Antonio Ciaccia Highlights Issues Within Health Care, PBM Operations for PCOC® 2020

September 15, 2020

At this year's Patient-Centered Oncology Care® 2020 virtual conference, purported lack of incentives, transparency in the supply chain of pharmacy benefit manager (PBM) operations, and the overall health care system will be discussed.

At this year's Patient-Centered Oncology Care® 2020 virtual conference, the reported lack of incentives, transparency in the supply chain of pharmacy benefit manager (PBM) operations and the overall health care system will be discussed, said Antonio Ciaccia, chief strategy officer of 3 Axis Advisors.

Transcript

AJMC®: What is the most important message you hope to bring to the audience at Patient-Centered Oncology Care® 2020?

Ciaccia: Having come from the pharmacy world, I tend to look at things through a pharmacy-oriented lens. That doesn't necessarily mean that I think everything pharmacy is completely innocent in what I think is a broken supply chain. Certainly, I think pharmacists have a much greater role to play in the current health care landscape, but I think that pharmacists suffer from really poor incentives.

Right now, profitability in pharmacy is largely dependent on how much prescriptions you can fill, how fast you can fill them, using a minimal amount of resources with which to fill prescriptions, and to capitalize on arbitrage opportunities that are available within the payer system. I think all of those things are very unhealthy incentives. However, they really determine who the winners and losers are in the pharmacy marketplace.

Likewise, I think the rest of the supply chain also suffers from poor incentives and conflicts of interest that get in the way of what I think is in the best interest of the patient. So, while I think that there are a tremendous amount of problems in the supply chain, I think that PBMs really control many of those incentives, and so I'll be highlighting a lot of the problems within the PBM landscape at the conference. But I don't want folks to think that the problems in the supply chain are exclusive to PBMs.

Ultimately, broken systems are just as their name indicates, broken systems. I think that a lot has to be done to fix the incentives and the lack of transparency in the supply chain so that ultimately providers and patients are better served. Along the way, the people that pay the bill, the plan sponsors, are better served as well.

So, talking about the problems in the current system and the poor incentives in the system are going to be a lot of what I talk about at the Patient-Centered Oncology Care® 2020 conference. I hope to be bringing a lot of good, new data that others haven't seen before, that kind of focus on why the need for reform is here.

AJMC®: We spoke with you last spring about your background in revealing PBM practices. There’s been a lot of discussion about changing PBM operations, but has anything improved?

Ciaccia: Yeah, I would say that things are improving, but they are negligible improvements. Last year, the big explosion was spread pricing. By uncovering the excess waste that PBMs were doing by paying providers low and billing payers high, we had uncovered hundreds of millions of dollars in waste across the country.

Understandably so, because of all the excess waste, there's a tremendous amount of reform over the last year. So, more and more states all across the country are banning spread pricing or at least requiring its disclosure. There are, right now, federally, the big Grassley-Wyden bill, the big Pallone-Pelosi bill on drug pricingall have language in there that would ban spread pricing.

Then over on the commercial side, the big piece of legislation in the Senate Health Committee would also ban spread pricing in the commercial sector as well. So, certainly, exposing spread pricing has created its day of reckoning, but it's not like PBMs all of a sudden have fallen out of the Fortune 25 either.

So, what we found in our more recent data is that as more scrutiny hits the spread pricing line item, PBMs are pivoting their business models, and one of the reactions we've seen is increases in administrative fees. We're seeing a growing gross-to-net bubble, so higher and higher rebates that PBMs are commanding, and we're also seeing an increased focus on specialty medications. So, we're seeing higher and higher payouts on specialty drugs, which might sound good for people that dispense specialty products. However, what we're seeing is that PBMs are pushing more and more of those overpriced specialty medications to their own PBM-owned pharmacies.

So, I would say that things are improving, but to say that we have solved the problem of PBMs cashing in on a lack of transparency and conflicts of interest, I'd say we're still very, very far away from that.