1 00:00:01,120 --> 00:00:03,279 The Becker's team is excited to announce the 2 00:00:03,279 --> 00:00:06,160 launch of our new CFO and Revenue Cycle 3 00:00:06,160 --> 00:00:06,660 podcast. 4 00:00:07,440 --> 00:00:10,240 Tune in for conversations with finance experts from 5 00:00:10,240 --> 00:00:13,119 the top hospitals and health systems. We'll discuss 6 00:00:13,119 --> 00:00:15,679 key trends and ideas to drive meaningful change 7 00:00:15,679 --> 00:00:18,855 in the industry. Look for Becker's CFO and 8 00:00:18,855 --> 00:00:21,995 Revenue Cycle podcast wherever you listen to episodes. 9 00:00:24,855 --> 00:00:27,175 Hello, everyone. This is Jacob Emerson with the 10 00:00:27,175 --> 00:00:30,054 Becker's Payor Issues podcast. Thrilled today to be 11 00:00:30,054 --> 00:00:32,740 joined by a special guest. Matt Gibbs is 12 00:00:32,740 --> 00:00:35,700 senior vice president and chief pharmacy officer at 13 00:00:35,700 --> 00:00:36,920 Blue Shield of California. 14 00:00:37,299 --> 00:00:38,979 Matt, thanks so much for taking the time 15 00:00:38,979 --> 00:00:40,600 to be with me on the podcast today. 16 00:00:40,659 --> 00:00:43,060 Hey, Jacob. Thanks for having me. Yeah. Absolutely. 17 00:00:43,060 --> 00:00:44,579 And before we dive into everything we wanna 18 00:00:44,579 --> 00:00:45,954 talk with you about, can you tell us 19 00:00:45,954 --> 00:00:48,594 a little bit more about yourself, your career 20 00:00:48,594 --> 00:00:50,674 background in health care, and what it is 21 00:00:50,674 --> 00:00:52,695 that you're doing today at Blue Shield? 22 00:00:53,795 --> 00:00:54,935 Sure. Happy to. 23 00:00:55,554 --> 00:00:57,395 My name is Matt Gibbs, and I'm a 24 00:00:57,395 --> 00:00:58,774 pharmacist by background. 25 00:00:59,395 --> 00:01:02,280 I've been kind of in non traditional pharmacy 26 00:01:02,280 --> 00:01:04,520 roles, for the last twenty seven years. I 27 00:01:04,520 --> 00:01:05,900 can't believe I can say that. 28 00:01:06,359 --> 00:01:09,480 And have mainly been in the pharmacy benefit 29 00:01:09,480 --> 00:01:12,359 management or PBM space for majority of my 30 00:01:12,359 --> 00:01:14,840 career. So, was there in the early days 31 00:01:14,840 --> 00:01:15,819 when there were 32 00:01:16,155 --> 00:01:17,295 what are called PBMs, 33 00:01:17,915 --> 00:01:19,055 around called PCS 34 00:01:19,355 --> 00:01:21,775 and Medco and all those old names and 35 00:01:21,915 --> 00:01:24,075 have recently spent time in the mid market 36 00:01:24,075 --> 00:01:26,255 transparent PBM space, both at EnvisionRx 37 00:01:26,635 --> 00:01:29,159 and at Capital Rx. And most recently here, 38 00:01:29,159 --> 00:01:31,400 I've been at Blue Shield of California for 39 00:01:31,400 --> 00:01:34,060 about a year and had initial responsibilities 40 00:01:34,359 --> 00:01:36,859 for launching the pharmacy care reimagine 41 00:01:37,479 --> 00:01:39,959 offering and, getting that stood up for the 42 00:01:39,959 --> 00:01:40,780 Blue Shield 43 00:01:41,484 --> 00:01:44,364 plan itself. And now as chief pharmacy officer 44 00:01:44,364 --> 00:01:47,004 having oversight for all of pharmacy services and 45 00:01:47,004 --> 00:01:49,644 transformation as we move forward into the rest 46 00:01:49,644 --> 00:01:50,864 of 2025. 47 00:01:51,405 --> 00:01:53,484 Fantastic. Well, let's talk a little bit about 48 00:01:53,484 --> 00:01:56,439 transformation, Matt. Obviously, there's been a lot happening 49 00:01:56,439 --> 00:01:57,900 at Blue Shield of California 50 00:01:58,359 --> 00:02:01,340 earlier this year. There's the creation of Ascendiant, 51 00:02:01,400 --> 00:02:02,540 a new parent company. 52 00:02:03,079 --> 00:02:05,159 So a lot of major changes happening across 53 00:02:05,159 --> 00:02:05,819 the enterprise. 54 00:02:06,600 --> 00:02:09,580 In that vein, what's your vision for pharmacy 55 00:02:09,639 --> 00:02:10,860 care for your members 56 00:02:11,185 --> 00:02:12,004 moving forward? 57 00:02:13,264 --> 00:02:16,064 No, good question. And while our corporate structure 58 00:02:16,064 --> 00:02:18,465 is interesting, I think the goal with what 59 00:02:18,465 --> 00:02:19,364 we wanna provide 60 00:02:19,664 --> 00:02:21,044 to members is the same. 61 00:02:21,344 --> 00:02:21,844 So, 62 00:02:22,864 --> 00:02:24,805 I look at it at pharmacy care reimagine 63 00:02:24,864 --> 00:02:25,604 this way. 64 00:02:26,049 --> 00:02:28,769 You can have the best member digital tools, 65 00:02:28,769 --> 00:02:31,009 you can have the best decision support, you 66 00:02:31,009 --> 00:02:33,810 can present, you know, hundreds of options to 67 00:02:33,810 --> 00:02:35,409 a patient or member in terms of how 68 00:02:35,409 --> 00:02:36,049 they can, 69 00:02:36,370 --> 00:02:38,150 have more informed healthcare decisions. 70 00:02:38,635 --> 00:02:40,395 But those tools are only as good as 71 00:02:40,395 --> 00:02:42,314 the data that goes in. And I think 72 00:02:42,314 --> 00:02:44,635 what has been missing in pharmacy for so 73 00:02:44,635 --> 00:02:47,034 long, at least in my entire career, is 74 00:02:47,034 --> 00:02:49,675 that the information presented to a patient or 75 00:02:49,675 --> 00:02:51,455 member is often mired 76 00:02:51,920 --> 00:02:52,580 with other, 77 00:02:53,120 --> 00:02:53,620 forces 78 00:02:54,000 --> 00:02:54,900 that don't necessarily 79 00:02:55,200 --> 00:02:56,819 present accurate information, 80 00:02:57,360 --> 00:02:59,760 meaning the actual cost of a drug. Are 81 00:02:59,760 --> 00:03:02,159 you actually seeing what a drug costs as 82 00:03:02,159 --> 00:03:04,314 a certain pharmacy on a certain day? Are 83 00:03:04,314 --> 00:03:05,455 you seeing what 84 00:03:05,914 --> 00:03:08,314 your PBM or insurance plan is presenting to 85 00:03:08,314 --> 00:03:10,875 you? So our goal is to break that 86 00:03:10,875 --> 00:03:13,115 apart to say, if we really wanna leverage 87 00:03:13,115 --> 00:03:14,814 these great digital assets, 88 00:03:15,194 --> 00:03:16,735 we need and we owe 89 00:03:17,034 --> 00:03:17,775 the member 90 00:03:18,250 --> 00:03:20,189 the actual information that 91 00:03:21,209 --> 00:03:22,889 is based on the cost basis of a 92 00:03:22,889 --> 00:03:24,810 drug itself. So then they can make an 93 00:03:24,810 --> 00:03:25,629 informed decision 94 00:03:25,930 --> 00:03:29,129 without any other interested parties saying, Hey, this 95 00:03:29,129 --> 00:03:30,729 may be more expensive, but you should use 96 00:03:30,729 --> 00:03:33,229 mail service because we own the dispensing facility. 97 00:03:33,449 --> 00:03:35,504 Or, Hey, this is your specialty drug, but 98 00:03:35,504 --> 00:03:37,025 we want you to use this one because 99 00:03:37,025 --> 00:03:38,625 there's a higher rebate on it for us 100 00:03:38,625 --> 00:03:40,724 as a pharmacy benefit manager. 101 00:03:41,025 --> 00:03:43,264 Stripping all that away so that you can 102 00:03:43,264 --> 00:03:45,425 really give the net cost to a member 103 00:03:45,425 --> 00:03:48,199 is our ultimate goal. That shouldn't be hard 104 00:03:48,199 --> 00:03:50,199 because we don't do that anywhere else in 105 00:03:50,199 --> 00:03:52,439 our economy, except in drugs where you never 106 00:03:52,439 --> 00:03:54,120 actually see the price of a drug as 107 00:03:54,120 --> 00:03:54,620 consumer. 108 00:03:54,919 --> 00:03:56,520 And our goal is to break that down. 109 00:03:56,520 --> 00:03:58,620 So just like when you make a decision 110 00:03:58,680 --> 00:04:01,020 over a certain potato chip brand or another, 111 00:04:01,145 --> 00:04:02,264 the price is in front of you at 112 00:04:02,264 --> 00:04:03,965 the grocery and you can make a decision. 113 00:04:04,185 --> 00:04:06,344 It's not this fictitious number that leads you 114 00:04:06,344 --> 00:04:09,064 down a path for some other interested party 115 00:04:09,064 --> 00:04:09,805 to make money 116 00:04:10,985 --> 00:04:13,064 on your back. So that is our goal. 117 00:04:13,064 --> 00:04:14,879 It sounds simple, but it's revolutionary 118 00:04:15,180 --> 00:04:16,939 because again, this is one part of The 119 00:04:16,939 --> 00:04:20,300 US economy where real price is rarely presented 120 00:04:20,300 --> 00:04:21,120 to the consumer. 121 00:04:21,740 --> 00:04:24,560 Absolutely. So you're really advocating for transparency 122 00:04:25,180 --> 00:04:27,264 on behalf of the member, Matt. And and 123 00:04:27,264 --> 00:04:29,104 I will say we've spoken with many Blue 124 00:04:29,104 --> 00:04:30,785 Shield leaders in the past, and they always 125 00:04:30,785 --> 00:04:31,285 emphasize 126 00:04:31,664 --> 00:04:34,964 the need for systemic reforms within the pharmacy 127 00:04:35,024 --> 00:04:37,845 space to improve transparency and accessibility 128 00:04:38,224 --> 00:04:39,204 to to drugs. 129 00:04:40,199 --> 00:04:43,079 So so what strategies or initiatives are you 130 00:04:43,079 --> 00:04:43,579 prioritizing 131 00:04:44,120 --> 00:04:46,039 as you've come into this new role to 132 00:04:46,039 --> 00:04:46,939 drive these changes? 133 00:04:48,599 --> 00:04:50,759 Right. So the the first thing that had 134 00:04:50,759 --> 00:04:52,860 to be done was, as a health plan, 135 00:04:53,079 --> 00:04:53,899 take back 136 00:04:54,305 --> 00:04:55,844 our management of pharmacy. 137 00:04:56,384 --> 00:04:58,964 Health plans throughout the country have outsourced 138 00:04:59,344 --> 00:05:00,084 their pharmacy 139 00:05:00,625 --> 00:05:03,604 department, their services, even their clinical reviews 140 00:05:04,305 --> 00:05:07,310 to pharmacy benefit managers. And now they're scratching 141 00:05:07,310 --> 00:05:08,990 their heads saying, gosh, why are my costs 142 00:05:08,990 --> 00:05:10,769 going up? Why do I not have flexibility 143 00:05:11,149 --> 00:05:13,230 in what drugs I cover? Why does my 144 00:05:13,230 --> 00:05:15,310 PBM always want to change my contract when 145 00:05:15,310 --> 00:05:16,829 I want to do something maybe direct with 146 00:05:16,829 --> 00:05:18,750 a manufacturer, or maybe I want to work 147 00:05:18,750 --> 00:05:19,889 with a different pharmacy? 148 00:05:20,795 --> 00:05:22,475 And health plans are waking up to the 149 00:05:22,475 --> 00:05:25,115 fact that pharmacy is no longer 10% of 150 00:05:25,115 --> 00:05:27,274 your, of your total healthcare spend. It's 30, 151 00:05:27,274 --> 00:05:28,495 it's 50%. 152 00:05:29,995 --> 00:05:32,475 And taking control of that function is key 153 00:05:32,475 --> 00:05:34,314 to your future existence as a health plan, 154 00:05:34,314 --> 00:05:36,740 no matter how big or small you are. 155 00:05:36,960 --> 00:05:38,720 And you saw the big health plans early 156 00:05:38,720 --> 00:05:41,680 on, the Uniteds, the Cigna's, the Aetna's, they 157 00:05:41,680 --> 00:05:43,680 all merged with big PBMs because they saw 158 00:05:43,680 --> 00:05:46,080 it coming. They knew that pharmacy had to 159 00:05:46,080 --> 00:05:48,319 be an owned and controlled asset if you 160 00:05:48,319 --> 00:05:50,500 wanted to control your healthcare destiny. 161 00:05:50,914 --> 00:05:53,074 And Blue Shield is right behind that saying, 162 00:05:53,074 --> 00:05:54,595 Hey, we wanna do that too, but we 163 00:05:54,595 --> 00:05:56,514 don't wanna be owned by or own a 164 00:05:56,514 --> 00:05:58,354 big BBM because we know there's lots of 165 00:05:58,354 --> 00:06:00,854 problems there. We wanna break it apart 166 00:06:01,314 --> 00:06:03,074 and kinda go back to the way that 167 00:06:03,074 --> 00:06:05,069 things were in the nineties when health plans 168 00:06:05,149 --> 00:06:07,089 owned and managed their own pharmacy, 169 00:06:07,629 --> 00:06:10,350 benefit and department. And so Blue Shield is 170 00:06:10,350 --> 00:06:12,189 ahead of the curve on that saying, we're 171 00:06:12,189 --> 00:06:14,589 gonna blow the traditional PBM model away. We 172 00:06:14,589 --> 00:06:17,569 did that in '24 by dismantling certain parts. 173 00:06:18,194 --> 00:06:20,615 And we use five different service providers 174 00:06:21,154 --> 00:06:25,014 to uniquely contract and supplement our pharmacy offering, 175 00:06:25,154 --> 00:06:27,394 where we own the relationship, we own the 176 00:06:27,394 --> 00:06:29,794 contract. So, I have a mail service relationship 177 00:06:29,794 --> 00:06:31,014 with Amazon Pharmacy. 178 00:06:31,410 --> 00:06:34,069 I have a retail network relationship with Navitus 179 00:06:34,209 --> 00:06:36,550 Health Solutions. I have a claims adjudication 180 00:06:36,930 --> 00:06:39,330 relationship with Abarca Health, and I have a 181 00:06:39,330 --> 00:06:42,949 specialty relationship with CVS Health. All these combined 182 00:06:44,345 --> 00:06:47,245 don't allow what happens in a vertically integrated 183 00:06:47,305 --> 00:06:49,865 PBM in terms of, you know, taking from 184 00:06:49,865 --> 00:06:51,625 an area point from another. I'll give you 185 00:06:51,625 --> 00:06:53,144 a good rebate, but maybe I'm going to 186 00:06:53,144 --> 00:06:54,904 make more money at mail service. There's all 187 00:06:54,904 --> 00:06:57,705 these levers that are pulled on you as 188 00:06:57,705 --> 00:06:59,959 a health plan And then downstream to our 189 00:06:59,959 --> 00:07:00,459 employers 190 00:07:01,000 --> 00:07:03,259 that don't necessarily work when 191 00:07:03,639 --> 00:07:05,720 you have all those vested interests in one 192 00:07:05,720 --> 00:07:08,360 entity. So pulling that apart, separate P and 193 00:07:08,360 --> 00:07:08,860 Ls, 194 00:07:09,560 --> 00:07:10,699 they're operating separately. 195 00:07:11,175 --> 00:07:13,495 Amazon doesn't care what Abarca is making. Abarca 196 00:07:13,495 --> 00:07:15,274 doesn't care what Navitus is making. 197 00:07:15,574 --> 00:07:17,894 And that allows me to negotiate in a 198 00:07:17,894 --> 00:07:19,274 much more linear fashion 199 00:07:19,574 --> 00:07:21,975 and also really describe the services they're providing 200 00:07:21,975 --> 00:07:24,235 and give me the flexibility in the contracts 201 00:07:24,649 --> 00:07:26,509 that allow me to get to this more 202 00:07:26,730 --> 00:07:29,949 transparent net price. So pulling it apart, removing 203 00:07:30,089 --> 00:07:32,889 the vested interest is key. And until you 204 00:07:32,889 --> 00:07:34,830 do that, you can't do all the transparency 205 00:07:35,290 --> 00:07:36,990 things that you wanna accomplish. 206 00:07:37,735 --> 00:07:39,495 No. It's it's fascinating to hear you talk 207 00:07:39,495 --> 00:07:41,814 about this. And and, obviously, Blue Shield made 208 00:07:41,814 --> 00:07:42,955 national headlines 209 00:07:43,335 --> 00:07:45,254 a few years ago when the company decided 210 00:07:45,254 --> 00:07:47,175 to to, as you said, match, shake up 211 00:07:47,175 --> 00:07:50,055 the traditional PBM model and partner with companies 212 00:07:50,055 --> 00:07:52,860 like like Amazon and Mark Cuban's cost plus. 213 00:07:53,819 --> 00:07:55,919 So so since that partnership went into place, 214 00:07:56,379 --> 00:07:58,860 any updates to share in terms of how 215 00:07:58,860 --> 00:08:01,419 how that's all, worked out, what you're hearing 216 00:08:01,419 --> 00:08:02,079 from members, 217 00:08:02,860 --> 00:08:06,159 actual health outcomes resulting from from these partnerships? 218 00:08:06,620 --> 00:08:08,479 Any updates to share about this? 219 00:08:08,935 --> 00:08:10,935 Sure. So most of our updates right now 220 00:08:10,935 --> 00:08:13,574 are operational because we're not even sixty days 221 00:08:13,574 --> 00:08:16,134 past go live and you could argue yeah. 222 00:08:16,134 --> 00:08:18,615 And you could argue January for even if 223 00:08:18,615 --> 00:08:21,574 we weren't changing things, everything changes in January 224 00:08:21,574 --> 00:08:23,569 because you have formulary changes, you have benefit 225 00:08:23,569 --> 00:08:25,810 changes, you have cost share changes. And so 226 00:08:25,810 --> 00:08:29,029 you really don't want to evaluate your financial 227 00:08:29,170 --> 00:08:32,129 impact until probably slightly after the first quarter, 228 00:08:32,129 --> 00:08:34,210 because there's a lot of nuances, flu season, 229 00:08:34,210 --> 00:08:36,425 a whole bunch of things. So, but early 230 00:08:36,425 --> 00:08:38,524 indications on the operational side 231 00:08:39,465 --> 00:08:40,365 are excellent. 232 00:08:42,024 --> 00:08:44,184 We've literally just had our launch party in 233 00:08:44,184 --> 00:08:45,965 three of our California offices, 234 00:08:46,665 --> 00:08:47,165 yesterday. 235 00:08:47,940 --> 00:08:50,179 And we were able to celebrate many things. 236 00:08:50,179 --> 00:08:51,860 You know, one of which was we we 237 00:08:51,860 --> 00:08:54,340 launched in in green status with an initiative 238 00:08:54,340 --> 00:08:56,120 this big, which is very rare. 239 00:08:56,500 --> 00:08:58,419 And we were able to close out most 240 00:08:58,419 --> 00:09:00,500 of our incident issues. We're down to a 241 00:09:00,500 --> 00:09:02,595 normal what we have our normal kind of 242 00:09:02,834 --> 00:09:05,394 business as usual incidents, meaning things that may 243 00:09:05,394 --> 00:09:06,774 have been built incorrectly, 244 00:09:07,154 --> 00:09:09,154 benefit designs that maybe needed to be tweaked 245 00:09:09,154 --> 00:09:11,714 after testing. We are already at what we 246 00:09:11,714 --> 00:09:14,834 call our our regular business operations, and we've 247 00:09:14,834 --> 00:09:15,894 removed daily, 248 00:09:16,540 --> 00:09:19,259 command centers, which were leveraged to make sure 249 00:09:19,259 --> 00:09:21,120 that everything was working in January. 250 00:09:21,420 --> 00:09:23,500 You know, like anything, you have your challenges, 251 00:09:23,500 --> 00:09:25,740 but a lot of the things we experienced 252 00:09:25,740 --> 00:09:27,920 really had nothing to do with our modular 253 00:09:27,980 --> 00:09:30,379 approach and the complexities that are involved around 254 00:09:30,379 --> 00:09:32,154 that. It had more to do with other 255 00:09:32,154 --> 00:09:34,714 market changes that happen. You know, some retail 256 00:09:34,714 --> 00:09:36,014 network changes around, 257 00:09:36,554 --> 00:09:39,195 cost plus networks, which are coming out. Many 258 00:09:39,195 --> 00:09:41,914 states that now have minimum reimbursement standards that 259 00:09:41,914 --> 00:09:45,129 went into to place around using national average 260 00:09:45,129 --> 00:09:48,009 drug acquisition costs plus the dispensing fee. So 261 00:09:48,009 --> 00:09:50,429 there were many things that happened, just 262 00:09:50,889 --> 00:09:53,629 industry wide, which definitely impacted 263 00:09:54,970 --> 00:09:57,514 our launch, But very few are related to 264 00:09:57,514 --> 00:10:00,154 the actual fact that we dismantled the fully 265 00:10:00,154 --> 00:10:02,815 integrated PBM and went to the route of 266 00:10:03,195 --> 00:10:04,815 a modular solution approach. 267 00:10:05,195 --> 00:10:07,195 Probably the most staggering piece is that we 268 00:10:07,195 --> 00:10:09,294 integrated five unique vendors 269 00:10:09,639 --> 00:10:12,199 and 18 different data systems all within our 270 00:10:12,199 --> 00:10:13,179 experience cube. 271 00:10:13,559 --> 00:10:15,959 So that's what's unique about our model. Blue 272 00:10:15,959 --> 00:10:18,199 Shield built an experience cube where all the 273 00:10:18,199 --> 00:10:20,279 data comes in from our service providers and 274 00:10:20,279 --> 00:10:22,754 we bifurcate it back out. We don't want 275 00:10:22,754 --> 00:10:25,074 a PBM at the center of that doing 276 00:10:25,074 --> 00:10:26,995 that work, because then what's the point? You're 277 00:10:26,995 --> 00:10:28,754 basically back in the same model that we're 278 00:10:28,754 --> 00:10:30,754 trying to move away from. So what that 279 00:10:30,754 --> 00:10:32,674 allows me to do is at any time, 280 00:10:32,674 --> 00:10:34,595 if somebody goes out of business, if we're 281 00:10:34,595 --> 00:10:36,480 not happy with their service, maybe I have 282 00:10:36,480 --> 00:10:37,919 a client that doesn't want to use one 283 00:10:37,919 --> 00:10:38,980 of our service providers, 284 00:10:39,279 --> 00:10:41,840 I'm able to leverage that experience cube and 285 00:10:41,840 --> 00:10:42,899 those same APIs 286 00:10:43,279 --> 00:10:46,340 and redirect to another provider. So this flexible 287 00:10:46,399 --> 00:10:48,399 solution allows me to be flexible, not only 288 00:10:48,399 --> 00:10:50,879 for Blue Shields, but hopefully for other loose 289 00:10:50,879 --> 00:10:51,860 plans to come. 290 00:10:52,454 --> 00:10:54,375 Absolutely. Well, clearly, a lot of innovative work 291 00:10:54,375 --> 00:10:56,134 happening at Blue Shield. So we look forward 292 00:10:56,134 --> 00:10:57,894 to all the updates there, Matt, and the 293 00:10:57,894 --> 00:10:58,394 partnerships, 294 00:10:59,174 --> 00:11:01,115 about about that those those updates. 295 00:11:02,054 --> 00:11:03,735 But one last trend that I wanted to 296 00:11:03,735 --> 00:11:05,495 ask you about is is something that we're 297 00:11:05,495 --> 00:11:08,000 seeing with insurers all over the country when 298 00:11:08,000 --> 00:11:09,220 they report their earnings, 299 00:11:09,759 --> 00:11:10,659 and when they publish, 300 00:11:11,759 --> 00:11:12,740 financial data. 301 00:11:13,200 --> 00:11:15,039 And often and we're hearing about this on 302 00:11:15,039 --> 00:11:16,980 the health system side too from CFOs 303 00:11:17,279 --> 00:11:18,179 in terms of 304 00:11:20,764 --> 00:11:22,944 managing high specialty drug costs. 305 00:11:24,044 --> 00:11:26,605 And that includes GLP ones, which are often 306 00:11:26,605 --> 00:11:29,565 specifically called out by name. So what's your 307 00:11:29,565 --> 00:11:31,264 perspective on this ongoing 308 00:11:31,565 --> 00:11:33,690 cost trend and and the future of, 309 00:11:34,570 --> 00:11:37,929 managing these these high cost specialty medications moving 310 00:11:37,929 --> 00:11:38,429 forward? 311 00:11:39,529 --> 00:11:41,450 Right. So if you look at the, there's 312 00:11:41,450 --> 00:11:43,470 a nephron study, which shows 313 00:11:43,850 --> 00:11:44,350 the 314 00:11:44,730 --> 00:11:46,995 areas where fully integrated PBMs make their money. 315 00:11:46,995 --> 00:11:49,654 And everybody is obsessed with talking about rebates 316 00:11:49,795 --> 00:11:51,955 or what they call retail spread, meaning they 317 00:11:51,955 --> 00:11:53,634 pay the pharmacies one thing and build their 318 00:11:53,634 --> 00:11:54,535 clients another. 319 00:11:54,915 --> 00:11:56,995 But the lion's share of revenue made by 320 00:11:56,995 --> 00:11:59,154 any PBM today, 39% 321 00:11:59,154 --> 00:12:01,870 of their revenue profit is actually coming from 322 00:12:01,870 --> 00:12:02,850 specialty pharmacy. 323 00:12:03,389 --> 00:12:05,309 And that causes a pause for me as 324 00:12:05,309 --> 00:12:06,210 a health plan. 325 00:12:06,669 --> 00:12:08,990 Because now their biggest revenue driver to their 326 00:12:08,990 --> 00:12:11,309 earnings is based on the highest trend item 327 00:12:11,309 --> 00:12:12,590 for me as a health plan. And that 328 00:12:12,590 --> 00:12:15,325 does not align very well. So what you 329 00:12:15,325 --> 00:12:17,485 have to do, it really two things. One 330 00:12:17,485 --> 00:12:19,165 is you want to make sure that your 331 00:12:19,165 --> 00:12:22,045 specialty arrangement is a cost plus arrangement, meaning 332 00:12:22,045 --> 00:12:25,165 that you're getting acquisition cost at the specialty 333 00:12:25,165 --> 00:12:28,330 pharmacy, plus the dispensing fee at every drug 334 00:12:28,330 --> 00:12:31,050 level. Many health plans will contract across all 335 00:12:31,050 --> 00:12:33,370 their specialty drugs, and there's an average and 336 00:12:33,370 --> 00:12:35,210 all these games are played. And, you know, 337 00:12:35,210 --> 00:12:37,230 unfortunately they get taken advantage of. 338 00:12:37,850 --> 00:12:40,410 The second piece that you really want to 339 00:12:40,410 --> 00:12:43,065 make sure you nail down on the specialty 340 00:12:43,125 --> 00:12:43,625 side, 341 00:12:44,324 --> 00:12:45,464 outside of 342 00:12:46,245 --> 00:12:47,944 the nuanced acquisition part 343 00:12:48,324 --> 00:12:50,504 I mentioned, is that you have the ability 344 00:12:50,565 --> 00:12:53,704 to do direct contracting on certain specialty drugs. 345 00:12:53,960 --> 00:12:55,879 And what I mean by that is we 346 00:12:55,879 --> 00:12:56,840 went to market, 347 00:12:57,240 --> 00:12:59,019 for biosimilar Humira 348 00:12:59,559 --> 00:13:01,799 and it was in a Bloomberg article where 349 00:13:01,799 --> 00:13:04,139 they showed our price of $5.25, 350 00:13:04,279 --> 00:13:04,779 lowest 351 00:13:05,160 --> 00:13:07,694 in the market anywhere. And why? We waited 352 00:13:07,694 --> 00:13:09,294 a little bit because we knew there were 353 00:13:09,294 --> 00:13:10,115 several launching 354 00:13:11,694 --> 00:13:14,014 in mid or early to mid twenty twenty 355 00:13:14,014 --> 00:13:14,514 four, 356 00:13:14,975 --> 00:13:17,875 some other health plans and the larger PBMs 357 00:13:18,095 --> 00:13:20,754 either leverage their quote unquote white labeled, 358 00:13:21,454 --> 00:13:21,954 branded 359 00:13:22,254 --> 00:13:22,754 products. 360 00:13:23,570 --> 00:13:25,490 And we knew that that ultimately wasn't the 361 00:13:25,490 --> 00:13:27,570 best idea because you're not taking away that 362 00:13:27,570 --> 00:13:30,309 motivation of I make money the more 363 00:13:30,610 --> 00:13:32,850 drugs I dispense as a PBM and we 364 00:13:32,850 --> 00:13:34,529 don't want that dynamic. So we went out 365 00:13:34,529 --> 00:13:35,190 and contracted 366 00:13:35,649 --> 00:13:37,190 along with our partner Evio. 367 00:13:37,824 --> 00:13:39,845 And we were able to secure with Fresenius 368 00:13:39,904 --> 00:13:40,404 Colby, 369 00:13:41,264 --> 00:13:44,065 what's called unbranded Adacio, which is a biosimilar 370 00:13:44,065 --> 00:13:46,625 for Humira, the world's most expensive drug. And 371 00:13:46,625 --> 00:13:48,884 we are at $5.25 a month, significantly 372 00:13:49,184 --> 00:13:49,684 below 373 00:13:50,029 --> 00:13:52,029 the big PBMs who are well over a 374 00:13:52,029 --> 00:13:54,750 thousand dollars a month. So it's just fascinating 375 00:13:54,750 --> 00:13:56,350 to me. We now have one example, we're 376 00:13:56,350 --> 00:13:58,190 gonna have more examples as we go into 377 00:13:58,190 --> 00:14:00,669 2025, as we look at other biosimilars in 378 00:14:00,669 --> 00:14:01,169 particular, 379 00:14:01,470 --> 00:14:01,970 where, 380 00:14:02,654 --> 00:14:04,414 this is why the costs are going up 381 00:14:04,414 --> 00:14:07,235 because the hand is still in the basket, 382 00:14:07,294 --> 00:14:08,434 whether they're manufacturing, 383 00:14:08,894 --> 00:14:09,714 white labeling, 384 00:14:10,095 --> 00:14:13,214 house branded biosimilar, whatever you call it, it's 385 00:14:13,214 --> 00:14:14,115 all a motivation 386 00:14:14,809 --> 00:14:17,209 for profit. And it's not typically in the 387 00:14:17,209 --> 00:14:19,610 best interest of the health plan consumer or 388 00:14:19,610 --> 00:14:22,250 our downstream employer clients, or most importantly, our 389 00:14:22,250 --> 00:14:24,089 members. So we're cleaning that up as much 390 00:14:24,089 --> 00:14:25,690 as we can. It's one drug at a 391 00:14:25,690 --> 00:14:27,774 time, but you have to have that flexibility 392 00:14:27,774 --> 00:14:30,014 in your contract or you can't even perform 393 00:14:30,014 --> 00:14:31,075 those those functions. 394 00:14:31,615 --> 00:14:33,375 Sure. Sure. Well, that's an amazing example you 395 00:14:33,375 --> 00:14:35,535 shared there with Humira. So I appreciate you 396 00:14:35,535 --> 00:14:37,075 sharing that with us, Matt. 397 00:14:37,615 --> 00:14:39,375 Before we go, what else are we missing? 398 00:14:39,375 --> 00:14:40,975 I mean, you've got a lot of health 399 00:14:40,975 --> 00:14:43,529 plan leaders listening in right now. Any other 400 00:14:43,529 --> 00:14:45,769 final thoughts or bits of advice you wanna 401 00:14:45,769 --> 00:14:46,509 offer them? 402 00:14:48,089 --> 00:14:48,589 Definitely. 403 00:14:48,970 --> 00:14:51,529 And I I think every pharmacy director, chief 404 00:14:51,529 --> 00:14:53,629 pharmacy officer, VP of pharmacy 405 00:14:54,169 --> 00:14:56,110 out there at any size health plan, 406 00:14:56,434 --> 00:14:59,414 I hope I'm hoping is shaking their head. 407 00:14:59,475 --> 00:15:01,254 Yes. When I say this is that 408 00:15:01,714 --> 00:15:04,934 health plans need to wake up and understand 409 00:15:05,554 --> 00:15:06,695 that pharmacy 410 00:15:07,074 --> 00:15:09,794 is the future. Whether it's gene therapy, more 411 00:15:09,794 --> 00:15:10,934 specialty drugs, 412 00:15:11,399 --> 00:15:12,919 you gone are gonna be the day of 413 00:15:12,919 --> 00:15:15,159 testing and surgery. We're already seeing it in 414 00:15:15,159 --> 00:15:15,899 many areas. 415 00:15:16,519 --> 00:15:18,759 And I hate to break it to everyone 416 00:15:18,759 --> 00:15:20,860 at the executive team at every health plan. 417 00:15:21,000 --> 00:15:23,019 If you don't have somebody in pharmacy, 418 00:15:23,524 --> 00:15:25,524 either on your senior team or on your 419 00:15:25,524 --> 00:15:26,424 executive team, 420 00:15:26,725 --> 00:15:28,325 you don't have the right voice at the 421 00:15:28,325 --> 00:15:29,065 right level. 422 00:15:29,445 --> 00:15:32,404 And it's critical, even more critical that you 423 00:15:32,404 --> 00:15:35,764 don't have diluted data coming to leaders within 424 00:15:35,764 --> 00:15:37,590 a health plan where you don't have the 425 00:15:37,590 --> 00:15:40,710 subject matter expert talking about the business of 426 00:15:40,710 --> 00:15:42,570 pharmacy and the clinical aspects. 427 00:15:43,029 --> 00:15:45,610 And I really applaud Blue Shield for elevating 428 00:15:45,750 --> 00:15:47,049 pharmacy to where it belongs. 429 00:15:47,509 --> 00:15:48,009 Sadly, 430 00:15:48,389 --> 00:15:49,715 that's not the case in a lot of 431 00:15:49,715 --> 00:15:51,554 health plans. And they wonder why their pharmacy 432 00:15:51,554 --> 00:15:53,634 spend is out of control because they haven't 433 00:15:53,634 --> 00:15:56,134 prioritized it. So I'll get off my soapbox, 434 00:15:57,235 --> 00:15:59,634 but the answer is very obvious. It's just 435 00:15:59,634 --> 00:16:01,634 getting the attention and understanding what you need 436 00:16:01,634 --> 00:16:02,455 to do structurally, 437 00:16:02,879 --> 00:16:04,320 what you need to do from a talent 438 00:16:04,320 --> 00:16:06,720 acquisition standpoint, and what you need to do 439 00:16:06,720 --> 00:16:09,519 from a member readiness standpoint to really position 440 00:16:09,519 --> 00:16:11,620 your success in pharmacy moving forward. 441 00:16:12,320 --> 00:16:15,039 Well, it's great soapbox advice for our audience. 442 00:16:15,039 --> 00:16:16,879 So Matt, I wanna thank you for taking 443 00:16:16,879 --> 00:16:18,485 the time to sit down with us and 444 00:16:18,485 --> 00:16:20,565 for sharing your insights with our listeners. We 445 00:16:20,565 --> 00:16:22,644 really appreciate it. It was a pleasure. Thanks, 446 00:16:22,644 --> 00:16:24,884 Jacob. If you'd like to listen to more 447 00:16:24,884 --> 00:16:29,304 podcasts from Becker's Healthcare, you can visit beckershospitalreview.com.