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Foreign.
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Hi, everybody. Cheryl Eckesson here. Welcome to another edition of Full Measure. After Hours. Today, America's drug price disaster, why drug prices skyrocketed after the Affordable Care act and what you can do about it. Today's topic is such a complicated story. I've taken many stabs at reporting on various aspects of this because it's so, so important and it impacts so many people. This week on full measure, Sunday, March 8, I break it down as best I can, talking about why you can get better prices. Sometimes when you're buying drugs, if you mention Goodrx at the pharmacy, they're not allowed to tell you, by the way, that there's a discount discount available. You have to ask them. That's a result of deals that they've cut with insurance companies and the people they purchase their drugs from. So next time you go to the pharmacy, if you have a pretty high copay or drug costs a lot under your insurance, ask them what the good Rx price is and they'll give it to you if it's cheaper. It's just one of the infuriating, dirty little secrets involving drug pricing, how your insurance companies and drug companies conspire to inflate prices so that they can then give you fake discounts and look like they're saving you money when they're actually charging you more. And we can talk about what some of the alternatives are. And if you think your insurance is saving you a ton of money because you're just paying a $5 or $35 copay, au contraire, the system inflates the prices and they want you to just look at the copay and not realize you're paying vastly higher premiums than you should. You're paying higher taxes to cover the higher Medicare and Medicaid costs because of this system. Here's my interview with a student of all of this, Jack Hoadley. He's a research professor emeritus with Georgetown University's McCourt School of Public Policy. Let's see if he can clear up some of this for us.
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C
Can you just give me a thumbnail sketch of your background and what you've studied when it relates to the topic we're talking about today?
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Yeah. So I started with a PhD in Political Science many years ago from University of North Carolina, Chapel Hill, and then know came to D.C. and have done health policy work in various government and academic settings. So I worked for a member of Congress at one point. I worked for the Department of Health and Human Services for a couple of years. Worked for what's now called the Medicare Payment Advisory Commission. And then also had an academic position at George Washington before coming to Georgetown University in 2002 and had been researching health policy all those years since, although now retired and working part time.
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C
Do you have any general reflections on drug pricing and drug prices and the whole structure here in the United States before I get into some specific questions?
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I mean, drug pricing is a very complicated system and it's kind of artificial in the sense that most people when they get a drug are not really paying the price of the drug, they're paying just a copay. Maybe it's a $5 co pay for a generic drug or a $40 co pay for a brand name drug. And so they're not really thinking about the real price of the drug because it's an insured product. And of course those who don't have insurance, it's a different story. And then partly because of that and partly because of the way drugs are distributed, you don't buy it directly from a manufacturer. In most cases you buy it from a pharmacy, who in turn buys it from a wholesaler who in turn buys it from a manufact manufacturer. And there's even more middlemen in there sometimes. And so we've really developed this kind of crazy system where drug the list prices of drugs are very artificial concepts and not something that really anybody pays. In fact, there's a concept out there in the system called an average wholesale price or an awp. But sometimes people say it's an ain't what's paid price because it's not artificial, it's just a number on a piece of paper.
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C
Would you agree that people are misled, maybe intentionally, maybe not, because maybe their copay is little, but if they're insured, they are paying the bigger price through premiums or we're paying through taxes that that cost is being paid somehow.
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It is in the system. And that's the thing. So that getting lower prices for drugs is something that ultimately benefits everybody, but it benefits us indirectly because it's when it works its way through our premiums or savings to the government for a Medicare that ends up in keeping taxes down at some point. So you know, you may be shielded from some of those prices because of insurance and a copay, but they do matter.
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C
Is there any way or any chance at a system where we're just buying our drugs from the manufacturer at a reasonable price without all the middlemen and markups?
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It would be a possibility. But you know, part of the thing is you don't buy a drug just on your own, you buy it with a prescription from your doctor. So that's got to be involved. In most cases, we're not talking here about vitamins and things like that that are over the counter, but for prescription drugs. And then a pharmacist plays a role in the system. Now, we could buy prescription drugs, and some do through mail order, but there's still a pharmacist involved in there somewhere. And that pharmacist, and in some cases, our insurance companies are helping to support what the doctor did. Your primary care doctor may have prescribed one drug. Your cardiologist may have prescribed another drug. Your gastroenterologist may have prescribed a third drug. If they're doing their jobs correctly, they're asking what other drugs you're taking, but not all of them do that. And that's another place where the pharmacist steps in, or even the health plan steps in to say, hey, let's look at all the drugs Jack's taking and see if there's any conflicts. And so we get that sort of reinforcement. So that's one reason we like having those middlemen, certain of the middlemen in the system, but there's other middlemen that are only in the system because of distribution chains. Now, the pharmacy buys from the manufacturer, but like so much of business, they use wholesalers and other intermediaries, and we probably could cut out some of those additional middlemen.
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C
Is there a simple way to explain how a drug might work? And I know there are probably many complicated formulas, but could you say, for example, there's a drug you may buy that looks like it costs $100, but it only costs you a $5 copay, and your insurance is only going to pay 50, not the 100. Can you kind of explain how that might work?
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Yeah. So because the drug moves from the manufacturer through whatever middlemen, wholesalers to the pharmacy, the base pricing is something that the pharmacy is paying back to the manufacturer to get the drug. So we could have a system where that's done. And, you know, if you're talking about food, there are manufacturers and wholesalers that deliver the bottle of milk to your grocery store, but you don't get a prescription to get your bottle of milk. You just go, and you can comparison price and shop and try to get the best deal by going to a couple of stores or knowing what store works best. But the world's complicated because of that prescription that needs to be involved. And the prescription is for a very specific product. It's for a specific brand name drug. Or maybe it's a generic availability. And of course that changes the difference. In order for an insurance company to negotiate a discount on your behalf, they're not negotiating with the pharmacy, they're negotiating back with the manufacturer who says, you know, I'd rather use our brand drug versus our competitor's drug. And for that basis they're going to give you a discount. But that discount becomes a rebate payment from the manufacturer back to the plan, which in turn you, the consumer benefit from. The $100 price is still going on between the pharmacy and the manufacturer. And the health plan pays $100 to the pharmacy to reimburse them for the cost of the drug. Your $5 copay fits in there as well. So really they've only paid 95 of the 100, but then the manufacturer sends them $50 as a rebate, so the net price ends up being $50. And it's that sort of multi layered system where because we're not buying directly and because of the insurance relationship, see, there's this two complicating factors. There's all the middlemen in the distribution chain, but there's also insurance that's sitting over here on the side and dictating it. And so between all of those, we don't have a direct chain of money. And as the money moves around, we've created a particular way to create discounts and to move money around to make sure everybody ends up in the right place. And that's probably caused a system that leads to some of the distortions and some of the problems that we now face.
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C
In very simple terms, if you can, what is Goodrx and what are companies like that?
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So Goodrx basically developed as a way to give individual consumers who are either uninsured or for whatever reason are buying their drugs without using their insurance. Maybe they have a high deductible and so they're having to pay out of pocket until they meet their deductible. Goodrx provides a way of providing the same kinds of discounts that those insurance companies arrange, but make them available to you as an individual consumer. So there are These organizations called PBMs or Pharmacy Benefit managers that are the negotiators on behalf of insurance plans with pharmaceutical manufacturers. And those PBMs are the ones that negotiate those discounts I was talking about that provide lower prices for the insurance plan. They've negotiated those discount prices. Goodrx goes to them and says will act like an insurance company in the sense that will you give us access to your discounts. There's, of course, fees paid to make that possible. And so Goodrx works with a number of different of these PBMs, tries to figure out what's going to give them the best discount on this drug versus that drug versus the next drug. So they might have five different PBMs that they're working with for different sets of drugs. Gives you the consumer access to that lower price or at least somewhat lower price. Because of course, some fees are paid to give Goodrx a basis for making money. So they take a little bit of the discount back in their fees, but then they're still giving you a better price than if you just walked into the pharmacy off the street and paid that sort of artificial list price.
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C
What is Goodrx? Is it just a private company or a publicly traded company? Could you or I go start a company that tries to do that?
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I suppose we could, yeah. I mean, if we wanted to invest in creating those relationships with those PBMs and trying to say, but you can't go in as an individual and say to that pbm, hey, I'm a customer. Can you give me the discount? They're looking for bulk discounts. They want to leverage that share of the market that they can go to Merck and say, merck, can you give me a discount of 20% across the board or 50% across the board? Because we'll bring our customers to the Merck drugs instead of the Eli Lilly drugs or the Novo Nordisk drugs, and then maybe they go to Novo Nordisk for the next set of discounts and say, we'll cut a deal with you on this group of drugs, the drugs to treat this disease. And so the idea is you're bringing a bucket of customers with you, whether it's all the customers represented by one Blue Cross plan, or whether it's all the customers that Goodrx pulls together in their individual marketing out to. To individual consumers. Goodrx says, okay, I've got 100,000 people who want to buy diabetes drugs, and for that, you know, we'll be able to participate in your discounted price.
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C
You kind of explained this, I think, but let me come at it a different way and see if you can again, in a way that's clear. Why can I go to the pharmacy? And sometimes I have my insurance and my copay, but say to them, what is a good RX price? And it's lower than my copay? How is that possible?
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So that would be relatively unusual, but it definitely happens. So first of all, Your co pay for some drug may be rather high. You may be using a drug that that insurance plan has not negotiated such a good price for. So maybe you need the Lilly drug and, and they cut their best deal with the Merck drugs. But your doctor says for your particular situation, the Merck drug doesn't work very well for you. You need the Lilly drug and your insurance company didn't cut a good deal with Lilly. Maybe Goodrx does. And Goodrx tries to create deals with every manufacturer. So it can say, we're going to have a bunch of Lilly customers, a bunch of Merck customers, a bunch of Novo Nardis customers. So it's all that game of leveraging volume that your insurance company does, GoodRx can do instead. And the copay, of course, is another way. The insurance company is using both to give you a lower price because that's why you bought insurance. But it's also trying to direct you to certain manufacturer's drugs, potentially the one they got the better deal with. Again, they want to move that market share.
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C
Do you know anything about Trump rx?
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A little bit.
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C
Can you tell us anything about, is that similar to Goodrx or is this a whole different animal?
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It's kind of a different animal. So in this case, I mean, it's, it's similar in the sense that they're finding ways to negotiate with manufacturers to get discounts. That's the overall name of the game. The manufacturer sets those list prices, they set them high, knowing that they're going to do a lot of discounting. A lot of that discounting, as I was talking about, is based on bulk purchase. You're going to go to my drug over my competitors. You're going to bring me some, a block of business and I'm going to give you a price for it. What TrumpRx is doing is saying, no, we're going to get a discount from you a different way. We're going to look at the larger international scene of pricing and there are cheaper prices internationally for a lot of complicated reasons. We want you, Eli Lilly or Merck or whoever the manufacturer is to give us something that looks more like the prices you give to Europe to country, to customers in Europe. And Trump is using the leverage of tariffs and other kinds of tools to try to be that negotiating leverage. So instead of saying, I'm going to bring you this whole block of United Healthcare customers that United is saying when they go to a manufacturer, Trump is saying, hey, I'll give you, I'll penalize you with A high tariff, but I'll get rid of that tariff if you'll give me this better price. So it's using a different form of leverage with the company, but it's still leveraging the manufacturer to give them a basis to provide a deal. And some of the manufacturers have signed now those agreements, they're talking about selling those and the details aren't available yet, selling those as direct purchases by consumers, not through insurance. So again, it may be more useful to the uninsured person who has no other source of doing it, the customer who has that high deductible, who can't use their insurance because they haven't met their deductible as a direct purchase at that favored Trump Rx price. UnitedHealthcare may have gotten just as good a price as Trump Rx. So you may not benefit if you're a UnitedHealthcare customer. But maybe the next insurance company didn't get as good a deal. So again, it's comparing those deals and seeing where it'll come out the best.
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C
What is your advice to somebody in what's a complicated landscape? If people care about their drug prices and they're a bit confused about maybe they have insurance or Medicare, you know, government insurance, but they're looking at Rx, they hear about Trump Rx, what do you, what would you suggest?
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It's in most cases, using the insurance is probably still going to be the best deal because it will give you access to co pays that are generally, if not always lower than what those list prices will be, even through those discount mechanisms. And in many cases with your insurance, there's going to be at some point an out of pocket maximum that you may hit. And if you go outside of your insurance, you're not adding that amount to your out of pocket total for the year. Now some people never hit those maximums, so it may not matter to everybody. The insurance company, if it's doing its job correctly, is also monitoring overall your health care, making sure that your drugs aren't in conflict with some other drug you're taking, trying to think about your other medical needs and management of your disease that's causing you to need those drugs. So insurance is still generally going to be the better way to do it. But, but for people who, you know, they should still research the alternatives. And again, in those situations, a lot of people have high deductibles. If you have a $5,000 or $7,000 deductible, a lot of people never hit those deductibles. So they really are like uninsured customers throughout the year. They're well protected if they end up with that nasty cancer diagnosis or get hit by the bus and need a much more expensive set of healthcare. So insurance is still important to them. But in the day to day world of filling your cholesterol medication or your blood pressure drug, you haven't met that deductible. Now you're much more of a cash customer. So at that point you may want to look at those alternative pricings and see if you can get a better deal.
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C
You are a student of all of this. You understand it. I've been reporting on these things for quite a while, not in depth like you, but this is one of the most complicated things I've ever tried to learn. Was it like that for you or do you see how it could be like that for ordinary people?
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It was definitely like that for me. For the first 20 years of my research career I used to say, I'll do insurance issues, I'll do physician payment issues, I don't want to deal with drug issues. And I just said that there's a level of complexity whether we're talking about the FDA side of drugs or whether we're talking about the payment side of drugs. And I avoided it and eventually hit a job where my boss said to me, we need you to look at prescription drug pricing. And from that point on, I kind of got caught up in it after a long learning curve and turned out to be a fascinating issue. And I really felt like I can make a contribution in helping people understand it better and trying to do research in it.
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C
If someone wants to do research. I think bottom line you said is your insurance, if you have it, is probably going to be best bet you gave scenarios under which it might not be. But, but is there a bottom line for someone that wants to do a little research? Maybe you have a high drug price that you want to say, hey, maybe I can get a better price. What should they do?
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They just need to look at alternatives. They need to shop to different pharmacies. There may be instances where one pharmacy offers a very different price than the next pharmacy. They need to look at things like Goodrx. They need to look at manufacturer assistance programs, which is another kind of program that most manufacturers offer. Now those tend to be income based and so they may have an income screen, but it may not be true. Poverty level screen. It might get a lot of people at middle income levels that could qualify. And you know, you see those in the fine print on those TV ads for the different drugs that people are offered. Contact, you know Pfizer, contact Merck for information on our assistance program. There are co pay programs out there that try to provide There's a number of ways people again, some of them have criteria you have to meet either based on income or Physician office Ask a physician's office always ask questions like is there a cheaper alternative drug? Maybe you've been prescribed an expensive brand name version and there's a generic, not the same generic because that's normally provided automatically by the pharmacy. Maybe there's a competing drug that's available in a generic form that works just as well or maybe works almost as well. And obviously that's a conversation with your doctor. But you know, doctors used to be wanted, nothing to do with the pricing side. Nowadays, most doctors understand that drugs are often very expensive and they're well equipped to work with you and help you figure out is there a cheaper way to get the treatment you need?
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Still confused? After all, we're mere mortals. This is way above things most of us can easily understand. I try to clarify a lot more in my story this Sunday, March 8th on full measure. You can find out how to watch by visiting Cheryl Atkison.com and clicking the Full Measure tab to find a listing of stations and times near you. Or you can always watch online at FullMeasure News. We post the program after it airs on TV. We post it online usually by around 11am Eastern Time on Sundays. And if you happen to be listening to this after March 8th, don't worry. You can look at FullMeasure News and watch replays anytime, or check out our unadvertised YouTube channel, FullMeasure with Cheryl Atkison. I hope you enjoyed today's podcast and that if you did, you'll consider checking out my other podcast, the Cheryl atkison Podcast, and leave a great review. Share it with your friends and subscribe. And if you think it's important to support independent reporting, you can pick up a copy of my latest national bestseller, Follow the Science How Big Pharma Misleads, Obscures, and Prevails. You could also go to my store, cheryl atkison.com click the store tab and find some exciting products designed exclusively for independent thinkers like you, with proceeds supporting independent reporting causes. There are some great products with slogans such as I need to find some new conspiracy theories. All my old ones came true and do your own research. Make up your own mind, Think for yourself.