The hidden reason behind rising RX products

Antonio Ciaccia, President of 46Brooklyn talks about why this is happening and how these drugs can be cheaper

Episode Transcript

Speaker 1 (00:00):
Alright, let's go over to the Legacy Retirement Group dot

(00:01):
com phone line and a guest I always enjoy speaking with.
It's Antonio cha Cha, president of forty six of Brooklyn,
a prescription drug expert. Antonio, First of all, how about
your Ohio State Buckeyes beating that team up north.

Speaker 2 (00:15):
Hey, I'm glad that Ryan Daig was able to shake
that monkey office back this weekend.

Speaker 1 (00:20):
Absolutely absolutely, Now focusing on a Big Ten championship and
then a deep, deep playoff run resulting hopefully in back
to back national championships.

Speaker 2 (00:32):
What could be better?

Speaker 1 (00:34):
Not much, dude, not much.

Speaker 2 (00:36):
So.

Speaker 1 (00:37):
Yeah, you're somebody that tracks prescription drug coverage for Americans
and the prices of prescription drugs. And we've talked a
number of times, Antonio about the PBMs, the pharmacy benefit managers,
and those folks are really the middleman and they I
still don't know why we even have these this level

(00:58):
of involvement, but they're the ones who really they are
able to throttle up or throttle down prescription drug prices.
So what have drug companies done to help ease the
pain for Americans who have the high cost of prescription drugs?

Speaker 2 (01:12):
Well, drug companies aren't doing very much right now, and
nobody in the drug channel is doing very much to
try and lower the costs of medicines for the end consumer.
It should be no surprise that it's in all you
can eat buffet. Anybody that can get their hands out
of plate, they will be serving themselves up some heaping
portions of drug pricing leftovers. PBMs, though structurally are supposed

(01:38):
to be the good guys. PBMs work on behalf of
insurance companies and health plans to try to negotiate lower
costs off of floated and inflated prices. The challenge becomes
that just like the drug companies, just like the wholesalers
and pharmacies, PBMs are also pub bookly traded companies who

(02:01):
want to make money off the same transactions they were
hired to control. So in some ways you can argue
they can exacerbate drug pricing dysfunction because we hire them
to control the costs of medicines, but they oftentimes end
up making matters even worse.

Speaker 1 (02:21):
So did I see that some of these major insurers
like you know, United Health or Signa and in pharmacy
cb as have launched their own private label drugs.

Speaker 2 (02:34):
Yes, so you know the battle the battlefield makes sense.
I think from a from a surface level, right, you
have drug companies want to charge higher prices and PBMs
are hired by our employers and our governments to try
and negotiate lower costs, and so in general you should

(02:54):
have a good hat fields in McCoy's relationship between the two.
But what we seen over the last few years, in
the face of growing scrutiny over PBMs driving bigger and
bigger markups on medicines. We saw this in Ohio a
few years ago with PBMs charging two hundred and forty
five million dollars in hidden spreads and fees to our

(03:16):
medicaid program that resulted in a national firestorm and overhaul.
Well as more and more scrutiny and reformists hit the
PBM industry, they have contorted and just when you think
you have the answers, just as Roddy Roddy Piper said
years ago, they changed the questions. And so now the
PBMs who are supposed to be fighting drug companies have

(03:37):
started their own drug companies, and so it really is
a great opportunity for them to kind of put their
money where their mouth is. PBMs are supposed to be
fighting high drug prices, so now that they're the drug companies,
they should be able to get them. Well. We did
a report last week where we started looking at the

(03:57):
prices being charged by the drug companies that are owned
by the PBMs and insurance companies, and the data was fascinating.
Of the highest priced drugs in the market, Quality Pharmaceuticals,
which is a subsidiary of Express Scripts in Signa, the
largest PBMs and insurance companies in the world, they set

(04:20):
prices that were just a slight discount to the highest
prices available in the market. And if you look at
the prices of their medicines, the sticker prices, and you
compare them to the lowest manufacturer prices in the market,
they were on average thirty three times higher than the
lowest prices you could find in the market.

Speaker 1 (04:41):
So that doesn't seem like it makes sense. If you've
got more people the in the in the game, you
should in theoried lower prices.

Speaker 2 (04:52):
Exactly. So essentially this is with looking at generic drugs.
So for those unfamiliar, when you go to the pharmacy,
there might be dozens of different options that could be
dispensed to you at the pharmacy. They all have different
sticker prices associated with them. Now, pharmacies and manufacturers can
certainly work to inflate the cost to consumers and plans,

(05:14):
but PBMs, again are there to be the good guys
to find the lowest prices. So one would assume if
they were actually setting the prices of the medicines that
they themselves own and distribute through their own vertically integrated company,
that they would be in the best position to get
the lowest price. But as they said, we found that
on average, of all the different interchangeable products in the marketplace,

(05:39):
for each drug under the Qualit brand, they were thirty
three times higher than the lowest prices in the marketplace,
which translates into higher costs for employers, government programs, and
the patients who they are supposed to be working for.

Speaker 1 (05:54):
Antonia chatcha expert in drug pricing with forty six Brooklyn
concerns as to where our drugs are made, you hear
a lot about you know, we need to make more
of our drugs here domestically, a prescription drugs domestically and
and rely less on China. What's what's your take?

Speaker 2 (06:10):
On that there are there's good reasons for wanting to
have a diverse portfolio of medicines that isn't solely reliant
upon foreign foreign imports. Right. China obviously is a trade
I would to say enemy, but Erica wants to put
always position itself better economically than one of its rivals

(06:34):
like China. As a result, when America is overly reliant
upon products that come from China, they can become bullies
if you will, when it comes to trade. So there's
been a big push by the Trump administration to try
and onshore more products. That's good for a number of reasons.
One is it can have more competition in international marketplace,

(06:55):
thus driving hopefully prices even lower. But it also ensures
that we don't have a concentration risk for whatever reason,
there's a natural disaster or let's say a trade war.
Anytime that we're overly reliant upon foreign born medicines, we
run a risk of essentially running out of our own supply,
which we saw a number of times during the COVID epidemic.

(07:17):
As there was a rush for medicines, we saw a
lot of shortages pop up internationally. So yes, we're seeing
a big focus on trying to enshore more production in
the United States so we are not as reliant upon
foreign born medicines.