INBW38: What I’m Up to Right Now, Big RHV Plans for the Summer—Also Doug Pohl, Justina Lehman, and Dr. Amy Scanlan

06/29/23 • 9 min

Thanks for joining me as we kick off the summer season. Here’s what we’re gonna talk about today in our 10-ish-minute conversation. Keeping it short and sweet.

First up, we got three super interesting voice messages left by your fellow members of the Relentless Tribe that I wanted to share with you. Next up, I will cover plans for the summer, because this summer, we have plans.

And then after that, just wanted to chat a little bit about what I am up to right now.

Agenda item #1: Episodes 399 and 400 of Relentless Health Value were me sharing my manifesto as it were. At the end of the show, I said that if you have a manifesto of your own, to share it by going to relentlesshealthvalue.com and hitting the orange leave a voice mail button. Doug Pohl, CEO of HealthTech Content, did so; and here is what he had to say:

“My name is Doug Pohl. I’m the founder and CEO of HealthTech Content, and I'm pretty frustrated by the lack of progress toward making the improvements we need for healthcare. So, I put this out there to sort of be a bat signal for anyone else who feels the same way I do but to also hold myself accountable to be congruent outwardly with how I feel inwardly. No longer will I accept healthcare’s prioritization of the bottom line. No more will I ignore the flagrant victimization of our society. I won’t sit silently while shortsighted greed ruins families. I don’t accept a profit-first model that kills people daily. I can’t let complacency keep me from taking action. I won’t let my voice wither away in fear. I can’t—and I won’t—remain quiet. I believe in the potential of regular people. I know how powerful we can be working together. Every one of us is affected by healthcare eventually, and it will take all of us to create the healthcare we deserve. The first step is rejecting the status quo. I’m tossing it out the window. How about you?”

And now let me share two more voice mail messages, and here’s why they both are meaningful. We know that this journey to transform the healthcare industry in this country can be long and slow and, at times, lonely. But together we are stronger and more able to help patients receive the care that they need and deserve at a price that we all can afford. So, thank you for being part of our community, and here’s two perspectives on why you being here matters.

Here’s a voice mail from Justina Lehman from the Infinite Health Collaborative (iHealth):

“When you are in the work of creating change in healthcare and really working to align with value for the patient, value for the physician, the clinician so they have an environment that they can thrive in, the work can feel hard. And it can feel lonely, and you can feel on an island. And Relentless Health Value podcast is your people. We often say this in our team of ... when you look to that podcast, you’re reminded of all the amazing people across this country doing incredibly meaningful work. And linking up with one another can create that strength and help you with your resiliency, especially on those days where you’re feeling down and that the work is hard and that you’re doing it alone. And sometimes you may even question: Is this work of value? Will it be valued of others? The Relentless Health Value podcast, Stacey, all of her guests have really been those people for us. Not uncommon for us to share podcasts amongst each other during the work of reminding each other of the people out there doing great things. So, so incredibly grateful for what Stacey’s built and for all the guests that have been on her show and the value it’s adding and the support it’s giving to those of us who are out in the trenches trying to make this happen. So, thank you, Stacey.”

And here’s a message from Amy Scanlan, MD, who was also a guest on episode 402:

“Hi, Stacey. It’s Amy Scanlan. Wanted to say thank you for your latest episode. It’s so helpful to be reminded that, even though we’re making little steps, we are making progress and we’re part of a greater movement. Thanks so much for the inspiration and for always doing the good work.

Bottom line, here’s my point and call to action: Share this show, especially with colleagues, with anybody trying to find a path forward who may be helped by a little companionship along the way. I just got a note, in fact, from Rajiv Patel, MD, MBA, FACP, from Bluestone Physician Services, and he wrote, “I am only a ...

Thanks for joining me as we kick off the summer season. Here’s what we’re gonna talk about today in our 10-ish-minute conversation. Keeping it short and sweet.

And then after that, just wanted to chat a little bit about what I am up to right now.

Here’s a voice mail from Justina Lehman from the Infinite Health Collaborative (iHealth):

And here’s a message from Amy Scanlan, MD, who was also a guest on episode 402:

Previous Episode

Encore! EP365: The Real Deal With PBM Contracts and Drug Rebates, With Scott Haas

I hope you enjoy this encore episode of one of the most popular shows in the last 12 months.

One of my mentors often said price is irrelevant. He said he would sell anything for any price as long as he could define the terms of the deal. During this conversation today with Scott Haas about PBMs (pharmacy benefit managers), that quote was playing in my head like an earworm.

I’m henceforth gonna struggle with the term rebate to define dollars that the PBM gets back from Pharma, because, according to my guest in this healthcare podcast Scott Haas, it turns out “rebates” comprise only about 40% of those back-end dollars that some PBMs manage to score from pharma manufacturers. I don’t have any insight really into this, but Scott Haas certainly does—and this is the average that he has seen in his work and that we’re going to dig into today. But in sum ... wow! Let me just repeat that a mere 40 cents on the dollar of the gross amount that PBMs take in “rebates” from Pharma these days winds up going back to plan sponsors, even plan sponsors who are getting “100% of the rebates.”

If you didn’t understand what I just said, no worries. I’m gonna explain it right now. If you did and you know the why behind all of this also, you could probably skip ahead about five minutes.

Here’s the backstory on this whole rebate fandango. Let’s start with part one of what is a two-part transaction.

So, part one: the deal between pharma manufacturers and PBMs. In general, a pharma manufacturer signs a deal with a PBM to give back whatever percentage of their gross sales revenue to the PBM at the end of the year, say. It’s along the same lines as a cash-back coupon for the PBM.

Why would a pharma company be up for giving cash back like this? Well, to get on a PBM’s formulary, giving cash back is like the price of admission. PBMs have a lot of leverage, after all—at least the big ones. They control access to millions and millions of patient lives. So, if Pharma wants their drug to be accessible to those millions and millions of lives, they have to play the cash-back game, otherwise known as the rebate game. They have to agree to give back to the PBM a certain amount of cash on the back end.

So, PBM pays Pharma’s list price up front—that’s the gross amount paid, based on the list price of the drug—and then after all the cash back gets toted up at the end of the year, there’ll be a net price. List price or gross price minus the cash back equals net price. It’s this net price that’s the true kind of final price which the pharma company gets paid per script by said PBM at the end of the day.

These days, most everybody pretty much knows that PBMs are getting these so-called rebates—this cash back from pharma companies that I just explained. And it’s pretty common knowledge the so-called gross-to-net bubble (the gross-to-net dollar amount) is pretty huge, meaning the rebate or cash-back amount is pretty huge. And many have also noticed that the gross-to-net dollar amounts seem to be growing bigger and bigger every year. I mean, for one insulin manufacturer, consider this: Their list price, their gross price, is $350 per script. And their net price after cash back/rebates was $52 this past year. Wait ... what? After all the cash back to the PBM, the insulin manufacturer got paid 86% less than their list price—$350 went down to $52 per prescription. The PBM vacuumed up 86% of the dough for every script written for this particular brand of insulin.

Okay ... so, say Pharma gives $100 back to the PBM based on the terms of their deal. Call that part one of this example transaction.

Here’s part two: the deal between PBMs and health plans or self-insured employers. Health plans and self-insured employers are customers of the PBM. They hire PBMs to manage the pharmacy benefits for their members or employees.

So, because everybody knows this whole rebate thing is going on, as part of the contracts that the PBMs put in place with their customers (meaning the health plans or employers), the PBMs tell their customers that they’re going to give 100% of the rebates back to the plan/employer. So, you’d think that if the pharma manufacturer paid $100 to the PBM, that the customers of the PBM (the plan sponsors) would get the $100 back then, right? The PBM would pass on 100% of the savings, as it were, if they’re saying that they’re gonna give 100% of the rebates. I mean, if this is actually true, that $100 in and $100 out, then the PBM is potentially performing a useful service, right? They’re lowering drug costs for their customer, the plan sponsors for their members and employees.

Except ... turns out, not so much. Because what is a rebate, really? A rebate can be anything the PBM defines as a rebate. And it turns out that, ...

Next Episode

How Come There Aren’t More Hospital Antitrust Cases? With Brennan Bilberry—Summer Shorts 1

May I just take a moment and thank the Healthy economist for leaving a super nice review on iTunes? The title of the review is “Best podcast on the healthcare industry,” and the Healthy economist writes, “There’s no one simple fix [for the healthcare industry], but [Relentless Health Value] contains valuable insights on what actions can be taken to make things better for consumers and patients.” Thank you, Healthy economist.

In this summer short, I am talking with Brennan Bilberry; and we’re talking about why everybody isn’t suing health systems for behaving badly in sometimes pretty egregious ways. Why isn’t anybody stepping in to prevent all of this consolidation that we all know, at this point, is pretty bad news? FTC, where are you?

Brennan Bilberry cites three reasons for the way fewer antitrust lawsuits than you’d think would be going on:

1. A continuing lack of transparency. It’s tough to sue someone when you aren’t really sure what they’re up to, and, even if you do, it’s hard to prove because you can’t get the data you need to prove it.

2. Political power of hospitals means legislatures have a hard time telling their major donors to kiss off and pass laws that actually enable legal recourse.

3. Turns out the FTC is a little toothless when it comes to those with tax-exempt (ie, nonprofit) status. Nobody expected nonprofits to act the way that some nonprofits are acting, and the laws haven’t caught up with the reality of the situation.

My guest in this healthcare podcast as aforementioned is Brennan Bilberry, who is a founding partner over at Fairmark Partners, which is a law firm litigating some of these antitrust lawsuits against some of these hospital chains.

The original pod with Brennan (EP395) is entitled “Consolidated Hospital Systems and Cunning Anticompetitive Contracts.”

Here’s a link to an article I was thinking about while recording this show about Daran Gaus’s hypothesis for how mergers will impact hospital prices.

And here’s a link to an article about how commercial prices for outpatient visits were 26% higher for patients receiving care at a health system than those visiting nonsystem physicians and hospitals.

Covering some of the consequences of consolidation and what it tends to do in local markets is the show with Cora Opsahl (EP373) and also the encore with Dale Folwell, state treasurer in North Carolina.

One last link is to the conversation I had with Scott Conard, MD (EP391), where the local hospital bought a local ACO (accountable care organization) physician organization and the community paid an additional $100 million to the hospital the following year.

You can learn more at fairmarklaw.com.

Brennan Bilberry is a founding partner of Fairmark Partners, LLP, a law firm focused on fair competition issues, especially in the healthcare industry. Fairmark has filed numerous antitrust cases against dominant hospital systems, seeking to tackle anticompetitive practices that lead to higher prices for businesses, consumers, and unions.

Prior to founding Fairmark, Brennan worked as a policy consultant and political operative whose work included overseeing environmental public policy campaigns in numerous countries, providing international political intelligence for US investors, advising political campaigns around the world, and designing consumer and legal advertising.

Brennan also worked on numerous US political campaigns, including serving as communications director for Terry McAuliffe’s 2013 successful campaign for Virginia governor, serving as deputy executive director of the 2012 pro-Obama Super PAC Priorities USA, and developing research and policy communications for the House Democrats.

Brennan is a native of Montana and South Dakota and has lived in Washington, DC, for the past 15 years.

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