EP 8 - Buying Drugs w/ Rashaun Reid of ParetoHealth

How is anyone able to buy specialty pharmaceuticals without going broke? What are some of the economic pressures on doctors to prescribe expensive meds? Where is Andrew Clayton hiding, and will he be back next time?

Join us with special guest host Ashley Hull and guest Rashaun Reid of ParetoHealth as they team up with Andrew Cavenagh to tackle these questions in an updated format.

Along the way, they go into why taking the convenient route when you should be helping people is a classic knucklehead move, the strange phenomenon of giving up transparency for a few dollars off your PEPM costs, and how to educate physicians on best pharmaceutical practices.

What is 80/20 with ParetoHealth?

Health insurance, dissected. It’s a take-no-prisoners journey into the heart of health insurance co-hosted by two of its major disruptors. The Andrews (Cavenagh and Clayton of ParetoHealth) give you fresh insights and perspectives. Join them in their conversations with guests who are also transforming an antiquated industry and reshaping the way employers select and implement healthcare benefits.

[00:00:04.240] - Andrew Cavenagh
Hello, everybody. It's Andrew Cavenagh of ParetoHealth. Welcome to another edition of 80/20 with ParetoHealth. Today, I have the pleasure of replacing Andrew Clayton with a guest host. Joining me today is Ashley Hall. Welcome to the show, Ashley.

[00:00:21.040] - Ashley Hall
Nice to be here. What'd you do to get Clayton to quit? Did he decide he had a better face for TV?

[00:00:26.540] - Andrew Cavenagh
Let's not get into how much I paid the producers to get Clayton off the show. We'll come back to that a little bit later, but let's focus on a couple of things. First, we're going to change our typical order. Normally we start with a little bit of knowledge, and then we do an interview with a colleague or a guest, and then we do the So You Know They're a Knucklehead session, but our producers tell me that everybody is listening to 70% of our podcast. So they're missing maybe the most important thing, which is where we make fun of people or things.

[00:00:51.100] - Andrew Cavenagh
So we're going to flip the order today, Ash. We're going to start with making fun of things. We'll start with Knucklehead, then we'll do the interview, and then again, we'll do a little bit of knowledge drops. How's that sound?

[00:01:00.890] - Ashley Hall
Sounds great. As long as there's no more lobotomy talk, I think I can handle this.

[00:01:04.970] - Andrew Cavenagh
Well, I'm hoping you have done your part here, which is that if you're doing a good impersonation of Clayton, I hope you are completely unprepared, haven't read anything in advance, and are just going to completely wing it, because that's really the way that Clayton likes to roll on these things.

[00:01:17.450] - Ashley Hall
I think that's manageable.

[00:01:19.610] - Andrew Cavenagh
Today, we're talking about PBMs. We're talking about pharmacy plans, we're talking about formularies, talking about Rx. Our knucklehead is straightforward, Ash. It's this: you know they're a knucklehead when they opt for the big PEPM savings off their TPA fees as opposed to getting a good PBM plan. That's what it is. That's the dramatic statement: you know they're a knucklehead if they take the 30 bucks off the TPA fee. It seems like a great deal. Why is it not a great deal? Why are they a knucklehead when that's the case?

[00:01:53.750] - Ashley Hall
When I think of PBM, when I think of health insurance carrier, I don't normally think of goodwill. They're not generally in the business of altruism. When you think about them giving or overextending on a fixed credit or rebate credit to offset an admin fee, and it seems really large, well, my thought is, well, then how much money are they really making? Taking that as like a broker hitting the easy button. So same brokers probably have 80% of their business fully insured. And as Clayton likes to say, "fooly" insured, F-O-O-L-Y.

[00:02:29.500] - Andrew Cavenagh
That's maybe the most creative Clayton has been in the last 48 years, or however long he's been around. So let's see through it. What happens? You opt for the big discount, and you give up all hope of control over the PBM. What are the key things that somebody gives up?

[00:02:45.140] - Ashley Hall
I think the key thing is transparency and visibility. If you're accepting the PBM contract from the carrier, then you're not getting any guarantees at the client level. First of all, you're being pulled in with the rest of their book of business, which is generally never a good thing. The second thing on the lines of transparency, you have no visibility into your contract. So you have no idea what guarantees are in place and if you've met them. You have no idea really what you're paying for the drugs that your plan participants are using. So you're just really in the dark. You're cutting a check and have no idea where those funds are going.

[00:03:26.130] - Andrew Cavenagh
Let's maybe keep it simple. If someone wants to get out of knucklehead purgatory relative to their PBM contract, the things they could do are easy, right? They could say, "Okay, quantify what the rebates are going to be. You're giving me 30 bucks or 40 bucks off my fee. What are the rebates worth?" Second is probably ask, "Can I control formulary?" Far be it from a PBM to insist on a certain formula that creates more rebates if they're getting all the rebates. Then transparency, "I want to see the contract. I want to see what the definition is of a generic versus a brand," because there's obviously games that can be played in that way.

[00:04:01.440] - Andrew Cavenagh
That's our Knucklehead segment for today. Don't just take the easy button and take the 30, 40 bucks off a TPA fee without doing the real work, because you're probably not helping your client at all. Therefore, you're knucklehead.

[00:04:20.690] - Andrew Cavenagh
Today we're thrilled to be joined by Rashaun Reid. Rashaun is a clinical pharmacist and part of the team here at ParetoHealth. Rashaun has over 20 years of experience in multiple different environments within health care, including retail pharmacy, pharmacy compliance, insurance authorization, most recently part of our effort to help drive down the cost of prescription drugs for the captive members. Rashaun, thrilled to have you. Welcome to the show.

[00:04:56.920] - Rashaun Reid
I'm so happy to be here today.

[00:04:59.320] - Andrew Cavenagh
Ashley and I will probably pass this back and forth, but I'll start with the first one. Would love to hear how you got into the industry.

[00:05:05.840] - Rashaun Reid
Well, I've always been strong in biology, chemistry, and math, and originally wanted to be a physician, an anesthesiologist to be exact. But after the six long years of pharmacy school, decided maybe we'll just stop at pharmacy and pursue other avenues within pharmacy. So that's what I did. Went into retail pharmacy, and while I was doing retail pharmacy, got my MBA because pharmacy is a business, and enjoyed that aspect of it. So did a lot of retail pharmacy, then went into PBMs as well as clinical pharmacy and a little bit of sales, unusual sales.

[00:05:41.610] - Andrew Cavenagh
One of the questions I often ask is, how do you describe your job at a cocktail party? Would love to hear that.

[00:05:49.210] - Rashaun Reid
I oversee the prior authorizations for high-cost medications.

[00:05:54.450] - Andrew Cavenagh
So not [crosstalk 00:05:55] not a drug dealer?

[00:05:57.370] - Rashaun Reid
Well, sometimes I do say I'm a licensed drug dealer. Matter of fact, I have a sweatshirt that I wear around my kids is this, "I'm a licensed drug dealer," and they get so embarrassed about that.

[00:06:07.650] - Andrew Cavenagh
That is awesome.

[00:06:09.500] - Ashley Hall
I'm noticing a theme at these… Or the people that we interview don't want to be very talkative at cocktail parties. They find every reason to avoid conversation. They must be hanging out with you, Cavenagh.

[00:06:19.900] - Andrew Cavenagh
We're going to have a great end-of-the-podcast-season party. We're going to get everyone together, and all six of us are going to sit in a room and not talk.

[00:06:27.580] - Ashley Hall
Rashaun, can you tell us why physicians are so frequently prescribing expensive, often unaffordable medications, and your take on how we've arrived at this place?

[00:06:40.500] - Rashaun Reid
The reason why is that physicians have absolutely no clue as to how much medications cost. They look at the knowledge base. If they have a great pharmaceutical sales representative coming in to vet them, then they're going to sell that particular product for that particular disease state. So it really is about educating the physician to let him or her know that there are other medications out there that might be less expensive.

[00:07:07.540] - Rashaun Reid
There's many times I've called on physicians to say, "Do you know how much this medication is? It's very expensive and it may or may not be covered by their plan had the member tried this." He's like, "Oh, no." I was like, "Well, it's half the price." And they'll say, "Oh, well, I wasn't aware of that." So it really is about educating, educating, educating the physician so they're aware of the cost of medications.

[00:07:28.000] - Ashley Hall
Do you ever wish that you could call them a knucklehead when you're on the phone?

[00:07:32.240] - Rashaun Reid
All the time. I might have, every once in a while, under my breath.

[00:07:39.080] - Andrew Cavenagh
Rashaun, one of the roles that you play here at ParetoHealth is to help our captive members save money around the PBM, around specialty drugs. I know at the member meetings we've talked about, literally, the millions of dollars that you've been able to save the captive members. Are there a couple of particular instances that stand out as memorable to you? Maybe one big dollar mountain, and maybe one that just meant a lot to you on a personal basis, more than economic.

[00:08:03.840] - Rashaun Reid
One prescription was for a little boy who was having seizures, and the medication was Sabril. One of the qualifications on the clinical criteria for that medication is that the patient has eye visits to doctor every six months. The patient was not having that and the doctor was still prescribing it. So I made a phone call to the doctor to make sure that he was having his eyes checked every six months so that he would not go blind, which could be a side effect of the medication.

[00:08:33.720] - Andrew Cavenagh
Rashaun, how does something like that happen? There's obviously no malice. It's just dotting i's and crossing t's, but incredibly important i's and t's, and I didn't even intend to do it, but there's a pun on eyes right there. How does that happen in today's data-driven world?

[00:08:50.360] - Rashaun Reid
Well, the PBMs have clinical criteria that they're looking at on particular drugs to make sure that different things are met. For example, labs are done, the diagnosis is correct, the dosage is correct. And if you overlook that, then that could be how the mistake can occur. That's why it's great that Pareto has me on board. I'm that second set of eyes looking at those prescriptions or those preauthorizations to make sure that everything is being adhered to.

[00:09:19.680] - Ashley Hall
When you think about all the scripts that you've reviewed since joining Pareto, are there certain things that you see often or patterns in terms of that clinical criteria not being met?

[00:09:31.440] - Rashaun Reid
A lot of it has to do with the PBMs not changing over or requesting a generic for medications or biosimilar for a medication.

[00:09:40.680] - Ashley Hall
So if you think about the consultant and the employer community, what's one thing that you wish that they knew?

[00:09:49.400] - Rashaun Reid
I wish they knew about alternative funding. For example, there's copay cards out there, patient assistance programs, and international sourcing that's available for a lot of specialty drugs.

[00:10:01.440] - Ashley Hall
Okay. Can you just explain, maybe when you talk about copay, assistance and how is that different from GoodRx or maybe is that the same? Can you just talk a little bit about what those programs can do?

[00:10:15.840] - Rashaun Reid
Well, the patient assistance program helps people that have no insurance or underinsured, and that's being managed by the pharmaceutical companies or nonprofit organization or government agencies. With the PAP programs, their costs are fully covered or the majority of it is covered, versus a coupon card, they're by the manufacturers as well, but they help people afford the expensive prescriptions by lowering their out-of-pocket cost.

[00:10:43.870] - Andrew Cavenagh
So if you got to choose one knucklehead thing, when you see something in the industry where someone's a knucklehead, what would you choose?

[00:10:52.030] - Rashaun Reid
I would choose brand to generic drugs. To give you an example, prescription by the name of Epclusa, which is for hepatitis C, has a generic available for it that is actually made by the same manufacturer that makes the brand. The brand drug for a 12-week course costs about $75,000, and for the generic made by the same manufacturer of the same line, costs about $25,000 for that 12-week treatment.

[00:11:21.500] - Andrew Cavenagh
Yeah, I'd say that's knucklehead worthy, right? You're spending 75 grand. You could be spending 25 grand, 50 grand savings. Even I can do that math. Rashaun, we appreciate you being here today. Probably have you back on some of these future episodes, but thanks for joining us.

[00:11:36.290] - Rashaun Reid
Thank you for having me.

[00:11:46.370] - Andrew Cavenagh
The last segment in today's episode is where we're going to try to drop a little knowledge. Ashley, today we're going to talk a little bit about specialty drugs. You know a lot about this. I know very little. I know they often say, explain it as if you're talking to a fifth grader. Pretend you're explaining it to Clayton. And if he could understand it, then I'm positive our audience will understand it. Specialty drugs. Top concern for almost anybody who is self-insured: frequency of them is going up, the cost is going up. It means the total cost is going up. So why are we have more drugs?

[00:12:30.240] - Ashley Hall
When you think about the cost drivers, there's really three main buckets, and you touched on it. Cost will increase because we either have more people taking a drug, or the unit cost of that drug has increased, or sometimes both. Let's start with a number of drugs that are in that "specialty class".

[00:12:52.200] - Ashley Hall
We're seeing more and more dollars from pharmaceutical companies being allocated to development of these drugs. They're highly profitable. You see the dark cloud of depression on TV, or Phil Mickelson peddling a drug, and people see them, and they somehow avoid all the side effects, including death, and just focus on the fact that it's going to heal their woes. So they go to their doctor and they ask for that drug. So we have manufacturers just continuing to expand the pipeline and look for therapies to treat these conditions.

[00:13:28.930] - Ashley Hall
The second thing is that we have an expansion of indications. What's an indication? Indication is the condition or the sickness, the disease that that drug is being treated. Where you have a specialty drug that originally might treat something like eczema, and it's expanded then to treat asthma, well, now you're going to have a much larger population of people that are taking a specialty drug because you've expanded the approved use to a condition that impacts a lot more people.

[00:14:05.000] - Andrew Cavenagh
You get a drug approved for eczema, it has to pass the FDA's test of being both effective and safe, and that gets you into the ballpark. Then you want to expand it to something like asthma, you just have to prove it's safe. So these drugs come in under one avenue, and then the manufacturers are trying to expand them as broadly as possible, to as many uses as possible without necessarily showing that they're more effective or as effective as things that are already in the market. Is that all accurate?

[00:14:40.280] - Ashley Hall
That is accurate. Then you think and you consider how advanced we've become. Innovation and our ability to really understand the way drugs work has really exceeded, outpaced our ability to appropriately reimburse for these treatments. So we understand these things. Probably one of the unintended consequences of COVID-19 is we have a better understanding of the mechanism of drugs. So things are moving through the pipeline much more quickly. We've arrived at this place where we've got an explosion of a specialty cost.

[00:15:16.500] - Andrew Cavenagh
Well, again, we could spend multiple episodes, and maybe we will on some of the nuances around drugs and specialty drugs in particular. But I think we've done what we accomplished today. Drop a little bit of knowledge and maybe leave the audience wanting more, maybe wanting more Ashley and less Clayton, but you know, we can let them decide that. Ash, thanks for joining in Clayton's stead today. Rashaun, thanks for being a part of it. We look forward to seeing you again on the next episode of 80/20 with ParetoHealth.

[00:15:52.650] - Voice-over
Thanks for listening to today's episode of 80/20 with ParetoHealth. We love hearing from you. If you have a question or an episode suggestion, please drop us an email at [e-mail]. That's [e-mail]. Dive deeper into 80/20 by visiting us at paretohealth.com/podcast. Lastly, make sure you follow us on Apple Podcasts, Google Podcasts, or Spotify so you don't miss an episode.