Hartford Business Journal

www.HartfordBusiness.com • November 16, 2020 • Hartford Business Journal 15 While Goodroot may be willing to make a lower profit margin com- pared to some industry leaders, Wa- terbury said continuing to produce a positive bottom line — something RemedyOne has done since 2016 — will be crucial if the company is going to accomplish its high aims. "You have to make money, you have to have enough capital to invest and take on risk," Waterbury said. "It's not a nonprofit, that's for sure." College health plans Springfield-based WellFleet, one of the largest U.S. administrators of student health plans, has been one beneficiary of Waterbury's approach. WellFleet, which is owned by Berkshire Hathaway and counts UConn among its 230 university clients, hired RemedyOne four years ago to help it forge a contract with a new PBM and act as WellFleet's ongoing pharmacy consultant. WellFleet CEO Drew DiGiorgio said it was tough to find the right match, given his company's college student niche. "None of the commercial PBMs were meeting our needs," DiGiorgio said. "They're focused on people, on blood pressure medication and cholesterol medications, and there's a lot of fat on those lines. My college students are on behavioral health medications, contraceptives and specialty drugs." With RemedyOne's help, Well- Fleet, which uses Cigna's provider network around the country, built its own private-labeled PBM called WellFleetRx, with a heavier focus on medications college-age patients tend to take. Nearly four dozen of those drugs are offered with no copay charged to the patient. DiGiorgio said the change is sav- ing money for university clients and students. "It's been a win-win all around; we've reduced the drug trend," he said. "We had a negative year last year on drug trend." Through its work with Rem- edyOne, WellFleet has also realized other savings, related to promised discounts or rebates on drug prices. "Just because your contract says you'll get a 65% discount doesn't mean you're actually getting it," he said. Waterbury's team determined WellFleet was actually getting some- thing like 62% and confronted the PBM, which quickly made good on the missing (and valuable) 3%. "Here's a million dollars," DiGiorgio said. Haves and have nots In the prescription drug industry, as is the case in many industries, negotiating favorable terms often comes down to leverage and scale. Large companies that self-insure their health benefits can expect a bit of wiggle room when it comes to negotiating prescription drug costs in their plans. But it's not as good as you might think, according to drug-pricing expert Eric Pachman. "Even the largest of them are still in bad contracts, from our experience," said Pachman, president of Ohio- based nonprofit 46brooklyn Research, which uses complex federal datasets to study and report on drug-pricing trends. "They may just be in slightly better versions of bad contracts." Things are more dire for companies and employees who buy traditional health insurance. Those firms have little opportunity to change plan designs, don't get direct drug rebates, and can't access claims data, he said. The way drug pricing works, ac- cording to Pachman, is supremely complicated and it leads to arbitrarily high costs for consumers, particularly employees of smaller businesses, as well as those who need high-price drugs to live, such as insulin for dia- betics or specialty drugs for illnesses like multiple sclerosis. "For the vast majority of people, this is a problem," he said. Part of the challenge is that the U.S. Food & Drug Administration, unlike regulators in other developed nations like Australia, approves drugs based on the efficacy and safety, with no con- sideration of value (medication cost vs. patient outcomes). "There is no public arbiter of cost- benefit in the U.S. marketplace," he said. "That job has been given to this private PBM marketplace and we are entrusting them to police the system, which is designed to churn out higher and higher-cost drugs." Pachman, who is vaguely familiar with Waterbury and RemedyOne, said the company appears to fit in with a few others that are seeking to lower pharmacy costs for employers through novel reimbursement models or other strategies. Another example is Navitus Health Solutions, a PBM owned by a St. Louis-based health system, which passes through 100% of drug re- bates to its clients, charging only an administrative fee, thereby removing potential conflicts of interest that can arise when PBMs divvy up drug rebates with their clients. Warehouse retail chain Costco bought a minority stake in Navitus earlier this year. "The more players that can be out there doing the same thing, chip- ping away at this problem, the bet- ter," Pachman said. Prescription drug price growth List prices for prescription drugs have grown 33% since 2014, outpacing hospital services, nursing homes and other healthcare categories, according to an index produced by GoodRx. This chart shows the aggregate percentage increase in prescription drug list prices since 2014. Source: GoodRx Drug List Price Index, Sept. 2020 0 10 20 30 40 Drug prices % increase 1/14 1/15 1/16 1/17 1/18 1/19 1/20 2.25 13.5 21.89 25.77 29.81 31.81 33.46 Erik Wallace, Goodroot's recently hired chief commercial officer, is hiring more salespeople to expand the company's client base. PHOTO | CONTRIBUTED Plan your exit, welcome your future You've been building your business for years. In many ways, you may feel like it's part of your identity. But exiting your business doesn't have to mean losing part of who you are. It should mean gaining the freedom to explore new passions and opportunities. With the right planning, tomorrow's possibilities can be wide open to you. 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