This episode with Chris Crawford, CEO of RxSaveCard, is not about the when, why, or how of GLP-1s for weight loss or best-practice prescribing. This episode very, very specifically is about the how and why of the pickle plan sponsors get themselves into often enough where if they impose formulary restrictions to limit the volume of meds that they are paying for, then unit prices go up, which is a thing for GLP-1s.
And this is critical just given how the costs associated with GLP-1s for weight loss contribute to some pretty significant increases in pharmacy trend for plan sponsors who choose to cover the GLP-1s for weight loss.
Chris Crawford and Stacey Richter discuss the challenges plan sponsors face with the rising costs of GLP-1 medications for weight loss. They explore how plan sponsors’ efforts to manage pharmacy trends often result in a tradeoff: lowering unit costs by increasing volume or vice versa. Chris also introduces a potential solution leveraging the growing cash marketplace, where employers can bypass traditional PBM contracts to achieve cost savings. Tune in for actionable insights into the perverse incentives in the pharmacy supply chain and innovative ways to navigate them. (Continued below the links)
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Bottom line, there are some really impactful and not frequently delved into perverse incentives at play here. And we’re gonna talk about these today. And these are really key for anybody on or about the pharmacy supply chain in the U.S. to know about. This is very actionable insight.
So, again, there’s an unfortunate tradeoff, as it stands right now, for many plan sponsors. Lower your volume and raise the unit price or vice versa.
This episode is sponsored by RxSaveCard, and a big thanks for that. I really appreciate RxSaveCard for its financial support because this episode covers a really important topic that we probably would have covered anyway over here at Relentless Health Value.
And so, RxSaveCard standing up and offering their financial support to cover it was a really nice thing to do. And I thank them for their generosity.
07:57 What are the two pieces going on with GLP-1 PBM prices and rebates for employers?
10:00 Is the cash price for these name brand drugs currently less than the rebated PBM price?
11:49 Why does the rebate for GLP-1s
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Stacey Richter (00:00):
Episode 461.
"Pick Only One Plan Sponsors, DoYou Want to Control GLP-1 Volume
or Control GLP-1 Unit Cost?"
Today, I am speaking with Chris Crawford.
(00:22):
American Healthcare Entrepreneurs andExecutives You Want to Know, Talking.
Relentlessly Seeking Value.
This episode is not about the when,why, or how of GLP-1s for weight loss
or best practice prescribing, and we donot wade into anything about lifestyle
changes or who is adherent or clinicalconsiderations and needed support.
(00:45):
There are a plethora of shows on thesetopics and this is not one of them.
This episode, very, very specifically,is about the how and why of the pickle.
Plan sponsors get themselves into oftenenough where if they impose formulary
restrictions to limit the volume ofmeds that they are paying for, then unit
(01:07):
prices go up, which is a thing for GLP-1s.
And this is critical just given howthe costs associated with GLP-1s for
weight loss contribute to some prettysignificant increases in pharmacy
trend for plan sponsors who chooseto cover the GLP-1s for weight loss.
Okay, so back to the conundrumtopic of this podcast.
(01:28):
Let us dig into the what is goingon here portion of this episode.
Keep in mind, total plan sponsor pharmacytrend or the total cost of drugs is
going to be this equation, drug volumetimes the unit price of each drug.
Thus, the pickle if you're tryingto lower total cost because, as I
(01:48):
just mentioned, as is often the casefor plan sponsors, you can have an
either or scenario on your hands.
You can either lower volumeand pay a higher unit price
or vice versa, but not both.
So yeah, it's not easy to lowerpharmacy trend when you're faced
with this either or scenario.
So, we talk about this relative toGLP-1s today, and we also talk about how
(02:12):
those new direct to consumer websitesthat some of the manufacturers like
Lilly and Pfizer are standing up.
The why these can matter to plansponsors in interesting ways, which
really, I had not thought about beforethis conversation with Chris Crawford
.Bottom line, there are some really impactful and not frequently delved
into perverse incentives at play here.
And we're going to talk about these today.
(02:34):
And these are really key foranybody on or about the pharmacy
supply chain in the U.S.
to know about.
This is very actionable insight.
So, again, there's an unfortunatetradeoff, as it stands right
now, for many plan sponsors.
Lower your volume and raisethe unit price or vice versa.
Here's the short version of thetangled web of the story for
(02:55):
how this tradeoff comes to be.
Once upon a time, a plansponsor does an RFP for PBMs
to manage their branded drugs.
And I keep saying branded drugs becausethere's a whole different story here,
which is similar but not the same forgenerics and also so called specialty
generics that I'm not going to talkabout with Chris Crawford today, but I
(03:17):
will talk with him about it next month.
So stay tuned.
But in this case, there's an RFP sent outand part of that RFP is evaluating PBMs
on their, in air quotes, rebate yields.
So we, the plan sponsor, are going toevaluate PBMs and pick our RFP winner,
not based on their lowest unit net prices.
(03:40):
But on how big the kitty ofrebates they can drag in is.
Pausing to reflect on that last partof our hypothetical play by play.
We, this hypothetical plan sponsorand or our broker consultant, are
evaluating PBMs based on the size oftheir rebates and we're going to pick
the PBM with the biggest rebates,thus the biggest rebate yield.
(04:01):
A few issues here.
What does this incent?
I'll take higher list prices as my firstguess, because obviously the higher the
list, the bigger the rebate yield can be.
But what it also incents is a littleless, I'm going to say, brutally obvious.
Say I'm a PBM or whatever, a GPO.
Say I go to a pharma manufacturerand I demand a ginormous rebate.
(04:26):
What is pharma going to ask for in returnin their negotiation with me, the PBM?
Oh right, pharma is going to say, Wellsure, I'll give you that bigger rebate,
but only if you can guarantee me volume.
Only if you do not restrict accessto my pharmaceutical product.
(04:46):
If you restrict access and thereforelower my drug sales volume that's
possible within this contract, then allbets are off and no rebates for you.
Okay, so the PBM is incentiveto maximize rebate yield.
So the PBM is gonna angle to getthe biggest rebates possible.
And in this scenario, if the rebatesgo up, net unit prices will in
(05:09):
fact go down for the plan sponsor.
However, the PPM's leverageto get those bigger rebates
is to pull back restrictions.
So the lower the unit cost, thehigher the volume of patients are now
going to be eligible to get that drug
and now, here we are at the finale ofour play by play, where plan sponsors
are asked to choose the side of theballoon that they are going to squeeze.
(05:32):
And they can only pick one side.
Lower unit prices and volume goes up,or lower volume and unit prices go up.
My guest, Chris Crawford, excitinglyenough, gives us a sort of have
your cake and eat it too optionin the conversation that follows.
And this third way is nowavailable because of the growing
cash marketplace that is emergingand getting bigger and bigger.
(05:53):
It's growing, this cash marketplace,because the more times a patient wanders
into a pharmacy with a discount card orshops on Mark Cuban or Amazon or goes
to a direct to consumer website, anddiscovers that they can get a drug, or
an MRI, or other medical service, nothingfor nothing, but if they discover that
they can get whatever it is they'relooking for, for less than they would
(06:14):
pay if they used their insurance?
Yeah.
Every time that happens,the cash marketplace grows,
and this is happening a lot.
Middlemen are taking such a chunk ofoverall healthcare spend that cutting them
out has become a very fruitful endeavor.
Okay, so the solution Chris Crawfordoffers up today is for plan sponsors
to leverage this cash marketplace.
(06:35):
Members get a discount card with money puton it, potentially, by the plan sponsor.
This lets employers get the frequentlylower cash price and employees get dollars
on their card to that end, potentially.
So a plan sponsor can restrict accessto GLP-1s through their PBM for weight
loss, but then choose to give somemembers who qualify based on whatever the
(06:56):
criteria the plan sponsor wants to set.
They can give members money towardthe purchase of the GLP-1s, and then
they, the member can go buy themat a direct to consumer website.
This whole thing, by the way, hasnothing to do with the PBM contract.
It's not considered, I guess, a carve out.
It's nothing that any PBM has to approve.
What's crazy to me is that the cash pricefor GLP-1s, the branded ones, can be
(07:20):
better than the PBM negotiated net prices.
That's just nuts to hear , butI don't know, maybe not as
surprising as it should be.
My name is Stacey Richter.
This episode is sponsored byRxSaveCard and a big thanks for that.
I really appreciate RxSaveCard for itsfinancial support because this episode
covers a really important topic thatwe probably would have covered anyway
(07:42):
over here at Relentless Health Value.
And so RxSaveCard standing up andoffering their financial support to
cover it was a really nice thing to do.
And I thank them for their generosity.
Chris Crawford, welcome toRelentless Health Value.
Chris Crawford (07:56):
Yeah, I'm excited to be here.
Stacey Richter (07:57):
Some pharma companies are setting up direct to consumer,
websites where a patient, forexample, Lily has one where they can
go in and get ZepBound, which is oneof their GLP-1 weight loss drugs.
And the cash price there is$3.99 for a 28 day supply.
Chris Crawford (08:12):
We're seeing.
Eli Lilly going direct and offeringcash prices to people without
insurance for Zepbound, their GLP-1,at a cost that's 70 percent less
than what you pay through the PBM.
So, two pieces going onand they really matter.
One is, it's $1,300 and you canusually get a rebate from your PBM.
(08:34):
That rebate from your PBM,though, comes with an asterisk.
And that asterisk is, You are not going torestrict access to who can get this drug.
The minute you try to restrict access.
So, as an example.
I want to place a higher body massindex or BMI threshold for somebody
to be able to get this drug.
If I do that, my rebate is gone.
(08:56):
What employers are really doing is saying,if you look at the FDA labels and the
guidelines, they say, there could be like40 percent of my employees that could
potentially be on one of these drugs.
And so let's say it's $1,300.
And let's say you'regetting a, $700 rebate.
So that's $$600, right?
$600 every 28 days, by theway, these are 28 day fills.
(09:19):
And 40 percent of your population canpotentially be on one of these drugs.
Take 40 percent of your populationtimes $600 times 13, what you have
employers saying is, I can't afford this.
This is a new expensethat I cannot afford.
What do I want to do?
And that's where they get into, well,maybe I can restrict it to just, you
know, my patients who just need it themost, or how can I afford to do this?
(09:40):
And so their employers are just caught inthis, you know, they're kind of squeezing
a balloon almost in one way, which is,well, if I try to restrict utilization,
now I pay more in a unit cost.
If I don't restrict utilization,I pay less, but now more
people are going to be on it.
When you do that math equation, youknow, kind of X times Y, it still
ends up to a really big number.
Stacey Richter (10:00):
So to recap what you said, even if I take the $1,300, which
is the WAC price, like the list priceof this branded med, and I subtract
the typical rebate, which is $600-700,I still wind up with $600 a month.
So, still, it's higher.
It's 200 bucks higher than the cash price.
(10:21):
So, first, I just kind of want tounderline, like, hey, we even have this
going on with branded meds, that the cashprice can sometimes be cheaper than even
the net price after rebates from a PBM.
But I think the next point that you'remaking is that the label that what the
PBM is saying is you can't do utilizationmanagement that deviates from the label.
(10:45):
Is that what I'm hearing?
And if you choose to do utilizationmanagement that deviates from the
label, then like you're not, we'regoing to withhold the discount
and you're going to pay the total.
Like if you, if you don't play by ourrules and you decide that you're going
to do a benefit design that is not ourbenefit design, then you lose the rebate.
Like, that's the stick.
Chris Crawford (11:05):
Yes, and to be clear, I haven't been involved
in any of these rebate contracts.
I don't know exactly whatthe paper looks like.
What we're hearing is from everyconsultant that I've spoken to in
the marketplace, when they try to putsome enhanced utilization management
in place, the rebates disappear.
And so whatever that form takes,and we know this from other branded
drugs too, right, that rebatesare based on formulary placement.
(11:29):
What other competition is inthe market for this, right?
Stacey Richter (11:32):
Yeah, there was just that whole article in the New York
Times about this with respect to opioidsand like the title of that article is
something like Some big PBMs took secretpayments from opioid manufacturers
to allow the free flow of opioids.
I can link to a gift articlein the, in the show notes.
Chris Crawford (11:49):
Right, because if I'm a pharmaceutical manufacturer,
I want people to have access.
I want as little gates in place for theperson to get the drug that they want.
And so this kind of followsone of those things.
If you're putting a higher hurdleon what can get access, we're no
longer going to give you this rebate.
And that again is just balloon.
Do I control utilizationor I control unit costs?
(12:11):
If you just skip the PBM system totally,you can do both because you're getting
the lowest unit costs on the marketdirect through the self pay website.
And you can decide whichemployees you want to help.
You know, in their weight lossjourney, contribute a portion here
towards that if you so choose to do.
Stacey Richter (12:28):
Got it.
Okay.
So what you're saying, the PBM and thepharma company or the GPO and the pharma
company had some kind of negotiation.
And it was a bit of a tit for tat and thePBM wanted more and more rebates and the
pharma company said, sure, fine, I willgive you that level of rebate or fee or
whatever it is you're looking for PBM.
But in order for that to happen, youPBM, there can be no restrictions.
(12:52):
That deviate from our label onthe formularies that you put
out to these plan sponsors.
So like, that's how that came about.
And you know, I was talking toa plan sponsor, a big jumbo, and
a person there told me they weretrying to do some GLP-1, some
innovative program with their members.
And literally their PBM vendorcalled up and yelled at this person.
(13:14):
I mean, what a dynamic.
Chris Crawford (13:16):
Well, in, so forget about who's to blame in that situation.
The reality is exactly what yousaid, there has to be a rebate that
comes through and to give, to kindof go on the side of the PBM, PBMs
are evaluated on their rebate yield.
So they want to show the highestrebate back when they're going
through a request for proposal orthey're on a spreadsheet that a
consultant's looking at them, right?
So they want to show the maximum value.
(13:38):
And so you show the maximum value bysaying, okay, no restrictions, right?
That's how we're going to negotiate thelargest rebate from the manufacturer.
You put the restrictions in.
That's a nuance that'stougher to spreadsheet.
And so I think that's where the issuewhere it really seems like it has
been this sort of all or nothing.
Stacey Richter (13:54):
Organizations do what we pay them to do.
And if we're paying peoplefor rebates, then what we get
is a ballooning of rebates.
Like that, that's justWhat is going to happen?
And, you know, the balloon just getsbigger because if we want to maximize
what's in the middle, you got to, yeah.
Chris Crawford (14:10):
You do that math, it's about $10,000 to $11,000 per person that
is on these drugs in savings, but you'renot going through the PBM and going
direct to self pay when you look at it.
Stacey Richter (14:21):
That's striking.
Chris Crawford (14:22):
Those numbers are just, that's the challenge, I think.
So if your jumbo employers I'mhearing are still covering them,
high margin businesses maybe stillcovering them, they can afford them.
Most companies, most self fundedemployers, can't just take out a whole new
$600 per person every 28 days expense thatjust gets lumped in while they're also
(14:43):
dealing with other medical costs, risingspecialty costs, cell gene therapies.
There's a lot of stuff comingat employers and plan sponsors.
There's not a whole lot of room to adda net new expense, which by the way,
generally people are on for a long time.
You know, so it's like, I'm just addingthis expense that may never go away.
How can I sustain that and afford it?
(15:04):
I think that's the really challengingposition that employers are in.
Stacey Richter (15:07):
Okay, so how does RxSaveCard fit in here?
And this ties into those, direct toconsumer sites or otherwise, where
The GLP-1s for weight loss, I don'tthink diabetes, but for weight loss
are available outside of the PBM.
Chris Crawford (15:22):
We're offered for cash outside of the PBM for $400.
Stacey Richter (15:25):
So having nothing to do with the PBM for this $400 price,
Chris Crawford (15:30):
How our RxSaveCard work, we're outside of that system?
There is an emerging ecosystemof cash pay prices, right?
So, Cost Plus Drugs is a great example.
Discount Cards, what our solutionreally does is allow employers to access
those cash prices outside of their PBM.
(15:51):
They don't have to change PBM,they can still keep their PBM.
If they want the rebates, if they want,you know, coverage for other things,
you stay with your PBM, but you're notlocked into only paying those rates.
Stacey Richter (16:02):
Okay.
So specifically for GLP-1s,how does this apply?
Chris Crawford (16:06):
I think really what employers are saying is, hey,
as a formulary decision with myPBM, I can't afford to cover these
through my PBM for weight loss.
Now diabetes is a separate issue.
They kind of run through there,but specifically for weight
loss, that's a formulary decisionthat a plan sponsor can make.
And so now when the drug is notcovered under your formulary,
you still have employers going,but everybody's asking about it.
(16:27):
Like, I'd love to provide this benefit.
I'd love to help people who reallyneed this drug, who want this drug.
How can I get them access?
Right.
And now it's like, again,Why does RxSaveCard exist?
There's a cash pricethat exists out there.
How can we help employersaccess that for their employees?
And if they want to subsidize someportion of that purchase through
(16:49):
wellness credits, incentives, youknow, other kinds of things, we
give them the vehicle to do that.
And so it really helps employers say,All right, I can afford that on a unit
cost basis and give a benefit that alot of my employees are asking for.
Stacey Richter (17:03):
There's a lot of things that are going on with GLP-1s
and just weight loss and obesity.
Like there's a wholeclinical side to that.
There's a whole lifestyle side to that.
There's a whole educationside to that, right?
So like that's kind of a whole separatetopic, but just relative to the cost
of the drugs to begin with and a way towisely procure drugs that are currently
(17:24):
available and work a lot of times forappropriate patients, like, if we,
all we're talking about right now iswe're limiting this to if somebody
has decided that they want and needa drug, how do we get it to them in a
way that's not going to bankrupt theplan or in the most cost effective,
prudent, reasonable way possible?
Chris Crawford (17:41):
When lower costs exist and the cash marketplace is out
there and you decide that, you know, Iwant my folks to have access to this.
Why overpay if you don't have to?
There is a market now and there's thisemerging market of cash and I think
that's what we're most excited about.
Stacey Richter (17:55):
So as you said, you give employees the RxSaveCard and
this card is bigger than just GLP-1s.
We'll talk about that in an upcomingshow, but relative to GLP-1s, specifically
the point is employees can go on one ofthe telehealth sites run by Pharma or
otherwise they can use the card to payall or some portion of the cash price.
(18:16):
And this is set by the plan sponsor.
And this can be intertwined withwellness credits or whatever else
the plan sponsor wants to do.
But bottom line, the plan is now notmaking a trade off between restricting
volume and unit price because the unitprice is, if I'm understanding this
right, already as low or maybe lowerthan some PBM prices, net of rebates.
(18:37):
And the plan can put whateverrestrictions in place that the plan wants.
Like the plan sponsor is in chargehere, making a plan that members
like, and which has an asked forbenefit, but also there's controls
in place and the price is still good.
Chris Crawford (18:49):
Absolutely.
Stacey Richter (18:50):
And is this considered like a carve, like do I have to get
my PBMs permission to use RxSaveCard?
Chris Crawford (18:55):
You do not.
No.
So we, our solution specifically, we'renot violating any terms of a PBM contract.
The same way a PBM couldn't tell you,Stacey, you can't go to Cost Plus
to get your drug, even if it's oninsurance or, Hey Stacey, you can't
use a discount card when you show up atyour local pharmacy, same thing here.
We are just accessing cashprices where they exist for
(19:18):
employers and for their employees.
So yeah, we're sitting outsideof that PBM relationship.
Stacey Richter (19:24):
And how this would look would be, I would just send
all of my employees this card.
I mean, and I don't want tominimize what I'm sure is a ton of
education and stuff that goes on.
But at the end of the day, it kind oflooks like, all the employees get this
card, it's not like this is alien to mostpeople at this time to like, pull out a
discount card and see if it's cheaper.
(19:45):
Like, people are doing that nowas kind of the course of how
they operate a lot of people.
So, you're basically saying justsend everybody this card and
they can, they can price check.
Chris Crawford (19:55):
And that is what makes us feel so great about it too,
is we aren't denying anybody's drug.
We're not telling youhave to switch a drug.
We exist to save people money.
And so when employers are rolling itout, they're rolling it out as, hey,
here's a new benefit where you mightbe able to get a drug for free, or
you might have an option to spendless than you were spending before.
So, we really have worked hardto create a everybody wins,
(20:18):
employer saves, employee saves.
You don't have to change your PBM.
You don't have to go throughthat migration or anything else.
This is just an added benefitthat you'd be put on next to it.
And so that's, what's so funis just, it's all good news.
Like why would we not do that when lowercosts exist and the cash marketplaces
out there, and you decide that, you know,I want my folks to have access to this.
(20:39):
Why overpay if you don't have to?
There is a market now and there'sthis emerging market of cash.
Stacey Richter (20:45):
Yeah.
I think that's very well put and I justwant to state for the record, lest anyone
be confused, this has nothing to do withthose AFPs, those alternative funding
plans where someone's trying to getcharity dollars by not covering a drug.
This is not that.
Totally different.
Go back and listen to the episode withBrian Reid if you want to hear about that.
(21:08):
Chris, is there anything Ineglected to ask you that you
want to talk about right now?
Chris Crawford (21:11):
We could talk about this for hours and go in, you know, so many
different directions and everything else.
So I just think what you are highlightingis really important and in preparation for
this discussion, I went back and listedsome older episodes that I hadn't listened
to and it was just sort of fascinating of.
Ge Bai from almost three years ago nowwas talking about this emerging cash
marketplace and so many of her predictionscame through, you know, and you mentioned
(21:36):
the Luke Slindee, discussion.
That was really fascinating.
So I just think I'd say people goback and listen to those episodes.
And it really just gives a nicekind of overlay of the land.
Okay, now this is the market.
And now what can I do as an informedbuyer or an informed benefits leader
knowing the market as exists andthere is this whole new area that we
(21:57):
can access and you don't have to onlypay the prices dictated by your PDM.
Stacey Richter (22:02):
Chris Crawford, if someone is interested in learning more about the
work that you're doing, about RxSaveCard,where would you direct them to find you?
Chris Crawford (22:11):
RxSafecard.com, you can reach out to us there.
We're very active on LinkedIn,trying to educate as much as we can
on the opportunities in the market.
So people can feel free tomessage me there as well.
Stacey Richter (22:20):
Chris Crawford, thank you so much for being on
Relentless Health Value today.
Chris Crawford (22:23):
I loved it.
Thanks, Stacey.
Tom Nash (22:25):
Hi, this is Tom Nash, one of the RHV team members.
You might recognize my voicefrom the podcast intro.
If you love this show and you want toshow us your support, please follow us
on your favorite podcast app, sign upfor the newsletter, or maybe consider
making a small donation in the tip jar.
Thanks so much for listening.
Episode 461.
"Pick Only One Plan Sponsors, DoYou Want to Control GLP-1 Volume
or Control GLP-1 Unit Cost?"
Today, I am speaking with Chris Crawford.
(00:22):
American Healthcare Entrepreneurs andExecutives You Want to Know, Talking.
Relentlessly Seeking Value.
This episode is not about the when,why, or how of GLP-1s for weight loss
or best practice prescribing, and we donot wade into anything about lifestyle
changes or who is adherent or clinicalconsiderations and needed support.
(00:45):
There are a plethora of shows on thesetopics and this is not one of them.
This episode, very, very specifically,is about the how and why of the pickle.
Plan sponsors get themselves into oftenenough where if they impose formulary
restrictions to limit the volume ofmeds that they are paying for, then unit
(01:07):
prices go up, which is a thing for GLP-1s.
And this is critical just given howthe costs associated with GLP-1s for
weight loss contribute to some prettysignificant increases in pharmacy
trend for plan sponsors who chooseto cover the GLP-1s for weight loss.
Okay, so back to the conundrumtopic of this podcast.
(01:28):
Let us dig into the what is goingon here portion of this episode.
Keep in mind, total plan sponsor pharmacytrend or the total cost of drugs is
going to be this equation, drug volumetimes the unit price of each drug.
Thus, the pickle if you're tryingto lower total cost because, as I
(01:48):
just mentioned, as is often the casefor plan sponsors, you can have an
either or scenario on your hands.
You can either lower volumeand pay a higher unit price
or vice versa, but not both.
So yeah, it's not easy to lowerpharmacy trend when you're faced
with this either or scenario.
So, we talk about this relative toGLP-1s today, and we also talk about how
(02:12):
those new direct to consumer websitesthat some of the manufacturers like
Lilly and Pfizer are standing up.
The why these can matter to plansponsors in interesting ways, which
really, I had not thought about beforethis conversation with Chris Crawford
.Bottom line, there are some really impactful and not frequently delved
into perverse incentives at play here.
And we're going to talk about these today.
(02:34):
And these are really key foranybody on or about the pharmacy
supply chain in the U.S.
to know about.
This is very actionable insight.
So, again, there's an unfortunatetradeoff, as it stands right
now, for many plan sponsors.
Lower your volume and raisethe unit price or vice versa.
Here's the short version of thetangled web of the story for
(02:55):
how this tradeoff comes to be.
Once upon a time, a plansponsor does an RFP for PBMs
to manage their branded drugs.
And I keep saying branded drugs becausethere's a whole different story here,
which is similar but not the same forgenerics and also so called specialty
generics that I'm not going to talkabout with Chris Crawford today, but I
(03:17):
will talk with him about it next month.
So stay tuned.
But in this case, there's an RFP sent outand part of that RFP is evaluating PBMs
on their, in air quotes, rebate yields.
So we, the plan sponsor, are going toevaluate PBMs and pick our RFP winner,
not based on their lowest unit net prices.
(03:40):
But on how big the kitty ofrebates they can drag in is.
Pausing to reflect on that last partof our hypothetical play by play.
We, this hypothetical plan sponsorand or our broker consultant, are
evaluating PBMs based on the size oftheir rebates and we're going to pick
the PBM with the biggest rebates,thus the biggest rebate yield.
(04:01):
A few issues here.
What does this incent?
I'll take higher list prices as my firstguess, because obviously the higher the
list, the bigger the rebate yield can be.
But what it also incents is a littleless, I'm going to say, brutally obvious.
Say I'm a PBM or whatever, a GPO.
Say I go to a pharma manufacturerand I demand a ginormous rebate.
(04:26):
What is pharma going to ask for in returnin their negotiation with me, the PBM?
Oh right, pharma is going to say, Wellsure, I'll give you that bigger rebate,
but only if you can guarantee me volume.
Only if you do not restrict accessto my pharmaceutical product.
(04:46):
If you restrict access and thereforelower my drug sales volume that's
possible within this contract, then allbets are off and no rebates for you.
Okay, so the PBM is incentiveto maximize rebate yield.
So the PBM is gonna angle to getthe biggest rebates possible.
And in this scenario, if the rebatesgo up, net unit prices will in
(05:09):
fact go down for the plan sponsor.
However, the PPM's leverageto get those bigger rebates
is to pull back restrictions.
So the lower the unit cost, thehigher the volume of patients are now
going to be eligible to get that drug
and now, here we are at the finale ofour play by play, where plan sponsors
are asked to choose the side of theballoon that they are going to squeeze.
(05:32):
And they can only pick one side.
Lower unit prices and volume goes up,or lower volume and unit prices go up.
My guest, Chris Crawford, excitinglyenough, gives us a sort of have
your cake and eat it too optionin the conversation that follows.
And this third way is nowavailable because of the growing
cash marketplace that is emergingand getting bigger and bigger.
(05:53):
It's growing, this cash marketplace,because the more times a patient wanders
into a pharmacy with a discount card orshops on Mark Cuban or Amazon or goes
to a direct to consumer website, anddiscovers that they can get a drug, or
an MRI, or other medical service, nothingfor nothing, but if they discover that
they can get whatever it is they'relooking for, for less than they would
(06:14):
pay if they used their insurance?
Yeah.
Every time that happens,the cash marketplace grows,
and this is happening a lot.
Middlemen are taking such a chunk ofoverall healthcare spend that cutting them
out has become a very fruitful endeavor.
Okay, so the solution Chris Crawfordoffers up today is for plan sponsors
to leverage this cash marketplace.
(06:35):
Members get a discount card with money puton it, potentially, by the plan sponsor.
This lets employers get the frequentlylower cash price and employees get dollars
on their card to that end, potentially.
So a plan sponsor can restrict accessto GLP-1s through their PBM for weight
loss, but then choose to give somemembers who qualify based on whatever the
(06:56):
criteria the plan sponsor wants to set.
They can give members money towardthe purchase of the GLP-1s, and then
they, the member can go buy themat a direct to consumer website.
This whole thing, by the way, hasnothing to do with the PBM contract.
It's not considered, I guess, a carve out.
It's nothing that any PBM has to approve.
What's crazy to me is that the cash pricefor GLP-1s, the branded ones, can be
(07:20):
better than the PBM negotiated net prices.
That's just nuts to hear , butI don't know, maybe not as
surprising as it should be.
My name is Stacey Richter.
This episode is sponsored byRxSaveCard and a big thanks for that.
I really appreciate RxSaveCard for itsfinancial support because this episode
covers a really important topic thatwe probably would have covered anyway
(07:42):
over here at Relentless Health Value.
And so RxSaveCard standing up andoffering their financial support to
cover it was a really nice thing to do.
And I thank them for their generosity.
Chris Crawford, welcome toRelentless Health Value.
Chris Crawford (07:56):
Yeah, I'm excited to be here.
Stacey Richter (07:57):
Some pharma companies are setting up direct to consumer,
websites where a patient, forexample, Lily has one where they can
go in and get ZepBound, which is oneof their GLP-1 weight loss drugs.
And the cash price there is$3.99 for a 28 day supply.
Chris Crawford (08:12):
We're seeing.
Eli Lilly going direct and offeringcash prices to people without
insurance for Zepbound, their GLP-1,at a cost that's 70 percent less
than what you pay through the PBM.
So, two pieces going onand they really matter.
One is, it's $1,300 and you canusually get a rebate from your PBM.
(08:34):
That rebate from your PBM,though, comes with an asterisk.
And that asterisk is, You are not going torestrict access to who can get this drug.
The minute you try to restrict access.
So, as an example.
I want to place a higher body massindex or BMI threshold for somebody
to be able to get this drug.
If I do that, my rebate is gone.
(08:56):
What employers are really doing is saying,if you look at the FDA labels and the
guidelines, they say, there could be like40 percent of my employees that could
potentially be on one of these drugs.
And so let's say it's $1,300.
And let's say you'regetting a, $700 rebate.
So that's $$600, right?
$600 every 28 days, by theway, these are 28 day fills.
(09:19):
And 40 percent of your population canpotentially be on one of these drugs.
Take 40 percent of your populationtimes $600 times 13, what you have
employers saying is, I can't afford this.
This is a new expensethat I cannot afford.
What do I want to do?
And that's where they get into, well,maybe I can restrict it to just, you
know, my patients who just need it themost, or how can I afford to do this?
(09:40):
And so their employers are just caught inthis, you know, they're kind of squeezing
a balloon almost in one way, which is,well, if I try to restrict utilization,
now I pay more in a unit cost.
If I don't restrict utilization,I pay less, but now more
people are going to be on it.
When you do that math equation, youknow, kind of X times Y, it still
ends up to a really big number.
Stacey Richter (10:00):
So to recap what you said, even if I take the $1,300, which
is the WAC price, like the list priceof this branded med, and I subtract
the typical rebate, which is $600-700,I still wind up with $600 a month.
So, still, it's higher.
It's 200 bucks higher than the cash price.
(10:21):
So, first, I just kind of want tounderline, like, hey, we even have this
going on with branded meds, that the cashprice can sometimes be cheaper than even
the net price after rebates from a PBM.
But I think the next point that you'remaking is that the label that what the
PBM is saying is you can't do utilizationmanagement that deviates from the label.
(10:45):
Is that what I'm hearing?
And if you choose to do utilizationmanagement that deviates from the
label, then like you're not, we'regoing to withhold the discount
and you're going to pay the total.
Like if you, if you don't play by ourrules and you decide that you're going
to do a benefit design that is not ourbenefit design, then you lose the rebate.
Like, that's the stick.
Chris Crawford (11:05):
Yes, and to be clear, I haven't been involved
in any of these rebate contracts.
I don't know exactly whatthe paper looks like.
What we're hearing is from everyconsultant that I've spoken to in
the marketplace, when they try to putsome enhanced utilization management
in place, the rebates disappear.
And so whatever that form takes,and we know this from other branded
drugs too, right, that rebatesare based on formulary placement.
(11:29):
What other competition is inthe market for this, right?
Stacey Richter (11:32):
Yeah, there was just that whole article in the New York
Times about this with respect to opioidsand like the title of that article is
something like Some big PBMs took secretpayments from opioid manufacturers
to allow the free flow of opioids.
I can link to a gift articlein the, in the show notes.
Chris Crawford (11:49):
Right, because if I'm a pharmaceutical manufacturer,
I want people to have access.
I want as little gates in place for theperson to get the drug that they want.
And so this kind of followsone of those things.
If you're putting a higher hurdleon what can get access, we're no
longer going to give you this rebate.
And that again is just balloon.
Do I control utilizationor I control unit costs?
(12:11):
If you just skip the PBM system totally,you can do both because you're getting
the lowest unit costs on the marketdirect through the self pay website.
And you can decide whichemployees you want to help.
You know, in their weight lossjourney, contribute a portion here
towards that if you so choose to do.
Stacey Richter (12:28):
Got it.
Okay.
So what you're saying, the PBM and thepharma company or the GPO and the pharma
company had some kind of negotiation.
And it was a bit of a tit for tat and thePBM wanted more and more rebates and the
pharma company said, sure, fine, I willgive you that level of rebate or fee or
whatever it is you're looking for PBM.
But in order for that to happen, youPBM, there can be no restrictions.
(12:52):
That deviate from our label onthe formularies that you put
out to these plan sponsors.
So like, that's how that came about.
And you know, I was talking toa plan sponsor, a big jumbo, and
a person there told me they weretrying to do some GLP-1, some
innovative program with their members.
And literally their PBM vendorcalled up and yelled at this person.
(13:14):
I mean, what a dynamic.
Chris Crawford (13:16):
Well, in, so forget about who's to blame in that situation.
The reality is exactly what yousaid, there has to be a rebate that
comes through and to give, to kindof go on the side of the PBM, PBMs
are evaluated on their rebate yield.
So they want to show the highestrebate back when they're going
through a request for proposal orthey're on a spreadsheet that a
consultant's looking at them, right?
So they want to show the maximum value.
(13:38):
And so you show the maximum value bysaying, okay, no restrictions, right?
That's how we're going to negotiate thelargest rebate from the manufacturer.
You put the restrictions in.
That's a nuance that'stougher to spreadsheet.
And so I think that's where the issuewhere it really seems like it has
been this sort of all or nothing.
Stacey Richter (13:54):
Organizations do what we pay them to do.
And if we're paying peoplefor rebates, then what we get
is a ballooning of rebates.
Like that, that's justWhat is going to happen?
And, you know, the balloon just getsbigger because if we want to maximize
what's in the middle, you got to, yeah.
Chris Crawford (14:10):
You do that math, it's about $10,000 to $11,000 per person that
is on these drugs in savings, but you'renot going through the PBM and going
direct to self pay when you look at it.
Stacey Richter (14:21):
That's striking.
Chris Crawford (14:22):
Those numbers are just, that's the challenge, I think.
So if your jumbo employers I'mhearing are still covering them,
high margin businesses maybe stillcovering them, they can afford them.
Most companies, most self fundedemployers, can't just take out a whole new
$600 per person every 28 days expense thatjust gets lumped in while they're also
(14:43):
dealing with other medical costs, risingspecialty costs, cell gene therapies.
There's a lot of stuff comingat employers and plan sponsors.
There's not a whole lot of room to adda net new expense, which by the way,
generally people are on for a long time.
You know, so it's like, I'm just addingthis expense that may never go away.
How can I sustain that and afford it?
(15:04):
I think that's the really challengingposition that employers are in.
Stacey Richter (15:07):
Okay, so how does RxSaveCard fit in here?
And this ties into those, direct toconsumer sites or otherwise, where
The GLP-1s for weight loss, I don'tthink diabetes, but for weight loss
are available outside of the PBM.
Chris Crawford (15:22):
We're offered for cash outside of the PBM for $400.
Stacey Richter (15:25):
So having nothing to do with the PBM for this $400 price,
Chris Crawford (15:30):
How our RxSaveCard work, we're outside of that system?
There is an emerging ecosystemof cash pay prices, right?
So, Cost Plus Drugs is a great example.
Discount Cards, what our solutionreally does is allow employers to access
those cash prices outside of their PBM.
(15:51):
They don't have to change PBM,they can still keep their PBM.
If they want the rebates, if they want,you know, coverage for other things,
you stay with your PBM, but you're notlocked into only paying those rates.
Stacey Richter (16:02):
Okay.
So specifically for GLP-1s,how does this apply?
Chris Crawford (16:06):
I think really what employers are saying is, hey,
as a formulary decision with myPBM, I can't afford to cover these
through my PBM for weight loss.
Now diabetes is a separate issue.
They kind of run through there,but specifically for weight
loss, that's a formulary decisionthat a plan sponsor can make.
And so now when the drug is notcovered under your formulary,
you still have employers going,but everybody's asking about it.
(16:27):
Like, I'd love to provide this benefit.
I'd love to help people who reallyneed this drug, who want this drug.
How can I get them access?
Right.
And now it's like, again,Why does RxSaveCard exist?
There's a cash pricethat exists out there.
How can we help employersaccess that for their employees?
And if they want to subsidize someportion of that purchase through
(16:49):
wellness credits, incentives, youknow, other kinds of things, we
give them the vehicle to do that.
And so it really helps employers say,All right, I can afford that on a unit
cost basis and give a benefit that alot of my employees are asking for.
Stacey Richter (17:03):
There's a lot of things that are going on with GLP-1s
and just weight loss and obesity.
Like there's a wholeclinical side to that.
There's a whole lifestyle side to that.
There's a whole educationside to that, right?
So like that's kind of a whole separatetopic, but just relative to the cost
of the drugs to begin with and a way towisely procure drugs that are currently
(17:24):
available and work a lot of times forappropriate patients, like, if we,
all we're talking about right now iswe're limiting this to if somebody
has decided that they want and needa drug, how do we get it to them in a
way that's not going to bankrupt theplan or in the most cost effective,
prudent, reasonable way possible?
Chris Crawford (17:41):
When lower costs exist and the cash marketplace is out
there and you decide that, you know, Iwant my folks to have access to this.
Why overpay if you don't have to?
There is a market now and there's thisemerging market of cash and I think
that's what we're most excited about.
Stacey Richter (17:55):
So as you said, you give employees the RxSaveCard and
this card is bigger than just GLP-1s.
We'll talk about that in an upcomingshow, but relative to GLP-1s, specifically
the point is employees can go on one ofthe telehealth sites run by Pharma or
otherwise they can use the card to payall or some portion of the cash price.
(18:16):
And this is set by the plan sponsor.
And this can be intertwined withwellness credits or whatever else
the plan sponsor wants to do.
But bottom line, the plan is now notmaking a trade off between restricting
volume and unit price because the unitprice is, if I'm understanding this
right, already as low or maybe lowerthan some PBM prices, net of rebates.
(18:37):
And the plan can put whateverrestrictions in place that the plan wants.
Like the plan sponsor is in chargehere, making a plan that members
like, and which has an asked forbenefit, but also there's controls
in place and the price is still good.
Chris Crawford (18:49):
Absolutely.
Stacey Richter (18:50):
And is this considered like a carve, like do I have to get
my PBMs permission to use RxSaveCard?
Chris Crawford (18:55):
You do not.
No.
So we, our solution specifically, we'renot violating any terms of a PBM contract.
The same way a PBM couldn't tell you,Stacey, you can't go to Cost Plus
to get your drug, even if it's oninsurance or, Hey Stacey, you can't
use a discount card when you show up atyour local pharmacy, same thing here.
We are just accessing cashprices where they exist for
(19:18):
employers and for their employees.
So yeah, we're sitting outsideof that PBM relationship.
Stacey Richter (19:24):
And how this would look would be, I would just send
all of my employees this card.
I mean, and I don't want tominimize what I'm sure is a ton of
education and stuff that goes on.
But at the end of the day, it kind oflooks like, all the employees get this
card, it's not like this is alien to mostpeople at this time to like, pull out a
discount card and see if it's cheaper.
(19:45):
Like, people are doing that nowas kind of the course of how
they operate a lot of people.
So, you're basically saying justsend everybody this card and
they can, they can price check.
Chris Crawford (19:55):
And that is what makes us feel so great about it too,
is we aren't denying anybody's drug.
We're not telling youhave to switch a drug.
We exist to save people money.
And so when employers are rolling itout, they're rolling it out as, hey,
here's a new benefit where you mightbe able to get a drug for free, or
you might have an option to spendless than you were spending before.
So, we really have worked hardto create a everybody wins,
(20:18):
employer saves, employee saves.
You don't have to change your PBM.
You don't have to go throughthat migration or anything else.
This is just an added benefitthat you'd be put on next to it.
And so that's, what's so funis just, it's all good news.
Like why would we not do that when lowercosts exist and the cash marketplaces
out there, and you decide that, you know,I want my folks to have access to this.
(20:39):
Why overpay if you don't have to?
There is a market now and there'sthis emerging market of cash.
Stacey Richter (20:45):
Yeah.
I think that's very well put and I justwant to state for the record, lest anyone
be confused, this has nothing to do withthose AFPs, those alternative funding
plans where someone's trying to getcharity dollars by not covering a drug.
This is not that.
Totally different.
Go back and listen to the episode withBrian Reid if you want to hear about that.
(21:08):
Chris, is there anything Ineglected to ask you that you
want to talk about right now?
Chris Crawford (21:11):
We could talk about this for hours and go in, you know, so many
different directions and everything else.
So I just think what you are highlightingis really important and in preparation for
this discussion, I went back and listedsome older episodes that I hadn't listened
to and it was just sort of fascinating of.
Ge Bai from almost three years ago nowwas talking about this emerging cash
marketplace and so many of her predictionscame through, you know, and you mentioned
(21:36):
the Luke Slindee, discussion.
That was really fascinating.
So I just think I'd say people goback and listen to those episodes.
And it really just gives a nicekind of overlay of the land.
Okay, now this is the market.
And now what can I do as an informedbuyer or an informed benefits leader
knowing the market as exists andthere is this whole new area that we
(21:57):
can access and you don't have to onlypay the prices dictated by your PDM.
Stacey Richter (22:02):
Chris Crawford, if someone is interested in learning more about the
work that you're doing, about RxSaveCard,where would you direct them to find you?
Chris Crawford (22:11):
RxSafecard.com, you can reach out to us there.
We're very active on LinkedIn,trying to educate as much as we can
on the opportunities in the market.
So people can feel free tomessage me there as well.
Stacey Richter (22:20):
Chris Crawford, thank you so much for being on
Relentless Health Value today.
Chris Crawford (22:23):
I loved it.
Thanks, Stacey.
Tom Nash (22:25):
Hi, this is Tom Nash, one of the RHV team members.
You might recognize my voicefrom the podcast intro.
If you love this show and you want toshow us your support, please follow us
on your favorite podcast app, sign upfor the newsletter, or maybe consider
making a small donation in the tip jar.
Thanks so much for listening.
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