OR_Sempre Health_Chris Ford: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.
Kyle Wildnauer-Haigney:
Hey everyone! Welcome back to the Outcomes Rocket Pharma podcast. I’m your host Kyle, and today I’m excited to introduce Chris Ford. And Chris, thank you so much for joining the show today.
Chris Ford:
Yeah, glad to be with you, Kyle. Thanks for having me.
Kyle Wildnauer-Haigney:
Well, maybe to kick it off, I’d love it to hear just, what inspires you to work in healthcare and really your story of how you got to where you are today.
Chris Ford:
Yeah, absolutely, so I’ve been in the drug management industry for about 15 years now. I’m with a company called Prime Therapeutics. Been here for the last seven years, we’re owned by 19 Blue Cross Blue Shield health plans across the US, and have been very interested over my healthcare career in ways to ultimately lower the healthcare costs, drug spend, for our plans and plan sponsors, and find unique solutions that can deliver really on the quadruple aim, right? So controlling the spend but managing that with optimizing outcomes and positive overall patient experience. So have been in a bunch of different areas within kind of the drug management space, primarily on the payer PBM and specialty pharmacy side, but have been able to parlay that now into, you know, a capacity or a role with our Blue Cross health plans that really looks across all of the different areas in terms of drug spend management as well as optimizing patient outcomes.
Kyle Wildnauer-Haigney:
That’s awesome. And, you know, so excited to have you on because I think the, you know, the PBM space is incredibly opaque, complex. There’s a lot of movement going on in that space today with vertical integration, a number of acquisitions happening, and I think Prime just announced one in the last couple of months, but I’d love it if maybe you could highlight some of the key trends that you’re seeing play out in the market today.
Chris Ford:
Yeah, I think you’re spot on, Kyle, in terms of the consolidation that we’re seeing and it’s really across the big three PBMs. Right now, all of the Big three PBMs are consolidated with the National Health Plan. They all own the pharmacy benefits, management channel, they all own their own GPO, which has been new over the past few years. They all own their own specialty pharmacy, and they’re even getting into other areas in terms of medical specialty management, in terms of provider services, and some of them are even getting into owning some of the provider space and most specifically on the primary care side. But so we’re seeing that consolidation and really the growth in influence and control in how they’re leveraging that across this broader healthcare ecosystem and ultimately doing what they feel is best to provide really value for their shareholders and just how to have more control and influence across that broader, you know, drug distribution ecosystem.
Kyle Wildnauer-Haigney:
And so when you kind of see what’s happening today and play it out maybe 3 to 5 years, whatever time period is most appropriate in your mind, what do you think is going to be the implications of that?
Chris Ford:
Yeah, and so I think we’re actually seeing it play out right now. And so I think, you know, traditionally, as you look at the breakout or for the information that’s publicly available in terms of the big three PBMs and what are the sources of profit for them overall, everybody thinks about rebates. It’s, you know, rebates and spread from their overall network constructions. And while that still is a large vector in terms of profitability for them right now, we’re starting to see that shift a little bit more into the specialty dispensing, right? And so as specialty overall, specialty drugs continue to increase in terms of, you know, the pipeline and the overall spend, and specialty represents more than half of drug expense overall, as we’re seeing that play out, we’re seeing more strategies that are pretty aggressive at how to control the channel, how to move that specialty utilization into an own asset of the big three to control that dispense. And overall, kind of how we’re seeing that play out is that specialty dispense makes up over a third of the big three gross profit, right? And so, as that’s playing out and there’s other dynamics around, you know, things like 340B and being able to capture some of that value, you know, other programs that we’re seeing playing out are different sources of funding, such as Copay Maximizer programs and cards. We’re just seeing more and more of the big three trying to control and move as much of the utilization into their own assets really for purpose of overall profit.
Kyle Wildnauer-Haigney:
Yeah, fascinating. And so tell me about Prime Therapeutics and really how you guys are positioned in the marketplace and how you see your kind of differentiate from those big three.
Chris Ford:
Yes, so we’ve been around for a little over 20 years. We’re a PBM that is owned by 19 Blue Cross Blue Shield health plans across the United States. We manage pharmacy benefits for over 30 million members. So we have a, you know, a decent size and scale, and overall, though, where I think we’re differentiated from really from the big three and other competitors that are out there is the whole notion of channel independence. And so going back to the big three, kind of growing their vertical stacks and doing everything they can to move utilization into their own assets, into their own channel, we don’t have that same conflict, right? So we’re looking across all of the innovation that’s happening within the market. You know, you’re seeing the role of health systems in hospitals getting into the specialty pharmacy space, they’re opening up their own specialty pharmacies, and it makes sense. If you’ve got a neurology clinic or a rheumatology clinic, having that integration and owning a specialty pharmacy, being able to send that script from the doctor within the purview of that health system into the own specialty pharmacy, there’s a lot of benefits there in terms of the coordination, the patient care and management, integration in terms of all the data and being, having visibility, in terms of all the lab notes and other patient data. There’s also value from 340B and how, you know, health systems that are 340B covered entities can procure drugs at a cheaper price than those that are not 340B covered entities. So we think there’s a lot of value in looking across all the different innovators and specialty pharmacies and really finding that right value for plan sponsors and patients specifically around how do you control the financial side of the equation and get the best financial value, but also balancing that again with the clinical outcomes and the overall patient experience and quality?
Kyle Wildnauer-Haigney:
Sure, it’s really kind of letting, being agnostic to any one channel or way to structure a contract to give your clients the ability to decide and ultimately the patient more flexibility. Is that right?
Chris Ford:
Yep, I think that’s spot on.
Kyle Wildnauer-Haigney:
That’s awesome, and I’d love to hear, if you have any examples of really how this has impacted outcomes, or the patients have noticed kind of a difference in, kind of a, service that’s delivered by Prime or supported by Prime versus one of the other PBMs.
Chris Ford:
Yes, so we have a program now, it’s called Integrated Rx, and the, you know, the value thesis behind it is ultimately that if you can have A, a broader network, and if you can allow some of these different hospitals and health systems that own their own specialty pharmacies, and you can get them to contract with you at very reasonable reimbursement rates while also having other requirements around things that have a positive influence on the clinical outcome as well as the patient satisfaction, that that ultimately is going to create a model that provides the best value for plan sponsors and their patients. So we’ve had this model in place for almost a year now, we’re starting to see some really great results just in terms of the financial value as well as the clinical value. But then there are some broader considerations as well that we’re starting to tap into. And so I think, you know, if you look at where healthcare is today and some of the abrasion that exists between the payer arm and the provider arm, we need better overall collaboration between the provider and the payer if we’re going to have a long term sustainable drug delivery system that provides good financial value as well as clinical outcomes and experience, and I don’t think that exists to the point that it needs to today. So we’re ultimately looking at this more collaborative model that doesn’t block out health system or hospital specialty pharmacies from networks, is what we’re seeing really across what the big three are doing, but rather having this collaborative partnership is really essential as we think about kind of where the puck is going and needing to have data sharing across entities, needing to go from the traditional fee-for-service type of a setup into more of a value-based arrangement. But you need to have a strong foundation and collaborative nature between your provider and payer arm, which I don’t think exists today. So that ultimately is where we’re trying to go in the future.
Kyle Wildnauer-Haigney:
Absolutely, and maybe you can give the audience a prediction or a bet. How long until you start to see the majority of drugs be contracted through value-based contracts? Do you have any thoughts on that?
Chris Ford:
Yeah, and so that’s one of the key things that our clients are talking about, and that ultimately down to our, all the plan sponsors that everybody wants to go from fee-for-service into value. But I will say is that it is incredibly complex and nothing massive is going to happen overnight. So this is going to be a multiyear type of a strategy. And I don’t have any great prediction in terms of, you know, the set number or percentage of contracts that are going to shift into VBC arrangements, but ultimately, you have to start with a strong infrastructure and platform to build off of. And right now, again, with the big three PBMs, they control 80% of the PBM market share, and they’re able to drive roughly 80% of that market share into their own specialty pharmacies. And so they’re doing that through restrictions around their network structure and benefit design and other mechanisms to ultimately steer that volume into their own asset. That is not creating a collaborative environment that’s needed for value-based contracting initiatives to ensue. So we’re really looking at it in terms of build the right infrastructure, build collaboration across provider and payer, and then ultimately have that lead into, you know, broader VBC arrangements between all the necessary parties.
Kyle Wildnauer-Haigney:
I love it. Focus on the foundational pieces first before we get into some of the more complex contracts with all the stakeholders. I’d love to just hear an example or maybe one of your experiences of the biggest setback that you have personally experienced, or kind of, within Prime Therapeutics over the course of your time there.
Chris Ford:
Yeah, so I think just in general, again, this is in healthcare. This is about the long game. We’re with, the number of large stakeholders that exist across the broader ecosystem, right, as you think about on the payer side and PBM and across distribution and the wholesale distributors and the pharmaceutical manufacturers and the specialty pharmacies themselves, there’s a lot of very large entities that exist that are all going after what’s in their best interests. And I think the challenge that we’re seeing is that when you have entities that are solely looking at what’s in their best interest, but they’re not looking across that broader ecosystem, you get into a scenario where everybody just is going after their own, you know, self-interest and they’re not looking to collaborate and they’re doing things that, you know, doesn’t necessarily create value across that broader ecosystem, and that’s where we need to go in terms of seeing these longer-term sustainable solutions. So, you know, to answer the question specifically in terms of the challenges that we deal with, it would be around different entities that we support, really looking at the here and now and doing everything possible to control spend, just given the rise of specialty pharmacy spend, that’s become a major challenge. So we certainly, you know, have that as one of our foundational goals of providing the best overall financial value, but we want to want to hedge on that and do it in collaboration with the other stakeholders so there’s value for everyone across that broader supply chain. And that’s, I think, the only way that we’re going to get into some type of a long-term sustainable type of a setup in a model. So it really is, don’t chase the financial value as kind of your sole driver today, but do that in balance of initiatives that can provide value for all entities and that ultimately are looking at all quadrants of the quadruple aim which you know financial value is one of them but it’s not the only one.
Kyle Wildnauer-Haigney:
Yeah, I think the quadruple aim is such an important framework to assess, you know, how should we work together to drive value for healthcare. So, Chris, one question for you, you know, there’s a lot of discussion around the expense of these specialty drugs. You can see some medications costing $80,000. I think one recently was priced at $2 million, which is just astronomical. I would love your thoughts on really where is this trend going? Where, are our drugs just going to continue to increase into the future without kind of any consolidation or any discounting? What do you think is going to happen there?
Chris Ford:
Yeah, I think that’s a great question, Kyle. So ultimately, as we look at the composition of drug spend today, you’ve got specialty that represents about half of overall drug spend a little bit more, and of that, it’s split pretty evenly between drugs that are administered on the pharmacy and the medical benefit. But where the puck is going in terms of the pipeline, it’s all around specialty. Over two-thirds of drugs in phase three trials, today are specialty drugs, and the majority of those are going to be administered under the medical benefit. To your point, we’re seeing the rise of selling gene therapies, right? So the science is absolutely crazy in terms of the progressiveness and these curative therapies that are treating these very small orphan conditions and, you know, really small patient populations overall. So they do come with a very large cost on a per-patient basis, and we are seeing drugs that are north of $1,000,000 on a per-patient basis. But you really need to think about it in terms of the value. In terms of the big selling gene, you know, therapy drugs that are in the pipeline, the biggest ones right now that everybody’s looking at are around hemophilia. And your average hemophiliac today is spending over half a million dollars annually. If you can have a gene therapy that’s actually curative, that’s treating their current condition, that doesn’t require the, you know, the ongoing factor use that they have today, even if a drug comes out with a $2, $3 million price tag, you only need a few years, right, you know, four or six years to ultimately be at parity with the financial picture today. And so that’s where it all ties back into the need for collaboration and the need for value. And we’re only going to get to that place if you have aligned interest across all the core stakeholders within the pharmaceutical supply chain. So again, our value prop at Prime is not to push volume into our owned assets or to do things with the motive of profit, but rather to provide the best overall value for our plan sponsors and for our members, and to do it in a collaborative fashion with all the different stakeholders that are needed to get into this more value-based type of a framework.
Kyle Wildnauer-Haigney:
And it is just in time, it sounds like. I mean, with majority of the pipeline of drug spend being this large molecule, expensive therapies, investing in the infrastructure to handle that across many stakeholders is, I imagine, wildly important and differentiates you among other competitors.
Chris Ford:
Yeah, I think that’s right. Because, you know, to your point, the current market is still evolving in terms of these really complex cell and gene therapies, and other non-cell gene therapies that are treating, again, these ultra-orphan and rare conditions. But again, where the pipeline is, where the pharmaceutical manufacturers are investing in terms of their R&D dollars, it’s all around these complex conditions, these very high costs conditions with smaller patient populations. So this is where the market is going, and ultimately, if all the different entities are not ready for that, they’re going to get hit with some very expensive bills that they might not be in a position to pay for. So it’s absolutely imperative to start building that foundation and that framework right now so that when we get into this future state that will have a good number of these very, very expensive one-time curative therapies, that everybody is able to pay for them and to ultimately get the right value, you know, clinical value outcomes, experience, etc., for the members that we all serve.
Kyle Wildnauer-Haigney:
Well, that’s fantastic, Chris. So maybe before we conclude, please share just like a closing thought and where the listeners can get in touch with you.
Chris Ford:
Yeah, thank you very much, Kyle, for having me on. It’s been great talking with you today. A closing thought would really be that ultimately we need to, as a society in the US, look at this whole picture of the quadruple aim. We need to balance the need for driving financial value and controlling spend with also having solutions that provide the best overall clinical value, patient experience, and net quality. So for any entity that sees the need for that balance and not solely going after financial value and overall company profitability, I think Prime Therapeutics is a great organization to collaborate with. Ultimately, any listener can go to our website, PrimeTherapeutics.com, or connect with me directly on LinkedIn. Happy to speak with anyone.
Kyle Wildnauer-Haigney:
Well, Chris, thank you again for coming.
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