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THE PBM IMPACT: INTERVIEW WITH STACEY MCCULLOUGH, PHARMD
The first of our two interviews is Stacey McCullough, PharmD, and Stacey's just amazing. She is the Chief Pharmacy Officer at NCODA.  

As I promised, I have got a world expert on PBMs to come and join us. Now, I didn't know this person until pretty recently when I started working with a group called NCODA. They were silly enough to invite me to be part of the group. Of their oversight group, and it's been an incredible eye-opening experience for me to understand so much more about this important aspect of the business of oncology. 

So, with me, shutting up, let me introduce Stacey McCullough. She is the chief pharmacy officer of NCODA, and she is our sort of guru, if you will, of understanding what's going on out there in our oncology world and the impact specifically on access to drugs and the impact of PBMs. So, Stacy, first, let me thank you very much for, as usual on short notice, being willing to jump in and share your thoughts on this important topic. 

Stacey McCullough, PharmD: Dr. Marshall, happy to be here and thank you for serving with us and bringing all your expertise to NCODA. It's a pleasure.  

John Marshall, MD: As I said, I've learned more from you than I've taught back the other direction, so I'm keeping going that direction. But, you know, here at our hospital system in Washington D.C., I had no real PBM awareness until really more recently, I used to think of PBMs as maybe a good thing, as a maybe a cost savings thing, a way to manage prescriptions on a higher level for patients who needed chronic prescriptions. But more recently, I've had  actually now, I think, up to 4 episodes where I tried to order a medicine for colorectal cancer for a patient on label, a perfectly straight indication where I was told I couldn't. I was trying to figure out who, in fact, told me I couldn't, and I couldn't get a peer-to-peer review. None of that, but I was told I had to order a different drug 1st before I could order the drug that I wanted to order so now my recommendations were being dictated by some really, I don't know who, out there, telling me what I could do. And so, my PBM awareness. Changed on a dime. So maybe if you could give us a little bit of background on all of this and how that could have gone from something that we thought of as good to something, maybe not so good.  

Stacey McCullough, PharmD: Absolutely. So, I think what you reference is, is maybe the experience of a lot of people and probably started a decade or so plus ago when as you know, being a giant with an oncology space, we started going from infused products to oral products. 

So instead of, you know, a buy and bill model, we introduced the pharmacy benefit. And what we saw in kind of that deluge of specialty products coming out, Oncology led the way, in that growth of specialty products. And so, we saw pharmacies and PBMs start to compete, not just within specialty pharmacy, but with an eye on oncology specifically because it was a leader among the field. 

So, PBMs, integrated in 2018 or so, where the payer and the PBM had their own specialty pharmacy. And so probably that would have been the entree into your world more specifically, all of these new oral oncology drugs. And then in addition to that, specialty pharmacies, maybe within your institution, as well as specialty pharmacies that are owned by the plan and the PBMs now competing for the control of your patient from a pharmacy, dispensing the drug perspective. 

John Marshall, MD: We've been talking about being a middle person, middleman, but you know, it's today. So, it's a middle person in the chain of events. Often middle people add value. To the chain, if you will, and I think that was the initial intention is that this was going to be value added, maybe save some of our staff some time and effort, maybe speed the delivery of medicines. What's your take on the value added of the middleman of the PBM. 

Stacey McCullough, PharmD: Yes, I think the value added is services offered. So, ideally the definition of a specialty pharmacy would be that you do prior authorization to help the patient find copay assistance. You utilize manufacturer copay cards, but really every step in the process. You know, your teams, you have an internal pharmacy there. And so, your teams are set up to do that. They have access to the EMR. They can go in and get the patient’s information. So, you've created your own efficiencies, I guess. The benefit would be if you're asking for a benefit versus if you've already established the process, and then it's an intrusion basically, on your current workflows. 

And that latter case is probably what has happened with the PBMs in that they then insert themselves between the physician and the patient. Oftentimes, the services that they offer may be difficult to offer without access to the EMR. So, they're kind of offering, I guess, education as well as benefits that maybe are outside what you're aware of, often confusing to the patient because you introduce another party into their care. And then, you know, your oversight really is lost a little bit. You don't know when the patient is getting their refills, if the patient calls the pharmacy to report a side effect or an issue with the medication, how does that get back to you? So, all well intended potentially. But now, the complexity of oncology care is definitely an impediment a lot of times to the care versus a benefit. 

John Marshall, MD: Yeah, I mean, there's a lot of money involved. I mean, here in Washington, we get ads about PBMs on bus stops and on the morning news. So, it's obviously an important political. issue as well about how this is going to go. 

What's your take or maybe what's in NCODA's take on, you know, how this should evolve or what the recommendations are to improve this process further? Because the orals are not going to go away. They're going to only increase. So, we need to figure this out.  

Stacey McCullough, PharmD: Sure. I mean, the complexity of oncology care, in itself is enough. So, fragmentation of care should be avoided. You know, the pharmacies that are in your institution, the medically integrated pharmacies. 

There's accreditations for specialty pharmacies out there and NCODA has an accreditation as well. These accreditations are intended to ensure operational as well as patient care. So, with those accreditations, that is the establishment, if you will, of good sound practices that should buy a pharmacy access to dispense these medications. 

Basically, what you're showing is that you're helping patients get access, you're making it affordable, and you're able to manage the patient from a side effect educational profile. So outside of, of having that in every pharmacy, kind of showing those competencies. Specialty pharmacies mandating that it go to their mail order pharmacy, or it go to their specialty pharmacy is really without validation. There's no reason other than the economic benefit, as you mentioned in that. So, you know, we support the continuity of care. We support the physician being the overseer of all of the care and the medically integrated team so that when you prescribe a medication, you have expectations of what your pharmacy team is going to do. You know that that patient is going to get access to the medication. It's going to be affordable. It's going to be dispensed. They're going to be educated in it. They're going to have tools that are going to empower them to be adherent with the medication. And any glitches in any of those steps in the process, you're going to get a notification back through your EMR to let you know that. Outside pharmacies aren't able to do that. And so, what goes on the outside of that, not only are they not able to promote optimal care, but some of the actions that they take may actually derail the care. As you mentioned in that, you know, you chose a product for a patient, and an outside entity tells you that you need to choose a different product. 

Typically, we all know these are very expensive products. As you mentioned, list prices are about the same. And so why the choice of one agent over another? I think, you know, even within a class of medication, distinct side effect profiles and your experience and your conversation with the patient to understand what's going to be the better choice. Anybody coming in and inserting themselves without knowing that conversation is really outside the benefit of the patient.  

John Marshall, MD: Yeah, and dictating a therapy based on a price they got not on the medical recommendation you're giving. 

Stacey McCullough, PharmD: Well, and you know, you bring up one point that we hadn't talked about, and that is the difference in buy and bill and the pharmacy side buy and bill you, you get the, the bill on the backside at the pharmacy, you pay at the register before you get your prescriptions. 

So, any of these price concessions that are on the back end, the patient is often paying a higher price because they're paying it off that list price, not off the net price sans any of the rebates or discounts that are in that. So that bubble pricing effect really does impact the patient often as well. 

John Marshall, MD: And of course, no transparency to that. You would never know what actually happened behind the scenes on all of that. Right.  

Stacey McCullough, PharmD: Absolutely. And that's where, you know, the resources that manufacturers often put out to help the patients, the copay, the patient assistance programs, we've seen, you know, copay maximizers and copay accumulators that redirect that benefit from the patient, you know, back to the PBM. We've seen alternative funding models and that, you know, patients are effectively uninsured because the preferred drug list is nonexistent. And so that actually qualifies them for manufacturer copay assistance or patient assistance programs, even though they're paying for insurance. So, there's no transparency, but the level of deception is very high within that too, and so patients are often caught in the middle of that, and you as their prescriber trying to get them medication, that's the downside. 

John Marshall, MD: Stacey McCullough, Chief Pharmacy Officer at NCODA. As I promised you all out there, she knows what the heck she's talking about and the vision going forward of what we need to do, what we need to make sure and emphasize as practicing physicians and all of us in this business of oncology, we need to figure out and evolve this PBM process further so it's in the best interest of our patients. So, Stacy, again, thank you so much for joining us.  

Stacey McCullough, PharmD: Dr Marshall. Oh, it's a pleasure to see you.  

John Marshall, MD: That was amazing. I hope you agree that Stacy's insights and thoughts about how we need to move this stuff forward is really useful to us.  

THE PBM MONEY TRAIL: INTERVIEW WITH ANTONIO CIACCIA
But we actually got also a 2nd interview in a 2nd take on this. I do want to introduce you to Antonio Ciaccia. Antonio founded several things along the way, as he'll share with us, but he works at a place called Three Axis Advisors which spends their day thinking about this issue of pharmaceuticals in the United States and ways that we could evolve it so that not only is there more transparency, there's more access and improved market system in place for all of us. So, I am pleased to introduce Antonio Ciaccia. Antonio, welcome.  

Antonio Ciaccia: I study drug prices for a living. We track manufacturer price changes. We track Medicare expenditures, Medicaid expenditures. We look at publicly available data sets that demonstrate utilization and pricing trends and what we have learned over time is that, between those moments of money going in and money squeezing out, there is a lot being lost in translation. 

John Marshall, MD: Okay if that's the problem, where do we go?  

Antonio Ciaccia: Well, in a number of directions. First and foremost, I think everybody believes that we should move toward a system of value-based medicine. I'm a big believer in the philosophy of value-based payments and value-based medicine. Problem is, is that the architecture of our system today is not aligned in that direction. We buy medicines based on volume, not value. The bigger you are, the bigger discounts you achieve. Thus, typically, the greater financial rewards you will yield. Everything I said there has nothing to do with the quality of the service rendered, the outcome to the patient, et cetera. 

The key driver of volume-based payments and volume-based reimbursement, starts with our exemptions to federal anti-kickback laws that allows PBMs, and health insurance companies to collect big kickbacks. from drug companies in exchange for preferential treatment on the formularies. Those exemptions create an arms race, to become larger and larger, thus, to extract larger and larger kickbacks, which results in significant market concentration and also insulates drug companies from the traditional competitive forces of lowering prices. Instead, incompetent competitive environments, they compete to raise prices. To create more bandwidth for kickbacks, which increases our reliance on the intermediaries to negotiate our way out of the problem.  

John Marshall, MD: Do you see us ever getting to value-based? I always, I've spoken for years on this subject because I've lived for 32 years as an oncologist. I've watched this business evolve. And I regularly say like, would you swipe your own visa card? Maybe I should say now tap your own visa card for it. And then because that would say, all right, well, let's connect the magnitude of benefit with the cost. And I can decide value-based medicine as a consumer, but because the consumer is in essence removed from the formula, they're not able to judge value ever. 

Antonio Ciaccia: The consumer has no meaningful impact on the business practices of the health care delivery system as it stands today. In general, decisions are made for them. And as a result, those who provide goods and services in our health care delivery system calibrate their business model and their offerings in the direction of the desires of the payers. Not necessarily the origin of the payment, which is the individual patient. And a good example. And you could see in pharmacy pharmacies don't compete to lower prices. Pharmacies don't often compete to increase their staffing, to attract a patient to come there instead. The PBM decides where you'll go. 

Right. And if they don't have complete carte blanche to decide where you'll go, they can heavily influence through cost sharing pressure, you name it, where you ultimately go. I know pharmacies that have very low prices. And here in Columbus, Ohio, we have a pharmacy called Freedom Pharmacy. 

They don't accept insurance. Their prices are a fraction of what any other pharmacy offers. Mark Cuban's Cost Plus drug company. His list prices, his sticker prices, meaning the prices that are offered to everybody are a fraction of what you'll find in other pharmacies. It begs the question that if the people that we hired to get us out of this drug pricing mess really had our interest at heart, they would be crawling over one another to get those pharmacies to be not only a network, but preferred. 

The opposite happens, right? They don't want them in network because they mess up the math. Instead, PBMs incentivize higher and higher usual and customary prices charged by pharmacies, and they negotiate big discounts off of those bogus inflated prices. The challenge though is, is that because of the way that PBMs contracted pharmacies, they actually incentivize them to charge higher and higher prices over time because of the disparate way that they pay them in the most favored nations clauses in their contracts, et cetera, which I don't need to bore you with, but trust my shorthand that PBMs incentivize pharmacies. To charge higher and higher sticker prices. And so what that leaves us with is greater necessity To use the PBM to put out the very fire that they're partially responsible for creating And so what is our way out of it? Well our way out of it is having a system that actually incentivizes drug companies and pharmacies to lower their actual prices to increase the quality of their goods and services rather than the opposite. Which is getting bigger and bigger discounts off of increasingly inflated prices without any sort of quantification of value for the actual service that's being rendered by the provider or the quality of the product that is being offered by competing drug companies.  

John Marshall, MD: So, let me ask one more angle on this is that from the work that you are doing, one of the principles that we've been talking about is lack of transparency. So, if you're going to then report to a government or to whatever that's asking for this information, how do you find it? Where is it?  

Antonio Ciaccia: I often complain about the lack of transparency in this marketplace, and to be clear, there is not enough. However, relative to other forms of other types of things that we buy in healthcare, pharmacy is relatively very transparent. My introduction into this world, in a formal drug pricing research capacity was in my home state of Ohio, pharmacies in our state were complaining about underpayments within our Medicaid managed care program. 

PBMs were driving lower and lower rates of reimbursement that was causing a lot of pharmacies to go out of business. Meanwhile, on the other end of the transaction, the state of Ohio said we're spending more for medicines. Those two things didn't make sense. How could pharmacies be getting paid less? How could the state be getting charged more when they're ultimately involved in the same transactions? 

Well, what we started doing was downloading very boring Excel files off of CMS's website. One being the National Average Drug Acquisition Cost, which for those that don't know, is a benchmark that is provided by the Centers for Medicare and Medicaid Services where they survey pharmacies on a month-by-month basis and they simply ask them the question, what did you pay to put the drugs on the shelf? 

And so we took that data set and combined it with another data set called state drug utilization data, which is a quarter by quarter, state by state, drug by drug accounting of how much every Medicaid program is buying and for how much they pay for those drugs. And so we were able to stitch those two data sets together. 

One being the real cost of the drug as purchased by pharmacies. The second being what Ohio Medicaid and every other Medicaid program across the country was being charged. And what you saw was this divergent experience over time. Well, we took all that information and gave it to state officials at the time, who I felt didn’t do what I thought they should do with that information. And so, I turned it over to local reporters. I sat down with reporters at the Columbus Dispatch. I flew out to New York to meet with folks at Bloomberg News. And I gave them all this data and they said, we think there's a big story here. The state of Ohio eventually followed the trail. Our state auditor, Dave Yost, decided to open the books and, voila, they found that there were $245 million worth of hidden PBM spreads where they were buying low, paying the pharmacies very low, billing the state high and pocketing the difference. 

All of that was started thanks to the accessibility and availability of limited, imperfect, but very valuable drug pricing data. What we have learned since then is that there's even more data out there. Medicare Part D has a ton of pricing information available on its site. You have folks like Mark Cuban that are publishing their prices. Costco publishes their prices, and, before, you know it, yeah, we have a black box in drug pricing, right? But the beauty of a black box is that it's multi-sided and there's a lot of things that you could find around it. Right. And, and so in answer to your question, there's not enough transparency, certainly. And I would argue that when we do work on behalf of state agencies or employers. They're not given the itemized receipt that they deserve. However, the limited amounts of transparency into the system we do have often helps us uncover the latest and greatest drug pricing schemes that are being cooked up by the various intermediaries in the drug supply chain. 

John Marshall, MD: You've done a great job of pulling this together and really serving the community at large, because the money that we're talking about. Is not really, I mean, whether it's government money or insurance company money or whatever, it's our money, right? This was money that we paid into these banks, these quote unquote banks for them to then distribute and cover this. And so, there couldn't be honestly, a more important way to try and make our health care system more efficient and find the fat in it so that we can deliver more services. 

I mean, it's just crazy how much we spend and still how much we're limited by what we can do.  

Antonio Ciaccia: Let me let me depress you just one little bit more.   

John Marshall, MD: Go for it.  

Antonio Ciaccia: It's an oncologist. Our story is very relevant to your line of work. So, the very first report that we ever issued was in August of 2018, when we launched 46Brooklyn Research as a nonprofit dedicated to what I would call drug pricing journalism. 

The very first report we released was called The Cancerous Design of the U.S. Drug Pricing System. And it was all about generic Gleevec, okay? Which I would argue is the poster child for drug pricing dysfunction. It was a huge part of the Federal Trade Commission's report that was released within the last month. 

But basically what we found was that Medicaid programs across the country were getting charged thousands of dollars for something that had been declining in its underlying cost significantly over the last few years. Fast forward the tape and again, this shows you the value of drug pricing transparency. 

We still see to this day Medicaid programs being charged thousands of dollars per prescription for generic Gleevec. We see employers being charged thousands of dollars per prescription. Patients in those commercial programs having cost sharing based upon those bloated prices. We just released a report in July, where we were looking at pricing information for generic Gleevec in the Medicare Part D program and the beauty of the Medicare program is that they will show you the prices of every single Medicare Part D plan. And within those Medicare formulary and pricing files you can see it within every plan the parent organization of those plans as you well know PBMs aren't really PBMs anymore. They're part of large vertically integrated companies that are often health insurers. Well, if you take all the prescriptions for generic Gleevec across all the different Medicare plans and roll them up to their parent organization, what you'll see is a company like CVS Health, which has hundreds of Medicare Part D plans, despite the fact that this drug has been generic for a long time and is very cheap. Still to this day, you will find CVS Health Medicare plans setting 597 different prices across all of its plans. The lowest price is around $2,600 per claim. The highest price is $8,200 for prescription. Okay. Now to give context here, not only do you have 597 prices, not only do you have about a $5,500 difference between the lowest price that they offer and the highest that drug can be bought from Costco or Mark Cuban for less than $40. 

Okay. So the games that we find, right, are not limited to that drug, but it is a demonstration of I think how much risk there is When there is not an aligned approach for how the prices of medicines are set at the pharmacy counter and when there are raging conflicts of interest within the companies that are setting those prices. 

John Marshall, MD: Are we the only country that does this?  

Antonio Ciaccia: We are the only country that does this. Other countries have a much more heavy-handed approach to drug availability and pricing. They say, look, these are the drugs we're going to have in, and these are the prices they're going to be. Sometimes that means that they cut off a lot of the inefficiencies that our system has. 

In other ways, they disincentivize manufacturers from bringing certain products into those marketplaces. That's a double-edged sword, and those are policy tradeoffs that I think everybody has to, has to consider. I personally am not as much of a fan of that heavy-handed approach, because I think sometimes it can, throw cold water on the access to medicines in the in the innovative churn that we rely upon to get access to those medicines but regardless I think the U.S. System hasn't been given a chance to flourish the way that a traditional market based approach could Because we have all of these special rules for Medicaid rebates, 340B rebates. We have these GPOs and exemptions to kickback laws. We have all these things that make the U.S. marketplace special. Aside from the price controls that separate, you know us on paper I think that the U.S. marketplace can be materially different than what it is today without having to go all the way and say hey, we just need to take this over as at a government level. 

John Marshall, MD: So the free market could handle it if really it was a free market and when I hear in the spectrum of sort of, you know, government heavy, quote-unquote, socialized medicine. You're not really there because of the level of restriction. But, you know, I think about the British health care system and the nice committees that oversee new drugs or new therapies, and they put a value proposition to it. So, they say, okay, here's what you're going to charge for it. Here's the magnitude of benefit. Medical people make a judgment. They have a certain fixed amount of taxes they can spend on health care, and they make a decision in or out. So they actually, and then publish the data, the decision in Lancet, for example, but, but that's often criticized because they, you know, there's a lot you can't get in Great Britain, because of that public health service system, we can get it all, but it's a very disrupted system, as you say. 

Antonio Ciaccia: I think it's important to remember that there was a, there was a market-based system before PBMs, right? And certainly, it was not nearly as robust as it is today, but it is important to remember that there was a time where our wallets and purses are what guided this, this marketplace. And if a medicine was too expensive, we sought alternatives. If a pharmacy was too expensive, we sought alternatives. The second, that third party payment governed the marketplace. All right. That's when things really started to get out of whack. And that's not me saying we don't need third party payment at all. It's not me saying that we should go back to a system where people can't afford their medicines. But I think it's important to understand the traditional forces that we rely upon in a free market are not present in the environment we have today for medicine.  

John Marshall, MD: This has been perfect.  

Antonio Ciaccia: Have a good one.