JC Scott (00:07):
Welcome to The Pharmacy Benefit, a podcast that highlights the role of PBMs in serving millions of patients and consumers throughout the country. I'm JC Scott. On today's program, we're going to talk about transparency. If there seems to be one thing the policy makers agree on when it comes to healthcare, it's transparency. There's a general belief that putting more information into the public domain will lead to better decisions and ultimately lower costs. We hear at PCMA believe that too, and we've been encouraging greater transparency when it comes to how manufacturers set prices for prescription drugs, and promoting measures to provide greater transparency to patients, prescribers, plan sponsors and policymakers.
JC Scott (00:49):
It's also important to understand the unintended consequences of some particular proposals and how they might lead to the opposite of the intended effect higher costs. It can seem counterintuitive, so our goal today is to help you understand the difference between the many types of transparency that PBM support to lower costs and proposals that just might increase the cost you pay for prescription drugs. Joining me to talk about all of this are two guests who bring a lot of expertise to the conversation.
JC Scott (01:17):
Julie Goon is the senior vice president of public affairs with Anthem. She's responsible for relating the company state and federal government relations, strategic advocacy, issue management, policy development, and regulatory affairs. She has more than 30 years of healthcare related policy leadership and management experience. Julie worked for a number of years in the federal government serving as a special assistant to the president for economic policy in the National Economic Council, and more recently, senior health policy director for the House Energy & Commerce Committee.
JC Scott (01:47):
Tim Dube serves as vice president of regulatory affairs right here at PCMA, where he leads the Association's Regulatory Strategy and represents PCMA before federal regulators at HHS and other agencies. Tim has deep experience in pharmaceutical and biotechnology policy issues. Prior to PCMA, Tim was a senior policy analyst in the HHS Office of the Assistant Secretary for Planning and Evaluation. And before that spent 11 years with Genentech. Julie, Tim, thanks for joining me and welcome to The Pharmacy Benefit.
Tim Dube (02:18):
Glad to be here today.
Julie Goon (02:20):
Happy to be here. Thank you, JC.
JC Scott (02:22):
So let's dive right in, and I'll open with a general question for both of you, because you've both worked in healthcare for many years in different roles. And I'm curious from a historical perspective, how has transparency evolved in healthcare? Has there always been this much focus and what do you think is driving it?
Julie Goon (02:38):
Over the last decade patients use of technology to interact with their healthcare provider, view personal health information, and price shop for prescriptions has grown significantly. As technology has evolved, the rise of innovative solutions in healthcare, including electronic health records and their increasingly widespread use has resulted in our ability to better deliver affordable patient care. Personal computers and mobile devices have also become far more commonplace, which has amplified the ability of consumers to access information around their specific healthcare needs.
Julie Goon (03:12):
In the last 10 years, we've also modernized health data exchange standards to further support interoperability and offer new opportunities to engage with patients. Today, most prescriptions are prescribed using an electronic prescribing system that allows the provider to enter prescription information into a computer device. Patients and providers now have access to electronic transparency solutions through real time benefit tools that can be integrated into a provider's electronic health record and are designed to provide information on patient specific out-of-pocket cost, drug alternatives, and prior authorization requirements.
Julie Goon (03:49):
Through these tools, patients now have the visibility into how much a prescription will cost before going to a pharmacy. And that's something that they didn't have for a long time. Prescription prices changed on a regular basis, and without access to this kind of tools and information you may not have known what your price was going to be when you walked into a pharmacy.
JC Scott (04:10):
That's great, Julie, thank you. And Tim, what's your perspective? I think Julie's telling us that, really, the evolution of technology has allowed us to have a greater focus on transparency because the tools are there to enable it.
Tim Dube (04:22):
I think that's right. I think Julie's right. Outside of healthcare, consumers have had access to a lot of information about different products that they might want to be purchasing. Amazon, going as far back as eBay, search engines on their own, you can find the price for the same item from many different vendors all over many different markets. And that it's come calling now in the healthcare industry, I think it's about time that people have a little bit more access to a sense of the price range of services that they might actually need.
JC Scott (04:53):
That makes a lot of sense, Tim. And Julie, you touched on real time benefit tools as you talked about this evolution of technology, and I wonder if you could talk about that a little bit more. Because Tim is comparing it here to the consumer experiences on say, Amazon, and other platforms where we're going to buy any number of consumer goods. I know it's a little more complicated when it comes to prescription drugs, because our health insurance coverage matters a whole lot to what we actually end up paying as the individual consumer as well as what the insurance company pays. So, talk a little bit more about real time benefit tools, how that works for these particular types of purchasing decisions.
Julie Goon (05:32):
Well, many of us have applications for our health insurance. We hear at Anthem have an application called Sydney Health. And if you go into Sydney Health, you're able to find pharmacies near your location that are in your network. And you're also able to input what kind of prescription you're looking for, and what you're cost sharing and the price of that prescription will be on a real time basis. So you don't have to try and figure out if you need to drive to this drug store or that drug store. You can find out very easily, and generally with geographic filtering, which facilities are closest to your location or whether it is actually more reasonable to go ahead and try and order something by mail for a longer period of time.
JC Scott (06:16):
That sounds like it really empowers the consumer to be able to take some of these cost decisions into their own hands. There's an element here for the doctor too. Right? The prescriber. Because you talked a lot about electronic health records and how these benefit tools can be used right at that point of prescribing.
Julie Goon (06:33):
Sure. Real time benefit tools are electronic, like I said, electronic prescription decision support tool that can help patients directly lower their out-of-pocket costs. But they can also help connect directly with payer and PBM data to present accurate patient specific drug coverage information in real time. And this allows for providers as well to search and select a drug and dosage that will fit the patient's needs. Then whether filling prescriptions at their local pharmacy or having their prescriptions delivered to their door, our members can look up the price of a drug and find a preferred pharmacy, compare notes, and keep track of their prescription history and provide all that information to their provider as well.
JC Scott (07:15):
Let's switch gears, Tim, just a little bit. And we talk quite a bit about how technology is helping on the consumer side. There's obviously a big part of the equation here when it comes to the entities that are providing coverage in the first place. So, plan sponsors. I know that one of the things that PBMs have supported for a long time is providing information to their clients on all contract terms, including how PBMs are paid for their services and negotiated rebates and all of those inputs. Is that something that's now universally done? And what's your perspective on transparency between the PBM providing the service and the clients that they represent?
Tim Dube (07:52):
Yeah, it's a good question. As we understand it from among our membership, right, most of our members are providing that level of detail back to their clients and then asking that their clients, health insurance, plan sponsors themselves, pass that kind of information along to their clients, the employers. We think that some of the noise and the friction in this space is that PBMs have, they contract on two different sides. First, with the plan sponsor itself, and then also with pharmacies. Whenever they're talking about pharmacy contract transparency here, but the employer contracts, the insurer contracts.
Tim Dube (08:23):
So employers are choosing from among several insurer options for their employees, and they may not have at the time they're making that decision full transparency into what the insurer has worked out with the PBM that they've chosen on that point. And so, what we're looking for is being able to pull that in information up to the employer so they understand what they're buying when they're buying pharmacy benefits in a pairing what the health insurance insure in a PBM. They may not have a final choice in what those contract terms are, but at least if they understand where the compensation is coming through and what benefits are being delivered, that would give them a better understanding and more ability too in the future purchase healthcare for their employees in the way that they want to.
JC Scott (09:05):
So explain that a little bit more to me, Tim. Where does that choice reside? How important is it that plan sponsors, insurance providers have that degree of choice to determine what level of information that they need and how they want to set up these benefits?
Tim Dube (09:20):
Sure. So, typically, when employer or an insurer or benefits consultant that they're working with is going ahead to set up their next year's open enrollment process for employees, they're using a third party system where they're soliciting request for proposals. And if they're soliciting health insurance plans, the health insurance plans are then working on their own with one or more PBMs to come up with The Pharmacy Benefit design as well. So the bids would come in, and by the time the employer sees the final set of bids they may not see the full array of options that have been presented to either the consultant or to the individual insurer that their insurers that they're choosing from at that point.
Tim Dube (10:02):
PBMs exist because they provide a valuable service in the market. And in providing a valuable service, they're compensated for doing so. And so the contract terms will essentially describe how the PBM is being paid for these services. Right? We talk sometimes about spread pricing versus pass through pricing on contracts. This is different ways that the amount paid to the pharmacy is reflected in the amount paid to the PBM by the insurer. The same thing happens with manufacturer rebates. There's either retained rebates or pass through rebates. And then on top of that there could be additional other administrative or service fees. And the ultimate purchaser, the employer, knowing exactly how the PBM is being compensated might give them a better sense of the level of value that the PBMs are actually creating on behalf of their employees.
JC Scott (10:47):
Julie, let's get your perspective on this as Anthem. Right? As a representative of Anthem, on what transparency, your plan sponsor customers and consumers find to be most helpful?
Julie Goon (10:58):
I think, at the end of the day, what's most helpful is giving consumers meaningful information to help them make choices that will drive value and improve outcomes. So we strongly support transparency that does that. Some transparency is just, and I think we'll talk about this a little later, just dumping a whole bunch of stuff out in the marketplace which isn't necessarily helpful. Anthem, as I mentioned before, has developed tools that simplify healthcare and empower consumers with relevant and actionable quality and cost information, while also safeguarding their privacy and security.
Julie Goon (11:31):
For example, Anthem Engage, another one of our programs, provides our members with the estimated total cost of likely episodes of care tailored to their specific health benefits. This also allows them to compare their out-of-pocket costs and quality across providers and facilities before they utilize services. As we continue to move forward, it is even more essential that price and quality transparency align with the way care is delivered. This is why we are continually updating and improving our ability to process and share insights with members and providers. Our goal is to reduce complexity and improve the consumer's experience.
JC Scott (12:07):
Thanks, Julie. And you touched on the next theme here for our conversation when you started to distinguish between the kinds of transparency that're actually helpful for plan sponsors and consumers, and the other kinds of transparency that might, as I said at the top, have the opposite of the intended effect and actually increase drug costs. One thing that leaps to mind for me is having to publicly reveal specific price concessions that might allow drug makers to realize that, "Well, gee, maybe we can actually discount less than we've been discounting in these negotiations." So I'd love it if both of you could weigh in on this a little bit and talk about, how not all transparency is good especially for the consumer in the goal of lowering costs. So, Julie, you want to continue on that theme?
Julie Goon (12:55):
Sure. As I said, and just to reiterate, PBMs and plans support transparency that can help lower costs and improve the quality of care. So we support transparency that actually does help to empower patients and their physicians. We can go back and talk some more in a couple minutes about more of these drug benefits tools, where members and providers can find pharmacies, understand coverage and tiering, find actual prices for prescription drugs including their applicable cost share. This kind of transparency allows both the patient and his or her prescriber to make informed decisions using both clinical and pricing information.
Julie Goon (13:31):
However, as you described, JC, proposals that would require disclosure or visibility into actual negotiated rebates would have an adverse impact and would likely result in an increase in overall drug costs. This view is supported by the Federal Trade Commission, which has studied the issue and found that such kind of disclosure creates a risk for anti-competitive behavior by manufacturers that would increase prices. Furthermore, the disclosure of negotiated rates and drug specific rebate information is not a consumer concentric approach and would fail to provide consumers simple, accurate, personalized information that is actionable.
Julie Goon (14:09):
The prior administration finalized the transparency rule with the intention that technology companies would use this information to develop their own apps for consumers. However, any out-of-pocket cost estimates provided through third party apps would likely be inaccurate and misleading since third party app developers would not have access to an individual enrollee's benefit information to provide timely, accurate, and personalized cost estimates. So it's really important that the information that you're getting does tie in directly with your own benefit plan so that you know what your cost is going to be, not just generally what the cost is out in the marketplace.
JC Scott (14:46):
Tim, I wonder if you can help unpack that a little bit too, because Julie made an important point about the disclosure of negotiated amounts. And to me, just on its face it seems a little bit counterintuitive that open price competition could actually lead to increased cost. I thought in most marketplaces that would lead to decreased cost. What's your perspective on that?
Tim Dube (15:08):
Yeah, that's right. So, as Julie was describing, a transparency in contract terms helps empower employers and individuals purchase healthcare insurance. However, transparency in these final net negotiated costs does not. So the term that economists use for this is tacit collusion. And as Julie referenced, both the Federal Trade Commission and the Congressional Budget Office, they have a hefty body of literature on this concept. And it really happens in highly concentrated markets like prescription drugs in PBMs. Right? So there are a few negotiating with few. This really sort of comes to bear.
Tim Dube (15:41):
The reason that costs go up when there's tacit collusion, this isn't the drug company, A, telling drug company, B, all its secrets. Right? This is all when the information is out in the open, drug company, A, knows drug company, B's, discount strategy across all plans in this case. And then both companies can look at each other's final results and say, "Oh, I didn't have to give away that much of a discount to get preferred status. Or even just non preferred status would've been fine." And they essentially trim their discounts and they still come out at the same, essentially, coverage position, that they would have had they not essentially bid blindly, which is how PBMs can work most effectively. Right? You never let drug company A know what drug company B is offering you. That's just negotiating against yourself.
JC Scott (16:22):
And let me interject there, Tim, just to make sure I really understand it. Because the easiest analogy that pops into my mind, and I want you to explain why this is not a good analogy, because I think that's what you're going to say. But the easiest analogy to me is the gas station and the price of gasoline. There are literally, where I get my gas, most warnings here in my neighborhood in Arlington, there's an Exxon on one side of the street and another gas station literally across the street. And they always seem to be dovetailing off of each other's prices that go up on the sign. Why does it not work the same way in the prescription drug marketplace?
Tim Dube (16:59):
So if we limit this to brand name prescription drugs, the main difference is that gasoline is a commodity. Right? Many producers are selling to many different sellers. Those two gas stations might literally be filling from the same truck. And then their individual overhead costs, rent, employee costs, other insurance, whether they operate a service station as well, that would dictate what kind of margin they need to make on gasoline at a commodity level. Brand name drugs instead are monopolies. They might face only indirect competition for generic drugs that are available.
Tim Dube (17:28):
So if we think about hepatitis C and the example that provides in the past five to 10 years. Right now there are four or five different high price, direct acting antivirals that are all highly effective and mostly safe. Everyone has been impressed with the outcomes from these products. But they're not the same molecule, so they're not commodities with each other. And they each have slightly different clinical indications. They're all competing for coverage and preference on any given PBMs formulary, with the losers either being non-preferred or not covered.
Tim Dube (17:57):
The winner is the one that the PBM through their P & T committee is going to choose that offers the lowest net cost given similar safety and efficacy. But if the losers, those that don't get covered, knew that the winner offered, say, a specific discount, they would know exactly how to get onto the formulary next time. If the winner knew that they gave away 20 percentage points more than the loser, next time they would only give away one percentage point more. And so, when the winner knows by how much it won, it's definitely going to dial back that going forward.
JC Scott (18:25):
I got you. That's helpful, Tim. I appreciate that because it's not as straightforward as it might seem when we think about, to your point, commodities or other goods that do operate in a little bit more head-to-head price competition, given oftentimes that we don't have enough competition in that prescription drug marketplace. Julie touched on another topic I'd love for you both to comment on. And that is the transparency and coverage rule that was issued by the last administration here in Washington, DC. I know it's something that PCMA objected to in particular. And I'm curious if you all can share your perspectives on why there were concerns with this particular rule.
Tim Dube (19:05):
Sure. So, in reality, PCMA filed comments in support of half of this rule. And I think that that's important to keep in mind. Right? One part of this proposed rule that came out in 2019 would have required health insurance issuers in the individual and group health insurance market to provide online enrollee self-service tools. Where someone enrolled in a plan could log onto a website, see where they are and they're deductible, out-of-pocket maximum obligations, look up an item or service that their doctor says they might need, and see what their cost sharing obligation would be for that service. This is good transparency. This is what we're after. This is what we think the market is building toward and can provide to people enrolled in either CMS programs or in the commercial market and employer-sponsored plans.
Tim Dube (19:52):
This is the good stuff. This is what we're here for. The other half of the rule which we opposed, also required health insurance issuers to post on their own websites what they called, machine readable files, that would include the negotiated rates paid to network providers, including pharmacies, for covered services. Our initial opposition to the proposed rule was based upon the fact that these files didn't meet the statutory obligation that they were based on. This obligation comes out of the Affordable Care Act, where the plans were required to make available to enrollees information in plain language that would help them choose from among different insurance options. So something that is "machine readable" is clearly not plain language. Because if it takes a machine to read it, then a human probably can't.
Tim Dube (20:37):
So that was our initial objection to it. Then the final rule came out in November, 2020, about a week after the election. And it included this other idea called historical net price. There was specific to prescription drugs and would be, the historical amount paid by that insurer or their PBM on their behalf over a 90 day period that started about six months prior. So now we had a new set of objections because if something's not on a proposed rule, it can't show up in a final rule. And that is really where a lot of our advocacy has been snowballing since then.
Julie Goon (21:07):
I think that's absolutely right. I think Tim gave you a really good response to that. And I think it's really important in any case when the government tries to put something in a final rule they didn't include in a proposed rule, even if you like it, I mean, that's just not really aligned with the Administrative Procedures Act and it leaves future rule making open to challenge. And so I think it's important to call that kind of thing out. Additionally, I just want to double down on what Tim said about the issue of disclosure proprietary information that would or could lead to tacit collusion among the manufacturers, as well as the requirement that we disclose very specific drug level rebates. It was not transparency that was going to help the consumer. It might have helped, I don't know, third party consultants. It might have helped the government, potentially, but I don't even know that that's true. I think it would've mostly helped drive up prices. And therefore we were all in the right position in opposing moving forward with that finalized rule.
JC Scott (22:11):
So the takeaway here. The rule, one was not going to be all that useful for consumers in the first place because of the way and the nature in which they were going to put this information out there wasn't something that you or I could easily understand and use in an actionable way. And, two, it brings up this risk, yet again, of undermining our ability, the industry's ability to negotiate for lower drug costs by putting the information out there in a way that could lead to collusion among manufacturers.
JC Scott (22:42):
So I can understand where the concerns were. Tim and Julie, is it fair to say through the course of this conversation if there are a couple of takeaways, one, is obviously we want to maintain the ability for those who are providing health insurance coverage to have choice in deciding how to set that up and what kind of information they need to set up their benefits. But two, most importantly is, at the center of all this has to be the patient or consumer and providing transparency that going to be useful and actionable by them to make decisions about their own individual costs. Is that a fair summation?
Tim Dube (23:16):
Yeah, JC. I think that's right. I think that there are a number of either CMS or private sector solutions and policies and programs being implemented in the near term that are bringing that kind of transparency to, either people shopping for health insurance coverage or people trying to use their health insurance coverage. And essentially, all the rowing should be in that boat to really help consumers. Anything that's requiring other kinds of disclosures of net pricing that's negotiated, that's not going to help a consumer in any kind of way. It's also administratively burdensome and it distracts from the broader goal of helping people make better decisions.
Julie Goon (23:55):
Yeah. And I just wanted to follow up JC, and say exactly what you said. This is about the consumer, and the tools that we've talked about through this podcast are all direct. All the tools that we've designed have been directed to help the consumer. They display the member cost share, accounting for, the deductible and out-of-pocket costs for home delivery and retail, as well as any generic or therapeutic alternatives. I think you asked me earlier about how the realtime drug benefit tools work for providers as well. And I just wanted to talk about that for a minute.
Julie Goon (24:30):
Because I think while it's important that transparency really be directed towards the consumer needs, the provider's also an important element in this as well. And on the provider side, our electronic real time prescription benefit tool is integrated within the provider's workflow and displays patient specific prescription drug benefits, including formulary coverage, cost share information, and therapeutic alternatives at the point of sale. So it helps the provider see patient specific information as they're actually using it. They can use their e-prescribing tool to prescribe a drug. They use their integrated electronic tools, see that information and determine if any changes need to be made.
Julie Goon (25:11):
Once they prescribe the drug, if a prior authorization is required, a provider can do an electronic prior authorization or EPA. It's the easiest way to submit and receive prior authorization requests and redeterminations, it's available 24 hours a day, seven days a week. And it improves the members' experience because they receive that determination sooner. The information we can give to our providers through this tool enhances the patient provider discussion. They can talk about adherence, they can talk about side effects, risks associated with the drug, cost of the drug compared to other alternatives, including lower cost generic alternatives. So by providing true price in coverage transparency, the patient is less likely to be surprised at the pharmacy and more likely to remain adherent. I really did want to go back to that question and underscore the importance of this kind of information to the provider as well as to the consumer.
JC Scott (26:05):
It's a great point, Julie. And I'll ask you for maybe the closing comment and closing thought as we wrap up here. But as we think ahead to where everything is going when it comes to transparency, I leave this conversation very much thinking it's all about how do we improve that consumer experience, empower them with more information, to your point, perhaps reduce the abrasion when they have to go through steps in the system. But when we think about what's next with technology, it's about empowering prescribers and their patients in the ways that you're describing. Is that how you see it too?
Julie Goon (26:39):
Absolutely. We believe the future of transparency and drug pricing will be delivered by the consumer imperative as well as driven by the competitive marketplace in which we operate as PBMs to satisfy the market demands of our clients. And our clients are our customers, their members, and providers. And given the competitive dynamic, I think the market adjusts and delivers and innovates whatever it is that the customers want. To the extent there is government regulation, consistency across different transparency requirements will be vital in order for PBMs and health plans to continue to deliver this kind of value and innovation for their clients.
JC Scott (27:20):
Terrific. Thank you, Julie. Thank you, Tim. This was a great conversation. It's a complicated topic and you all help provide a lot of context and focus. Thank you for joining me for this today.
Julie Goon (27:31):
Thank you for having us.
Tim Dube (27:32):
Yeah. Thanks for having us.
JC Scott (27:34):
And thank you to all of you for listening. I encourage you to subscribe to The Pharmacy Benefit and download all of our podcast episodes. You can do that on Google Podcasts, Apple Podcasts, Spotify, or wherever you find your favorite podcast. I'm JC Scott. Thanks for joining me.
Welcome to The Pharmacy Benefit, a podcast that highlights the role of PBMs in serving millions of patients and consumers throughout the country. I'm JC Scott. On today's program, we're going to talk about transparency. If there seems to be one thing the policy makers agree on when it comes to healthcare, it's transparency. There's a general belief that putting more information into the public domain will lead to better decisions and ultimately lower costs. We hear at PCMA believe that too, and we've been encouraging greater transparency when it comes to how manufacturers set prices for prescription drugs, and promoting measures to provide greater transparency to patients, prescribers, plan sponsors and policymakers.
JC Scott (00:49):
It's also important to understand the unintended consequences of some particular proposals and how they might lead to the opposite of the intended effect higher costs. It can seem counterintuitive, so our goal today is to help you understand the difference between the many types of transparency that PBM support to lower costs and proposals that just might increase the cost you pay for prescription drugs. Joining me to talk about all of this are two guests who bring a lot of expertise to the conversation.
JC Scott (01:17):
Julie Goon is the senior vice president of public affairs with Anthem. She's responsible for relating the company state and federal government relations, strategic advocacy, issue management, policy development, and regulatory affairs. She has more than 30 years of healthcare related policy leadership and management experience. Julie worked for a number of years in the federal government serving as a special assistant to the president for economic policy in the National Economic Council, and more recently, senior health policy director for the House Energy & Commerce Committee.
JC Scott (01:47):
Tim Dube serves as vice president of regulatory affairs right here at PCMA, where he leads the Association's Regulatory Strategy and represents PCMA before federal regulators at HHS and other agencies. Tim has deep experience in pharmaceutical and biotechnology policy issues. Prior to PCMA, Tim was a senior policy analyst in the HHS Office of the Assistant Secretary for Planning and Evaluation. And before that spent 11 years with Genentech. Julie, Tim, thanks for joining me and welcome to The Pharmacy Benefit.
Tim Dube (02:18):
Glad to be here today.
Julie Goon (02:20):
Happy to be here. Thank you, JC.
JC Scott (02:22):
So let's dive right in, and I'll open with a general question for both of you, because you've both worked in healthcare for many years in different roles. And I'm curious from a historical perspective, how has transparency evolved in healthcare? Has there always been this much focus and what do you think is driving it?
Julie Goon (02:38):
Over the last decade patients use of technology to interact with their healthcare provider, view personal health information, and price shop for prescriptions has grown significantly. As technology has evolved, the rise of innovative solutions in healthcare, including electronic health records and their increasingly widespread use has resulted in our ability to better deliver affordable patient care. Personal computers and mobile devices have also become far more commonplace, which has amplified the ability of consumers to access information around their specific healthcare needs.
Julie Goon (03:12):
In the last 10 years, we've also modernized health data exchange standards to further support interoperability and offer new opportunities to engage with patients. Today, most prescriptions are prescribed using an electronic prescribing system that allows the provider to enter prescription information into a computer device. Patients and providers now have access to electronic transparency solutions through real time benefit tools that can be integrated into a provider's electronic health record and are designed to provide information on patient specific out-of-pocket cost, drug alternatives, and prior authorization requirements.
Julie Goon (03:49):
Through these tools, patients now have the visibility into how much a prescription will cost before going to a pharmacy. And that's something that they didn't have for a long time. Prescription prices changed on a regular basis, and without access to this kind of tools and information you may not have known what your price was going to be when you walked into a pharmacy.
JC Scott (04:10):
That's great, Julie, thank you. And Tim, what's your perspective? I think Julie's telling us that, really, the evolution of technology has allowed us to have a greater focus on transparency because the tools are there to enable it.
Tim Dube (04:22):
I think that's right. I think Julie's right. Outside of healthcare, consumers have had access to a lot of information about different products that they might want to be purchasing. Amazon, going as far back as eBay, search engines on their own, you can find the price for the same item from many different vendors all over many different markets. And that it's come calling now in the healthcare industry, I think it's about time that people have a little bit more access to a sense of the price range of services that they might actually need.
JC Scott (04:53):
That makes a lot of sense, Tim. And Julie, you touched on real time benefit tools as you talked about this evolution of technology, and I wonder if you could talk about that a little bit more. Because Tim is comparing it here to the consumer experiences on say, Amazon, and other platforms where we're going to buy any number of consumer goods. I know it's a little more complicated when it comes to prescription drugs, because our health insurance coverage matters a whole lot to what we actually end up paying as the individual consumer as well as what the insurance company pays. So, talk a little bit more about real time benefit tools, how that works for these particular types of purchasing decisions.
Julie Goon (05:32):
Well, many of us have applications for our health insurance. We hear at Anthem have an application called Sydney Health. And if you go into Sydney Health, you're able to find pharmacies near your location that are in your network. And you're also able to input what kind of prescription you're looking for, and what you're cost sharing and the price of that prescription will be on a real time basis. So you don't have to try and figure out if you need to drive to this drug store or that drug store. You can find out very easily, and generally with geographic filtering, which facilities are closest to your location or whether it is actually more reasonable to go ahead and try and order something by mail for a longer period of time.
JC Scott (06:16):
That sounds like it really empowers the consumer to be able to take some of these cost decisions into their own hands. There's an element here for the doctor too. Right? The prescriber. Because you talked a lot about electronic health records and how these benefit tools can be used right at that point of prescribing.
Julie Goon (06:33):
Sure. Real time benefit tools are electronic, like I said, electronic prescription decision support tool that can help patients directly lower their out-of-pocket costs. But they can also help connect directly with payer and PBM data to present accurate patient specific drug coverage information in real time. And this allows for providers as well to search and select a drug and dosage that will fit the patient's needs. Then whether filling prescriptions at their local pharmacy or having their prescriptions delivered to their door, our members can look up the price of a drug and find a preferred pharmacy, compare notes, and keep track of their prescription history and provide all that information to their provider as well.
JC Scott (07:15):
Let's switch gears, Tim, just a little bit. And we talk quite a bit about how technology is helping on the consumer side. There's obviously a big part of the equation here when it comes to the entities that are providing coverage in the first place. So, plan sponsors. I know that one of the things that PBMs have supported for a long time is providing information to their clients on all contract terms, including how PBMs are paid for their services and negotiated rebates and all of those inputs. Is that something that's now universally done? And what's your perspective on transparency between the PBM providing the service and the clients that they represent?
Tim Dube (07:52):
Yeah, it's a good question. As we understand it from among our membership, right, most of our members are providing that level of detail back to their clients and then asking that their clients, health insurance, plan sponsors themselves, pass that kind of information along to their clients, the employers. We think that some of the noise and the friction in this space is that PBMs have, they contract on two different sides. First, with the plan sponsor itself, and then also with pharmacies. Whenever they're talking about pharmacy contract transparency here, but the employer contracts, the insurer contracts.
Tim Dube (08:23):
So employers are choosing from among several insurer options for their employees, and they may not have at the time they're making that decision full transparency into what the insurer has worked out with the PBM that they've chosen on that point. And so, what we're looking for is being able to pull that in information up to the employer so they understand what they're buying when they're buying pharmacy benefits in a pairing what the health insurance insure in a PBM. They may not have a final choice in what those contract terms are, but at least if they understand where the compensation is coming through and what benefits are being delivered, that would give them a better understanding and more ability too in the future purchase healthcare for their employees in the way that they want to.
JC Scott (09:05):
So explain that a little bit more to me, Tim. Where does that choice reside? How important is it that plan sponsors, insurance providers have that degree of choice to determine what level of information that they need and how they want to set up these benefits?
Tim Dube (09:20):
Sure. So, typically, when employer or an insurer or benefits consultant that they're working with is going ahead to set up their next year's open enrollment process for employees, they're using a third party system where they're soliciting request for proposals. And if they're soliciting health insurance plans, the health insurance plans are then working on their own with one or more PBMs to come up with The Pharmacy Benefit design as well. So the bids would come in, and by the time the employer sees the final set of bids they may not see the full array of options that have been presented to either the consultant or to the individual insurer that their insurers that they're choosing from at that point.
Tim Dube (10:02):
PBMs exist because they provide a valuable service in the market. And in providing a valuable service, they're compensated for doing so. And so the contract terms will essentially describe how the PBM is being paid for these services. Right? We talk sometimes about spread pricing versus pass through pricing on contracts. This is different ways that the amount paid to the pharmacy is reflected in the amount paid to the PBM by the insurer. The same thing happens with manufacturer rebates. There's either retained rebates or pass through rebates. And then on top of that there could be additional other administrative or service fees. And the ultimate purchaser, the employer, knowing exactly how the PBM is being compensated might give them a better sense of the level of value that the PBMs are actually creating on behalf of their employees.
JC Scott (10:47):
Julie, let's get your perspective on this as Anthem. Right? As a representative of Anthem, on what transparency, your plan sponsor customers and consumers find to be most helpful?
Julie Goon (10:58):
I think, at the end of the day, what's most helpful is giving consumers meaningful information to help them make choices that will drive value and improve outcomes. So we strongly support transparency that does that. Some transparency is just, and I think we'll talk about this a little later, just dumping a whole bunch of stuff out in the marketplace which isn't necessarily helpful. Anthem, as I mentioned before, has developed tools that simplify healthcare and empower consumers with relevant and actionable quality and cost information, while also safeguarding their privacy and security.
Julie Goon (11:31):
For example, Anthem Engage, another one of our programs, provides our members with the estimated total cost of likely episodes of care tailored to their specific health benefits. This also allows them to compare their out-of-pocket costs and quality across providers and facilities before they utilize services. As we continue to move forward, it is even more essential that price and quality transparency align with the way care is delivered. This is why we are continually updating and improving our ability to process and share insights with members and providers. Our goal is to reduce complexity and improve the consumer's experience.
JC Scott (12:07):
Thanks, Julie. And you touched on the next theme here for our conversation when you started to distinguish between the kinds of transparency that're actually helpful for plan sponsors and consumers, and the other kinds of transparency that might, as I said at the top, have the opposite of the intended effect and actually increase drug costs. One thing that leaps to mind for me is having to publicly reveal specific price concessions that might allow drug makers to realize that, "Well, gee, maybe we can actually discount less than we've been discounting in these negotiations." So I'd love it if both of you could weigh in on this a little bit and talk about, how not all transparency is good especially for the consumer in the goal of lowering costs. So, Julie, you want to continue on that theme?
Julie Goon (12:55):
Sure. As I said, and just to reiterate, PBMs and plans support transparency that can help lower costs and improve the quality of care. So we support transparency that actually does help to empower patients and their physicians. We can go back and talk some more in a couple minutes about more of these drug benefits tools, where members and providers can find pharmacies, understand coverage and tiering, find actual prices for prescription drugs including their applicable cost share. This kind of transparency allows both the patient and his or her prescriber to make informed decisions using both clinical and pricing information.
Julie Goon (13:31):
However, as you described, JC, proposals that would require disclosure or visibility into actual negotiated rebates would have an adverse impact and would likely result in an increase in overall drug costs. This view is supported by the Federal Trade Commission, which has studied the issue and found that such kind of disclosure creates a risk for anti-competitive behavior by manufacturers that would increase prices. Furthermore, the disclosure of negotiated rates and drug specific rebate information is not a consumer concentric approach and would fail to provide consumers simple, accurate, personalized information that is actionable.
Julie Goon (14:09):
The prior administration finalized the transparency rule with the intention that technology companies would use this information to develop their own apps for consumers. However, any out-of-pocket cost estimates provided through third party apps would likely be inaccurate and misleading since third party app developers would not have access to an individual enrollee's benefit information to provide timely, accurate, and personalized cost estimates. So it's really important that the information that you're getting does tie in directly with your own benefit plan so that you know what your cost is going to be, not just generally what the cost is out in the marketplace.
JC Scott (14:46):
Tim, I wonder if you can help unpack that a little bit too, because Julie made an important point about the disclosure of negotiated amounts. And to me, just on its face it seems a little bit counterintuitive that open price competition could actually lead to increased cost. I thought in most marketplaces that would lead to decreased cost. What's your perspective on that?
Tim Dube (15:08):
Yeah, that's right. So, as Julie was describing, a transparency in contract terms helps empower employers and individuals purchase healthcare insurance. However, transparency in these final net negotiated costs does not. So the term that economists use for this is tacit collusion. And as Julie referenced, both the Federal Trade Commission and the Congressional Budget Office, they have a hefty body of literature on this concept. And it really happens in highly concentrated markets like prescription drugs in PBMs. Right? So there are a few negotiating with few. This really sort of comes to bear.
Tim Dube (15:41):
The reason that costs go up when there's tacit collusion, this isn't the drug company, A, telling drug company, B, all its secrets. Right? This is all when the information is out in the open, drug company, A, knows drug company, B's, discount strategy across all plans in this case. And then both companies can look at each other's final results and say, "Oh, I didn't have to give away that much of a discount to get preferred status. Or even just non preferred status would've been fine." And they essentially trim their discounts and they still come out at the same, essentially, coverage position, that they would have had they not essentially bid blindly, which is how PBMs can work most effectively. Right? You never let drug company A know what drug company B is offering you. That's just negotiating against yourself.
JC Scott (16:22):
And let me interject there, Tim, just to make sure I really understand it. Because the easiest analogy that pops into my mind, and I want you to explain why this is not a good analogy, because I think that's what you're going to say. But the easiest analogy to me is the gas station and the price of gasoline. There are literally, where I get my gas, most warnings here in my neighborhood in Arlington, there's an Exxon on one side of the street and another gas station literally across the street. And they always seem to be dovetailing off of each other's prices that go up on the sign. Why does it not work the same way in the prescription drug marketplace?
Tim Dube (16:59):
So if we limit this to brand name prescription drugs, the main difference is that gasoline is a commodity. Right? Many producers are selling to many different sellers. Those two gas stations might literally be filling from the same truck. And then their individual overhead costs, rent, employee costs, other insurance, whether they operate a service station as well, that would dictate what kind of margin they need to make on gasoline at a commodity level. Brand name drugs instead are monopolies. They might face only indirect competition for generic drugs that are available.
Tim Dube (17:28):
So if we think about hepatitis C and the example that provides in the past five to 10 years. Right now there are four or five different high price, direct acting antivirals that are all highly effective and mostly safe. Everyone has been impressed with the outcomes from these products. But they're not the same molecule, so they're not commodities with each other. And they each have slightly different clinical indications. They're all competing for coverage and preference on any given PBMs formulary, with the losers either being non-preferred or not covered.
Tim Dube (17:57):
The winner is the one that the PBM through their P & T committee is going to choose that offers the lowest net cost given similar safety and efficacy. But if the losers, those that don't get covered, knew that the winner offered, say, a specific discount, they would know exactly how to get onto the formulary next time. If the winner knew that they gave away 20 percentage points more than the loser, next time they would only give away one percentage point more. And so, when the winner knows by how much it won, it's definitely going to dial back that going forward.
JC Scott (18:25):
I got you. That's helpful, Tim. I appreciate that because it's not as straightforward as it might seem when we think about, to your point, commodities or other goods that do operate in a little bit more head-to-head price competition, given oftentimes that we don't have enough competition in that prescription drug marketplace. Julie touched on another topic I'd love for you both to comment on. And that is the transparency and coverage rule that was issued by the last administration here in Washington, DC. I know it's something that PCMA objected to in particular. And I'm curious if you all can share your perspectives on why there were concerns with this particular rule.
Tim Dube (19:05):
Sure. So, in reality, PCMA filed comments in support of half of this rule. And I think that that's important to keep in mind. Right? One part of this proposed rule that came out in 2019 would have required health insurance issuers in the individual and group health insurance market to provide online enrollee self-service tools. Where someone enrolled in a plan could log onto a website, see where they are and they're deductible, out-of-pocket maximum obligations, look up an item or service that their doctor says they might need, and see what their cost sharing obligation would be for that service. This is good transparency. This is what we're after. This is what we think the market is building toward and can provide to people enrolled in either CMS programs or in the commercial market and employer-sponsored plans.
Tim Dube (19:52):
This is the good stuff. This is what we're here for. The other half of the rule which we opposed, also required health insurance issuers to post on their own websites what they called, machine readable files, that would include the negotiated rates paid to network providers, including pharmacies, for covered services. Our initial opposition to the proposed rule was based upon the fact that these files didn't meet the statutory obligation that they were based on. This obligation comes out of the Affordable Care Act, where the plans were required to make available to enrollees information in plain language that would help them choose from among different insurance options. So something that is "machine readable" is clearly not plain language. Because if it takes a machine to read it, then a human probably can't.
Tim Dube (20:37):
So that was our initial objection to it. Then the final rule came out in November, 2020, about a week after the election. And it included this other idea called historical net price. There was specific to prescription drugs and would be, the historical amount paid by that insurer or their PBM on their behalf over a 90 day period that started about six months prior. So now we had a new set of objections because if something's not on a proposed rule, it can't show up in a final rule. And that is really where a lot of our advocacy has been snowballing since then.
Julie Goon (21:07):
I think that's absolutely right. I think Tim gave you a really good response to that. And I think it's really important in any case when the government tries to put something in a final rule they didn't include in a proposed rule, even if you like it, I mean, that's just not really aligned with the Administrative Procedures Act and it leaves future rule making open to challenge. And so I think it's important to call that kind of thing out. Additionally, I just want to double down on what Tim said about the issue of disclosure proprietary information that would or could lead to tacit collusion among the manufacturers, as well as the requirement that we disclose very specific drug level rebates. It was not transparency that was going to help the consumer. It might have helped, I don't know, third party consultants. It might have helped the government, potentially, but I don't even know that that's true. I think it would've mostly helped drive up prices. And therefore we were all in the right position in opposing moving forward with that finalized rule.
JC Scott (22:11):
So the takeaway here. The rule, one was not going to be all that useful for consumers in the first place because of the way and the nature in which they were going to put this information out there wasn't something that you or I could easily understand and use in an actionable way. And, two, it brings up this risk, yet again, of undermining our ability, the industry's ability to negotiate for lower drug costs by putting the information out there in a way that could lead to collusion among manufacturers.
JC Scott (22:42):
So I can understand where the concerns were. Tim and Julie, is it fair to say through the course of this conversation if there are a couple of takeaways, one, is obviously we want to maintain the ability for those who are providing health insurance coverage to have choice in deciding how to set that up and what kind of information they need to set up their benefits. But two, most importantly is, at the center of all this has to be the patient or consumer and providing transparency that going to be useful and actionable by them to make decisions about their own individual costs. Is that a fair summation?
Tim Dube (23:16):
Yeah, JC. I think that's right. I think that there are a number of either CMS or private sector solutions and policies and programs being implemented in the near term that are bringing that kind of transparency to, either people shopping for health insurance coverage or people trying to use their health insurance coverage. And essentially, all the rowing should be in that boat to really help consumers. Anything that's requiring other kinds of disclosures of net pricing that's negotiated, that's not going to help a consumer in any kind of way. It's also administratively burdensome and it distracts from the broader goal of helping people make better decisions.
Julie Goon (23:55):
Yeah. And I just wanted to follow up JC, and say exactly what you said. This is about the consumer, and the tools that we've talked about through this podcast are all direct. All the tools that we've designed have been directed to help the consumer. They display the member cost share, accounting for, the deductible and out-of-pocket costs for home delivery and retail, as well as any generic or therapeutic alternatives. I think you asked me earlier about how the realtime drug benefit tools work for providers as well. And I just wanted to talk about that for a minute.
Julie Goon (24:30):
Because I think while it's important that transparency really be directed towards the consumer needs, the provider's also an important element in this as well. And on the provider side, our electronic real time prescription benefit tool is integrated within the provider's workflow and displays patient specific prescription drug benefits, including formulary coverage, cost share information, and therapeutic alternatives at the point of sale. So it helps the provider see patient specific information as they're actually using it. They can use their e-prescribing tool to prescribe a drug. They use their integrated electronic tools, see that information and determine if any changes need to be made.
Julie Goon (25:11):
Once they prescribe the drug, if a prior authorization is required, a provider can do an electronic prior authorization or EPA. It's the easiest way to submit and receive prior authorization requests and redeterminations, it's available 24 hours a day, seven days a week. And it improves the members' experience because they receive that determination sooner. The information we can give to our providers through this tool enhances the patient provider discussion. They can talk about adherence, they can talk about side effects, risks associated with the drug, cost of the drug compared to other alternatives, including lower cost generic alternatives. So by providing true price in coverage transparency, the patient is less likely to be surprised at the pharmacy and more likely to remain adherent. I really did want to go back to that question and underscore the importance of this kind of information to the provider as well as to the consumer.
JC Scott (26:05):
It's a great point, Julie. And I'll ask you for maybe the closing comment and closing thought as we wrap up here. But as we think ahead to where everything is going when it comes to transparency, I leave this conversation very much thinking it's all about how do we improve that consumer experience, empower them with more information, to your point, perhaps reduce the abrasion when they have to go through steps in the system. But when we think about what's next with technology, it's about empowering prescribers and their patients in the ways that you're describing. Is that how you see it too?
Julie Goon (26:39):
Absolutely. We believe the future of transparency and drug pricing will be delivered by the consumer imperative as well as driven by the competitive marketplace in which we operate as PBMs to satisfy the market demands of our clients. And our clients are our customers, their members, and providers. And given the competitive dynamic, I think the market adjusts and delivers and innovates whatever it is that the customers want. To the extent there is government regulation, consistency across different transparency requirements will be vital in order for PBMs and health plans to continue to deliver this kind of value and innovation for their clients.
JC Scott (27:20):
Terrific. Thank you, Julie. Thank you, Tim. This was a great conversation. It's a complicated topic and you all help provide a lot of context and focus. Thank you for joining me for this today.
Julie Goon (27:31):
Thank you for having us.
Tim Dube (27:32):
Yeah. Thanks for having us.
JC Scott (27:34):
And thank you to all of you for listening. I encourage you to subscribe to The Pharmacy Benefit and download all of our podcast episodes. You can do that on Google Podcasts, Apple Podcasts, Spotify, or wherever you find your favorite podcast. I'm JC Scott. Thanks for joining me.
