EP435: Optimized Pharmacy Benefits Are Required if You Want to Do or Buy Value-Based Care, With Dan Mendelson
For a full transcript of this episode, click here.
This conversation I am having with Dan Mendelson, my guest today, all started with a post that he had written on LinkedIn considering how pharmacy benefits can or should be optimized within the broader context of value-based care. Total cost of care, value-based medical care, and pharmacy benefits—these worlds have to collide. There is just so much intertwined into all of this, which is why I pretty much immediately invited him to come back on the pod to discuss in greater detail.
A few years ago, I heard a doctor say that practicing medicine without considering pharmacy is like getting to the 90 yard line, putting down the ball, and walking off the field. And, yeah … when a patient gets to a certain point in a whole lot of disease progressions, optimal medical therapy includes pharmacy. It’s a thing. Adherence is a thing.
In fact, I saw a stat the other day that patients not taking their meds costs an estimated $3874 PEPY (per employee per year). Also, half of all hospital admits are caused by nonadherence. Those two stats, by the way, are from a post on LinkedIn by Brian Bellware, who was recapping a video from Eric Bricker, MD.
But also, as Barbara Wachsman (EP430) said on the show, half, I think she said, of all ER visits are due to patients not taking their meds right. Olivia Webb (EP337) was on the pod, if you want to go back and listen to that one, talking about how she spends hours every month trying to figure out how to navigate access issues to manage to get her Crohn’s disease drug.
So, yeah … one underlying reason why a lot of this stuff happens is that pharmacy benefits are purchased and siloed a lot of times. In fact, I have yet to see, really, any mainstream contract wherein a PBM (pharmacy benefit manager) is held accountable in any way for downstream medical costs, which may be incurred because of suboptimal pharmacy benefit design, right? And there are so many examples of bad downstream medical impacts.
I really like how Mark Fendrick, MD, put it in episode 308. He said benefits, including pharmacy benefits, are like peanut butter and jelly relative to enabling high-quality care. You gotta have both working in concert, like CMS or a plan sponsor just paid a ton of money to get a patient an organ transplant, and then the patient can’t afford their transplant meds, which aren’t on formulary and are really expensive, and therefore there’s organ rejection. This happens.
Or a patient with uncontrolled diabetes with a huge co-pay for insulin. Doctor says, “Hey, you gotta take your insulin.” Patient says, “Can’t afford it.” Right? This makes no sense, and it’s shockingly common. I’m thinking right now of that young man who died in the Midwest because he could not get his asthma inhaler. It wasn’t on formulary.
So, here’s the game plan. I talk with Dan about the five kind of vital considerations he had brought up in that aforementioned LinkedIn post when considering how pharmacy benefits can or should be optimized within the broader context of value-based care. Dan’s advice for the pharma industry is woven in here as much as his advice for EBCs (employee benefit consultants) and employers.
I am sure that most of our listeners are going to be very familiar with Dan Mendelson, my guest today, and his work; but the quick background here is that he runs Morgan Health. The mission over there at Morgan Health is to drive innovation in employer-sponsored healthcare, and they do that by investing and working with their portfolio companies in the context of the 300,000 or so employees over at JPMorgan Chase. At the same time, Morgan Health also engages in policy discussions because, as Dan says, no one employer is going to control public policy.
As a footnote here, I just will say that I actively seek out opportunities to listen to Dan Mendelson’s thoughts. He has spoken a lot and really eloquently and with great insight about setting up the economic models for healthcare, not sick care. Recently, actually, he was on a panel at the Milken conference along with Natalie Davis; Yele Aluko, MD, MBA; and Henry Ting, MD. There are definitely insights to be gleaned.
Also mentioned in this episode are Brian Bellware, CIC, CHVP; Eric Bricker, MD; Barbara Wachsman; Olivia Webb; Mark Fendrick, MD; Natalie Davis; Yele Aluko, MD, MBA, FACC, FSCAI; Henry Ting, MD; Ashok Subramanian; Rik Renard; Nina Lathia, RPh, MSc, PhD; Don Berwick, MD; Kenny Cole, MD; Steve Pearson, MD, MSc; Sarah Emond; Alex Sommers, MD, ABEM, DipABLM; and Jodilyn Owen.
You can learn more at the Morgan Health Web site and follow Dan on LinkedIn.
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