AH029 - Selling Pharmacy Benefits: Building Relationships & Meeting Clients' Needs, with Nick Van Hook

Transcript

Lightly edited for clarity.

[00:27] Justin Venneri: Hello and thank you for joining us for this episode of the Astonishing Healthcare podcast. This is Justin Venneri, your host and Director of Communications at Capital Rx. And today I have Nick Van Hook with us, Vice President of Commercial Markets. Nick focuses on our broad range of employer groups, and he tends to focus on health systems, universities and other larger institutions. Nick, welcome to the show.

[00:48] Nick Van Hook: Great to be here, Justin. Only agreed to do this when you weren't wearing your Rangers hat, so I appreciate your commitment there.

[00:56] Justin Venneri: Had to take that off for this.

[00:57] Nick Van Hook: We'll clarify -- New York Rangers. I don't want to get any Texas Ranger baseball fans unhappy out there, but yeah, good to be here. Looking forward to this.

[01:04] Justin Venneri: Likewise. So, we're going to be talking about the selling season, essentially, and just current trends you're seeing in the market. But before we get into that, maybe you could tell us a little bit about your background in PBM and consulting and what led you to Capital Rx?

[01:19] Nick Van Hook: Yeah, so, I didn't know what a PBM really was coming out of school. I actually spent a little bit of time on the mini tours trying to pursue my professional golf career. Ultimately failed miserably. You find out pretty quickly that it's pretty competitive out there, but really awesome experience. Learned a lot, got to meet a lot of new people, and ultimately, really after that was kind of just at that point, looking for a job and happened to take a job at Medco, which was one of the larger employers in our area. I mean, their office was five minutes from me – like I said, had no idea what a PBM was, but started in retail networks, worked help coding the retail network pricing -- so, through access databases.  

I was there through the acquisition, so Medco to Express Scripts. I actually moved internally to a role with performance guarantees and rebate analysis. So, my whole time there, spent a little over three years or close to three and a half years. And then during that time of the acquisition and the merger, you know, there wasn't a lot of room for movement. And so, ultimately, you know, a number of the folks that had left had went over to Truveris. And I went to Truveris, got to do RFP work -- so procurement, did some audit stuff from the kind of consulting side, which is where I met AJ and our co-founders.  

I was there for a couple of years, really enjoyed it, moved to Mercer in their pharmacy practice where I got to further expand my career into, you know, strategy work, continue to do RFP procurement stuff, helped manage some of the audits, didn't necessarily do the work, but still stayed close to that. Write market checks and all that type of work. And ultimately really enjoyed it there. Really enjoyed the folks, but, you know, kind of hooked up with AJ again, had some conversations, and really loved what he was doing.  

I ultimately did want to get into a full sales role at some point in my career, so really enjoyed my background getting to that point, but also knew I needed to be passionate about what I was selling. And so, like I said, I had a reconnect with AJ in 2019 and here I am a little over five years later.

[03:15] Justin Venneri: So good stuff. So we just sort of went through the selling season for larger groups. Can you talk a little bit about selling B2B in the current environment? And then part two of this question, we can get into some of the specific questions and themes you've been hearing about or addressing during your meetings.

[03:32] Nick Van Hook: Yeah. So selling B2B in healthcare, you know, I think one of the big things is in today's landscape, one, people want to talk to us. Pharmacy is at the forefront of legislation. It's just a topic in the news. People want to learn more about that. So, you know, building trust within consulting firms, employer groups, acting as a trusted advisor, not just a salesperson, really being an expert that they can lean on.

This is a much longer sales cycle. You know, I joke with some of my buddies who are in sales as well. I mean, they, you know, ultimately work on a group and it goes live basically once they get the go ahead, right? We have discussions that happen before RFPs. You go into the RFP process and by the time implementation goes along, you can have a 5-12+ month sales cycle. And again, that's not even including some of the pre-discussions you have.  

You go through this a lot, right? We mean, I've talked to plenty of groups in 2019 that, you know, didn't select us way back then. For whatever reason it was, they stayed; we were too new. But you continue to have those conversations. You continue to lean on your expertise in the industry and, you know, just saying, hey, did you see this? Did you hear that? You realize quickly that you build some trust. Folks come to you as a trusted advisor. Right? Like, they know that they didn't select us, but they may still ask us questions whether it be at the B2B side or even through the consulting community, right? Just asking us for our thoughts on a particular topic. So, trying to really build that trust and relationship.  

I love meeting and talking to people. It's one of the reasons I wanted to get into sales and the relationship building side of that. Because, again, if you build a good relationship, just because you may not win a group, I'll call it right at that time, that relationship can continue to grow. And ultimately down the road, at some point, you're willing to do business with them. And there's so many different ways you can do that, whether through common interests: sports, kids, travel; whether just professionally. Like I said, being an industry expert, subject matter expert on whatever particular topic someone wants to talk about, there's so many different ways you can continue to build and maintain those relationships.

[05:31] Justin Venneri: So, it sounds like you try to make it personal in a lot of ways to build that trust and build that relationship.

[05:36] Nick Van Hook: Yeah, absolutely. Like I said, everyone that knows me personally knows that I can literally talk to anybody on the line at anywhere. I really just enjoy good conversation and have a lot of interests. And so, yeah, I try to make it personal. Whether, again, it's someone who loves sports. I love sports. I enjoy traveling. When we get to travel for vacations, my kid now, he's three years old, so whether it's, you're talking to folks that have a similar age group or even folks that have older children that are like, “Oh, I remember, you know, when my kids were that age.”  

And so you just kind of build that relationship with them. I mean, I really do enjoy the interests of others. And like I said, having those discussions, I feel like I spend a lot of time just talking with folks, not always necessarily about work at the PBM industry, just, you know, hey, how are your kids doing? Or, hey, did you see, you know, so and so sports team won or what happened in the industry? So, there's various different ways that I like to connect. Sometimes just making a phone call without even talking business,  and you ultimately sometimes lead the business because that's just how the introduction happened.  

But the end of the day, I try to make them definitely more personal. And I think I enjoy it because as people move around in jobs today, in today's day and age, whether it be in or out of industry, and you can still stay pretty close with folks who you may not even do business with anymore. So, it's a been really enjoyable part of my job.

[06:52] Justin Venneri: It's great. So, onto business trends. What have you been seeing or hearing from the benefits directors, plan sponsors, etc., the folks that you have to navigate this process with over an extended period of time. What are the key things they're focused in on or trying to address?

[07:08] Nick Van Hook: Yeah, look, right now, I think every conversation we have with folks is specialty, GLP-1s. And then when you get further along in a competitive process, they may have the question on, like, how do you differentiate yourself from, maybe not necessarily some of the bigger competitors that are out there, that everybody is more well aware of, but more similar type PBMs, such as ourselves, trying to make a difference in the marketplace. There's a lot of PBMs out there trying to do something different. So those are really the questions we get on a day-to-day basis.  

You know, you get a lot of questions now with all the legislative action happening, or discussions happening. A lot of the reports coming out, you know, around the New York Times article, Wall Street Journal article, the FTC findings, all of those things are not just being asked in random conversations or, you know, whatnot; they’re actually being asked in finalist meetings. So, you know, we had an opportunity to pitch our value prop and our differentiators, but asking our thoughts and what's happening in the market as well.

[08:05] Justin Venneri: So when somebody asks you how do you differentiate yourself, how do you typically respond to that?

[08:10] Nick Van Hook: One of the things I think that makes us unique, obviously, is our cost-plus approach using NADAC. But I also do think JUDI, which in many cases, our adjudication platform, the technology that really drives the business, is a huge differentiator because it allows us to be truly independent as an organization. A lot of other PBMs -- large, small, start up -- are leveraging the same technology, variations of it, right? They have their own variations of it, but they're licensing the same technology that's decades old. And I think JUDI allows us to ultimately be fully independent and own and operate everything we do, right?

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We own our network contracts. We own our contracts with mail, specialty. We own our own call center. All of those things, I think JUDI allows us to do more efficiently. And so, I think that's one of the biggest differentiators that I point out. Obviously, you get to a point to be able to tell your differentiators when financials work out, right, when you have a compelling proposal on the table. But at the end of the day, I do think that allows us to fully differentiate ourselves from an independent perspective and also the way we service our clients.

[09:18] Justin Venneri: Okay. And then you mentioned GLP-1s. Obviously, super hot topic originally for diabetes, weight loss, cardiovascular risk, so on and so forth. What are the discussions like that you're having around GLP-1s these days?

[09:31] Nick Van Hook: Well, I'll plug Bridget's podcast as well - AH021 - Managing Pharmacy Costs in a GLP-1 World, with Bridget Mulvenna.

[09:35] Justin Venneri: That was a good one.

[09:36] Nick Van Hook: Definitely go listen to that as well for more in depth. But, yeah, I mean, it's funny because sometimes you don't even have it on the agenda and you talk about it, right, for some of these meetings just because it's inevitable. I mean, the reality is specialty and GLP-1s, whether you cover it for weight loss or not, is upwards of 70-75% of spend in employers total drug costs today. So it's, it's a big impact.  

And talking with them through various different strategies that we can deploy, some of the controls we can put in place, programs we have to offer through homegrown programs, through third party relationships that we have from a management perspective. So you're really talking through the whole gambit of that with employer groups. And like I said, Bridget does a great job, her podcast talking about GLP-1s. But we do have these discussions every day. It's a hot topic. Folks don't know what to do. It's so new and it's skyrocketing in costs. So, you know, kind of talking through how we can help manage their costs as a good partner.

[10:33] Justin Venneri: That makes sense. And you mentioned prior authorization and just sort of quote unquote, proper controls. How do you think through, or how do you explain to people that you're talking to that you can make this work and actually manage the program without causing disruption?

[10:48] Nick Van Hook: That's a great question. So much focus is on the unit cost, and I know Kristen [Begley, PharmD] talked about that in her podcast as well, but so much -- and by the way, everyone should thank me for plugging their podcast here - AH010 - The Power of PMPM: Holding PBMs Accountable for Total Drug Spend, with Kristin Begley, PharmD.

But so much focus is on the unit costs. How do we control unit costs?  

That's really what a lot of, even the articles you see, how can we control unit costs? I think what goes overlooked sometime is the impact you can have on the actual drug mix, right? Making sure folks know or steering them to lower cost medications. One of the easiest ways to do that is through prior authorization and ensuring appropriate use of a medication. You know, I think the FTC findings recently even mentioned that some of the PBMs that own mail, especially dispensing, have, I don't want to say different criteria, but it seems like the criteria is a little easier to pass through.  

So, the reality is on a prior authorization, and people get scared when you talk about that because it's a looked at as a barrier to care. The reality is it only touches about 2-3% of your total membership, but that 2-3% of that membership is driving upwards of 60%-70% of your costs. And so those are the folks you want to really take a look at and say, hey, are there better options, lower cost options for these members to take? And I think you have a far better impact on controlling costs and keeping or bettering outcomes by doing so.  

You know, that shows with the, we look at the level of appeals we get on the prior authorization and it's very, very low. So we are making the best appropriate decision at that initial review and we don't really hear a ton of noise from members about the process. I do think JUDI allows us to do it faster than industry typically can. See, I think some of the biggest pain point with a prior authorization can be the time it takes so that where some of the disruption comes in or the thought of disruption comes in. But the reality is it's a very small part of your membership, but it impacts a lot of the cost.

[12:35] Justin Venneri: When you say upwards of 60-70%, I think the general stat is that a couple percent of your membership is going to drive, because of specialty, over 50% of the costs. And now you're lumping in GLP-1s on top of that.

[12:48] Nick Van Hook: Yeah, the 1% drives 50%. Right. But now you're looking at high-cost brands and GLP-1 utilization. Yeah, you're talking about 2-3% of your membership that's touching 60-70% of spend. It’s big.

[13:03] Justin Venneri: Okay. And this lengthy process that begins RFP -- request for proposal, right? When you get into the discussions and when you get into these kind of finalist settings, you mentioned that the articles come up, the press coverage comes up. What do those conversations typically go like for you? How do you tend to address those things?

[13:22] Nick Van Hook: I think they're easy for us. Right? I mean, in overall concept of what all these articles and the FTC is trying to do is uncover the true black box of this PBM industry, right? And for us, that's what our co-founders set out to do, right? Is make a positive change in the industry and really provide visibility into what's actually happening from a cost perspective, from a controls perspective. And so the discussions for us are very easy, right. And many of us who have joined this organization are highly mission driven as well.

And so, these types of conversations that are happening now outside of the walls of our building are what we've set out to try and do from the beginning and is really make a positive impact on the cost of medications, clinical outcomes, and just provide visibility into the overall benefit for a plan sponsor. Because at the end of the day, PBMs really started out as administrators. The whole industry has since evolved into what it is today, but really getting back to the core roots of just, hey, we are here to administer your plan. The data is yours. We have a fair acquisition cost pricing model, and at the end of the day, we're going to give you the information you need to make a more informed decision. We'll provide recommendations, but it is ultimately your plan. So, if you want to carve out specialty, you can carve out specialty. If you want to look at a different type of point solution, right, even if we have a program for it.  

Those are the kind of kinds of conversations we have because we're not making money on drug price or drugs going out the door, or spread pricing like you see in the market, or retention of rebates and all of those things that you keep hearing about. So, for us, it's a lot easier to have those discussions with plan sponsors and say, hey, it's your plan. You get to ultimately make that decision and we'll give you recommendations and information that you need to do so.

[15:11] Justin Venneri: And you brought up rebates there. You mentioned it previously in the discussion, too. Can you share a thought or two on rebates and the discussions you have with prospective clients or clients around rebates. And we pass them through, of course, but what are the things that the plan sponsor is thinking about as they read about rebates and the gross to net?

[15:30] Nick Van Hook: Yeah, it kind of ties back to the drug mix side of things and things we talked about around prior authorization controls, GLP-1s and specialty. Ultimately, employers are used to getting large rebate checks right now. That is just the way the industry has been. But the reality is those large rebate checks are because your members are filling high-cost medications.  

I think the discussion is that the rebate checks don't need to be that high if you’re steering to a lower cost brand medication or you have the ability to go to a generic medication instead of a brand that carries a rebate. Those are the types of discussions we’re having. You take a group over and their costs are down, but that doesn't necessarily mean their rebates are higher than what they had in the past. It's just a matter of being able to have an impact on the true total cost of their plan.  

So, I think it fits. And I think a lot of people are starting to realize that, you know, we don't want to chase rebates because chasing rebates means we are paying more in drug spend. Employers are trying to educate themselves more on a market that's been very much a black box, as I mentioned, for so long. So, the discussions have been very positive around rebates, and I think we'd all love them to go away and just get to a net-cost approach. But the reality is that's not the case today. And so, you mentioned we passed through 100%, but we're not chasing those to lower cost.

[16:55] Justin Venneri: Got it. So, what makes Capital Rx a logical option for health systems where you spend a lot of your time?

[17:01] Nick Van Hook: Kind of goes back to the administrator part of this, right? Health systems are unique in that they have, obviously, clinical expertise that most employers do not have within their HR teams, or just access to outside of the consulting world. The employer group and the health system. They actually have clinical expertise in house. Many of them own pharmacies that they want to leverage more.  

And so back to the discussion a little while ago here, that we are here to administer your plan the way you want it to be administered. So, if you philosophically believe something from a clinical perspective, we're able to administer that. JUDI allows us to do so many awesome things when it comes to customization and things of that nature. The same thing goes for owning dispensing assets. We don't own pharmacies. We don't profit from the dispensing of a medication. So, to the extent you want to leverage your in-house pharmacy, we are happy to do that.  

And I think those are really some of the things that resonate the most with health systems. And we obviously have a very clinical first approach when it comes to account and customer service as well. So it's not just the HR team that gets to interact with some of our teams, but also how can we support the pharmacy teams? How can we support the clinical discussions on the health system side? So, all of that kind of goes into what, I would say, are the key differentiators for us when it comes to health systems and why health systems are really talking to us.  

I mean, healthcare is local. Right? And I think in so many ways, they’re battling their own vendors for market share. So, at the end of the day, we're here to just help them capture what, you know, ultimately, they want to capture.

[18:38] Justin Venneri: A little bit better control, better alignment.

[18:41] Nick Van Hook: Or even not, right? Again, if their clinical philosophy on a particular medication doesn't necessarily align with ours, that's okay. We can provide the impact, we can provide the disruption. But if they want to administer it a certain way, we're going to do that, Especially for a health system.  

A lot of them do have internal P&T committees, so there's definitely a vaster clinical knowledge within that health system space to make some of those decisions than your employer group, who may lean on the consultant’s recommendations, are becoming subject matter experts themselves, but don't have that pharmacist background to kind of really make that ultimate decision or feel comfortable making it by themselves. Where you do tend to see in the health system space, people can make those decisions. They do have that background.

[19:23] Justin Venneri: Makes sense. Okay, so last one, and I ask everyone, what is the most astonishing thing you've seen relating to our discussion here and that you can share? Of course, because I know you've seen a lot. If you want to go in and around PBM, B2B sales, and or consulting, it's all fair game.

[19:41] Nick Van Hook: There's probably so many things to share on this one, and I'm sure so many others have hit on some of those topics as well. I'll say this. You know, one of the real interesting ones I saw in one of my past consulting roles. Trying to be a little vague. But we worked with an employer group that actually had 6 or 7 unsigned contracts and amendments, which absolutely blew my mind that, you know, you continue to operate in a world of, you have a vendor that you're essentially providing benefits to your members, but you haven't signed a contract or amendment in six or seven years. And we talked about all the things that we've talked about today, but at the end of the day, what ramifications will they have if you just leave these contracts unsigned? So we went back through and started to go through that process in order for them to leverage some of the stuff they wanted to. But, yeah, I thought it was very interesting that -- I always just come from a, I don't know, you go to college, and you talk about contracts signed and then you do work. We live in a world here where it seems like you can go years without a signed contract, but everything still somehow gets done.

[20:48] Justin Venneri: That's wild. Yeah, I guess. AJ talks about no prices in contracts and they're so hard to audit, etc. So why sign it, right?

[20:56] Nick Van Hook: Yeah. So why sign it?

[20:59] Justin Venneri: It's great. All right, Nick. Well, thanks so much for joining us on the show today. Hope you have a great rest of your day.

[21:04] Nick Van Hook: Thanks, Justin.

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