GLP-1s: The PBM Perspective (with Justin Jasniewski)

This video provides an in-depth exploration of the Pharmacy Benefit Management (PBM) market in 2024, focusing on its complexities, the drive for transparency, and the significant impact of emerging drug classes like GLP-1s and gene therapies. Justin Jasniewski, CEO of Serve You Rx, discusses how PBMs often complicate a system that isn't inherently complex, highlighting the need for greater clarity and value for self-funded employers. The discussion traverses the competitive landscape of the PBM industry, the evolution towards more transparent practices, and the critical role of PBMs in managing the escalating costs and unique challenges presented by novel pharmaceutical treatments.

The conversation delves into Serve You Rx's approach, emphasizing highly customized benefit plans, exceptional service, and flexibility for mid-market self-funded employer groups (200-5,000 covered lives). Jasniewski explains how his company differentiates itself in a crowded market by owning its assets, ensuring direct employee contact, and focusing on delivering value rather than merely critiquing larger PBMs. A significant portion of the discussion is dedicated to cost management strategies, including the effective use of "point solutions" like patient assistance programs and alternative funding to mitigate high drug expenses, and uncovering hidden fees and structural loopholes within the broader PBM ecosystem, such as rebates held by Group Purchasing Organizations (GPOs) or co-manufacturing deals for biosimilars.

The video then transitions to specific drug categories, offering a detailed look at GLP-1s and gene/cell therapies. For GLP-1s, the discussion covers their effectiveness in blood sugar reduction and weight loss, their associated side effects, the surge in demand, supply chain issues, and the low persistence rates among patients, underscoring the necessity of integrating these drugs with comprehensive lifestyle programs for sustained outcomes. Regarding gene and cell therapies, the conversation highlights their exorbitant price tags (e.g., $1M+), the implications for stop-loss carriers and reinsurance, and the need for robust strategies involving centers of excellence and diversified risk pools to manage these high-cost, potentially curative treatments. The future outlook for PBMs is also explored, predicting increased regulatory scrutiny, a shift towards transparent pricing, changes in rebate handling, and a greater demand for PBMs to be flexible and nimble in integrating new point solutions and risk-sharing models tied to actual spend.

Key Takeaways:

• PBM Complexity and Transparency: The PBM system is often made complicated by PBMs themselves, leading to a lack of transparency in pricing, fees, and rebate handling, which ultimately disadvantages employers and members.
• Customized Solutions for Mid-Market: Mid-market self-funded employers (200-5,000 lives) benefit significantly from PBMs that offer highly customized benefit plans, prioritize service, and demonstrate flexibility in integrating various point solutions.
• Differentiation in a Crowded Market: PBMs can stand out by emphasizing a strong track record, owning their operational assets, providing direct customer service with their own employees, and focusing on delivering superior value rather than just criticizing competitors.
• Proactive Employer Engagement: Successful employer clients are those who are service-focused, actively seek to take control of their drug spend, and prioritize actual cost reduction over chasing high rebate numbers or low spreadsheet prices.
• Leveraging Point Solutions: Utilizing patient assistance programs, alternative funding programs, and specialty patient advocacy initiatives can effectively move high-cost claims off the primary plan, significantly reducing employer drug spend.
• Uncovering Hidden PBM Fees: Employers should be vigilant about various ways money can be siphoned from the system, including rebates held by GPOs, co-manufacturing deals for biosimilars, and other opaque arrangements that reduce true transparency.
• GLP-1s: Efficacy vs. Persistence: While GLP-1s are highly effective for conditions like type 2 diabetes and weight loss, they often come with unpleasant side effects and low persistence rates (only 30-40% of weight loss patients remain on them after a year), indicating a need for integrated lifestyle programs.
• Gene and Cell Therapy Management: The multi-million dollar price tags of gene and cell therapies necessitate robust strategies involving stop-loss carriers, reinsurance, centers of excellence, and diversified risk pools to manage the financial impact on employer groups.
• Future of PBMs: Regulatory & Flexibility: The PBM industry faces increasing regulatory scrutiny, pushing towards transparent/pass-through pricing and mandated rebate pass-through. Future success will depend on PBMs' flexibility to integrate new point solutions and adapt quickly to market changes.
• Risk-Sharing and Outcome-Based Models: The future of PBM contracting will likely involve risk-sharing models where PBMs tie their fees to actual spend outcomes (per member per month drug expense) rather than just savings percentages, providing greater predictability and control for employers.
• ROI Challenges for Wellness Solutions: The high employee churn rate (average person switches employers every two years) makes it difficult for employers to see a clear ROI on long-term wellness and point solutions, as the benefits may accrue to a subsequent employer.
• Importance of Clear Communication: Employers should choose PBMs that can explain complex concepts in a straightforward, understandable manner, ensuring full comprehension of what they are getting, who is being paid, and what the expected outcomes will be.

Tools/Resources Mentioned:

• Sponsors: Paro Health, Claim.do, PlanSight
• Point Solutions/Partners: Paul, Payer Matrix, Script Sourcing
• Emerging Therapy Management: Emerging Therapy Solutions (ETS)

Key Concepts:

• Pharmacy Benefit Manager (PBM): A third-party administrator of prescription drug programs for commercial health plans, self-insured employer groups, Medicare Part D plans, and government programs.
• Self-Funded Groups: Employers who directly pay for their employees' healthcare claims, rather than paying premiums to an insurance company.
• GLP-1s (Glucagon-like peptide-1 receptor agonists): A class of drugs used to treat type 2 diabetes and, in some formulations, for weight management, by affecting blood sugar and satiety.
• Gene and Cell Therapy: Advanced medical treatments that modify genes or cells to treat or prevent disease, often involving extremely high costs.
• Stop-Loss Insurance: Insurance purchased by self-funded employers to protect against catastrophic claims that exceed a certain threshold.
• Reinsurance: Insurance for insurance companies, used to transfer risk from one insurer to another, particularly relevant for high-cost claims like gene therapies.
• Patient Assistance Programs (PAPs): Programs offered by pharmaceutical manufacturers or non-profits to help patients afford their medications.
• Alternative Funding Programs: Strategies to help patients access high-cost drugs, often by leveraging manufacturer programs or other non-traditional funding sources.
• Group Purchasing Organizations (GPOs): Entities that help healthcare providers realize savings and efficiencies by aggregating purchasing volume and negotiating discounts with manufacturers, sometimes holding rebates.
• 340B Programs: A U.S. federal government program that requires drug manufacturers to provide outpatient drugs to eligible healthcare organizations and pharmacies at significantly reduced prices.
• Net Promoter Score (NPS): A widely used market research metric that typically takes the form of a single survey question asking respondents to rate the likelihood that they would recommend a company, product, or service to a friend or colleague.

Examples/Case Studies:

• Serve You Rx's Business Model: Focuses on mid-market self-funded groups, offering highly customized benefits, flexibility ("seek to say yes"), and a commitment to service, standing out by owning assets and providing direct employee contact.
• Successful GLP-1 Use Case: A family member with uncontrolled type 2 diabetes, combined with nutrition coaching and exercise, successfully used a GLP-1 to get off other diabetes medications and normalize A1C levels, demonstrating its potential when integrated with lifestyle changes.
• Luxturna: Mentioned as a gene therapy that cures a certain type of blindness, highlighting the challenge for employers who pay for such a high-cost treatment only for the employee to switch jobs shortly after.