July 29, 2024 • 8 mins
Antonio Ciaccia, a prescription Drug Expert explains why they have so much influence on drug prices
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
All right, eight thirty eight, we'll check in on the
(00:01):
Legacy Retirement Group dot Com phone line with our buddy
Antonio Chatscha from Three Axis Advisors. Essentially, what Antonio does
is a consulting firm helps diagnose and eliminate inefficiencies in
the prescription drug supply chain.
Speaker 2 (00:18):
Amen to that, Antonio, Good morning.
Speaker 3 (00:21):
Hey, I'm ready for a scratch and chicken cutlets sale.
Speaker 2 (00:25):
Yeah, a little bit of red sauce on there, glass
of red wine.
Speaker 3 (00:29):
Yeah, that sounds good to me.
Speaker 2 (00:30):
There you go.
Speaker 1 (00:31):
Antonio, by the way, also a graduate from the Ohio
State University.
Speaker 2 (00:35):
I know people appreciate that, so Antonio.
Speaker 1 (00:38):
The story this morning is that there's a new FTC
report Federal Trade Commission. They're suggesting that pharmaceutical middlemen are
the ones profiting at the expent of people like you
and me who go to the pharmacy and overpay for
their prescriptions and hurting small pharmacies as well. I don't
think we needed an FTC report to tell us this.
Speaker 2 (00:58):
You've been talking about this for all time.
Speaker 3 (01:02):
Yeah, it's nothing new to folks in the state of Ohio.
In fact, the Federal Trade Commission report draws heavily on
some of our own work and the work of the
State of Ohio to address some of the fundamental misalignments
that exist within the PBM industry. Where these pharmacy benefit
managers are hired with the idea that they are going
(01:24):
to lower the costs of medicines, the reality is is
far more complicated. They do provide savings off of fogus
inflated list prices, but they're not necessarily turning around a
fair deal all the time either. And the FTC report
weighs in heavily on some of the various tools that
(01:45):
PBMs use to inflight the plight and inflate the prices
of medicines that we pay as consumers or as government programs.
Speaker 1 (01:53):
So let's drill down on the pharmacy benefit managers or
PBMs as you call them, like, who are they, what
are they?
Speaker 2 (01:59):
Who do they want for?
Speaker 3 (02:02):
So? PBMs are the intermediaries in your transaction that most
has still never heard of. They are Fortune fifteen companies
and they are part of larger vertically integrated corporations the PBMs.
Their names are CBS, care Mark, OPTIMRX, and Express Scripts.
You might know them through their subsidiary or affiliate companies
(02:25):
known as Signa, Etna, CBS, United Healthcare. These large companies
are now multi layered healthcare delivery organizations. The PBM essentially
handles the drug benefit under your insurance plan. They get
to determine which drugs are covered under that plan, which
(02:46):
ones are not, how much you'll pay out of pocket,
how much you won't, how much pharmacies are paid, how
much employers or government programs are charged. But they live
at the dead center nucleus of our prescription drug ricing
transaction and are responsible for what the end experience will be.
Speaker 1 (03:05):
So what's the criteria they use in determining all of
the above, Whether how much I pay, how much, who's covered,
who gets paid, how much the insurance company plans cover,
how much I got? What's the crime? Who comes up
with Is it just arbitrary? Are they just throwing darts
at a dart board or I'm sure they've got a formula.
Tell me they've got a strategic way to come up
(03:26):
with these numbers.
Speaker 3 (03:28):
I would love to sit here and tell you that
it was straightforward and easy to pin down. You said arbitrary.
I'll take that word and just tweak it a bit.
It's arbitrage. It's by low, sell high and take advantage
of the non transparent difference. That is what we saw
in the State of Ohio Medicaid program years ago when
(03:48):
they were underpaying pharmacies doing a much higher inflator rates
in the state and pocketing two hundred and forty five
million dollars in the middle. Afterwards, Attorney General Yost file
litigation over those issues. But to give you an idea
of just how all over the map it is, we
put out a study last week where we were looking
(04:09):
at the prices of medicines in the Medicare program. There's
not a lot of transparency in the drug world, but
there is enough. But what we did is we said,
let's look at all the different prices that are being
charged by Medicare plans that are owned and operated by
these large big three PBMs and health insurance companies. We
(04:29):
took a leukemia drug called generic Levek, and we looked
at all the plans that were covered by CBS Health.
Within the hundreds of plans that CBS Health has in Medicare,
they are setting five hundred and ninety seven different prices
for this one drug. At the same time, the scale
of prices started two thousand, six hundred dollars per prescription
(04:53):
and go all the way up to eighty two hundred
dollars per prescription. Now you may look at and say, wow,
that's a big range. Well, the lowest one again two
six hundred dollars. The same drug can be acquired at
Costco or Mark Cuban's Cost plus drug company for less
than fifty dollars.
Speaker 1 (05:13):
So I'm a drug company, I create a drug that's
in demand, I've got my hard costs in. They go
into the drug and then everyone gets their piece of
the pile along the way. I mean, how do we
how do we buy drugs directly from the drug company
that they need to make their money?
Speaker 2 (05:29):
I get it.
Speaker 1 (05:30):
I guess pharmacies need to get their hand in the
till a little bit. They're the ones that are dispensing it.
But I mean, everyone's gonna take a couple of pennies
off of every you know, every pill that I buy.
But how do we cut the chase? How do we
cut to the chase. How do we eliminate that middleman?
Those PBMs?
Speaker 3 (05:48):
Well we could take a page from the the Wide administration,
you know, when they found this massive problem in our
medicaid program. They said, how do we fix it? And
they try to pass a number of different policy reforms
to try and whittle around the edges and really get
at the heart of some of the things the PBOs
were doing to take advantage. After a while, they finally
(06:11):
realized we can't win right. We're not going to outplay
them on this field, on this battlefield that they own.
So they said, we're going to eliminate this entire phenomenon.
And so rather than allowing PBMs to arbitrarily set prices
and make money at different layers or different ways off
the transaction, they said, we are going to be in control.
(06:34):
We're going to set a single price list for all
the medicines based upon actual marketplace conditions, and then foundationally
based all of our pricing off of v meaning both
the pharmacies will be paid based upon the actual cost
of the drug the state will be billed based upon
the same underlying costs of the drug, rather than allowing
(06:57):
for an asymmetry of information to allow for a growing
gap between what the states costs are versus what pharmacies
are actually being paid. That approach is what we often
counsel employers and government programs to take is to say,
stop letting a highly conflicted intermediary who makes money off
of the high prices of drugs invent the cost that
(07:21):
you will bear when it comes to paying the bill.
Speaker 1 (07:24):
So with the FTC, with their report, did they offer
any solution from their perspective? I mean, I'm not somebody
who's for more government involvement, but it seems like that
that's where this could head.
Speaker 3 (07:39):
Well. The FTC report was an interim report, and the
reason they released an interim report was, according to the FTC,
they've been demanding all sorts of information from PBMs and
their affiliated companies, but they have not held up their
end of the bargain intopplying that documentation. So we could
also look to the House Oversite Committee. Congressman James Comer
(08:03):
from Kentucky who's been leading a lot of the inquiries
of the House Government Oversight Committee. They released their own
report last week. Have added even more pieces to the
puzzle board. And what you're seeing is a growing pattern
and a chorus from both sides of the aisle that
the people that we hired to make this better are
(08:23):
in many ways making it worse. The problem is is
that we're still in the diagnosis phase. And if you
haven't finished the diagnosis phase, it's hard to prescribe the
necessary treatment. I think there's a lot of things that
Congress are looking at that I would just argue directionally,
are promising and spread that line of not overdoing it, right,
(08:46):
because the second you start having the government solve all
your problems, they become the problem.
Speaker 2 (08:51):
Right.
Speaker 3 (08:51):
We know that there are some necessary things to realign
this market,
All right, eight thirty eight, we'll check in on the
(00:01):
Legacy Retirement Group dot Com phone line with our buddy
Antonio Chatscha from Three Axis Advisors. Essentially, what Antonio does
is a consulting firm helps diagnose and eliminate inefficiencies in
the prescription drug supply chain.
Speaker 2 (00:18):
Amen to that, Antonio, Good morning.
Speaker 3 (00:21):
Hey, I'm ready for a scratch and chicken cutlets sale.
Speaker 2 (00:25):
Yeah, a little bit of red sauce on there, glass
of red wine.
Speaker 3 (00:29):
Yeah, that sounds good to me.
Speaker 2 (00:30):
There you go.
Speaker 1 (00:31):
Antonio, by the way, also a graduate from the Ohio
State University.
Speaker 2 (00:35):
I know people appreciate that, so Antonio.
Speaker 1 (00:38):
The story this morning is that there's a new FTC
report Federal Trade Commission. They're suggesting that pharmaceutical middlemen are
the ones profiting at the expent of people like you
and me who go to the pharmacy and overpay for
their prescriptions and hurting small pharmacies as well. I don't
think we needed an FTC report to tell us this.
Speaker 2 (00:58):
You've been talking about this for all time.
Speaker 3 (01:02):
Yeah, it's nothing new to folks in the state of Ohio.
In fact, the Federal Trade Commission report draws heavily on
some of our own work and the work of the
State of Ohio to address some of the fundamental misalignments
that exist within the PBM industry. Where these pharmacy benefit
managers are hired with the idea that they are going
(01:24):
to lower the costs of medicines, the reality is is
far more complicated. They do provide savings off of fogus
inflated list prices, but they're not necessarily turning around a
fair deal all the time either. And the FTC report
weighs in heavily on some of the various tools that
(01:45):
PBMs use to inflight the plight and inflate the prices
of medicines that we pay as consumers or as government programs.
Speaker 1 (01:53):
So let's drill down on the pharmacy benefit managers or
PBMs as you call them, like, who are they, what
are they?
Speaker 2 (01:59):
Who do they want for?
Speaker 3 (02:02):
So? PBMs are the intermediaries in your transaction that most
has still never heard of. They are Fortune fifteen companies
and they are part of larger vertically integrated corporations the PBMs.
Their names are CBS, care Mark, OPTIMRX, and Express Scripts.
You might know them through their subsidiary or affiliate companies
(02:25):
known as Signa, Etna, CBS, United Healthcare. These large companies
are now multi layered healthcare delivery organizations. The PBM essentially
handles the drug benefit under your insurance plan. They get
to determine which drugs are covered under that plan, which
(02:46):
ones are not, how much you'll pay out of pocket,
how much you won't, how much pharmacies are paid, how
much employers or government programs are charged. But they live
at the dead center nucleus of our prescription drug ricing
transaction and are responsible for what the end experience will be.
Speaker 1 (03:05):
So what's the criteria they use in determining all of
the above, Whether how much I pay, how much, who's covered,
who gets paid, how much the insurance company plans cover,
how much I got? What's the crime? Who comes up
with Is it just arbitrary? Are they just throwing darts
at a dart board or I'm sure they've got a formula.
Tell me they've got a strategic way to come up
(03:26):
with these numbers.
Speaker 3 (03:28):
I would love to sit here and tell you that
it was straightforward and easy to pin down. You said arbitrary.
I'll take that word and just tweak it a bit.
It's arbitrage. It's by low, sell high and take advantage
of the non transparent difference. That is what we saw
in the State of Ohio Medicaid program years ago when
(03:48):
they were underpaying pharmacies doing a much higher inflator rates
in the state and pocketing two hundred and forty five
million dollars in the middle. Afterwards, Attorney General Yost file
litigation over those issues. But to give you an idea
of just how all over the map it is, we
put out a study last week where we were looking
(04:09):
at the prices of medicines in the Medicare program. There's
not a lot of transparency in the drug world, but
there is enough. But what we did is we said,
let's look at all the different prices that are being
charged by Medicare plans that are owned and operated by
these large big three PBMs and health insurance companies. We
(04:29):
took a leukemia drug called generic Levek, and we looked
at all the plans that were covered by CBS Health.
Within the hundreds of plans that CBS Health has in Medicare,
they are setting five hundred and ninety seven different prices
for this one drug. At the same time, the scale
of prices started two thousand, six hundred dollars per prescription
(04:53):
and go all the way up to eighty two hundred
dollars per prescription. Now you may look at and say, wow,
that's a big range. Well, the lowest one again two
six hundred dollars. The same drug can be acquired at
Costco or Mark Cuban's Cost plus drug company for less
than fifty dollars.
Speaker 1 (05:13):
So I'm a drug company, I create a drug that's
in demand, I've got my hard costs in. They go
into the drug and then everyone gets their piece of
the pile along the way. I mean, how do we
how do we buy drugs directly from the drug company
that they need to make their money?
Speaker 2 (05:29):
I get it.
Speaker 1 (05:30):
I guess pharmacies need to get their hand in the
till a little bit. They're the ones that are dispensing it.
But I mean, everyone's gonna take a couple of pennies
off of every you know, every pill that I buy.
But how do we cut the chase? How do we
cut to the chase. How do we eliminate that middleman?
Those PBMs?
Speaker 3 (05:48):
Well we could take a page from the the Wide administration,
you know, when they found this massive problem in our
medicaid program. They said, how do we fix it? And
they try to pass a number of different policy reforms
to try and whittle around the edges and really get
at the heart of some of the things the PBOs
were doing to take advantage. After a while, they finally
(06:11):
realized we can't win right. We're not going to outplay
them on this field, on this battlefield that they own.
So they said, we're going to eliminate this entire phenomenon.
And so rather than allowing PBMs to arbitrarily set prices
and make money at different layers or different ways off
the transaction, they said, we are going to be in control.
(06:34):
We're going to set a single price list for all
the medicines based upon actual marketplace conditions, and then foundationally
based all of our pricing off of v meaning both
the pharmacies will be paid based upon the actual cost
of the drug the state will be billed based upon
the same underlying costs of the drug, rather than allowing
(06:57):
for an asymmetry of information to allow for a growing
gap between what the states costs are versus what pharmacies
are actually being paid. That approach is what we often
counsel employers and government programs to take is to say,
stop letting a highly conflicted intermediary who makes money off
of the high prices of drugs invent the cost that
(07:21):
you will bear when it comes to paying the bill.
Speaker 1 (07:24):
So with the FTC, with their report, did they offer
any solution from their perspective? I mean, I'm not somebody
who's for more government involvement, but it seems like that
that's where this could head.
Speaker 3 (07:39):
Well. The FTC report was an interim report, and the
reason they released an interim report was, according to the FTC,
they've been demanding all sorts of information from PBMs and
their affiliated companies, but they have not held up their
end of the bargain intopplying that documentation. So we could
also look to the House Oversite Committee. Congressman James Comer
(08:03):
from Kentucky who's been leading a lot of the inquiries
of the House Government Oversight Committee. They released their own
report last week. Have added even more pieces to the
puzzle board. And what you're seeing is a growing pattern
and a chorus from both sides of the aisle that
the people that we hired to make this better are
(08:23):
in many ways making it worse. The problem is is
that we're still in the diagnosis phase. And if you
haven't finished the diagnosis phase, it's hard to prescribe the
necessary treatment. I think there's a lot of things that
Congress are looking at that I would just argue directionally,
are promising and spread that line of not overdoing it, right,
(08:46):
because the second you start having the government solve all
your problems, they become the problem.
Speaker 2 (08:51):
Right.
Speaker 3 (08:51):
We know that there are some necessary things to realign
this market,
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