At this year's Community Oncology Conference, Antonio Ciaccia, the chief strategy officer of 3 Axis Advisors, will present about pharmacy benefit managers (PBMs) and drug pricing issues. The conference, hosted by the Community Oncology Alliance, takes place virtually on April 23 and April 24, and The American Journal of Managed Care® (AJMC®) is previewing some of the speakers and topics.
The American Journal of Managed Care (AJMC®): Thank you for joining us today.
Antonio Ciaccia: Thank you.
AJMC®: Can you explain a little bit about yourself and your history and what you do?
Ciaccia: I'm born and raised in pharmacy, my dad's a hospital pharmacist up in the Cleveland area. And my sister is a retail pharmacist in the Akron area. I originally went to school to become a pharmacist like my dad. And then about midway through the second year, I said, this is boring, I'm out of here. And I ended up taking over a newspaper at Ohio State. I had worked as a pharmacy technician for 2 years and just felt that the education was not all that interesting to go do pharmacy, because at the time pharmacy was just really lipstick poor, and that's about it, answer a bunch of hassle questions on insurance and pharmacy benefit managers (PBMs)… That was right around the time that actually pharmacists could start doing immunization. So obviously the profession has changed a lot since I exited. But I'm really interested in drug pricing, and I've been very interested in public policy.
One of my first jobs out of college was at the Ohio Pharmacists Association, where I started to learn about the intricacies and nuances of the drug supply chain. You know, it's no secret pharmacists complain about the system. It's erratic, it's unpredictable, and according to them, it's not as lucrative as it used to be. And whether pharmacists make enough, too much, too little - it really doesn't matter to me. What fascinates me is how we set prices in the drug supply chain. And so that inquiry was kind of wrapped up back in 2016. When pharmacists told me there was a huge cut in reimbursements in the state of Ohio, and it was unsustainable, the sky was falling, etc. I went back to the Department of Medicaid in Ohio and asked them, what happened? They said, well, nothing, we didn't change anything, but we've never paid more for prescription drugs than now. And so that disconnect between pharmacies getting paid less than ever, and the state paying more than they ever had, was interesting to me. We started to get very deep into data analytics. We started studying how PBMs and health plans ultimately set prices for the pharmacies, but also the people paying the bill, whether it's the department of Medicaid or employer. We've learned along the way that there's a huge disconnect between the prices paid out versus the prices billed back to the plan sponsors. Our hope is to diagnose dysfunction, and to hopefully lead to a system where pricing is a little bit more objective, so that ultimately in the push towards value-based care and value-based reimbursement, in order to assess value, you have to first know what you're paying. And so we aim to solve, what did you pay? And how much did it actually cost?
AJMC®: And that's what 3Axis Advisors does.
Ciaccia: That's correct. So we launched 46 Brooklyn Research, which is a nonprofit dedicated to drug price transparency. We did that born out of our work in Ohio, where we saw that disconnect between paid out versus what was being billed. We took all that data that started the disruption in Ohio where they basically fired all the PBMs in the system, and moved to a different one. We took all the data that we use to kind of learn, and then we published it for free on 46 Brooklyn Research for every state in the country where they could see on our website right now, what the cost of a drug is versus what each state in the country is being billed on a quarterly basis in their Medicaid program. When we launched that we got a lot of inquiry from employers, governments, and pharmacies to do more detailed exploration of proprietary data. And so we launched our consulting firm 3AxisAdvisors, where we get into a little bit deeper level of drug pricing and data.
AJMC®: What are you presenting at COA when they have their virtual meeting on April 23 and April 24 next week?
Ciaccia: What I'll be doing is I'll be going through a little bit of our journey of knowledge. When we started this, we diagnosed one issue in the supply chain, which is spread pricing. Spread pricing is the difference between what a pharmacy or a provider is paid for a drug, versus what a PBM and health plan bill to a plan sponsor on the other end, the difference being captured as the spread. In Ohio that amounted to $244 million in just 1 year in the state Medicaid program. What we learned was that spread pricing was really just one supply chain distortion in the system. And so what we started doing, which was diagnosing spread pricing, we learned well, what about the drugs that are really paying well? When I first started looking at pharmacy, pharmacists would come to me and say, I’m losing $100 on this prescription, I'm losing $200 in this prescription, [and I’m] like, well, the lights are still on somehow, so you're obviously making money somewhere, so where's the money? You learn over time. Well, yeah, they might lose $200 on this one, but they might make $3000 on the next one. To me, it was just fascinating to see, okay, well, why are these prices so low on one end and so high on the other end? And what's driving these decisions? Because we ultimately asked the pharmacist to render one level of care for the most part across all drugs, you know, drug utilization review, consult with the patient, you know, do all the things that you're supposed to do. Generally speaking, the cost to do that for every prescription is around $10. So anytime you see a massive loss of $100 or $200, or a massive gain of $3000, there's a pricing distortion there. There's an issue there. And so we started to look at which drugs are overpriced versus underpriced. If you're an employer, are you paying for too many brand-name drugs versus generic drugs? What's your rebate look like? Are you getting good rebates? That might account for why you are paying for more brand-name drugs. Essentially, what we tried to do is, we learned a long time ago that this system is intentionally complex, intentionally opaque. And we'll never get all the answers because there are many things that will be locked in a proprietary black box. But our job is to try and crack it open as much as possible to show people how the system actually works. What we'll be talking about at COA is all the things that we've learned from state Medicaid programs, all the things we've learned from the Medicare Part D program, and all the things we've learned from commercial employers as well, to show exactly just how screwy sometimes the pricing can be, not just to the detriment of the provider, but more importantly to the people paying the bill.
AJMC®: And I guess there's a particular impact on oncology practices and patients with cancer and they have to use specialty pharmacies?
Ciaccia: That's correct. So some of the some of the research that we've done shows that some of the most overpriced drugs, meaning the drugs that yield the most margins, are oncology drugs. That was also interesting to us. So the question is, if a PBM ultimately is setting the reimbursement rates to all the providers, and there are some drugs that they're willing to underpay so much for that begs the question, well, what entices them to overpay for a drug? What interest is there for a PBM to pay $4000 in margin and for a single prescription of Gleevac? What we learned once we started looking into data was that well, it just so happened that many of those prescriptions were being pushed away from community pharmacies and oncology practices, and they were being forced into the PBM-owned specialty pharmacy. So the question why would you pay $4000 in margin for a prescription when the cost of dispensing might be anywhere between $10 and $100, well, it's an easy answer when you're pushing all those prescriptions to your affiliated pharmacy that you own as the PBM. We do a lot of investigating into overpriced and underpriced drugs, and then we try to answer the question of why would they overprice or underprice those drugs?
AJMC®: Is there anything else you want people to know about the conference this year? Anything that you in particular are looking forward to hearing?
Ciaccia: You know, the thing that I think is, it should be interesting to folks that are participating in the COA conference, is that I feel like for years or decades that PBMs and health plans and wholesalers have always been, you know, miles ahead of everybody. And the research that we do is regaining the ground. You know, we're no longer miles behind. I like to think that we're a few steps behind at this point. All the intricacies of the supply chain and the nuance that is driving some providers out of business or causing some plan sponsors to roll back their benefits, we’re able to diagnose I think, a lot of the reasons why those things are occurring. And so, at the session, we'll be going over a lot of a lot of data that most people haven't seen. For those looking for disruption and change, I think that a lot of the data that we'll be sharing will be quite illuminating.
AJMC® : Well, thank you so much for joining us here today. We really appreciate your time, and we look forward to hearing you speak at the conference.
Ciaccia: Thank you. I look forward to it.