Exploring the Complexities of Pharma Rebates with Ann Lewandowski
In this Summer Short episode of Relentless Health Value, host Stacey Richter converses again with Ann Lewandowski about the intricate dynamics of pharmaceutical rebates, or as Lewandowski prefers, post-sale concessions.
The discussion delves into the nuances of these rebates, the impact they have on drug costs, and the hidden consequences for patients and plan sponsors.
They highlight articles and insights by Austin Chelko and Peter Hayes, touching on how rebates can disadvantage the pursuit of lower-cost generics and biosimilars, and can obstruct pharmacogenetic testing that ensures drug efficacy and safety.
The conversation also critiques the opacity of rebates, deemed trade secrets by pharma and PBM companies, and underscores the ethical and financial dilemmas posed by the current rebate-driven system.
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07:24 What is a pharmaceutical rebate?
08:15 Why are pharma rebates so opaque?
09:52 Texas lawsuit on insulin pricing.
10:18 Why is focusing on a singular type of concession difficult with current pharma rebate structures?
10:50 EP397 with Paul Holmes.
13:55 EP353 with Pramod John, PhD.
14:29 How does pharma genomics testing affect pharma rebates?
14:52 EP465 with Chris Crawford.
15:52 EP426 with Nina Lathia, RPh, MSc, PhD.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
"Summer Short. Pharma Rebates:
A Few Nuances You May Not Have (00:00):
undefined
Thought Of." Today I am speakingagain with Ann Lewandowski,
American Healthcare Entrepreneurs andExecutives You Want to Know, Talking.
(00:24):
Relentlessly Seeking Value.
So much can be said about pharmarebates or as I'm starting to call
them after speaking with my guesttoday, Ann Lewandowski, monies
received back from manufacturers oreven post-sale concessions, and we
get a little bit into this today whyrebates is just so much linguistic
(00:45):
gymnastics that I am over the word.
I mean, some of these monies receivedfrom manufacturers are labeled rebates,
but not all the money that comes frommanufacturers is usually called a rebate.
Some of these dollars for sure, windup in the pockets of the PBM/GPO
or even in the pocket of the TPA.
Allegedly, I guess if I'm thinkingabout that whistleblower case where
(01:07):
27 million of somebody else's rebatesis alleged to have wound up in
the EBC/TPA executive bonus poll.
Listen to that pod with Ann Lewandowskifrom earlier if you are not familiar.
But regardless much has alreadybeen said about these, whatever
we're calling former rebates onRelentless Health Value in the past.
(01:28):
The shows with Scott Haas, MarkCuban, Chris Sloan, Pramod John,
Paul Holmes, amongst others.
I say all this to say that this show todayis not some kind of Vulcan Mind Meld.
Wherein all the insight there is onthis vast topic gets compacted into
your 20 minute drive home for whateverit is you happen to be doing right now.
(01:50):
Alternatively, this show is gonnasummarize what's happening and
being written right now about thesewhatever in air quotes, pharma
rebates that has caught my eye.
First up, an article by Austin Chelko.
All links to everything I'm talking about,including all those earlier shows are
in the show notes by the way, as usual.
(02:10):
But here is a paragraph fromthat article by Austin Chelko.
"Despite per employee rebates paid toemployers increasing almost threefold
since 2017, our benchmarking datareveals total drug costs have still risen
by close to 24% over that same time.
(02:31):
So threefold increase in rebates back,but drug costs still are going up 24%.
"Health plans continue chasing rebatessimply because they are presented as
savings and dangled like a golden carrot.
However, it does not address thecost problem as everyone would like.
There are multiple long-termimplications to this approach,
i.e. the rebate approach.
Here are just a few.
(02:52):
"Implication one, rebate drivencontracts block employers from pursuing
lower cost generics, biosimilars,and therapeutic alternatives.
Implication two.
Rebates incentivize PBMs to supportclinically immaterial patent
extensions, and shifts the priorityfrom comparative effectiveness.
Implication three.
Under most contracts, PBMscan hit any guarantee they set
(03:13):
for a particular employer."
Listen to the show with ChrisCrawford all about that.
"This happens by making formularychanges, cross-subsidizing drug
channel guarantees, MAC manipulation,changing drug tiers, et cetera."
Right?
So the stuff Austin mentionsare for sure issues.
And here's another one, and this isthe one Ann Lewandowski discusses
in the Summer Short that follows.
(03:35):
Rebate deals often shovegenetic testing off the bus.
No genetic testing to determine ifa drug will work or maybe even is
harmful for the member or patient.
You can't genetic test and then makecoverage decisions based on that genetic
test if you want to keep the rebate.
So choose between knowing a drug willwork because there's a genetic test
(03:56):
available to determine this, in somecases, or option two, getting the rebate
off the often crazy high list price.
And this is really a rockand a hard place choice.
Ann Lewandowski, relative togenetic testing, cites a study in
the conversation that follows aboutjust how pharmacogenetic testing
can reduce emergency room departmentvisits for medication interactions.
(04:20):
Also, now I'm thinking aboutthe show with Pramod John.
There were two earlier RelentlessHealth Value episodes with him that
get into this exact same genetictesting insight in some detail.
It's becoming really inarguable thatsome drugs are just not gonna work for
some people, and seriously, we wantsomebody running around who needs a blood
(04:40):
thinner taking one that is not working.
But then if you try to rollout the genetic testing, you
don't get the rebate, right?
Now, you do have to watch some of thesetesting companies, though I had a bit
of a personal run in with one of them.
Certainly call me if interested.
Okay, one last really pretty key talkingpoint before we kick into this Summer
Short, and yet don't kill the messenger,but it would be disingenuous not to point
(05:04):
out the service that rebates provide tosome plan sponsors who are so inclined.
Here is a post by Peter Hayes.
Peter wrote, "What often getsoverlooked in discussions is the
net impact of certain behind thescenes financial transactions.
In this case, the rebates are directedto the plan sponsor who uses them
(05:24):
to lower premium costs for everyone.
However, this benefit comes at theexpense of patients using medications
and paying the full price for them.
"This situation effectively createsa regressive tax on sicker patients.
Healthier members benefit from reducedpremiums while those who need critical
medications end up paying more.
Unfortunately, about 50% of Americansare not taking essential medications
(05:47):
due to affordability issues, whichultimately leads to higher costs
for everyone in the long run."
To this end, Peter Hayes citesan Adam Fein post referencing
new data from Milliman.
Adam Fein wrote about that.
He wrote, "As this Milliman reportexplains in most employer-sponsored PPO
plans, rebates do not affect an employee'sout of pocket costs, but could reduce
(06:10):
employee contributions to their premiums."
Again, links in the show notesto all of this stuff, including
the full report from Milliman.
So all of this is certainly food forthought as we think through actions
and reactions and downstream impact.
Hi, I'm Chris Crawford, CEO,and founder of RxSaveCard.
If you love the Relentless HealthValue podcast like I do, be sure to
(06:33):
follow their LinkedIn page and join theconversation about the topics every week.
Thanks so much for listening.
Today, as aforementioned, I amspeaking with Ann Lewandowski.
Ann Lewandowski is a nationally recognizedaward-winning healthcare executive.
Most listeners probably know her lastname, at the very least, from the
Lewandowski versus Johnson & Johnsoncase that came out last year.
(06:56):
Also, as aforementioned, I hadinterviewed Ann earlier about the
Pharma Rebate whistleblower case.
My name is Stacey Richter.
This podcast is sponsored byAventria Health Group, and here's my
Summer Short with Ann Lewandowski.
Ann Lewandowski, welcometo Relentless Health Value.
Thanks, Stacey.
I'm so pleased to be here.
Many of our listeners are gonna beextremely familiar with pharmaceutical
(07:19):
rebates, but why don't we just startat the very beginning here briefly.
What is a pharmaceutical rebate?
A pharmaceutical rebate is verysimilar to other rebates that
you have in your life, right?
There may be something you purchasean appliance or even a bottle of
liquor, and you get something thatsays, typically mail this in and
(07:40):
we'll send you some money back.
Essentially, it's a post-saleconcession that comes back to
a plan sponsor in so many days.
Importantly, for those wonderingwhat about the anti-kickback statute,
because many of you probably workin healthcare and saying, I can't
do that in my line of business.
They actually have been granted anexemption from the anti-kickback statute
(08:02):
to allow this post-sale concessionto come back to plan sponsors.
So the old Safe harbor.
Yes, thank you.
The old Safe Harbor.
That all sounds fine and all.
It's nice to get money back.
But the one thing that always getssaid whenever you say rebates,
usually in the first two sentences,is just how opaque they are, how
(08:23):
very mysterious this whole thing is.
Why are they so oftenconsidered a black box?
The easiest and most straightforwardanswer right now is that pharma has been
able to classify them as trade secrets.
Pharma companies don't wanna disclosethem because they would have an economic
impact potentially with all of theircustomers looking at a list of rebates
(08:45):
and saying, I want the lowest one.
And PBMs have an equal andopposite reason for the opacity.
In fact, sometimes I'm not even supersure which party at this point is
the one squawking the loudest aboutprices being intellectual property.
Even if you look at thereporting laws, they have been
deferred to as trade secrets.
(09:05):
So, if you look at Minnesota, theyhave a beautiful PBM reporting bill
that they put an annual report about,but all of the rebates are aggregated.
The PBMs are not named, and that'sone of the challenges in trying
to crack open this black box.
But I do think that there are validarguments to challenge that trade secret
designation, which are that they doimpact other people's economics as well.
(09:31):
The first thing that comes tomind is everybody else knows
what everybody else's prices are.
But then again, where there'smystery, there's margin.
What's a rebate?
Exactly.
And what's an administrative fee?
And just kind of all the gamesthat are being played there.
That's a really great point, Stacey.
I tend to try and classify it as postsale concession because I think that
lumps in more of these other things.
(09:52):
But when the Attorney General of Texaswent and filed their insulin pricing
lawsuit, they had probably about 50kinds of ways that these are classified.
And I won't bore all your readers withthe different types, but I'll send
over, so maybe you can put it in thecomments of the podcast, you know, the
(10:15):
multiplicity of like all the things.
And so I, I do think,like, to say rebate, right?
Because now all the PBMs are saying,Oh, we're passing through the rebate.
Don't worry about it.
We're all good.
I think focusing exclusively on a singulartype of post-sale concession is sort of
(10:35):
like chasing a snowflake at this point.
It's going to be hard to capture.
And just to speak specifically aboutthe impact of these rebates or post-sale
concessions, if we wanna be moreaccurate, since as you just said, and
as Paul Holmes said, actually reallycrisply in that episode from a year or
so ago, a PBM can call these post-saleconcessions, whatever they want.
(10:59):
They could get back a hundreddollars, I don't know, from a form
manufacturer, and call 40 or 50 or10 or 95% of those dollars a rebate.
And guess what?
They can call whatever dollarsthey want the rebate portion.
They're the ones that are definingwhat rebate actually means.
And anyone saying that a plan sponsoris getting back a hundred percent of the
rebates, it's, it's kind of meaninglessif you think about it in this regard.
(11:22):
But what are some of maybe the lessobvious problems here, besides the fact
that a hundred percent of rebates is arelatively meaningless statement just
given the linguistic gymnastics afoot.
One of the biggest challenges right nowis the impact on pharmacogenomics testing.
Manufacturers use rebate dollarsto get essentially what's a direct
(11:43):
to label agreement with a PBM.
So you're not adding priorauthorization criteria.
And then you know, that's usually inthe name of patient access, which I
think a lot of people can get behind.
But the challenge is changing an FDAlabel is expensive, it's time consuming
and sponsors, drug sponsors need tojustify that to their shareholders.
(12:07):
The problem is we're in a worldwhere innovation and lab testing and
pharmacogenomics are acceleratingat such a rapid pace that
those labels aren't keeping up.
So what you're talking about thereis every pharmaceutical product
has a package insert or a label.
It's called a couple of different things.
And that's what's approved by the FDA.
(12:28):
It's the, you know, if you actuallyread one, it's the, this is how
this drug works and this is whatit does, exactly, and specifically.
Like it's in, it's indicated forthese conditions, and here are the
adverse events that you can expect.
It's just, it's got all of those,effectively what it's saying is
this is who is an appropriatepatient for this medication based
(12:51):
on its approval like net net.
That's what's happening here.
And usually these arevery large documents.
Back to sort of this pharmacogenomicstesting issue, if you're a plan sponsor,
somebody paying for this medication,you want it to be an effective
medication for that person, right?
And pharmacogenomics is startingto allow people to really
(13:14):
understand when a medication isgoing to be effective or not.
You've been on sort of an ER kick, soI'll highlight that one study actually
reported that pharmacogenomics testingcan reduce emergency department visits
for medication interactions by 42%.
Wow.
Wait, wait.
So 42%.
(13:35):
And it's been highly talked aboutfor many, many years, just how many
deaths and hospitalizations aredue to pharma contraindications
and just interactions, right?
Like especially with older peoplewho are taking multiple drugs, they
don't realize that they interact.
And what I'm understanding you sayand Pramod John was on the pod a while
(13:56):
ago talking about this, just likethere's so many drugs where if you
do a form, like if you do a genetictest you can see right outta the
gate that this drug's not gonna work.
You can see right outta the gate thatthe person's gonna have an issue with
it or, or if they take these two drugsconcurrently, there's gonna be an issue.
So that's what you're talking about.
Exactly.
Or it could be, wow, this blood clottingmedication isn't gonna work for me.
I end up with a deep vein thrombosis inthe ER and need that fixed like that would
(14:22):
be captured in that 42% in reduction.
All right, so what does thathave to do with rebates?
Like I said at the beginning, thisdirect to label agreement, that
happens often with older medicationsin particular, the label does not
include a pharmacogenomics test.
And so it can create a rebate wallwhere if you want to seek those
(14:45):
rebates, you actually can't havepharmacogenomics testing or you
might put those rebates at risk.
Okay.
This is what I'm understanding, andfor the GLP-1s, this is something that
Chris Crawford talked a lot about, wherebasically the deal that is brokered
between the PBM and the pharma companyis you only get the rebates if you don't,
(15:08):
it's basically all appropriate patients.
And the second that you start limitingwith pharmacogenomic testing or however
else you wanna limit, the secondthat you put limits that are greater
than whatever the label says, youjust forwent all the rebates, rebates
out the window, no rebates for you.
Yep.
Like that, good old Seinfeld SoupNazi new soup for you if you add on.
(15:29):
That's really a problem in an eraof very rapid genetic sequencing
or genetic understanding.
Like I said, I thinkthere are reasons, right?
Changing the FDA label is difficult, timeconsuming, and you have to justify that.
At the same time, I think if whatyou're trying to do is get the right
(15:49):
medication to the right patient,it does create some challenges.
Yeah.
Like if you're trying to do avalue-based formulary, for example,
and Nina Lathia talked a lot aboutthis in that earlier episode.
I can just see how this would be a superbig issue if you're actually trying to
get the right med to the right patientand because rebates are so, I mean, as
(16:09):
we all know, list prices are really high.
Rebates can be giant.
If you forego the rebate now as aplan sponsor, you, you're paying list.
It's just, yeah, that's, that's tough.
I think this is the reason why thereare opportunities, like as biosimilars
come to market and there are lowlist price products, those become so
(16:31):
much more interesting because theyremove this Sophie's Choice for plan
sponsors where, you know, what do I do?
Do I chase the rebate?
Or do I really create a value-basedformulary where I am looking at who
is actually going to respond to thismedication because I don't wanna waste
even $500 or $2 on prescribing somebodysomething that's just not gonna work
(16:56):
based on their biochemistry and genetics.
Conundrum.
Yeah.
Yeah.
Pay more.
It's just almost like follow thelatest science and you'll wind up
counterintuitively paying way moredue to the limitations of contracting.
You'll definitely find yourselfbetween a rock and a hard place.
If you're trying to do a value-basedsomething or other, like for example,
(17:17):
doing PGX testing, pharmacogenetictesting, which can determine
whether certain medications aregonna work or, or not work, which
I could have life-threateningclinical consequences to patients.
You're saying, okay, fine.
I won't do any of that stuffsuch that I can get this rebate.
It's not justlife-threatening consequences.
(17:37):
Sometimes we get a little focused on that,but I find often health plan sponsors
don't consider, what does it mean toaccumulate disability because you're
not on the right medication either.
And you have different types of spending.
Say you sponsor a long-term disabilitypolicy, you could potentially see
increased spending there because peoplearen't getting onto the right medication.
(18:01):
And that's, personally, I think that'sa really damaging situation for both
a person, but also for an employer tobe paying somebody, you know, 50, 60,
whatever percent of their salary toliterally do nothing simply because
they're not on the right medication.
(18:21):
I think that's really ahorrifying scenario for everyone.
Ann Lewandowski, if someone isinterested in learning more about
your work where would you direct them?
LinkedIn, or you could reach outto me at ann@patientvalueinsights
or patientvalueinsights.com.
And we will put theselinks in these show notes.
Ann Lewandowski, thank you so much forbeing on Relentless Health Value today.
(18:43):
Thanks Stacey.
It's been such a pleasure to join you.
I'm Peter Hayes.
I'm the principal of HealthcareSolutions and had been involved
in healthcare for 30 plus years.
I will say one of the sources thatI go to and rely on all the time to
kind of stay up to date and reallyunderstand what's happening in healthcare
is to listen to Relentless Health.
(19:03):
I encourage everyone to sign up forthe Relentless Health Newsletter.
It's just a great source of what'shappening in healthcare today.
To me, it's the most trusted source thatI use to really try to stay current with
the complexities of the healthcare system.
So thank you everyone, and I hopeyou listen and start the good fight
and I try to make healthcare alittle bit better for all of us.
(19:25):
Thank you.
undefined
Thought Of." Today I am speakingagain with Ann Lewandowski,
American Healthcare Entrepreneurs andExecutives You Want to Know, Talking.
(00:24):
Relentlessly Seeking Value.
So much can be said about pharmarebates or as I'm starting to call
them after speaking with my guesttoday, Ann Lewandowski, monies
received back from manufacturers oreven post-sale concessions, and we
get a little bit into this today whyrebates is just so much linguistic
(00:45):
gymnastics that I am over the word.
I mean, some of these monies receivedfrom manufacturers are labeled rebates,
but not all the money that comes frommanufacturers is usually called a rebate.
Some of these dollars for sure, windup in the pockets of the PBM/GPO
or even in the pocket of the TPA.
Allegedly, I guess if I'm thinkingabout that whistleblower case where
(01:07):
27 million of somebody else's rebatesis alleged to have wound up in
the EBC/TPA executive bonus poll.
Listen to that pod with Ann Lewandowskifrom earlier if you are not familiar.
But regardless much has alreadybeen said about these, whatever
we're calling former rebates onRelentless Health Value in the past.
(01:28):
The shows with Scott Haas, MarkCuban, Chris Sloan, Pramod John,
Paul Holmes, amongst others.
I say all this to say that this show todayis not some kind of Vulcan Mind Meld.
Wherein all the insight there is onthis vast topic gets compacted into
your 20 minute drive home for whateverit is you happen to be doing right now.
(01:50):
Alternatively, this show is gonnasummarize what's happening and
being written right now about thesewhatever in air quotes, pharma
rebates that has caught my eye.
First up, an article by Austin Chelko.
All links to everything I'm talking about,including all those earlier shows are
in the show notes by the way, as usual.
(02:10):
But here is a paragraph fromthat article by Austin Chelko.
"Despite per employee rebates paid toemployers increasing almost threefold
since 2017, our benchmarking datareveals total drug costs have still risen
by close to 24% over that same time.
(02:31):
So threefold increase in rebates back,but drug costs still are going up 24%.
"Health plans continue chasing rebatessimply because they are presented as
savings and dangled like a golden carrot.
However, it does not address thecost problem as everyone would like.
There are multiple long-termimplications to this approach,
i.e. the rebate approach.
Here are just a few.
(02:52):
"Implication one, rebate drivencontracts block employers from pursuing
lower cost generics, biosimilars,and therapeutic alternatives.
Implication two.
Rebates incentivize PBMs to supportclinically immaterial patent
extensions, and shifts the priorityfrom comparative effectiveness.
Implication three.
Under most contracts, PBMscan hit any guarantee they set
(03:13):
for a particular employer."
Listen to the show with ChrisCrawford all about that.
"This happens by making formularychanges, cross-subsidizing drug
channel guarantees, MAC manipulation,changing drug tiers, et cetera."
Right?
So the stuff Austin mentionsare for sure issues.
And here's another one, and this isthe one Ann Lewandowski discusses
in the Summer Short that follows.
(03:35):
Rebate deals often shovegenetic testing off the bus.
No genetic testing to determine ifa drug will work or maybe even is
harmful for the member or patient.
You can't genetic test and then makecoverage decisions based on that genetic
test if you want to keep the rebate.
So choose between knowing a drug willwork because there's a genetic test
(03:56):
available to determine this, in somecases, or option two, getting the rebate
off the often crazy high list price.
And this is really a rockand a hard place choice.
Ann Lewandowski, relative togenetic testing, cites a study in
the conversation that follows aboutjust how pharmacogenetic testing
can reduce emergency room departmentvisits for medication interactions.
(04:20):
Also, now I'm thinking aboutthe show with Pramod John.
There were two earlier RelentlessHealth Value episodes with him that
get into this exact same genetictesting insight in some detail.
It's becoming really inarguable thatsome drugs are just not gonna work for
some people, and seriously, we wantsomebody running around who needs a blood
(04:40):
thinner taking one that is not working.
But then if you try to rollout the genetic testing, you
don't get the rebate, right?
Now, you do have to watch some of thesetesting companies, though I had a bit
of a personal run in with one of them.
Certainly call me if interested.
Okay, one last really pretty key talkingpoint before we kick into this Summer
Short, and yet don't kill the messenger,but it would be disingenuous not to point
(05:04):
out the service that rebates provide tosome plan sponsors who are so inclined.
Here is a post by Peter Hayes.
Peter wrote, "What often getsoverlooked in discussions is the
net impact of certain behind thescenes financial transactions.
In this case, the rebates are directedto the plan sponsor who uses them
(05:24):
to lower premium costs for everyone.
However, this benefit comes at theexpense of patients using medications
and paying the full price for them.
"This situation effectively createsa regressive tax on sicker patients.
Healthier members benefit from reducedpremiums while those who need critical
medications end up paying more.
Unfortunately, about 50% of Americansare not taking essential medications
(05:47):
due to affordability issues, whichultimately leads to higher costs
for everyone in the long run."
To this end, Peter Hayes citesan Adam Fein post referencing
new data from Milliman.
Adam Fein wrote about that.
He wrote, "As this Milliman reportexplains in most employer-sponsored PPO
plans, rebates do not affect an employee'sout of pocket costs, but could reduce
(06:10):
employee contributions to their premiums."
Again, links in the show notesto all of this stuff, including
the full report from Milliman.
So all of this is certainly food forthought as we think through actions
and reactions and downstream impact.
Hi, I'm Chris Crawford, CEO,and founder of RxSaveCard.
If you love the Relentless HealthValue podcast like I do, be sure to
(06:33):
follow their LinkedIn page and join theconversation about the topics every week.
Thanks so much for listening.
Today, as aforementioned, I amspeaking with Ann Lewandowski.
Ann Lewandowski is a nationally recognizedaward-winning healthcare executive.
Most listeners probably know her lastname, at the very least, from the
Lewandowski versus Johnson & Johnsoncase that came out last year.
(06:56):
Also, as aforementioned, I hadinterviewed Ann earlier about the
Pharma Rebate whistleblower case.
My name is Stacey Richter.
This podcast is sponsored byAventria Health Group, and here's my
Summer Short with Ann Lewandowski.
Ann Lewandowski, welcometo Relentless Health Value.
Thanks, Stacey.
I'm so pleased to be here.
Many of our listeners are gonna beextremely familiar with pharmaceutical
(07:19):
rebates, but why don't we just startat the very beginning here briefly.
What is a pharmaceutical rebate?
A pharmaceutical rebate is verysimilar to other rebates that
you have in your life, right?
There may be something you purchasean appliance or even a bottle of
liquor, and you get something thatsays, typically mail this in and
(07:40):
we'll send you some money back.
Essentially, it's a post-saleconcession that comes back to
a plan sponsor in so many days.
Importantly, for those wonderingwhat about the anti-kickback statute,
because many of you probably workin healthcare and saying, I can't
do that in my line of business.
They actually have been granted anexemption from the anti-kickback statute
(08:02):
to allow this post-sale concessionto come back to plan sponsors.
So the old Safe harbor.
Yes, thank you.
The old Safe Harbor.
That all sounds fine and all.
It's nice to get money back.
But the one thing that always getssaid whenever you say rebates,
usually in the first two sentences,is just how opaque they are, how
(08:23):
very mysterious this whole thing is.
Why are they so oftenconsidered a black box?
The easiest and most straightforwardanswer right now is that pharma has been
able to classify them as trade secrets.
Pharma companies don't wanna disclosethem because they would have an economic
impact potentially with all of theircustomers looking at a list of rebates
(08:45):
and saying, I want the lowest one.
And PBMs have an equal andopposite reason for the opacity.
In fact, sometimes I'm not even supersure which party at this point is
the one squawking the loudest aboutprices being intellectual property.
Even if you look at thereporting laws, they have been
deferred to as trade secrets.
(09:05):
So, if you look at Minnesota, theyhave a beautiful PBM reporting bill
that they put an annual report about,but all of the rebates are aggregated.
The PBMs are not named, and that'sone of the challenges in trying
to crack open this black box.
But I do think that there are validarguments to challenge that trade secret
designation, which are that they doimpact other people's economics as well.
(09:31):
The first thing that comes tomind is everybody else knows
what everybody else's prices are.
But then again, where there'smystery, there's margin.
What's a rebate?
Exactly.
And what's an administrative fee?
And just kind of all the gamesthat are being played there.
That's a really great point, Stacey.
I tend to try and classify it as postsale concession because I think that
lumps in more of these other things.
(09:52):
But when the Attorney General of Texaswent and filed their insulin pricing
lawsuit, they had probably about 50kinds of ways that these are classified.
And I won't bore all your readers withthe different types, but I'll send
over, so maybe you can put it in thecomments of the podcast, you know, the
(10:15):
multiplicity of like all the things.
And so I, I do think,like, to say rebate, right?
Because now all the PBMs are saying,Oh, we're passing through the rebate.
Don't worry about it.
We're all good.
I think focusing exclusively on a singulartype of post-sale concession is sort of
(10:35):
like chasing a snowflake at this point.
It's going to be hard to capture.
And just to speak specifically aboutthe impact of these rebates or post-sale
concessions, if we wanna be moreaccurate, since as you just said, and
as Paul Holmes said, actually reallycrisply in that episode from a year or
so ago, a PBM can call these post-saleconcessions, whatever they want.
(10:59):
They could get back a hundreddollars, I don't know, from a form
manufacturer, and call 40 or 50 or10 or 95% of those dollars a rebate.
And guess what?
They can call whatever dollarsthey want the rebate portion.
They're the ones that are definingwhat rebate actually means.
And anyone saying that a plan sponsoris getting back a hundred percent of the
rebates, it's, it's kind of meaninglessif you think about it in this regard.
(11:22):
But what are some of maybe the lessobvious problems here, besides the fact
that a hundred percent of rebates is arelatively meaningless statement just
given the linguistic gymnastics afoot.
One of the biggest challenges right nowis the impact on pharmacogenomics testing.
Manufacturers use rebate dollarsto get essentially what's a direct
(11:43):
to label agreement with a PBM.
So you're not adding priorauthorization criteria.
And then you know, that's usually inthe name of patient access, which I
think a lot of people can get behind.
But the challenge is changing an FDAlabel is expensive, it's time consuming
and sponsors, drug sponsors need tojustify that to their shareholders.
(12:07):
The problem is we're in a worldwhere innovation and lab testing and
pharmacogenomics are acceleratingat such a rapid pace that
those labels aren't keeping up.
So what you're talking about thereis every pharmaceutical product
has a package insert or a label.
It's called a couple of different things.
And that's what's approved by the FDA.
(12:28):
It's the, you know, if you actuallyread one, it's the, this is how
this drug works and this is whatit does, exactly, and specifically.
Like it's in, it's indicated forthese conditions, and here are the
adverse events that you can expect.
It's just, it's got all of those,effectively what it's saying is
this is who is an appropriatepatient for this medication based
(12:51):
on its approval like net net.
That's what's happening here.
And usually these arevery large documents.
Back to sort of this pharmacogenomicstesting issue, if you're a plan sponsor,
somebody paying for this medication,you want it to be an effective
medication for that person, right?
And pharmacogenomics is startingto allow people to really
(13:14):
understand when a medication isgoing to be effective or not.
You've been on sort of an ER kick, soI'll highlight that one study actually
reported that pharmacogenomics testingcan reduce emergency department visits
for medication interactions by 42%.
Wow.
Wait, wait.
So 42%.
(13:35):
And it's been highly talked aboutfor many, many years, just how many
deaths and hospitalizations aredue to pharma contraindications
and just interactions, right?
Like especially with older peoplewho are taking multiple drugs, they
don't realize that they interact.
And what I'm understanding you sayand Pramod John was on the pod a while
(13:56):
ago talking about this, just likethere's so many drugs where if you
do a form, like if you do a genetictest you can see right outta the
gate that this drug's not gonna work.
You can see right outta the gate thatthe person's gonna have an issue with
it or, or if they take these two drugsconcurrently, there's gonna be an issue.
So that's what you're talking about.
Exactly.
Or it could be, wow, this blood clottingmedication isn't gonna work for me.
I end up with a deep vein thrombosis inthe ER and need that fixed like that would
(14:22):
be captured in that 42% in reduction.
All right, so what does thathave to do with rebates?
Like I said at the beginning, thisdirect to label agreement, that
happens often with older medicationsin particular, the label does not
include a pharmacogenomics test.
And so it can create a rebate wallwhere if you want to seek those
(14:45):
rebates, you actually can't havepharmacogenomics testing or you
might put those rebates at risk.
Okay.
This is what I'm understanding, andfor the GLP-1s, this is something that
Chris Crawford talked a lot about, wherebasically the deal that is brokered
between the PBM and the pharma companyis you only get the rebates if you don't,
(15:08):
it's basically all appropriate patients.
And the second that you start limitingwith pharmacogenomic testing or however
else you wanna limit, the secondthat you put limits that are greater
than whatever the label says, youjust forwent all the rebates, rebates
out the window, no rebates for you.
Yep.
Like that, good old Seinfeld SoupNazi new soup for you if you add on.
(15:29):
That's really a problem in an eraof very rapid genetic sequencing
or genetic understanding.
Like I said, I thinkthere are reasons, right?
Changing the FDA label is difficult, timeconsuming, and you have to justify that.
At the same time, I think if whatyou're trying to do is get the right
(15:49):
medication to the right patient,it does create some challenges.
Yeah.
Like if you're trying to do avalue-based formulary, for example,
and Nina Lathia talked a lot aboutthis in that earlier episode.
I can just see how this would be a superbig issue if you're actually trying to
get the right med to the right patientand because rebates are so, I mean, as
(16:09):
we all know, list prices are really high.
Rebates can be giant.
If you forego the rebate now as aplan sponsor, you, you're paying list.
It's just, yeah, that's, that's tough.
I think this is the reason why thereare opportunities, like as biosimilars
come to market and there are lowlist price products, those become so
(16:31):
much more interesting because theyremove this Sophie's Choice for plan
sponsors where, you know, what do I do?
Do I chase the rebate?
Or do I really create a value-basedformulary where I am looking at who
is actually going to respond to thismedication because I don't wanna waste
even $500 or $2 on prescribing somebodysomething that's just not gonna work
(16:56):
based on their biochemistry and genetics.
Conundrum.
Yeah.
Yeah.
Pay more.
It's just almost like follow thelatest science and you'll wind up
counterintuitively paying way moredue to the limitations of contracting.
You'll definitely find yourselfbetween a rock and a hard place.
If you're trying to do a value-basedsomething or other, like for example,
(17:17):
doing PGX testing, pharmacogenetictesting, which can determine
whether certain medications aregonna work or, or not work, which
I could have life-threateningclinical consequences to patients.
You're saying, okay, fine.
I won't do any of that stuffsuch that I can get this rebate.
It's not justlife-threatening consequences.
(17:37):
Sometimes we get a little focused on that,but I find often health plan sponsors
don't consider, what does it mean toaccumulate disability because you're
not on the right medication either.
And you have different types of spending.
Say you sponsor a long-term disabilitypolicy, you could potentially see
increased spending there because peoplearen't getting onto the right medication.
(18:01):
And that's, personally, I think that'sa really damaging situation for both
a person, but also for an employer tobe paying somebody, you know, 50, 60,
whatever percent of their salary toliterally do nothing simply because
they're not on the right medication.
(18:21):
I think that's really ahorrifying scenario for everyone.
Ann Lewandowski, if someone isinterested in learning more about
your work where would you direct them?
LinkedIn, or you could reach outto me at ann@patientvalueinsights
or patientvalueinsights.com.
And we will put theselinks in these show notes.
Ann Lewandowski, thank you so much forbeing on Relentless Health Value today.
(18:43):
Thanks Stacey.
It's been such a pleasure to join you.
I'm Peter Hayes.
I'm the principal of HealthcareSolutions and had been involved
in healthcare for 30 plus years.
I will say one of the sources thatI go to and rely on all the time to
kind of stay up to date and reallyunderstand what's happening in healthcare
is to listen to Relentless Health.
(19:03):
I encourage everyone to sign up forthe Relentless Health Newsletter.
It's just a great source of what'shappening in healthcare today.
To me, it's the most trusted source thatI use to really try to stay current with
the complexities of the healthcare system.
So thank you everyone, and I hopeyou listen and start the good fight
and I try to make healthcare alittle bit better for all of us.
(19:25):
Thank you.
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