00:00I think everybody in this country can agree that the rising costs of pharmaceuticals has been unsustainable. You know it used to be drugs could be 5, 10, maybe 15 percent of overall claim spend. Now it is completely typical to see it be 25 percent and above. I've seen it as bad as 75 percent of the total cost of claims only being on prescription drugs. You think about a health plan. It's composed of medical claims and pharmacy claims. Usually you would expect your pharmacy claims to be a lot lower, but we've definitely seen them start to even out. Guess who makes more money when employers pay more money? PBMs, hospital systems, providers, insurance carriers, brokers. Everybody wins when you lose.
00:48That's the fundamental problem. If a PBM's job is to set the price of your drugs, you should only hire a fiduciary PBM that's going to act in the best interest of the plan sponsor and the plan participants. When you look at the fundamental founding principle, if you will, of a PBM, it's good. It makes sense. However, how it's transpired, you know, spread pricing, rebates, I mean, and it's not just the PBMs that are the problem, of course that's what this documentary is about, but even brokers, they will take a per-script per-fill fee. Why? Why do you need to get paid on every drug that's filled through a health plan. So what was once, you know,
01:25set up to be a very good, helpful thing for employers, it's gone very sideways and it's about time that it changes. You might think the price of your prescription is set at the pharmacy counter. But in truth, there's a powerful middleman pulling the strings.
01:56Imagine planning a trip. You choose your flight, your hotel, or so you think. In reality, the travel agent you've hired is cutting deals behind the scenes. They've decided which flights you can take, which hotels you can afford, and how much you'll pay. That's exactly how pharmacy benefit managers, PBMs, work in healthcare.
02:24They decide which drugs make it onto your plan, which pharmacy you can use, and how much ends up on your bill. They strike secret deals with drug makers, take rebates in the shadows, and leave patients caught in the middle. They're one of the most powerful forces in American medicine, and most people have never even heard of them. The Federal Trade Commission planning to sue the three largest pharmacy benefit managers over insulin and other drug prices. This lawsuit is expected to target those so-called middlemen. middlemen. Pharmacy benefit managers or PBMs are responsible for negotiating pharmacy prices with drug manufacturers. They're being accused of profiting by inflating drug costs and squeezing main street pharmacies. Employers are receiving rate increases on their health care plans.
03:21If they're self-funded, they're getting hit with higher PBM costs, getting higher with with a higher pharmacy cost. Scott, let me start with you. You represent the largest association of PBM companies, I think. Is that right? Yes, sir. I believe the only. The largest and only. Perfect. On average, all together, we pay 422% more than all of these other countries. Either you're the worst negotiators in the history of the world, or something's wrong with your business model. Which is it?
03:55I think when we talk about the pharmaceutical supply chain in general, there's a lot of blame to go around. Some of it certainly falls on the drug manufacturers, because in the U.S., we pay a higher cost for every drug that they develop than any other nation in the world. and part of that is because they know we will.
04:27Certainly, there's value that pharmaceutical companies create when they do the research and development on these drugs. I just don't think that solely Americans should be the one subsidizing that for the entire rest of the world.
04:44I spent about seven and a half years working in the pharmaceutical industry, both domestically and internationally. Throughout my career I've had the opportunity to work in the hospital environment, in the drug manufacturer environment, in the payer environment. I got a call from my father in 2003 and he said, I just looked online and I can get my Prilosec, my acid pill, for a third of the price in New Zealand. Should I buy it? And I said, well, who makes it? he said AstraZeneca. I said buy it.
05:26I don't think people really know how the system works because they don't have to, I guess. I've been working in international pharmacy for the past 13 years. The FDA quoted that 40% of the finished drug products in the United States are not manufactured here. Typically medication will come off the same production line, whether that's in Ireland or whether it's in Europe, multiple countries. So you've got all the medication coming off the production line, being tableted and then being put into its final dose form. So the final dose form is the packaging. And then it goes out into those different supply chain channels. Having worked internationally for a drug manufacturer, they're not sending the crap to New Zealand
06:12and the good stuff to America. These are products where if you were on vacation in New Zealand, this is what they're going to hand you with your prescription. It's the same product, made by the same manufacturer. In many cases, it's in the same packaging, in the same form. The only thing that's different is the price.
06:38If it's coming to New Zealand, it would go to a licensed pharmacy wholesaler who would then send it to the pharmacy where it would be dispensed to the end customer. When it's coming to the U.S., it's a little bit more complicated. It's still coming in through a wholesaler and going to the pharmacy, but in the middle there are the layers of the pharmacy benefit managers.
07:01In addition to the pharmaceutical companies, you also have the PBMs, the wholesalers, the actual pharmacies, all of these folks that touch the drug before they ever make it into the hands of a person. The United States is the only country that has PBMs. There's nowhere else in the world that has anything equivalent to the PBM industry. In this country, we account for 60 to 70% of the world's spend on pharmaceuticals, even though we're not 60 to 70% of the world's population, right? In my experience, I would say that American companies are probably paying up to 70% too much for their medications. United Kingdom, Australia, New Zealand, they all have governments that negotiate on pricing with the pharmaceutical companies.
08:00But no pharmaceutical company is going to negotiate to the point where there's no profit. I mean, why would they do that? I have been a pharmacist for 30 years. I've been in the practice of pharmacy since 1987. When I say pharmacy, I mean the community retail setting of pharmacy.
08:33At one time, somebody could get fresh out of pharmacy school, just want to go in and open up a pharmacy and make that their living to raise a family, you know, be part of the community. Nowadays, it's just not like that anymore.
08:45I remember when I was in high school working at the pharmacy, there was one PBM that got introduced and we actually would punch it in at the end of the day, the different claims on it. They would do the whole modem dial up and get the, remember those days, and we would get the, end up getting a check later. If we could buy drugs directly from the manufacturer, it would probably be a whole lot less expensive. And in fact, that's almost how it used to work back in the day. So PBMs didn't used to exist, right? It used to be that manufacturers made drugs. They sold those drugs to pharmacies. And then you as a consumer would just walk into a
09:26pharmacy and pay cash for whichever drug you might need. But as drugs started to become more expensive. Now we wanted to cover them as an insurance benefit. It became a nightmare for employees to figure out how to utilize that benefit. So enter PBMs, who initially were tasked with creating a network of pharmacies, putting together a standardized list of prices and which drugs should be covered and everything else. And that started as a great mission until they realized, hey, we sit right in the middle of this increasingly complex transaction, and it's only increased in complexity over the years.
10:09This slide does a good job of describing how the PBM has inserted itself as a middleman in the pharmacy ecosystem. Starting with the insurance company, this is the entity that hires the PBM, ultimately pays for prescription drugs that are dispensed and processed through the PBM, but is also extracting revenue from the drug manufacturers for those medications that were dispensed, some of which may be shared with their client, some kept. Then you've got the consumer. The PBM owns the systems that allow pharmacies to process claims at the point of dispensing, But the PBM also sets the price for those drugs, not only for the dispensing pharmacy, which ultimately is shared in the form of co-paying co-incentives by the member, but
11:00they also set the price for the payer that's paying for those drugs. PBMs are, if you will, inserted into the middle of this ecosystem and have figured out ways to profit off of every interaction at every corner, many of which, unfortunate for the plan sponsor, are not transparent, not known. They're not technically representing one side, right? They've got influence from the drug company, they've got influence from the employer, from the wholesaler, from the pharmacy, and they're able to influence all of those entities as well. The market share became more and more and more and more so that every claim, every prescription now is run electronically through the PBMs and so that when you fill a prescription,
11:49it goes straight, tells you exactly what you have to charge and that's what pharmacy is now. The secret in pharmacy pricing is you have the AWP, the average wholesale price and then the actual acquisition cost. This is what the pharmacy pays for the medicine. So the manufacturer down here has already been paid, so there's a nice little profit from the manufacturer to the pharmacy right there. So everything above the cost to the AWP is really going to the PBM. This is a tough time to be in the pharmacy business because at the end of the day, the PBMs are the big dog, and many pharmacies are put into a position where they have to accept whatever reimbursement is coming from the pharmacy, often at a loss.
12:32PBMs have been putting a lot of pressure on pharmacies in terms of pricing, because at the end of the day, if they can force down the amount of money that they pay pharmacies, that gives them additional margin, as far as their markup, that they're ultimately charging to the plan sponsor. Drug manufacturers are often painted as the evil in terms of the pricing for drugs in this country, but PBMs are very much complicit. The PBM is setting the price that the patient pays or they pay a portion of through their co-pay and that the plan sponsor pays. That price is not dictated by the drug manufacturer.
13:13If you don't understand the PBM industry, that's understandable because it's meant to be opaque by design. But if you understand that the traditional PBM is in business to sell drugs to patients at a profit, that pretty much sums it up. Certainly in the circles that I run in, everyone knows that PBMs are crooks, right? And if the folks who ran the large PBMs worked on Wall Street, they'd all be in jail by now because you can't do that kind of stuff on Wall Street.
13:50In 2004, I was brought into the detective bureau from the road investigating all kinds of offenses, the full gamut from drugs to sexual assaults to burglaries. I'm currently the executive director for the New Jersey State PBA, which represents 32,000 active law enforcement officers from all facets of law enforcement throughout the state in New Jersey. We're also one of the biggest law enforcement unions in the country. One of the things you have to develop in your career is you have to have the ability to look at all the facts, right? You look around back, you look around front, you have to look at everything that's in front of you. When New Jersey passed its landmark benefits and pension reform, a committee was formed that
14:44put labor and management together. Well, they put two police detectives on there. It's the worst mistake they ever made. I got into the health benefits side of things. I was appointed as a representative to a state committee from our organization and immediately saw that something wasn't right here. You know, something just didn't make sense. I've come to understand that transparency isn't just a policy, it's the bedrock of trust and integrity. We all know when it's missing the community suffers. We would find things that were done wrong and fraud, Waste, abuse, my three favorite words in this space. It was just so much like questioning a suspect. But it was easier to get a confession out of a bad guy than it was to get the truth out of a public vendor.
15:38Fraud, waste and abuse. Let's talk about fraud, waste and abuse. About 30 years ago, we started pharmacy investigators and consultants. Before that name, we were pharmacy outcome specialists, but we became much more involved in fraud, waste, and abuse in the industry, and so we were really investigating fraud, waste, and abuse perpetrated by providers and members. At that time, prescription drugs were $200 per member per year. Now they're $200 per member per month, if you're lucky. So we weren't just looking at the financial arrangements, but really where all the money was going. The Washington attorney general won a settlement with a health care company saying it was not sharing money properly with Washington's Medicaid program. CVS helped to pay nearly $950 million in penalties and damages after a pharmacy services provider under its umbrella lost a lawsuit.
16:34There is a tremendous amount of fraud going on here because there's no transparency. I'm going to show you a little bit of information about what we find in audits and how we can see where spread pricing is really not a good thing.
16:50So there's a term utilized in the PBM industry called spread. Spread is the difference between what a PBM pays a pharmacy to dispense a medication and what they charge the client for that medication. The difference is spread, which is essentially a markup, right? So this is what we found in an audit recently. This drug, teriflomide, this is a very old generic drug. It's used for MS. Five prescriptions, $29,000. So the PBM charged our client $29,000 for five prescriptions. Really, they have full reign to charge whatever they want, whatever the client will accept for a drug, and make this incremental profit. We just wanted to see what this would cost in a normal pharmacy without a benefit plan.
17:46And as we can see here, under GoodRx, this same drug is $35. You can't measure it because it's not public available information that you can ask a pharmacy, how much did you get paid for this drug versus how much did I pay as a plan sponsor? We get very little data on drug prices. You can just see what the total spend is on a drug. And most of the time they won't even tell us how many prescriptions that is or how many units it is. We've seen it to range from $10 to $20 a prescription up to thousands of dollars. per prescription. So here we see in GoodRx, diacycline DR, this cost $247 at the pharmacy
18:29with no benefit plan, no insurance negotiated, nothing. And now here we look at, from what my client, the same drug, one prescription, $1,278. At the end of the day, it's whatever the PBM, frankly, feels they can get away with. There's a drug called imatinib.
18:51a prospective client. They had one member on this drug and throughout the year had 12 fills of this drug. And I think the plan paid somewhere around $120,000, $130,000. And the member had paid $6,000. The exact same drug on the same day at the same pharmacy, if you just went in with an honest pharmacy benefit would cost $1,300 for the entire year. Humira, everybody's heard of Humira. $9,000 a prescription, right? You can get at Walgreens here in Chicago for $550. Nothing makes my blood boil more than that because that's a PBM just picking the pockets of everyday Americans. When you talk about illegal drugs. Everybody knows what everybody charges for. If I want a dime bag, it's $10. You know,
19:48that's what it is on the street. With PBMs and Big Pharma, nobody knows what the drug really costs and what the profit margin is on it. Secondly, once they get the data, plant sponsors aren't always the ones that know what these drugs sell for in the pharmacies. They're not pharmacists. They don't understand what the average cost of these drugs are. Society here is that, hey, I go to XYZ pharmacy, get my prescription filled. I don't even think about independent down the street, but in reality, they come in. I tell them what the price is, and they're shocked faces. I've been paying $100 across the street, and you're selling it to me for $10? There's been a strong movement towards transparency, forcing PBMs to eliminate spread.
20:38Many PBMs, including the big guys, are offering no spread options. When they're eliminating spread in one place, they're capturing it someplace else. we're going to go through a few examples of ways that pbms can disadvantage their clients and also impact their employees it's important really for clarity these are not one-offs these are not exceptions to the rule if you currently are with a traditional pbm i can say confidently you are experienced or having some of these if not all of these methods being used against you to your disadvantage in your pharmaceutical spend I'm gonna go from very simple a very simple way the intent is for the PBM to match the interest of the employer in providing the therapeutics they want to provide to
21:43their employees so a formulary it's just the list of meds this is what we're going to provide. If I'm Ken Pharmaceutical Company and I make KenRx, this pill that cures everything, I want to make sure that my pill is on every PBM's formulary, right? Well, either I make a really good pill that all of the doctors want because they've seen the clinical results and they're like, ah, that's what I'm going to prescribe. Or I create a revenue stream with a PBM that It influences their decision making, so when they're advising their clients on how they're going to design their formulary, they can use their influence to get MyMed in that formulary. That revenue stream is a rebate.
22:33Rebates are a very interesting and very complex phenomenon in the pharmaceutical industry. The simplest way to look at a rebate is to think of it as a coupon. So let's take an example. Let's say there's four drugs in a therapeutic category. And all these drugs are pretty much priced the same. The manufacturer of one of these four drugs decides, you know what, I really want to get aggressive and I want to be the leader in this market, right? So what do they do? Totally something against any kind of economic theory. They raise the price and say, you know what, if you use my drug, I'll rebate you the difference to the other three.
23:13And when this all started, it was a good thing. It was good for the manufacturer. They got more market share. It was also good for PBMs because again, they could show where they were actually managing the cost of an individual therapy. But no, everybody got greedy. Manufacturer 2, 3, and 4 in that category said, well, I can do the same thing. I can raise the price. these rebates come back to plan sponsors you know through the PBM some of it comes back some of it doesn't. There's a thousand dollar med that has a five hundred dollar rebate it's a thousand dollar med that that employee pays a thousand dollars plus tax five hundred dollars works its way through the system
24:00and it gets to the PBM. If the PBM is keeping that rebate what has just happened is your employee just paid a thousand dollars for a med that should cost them $500. In reality, a rebate is just an interest-free loan to the drug company and the PBM. You're paying more than you should and then nine months later you're getting some of that money back. You just gave someone an interest-free loan. It's worse than overpaying on your taxes. The only way your drug gets paid for through the PBM is if it's on the formulary. The impact of those rebates on the manufacturer is we're going to threaten to take your product off formulary unless you fork up some dollars.
24:42The manufacturer has to pay those rebates, and how do they make up the difference? They raise the price. When it comes to rebates coming from the drug manufacturers, those dollars have escalated into the multiple billions of dollars.
24:57So then there was a group of executives in the traditional PBMs that realized, you know, the employers don't know anything about this, And there's a whole lot of money in this program that they know nothing about. You know, I think I could create a new kind of PBM. I'm going to call it a transparent PBM. I'm going to share the numbers with my clients. So my clients at least know and can see what's going on. Employers started to negotiate for those rebates. You know, started off with, well, I get, you know, 20% of the rebates. I got to get some of it, you know. and then over time got more and more and more. And the transparent PBMs got hooked on the rebates, just like the traditionals.
25:43I'm old enough to remember back in the day when the PBM industry got started, there were large PBMs that ran ads all over the place saying that they were the most transparent PBM in the industry. So transparency was important back then. But if a client asked for a copy of their detailed claims extract, they were told it was proprietary. Now I knew from my detective training, if somebody's elusive, they're probably lying or hiding something. When I finally would drill and drill and drill and get to get an answer, they would tell me, oh, that's proprietary. How can something be proprietary when the tax dollars are paying for it? I think transparency is a really nice word.
26:20It sounds great. It makes everyone in the room feel good when we say that word. However, the PBM industry especially is gross. is not a legal term. It's whatever the PBM wants it to mean and you can define it however you like in your contract. If someone put in a contract, we will deal transparently with our client. No court in the world would be able to interpret precisely what that means. From my perspective, having worked in this business as long as I have, transparency is not enough. Fiduciary is a legal term. It applies to the financial services industry but it's also defined under ERISA. And there's three primary tenets. Number one, you can't have any conflicts of interest, so no conflicts of interest. Number two is only looking out for the
27:10best interests of the plan and plan participants, i.e. the the enrollees. And number three, all utilization and financial information relative to the plan is in full view. A planned fiduciary commitment and contract means something. If you violate that contractual obligation the client can sue you and they'll win. Early on there were multiple lawsuits against PBMs for not living up to an implicit fiduciary duty. So language has crept into the traditional PBM contract that specifically says that the PBM is not a fiduciary and not obligated to act in a fiduciary manner. Almost every PBM is a fiduciary. Now, who that fiduciary responsibility is to is, I think, the interesting point. The large PBMs that are all publicly traded have a fiduciary obligation to their shareholders to maximize profit, which I think, by the way, they are exceptional at.
28:16If you look at stock prices between insurance companies and PBMs, wholesalers and PBMs, drug manufacturers and PBMs, you will see that the stock prices of the PBMs are soaring and everybody else is left in the dust. At the end of the day, the money ends up at the PBM. If you look at a definition of a rebate in a PBM contract, it's all over the place. Now why would they have different verbiage for different types of money flows going from a drug manufacturer to a PBM? a balloon when you poke it here it comes out someplace else. There's a number of programs that generate revenue for the PBM as they manipulate or manage the formulary.
29:17Manipulation I'm using that term to mean not in the best interest of their client. They're not giving money to PBMs just because they want to. They have to justify a return on investment to their shareholders. And how do you get a return on investment as a drug manufacturer? You sell more drugs. The Transparents were in a situation where the employers knew what was going on. And so the pharmaceutical industry did something which is remarkably nefarious, but you know, you gotta hand it to them, pretty brilliant. They called the Transparent PBNs and they said, hey, I'll give you the bad news first. The rebate checks we're going to send you this coming year are going to be way smaller
29:57than they were last year. But I got some good news for you. We have a market share fee that we're going to send you. And then it's a blue sky fee. It's a unicorn or whatever fee. It's whatever you want to call it. It doesn't say rebate. So you get to keep it. So as drug A became a higher market share than the market share of the other three, which went down, PBMs got more money. Now the PBM was getting money for switching from those other cheaper products to the more high cost product. PBMs may take the inexpensive competition, the generic, off a formulary and they'll keep the expensive brands on the formulary, which means that me as a patient, my only option
30:45is to pay for the expensive branded product. If you place my brand on your formulary, I will send you a check for X hundred thousand dollars. That's the easy thing. Where it gets more complex is when a brand loses its exclusivity for that therapeutic and generics are coming onto the market. I don't want them on that formulary because they come at a lower cost and I don't get to sell my brand mad. So what I do is I call Ken. I say, Ken, I'm going to send you X hundred thousand dollars if you make my brand a tier one, which means the lowest copay. When I say tier one, think of real low copay, $15 copay, $5 copay.
31:29When I say tier two, three or four, think of a high copay, $45, $65 copay. And so if you make my brand a tier one, I'll send you X hundred thousand dollars. But any other generic has to be at a higher tier, tier two, three or four. I want to be the exclusive drug in the category and I'll pay you additional rebates to be in that category or instead of being in tier three a higher copay I want to be in tier two a lower copay so the individual patient has more of an incentive to prefer my drug you can have a physician out there who writes a prescription for the generic this person walks into the pharmacy
32:11they hand their their prescription to the pharmacist pharmacist you know pulls it up looks at the prescription, sees it's tier three. It's got a $65 copay. I can get you this exact same therapeutic as a tier one and then your copay's $15. So do you want the $65 med or do you want the $15 med? Well, the member is gonna do what the member should do and say, I'll take the lower cost. But what that employee doesn't understand is they paid a $15 copay, but it's a $600 brand med that now the company has to pay $585 instead of getting that $80 generic. There are no ethical boundaries in the PBM and pharma space. There are none.
32:58They don't look at effectiveness of the drug. You know, they look at what's the best drug and what's the best rebate and where am I going to get my cut? How are people supposed to know they're paying $80,000 a year when the doctor writes a script? All I know is that when I go to the pharmacy, I'm paying my $25 copac and I know nothing else. Now, it gets worse. At some point if an employer figures out that they're being delivered a brand med that has a generic available, let's talk to the PBM about it. So the PBM gets caught. The PBM, this is what happens, called pharmaceuticals and said, hey, you know you gave us a formulary placement fee and my clients are up in
33:36arms because I'm delivering the brand med. And I'm gonna lose clients, right, if They don't trust me. The pharmaceutical industry says, no problem. Here's what we do. You can deliver the generic, but you have to charge them the brand price. Collect the money, you send us the difference between the generic and the brand, we're still whole, your clients are getting the generic, everybody's happy. They don't understand what the average cost of these drugs are, and so they look at the bill and they say, well, what am I going to do? I don't know that this drug actually sells in the pharmacy for $16 when they've charged me $1,800 for it. For about one out of five prescriptions, insurers required people to pay more using their insurance
34:20than if they paid the pharmacy's retail price. For example, last night, a lady came in for an antibiotic ointment. We filled it, ran it through her insurance. It was $192. Put it through for the cash price, and it was just $15. dollars. In the Johnson & Johnson lawsuit there's a drug in there that's specifically called out.
34:42This is a specialty generic. It's only special because the PBM says it's special. They used to make a whole bunch of money on the brand and now that it's generic they don't make that money anymore. They had to find a way to keep making that money and so now it's a specialty generic. Cigna, Anthem, United, Aetna, they all routinely deny employers access to their own claims data and then they turn around and monetize it for themselves.
35:11There are many situations that just blow my mind as far as the charges that PBMs have or the rebates that they keep or what they do for a business practice. They would take generic drugs, mix them with other things, maybe put them in a gel or a solution as opposed to a tablet and charge thousands of dollars for drugs that otherwise would cost pennies. This concept has been also utilized to create product combinations in the marketplace that add no value but carry a brand, an NDC, which is a unique code for adjudication and payment purposes. A good example is a drug named Duexis. Let's take a drug called Duexis. Duexis is on the big three and every other PBM formulary, right?
36:01This drug is $2,500 a month. But you can get these two products that are over the counter for $18. Why would they do that? Does that make any sense? Is that consistent with their mission of keeping costs down? No, but the rebates, the incentives from the drug manufacturers were massive. Maybe the PBM kept 50% of that $2300 or $2500 and put it in their pocket. Why is Viagra on the formulary? Because even though there's a generic available, they make huge amounts of money on the formulary for that brand drug, not the generic for the brand. The slightly different dose or slightly different formulation for a product. Let's say that the original product was a 50 milligram.
36:51They'll come out with a 48 milligram and charge thousands of dollars for that product. They're looking at every opportunity to make money off of the lives that they manage. They're doing a really good job of that if you look at their stock price. But if you're the payer, you should be looking at this with a jaundice eye and ask the question, Are they really working for me or are they working for themselves?
37:20Early 2024, when we finally started seeing these health care lawsuits, I read through the entire lawsuit. What they did is they referenced particularly the PBM and the ridiculous cost of drugs that these Fortune 100 companies agreed to pay over a cash pay price. Right. So they had cited 38 different drugs in the first lawsuit. And the first thing I did was I took those 38 drugs and I priced them against what our clients were paying with a fiduciary pharmacy benefit manager. And the difference was astounding. It was 93% lower that our clients were paying over a Fortune 100 company. So making good decisions in pharmacy benefit managers is not a size thing. Our smallest client in our book of business only had 60 insured employees.
38:06yet they're paying 93% less than a Fortune 100 company. So the difference maker in these things is really the executive team, the HR team in making these decisions, not size. It's the tail that wags the dog in a lot of these situations when the carrier is telling the broker, who's then telling the employer, who's then telling their employee that, no, no, no, this is the way it's done because all of them profit off of them believing that.
38:36We're at a breaking point in this industry. We can't pay $80,000 for a drug that clears up eczema. We can't pay it. We can't afford it. It's not the doctors and the nurses and the people that work in the factories making the drugs. It's not them that are making the money. It's the executives and the shareholders. I could go on for hours about what are the different ways that a PBM can disadvantage their client or take advantage of their client or manipulate their relationship with their client and garner revenue. There's no magic to it. It's there. How do you get control or how do you begin to get control of that situation? really no one silver bullet. You have to chip away at this and chip away at it from educating
39:34yourself as a plan sponsor. You can't just focus on one thing. It is a constant. There's so much evidence of this, you know, with all the lawsuits that are coming out now, read those lawsuits. People won't spend the time to do it. They'll just pay their $17,000 premium share. I want the best plan out there and not have a plan. When we hear about lawsuits like the Johnson & Johnson lawsuit or the Wells Fargo lawsuit or the Chase lawsuit, one instantly thinks, well, they're suing the PBM. But that's not, in fact, the basis of those lawsuits. The employees that are enrolled in the benefits plan for those companies are suing their employer One of the benefits of a benefit program for employers is that they get tax benefits,
40:30right? With these tax benefits though came a fiduciary responsibility. Putting the lens on employers and plan sponsors to make sure that they're good stewards and fiduciaries of their own plan, to put pressure on the vendors, at the end of the day that law does not apply to the providers. It doesn't apply to the PPM. It doesn't apply to the hospitals. It doesn't apply to the TPAs, which means that they're not held accountable, if you will. They don't tell you what they reimburse the pharmacy. They don't tell you what they're getting back from drug manufacturers. So they're put into a really rough position of trying to be a fiduciary, trying to understand what the costs are for prescription drugs, but then not having the data to support it.
41:14The fact that the vendors won't supply the data that you're producing for them, it's your data. All these answers are in the data. And if we can get the data, we can find the answers. I believe the challenges in the costs, particularly in the pharmaceutical space, is not something that we can point at the employers and say, wow, you guys dropped the ball here. I don't know of a single employer who didn't honestly in their heart want to deliver the best benefit they could with the resources they had. The folks that you work with, you need to ask them to employ the concept of fiduciary in that business relationship. There are some industries that require it, right?
42:00You hire an attorney, they have to work in your best interest, right? They can't work both sides of a lawsuit, right? They can't represent you and the person that is suing you. I think that the industry has forgotten who the client is. And plan sponsors feel it every day. We talk to them every day. And they're frustrated that they ask their PBM to do certain things, and the PBM flat out says no. Or they go to their carrier and say, I'd like to use a PBM that's not the PBM that you own. And they're told no. The response to that is buy your PBM services from the best option for your PBM, buy your TPA carrier services from whoever is the best option for that.
42:45Don't get stuck in this game where the carrier, or the PBM for that matter, is dictating who you can and cannot use as a vendor. You know, I've been in this business 30 years as a consultant. Before that, as part of the industry. And I'm starting in 2025 to actually see some hope. We now have PBMs that are really doing the right thing, that are stepping up and becoming totally transparent. You have now on the market space fiduciary PBMs who talk about all market available incentives from the supply chain. Don't just talk about the rebates. Anything that comes from the supply chain is owned by the employer and goes to the employer.
43:39I think it's important for people to really understand what international pharmacy is and how it works, how you pick a good provider, what it looks like when it's done well. And I think important for people to understand the savings opportunities that can be derived. You know, that's only got to be good for the plan. When you go to pharmacies that aren't beholden to the PBM, they're mostly going to charge from the acquisition up. And it's kind of a win-win for everybody. It's a win for the patient because it's going to be cheaper than AWP costs. It's a win for the pharmacy because, you know, they're getting by with a profit that's manageable for them without gouging the patient.
44:16To me, there's a great deal of hope for change. You know, we were all excited with the Consolidated Appropriations Act of 2021. The requirements of hospitals to make their prices transparent. The recent executive orders we're excited about. Now, will they ever be enforced? That's the question. I think the reason that a lot of folks are starting to kind of wake up now is is because of organizations like ours, because of films like this one, because of the broker community out there that's really trying to fight the good fight and screaming from the rooftops, your PBM is taking advantage of you. This is the easiest thing in your benefit to change, so change it and you can save a boatload of money, but certainly we're still only at the
45:09tip of the iceberg. There's a lot left to do. Real change to happen in the pharmacy world is going to be very difficult because it's a monster that can't be put back in the closet without some kind of help through our legislation. I think between legislation, between education, those two things are really kind of our hope for the future. The more that plan sponsors do educate themselves, that they do know about major therapeutic categories where they are asking questions of their PBM, That's hope. It is incumbent upon the employer to make a better purchasing decision. Now that you've seen all this, you've seen the lawsuits, you've seen the FTC reports, you've seen the FTC now suing the PBMs and the PBMs suing them for defamation, you can't
46:00just go back to your desk and do it the same old way. At some point, there's a saturation that has to occur and people are going to rise up against it and it's going to be you're with us or you're against us.
46:19There has never been a moment in time where so many intersections of this healthcare crisis are intersecting in a place where employers can actually do something about it. I think the scariest thing for employers is disruption of the employees, right? The last you want to be doing is flipping employees from one health care plan to a next because fundamentally we've trained them that anytime health care changes it's for the worst. That's what I love about the PBM conversation. You can solve it. It's not hard. It's really easy and man does it make a great financial impact. It is the lowest hanging fruit within making an impact in a health plan. We're not asking anybody to go somewhere different. We're not taking away anything. If anything we're
47:02creating those win-win-win situations where everybody's having an elevated experience off of just simply choosing a better pharmacy benefit manager. Start slow, start easy. It's not that difficult. Just ask how this is actually going to reduce the frequency and severity of claims. And I firmly believe that every CEO in this country has a social contract with their employees where they say, I'm going to help you be the healthiest human possible. This is my responsibility. Whether they like it or not, they know it's their responsibility. And I truly believe that when CEOs see this film and they open their eyes to what's really going on and realize that they have the power, they're not going to sit back.
47:43They're not going to continue to let it happen. They're not going to work with misaligned vendors. They're going to do the right thing. Thank you. Thank you. Thank you. Thank you.
