AJ Loiacono speaks at MedCity INVEST in Chicago.
AJ Loiacono, CEO of Capital Rx, a pharmacy benefits manager founded in December 2017, doesn’t shy away from strong opinions.
In a recently concluded panel at the INVEST conference organized by MedCity News in Chicago, Loiacono laid out what’s on his policy wish list and commented that no one can figure out how much the drug will cost. He also took over large PBM operators such as CVS Health (which owns CVS CareMark and Aetna’s pharmacy benefit plans), Cigna (which owns Express Scripts) and UnitedHealth Group, the three largest PBMs in the country.
But what he trained first was anger at the federal government.
So let’s just say the federal government, it’s our biggest payer. It should be… From a resource standpoint, we are the most complex, but very simply at the top level, the federal government maintains five unique drug pricing schedules for its own spending. So this includes Medicare, Medicaid, VA, DOD, and 340 B. If you look at the branded products on these timelines, these are not like, well, the difference is 5% or 6% net cost. The difference is 100% to 150% of the net cost. So imagine if it’s defense spending and you’re in front of a Senate panel and someone says, ‘Hey, Lockheed’s newest fighter jet was $50 million last week, but this time it’s running, it’s $100 million’ and the next The week is $75, the Navy is $120, but the Air Force is $150. It’s pointless and no one will allow it.
If I had another wish in the genie bottle here, it would go to the U.S. government to eventually set a uniform pricing standard. I mean net pricing. …The federal government can’t even give me a simple answer on price. And it would be disgusting if I went straight from the list to Big Employers, Small Employers, ACA to Cash.So I think the federal government needs to take control of a $600 billion industry, standardize prices, not fix prices, but set a benchmark [world] Can be rationalized to understand what is fair. That is my wish.
co-group member A sort ofI also shared what’s on his policy wish list Soon came the audience question and answer time. Adam Boris of Humboldt Park Health stood up and asked Loiacono if the entry of companies like GoodRx, SingleCare and Amazon would disrupt the world of drug pricing. Specifically, he commented: “I can run something with insurance, it’s $150, with GoodRx, it’s $6. How can this be sustainable?
Loiacono really unleashed his frustration, basically blaming the big PBMs for these huge differences and that what they’re doing is unsustainable. Not even moral.
this is the truth.they are [Discount card companies like GoodRx] Nothing helps. frankly speaking. If carriers and all PBMs did their damn job, there would be no such thing as a discount card. So why does it exist? Well, let’s look at the numbers. The US cash market is at 6%. What does that tell me? There is a 94% chance that I can put any price on the register and you will accept it. These are great opportunities. If you don’t take it, what’s behind SingleCare or GoodRx? It’s a network that includes Express Scripts and CVS as well as UnitedHealthcare and MedImpact and a dozen other vendors. So even if I don’t get you a bad price, I can still make half the profit on a price that looks good. But even that’s not a decent price. Again, this goes back to my previous point. The federal government cannot determine what the actual price of the drug is. So my previous statement was how can you as a consumer? So I think what we’re starting to see is that when buyers and sellers freely communicate about prices, prices settle themselves.
When I go to the store, I don’t have to figure out omg, can I get good priced popsicles? No, the price was set long before I entered the store. And someone won’t magically change the price of a popsicle for the next person who opens the fridge. But that’s how the U.S. supply chain works at the last hop. But oddly, that’s not how the rest of the supply chain behaves. So when you come from the pharmaceutical industry and produce a tray of medicines, at the end of the day it has a unit cost and that unit cost is sold to what we call wholesalers like ABC [AmerisourceBergen] and McKesson. They have a unit price, they sell to pharmacies and hospitals, they have a unit price. But when you get to the last hop in the supply chain, something magical happens. All prices in the U.S. are gone, not because prices don’t exist, but because the entities that control the last hop in the supply chain — carriers and PBMs — want it to. So I don’t blame anyone. I don’t think anyone’s initials are CVS at this time, and no one’s last name is Cigna. I think these are just the realities of being a public company, your fiduciary duty is your shareholders and you should maximize your value and your business model. But this is not sustainable. This is certainly not what I mean by morality. And since drug prices don’t change every hour of every day at every pharmacy, it’s a complete lie. Drug pricing in the U.S. is completely stable. Brand-name drugs change like clockwork twice a year. Call it January and July, and generics are scaled down based on your purchasing schedule. If you look at total net worth, it has been declining since 2014. So technically, net drug spending in the U.S. should be negative. but it is not the truth. So yes, you can tell from the tone of my voice. I’m annoyed by this topic, but no one wants to talk like me. For whatever reason. I think they would think they would be brought back and shot. But the truth is, it’s the truth.
Loiacono says where he is in his company, capital receipt Other new PBMs may be different.
So buyers and sellers in the U.S. can’t have contractual communication at the point of sale…except for us, [though] I’m sure there are other PBMs starting to do this. But the only way to create efficiency in any market is for buyers and sellers to freely exchange prices.So we use NADAC Pricing from the federal government.I don’t Mac list. I do not spread. All my clients get the same price. If any pharmacy wishes to offer lower prices, God bless them, please do so. But I don’t get in the way of patients, plans or pharmacies. This is the way it should be.
A co-panel member chimed in on drug pricing.
“Honestly, I’ve worked for PBM before and the pricing was a disaster,” said James Lott, chief executive of Script Health, whose mission is to provide simple and affordable life-saving medicines and Work with a pharmacist. “Anyone who has had the fun of drug pricing knows that it’s a headache, and it’s very [perplexing]. So I can’t say more convincing than AJ. So I agree with his idea and agree. “
Photo: Walter Lin
