AH050 - PBM Pain Points and Overcoming the Fear of Change, with Hope Nakazato, PharmD

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 joining me in the studio today is one of our newest colleagues, Hope Nakazato.  

We're going to be covering a few things that listeners may find interesting as they wrestle with how to go through the selection process for a new pharmacy benefit partner. And just in general, thinking about what's most important from a pharmacy benefit partner. Hope, thanks for joining me in the studio today.

[00:57] Hope Nakazato, PharmD: Thanks, Justin.

[00:58] Justin Venneri: Can you go into a little bit more detail about your path to Capital Rx nd your background in the industry?

[01:04] Hope Nakazato, PharmD: Yeah, sure. So I'm VP of Business Development here at Capital Rx and I'm a pharmacist by training, so I've spent the last ten years in this industry. I started out my career in retail pharmacy, worked there for a couple of years, managed retail pharmacies, and then actually decided to make the switch back to the hospital pharmacy setting. That's where I had some of my interning years and took on a clinical role at the hospital setting.

And it was really in the hospital setting where I saw some upsetting things, particularly when it came to wholesalers creating medication shortages and how this impacted the patient quality of life and the cost repairs in our hospital system.  

So I knew if I wanted to influence things on a macro level that I'd have to get my MBA and be more on the other side of things. So I applied for my MBA, got in, and I switched to a job at that point with a health plan as a clinical pharmacist consultant. Then I went to a broker and did consulting for about two and a half years on the pharmacy benefit. And now most recently I landed here at Capital Rx.  

So I'm excited to be here and very excited about what we're offering plan sponsors and clients and members at Capital Rx.

[02:14] Justin Venneri: Likewise. And when I saw your resume, I was super excited to have this conversation because of your experience in all of those different seats can really help inform the why, you know, why or how from a pharmacy consultant's perspective. Having been in the retail setting, having been in the clinical setting, there are all these key issues, or like friction points, that we encounter with, particularly, employer plan sponsors who wrestle with the decision-making process and the procurement process and just general vendor relations issues. And then there's a fear of change.  

Maybe we'll start off with some of the friction points that you see or you've experienced over time in working with HR leaders, benefits directors, etc.

[02:56] Hope Nakazato, PharmD: Sounds good. And if I achieve anything with this episode, I really want to challenge plan sponsors to really think about pain points, if any, with their current PBM solution. And then I want these items to be remembered when we talk about change and how I believe there are better solutions available in the marketplace.  

So, the first friction point is just this idea of execution or lack thereof. And so time and time again I've seen errors -- errors with plan designs, errors with pricing, errors with reconciling plan spend at the end of the year, errors with members not being able to pick up their medications or a medication not being covered by a plan.  

And so the worst part about all these mistakes is that they're almost always detrimental to the member or they're almost always largely expensive to the client. And most traditional PBMs are unable to fix these problems with any sort of speed whatsoever. So, these errors take weeks if not months to chase down and even longer to reconcile and make the member or client whole after the fact. So this idea of execution is number one.  

Two, communication or lack thereof. We talk about the thousands of tiny decisions that we as PBMs make on a daily basis to manage your plan. And many of these we will go back and help consult the plan sponsor on what decision to make in a collaborative manner. But there is an extreme lack of partnership that I've seen across traditional PBMs. These tiny decisions are made on your behalf all the time and no communication is ever made or an incomplete or non-transparent communication is made. So solutions that could be beneficial to the plan may become available, and if they're not in the aligned interest with the PBM making more money, then they're not readily offered to the client as a solution.  

So this often leaves members with having to pick up the pieces, or the plan sponsor is tasked with answering for the PBM's decision that was never communicated to the plan sponsor in the first place.  

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[05:00] Justin Venneri: And like tiny decisions, are you referring to things like clinical decisions on the back end related to a member's specific situation or something else?

[05:08] Hope Nakazato, PharmD: Yeah, tiny decisions like formulary changes, updates in utilization management, you know, new clinical programs being offered or coupon solutions being offered that just aren't offered to the plan. So these many different decisions on a daily basis -- how to execute the utilization management, if there are new criteria being offered, if there's exceptions that should be offered to the plan. So all these tiny little decisions that make up millions of dollars on an annual basis.  

But there's a real lack of communication between the PBM and the plan sponsor and, ultimately, the member at most traditional PBMs. So it becomes very, very frustrating for plan sponsors to have to be a middle man and answer for both sides. And I've seen that a lot.  

And then number three is flexibility or the lack thereof. So this is an interesting one for me because I definitely think of large spend being a driver here in areas where spend increases massively or there is a large gross spend to begin with. So we're thinking like GLP-1, specialty, etc.  

Many plan sponsors question what can we do to decrease spend here? Pretty easy question. But honestly, if adding spend is advantageous to the PBM, the answer is usually a justification for why your plan is spending more money, or it's a quote unquote, “Sorry, but you just have members on more expensive medications. It's exciting. We have more expensive medications; they're better at treating disease states. But that's just the way it is. Your spend is going up. But medications are more expensive.”

But the PBM is justifying why they're already doing everything they can to manage the situation, but there are no customizations, creative thinking is not allowed, plan edits are slow to be made, and external vendors are not allowed because it's not within the best interests of the PBMs.  

So these are really the pain points. And I call them, I wrap them up into intangibles. Right? Because most PBMs all say the same things or it feels like you're saying the same things. But these intangibles are really what make up your experience on a day-to-day basis with how you're communicating between the PBM and the members and ultimately how you're supporting your membership through your relationship with your PBM.  

So those are the pain points that I see on a daily basis.

[07:26] Justin Venneri: Okay. And with those as the pain points, and you mentioned cost very specifically in the third one. And we've all seen the surveys, we've all seen the trends for a decade plus of double-digit compounding inflation on the pharmacy spend line for plans. This goes back to the fear of change. Why would anybody want to keep dealing with all that stuff? Are there certain steps, if we peel back the onion, things that plan sponsors can do or consultants can think about to help address these issues and overcome that fear?

[07:56] Hope Nakazato, PharmD: Yeah, and this is something that I find very interesting. So many of us are unhappy with our product or service, yet we continue to just complain about the product and not make any changes.  

I actually just read a book on this exact concept to help me understand and think through more about this concept. And it's a book called "Who Moved My Cheese?" By Dr. Spencer Johnson. And this book is a parable that focuses on four characters: two mice and two little people that live in a maze and they're searching for cheese. And the cheese in this story is representative of things that bring happiness and fulfillment. But this cheese can actually just be taken away.  

So when the cheese runs out one day, this story tells how each of the four characters approach the change differently and what the outcomes are. And I'm not going to give anything away about the book other than just to say that the largest obstacle to change for many people is fear of the unknown. And the largest regret of many people is that they didn't adapt to change more quickly when they saw an opportunity for things to get better.  

So that's my little spiel today about change that I just want to keep in mind as I go through reasons why you shouldn't be afraid to change. And that's just kind of what I want everyone to remember.

[09:11] Justin Venneri: Sounds like you found a great book reference to for an analog here.

[09:15] Hope Nakazato, PharmD: Yes. So I'll start back to your point, Justin. I'll start with number one.  

So look, I'm going to be summarizing concepts with buzzwords here, but I want to be very careful about this because there's a lot of people in the industry claiming the same concepts right now. So I'm going to actually give examples of how I think Capital Rx is doing these items in the marketplace right now.  

So the first item that I want to touch on is alignment. This is a key differentiator for us at Capital Rx, is that we are 100% financially aligned with the plan sponsor. And by that, I mean every plan sponsor that we service. So using NADAC as our pricing benchmark allows the supply chain to set the price, and this price holds true for every single one of our clients.  

We pass back 100% of rebates, and we're willing to give reporting for this on an NDC-9 level so customers can truly appreciate the total economic impact of each medication.  

We do not own any of our own dispensing assets. Therefore, you're free as a client to leverage whatever dispensing arrangement is best for you and your members.  

And this is key, we're open to partnering with external vendors. So if you feel there's a third-party vendor who is managing specialty, weight loss drugs, for example, exceptionally well, we're happy to partner with this solution and integrate them into your benefit.  

So, simply put, we do not set the drug prices at Capital Rx and we work off a sole source of revenue, which is our admin fee. Therefore, we're fully aligned in the interests of all our clients. And that's number one, why you shouldn't be scared to make a change.

[10:45] Justin Venneri: Got it. What's the next most frequent thing you heard? And you just kind of shook your head like, wait, why are you scared of that? Or what's holding you back?

[10:54] Hope Nakazato, PharmD: Yeah, for the second reason, this idea of consistency. Look, I know change can be scary, but it's a lot less scary when you know you have a PBM partner rather than a PBM that you just signed a contract with.  

So we truly view ourselves as an extension of your team in order to empower a better member and client experience. And this is just evident by our customer satisfaction. So we have consistently better NPS scores over the industry average.  

So this idea of execution and consistency, where you have a partner who's really representing your plan as well as your membership and supporting that, is very important for making a change  

[11:32] Justin Venneri: That makes sense. So I assume there's some building trust there to demonstrate that, like, hey, this customer contact center is really here for you and you're not just to get people off the phone quickly kind of thing.

[11:41] Hope Nakazato, PharmD: Yes.

[11:42] Justin Venneri: Cool. And then a third?

[11:44] Hope Nakazato, PharmD: Yeah, so I think a third reason that you should be looking for as you're approaching change is an idea of being future proof.  

So as you head into this world of unknown, we know that the industry is shaping up really rapidly. We know that there's a lot happening quickly. So, looking for a PBM partner who's really able to adapt with different forces that can be changing to the industry and just to be agile into the future state.  

So I know here at Capital Rx we do have our Never Move Again™ approach, which just allows clients to leverage JUDI®, our adjudication platform, as an independent claims adjudication platform and customer service package and just plug and play different solutions for mail and specialty, rebate aggregator, point solutions, etc.

And I think this idea is really great because it's this idea of being empowered about your plan. You're able to represent your plan however you want to, however is best for your members. I think this is really important to think about as you move forward with change is how can your partner adapt with different market forces and with different legislative pushes? I think that's a really good point to think about.

[12:55] Justin Venneri: Got it. That makes a ton of sense to me. So everybody loves surprises. You have to have a fourth one, right?

[13:00] Hope Nakazato, PharmD: Yeah. Look, I feel very confident about what we do here at Capital Rx. I've seen it in action myself from the other side and that's one of the many reasons that I'm here today. But what I would say for this question is that everyone makes mistakes, no one is perfect, and there will be mistakes that occur with any implementation, partnership, etc. But for me, it's all about how your partner addresses and responds to, and ultimately fixes, their mistake.

And this is how I define a good partnership. So if there are mistakes with Capital Rx, we aren't benefiting from egregious price gouging events, or lack of rebate pass-through, or clawbacks. We're equipped with the technology to respond quickly to the event and make sure that we're reconciling with all the information quickly at hand. And then we're closing the loop with our engaged customer care teams, our account managers.  

So I think it's important when you're thinking about a change, a partnership, how does someone respond to a problem in your current scenario. Are you happy with the issue resolution where you are? And then ultimately does the new partner have the tools, the staffing, and the technology? That's how I judge a new solution. So I think that's important to think about as well.

[14:09] Justin Venneri: And second last question for you. What's one piece of advice you'd give your younger, just starting out in the industry, self based on what you know today?

[14:16] Hope Nakazato, PharmD: That's a great question. And Justin, I'm actually going to go back to the book I referenced earlier on this one.  

So in my younger career, I was always keen to figure out that a process was broken or could be optimized in some way. But I had this idea in my head that if I couldn't fix something 100%, I would fail.

So many times I would just conform to the status quo and be scared to change and make things better. And that's why a quote from "Who Moved My Cheese?" really hit home. And this quote is "What would you do if you weren't afraid?" And what this means to me is that it doesn't have to be 100 or 0. There is so much benefit to just looking at a solution and situation as 10 is better than 0. Small changes are not just okay, they're good. So a step in the right direction and challenging yourself to become better starts here.  

I would challenge my younger self, but also would encourage people to think about what would you do if you weren't afraid? Would you acknowledge that a process isn't working and that there might be better solutions available? And even though those solutions are new, that instead of being scary and overwhelming, new solutions that make a process better are good and can even be fun and very rewarding as you see them help others and address problems in the space head-on.

[15:32] Justin Venneri: That's great advice. Last question and I ask everybody: what's the most astonishing thing or surprising thing that you've seen that you can share, compliant, of course, over the course of your working with employer plan sponsors. Tell us a good story, funny, shocking, whatever you got.

[15:48] Hope Nakazato, PharmD: I love this question. I love the compliant part of things. But for this question, I would just say trust your gut. I have seen so many things in the industry that I would never have believed could have happened and much less happen every single day with many PBMs.  

So for my example, I'll just say I've seen other PBMs where the generic cancer drug is priced at $18,000 when there's a cash price available at $40. And I've seen this clear as day in the claims data. And when I questioned the PBM, the response I was given was simply, well, in aggregate, your contract guarantees are being met, so there are winners and losers, but this claim is priced correctly. And that logic just has never resonated with me.  

I'll just give a quick wrap-up if okay, and this is a call to action.  

So think through your PBM partner. Do any of these concepts I mentioned resonate with you? I would just encourage you: don't be afraid to change and trust that, if you want to chat more about any of these concepts or think about a new partnership, just please reach out. We'd love to hear from you and potentially partner with you into the future.

[16:54] Justin Venneri: Well, that was great, Hope. Thank you so much for taking the time and joining me for a discussion about why you don't have to be afraid to change. Have a great rest of your day.

[17:01] Hope Nakazato, PharmD: Thank you so much for having me today and really appreciate being on the podcast.

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