Today we're going to be discussing U. S. drug pricing and policy. We're pleased to have Gary Branning as a guest on our podcast today. Gary is the president of MMR, which is a division of NPG Health. He's responsible for business development, strategy and knowledge of various healthcare stakeholders, or developing solutions that navigate the complex U. S. market. He's also an associate professor at Rutgers Graduate School of Business. He's a national speaker on U. S. healthcare trends.
Please follow our podcast to be advised when a new episode is available. I want to thank everybody for listening to our podcast.
Today we're going to be discussing U. S. drug pricing and policy. We're pleased to have Gary Branning as a guest on our podcast today. Gary is the president of MMR, which is a division of NPG Health. He's responsible for business development, strategy and knowledge of various healthcare stakeholders, or developing solutions that navigate the complex U. S. market. He's also an associate professor at Rutgers Graduate School of Business. He's a national speaker on U. S. healthcare trends.
Please follow our podcast to be advised when a new episode is available. I want to thank everybody for listening to our podcast.
The information, opinions, and recommendations presented in this podcast are for general information only. Any reliance on the information provided in this podcast is done at your own risk and should not be considered legal, business, or medical advice. Hello and welcome to the Healthcare Maze podcast. My name is Mike McLaughlin and I'm the CEO and founder of MGM Advisory and Educational Services. Today we're going to be discussing U. S. drug pricing and policy. We're pleased to have Gary Branning as a guest on our podcast today. Gary is the president of MMR, which is a division of NPG Health. He's responsible for business development, strategy and knowledge of various healthcare stakeholders, or developing solutions that navigate the complex U. S. market. He's also an associate professor at Rutgers Graduate School of Business. He's a national speaker on U. S. healthcare trends. He also writes a healthcare blog for the Rutgers University Business School. He has over 30 plus years of expertise in healthcare. Gary's recognized throughout the pharmaceutical industry for his innovative approaches to creating leading edge solutions with the primary focus on customer impact and corporate profitability. Gary, welcome to the program.
Gary:Thank you, Michael. Always good to have a conversation with you.
Michael:Yes. And I mentioned to our listeners, Gary is returning. He's already been on the program once before, so we're very appreciative that he's taking time out of his busy schedule here to talk with us and share his knowledge. On the pharmaceutical industry, as our listeners, I'm sure realize this is a very complex topic. We're going to go over everything from pricing. From a manufacturing point of view of drugs, we're going to talk about recent policy changes where Medicare has gotten approval to negotiate some drug pricing the transparency someday pharmacy benefit managers. And how that will reduce the cost of drugs copay accumulators. This is a pretty hot topic. We're going to walk through that and some recent activity in Congress relative to that. And briefly talk about Pharmaceutical companies that are taking this cost plus approach and what impact that might have in the market, especially in with generic drugs. So first, Gary something dear to everybody's heart in the U. S. Pricing for U. S. drugs, and I wanted to let you walk through a number of different factors, but just want to give our listeners an example of some of the factors. Most prominently research and development costs, obviously are key here, manufacturing costs. In order to create the product and then market competition, what's going on in the marketplace. I'll let you elaborate on those and any others that you think can help our listeners better understand the pricing on the U. S. market for drugs.
Gary:The pricing in the marketplace is a, is like you said, it's very complex, Michael, and it all starts with the price that the drug manufacturer can create, and that price is known as the wholesale acquisition cost, the WAC cost. Now that WAC number that is created by a pharmaceutical manufacturer isn't what's paid by anybody else, so all drug pricing is built off of the price that the pharmaceutical manufacturer comes up with. Now, when we bring a drug to the marketplace, we have to think about not just, our WAC price times the amount of patients that would use our drug, we also have to think about the net price. Because what goes into pricing and what we bring to the shareholders is the net times what we sell. And what that means, Michael, is that you really have to take into consideration things like The competition. Like you mentioned, we have to think about the customer and what the value is to the customer. We have to think about whether it's a direct channel or an indirect channel. Is there any channel incentives? What kind of concessions do we have to give in the marketplace? Is there any rebating or discounting that's going to be required to the PBM marketplace? That's going to drive the net price down even further. And because of all that, pricing isn't what it seems because Once again, you mentioned it that there's no transparency in price. You're talking about transparency with PBMs, but there's not transparency of price in health care in general. And that would include the pharmaceutical industry because we don't even publish the WAC price. The price that people see is the price that they pay which obviously makes some of this quite complex. A little bit of statistics for you though, Michael, is that when you think about the branded pharmaceuticals, not generic now, the branded pharmaceuticals, There's about 240 billion paid out in rebates, and that was in 2022. I don't have a 2023 number handy, but in 2022, 240 billion. in rebates were given out for branded drugs. Of that, about 80 percent of them went to rebates, which is, you mentioned the word PBM, Pharmaceutical Benefit Managers, and their clients. And that would also include Medicare, Medicaid and other discounts that are in the supply chain, which would be called chargebacks. They look like rebates and feel like rebates, but they just have a different name. But all that accounts for about 80% Of that 240 billion dollars, which then nets the pharmaceutical company less than 50 cents on the dollar for a branded drug. So when you hear the price, think about it being about half when you get done with all the price concessions in the marketplace.
Michael:That's really interesting. And when you think about everybody's comments, typically in the industry. especially on the provider side and even on the insurer side of why the cost of prescription drugs is so high. But based on what you're saying, Having the pricing with less than 50 percent of where you started out from is, interesting, it's so complicated to get to that point.
Gary:Most of the drug discovery and innovation these days, Michael, are in the rare and orphan specialty diseases. The money is really in specialty drugs now. So what's affordable at the counter, like when you go to a retail pharmacy, not a specialty pharmacy, patients out of pocket cost, if they have insurance should be pretty reasonable. You might be in a bad plan because it really comes down to the benefits that you choose or your employer chooses for you. But when you get into specialty drugs, there's where the model's broken. Because the model that we're talking about, this rebate model, wasn't built for all the innovation that the pharmaceutical companies are coming out with today. It was built in the 80s and it still exists today. And back in the 80s, drugs didn't cost that much money. The burden to the payers now have gotten so big, the demand for rebates have gotten so high, it's just, we're at a threshold right now, which is why there, I know you wanted to talk about, government intervention in the Inflation Reduction Act as well, because, we don't have a model that really does a good job paying for the innovation that's coming out of the pharmaceutical industry.
Michael:I've seen a lot of the revenue enhancement data being on the specialty pharmacy side, especially in the last, probably 5 to 7 years but it's interesting you talk about, a lack of a model to handle that particular set of drugs but when you talk about the whole idea of the manufacturers negotiating with payers as part of this pricing
Gary:The rebates are a result of the negotiations. With the payers. So what they what price concessions they want from the pharmaceutical industry. It's a negotiation. We can walk away. But then we might not get coverage for our drugs, which means patients won't have any access for it. Cause restrictions can be put on it. The patients can't actually get the drug. So the pharmaceutical industry is very keen of that and they're willing to negotiate with the payers to try to get the best coverage. and the most affordable coverage for the drugs that they bring to the marketplace. I won't always say that we're successful, but, that is the plan.
Michael:And when they negotiate with the payers and the offer rebates, that obviously gets them a place in the formulary for the payer.
Gary:Yeah, because the reason we pay the rebates, first of all, is that is if we bring a drug to the marketplace and the payer puts restrictions on it, we could pay rebates to remove those restrictions, like you might have to fail on something before you can get the drug your doctor prescribed for you. There may be paperwork like prior authorizations that have to be filled out by the physicians before. The patient can get the drug. These all cause delays. So we'll be willing to pay to eliminate some of those delays, but also will translate into where it's placed on the formulary. And based on the formulary tiers, the higher the tiers, if it's in a fourth tier, fifth tier, sixth tier, it's going to cost the patient more money. So one of the objective also is to get formulary movement. with rebates is to push it into a lower tier so that it actually is more affordable for the patient.
Michael:Let's talk about one other thing here, which I'm just curious of your feedback on this. And maybe this relates more to cash payment for drugs, but I found myself, I'm sure you have, and I'm sure some of our listeners have, you have coverage, let's say prescription benefit plan private insurance, or, MA coverage in Part C or Part D coverage if you're traditional Medicare, and they tell you, for example, that 200. 200. 200. And you look at them like, what, 30 day, 30 days of the prescription. And then they say I can look up at the manufacturer on the website separately for you and see if I can get you. a separate discount. This is going to be more towards what I'll assume is a cash payment approach or things like good Rx or some of these cards. And I've had this happen to me a couple of times where with the coverage I had there was a certain amount of money. And then they turned around and said, you know what let me look up good Rx for you. Let me do this or that. And they came back with a price that was half out of pocket. And that surprised me the first time it happened to me. This is probably five years ago. And now whenever I go to pick up any kind of prescription, I come in with a printout from one of these coupon cards with a price. And I wait for the price from the insurance company, whatever that's going to be. And then if it's much higher, I'll just give them this coupon I have.
Gary:It's a complicated question. I also teach pharmacy students. So in Merkur's Pharmacy School, we get all these stories there too. And what you'll find, Michael, is that it's very complicated, first of all, and it's important to be able to navigate the healthcare system. So if you get a prescription, find out if it is available cheaper someplace else. So it could be on Mark Cuban's cost plus drug, right? It could be it could be something like good RX. Sometimes you just ask the pharmacist, what's the cash price of the drug. It actually might be cheaper than what is being offered by your insurance benefits. In addition, for example, there's even pharmaceutical manufacturers that put coupons in or cost offsets for the beneficiaries and those opportunities are paid for by the pharmaceutical manufacturers and it buys down the copayment. Of the plan that you have. So say you have a copayment of 100. They might buy it down to 20 and you just provide the coupon and that coupon is actually paid for by the pharmaceutical manufacturer. Now what makes that interesting, though, is that can only be done for commercial beneficiaries. It cannot be done for any government beneficiary like Medicare and Medicaid. So the pharmaceutical manufacturers can't help the Medicare and Medicaid folks, but we can help folks that are on the commercial side of the business. There's also programs that exist by individual manufacturers. So for example, if they get so deep in rebates over time, cause remember I was telling you, they're making 50 cents on the dollar. That's the average. If you think about it some drugs are even deeper than that. If it gets to a point where why rebate it when you can just sell it direct for cash, There's programs that are offered by pharmaceutical manufacturers where you can log right into their distributor and they'll ship you three months of the drug. For example, my wife takes a drug and she pays 25 a month. The insurance wanted 60 a month. So it's and but you also have to realize that it doesn't count towards your deductibles. So if you're using, if you're using any of these programs, they don't count toward your deductible. And that's an important thing to understand, even if you're using a, even if you're using a pharmaceutical coupon, because what the PBMs will do is they trigger that coupon and reset your deductible. So none of the cash outlays that happen that are, if you're paying cash or using a coupon, those things don't count towards your deductibles.
Michael:The first time I started looking with a, it was a good RX card and it said put in your zip code and look at all the pharmacies in the area for this particular prescription you want. I'm telling all of our listeners, if you've never done this, you need to take the time to do this. I could not believe the range of prices. Within the same zip code at all different pharmacies for the same drug. Let me
Gary:explain that. I can explain that to you. Remember I said there is no transparency in price, right? And every pharmacy can charge anything they want for the drug. There is no list price for a drug. So if they're selling it at cash, they can sell it for any price that they want. Now, when they're selling it through your benefits. That's fixed by the insurance company, which is also the benefit of having insurance because that's that rate is negotiated for you. And then your copayment is set on that and which most of the time should be better than paying cash. It's also the same as Michael, you're on the physician side quite a bit. If you went for a routine physical and asked five different physicians what the rate would be, those rates would be different too, because there's no transparency in price there either. And each physician can charge what they want, but when it comes down to their geographic area and the rates that are negotiated by the insurance company, when you get your explanation of benefits, you'll see what the physician charged, you'll see what the insurance company said they'll pay, and they'll tell you what your out of pocket's going to be. And the drug industry works the same way.
Michael:I'll give you the exact numbers for this 1 prescription. I saw in the same zip code a high of a 145 dollars. And a low for the exact same prescription of about 19 in the same zip code. It's unbelievable the difference. So it is worth shopping around
Gary:that's our tip for all of our listeners. Yes. If you're in the US health care system shop by navigation
Michael:okay. Let's go on to the next question that we have here. And although it's obvious that what the answer probably is here, but. I wanted to give you a little input that I found and just get your sense of the impact on the industry because of this. But as we know, for the Inflation Reduction Act that got passed in 2022, starting out with 10 Part D drugs. On the Medicare side now the government can actually negotiate pricing with the manufacturers. And what I found in my research, and I don't know if Gary, if you've seen something different, but what I was able to find it says the highest negotiation price you could get discount at 75 percent of average manufacturer price. Which is a 25 percent discount for drugs marketed, 9 to 16 years. So any drug hasn't been marketed for at least 9 years. They can't be discounted
Gary:if you can't negotiate, the government cannot choose a product and negotiate if it's a small molecule that's been on the marketplace for less than 9 years. If it's a biologic, it's 13. Okay.
Michael:Okay. And then the end of this that I see here, it says that for drugs marketed more than 16 years, it's 40 percent of the average manufacturer price or 60 percent discount. And again, these are the Maximum amount of discounts that could be negotiated.
Gary:And that's what they're going to eventually get to based on negotiating with the pharmaceutical manufacturers. So there's already been one round where the government sent the prices to the manufacturers. The manufacturers now, and it was only about two weeks ago, have sent their revised pricing back. This will all come to, a date in August where the number will be set.
Michael:August
Gary:is the wrap up and then September they publish it and then the prices take effect on January 1st, 2026.
Michael:This is obviously in the U. S. This is a big change in pricing and I know you and I have actually attended some conferences or presentations with drug manufacturers. I remember this question being brought up to some of the senior management that was there from some drug companies. What if we could start negotiating prices at some point for Medicare? The reaction from the companies were something like I'm paraphrasing, but something like where we do that, we negotiate with governments all around the world. It was just, the U. S. It's very political and a lot of this got pushed off for a period of time. So my reaction when I heard, And it was initially the first end drugs here. I didn't think myself given that these firms have been having these types of discussions with other countries for an extended period of time. I didn't think it would be A significant financial issue for them, given that there was a relatively small number of drugs. Number one. And, as we just discussed somewhere between 25 percent for the newer drugs and for older drugs, the 60 percent discount, I'm just curious from your vantage point, what kind of feedback are you getting from the pharmaceutical industry on this?
Gary:First of all, the drugs in Medicare have always been negotiated, but by the commercial entities that serve Medicare. So drug prices. To like PBMs and prescription drug plans that are already working in Medicare. They're already negotiating with the pharmaceutical manufacturers. One of the consequences of this, though, is when the maximum fair price is set, that drug will no longer pay rebates. Because now you're going to, you're actually going to set the floor on that product. It also is going to affect all the other products in the therapeutic category, because say there's five products in that therapeutic category. The other four. Are going to have to probably match the maximum fair price or not be covered. So it's, you're going to see a tightening up of formulas. The other piece that you mentioned and people say this a lot, is that, yeah, it's only 10 drugs, but it's 10 drugs, goes to 15, then it goes to 20, and by 2031, the government will have negotiated 100 drugs. And continuing on. So also there's a proposals in Washington that are talking about accelerating this program to even more drugs per year. Some of the unintended consequences, though, Mike, like you mentioned, though, is that, it's going to put a lot of margin pressure on the pharmaceutical industry. You're going to think about what a pharmaceutical manufacturer is going to do. It's best opportunity is to optimize the nine years or the 13 years. So they're going to probably bring drugs out at a higher price. They're going to do that for two reasons though, because also part of the inflation reduction act, there's an inflation penalty. So if the pharmaceutical manufacturer price. Year on year, every quarter, should exceed the consumer price index. They will also have to pay a penalty back to CMS. So launch drugs will probably come in higher, take less price increases, and manage it. Now, drugs that are currently on the marketplace, there's not a lot of room for more rebating. Because, you're talking about not being able to make up the difference in rebates. As I said, rebates go up every year because of the clients. It's almost like giving candy to a baby. So they want more. So the downstream clients of the PBMs, their clients like rebates, and they want more rebates every year, which puts more pressure on the pharmaceutical industry. And to make up for the rebates, we take price increases. So it's a never ending game. Now that we can't take price increases in Medicare because of the inflation penalties, that means we're going to launch at higher prices. Means. I would expect that would be what would happen and not take any price increases and see what the best way to optimize the value of our product in the time that we actually have it to commercialize. So that's one of the pieces that I think it's important to understand is that one of the unintended consequences is that they haven't really managed to, launch prices. They haven't managed the rebate side of the business. Like I said before, the system that we built back in the 80s is what we're using today. And this is not a direct fix for what is needed in the industry yet. It's a start. But it also has some unintended consequences. I mentioned to you before, but any drug that is the MFP, those rebates go away. So there's going to be more pressure on other drugs. So the rebating piece of this probably will be expedited. In addition, There'll be margin pressure on the payers themselves, the prescription drug plans that are managing the pharmacy benefit for the Medicare beneficiaries. Those plans will also have to manage starting next year, a 2, 000 cap for all drugs for all beneficiaries. And they're also have to pick up 60 percent in catastrophic coverage where they're only picking up 20. So keep in mind, that's a tight squeeze on the payers themselves. And when you're talking about drugs, they only have one place to go, which is the pharmaceutical industry. So there's going to be more pressure on the pharmaceutical industry that's going to be exerted because, everybody's got some skin in the game as to how this new benefit design rolls out. In 2025 with that 2, 000 cap, pharma's picking up 20 percent in catastrophic coverage. So think about it. If we're already paying rebates that are, let's just say 40%, We're going to pay an extra rebate of 20 percent to CMS. So now we're at 60 percent already. So there's a lot of consequences that are buried in this legislation that frankly make it hard for the payers themselves, the prescription drug plans and the pharmaceutical manufacturers. I think that there's going to be Tighter formularies. I think there's going to potentially be less drugs covered. And it's going to be, an interesting dynamic as we move forward into 2025.
Michael:I'm not surprised what you're telling me. I assumed that and again, it would depend on the class of drugs. But overall, I would expect the margins to become tighter. I don't know if it's also going at some point to lead, if it's even possible, to more consolidation of the pharmaceutical industry, but I think that certainly the potential is there for that.
Gary:It's going to lead into consolidation in the prescription drug plant marketplace, for sure. Already there's a big move that's happening right now and it's, they're not the largest, but they're certainly recognizable. Cigna has sold off all of its Medicare business to HCSC, a Blue Cross Blue Shield plan.
Michael:I did see that probably about a month ago. It's definitely going to change the the business model. And like you said We'll have to see as we go out. I guess one of the good things for the industry, and I'm sure this was part of the lobbying efforts, was to gradually have the number of drugs that are involved. And I'm not surprised somebody's trying to move the number of drugs along quicker, but I think I would be surprised if that actually got approved right now. I think everyone's just looking to start the process and see what happens.
Gary:The current process right now for negotiations going is like a three year window that will be tightened up to a two year window once they get their hands on how to do this. But it's just a, just an interesting dynamic. One of the bigger changes in the pharmaceutical industry in a long time.
Michael:Okay let's talk about, and I think we'll probably just, this will probably be our last topic today. Let's talk about the pharmacy benefit managers. And in particular there was a lot of discussion on Capitol Hill the last couple of months about legislation going through that was going to limit some of the revenue that these organizations can generate. And it actually got bipartisan support. The House. Passed the bill. The Senate had a bill come out of committee. And there was a lot of excitement that these I'll call them middlemen for a better way of describing them will be in a position where they would be much more transparent with exactly how much money they're making and how they're doing it. I looked at a couple of factors here. That was, historical spread pricing. We've already talked about rebates. Administrative fees. You brought up specialty pharmacy. There are service fees there. The mail order pharmacy, they make money there. All of these different approaches are ways for the PBMs to make money. But currently it's really difficult to understand exactly how much money they're making. So I think the first step here was to just better understand what are the costs that are involved here? What exactly are the fees that are involved here? That are being passed along either to usually health insurance plans or employers. So that it's a little bit clear and that I will mention one other quick thing and then I'll let you give me your take on this over the last, 3, 4 years at the most a number of insurance companies have actually purchased or created their own pharmacy benefit manager organizations. So what's interesting here is that in some cases. Some of these organizations, which are insurance companies, all in their own PBM. And it's a separate line of business. And I know some of the larger insurance companies. Have hired a significant number of doctors over the years. So they're looking to try to keep as much profitability from the market in house as possible. But let's just talk about the PBMs from your point of view. Does it seem to make sense to you that whenever this legislation, and probably be after the election at this point in November, but assuming this legislation gets back out. In front of both houses and passes. Will this transparency help us better regulate?
Gary:There were a lot of questions built into that. So first, I'd like to tell you about the one company you mentioned. UnitedHealthcare has 90, 000 physicians. It owns 90, 000 physicians. There's also a, there's also a DOJ investigation because that's too much market power. But you also mentioned some of the PBMs that have been formed by large health plans or even health plans in general. The largest, which is Anthem, which is actually called Elevance now, started their own PBM called Carillon, but it's administered by the largest PBM, CVS Health. The largest PBM is CBS followed by Express Scripts, followed by OptumRx, which is owned by UnitedHealthcare as well. But you're also correct that PBMs are in the hot seat and transparency is the watch word for this year. And it was also there was some PBM components. In the funding package, which was in, it was out, it was in, it was out, and right now it's out. But you're talking about the different policies that have been floating around in Congress, which is the Pharmacy Benefit Reform Act, the Pharmacy Benefit Manager Transparency Act, the PBM Accountability Act, and we also have the Patient Act. These four bills have been popping around and they do have bipartisan support. We are in an election year, Michael, and so that kind of freezes legislative action until there's some new people in town. We don't know what the election outcomes are going to be, but it really is going to hold legislation back. If it went into the funding package, which is what you were talking about, there was a lot of excitement. Then things would happen now but pulling it out of the funding package, now it's going to go legislatively and that's going to stall for a little while, but it's going to be resurrected. And I can guarantee you just like I was telling all my students over the years is that there was so much noise about pharmaceutical pricing. If we don't fix it, the government will. We got the IRA. PBMs, they're in the hot seat now. It's not pharma anymore in the hot seat. It's the PBMs in the hot seat. Something is going to happen. And PBMs are actually preparing for it. A little, misunderstood area of the PBMs is that they've actually outsourced their negotiations with the pharmaceutical companies now to an organization called the GPO. These GPOs, the ownership is partially PBMs, some health plans, some only PBMs, but all three of the large PBMs Now have a rebate aggregator that does the first line of negotiations with the pharmaceutical manufacturer. There's a couple reasons for that is one is the Trump administration had passed a, regulation saying that rebates had to be passed down to point of sale, which meant that could be a revenue hurt. For the PBMs. It was called the Safe Harbor Act and under Safe Harbor, GPO membership fees, they sound like rebates, but GPO membership fees actually fall under Safe Harbor. So the GPO said we don't collect rebates anymore. We're GPOs now. So they created these GPOs to be a rebate aggregator. And now the PBMs are downstream clients to the GPOs. Now when you talk about lack of transparency, there's a lot of conversation about the PBMs. I'd like to take it up a notch, and there's an FTC investigation about the PBMs also, and they just, in the last couple months, said that we're going to look at the GPO business too, because there's even less transparency there, because we know what rebates the PBMs get. But we don't know what rebates that the GPOs collect. So it's a, it's an amazing twist that only started a couple years back. They're in full swing and it's the GPOs that are the lead negotiator now for the rebate.
Michael:So based on what you just said and some of the things I went over as far as how the PBMs make money, and now you're bringing up the GPOs also, with more transparency, it seems reasonable then that should have some impact in a positive way on drug pricing? Would you agree?
Gary:It may. Like once again, it is complicated. If there's full transparency of what rebates are out there in the marketplace, say you're a pharmaceutical manufacturer and you're paying a 20 percent rebate and the competition's paying like a 30 percent rebate, all of a sudden now that makes you look bad. You were the better negotiator. But what's right and what's wrong? I don't know but full transparency because right now the negotiations that happen between the Prescription business so the pharmacy benefit managers and the pharmaceutical manufacturers is all done under confidentiality agreements
Michael:It sounds like the provider side when they deal with the insurance companies, you're absolutely right. I mean there is on the hospital side and the physician side, there are now bills that have been passed. Forcing these organizations to talk about what exactly is the negotiated fee? What is that number? So I guess it's probably going to get to the same point here on the drug side. We're going to have to force the issue. But even things like these PBMs negotiating prices with pharmacies. I see some examples and some research saying that, let's say they decide to reimburse a pharmacy 50 for medication, but then they charge the health insurance plan of the employer 60. They pocket the difference is revenue.
Gary:That's spread pricing.
Michael:It was not exactly the same as cost plus, but just to understand where the pricing is and how much money is being generated revenue wise because of these different Pricing amounts to different
Gary:clients pharmacy. You made me think of something interesting. Do you know we're trans how transparency could work in the pharmaceutical industry is how it works on the provider side through an explanation of benefits. You know what the negotiated rate is that your plan negotiated for you because that shows up in your explanation benefits what the physician's fee rate fee schedule was your explanation benefits is what the insurance company is willing to pay that's the negotiated rate. What if we did that for pharmacy we tell people, here's what the prices, here's what your insurance company negotiated here's what your out of pocket is. I mean that, that may, doing an EOB, an explanation of benefits in the drug side, might be a way to get it started, I'm thinking.
Michael:I think it's a good idea. I think the more information from these bills where we better understand exactly what's going on pricing wise, I think a lot of other potential solutions will come out of that.
Gary:I think for a patient too that got an EOB for their drug, say for example, Yeah, I think for a patient too that got an EOB for their drug, say for example, you paid 50 for it. You thought that was a lot. You got your EOB, the pharmaceutical manufacturer, charged 2, 500 a month. The PBM negotiated it down to 2, 000, and your out of pocket is 50? That, that would be information that at least a consumer would start to realize I'm getting quite a bit of value out of my insurance and maybe even out of my 50 drug payment.
Michael:I'm sure it would go both ways. In some cases would be a great deal and others you'd wonder why. The negotiated price should have been, more favorable, but This is why we talked. We came up with a genius idea. EOB is for drugs now. I like that idea. And like I said, I think the more we can see on exactly how these organizations are fixing cost versus price as simple as that sounds, I think we're going to come up with a lot of potential solutions going forward. And it certainly should improve competition at least. When you start to see things like that. Gary, this has been very interesting discussion. We've gone through just the general pricing, how that's established. We talked about government getting involved now on the Medicare side initially with 10 drugs and those initial 10 drug pricing taking place January 1st of 26. We talked about the pharmacy benefit managers referred to as, some of the middlemen in the health care industry and how Probably after the election, some bills are going to get passed here. That is going to help us better understand exactly what their costs are that they've negotiated with the manufacturer. And what are they then in turn charging their clients and other pharmacies. So I think once that information becomes available, it's going to really help everyone understand better what some potential solutions are. Gary, thank you so much. Thank you, Michael. Let me know
Gary:if there's another topic you want to talk about. It's always fun.
Michael:Sounds good, Gary. And I want to thank all our listeners and please subscribe to this podcast and you'll be kept updated as to when the next podcast will take place.