The Pharmacy Benefit

Host JC Scott speaks with Mostafa Kamal, CEO of Magellan Rx Management, about the evolving role of the PBM market in delivering solutions to its clients. JC and Mostafa also discuss challenges to Medicaid during the current economic downfall, as well as upcoming technological innovations to improve the patient experience.

Show Notes

Host JC Scott speaks with Mostafa Kamal, CEO of Magellan Rx Management, about the evolving role of the PBM market in delivering solutions to its clients. JC and Mostafa also discuss challenges to Medicaid during the current economic downfall, as well as upcoming technological innovations to improve the patient experience. 

PBM Tools Drive Affordability and Care for Medicaid: Recent unemployment hikes are expected to put severe strains on Medicaid. States across the US will have budgetary pressures to cope with the surge of new patients. Magellan Rx Management is delivering solutions to US States and DC to lower costs and improve efficiency for their Medicaid programs.

New PBM Market Disruptors Are Emerging: Innovators (i.e., “disruptors”) identify and eliminate market inefficiencies to improve customer experiences. In the age of COVID-19 and changing consumer expectations, Mostafa anticipates an increase in the pace of PBM market disruptions. JC and Mostafa discuss some major disruptions on the horizon, including drone home deliveries, real-time information sharing, and predictive modeling to identify medication non-adherence risks.

Greater Personalized Care in the Future: Mostafa believes that future PBM market disruptors will focus on the personalization of medicine. He foresees a customized, genetic-based pharmacy experience for each patient.

You can subscribe to The Pharmacy Benefit on Spotify, Google Podcasts, Apple Podcasts, and all other major platforms.

What is The Pharmacy Benefit?

JC Scott, President & CEO of the Pharmaceutical Care Management Association, discusses the latest trends, public policy developments, and political challenges impacting drug pricing and healthcare.

You'll hear the nation's top thought leaders, policy experts, and political analysts on topics like how employers, unions, and others use Pharmacy Benefit Managers (PBMs) to drive value for their members in the face of growing healthcare costs. You'll also learn about advancements in gene therapy, biologics, other cutting edge therapies, and the patient benefits and cost challenges that come with them.

The Pharmacy Benefit will also analyze the latest news from inside the industry and give you an educated perspective on where things currently stand and where we think they're headed.

J.C. Scott (00:09):
Welcome to The Pharmacy Benefit. A podcast where we talk about issues impacting patients, consumers and affordable access to prescription drugs and better healthcare, through the work being done by pharmacy benefit managers or PBMs. I'm J.C. Scott, thank you for joining me. Even before the COVID-19 pandemic, the healthcare system was evolving at a rapid pace due to new technologies and patient preferences.

J.C. Scott (00:32):
That evolution has accelerated in many ways as a result of the pandemic, changing just about everything in the way people live their lives, how they do their jobs, see their doctors, and how they get their needed prescription medications. Today's episode examines how innovations and technological advances put in place by PBMs, many long before the pandemic hit, are really now coming into focus and showing their value. Joining me today to talk about technology and PBMs, is someone who has focused a great deal of attention on the topic of innovation.

J.C. Scott (01:03):
Mostafa Kamal is the Chief Executive Officer of Magellan Rx. In his role, Mostafa is responsible for all of Magellan's pharmacy business lines including commercial, government and specialty pharmacy divisions. One of his and his company's goals is to deliver innovative, best in class drug management solutions to help clients improve health and cost of care. Mostafa also sits on the board of the Pharmaceutical Care Management Association or PCMA. Mostafa, thanks for joining me.

Mostafa Kamal (01:30):
Thank you J.C. It's great to be here. Thank you for having me today.

J.C. Scott (01:34):
So maybe to start out before we get deep into the conversation, for those who may not be familiar with Magellan Rx, walk us through who you are and the evolution of the company.

Mostafa Kamal (01:44):
Sure thing. Simply put, Magellan Rx exists to help solve complex pharmacy challenges for our customers. Our focus is really on driving improved health outcomes and affordability for the people that we serve. And really J.C., our secret sauce lies in our people. Our people are problem solvers, they're idea generators, and we're energized by discovering new and better ways to bring cutting edge solutions to our clients. And think about how Magellan Rx came to be, we're really born of a deep and rich history as pioneers in specialty drug management. And that's coupled with a long track record of partnership with state Medicaid programs, where we care for the most vulnerable population.

Mostafa Kamal (02:26):
So we've always specialized... We like to say we've always specialized in doing the hard stuff. And over the last decade, we've merged the experience from both of those businesses, and we've expanded across all market segments. So we're now serving health plans, employers, union groups, government programs in both Medicaid and Medicare. And it's really been a blast to be here and to help build Magellan Rx alongside all of our dedicated employees who are just super enthusiastic about the industry and where we can go from here.

J.C. Scott (02:58):
Terrific. And you mention of Medicaid as part of the roots of the company. I want to circle back to that in a little bit because as we both know, unfortunately we're living through a time where the economy is shifting and a lot of people are moving onto the Medicaid roles. And I'm going to preview for you that I'm going to look for your perspective on what that means for the healthcare system in a second. But I do want to talk a little bit about you first and have you tell us about your personal history with Magellan. What motivated you to join the company, and what really excites you about the work that you're doing?

Mostafa Kamal (03:30):
Well, you know it's interesting. I've been in the PBM space for over a decade. I've been with Magellan for roughly eight years. Prior to that, I was with a company called Medco Health Solutions, for those folks that follow PBM. Back then it was one of the largest PBMs and now a part of Express Scripts. I think it's a similar answer that you'll get when you talk to anybody who's in the PBM space is that, nobody really comes up saying that they're going to be a PBM employee or a PBM executive. I was actually working in the travel industry. I've got an economics background. I was doing a lot of pricing and underwriting type work. And I got a call unsolicited from Medco, and they were working on building Pricing Function Department. And I remember the first thing I thought was, "What's a PBM?"

Mostafa Kamal (04:21):
After I got to understand the important work that PBMs do and meeting the team, I was sold. And since then I've been working in this space for quite some time. I've been in this role as the CEO of Magellan Rx for about five years. Prior to that I ran our specialty drug division. Prior to that I was in a number of underwriting, pricing and analytics role.

Mostafa Kamal (04:45):
And the one thing that really strikes me about PBMs, where I feel PBMs are unique, it's really in that they live at the nexus of caring for people, delivering and managing technology and innovation, and generating savings for the healthcare system. And I've really found that combination to be what makes this work very fulfilling and compelling. And the opportunity to come to Magellan Rx early on, when we were first starting to build out the pharmacy capabilities was really an exciting opportunity for me. As it's clear that there are opportunities all over the place in healthcare for us to rethink the way we do things, introduce new and innovative concepts. And Magellan really provided a great opportunity for us to start building with that premise in mind.

J.C. Scott (05:37):
Terrific. And that's most of what I'd like to talk to you about today Mostafa, is that technological angle and how those innovations are enabling your company and others in the industry to do a better job with the other two pillars that you mentioned, caring for people and managing costs. But before we get into sort of the forward futuristic looking part of the conversation, let's talk about the Medicaid piece since you raised that at the top. As you and I were just discussing, the Medicaid population is likely to only grow in the near future given the economic situation. One of the ways that PBMs play a role in helping states to manage Medicaid, both in terms of serving the Medicaid population and helping with the budgetary cost, which can often be overwhelming for state budgets. Can you just talk a little bit about the role the PBMs and Magellan play in Medicaid?

Mostafa Kamal (06:32):
Yeah, absolutely. Thanks for the question there because I do think it's a very important part of our healthcare system. Medicaid is a critically important program. It's an important safety net program. And we know that states across the country have budgetary pressures just like businesses have budgetary pressures. And therefore there is a lot of similarity between what we do for commercial businesses that are looking to provide quality healthcare to their membership. And very similar to what we do with states in terms of leveraging PBM tools. Now there are some [inaudible 00:07:09] nuances about Medicaid that are critical to remember. And again the state budget pressures, the fact that it's a very vulnerable population, the population within Medicaid for folks that have behavioral health conditions or other comorbidities, they can be two to four times the cost of an average patient.

Mostafa Kamal (07:30):
And so it's really important for us to bring solutions and capabilities to the table that allow us to bring case managers, care managers, better whole person care type focus to these patients to be able to deliver better outcomes. What we do today is we're working with 26 states in D.C., to bringing a variety of PBM tools to the equation. We're helping to lower the costs, negotiate prices on behalf of the states, delivering the technology solutions to allow for claims processing and allow for a prior authorization administration, and real time tools to help doctors move through the processes in an efficient manner. What we found is, working very closely hand-in-hand with the states, understanding the populations, understanding that within a Medicaid population it's not just one profile of patient. There are multiple different cohorts within Medicaid, and you've got to be able to bring tailor-made clinical solutions, to drive better outcomes and to drive the affordability. And we're very proud that we've been able to help support over half the states in the country accomplish better care and better affordability.

J.C. Scott (08:46):
So Mostafa let me ask you one follow up question on that, because I think that you and I have both encountered and others in the industry that, perhaps there's not a full appreciation of the importance of what you just described, the work that PBMs can do for Medicaid. Oftentimes with policymakers, we encounter skepticism about the role the PBMs play, and perhaps a desire to more designed systems that limit the use of PBM tools. What do you think is the missing link? What should we be communicating to policy makers so that they better understand what you were just explaining to us?

Mostafa Kamal (09:22):
Well, I think that there are a lot of different sources of information, and there are a lot of different reasons why people say the things that they say. The things that have been criticized on the commercial side are, when you really break it down, are tools that drive lower costs. It's just a matter of where the cost is going to. So rebates... I mean rebates are a mechanism... It's a private sector mechanism to driving down pharmaceutical drug costs. Where those rebates end up, really has been a topic of debate on the commercial side. On the Medicaid side, a hundred percent of all those rebate dollars flow back to the state. And the state uses it to help provide more services to help improve the affordability for the state, to help with the budget consideration.

Mostafa Kamal (10:09):
So it's actually interesting to see that a topic like rebates, which is sometimes a topic that is criticized on the commercial side, is actually an essential PBM tool on the Medicaid side, that allows us to deliver more care to more people, and to help the states do that in a way where they don't completely blow up their budgets. Same things with claim edits and safety tools, and making sure that the patients are adhering to certain drug lists. In the Medicaid world it's called a PDL, a preferred drug list. In the commercial world it's called the formulary.

Mostafa Kamal (10:46):
So I think it's just important to recognize that, when you look at it from an intellectual standpoint, the tools that PBMs have created over the years, are really very effective tools to drive affordability and better care. And I think a lot of the debate on the commercial side has been about where the value of those tools, where the dollars are accruing. Whether it's to the patient or the employer et cetera. And I think in our conversations with policy makers, it's really important to make that distinction. Because without PBMs, you don't really have the mechanism to deliver better value in the pharmaceutical world.

J.C. Scott (11:27):
Terrific. Well hopefully we can continue to help drive that understanding. Because I think what you've just articulated for us really underscores the importance of the work that PBMs are doing, perhaps now more than ever as the pressure on Medicaid grows. But let's shift gears a little bit Mostafa and talk a little bit about the technological side. You've talked about PBM tools and innovation. A lot of that to me is reflected in some of the technological disruptions that we've seen over time, and then how those are being leveraged by industry to meet the care management and cost management pieces of the agenda. So let's start at a high level, because over the years I've heard you talk a lot about how important disruptors are in healthcare, and how PBMs fit into that. We're in the middle of a pandemic which in some ways is really the ultimate disruptor. How are you thinking about your earlier theories on disruption in healthcare? Do they still hold? And if not, what's changed in your mind?

Mostafa Kamal (12:27):
Well, you know I am very passionate about this topic, and I think it's disruptors and disruption is really critical to any well-functioning market. The good disruptors put the customer at the center of their priorities, and they focus on reducing or eliminating the inefficiency in the processes and the abrasion in the processes. Really when you think about where the abrasion and inefficiency comes from, it's generally caused by established companies that don't evolve to address changing consumer needs and preferences. And knowing what your customers want, and better yet, anticipating what your customers will want, and relentlessly focusing on delivering that wow factor, is so important. And I think disruptors... They do a great job of coming into an industry and identifying those areas. The only thing that really has changed with respect to my views on disruption and innovation with respect to COVID-19, is really just that the pace with which disruptors need to move has increased pretty dramatically.

Mostafa Kamal (13:36):
I think COVID-19 magnified the importance of this philosophy, and created a need for an even faster pace of disruption and innovation. I've heard Jeff Bezos say multiple times, "You'll never hear a customer say, 'I love Amazon, but I wish they didn't ship so fast.'" Or, "I love Amazon, but I wish their prices were just a little bit higher." Well, there are analogs that in our industry you'll never hear a member say, "I wish it took longer to get my drug approved." Or, "I wish it was a bit more expensive [inaudible 00:00:14:05]." So there are principles around how you create utility for patients, how you create utility for prescribers, and how you create utility for clients in what we do, that make us valuable in their everyday workflow.

Mostafa Kamal (14:24):
And so I think with COVID-19, obviously we had a massive acceleration of people moving to work from home. We had a massive acceleration of lots of businesses that were losing revenue or not able to operate. We had folks doing a lot more shipping of [inaudible 00:14:43] drugs and other goods home. And so being able to respond very quickly to those shifting consumer needs during this pandemic, has been really important. And companies that have that DNA, I think are able to move a lot more quickly and have a higher chance of delighting customers. And I think the PBM industry has always been an industry that's in my view been, had an amazing way of redefining itself every few years. And I think the industry has done a relatively good job of making sure that we continue to move with consumer needs to make sure that we're driving utility to as I said, patients, providers and clients.

J.C. Scott (15:27):
So let's talk about some of the specific sort of accelerated disruptions as a result of COVID. You mentioned home delivery and mail order is one. And it strikes me that on your website, that you have an article about the possibility of drone technology being used to deliver drugs to customers' homes, which in some ways feels pretty futuristic. But as you mentioned, Amazon and others are already thinking about this. And with the volume of stuff that my family seems to order off of Amazon, I'm expecting a line of drones in the sky any day now outside our house. But I'm curious for your thoughts on when we see that manifest in the delivery of prescription medication. Because I know a lot of people that to your point really have realized the value and convenience of having the option of mail or home delivery during the pandemic. How do you see that evolution taking place?

Mostafa Kamal (16:19):
Yeah. In a world where we're spending a lot of time at home, wouldn't it be fun to have like a family event where you stated drones lining up outside the...

J.C. Scott (16:28):
Well, my daughter would enjoy that.

Mostafa Kamal (16:33):
Yeah. On that point I think in general, as we've seen with step function change in technology and innovation, in general it's hard. I think it's just part of the human condition. It's hard for people to think of change in exponential terms. We tend to think of change in incremental terms. Now it's coming with UPS and maybe it'll come with some other autonomous vehicle, and the move to drone seems to be so far out there in terms of an exponential change that I think a lot of people respond to it by saying, "Hey, is this really possible? Is this real?" But I truly believe that it's way closer than anybody thinks. If you look at what some of the most innovative companies in this space are doing, there're companies that are operating outside of the United States today, that are delivering blood and taking care of critical patients in various countries in Africa.

Mostafa Kamal (17:35):
And they're really doing an amazing job, where they've leaped over the need to... So for example, there's a company called Zipline that you may be familiar with, and they're really doing... We had Keller who's the CEO, founder and CEO of that company present at one of our client conferences. And the work that they're doing just is tremendous. And if you think about some of the places where they're operating in Africa, there aren't good roads to get from point A to point B. And so rather than trying to build that infrastructure, you can leverage the step function advancement in technology to really just leapfrog that.

Mostafa Kamal (18:12):
And I think in the United States, we're very close to being able to bring those types of capabilities in a robust way. I think it's a very exciting space for us. I'm really looking forward to seeing the progress there. For us in the US it's a lot more about making sure that the regulators catch up with the technology, and the boards of pharmacy, and getting through those kinds of approvals here is sometimes the long pole in the tent. But I feel very optimistic that we're going to be there a lot sooner than folks imagine.

J.C. Scott (18:50):
It's interesting that you say that, because as I think about technological advancement and what it's meant for healthcare delivery, obviously the area of information sharing, real time information sharing, is one that has the potential to be a game changer in many ways, it's already been a game changer. To your point about regulators catching up, there are still lingering issues around interoperability of systems that have to be solved. But from the PBM perspective, can you talk a little bit about the technologies that are brought to bear, to meet consumer and patient need right there in the doctor's office when decisions are being made about prescriptions, and what other sort of real time information availability has meant for PBMs work on behalf of patients?

Mostafa Kamal (19:34):
Yeah, absolutely. And again, healthcare is not much different from other parts of our economy, and what consumers have become really reliant on, and what we've come to expect as consumers is that things are more real time. Things are more personalized. And if you think about what you expect when you interact with an online retailer, or what you expect when you walk into an Apple Store, it's only a matter of time before patients start demanding those things in the healthcare experience. And I think when you look at PBMs, PBMs have been pioneers in this space. 40+ years ago, the PBM world moved to online claims processing before anybody else was even thinking about that.

Mostafa Kamal (20:24):
So the capability to do things real time is there, because the plumbing is there. And so I've been very pleased to see our industry move forward with capabilities, real time capabilities in the physician's office like real time benefit checks, like real time pricing information, formulary information that allows you... Again going back to the point about removing abrasion and removing inefficiency, rather than have a patient trial and error go to the pharmacy. It's not covered. You have to go call the doctor. You do that all in one shot upfront, I think just makes the experience much more seamless, and gets to the right product at the right cost instantaneously. And that is an important advancement and I think one that we continue to build upon

J.C. Scott (21:14):
And what kind of tools are available... Going back to the conversation on Medicaid for example. You mentioned that oftentimes individuals in the Medicaid population may be at a higher risk for health complications, and being able to encourage and assist with medication adherence is pretty important. How does technology play a role there? What kind of tools are available to help those individuals in staying on their meds?

Mostafa Kamal (21:40):
Yeah, technology is huge in the area of adherence. So adherence is as you know, such a critical driver of overall health care costs, and preventing further complications and emergency room visits, et cetera. So this is an area where we as an industry, and Magellan Rx has spent a lot of time and energy to be able to impact adherence and drive better outcomes there. And technology is critical to that. Because there are a couple of steps as you think about adherence. One is, ensuring that you've got the predictive modeling and analytics needed to be able to understand who's at a higher risk for nonadherence. That's step one, identifying the population. Within any given population, you'll find 10 to 20% of the membership driving 80 to 90% percent of the cost and complexity.

Mostafa Kamal (22:37):
And so being able to identify those folks, leveraging as I mentioned, analytics and predictive modeling and artificial intelligence, we're able to apply algorithms to our data sets to identify those patients that are at a higher risk of nonadherence. Once you get there, you look at the clinical profile of those patients. Again using our data proprietary analytics and technology, to identify what subset of patients we would reach out to, taking into account things like social determinants of health and their various conditions. And then from there, you get into the outreach where you want to have specially trained individuals outreach to these patients and meet them where they are. Now there's no one size fits all to this. Some patients want to have a phone call. Some patients want to have a digital experience. Some patients want to have a video call or a face to face experience. And being able to seamlessly plug and play all of those various options, is really important in order to engage the patient and be able to drive the behavior change needed.

Mostafa Kamal (23:40):
All of this is about behavior change when it comes to adherence. You have to drive the behavior change needed, in order to get the patient adhere. And there are so many different reasons why people are not adherent. I was having a conversation the other day with someone outside of the industry and they were saying, "Well, people just need to be more disciplined." It's not that simple. Sometimes there are cost reasons. There are shelter issues where someone is homeless. That it's not necessarily the highest priority in their mind to take their medication at 8:00 AM every morning. So I think it's really critical to get underneath the root cause, and start deploying specially trained case managers and other tools to help eliminate those barriers to drive better adherence. And technology is such an important piece of that along the entire continuum.

J.C. Scott (24:32):
Mostafa you've been very generous with your time. Maybe just as we close, I would reflect that the much of what we've talked about today really does fit into what you said about the industry as a whole, continuously redefining itself and evolving. We talked about how that evolution and the use of technology are changing everything from the way our medications are delivered, to the way information is shared and how we empower patients in their decision making, to the use of technology to help change behaviors and help patients get better outcomes through adherence. As you look ahead to what comes next, what do you think the industry is going to look like say a decade from now? In other words, what are the next disruptors? What are the next changes? And what's that going to mean for patients and the way that your company serves them?

Mostafa Kamal (25:18):
[inaudible 00:25:18] this is really exciting when you think about the art of the possible here. We talked a lot about leveraging technology to provide real time information to remove abrasion. We talked about leveraging technology to help drive the proper clinical interventions. But where I think the next frontier is, is really around personalization. And that's where personalized medicine pharmacogenomics comes into play. And I think as technology continues to evolve, I envision a world where we are able to customize for each individual their pharmacy experience, all the way from how we want to interact with them and all the things that we've talked about. But more importantly about your genetics and how you metabolize drugs. Today as an example, we have formularies and we worked through formularies to drive product preferencing. Well imagine a world where your formularies based on [JC's 00:26:17] genetic code, and I'm going to get you to the right drug right from day one.

Mostafa Kamal (26:22):
When we look at what's happening on the manufacturing side, a lot of the products, a lot of the R&D and a lot of the products that are in the pipeline and coming out are for more and more complex conditions, rare diseases, cell and gene therapy. And so the pipeline is moving in that direction. And I think PBMs can play a really important role in bringing the products which are phenomenal, ensuring that we leverage our tools to drive appropriate use and affordability, but deliver that in a much more personalized way for patients. And I'm excited about that next phase for our industry, because I truly believe that that's where we need to go. And I think those of us who get there faster, I think we'll be more successful in the long run.

J.C. Scott (27:14):
Awesome. Well I think we're all excited to see what comes next for the industry, and to see how we face this really critical time in the evolution of healthcare. Mostafa, thanks so much for joining me today.

Mostafa Kamal (27:25):
Oh, my pleasure J.C. And I'm really enjoying these podcasts. You're doing an amazing job as a host. I think it's a hidden talent of yours.

J.C. Scott (27:35):
Well, thanks for coming along on this journey with me. I enjoyed the conversation a lot. I hope everyone who's listening enjoyed it as well. And if you haven't already, you can subscribe to future podcasts on Google, Apple or wherever you get access to your favorite podcast. I'm J.C. Scott, and this is The Pharmacy Benefit.