Geri Beth Bemberg
So you’re impacting, in Arkansas at least, a large majority of the population in a self-funded arrangement. And I realized very quickly that what I wanted to do was manage that in other health plans. So I actually did a residency in evidence-based medicine and managed care pharmacy, which is essentially just a fancy way to say I now specialize in what you should cover, why you should cover it, and how you should cover it through your pharmacy benefit manager relationship. Prior to coming to Stephens, I continued to do that mostly through state self-funded plans. Then I was recruited by Stephens about seven years ago to do that for their clients. Now we’ve built quite the pharmacy practice—myself and another pharmacist, Dr. David Keezner—and we are having so much fun doing it. And because of our relationship here and Stephens’ relationship with UBA, we are now able to work with other partner firms like you guys, and we are now going to be the UBA alliance’s preferred pharmacy vendor starting in 2025. So we’re super excited and glad to be here.
Mike Rankin
Yeah, we’re very excited about it as well. In fact, at our last UBA meeting, that’s really what triggered the desire to interview you a little further and get a better understanding of not only the offering but also some of the best practices that both employers and participants can use as consumers to help manage the cost. And one of the things we’ve seen in the last 12-18 months is that one of the significant cost drivers has been the wide and mass distribution of the GLP-1s, like Wegovy and Mounjaro. Can you talk to me a little bit about, you know, those drugs, not only what they do but also the impact on employer health plans and participants?
Geri Beth Bemberg
Yeah, absolutely. I think to look at those products on a weight loss benefit, you kind of have to take a step back a little bit, right? So most people are familiar with GLP more on the diabetes side. I mean, you know, a couple of years ago, they were more known for diabetes. Now everybody relates them to weight loss.
Mike Rankin
Sure.
Geri Beth Bemberg
Social media, mainstream media—you get on the internet now, the first thing you see usually. But those products, such as Ozempic, Mounjaro, Trulicity, Victoza, were traditionally used to treat diabetics. Victoza is actually the first product that came out with a weight loss drug. It was called Saxenda. It came out, goodness, probably eight to ten years ago. But the thing that was interesting about it, there was not that large uptake that we’re seeing now. And I directly attribute that to the fact you had to take it once a day. So that’s mostly why most diabetics did not want to take these GLP products in the past—because you didn’t want to take a shot every single day.
Geri Beth Bemberg
And so now these newer products are once a week, and you can see now they have these weight loss benefits. And so that’s how we got Wegovy and Zepbound. So Wegovy is the weight loss version of Ozempic, and then Zepbound is the weight loss version of Mounjaro. You’re exactly right. I mean, these drugs are driving healthcare expenditure in ways we haven’t seen before. It’s really the first time we’ve seen the media and social media playing such a large role in the medications people are asking their physicians for. And it’s having a big impact on the healthcare plan overall..
Geri Beth Bemberg
So just some walking-around numbers to think through—a 1% increase in utilization of GLP products actually drives a 5% increase in overall self-funded employer healthcare expenditure. That is significant. It’s a big number when you think about it. I mean, you think through what some of your employers and some clients are spending on healthcare—5% is a big number. And then when you put it into that per member, per month number, that actually comes out to about a $10 PMPM increase just from the addition of one drug category. That’s something we haven’t seen in a long time—since, honestly, since specialty drugs really came onto the market.
Mike Rankin
Right, right. And I know that just in looking at some of the prescription reporting from the carriers that we see in PBMs, I mean, it might be that six of the top ten drugs being dispensed now are in the GLP-1 category. You’re right. I haven’t seen anything like it in 20 years, 30 years.
Geri Beth Bemberg
Yeah. And it’s interesting to me—I think semaglutide, which is the generic name of Ozempic and Wegovy, was very close to being the number one product, or may have been the number one if you just look at active ingredient products that were cost drivers in the U.S. last year. So, you know, a little less than $800 billion spent in the pharmaceutical industry, and semaglutide and adalimumab—the generic name for Humira—were the two heavy drivers there, semaglutide being made up again of Wegovy and Ozempic. But adalimumab—you know, we have all these biosimilars out in the market for it now, and Humira is still finding a way to have some market share.
Mike Rankin
Yeah, that’s interesting you mention Humira because thinking back over the last four, five, six years, so beyond the GLP-1, that was really one of the bigger cost drivers just in and of itself—was Humira.
Geri Beth Bemberg
Absolutely, absolutely. And now, the biosimilar world that we’re in—so, for anybody who’s not familiar with that, a biosimilar is essentially a generic version of a biologic product. So, they’re not going to call it a generic, but it has a brand name in most instances. But it’s that same active ingredient. They’ve been approved for a little bit, but they’ve been tied up in litigation here in the U.S. And so, we’re starting to see them hit the market. As more and more enter the market, we’re hopefully going to see them drive the cost down overall.
Geri Beth Bemberg
But, I mean, when you look at a drug that has, I think, 35 to 40 indications, it’s treating a whole host of different disease states. It is still making up a large portion of the healthcare expenditure in the U.S. And then you think about, too, there are several other drugs just like it. I mean, you’ve got Enbrel, and then you have the Stelara and the Skyrizi of the world. So, you take them less frequently, but they still cost the same on an annual basis. It’s interesting, and it’s having a big impact, honestly, on the drugs that are approved through the FDA on an annual basis. You know, one thing I’ve noticed is that over the years, we’ve gone from the FDA primarily focusing on approving, you know, new blood pressure meds or new cholesterol medications or things like that.
Geri Beth Bemberg
And now, we’re at a place where they’re approving—I think it was like 14 biosimilars in the first half of 2024 this year. So, they referenced a whole different host of products. So, we were looking at things such as Dolora and Humira, Solaris, things like that. And so, we’re heavily approving specialty meds, which are more expensive. And so, it’s just driving up healthcare even further.
Mike Rankin
Even further. And talking about, you know, potentially, you know, prices coming down with the biosimilars once, hopefully, they get through litigation here and are able to get to market. But I’ve also been reading about some price wars starting to happen on the GLP-1 side. There was an article in the Wall Street Journal the other day talking about that. So, do we think there might be some relief for employers as these prices go down, or will it simply just spur more demand so that the net spend—I don’t know—will be that much different?
Geri Beth Bemberg
No, I think that’s a great question. Honestly, they have kind of gone an interesting route with that. You know, Eli Lilly makes Zepbound and Mounjaro, and Wegovy is the product currently made by Novo. They really have more indications they’re getting approved for. So, they have the secondary cardiovascular risk reduction indication that was approved. So, Wegovy can be used for weight loss. It can also be used for secondary cardiovascular risk reduction, which is a way to say, if you’ve had a heart attack or a stroke, you can take this medication and it will hopefully prevent you from having another.
Geri Beth Bemberg
And it has been shown to work in clinical trials. But I say that because it’s interesting. Eli Lilly has really taken the stance of this kind of direct-to-consumer avenue that I think was referenced in that Wall Street Journal article. So, what they’re doing is, for a cheaper price—much cheaper than what you would actually obtain in a pharmacy—you can go to their website, and you can get the medication through a prescriber, and you can get it directly from the manufacturer for, I think, like $400 a month. Now, it is dosed a little bit differently. You have to draw it up yourself in a syringe and inject it—it’s not in a pen—but that is very interesting to me because they’re trying to get their market share in a bit of a unique way.
Mike Rankin
Yep.
Geri Beth Bemberg
For Wegovy, the rebates really come into play there, honestly. Right, because that’s really what’s going to, at this point in time, drive the cost down. I don’t foresee either of those drug companies actually lowering the cost of their medication just right off the bat. It’s going to have to come in the form of rebates, which actually makes our job even more important because it really hammers home the need for those really strong, transparent pharmacy benefit manager contracts to ensure, if you are self-funded, that you’re getting your rebate. So, they may raise the rebates, but if you’re not in an arrangement where you’re going to benefit from that—and your plan is not going to benefit from that—that’s not really helping anybody. But yeah, it’s an interesting place we’re in right now, where in the past, we’ve kind of toyed with the idea of savings in the sense of formulary control, right?
Geri Beth Bemberg
Moving something from tier three to tier two, or it’ll go generic. We’ve entered a whole new world now where here comes direct from the manufacturer, shipped to your house at a cheaper price, which plays outside of your health benefits.
Mike Rankin
That’s right.
Geri Beth Bemberg
So, it’s very interesting.
Mike Rankin
Yep. So, a couple of things I want to drill down on—one that you just mentioned, the topic of rebates. I think that most CFOs are certainly aware, but probably in the smaller end of the market, under 100 employees or so, it’s difficult to—unless you’re truly in a self-funded environment—it’s difficult to take advantage of that. But at a higher level, I always think of a rebate like an automobile manufacturer. Okay, well the price of the car is $60,000, and then they’re going to give you $5,000 back. But can you walk us through sort of the mechanics of the rebate, and then where does that money go if you’re not paying attention to it?
Geri Beth Bemberg
Yeah, absolutely. So, it’s interesting you say the sticker price on a car. David and I have a joke—you know, drugs are priced off AWP, and so we say AWP normally stands for average wholesale price. Here in the South, we also refer to that as “ain’t what’s paid.” We oftentimes say it’s like the sticker price on a car—you should never pay it.
Mike Rankin
Right, your MSRP negotiation.
Geri Beth Bemberg
Yeah, exactly, exactly. You never walk in and pay that, but you’re exactly right. And so the way rebates work is drug manufacturers will negotiate with a pharmacy benefit manager. So, just for reference in this instance, a pharmacy benefit manager, or PBM for short, are companies that manage actual pharmacy benefits. They adjudicate the claim. Commonly known names are Optum, Express Scripts, CVS Caremark. So, those companies negotiate on behalf of the groups they represent—employers—with drug manufacturers for a place on their formulary. And so, in a very simplified version, they provide rebates back to the PBM in exchange for placement on the formulary.
Mike Rankin
And they dangle a little carrot there. Yep, that turns out to be not so little.
Geri Beth Bemberg
Yeah. And it actually turns out to be almost 40% to 50% of healthcare expenditure, honestly. And that’s the part that you really gotta watch out for, though, because exactly like what you just said—where does the money go? If you’re not in a self-funded arrangement where you’re getting 100% of the rebate, where does the money go? And, you know, it does go back to the PBM in a fully insured arrangement. Oftentimes it’s used to offset price hikes and premiums, things like that. So there’s a lot of different places it could go. But I will tell you, in a self-funded environment, if you have that transparent contract, it’s going back to the employer. You just have to make sure you put yourself in a place where that is the case so you and your plan can actually benefit from it.
Geri Beth Bemberg
Now, you know, in a fully insured arrangement, that’s something that more and more, as rebates have gone up, I think employers—even in a fully insured arrangement—have to be more aware of rebates than they ever have before.
Mike Rankin
Absolutely.
Geri Beth Bemberg
And the reason I say that—yeah, absolutely. I mean, you see time and time again that PBMs and carriers will come back with a price hike or, you know, we’re going to raise rates 10%, and it’s like, well, guys…
Mike Rankin
There’s $100,000 or $200,000 that’s being funneled back to the plan that’s just—it doesn’t show up as an offset to the claims, which it really should.
Geri Beth Bemberg
Exactly, yeah, absolutely. And so that is something that we’re doing for employers now—looking at pharmacy spend, even on fully insured clients.
Mike Rankin
And you can project what estimated rebates are going to be within that plan. That’s really powerful information.
Geri Beth Bemberg
Yeah, absolutely. And we’ve had several clients that have gotten rate holds out of that. They’ve been able to negotiate, you know, if they truly did deserve an increase, if they had a bad year, they’ve been able to negotiate that rate increase down.
Mike Rankin
Yep.
Geri Beth Bemberg
It’s just having—I hate to say the “knowledge is power” thing, but that really is where we are in terms of rebates.
Mike Rankin
So, in that kind of example, let’s say I’m an employer and I have 200 employees, maybe I am fully insured. That just—it’s different market by market, right? And so especially in California, where you have a lot of HMO population, you might have 150 folks on the HMO and 50 on a PPO, and it doesn’t always necessarily lend itself to self-funding. But in that scenario, if that employer can get a list of the top ten, or even top drug utilization from the carrier, then you guys can look at that and do a projection of what that rebate amount might be, or a range anyway.
Geri Beth Bemberg
Yeah, absolutely. Because it’s funny you say even just the top ten, because you hit the nail on the head right there. You know, when you look at a pharmacy spend at this point in time, top ten usually is 50% or more of their plan spend. So that’s where the rebates are anyway. They’re always your higher-cost meds. They’re always those brand name diabetic meds like we just talked about. You know, the other categories that may pop in there—so, the oral anticoagulants. Those are almost always brand name. Inhalers oftentimes pop up, and then mental health medications as well.
Geri Beth Bemberg
So, brand name depression meds or things like that—all of those have a rebate. And so we’ve had tremendous success using just the top ten to help our clients look at their overall spend, forecast what those rebates should be, and what they should be getting credit for, and then use that to help get them either a rate reduction, rate hold, or get that increase down a little bit.
Mike Rankin
Right, right. And so I do want to talk a little bit about the participant—like, we as consumers and some of the things that we can do. But before we get to that, maybe share just a little snapshot of some of the different exercises that you go through to help an employer not only become aware of their spend, but then start to pull some of the levers of what they can do about it. You know, let’s say in that employer range of 100 to 500 employees.
Geri Beth Bemberg
Yeah, absolutely. So, obviously, it’s another area where even 100 to 500 lives right there, right? We’re talking about whether you’re fully insured or self-funded. So, fully insured, you are kind of more reliant upon…
Mike Rankin
Your carrier, obviously, because that PBM is tucked in.
Geri Beth Bemberg
Yep, yep, absolutely. So, you’re relying on things such as, you know, how can we fluctuate our co-pays? Do we need to look at moving to a deductible plan, things like that? Self-funded, it gets a little more fun—or, I think it’s fun, not everybody probably does. But there you really do have a lot of things you can do. So you can look at what are the primary cost drivers. Do we have an access issue within our population? So, for instance, are our members having an issue paying for their drugs? If that’s the case, and they are, they may not be taking them, which could actually be raising costs on the medical side. So, one thing we’ll look at is if that is the case, we may even suggest that you start paying for more medications on behalf of your members. So, you would think, “Okay, hey, you want me to pay more money? How’s that going to help me?” But if you put in something, let’s just say, for instance, you have a high-deductible plan only.
Geri Beth Bemberg
So everybody is in a high-deductible plan. They’re paying for the high cost of those meds upfront. Maybe you look at something like putting in that expanded preventive list. So this is outside of ACA. You put in an expanded preventive list—you can do brands and generics, you can do just generics—but either way, and oftentimes you will see just easing that access point for members will increase their adherence to their medications, which will then save you money on the medical side. Now, in terms of actual savings on the pharmacy side, I don’t like to mess with co-pays too much simply because in the grand scheme of things, if the medication is $500, we’re not saving a ton by increasing the member co-pay $5.
Mike Rankin
Right.
Geri Beth Bemberg
But, you know, at that point in time, especially on a specialty med…
Mike Rankin
Right.
Geri Beth Bemberg
So, if the med is $6,000 and we raise the co-pay $100, what’s it going to do? Exactly. It’s not going to prevent them from being a stop-loss hit, you know, that $100 per month. So, something we’ll do is we first look at their utilization management. Do they have members accessing drugs without the proper prior authorizations and step therapies? Is there something we can do on quantity limits? We will also look at—my bread and butter is formulary management. What kind of meds are your members taking, and are there clinically appropriate alternatives that may have a cheaper price tag that we could shift members to? And then finally, looking at something called alternative funding—so, specialty carve-out is something we’ve had a lot of success with. You know, it’s not right for everybody, but I do think in instances where you can use it—and we’re at a point now where it’s not even, you know, everybody has some sort of alternate funding solution. I think it’s important how you do that alternate funding, how you structure your contracts with your PBM, because there are ways and times where doing alternate funding, if you’re in a PBM contract where, for instance, you forego rebates if you do alternate funding or you forego prior authorization criteria, you’re not going to come out better in the long run. So, it’s all about how you set that plan up on the front end.
Geri Beth Bemberg
Those are different things we’ve done. Yeah, absolutely. Those are some things we’ve done for clients that have really driven some cost savings for them.
Mike Rankin
And you mentioned it—talking about savings for the participant and kind of we as consumers, you know. I think about there being two primary types of plans from the consumer standpoint. One would be a co-pay plan—you’ve got generic, brand, and non-formulary. Then the other would be a high-deductible plan where the contracted price is the contracted price when you hit the pharmacy. But what are some of the things that we can all do? Is it going to the manufacturer’s website and getting a coupon, or shopping around? How do you really effectively do that as a consumer, in your opinion?
Geri Beth Bemberg
No, I think that’s a great question. So, I think the first question is always at the prescribing point. So, asking your physician, “Is this a generic? If it’s not, is there a generic available that might be better?” That is one thing I’ve noticed—honestly, prescribers are not as familiar with the cost of medications. And so, oftentimes, they’re even a little sticker-shocked. We work with several hospitals and physician groups, and they’re even a little shell-shocked when they get to the pharmacy counter and they’re like, “Oh, I didn’t know what that cost.”
Mike Rankin
Right.
Geri Beth Bemberg
Yeah, exactly. So, that’s the first thing. The second thing is, if you have to take a brand name—yes, absolutely, there’s always a coupon. And so for the patient, that’s definitely something you want to check out. Oftentimes, prescribers or pharmacies may have those readily available. You can actually normally go to the pharma or to the main manufacturer website. So, for instance, if you go to Wegovy.com—just since we were just talking about that one—there’s always a patient savings and support section of the website. And then the other thing would be, especially with generic medications, because that is where the biggest fluctuation in cost can be, I highly recommend shopping around. And I don’t say that in a way of, you know, I don’t want you to use five different pharmacies if you have five different medications.
Geri Beth Bemberg
But most PBMs have a website that will allow you, in a member portal or something like that, to go in, put your medications in, look at what they cost at different pharmacies, and pick which one works best. I mean, one drug may be $0.05 more expensive at one pharmacy, but the other may be $10 cheaper at another pharmacy. And so, just find that pharmacy that’s the best fit and make sure that you really are saving where you can, in a way that’s convenient for the members so you still take your drug.
Mike Rankin
Yeah, that makes sense. And I don’t know, last question here—if you have the data, or this is just my suspicion, having been on both types of plans, where in a co-pay plan, if the difference between a generic and a brand co-pay is $20—like, a generic is $10 and a brand is $30—I think a lot of people just go for the brand. As opposed to being on a high-deductible plan, like with an HSA, and you go and you say, “Okay, well, the brand is $150, but the generic is $3.” Most people are going to gravitate towards the generic in that particular case.
Mike Rankin
And I would have to think that that element of the consumer-driven aspect of the plan probably plays out in real life on the claim side. But do you guys see that data, or do you have an idea of the difference that kind of co-pay differential drives?
Geri Beth Bemberg
So, that’s a really interesting question. One thing I will tell you—most clients we look at now have a really high generic utilization rate. Most clients I see run about 88% to 90% generic dispensing rate, or GDR, is what we call it. So, right off the bat, when you’re looking at that percentage of drugs as generics, that’s already a big chunk of it. Right. In instances where a generic may be available for a brand name—so, for instance, let’s say we’re talking Crestor and its generic rosuvastatin.
Geri Beth Bemberg
In plans such as that, I actually set my plans up to where a member can’t—they don’t want to get the brand, so we want to ensure that they’re taking the generic when it’s available. And so what we’ll do is we’ll essentially set them up with kind of a brand penalty co-pay if the member chooses to take the brand over the generic.
Mike Rankin
Yep. And that’s an eye-opener. That’ll change behavior.
Geri Beth Bemberg
That changes behavior very quickly. And then the other thing—you know, obviously there are always going to be a few things. I can’t think of very many off the top of my head, but there are a class of medications called narrow therapeutic index drugs, where if you start on the brand, they really prefer for you to stay on the brand because even the slightest change in…
Mike Rankin
Chemical makeup could throw you off.
Geri Beth Bemberg
Yeah, absolutely. Absolutely. So, in those instances, obviously, there are medical exceptions to that. And so you can set the plan up to where if the physician requests the brand, it won’t override.
Mike Rankin
Sure.
Geri Beth Bemberg
Yeah, absolutely. And so that can all be done at the pharmacy counter and between your plan build on the front end. We refer to those as “dispense as written” or DAW codes. You can set some of those up on the front end, and then also, that way, if the pharmacist can put it in right there on the front end of the pharmacy counter, there doesn’t have to be any kind of exchange of info between the physician, the pharmacist, and the PBM. It just happens automatically.
Mike Rankin
Yeah. That’s great information. Really good to know. Well, Geri Beth, I don’t know how many people would say that talking about pharmacy spend is a delight, but this has been a delight. I really do appreciate the time. And if I’m—when I reflect back on the conversation here, there are kind of three things that stand out to me. One is if you are a decision maker at a fully insured company, there may be circumstances that prevent you from going self-funded, but don’t feel helpless.
Mike Rankin
There is a way to get the information and then use that to your benefit in the negotiation process. So, that’s one. Two, if you are a larger self-funded employer, there are lots of levers you can pull, but you really want an independent consultant with your background and expertise that can help you wade through that and give proper advice. And then three, as a consumer—for all of us—making sure that we’re shopping around, doing our best. Talk to your doctor, talk to the pharmacist, and go to the company websites, both the manufacturer and the PBM portal with the carrier that you’re using, to be able to shop around. Does that sound about right?
Geri Beth Bemberg
Yeah, you nailed it. Thank you so much. This is great. Thank you for having me.
Mike Rankin
Yes, thank you. Really appreciate the time. We’ll talk soon.
