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Latest Executive Roundtables

Asembia 2025 

Topic

Sales and Marketing

1rem

The quest to align cost with care, enhance data visibility, and shed the dependence on outdated revenue streams.

What Innovation in PBM Management Really Looks Like

The draft assessment finds that the popular weight loss drugs are costly but worth the price tag, while also urging for broader coverage and policy solutions.

ICER Releases Cost Analysis Report on Obesity Treatments Semaglutide, Tirzepatide

The merger integrates EVERSANA’s commercialization services with Waltz Health’s AI-powered payer tools to address patient affordability, streamline drug access, and reduce costs for high-expense therapies such as GLP-1s.

EVERSANA and Waltz Health Unite to Address Drug Pricing and Access Issues

Health plans face challenges in risk arrangements for orphan drugs, but increasing competition may open doors for innovative pricing strategies.

Risk Contracting When Orphan Disease Space is Crowded

The 15% tariff on pharmaceutical imports from the European Union is not a short term inconvenience, it represents a structural shift in the economics of the US pharmaceutical market.

How Can Pharma Leadership Prepare for the Current Tariff Environment and Potential Changes in 2026?

The Challenges and Advantages of US Healthcare in a Worldwide Perspective

, Rob Abbott, CEO of ISPOR, discussed how health economics and outcomes research (HEOR) is transforming the way health systems and governments around the world address rising drug prices. Abbott highlighted the growing importance of real-world evidence, patient-centered approaches, and artificial intelligence in shaping value-based healthcare decisions. He also emphasized the critical role of cross-sector collaboration among regulators, payers, academia, and industry in advancing evidence-based policies and improving patient access to innovative therapies.

Pharmaceutical Executive: From your global perspective, how do US healthcare policies compare with other systems in terms of value-based care and outcomes measurement?

That’s a layered question, and I want to start with a caveat: comparing healthcare systems across the globe requires accounting for significant social, cultural, and economic differences. That said, the US performs quite well in some defined areas. For example, cancer screening rates are strong, flu vaccination rates remain relatively high, advanced medical technology is widely available, and there is excellent specialized care for complex conditions.

However, the broader picture is more mixed. Like many healthcare systems, the U.S. is grappling with rising costs, growing complexity, and the rapid evolution of digital health. At the same time, new ideas are emerging about how to define and measure value in care. The U.S. spends more per capita on healthcare than nearly every other high-income nation, yet it remains the only one without universal coverage. As a result, millions of Americans are either uninsured or underinsured, leading to outcomes such as lower life expectancy, higher rates of chronic disease, and greater prevalence of obesity compared with peer nations.

So, while the US excels in certain areas, it underperforms in others. The common challenge—shared globally—is figuring out how to contain rising costs while managing an increasingly complex healthcare landscape.

 Health economics and outcomes research (HEOR) is increasingly shaping how health systems and governments address rising drug prices. HEOR integrates clinical trial results, real-world data, patient experiences, and economic analysis to evaluate medical interventions. By assessing a treatment’s cost-effectiveness and real-world value, HEOR informs value-based pricing and decision-making, going beyond traditional clinical trial data to determine how drugs perform in everyday patient care.

A key trend highlighted in ISPOR’s 2024–2025 Top 10 Trends report is the growing importance of real-world evidence. Unlike clinical trials, real-world evidence captures patient outcomes, side effects, and overall cost-effectiveness after drugs enter the market, making it critical for both policy and clinical decisions. Another transformative trend is the accelerated adoption of artificial intelligence (AI) and digital health tools. AI is being used to synthesize literature, analyze complex data sets, and tailor treatment protocols efficiently. However, experts caution that while AI offers significant potential, human oversight remains essential to ensure patient-centered care.

From a global perspective, US healthcare excels in certain areas, such as cancer screening, vaccination rates, and advanced medical technology, but faces challenges including high per-capita costs, lack of universal coverage, and suboptimal outcomes in chronic disease and life expectancy. These issues highlight the universal challenge of managing rising costs amid increasing complexity.

Collaboration across government, academia, and industry is critical to advance evidence-based health policy and patient access. Organizations like ISPOR, with its global membership spanning regulators, payers, patient organizations, and academics, are fostering these partnerships. Initiatives, such as pilot projects aligning regulators and health technology assessment agencies in Europe, illustrate how coordinated efforts can improve patient access to innovative therapies while navigating the complexities of cost, efficacy, and healthcare delivery.

Overall, HEOR, real-world evidence, AI, and multi-stakeholder collaboration are central to shaping efficient, patient-centered, and cost-conscious healthcare systems worldwide.

Videos

Rob Abbott, CEO, ISPOR, highlights that the United States excels in areas like cancer screening and advanced medical technology while facing challenges such as rising costs, lack of universal coverage, and health outcomes that lag behind other high-income nations.

Video Series

Understanding the Impact of Health Economics on Cost Effectiveness and Patient Outcomes

Pharmaceutical Executive: How is Health Economics and Outcomes Research (HEOR) shaping the way health systems and governments around the world address rising drug prices?

That’s a very timely and important question. To level set, health economics and outcomes research is an interdisciplinary field that draws on clinical trial results, real-world data and evidence, patient experiences, and economic analysis to evaluate medical treatments and interventions. What’s most important is that HEOR provides evidence to guide value-based pricing and decision-making, linking the cost of a treatment or drug to its real-world impact and patient outcomes. In this way, HEOR helps determine the cost-effectiveness of drugs, assessing value well beyond what clinical trials alone can reveal.

Health economics and outcomes research (HEOR) is increasingly shaping how health systems and governments address rising drug prices. HEOR integrates clinical trial results, real-world data, patient experiences, and economic analysis to evaluate medical interventions. By assessing a treatment’s cost-effectiveness and real-world value, HEOR informs value-based pricing and decision-making, going beyond traditional clinical trial data to determine how drugs perform in everyday patient care.

Rob Abbott, CEO, ISPOR, explains how health economics and outcomes research is helping healthcare systems measure the true value of treatments, improve patient outcomes, and address rising drug costs globally.

Executive Orders and Drug Pricing: Constitutional Limits on the Most Favored Nation Model

Ron Lanton, Partner, Lanton Law, addressed the growing debate over the limits of presidential authority in drug pricing policy. One particularly controversial issue is the use of executive orders to implement international pricing benchmarks—such as the Most Favored Nation (MFN) model—without congressional approval. This approach raises fundamental constitutional questions about the separation of powers, as drug pricing has traditionally fallen under the legislative authority of Congress. As the executive branch seeks new ways to address rising pharmaceutical costs, legal scrutiny is intensifying over whether such actions overstep the bounds of presidential power.

Pharmaceutical Executive: What are the constitutional or statutory limits on the President’s authority to implement international pricing benchmarks like the Most Favored Nation model through executive order, without congressional approval?

 Executive orders can generally be used to enforce powers that the President or the executive branch already possesses. The key issue here is whether implementing something like the Most Favored Nation model via executive order exceeds those powers. Constitutionally, Congress holds the authority to legislate on matters such as drug pricing—not the executive branch. The legal boundaries in this specific area aren't entirely settled, but this executive order is likely to face significant legal scrutiny. Courts will likely examine it through the lens of the separation of powers doctrine to determine whether it oversteps presidential authority.

Ron Lanton, Partner, Lanton Law, discusses the constitutional and statutory challenges facing the President’s use of executive orders to implement international drug pricing models such as the Most Favored Nation, highlighting the ongoing debate over separation of powers and congressional authority.

Jennifer Kyle, CEO and founder of Condor, explores how improving financial management directly impacts drug pricing.

How Improving Financial Management Directly Impacts Drug Pricing

video interview, Jennifer Kyle, CEO and founder of Condor, discusses the inspiration behind creating a financial cloud platform for biopharma R&D. During the beginning of her career in auditing and finance, she repeatedly encountered the same financial management challenges across various biotech companies. This led her to develop Condor, a platform that integrates clinical and financial systems, providing a unified system of record for accruals, vendor oversight, budgeting, and forecasting. Future plans include advanced AI and machine learning for benchmarking and deeper integrations with clinical systems.

Pharmaceutical Executive: How does improving financial management directly impact drug pricing?

 Financial management's direct impact on drug pricing is kind of simple. Clinical trial outcomes ultimately affect drug pricing. Prices are set to recover the significant R&D investments before that patent cliff expires. This includes expenses from clinical trials, regulatory compliance, and the high rates of failure. It's not just one clinical trial; it's all of the trials that you've ran—and most have failed in the pursuit of getting it to market. You've got to look at those entire portfolio costs. The higher and less predictable these development costs are, the greater the pressure to set higher prices to achieve that profitability and to ensure funding for future treatments.

Managing your cost is extremely important to be able to recover that revenue. Aside from drug pricing, the predictability of your costs and financing is directly tied to the availability of new treatments. We see this specifically around oncology and rare disease therapeutics. Those programs are very expensive and highly unpredictable. Especially with rare diseases, there aren’t massive patient populations to offset those costs. 

Being able to fail faster for a lesser amount of money, and being able to pivot and adjust, is ultimately paramount for being able to get that drug to market as fast as possible and into the hands of patients that need it.

Kimberley Chiang, vice president of biopharma commercial solutions at CoverMyMeds, discusses how the industry leverages data and technology to identify and address affordability issues before they become a barrier to patient access.

Proactively Identifying & Addressing Affordability Issues with Predictive Analytics

 video interview, Kimberley Chiang, vice president of biopharma commercial solutions at CoverMyMeds, discusses "The 2025 Medication Access Report." She highlights gaps in data-sharing and cross-functional collaboration as major bottlenecks that cause delays, rework, and increased patient burden. Chiang shares that only 3% of patients utilize support programs due to a lack of awareness. A large majority of the report's respondents plan to expand funding for patient support programs within the next 5 years due to large number of new therapies expected to come to market.

Pharmaceutical Executive: How can the industry leverage data and technology to proactively identify and address affordability issues before they become a barrier to patient access? What role does predictive analytics play in this?


 The ability to be proactive in identifying and addressing those gaps requires a centralized data system and a greater ecosystem. The ability to leverage data requires that data to be comprehensive. Predictive analytics will run on strong data models, and in order to have those, you need a seamless experience.

How do we capture data along the patient journey, and how do we ensure that predictive analytics will help us analyze that data? It all starts with the ability to streamline the data. If we don’t begin to bring data sources together in real and important ways, we will not be able to properly allocate our resources and spending in pharma. There will be some forecasting and assumptions, but with some real-world data (RWD) integrated.

Think about the addition of an integrated data model with RWD and what that could do for better predictive analytics. Our assumptions would be lowered, and our predictions would be better. We would have optimized predictability for where the funding needs to be directed.

The second piece of that is you have better clinical outcomes if you can identify in advance. You will not have patients walking away from their prescriptions, which continues to be a challenge. We are also seeing significant increases in claims denials. About 73% of claims are denied. What do we do when claims come back denied?

With predictive analytics, there are affordability and co-pay types of expansion. There’s also focus and energy around overturning claim denials. How do we ensure that the claim was denied for righteous reasons? The ability to have all of the data integrated and run it through predictive analytics alongside RWD would help us improve clinical outcomes. Those patients will not be denied medication that they need and rightfully deserve.

Doing all of this more efficiently will remove costs from the ecosystem. There is significant fragmentation in all of the processes. To bring all of that data together to understand the market access for a single brand launch, bio-pharmas must piece together all of that information. Bringing data together and using predictive analytics with strong data models will help these companies do so more efficiently. It will take costs out of the system and speed patients onto the right medications. Healthcare providers will also spend less time waiting for the patient to get approved.

Kimberley Chiang, vice president of biopharma commercial solutions at CoverMyMeds identifies innovative strategies and solutions for addressing the rising cost of medications and improving patient access.

Strategies to Address Rising Medication Costs & Improve Patient Access

Pharmaceutical Executive: Beyond traditional copay assistance programs, what innovative solutions or strategies does the report show are emerging to address the rising cost of medications and improve patient access?


 Beyond traditional copay programs, innovating in this area is going to be critical in the next few years. The challenge is to rethink the journey. We need to see patients in more dimensions than we’re seeing them today. We need to see more than just their ability to pay. There are more things that are critical drivers of adherence and access to medication that should be considered along the patient journey.

We are big advocates for a comprehensive view of the patient, expanding that view, and then bringing that into the data. For folks that are bringing and designing projects and financial support programs, this means figuring out how to design those dimensions in to ensure that we’re not just looking at pure affordability. This means going beyond asking if they have coverage and what their copay is. Expanding beyond that is one of the most critical elements to evolving the state of patient affordability programs.

The way to do that is in the design. Traditional co-pay programs only look at two dimensions: do you have a copay and can you afford to pay. We have to look at a couple of different elements. Using patient education as an example, we can educate patients to self-advocate and declare the challenges they might be experiencing in a community. The ability for a person who’s living on their own to pay for a taxi to take them to receive their medication at a distant clinic impacts whether they even consider taking the medication.

How can we look at all of the dimensions of a patient and plan those assessments into program design to ensure adherence from the beginning? We think of adherence as perpetually being on the medication and living well. A lot of the work in the past 5 years has been around structing adherence support programs for patients who have agreed to go on a prescription and have no affordability issues.

Addressing adherence issues at the very beginning is a change to that paradigm. We’re moving off of the linear patient journey and looking at dimensionalizing the patient experience. How do we plan forward and proactively identify those gaps? What algorithms can we use with predicative analytics to look at a patient’s profile and show what a support program looks like that has the best chances of that patient getting, staying on, and doing well with medication? What levers do we need to play with in a support program to ensure that the patient’s holistic needs are managed? This includes educating them, managing travel concerns, and pre-planning all of that.

The journey doesn’t look like a straight line. We need to constantly review if the patient’s needs have changed as their journey improves or time passes. Are there ways to intervene early using predictive analytics? Should we intervene with certain types of patients on certain dimensions early in their healthcare journey to have the best outcomes? This is the important element in designing patient support programs. We’re going to spend the money, but how do we do that differently going forward?

The other element is bringing the concept of digital healthcare forward so that patients have digital solutions and tools at their fingertips. Patients today can do all of their other needs on their phones. This is the mobile phone culture which we talk about quite extensively in the report. However, a patient who’s experiencing illness can’t pick up their phone to search for help with their questions or find affordability options. They don’t have tools to monitor where they should be in their healthcare journey. There is an overwhelming appetite for innovative tools.

However, digital solutions come with a bit of a paradox: more digital solutions mean less human touch. The industry is going to be challenged with striking that balance between putting efficient digital tools in the hands of the patients while also allowing for the human touch when it’s needed. That’s a balance that we need to strike, and it’s going to be a challenge that the industry is going to face. Eighty percent of patients say they prefer something digital, but how many are actually using digital tools when available?

What we need to monitor as we bring these brilliant, innovative solutions forward is the balance with the patient’s access to a human touch.

Kimberley Chiang, vice president of biopharma commercial solutions at CoverMyMeds, identifies innovative strategies and solutions for addressing the rising cost of medications and improving patient access.

Peter Ax, Founder & CEO of UpScriptHealth, identifies strategies that pharmaceutical companies and digital health platforms can employ to navigate a potential drop in demand due to tariff-induced increased costs. 

How Pharmaceutical Companies Can Mitigate a Potential Drop in Demand Due to Tariffs

 Video Interview, Peter Ax, Founder & CEO of UpScriptHealth, discusses the impact of tariffs on the pharmaceutical industry, highlighting that tariffs will initially affect pharmaceutical companies, particularly those dealing with branded medications and generics. He notes that tariffs could lead to strategic supply chain changes, including potential US manufacturing shifts. Digital health platforms like UpScriptHealth aim to reduce friction and costs in healthcare, potentially offsetting tariff impacts. Ax emphasizes the importance of telehealth in ensuring medication availability and the strategic partnerships between digital health platforms and pharma companies to improve patient care and access. He also praises Pfizer's approach to delivering comprehensive care rather than just selling medications.

Tariffs could impact consumer demand. What strategies can pharmaceutical companies and digital health platforms like UpScriptHealth employ to mitigate this potential drop in demand due to increased costs?

Tariffs will increase costs — short run and long run — and will have different effects on the supply curve. But the bigger issue is, how do we solve the systemic problems that are involved in healthcare? And that's where digital platforms like UpScriptHealth (UpScript) come into play. The number one thing we have to do is take the friction and cost out of the system, and that's what we do every single day. We make trained clinicians available to patients right away. We make the insurance reimbursement process a lot simpler in terms of: we'll process the prior authorization for patients. We’ll process a lot of things behind the scenes to help the patient get on therapy as fast as they can.

So, we sort of take friction out of the system, and that's really going to be the job of digital health companies like UpScript, and that's going to continue to be the job. Take costs out of the system, take friction out of the system, make medications accessible, and if we can take some costs out of the system, we might actually offset any effect the tariffs have.

In this part of his Pharmaceutical Executive Video Interview, Peter Ax, Founder & CEO of UpScriptHealth, identifies strategies that pharmaceutical companies and digital health platforms can employ to navigate a potential drop in demand due to tariff-induced increased costs.

Peter Ax, Founder & CEO of UpScriptHealth, addresses how tariffs will affect pharmaceutical costs and which drug categories will be most affected.

How Tariffs Will Drive Up Pharmaceutical Costs & Which Drug Categories Will Be Most Affected

Will tariffs drive up pharmaceutical costs? Are there particular types of tariffs or drug categories that would be more affected than others?

When you think about tariffs, you really have to think about how they impact micro markets. Let's, for example, think about there's generic medications and there's branded medications. And let's think about those as two micro markets for a minute. The branded medications, the cost of branded medications, comes from two things, right? It comes from raw materials, and it comes from labor. So, if the price of raw materials goes up, or increases in price for what we're importing in raw materials, certainly that's going to, on its face, impact the price of the development of that medication.

However, the fact that it's impacting the price that medication will not necessarily impact the price to the consumer, because think about all the intermediaries involved in healthcare. There's payers involved, there's PBMs involved, and because of that, what you will see is, let's say, an increase in pricing raw materials, increase in price in the manufacturer of that branded drug, and the person that's going to really bear the brunt of that is really the pharmaceutical company in the short run.

Now, in the long run, it impacts all consumers, but in the short run, it's really the pharmaceutical company, because they have to renegotiate contracts with their PBMs and renegotiate pricing. I mean, some of the contracts might have specific clauses that deal with tariffs as an issue, but most won't. There'll be a lagging effect on any price increase to individuals, and really, it's the pharmaceutical companies that will bear the brunt. The second piece of that analysis is the other micro market, generics. If you think about generics, a lot of the cost of manufacturing generic is really the raw material. So, tariffs may have a larger impact there.

Not only that, but the generics Marketplace is a thin margin marketplace, so you could even see perhaps a curtailment of some supply as manufacturers decide they're not going to manufacture certain drugs that require increasing prices and raw materials that they can't pass on to the consumer. So it really depends on how quickly they'll be able to pass that pricing onto the consumer. The other side of that argument is the consumer price for generics is so low that to go up 10 or 20% isn't really going to be a very dramatic number. So you may not see a large impact in the generic space at all, or you might see certain manufacturers deciding that they want don't want to be involved any longer in manufacturing certain drugs.

Now, having said that about the micro markets of tariff pricing, I think one of the bigger implications of tariff changes that will take place is in the boardroom. Because if you think about it, what sudden tariffs are doing is forcing companies to analyze their strategic supply chain, where's Where are their supplies coming from? What manufacturing do they need to bring into the United States? What manufacturing do they need to redevelop? Do they do they need to redeploy assets and resources? And those are board level discussions. So frankly, I think tariffs have an instantaneous effect on pricing, right, but they have a much longer-term effect impact on strategically. How is the supply chain going to evolve? How is where is manufacturing going to move? And if you're a board member of a major pharma company today, you've got to be asking yourself, ‘Is your company properly positioned to deal with supply issues when tariffs come and go?’, and it looks like tariffs might be in the sort of vernacular for the next at least the next four years, and probably longer.

In this Pharmaceutical Executive Video Interview, Peter Ax, Founder & CEO of UpScriptHealth, addresses how tariffs will affect pharmaceutical costs and which drug categories will be most affected.

Ron Lanton on PBMs and Mark Cuban's Drug Plus

Pharm Exec: Recently, CVS and Express Scripts have announced plans to set up pricing models that follow Mark Cuban’s Cost Plus Drugs model. What do you think the overall implications will be for the pharmaceutical industry?

There's definitely going to be changes. I know we'll probably get into what other pair of eyes are looking at pricing when it comes to the drug industry. I think what Mark Cuban did transformed a lot of things. I still think we have to see where his vision is going because the last time I spoke about this, he had just launched, and he had a plan, but it seemed to go towards vertical integration. He was originally going to start with low cost drugs, and that's actually moved a lot of people. We've seen retail pharmacies that are doing cost plus models and it shows that he's really changed a lot of things for the industry. It's always been this struggle to try to get to the true cost of the drug. When you look at what he's done here with this cost plus company, he has 1000 generics, with 10 brand name medications in about 38 states. It's not a small operation by any means, but he's not a typical businessperson we would normally see. When you look at his interviews, and you see his philosophy of "Hey, I've made my money and I just want to make a change," he's definitely done that. 

Pharm Exec: Specifically focusing on CVS, what were the potential motivations for large PBMs to take action on drug pricing?

From an outsider looking in and seeing all the changes that are happening, it's purely monetary. With more and more retail pharmacies looking at this model and more policy maker scrutiny on what this model is and trying to get to the true cost of a drug, the out-the-door cost is usually what the industry calls it. With them being the largest pharmacy benefit manager, it's almost as if they had no choice but to start changing with the times. 

Like many, I was very surprised when they announced their plan, the cost vantage plan, which entails customers paying drug manufacturers the list price plus a markup and a dispensing fee. They're saying that it most cases, it's going to result in lower drug prices. But, I think that many of us are skeptical. Personally, I'm skeptical, because I've dealt with CVS where we were on the other side of legislation trying to get some fairness put in as far as pharmacy reimbursement. To hear what some of those arguments have been in the past, about how things have been justified or should be justified a certain way didn't hold a lot with me. I'm encouraged that they're trying to make things right, but I think that we need some additional details to understand how this is going to work. I haven't seen it yet but maybe others have. 

Pharm Exec: At this time, can you give us an update on the current state of PBM legislation in Congress? Is there anything on the horizon that you expect?

There's quite a few things. I've done my research and there were multiple bills on point. I'll give you a few that have kind of caught momentum. 

The first that made a lot of news was the Lower Cost More Transparency Act. That bill had a lot of things such as a spread pricing ban. Under their PBM transparency section, they stated that plans offered by large employers would require PBMs would have to report transparency twice a year. Some of those actions include drug selection and acquisition costs, rebates and fees, any out of pocket spending, and rationale behind formulary placement. So, these are things to really get at. 

There were also some privacy issues with that regarding HIPPA, and they also have the gag clause ban. It's currently at the senate. I think things might happen with the senate this year. Hopefully, they won't change any of the language because if they do, it has to go back to the house and they have to work that out. So, I think they want to make as little waves as possible. But, over in congress they have a lot of issues to deal with right now that we've seen in the news, so I don't know if this is going to clear before election time. 

Two more that I'm watching are the Pharmacy Benefit Manager Transparency Act, which prohibits PBMs from engaging in certain activities when managing drug benefits, and the Pharmacy Benefit Reform Act, which basically states what a PBM has to report regarding the amount of prescription drug copay assistance plans that are funded by drug manufacturers and a list of covered drugs under the plan during a certain report period. It's transparency, but it doesn't go to the same level as the other two bills that I had mentioned. 

I think if I had to look at what were my three strongest bills right now, it would be those. 

Pharm Exec: What do you think influenced Congress to take action on PBM transparency?

I think just the business climate as a whole. It's no secret that many independents are closing for these very reasons we've been talking about. That's been an open secret for a long time. We even had a supreme court case about it where in 2020 in state legislatures, PBMs were saying "You can't pass state transparency laws." That argument was shot down. Now, it's just the aftermath of how far can a state take these things and what is their oversight when they pass a law. 

This issue has been around for awhile. I think that congress has also been watching the FTC. They've been very active in what they've been trying to figure out. I know that in 2022, the FTC launched what is called a section 6B study, and that's basically a study where they were trying to investigate PBM business practices. They were asking for some additional information from the other large PBMs specifically about what some of these contracts have. Recently, we've had a couple of senators say that something now needs to be done. 

Pharm Exec: What could be the long-term implications of the Cuban model on drug pricing?

I think it's too early to say. I think right now it moves us towards that true cost of a drug, and I think it puts more pressure on a PBM to stop putting all these other things in the pot to try and sweeten it for them. I also think that this is going to push what has long been missing from PBM oversight, which is CMS. We've had many conversations with CMS over the years about whether or not they are the actual regulator of PBM, is there a federal regulator? We think there is, but every time you ask them about PBM oversight, they point to the non-interference clause. Personally, I think with the passing of the Inflation Reduction Act, that argument is significantly weakened. But, I think over time, that's going to erode. I think that outside forces such as Mr. Cuban's cost plus model is going to help accelerate that. I don't know what the future holds, but I do know that it's working. This didn't happen overnight where PBMs just got control of everything, and it's not going to happen overnight where we kind of unwind what has happened over the last 15 to 20 years. 

Pharm Exec: Is there any other pending legislation that could impact the pharmaceutical landscape?

I think many of our changes that we're going to see will come from the state legislatures. It just seems that they're able to pass things easier. I think we should just take a look at what some of these major market states are doing, and then keep an eye on the FTC. They've finally come out with something that is decisive enough to force PBMs to move faster. 

In an interview with Pharm Exec Associate Editor Don Tracy, Ron Lanton, Partner, Lanton Law PLLC, discusses recent moves by CVS and Express Scripts to follow Mark Cuban's Cost Plus Drugs model. 

Ron Lanton, Partner, Lanton Law PLLC, Discusses New Drugs Plus Pricing Models

Bill Roth Discusses the Changing PBM Landscape

Bill Roth PBM

Nicholas Saraceno: What may be the potential driving force behind recent moves by PBMs like CVS and Express Scripts to overhaul their drug pricing structures?

There's a lot of speculation on the real drivers behind what these plans really mean. We'll unpack them in two main ways. One is the rise of the cash pay model. What they're proposing is to have an offering similar to Mark Cuban's Cost Plus and Amazon's cash pay portion of their pharmacy model. In that world, those pharmacies have realized how dramatically overpriced the out of pocket is on generics. The whole insurance based genetics works on the idea that if a brand is at $1000, and if I charge $600 for the generic, it's a massive savings from the brand. But, the reality is those products may be purchased by the pharmacy for $20. That would be what you consider an egregious margin. That's where the cash pay pharmacy is coming in and saying "I'll price it out at $40." If you look at specialty products in the oncology area, the list prices of the brand are roughly $120,000 a year. If you use insurance, the generic versions are probably $60,000 a year. Both products are available on a cash pay for somewhere between $15-$30 a month. I just think that's an example of how much things have inflated. That's the value in the cash pay market for generics. It's a pin that's going to pop the profitability on the generic side. It's a big risk to the overall retail pharmacy model. 

Second, is the repayment of the products to the payers. What they're trying to do from what we can understand is try to work in a world where they don't lose money on brands. That is a fundamental shift of how pharmacy has been reimbursed for the last two decades by PBMs. It has worked on a bundled model for a long time. The idea is that you lose a little money on the brands but you make make it back on the generics. Up until the end of the patent cliff in 2016, that was the road and nobody had any problem with it. I get the question a lot from manufacturing clients on why now has the pharmacy come out and they're losing money. There's two main reasons than any other. The new generics aren't coming out the way they were from 2012-2016. Second is the slow degrade of that generic business over to cash pay. Basically, the generic margins aren't offsetting the massive losses on the brands. In our interpretation, it's no different than what medicaid did by moving to a NADAC or an AAC perspective. It's basically to compensate the pharmacy close to where their acquisition price is. I think a piece that's exacerbating it for the larger pharmacies is a big difference between how national pharmacies buys generics and brands as opposed to how an independent buys. An independent buys at an aggressive cost, sometimes even better. But, they pay more for generics than a chain would. A chain goes very aggressive with their generics. Therefore, they're paying higher. They're seeing an exacerbated loss on brands that retailers aren't seeing. The reality though is that if you move to a NADAC or an AAC pricing model, that could be as much as maybe a 3% price increase to plan sponsors. I don't think the plan sponsors have the ability to stomach that type of an increase. I think that's where the skepticism of the reality is. Not to say that it won't happen, but we're pretty skeptical that it will. There is another event that's happening this year. From what we can see, the WAC reductions have already started and we knew this was happening for insulin. If brands were to continue with the thread of lowering WACS, It does at least soften the losses. Your percentages are still losing at the same level, but the dollars that you're losing are offset by it. 

When it comes to these new pharmacy and reimbursement models, the cash pay makes a lot of sense to me, but it's playing with fire as it could burn the insurance aspect of the business. The move to a NADAC model doesn't solve the problem, it just lessens the losses. It still doesn't do anything to offset my earlier point, that the bottom 2% of brands are still looking at losses within the pharmacy. Maybe the losses just aren't as extreme. It's better than nothing. The pharmacies have to try something. It's something to watch to see how it plays out. We're being a little cautious when it comes to saying whether it's good or bad or whether it has legs or not. We understand the drivers behind it and we'll just have to see how it plays out. 

Saraceno: With PBMs under fire from legislators in DC, have we begun to see a tectonic shift in the pharma landscape that will remove some of the power PBMs have?

I view the PBMs as being incredibly strong and powerful entities that are highly needed in the market. Until we have another alternative to them. There's a great report by Eric Percher from Nephron Research where he profiles the way PBMs have been compensated for the last 10 years relative to where they're getting money from. They've really shifted a lot of their focus into specialty. There's about a third of their dollars that are coming from specialty pharmacies, we've seen massive rises there. They've been very successful in moving their rebate dollars to their admin fee layers. Basically, they've found great ways to protect all of those margins. I don't know why people have a tendency to lose the importance of this. It's not an obvious piece of the business, but it's a check that comes into these companies through another angle. So, they'll overpay for healthcare and then use that money for other angles of running their business. I don't necessarily agree with it, but I understand it. Until the plan sponsors are willing to let go of those rebate dollars, I don't see any difference. There were a number of good folks that kind of taught me that plan sponsors are looking for performance. The PBMs perform. As much as I think the industry likes to dislike the PBM, they have a very entrenched position in the market. What's your next alternative? You can carve out things like generics, but it doesn't do anything to impact specialty. 

Saraceno: In light of Eli Lilly’s new DTC program for the above drugs, how might this impact PBMs in the long-term if more manufacturers follow in Lilly’s path? 

I think part of it may be tied up in what success looks like for a program like Lilly Direct. Will they actually do better in that model than working through the traditional PBM to retail, or PBM to specialty pharmacy model. I think there's still challenges with reaching frequency. One of our consultants was actually talking about seeing where it goes. Even if you try a search right now to find Lilly Direct, it's not optimized for SEO yet. That's not the way that I think we recommended it be built. We would have recommended a full therapeutic area approach. Why just have your products? Why not create a better draw? If you're competing with a lifestyle pharmacy, have everything that they have. Present yourself as another lifestyle pharmacy, and just amplify it. 

In an interview with Nicholas Saraceno, Bill Roth, General Manager, Managing Partner, Blue Fin Group, discusses the changing role of PBMs and recent price structure overhauls. 

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