas—
Wayne LowryOK, I'm gonna put a pin in that we're going to circle back on that one.
Matt HoffYeah, this is what happens when we record on a Friday afternoon. I'm in a million directions.
Matt HoffBut in Arkansas, their dispensing laws are very strict. There's limits on day's supply. There's limits on who can dispense. There's limits on what fills they can do. You know, if you want more details on that, please reach out to the A-S meds team and we're happy to go walk you through it.
(13:53):
Matt HoffBut Arkansas already has some of the hardest laws around physician dispensing, meaning Arkansas patients are at a disadvantage compared to their neighboring states, besides Texas in terms of being able to access drugs, then you throw a law on top of this that makes the largest pharmacy chain have to make a tough choice between exiting the state or ceasing operations or selling off their business.
(14:21):
Matt HoffI don't see how that helps patients in the slightest.
Wayne LowryYeah. Well, so DPC's that are listening to this and considering how this might affect their patients, what are some of the things—now obviously like you mentioned, this is starting in Arkansas, but there are 36 other attorney generals that are looking at this, there's a push for federal action on this,
(14:49):
Wayne LowrySo this is likely to impact every DPC in America if we're going to be honest. So, if you're a DPC in America, what are some of the things that you can do right now in preparation to this case in Arkansas?
Matt HoffThe first thing is start dispensing. Take control of your patients, control of your future into your own hands. If you're able to begin that process, develop your policies. Start getting your patients used to having a better service and getting their medications right on site.
(15:26):
Matt HoffYou're going to be one step ahead of the game because you're already going to have that alternative in place as your status quo, if something is going to happen.
Matt HoffYou know, predicting red legislation these days is pretty impossible. There's another pharmacy bill that Arkansas was a first mover on—
Wayne LowryBreaking news: we're now going to put a tariff on the last statement you made.
(15:50):
Matt HoffYeah, they're putting a tariff on Arkansas.
Wayne LowryI just tear up your statement.
Matt HoffYeah. Arkansas put the most harshest tariff on CVS that there is.
Matt HoffBut I think that the number one thing is start dispensing so you can take control of patients in your own hands. This will have ripple effects across pharmacies across the country. So whether you're in Alaska or Florida or anywhere in between, there's going to be a high level service disruption or high level what's going to happen long term for the pharmacy that’s seeing my patient because these different organizations are going to make choices.
(16:35):
Matt HoffPharmacies are continuing to close at a rapid rate.
Matt HoffI feel like this is going to accelerate it, so start having that plan in place now and then come what may, you'll see what happens. if you're in a state where you can't dispense, or if you're in a state that has more restrictive dispensing laws, states that clamp down on your delegative authority to any mid level you may employ, start getting active. Start saying look at what's happening out there.
(17:08):
Matt HoffWe as a medical organization, we as a medical society, as a cohort of doctors, have an obligation to take care of patients and we need to make sure that come worst case scenario we can get the treatments that patients need into their hands.
Matt HoffAnd I know drugs have some bad reps around them right now, but if this was physical therapy or casts for broken arms or any other part of a common treatment plan, you would be up in arms about this.
(17:43):
Wayne LowrySo if you were to put—I don't know if you're a gambling man—but let's just say, hypothetically, we're going to put a wager on one of those many different online betting portals.
Wayne LowryHow likely it is that Congress would pass a sweeping federal bill versus the states taking this on one by one, where would you put where? Where's the smart money going?
(18:07):
Matt HoffI would go all in on states doing this one by one.
Matt HoffWhat you've seen from Congress is they have different priorities and it's been very interesting to see the mess that is Washington, DC. And that's not a new thing that's been that way for a while. I don't think you have—with the exception of the few fairly educated people who come from pharmacy or that are doctors, people who are really focusing on this issue the way that we hope they would.
(18:46):
Matt HoffIf you go back to the fall, there were billboards around Washington, DC talking about PBM reform. And I think PBM reform is something that's still on the docket..
Matt HoffBut the pharmacy, the PBM interaction, I see is something that's very unlikely to have any notice at a federal level. And then if you look, Arkansas passed a first in the nation bill about pharmacy reimbursements a couple years ago.
(19:14):
Matt HoffAnd since then you've seen copycat bills and around tenish states with some that have passed in some form or fashion. I think this will take the same path.
Matt HoffAnd it kind of spreads E across the SEC. If you want to think about that. So it kind of goes to Tennessee and works its way up to some of those states. But I I think that those states that are sort of politically aligned will see this as a really good idea bill.
(19:45):
Matt HoffAnd try to do something similar without thinking of the 2nd and 3rd order effects.
Wayne LowryNow, if you were waving your magic wand on what you would recommend? Like, what would you do as far as the uniform standard across all those states if the feds aren't going to do it and I've elected you, supreme ruler of all things pharmacy, what's the first thing you're doing, Matt?
(20:09):
Matt HoffWell, obviously physician dispensing for you know any—physician dispensing is not an increase of what scope of practice is.
Matt HoffIf you can write the prescription, you should be able to do basically something as complicated as self-checkout at a grocery store, grab a pre-packaged bottle medication, scan it, label it, and hand it out to the patient.
(20:35):
Matt HoffYou know you're restricting the thing that you can trust most 12-year-olds to do harder than you're restricting the act of writing a prescription, which you have to become a doctor or nurse practitioner or PA for.
Matt HoffSo that's obviously number one. I think this is a question, Wayne, which is “what is the root cause problem?” and the root cause problem is that pharmacies are going out of business because they are not making money selling their core products which are pharmaceuticals .
(21:10):
Matt HoffSo let's look at ways that we can fix that that don't affect patients. So I mentioned earlier that there was a mandatory minimum dispense fee law, which was great. The National Association of Change Drug Stores did a study prior to COVID that said it costs about $12.95 for a pharmacy to dispense a bottle of air.
(21:34):
Matt HoffYet most of the time the dispense fee that a PBM is charging them back is less than 5 bucks. So they started passing laws that said mandatory minimum dispense fees were $13. That's great. The pharmacies passed that cost on to either the patient or to the employer. So that second order effect of a bill that would have had a really good intention either hurt the payer, the government—if it's a government paid program or the patient themselves,
(22:03):
Matt Hoffand if you take a really cheap antibiotic and add $13 on top of it, you put it in the realm where people can't afford it. So I love the mandatory minimum dispense fee law. What they also need to do is clarify or cap or specify that this can't come out of the patient's copay and can't just get billed back to the employer.
(22:26):
Matt HoffThe PBM should be the one paying it, so you're not inappropriately punishing a patient or their employer, since that's where healthcare costs are rising. If he intends to take it out of the PBM's margin, then take it out of the PBM's margin. Nate Act laws, which are becoming really common—especially for pass-through pricing I think that's another fantastic solution there.
(22:52):
Matt HoffAnd you should look at—and I think the world would want to look at—doing a smart NADAC model that specifies a structure for what reimbursement should be.
Matt HoffThose are probably the two most impactful things that I would do day one with the exception of dispensing, which shouldn't require supreme being to make that a necessity.
(23:14):
Wayne LowryTake a quick break to talk about scalebyseo.com
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(23:36):
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(23:59):
Wayne LowryOK, Matt. So we've talked about the patients, the doctors, the big chains. What about the mom and pops? How will this affect the small independent pharmacy in Arkansas and other states that choose to adopt this same structure?
Matt HoffIndependent pharmacies have had a rough time the last few years and we have a I personally have a pretty deep connection to one our sister company was founded out of a mom and pop pharmacy in rural Nebraska which…
(24:30):
Matt HoffIt's a situation that looks a lot like most of the pharmacies we're talking about in Arkansas.
Matt HoffI have a lot of sympathy for those pharmacies and they are closing at a rapid rate without really being replaced with another viable option. So especially for rural patients, they have a really hard time getting access to care because if the nearest pharmacy was two hours away and it closes down, you might be driving 3 or 4 to the next one that's still open.
(24:58):
Matt HoffMy thought is, you know, decreased competition always has a positive market effect for little folks.
Matt HoffBut the little folks are still going to be dealing with the same problems with reimbursement, the same problems with economy of scale, the same issues with lack of pharmacists. You know, CVS will not just take their ball and go home. I'm sure they'll try to spin it off or sell it off to somebody who is able to stay in business.
(25:34):
Matt HoffSo, I don't think you're going to see a full one-to-one replacement. I just don't see it creating enough space for them, and it's not solving their fundamental problem. So if this was the goal—to help those guys stay in business—I think it's another misguided effort.
Wayne LowryAwesome. Well, thanks, Matt. I want to say to everyone listening: Matt is a great expert in this field. We're really glad to have him on the pod today. So, huge thanks to my friend—the friend of the pod—Matt Hoff. This was eye-opening.
(26:08):
Wayne LowryIf you want to learn more about his company A-S Medication Solutions, go over to a-smeds.com. I hear they have a new blog. You might want to check that out.
Wayne LowryYou can find Matt on LinkedIn, his link to his profile will be on the show notes as well as their company LinkedIn account and other social media handles. For more DPC goodness, head over to bestdbc.com. Make sure to follow us on social media and subscribe to our YouTube channel.
(26:44):
Wayne LowryMake sure you like this channel and also share it with your friends. If you're just listening to the podcast, make sure you subscribe and leave us five stars on any channel that allows you to do such.
Wayne LowryUntil next time, remember your health matters. Demand the best with direct primary care. Bye bye.
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