Expert Discusses PBM Transparency, Balancing Competition, and Real-Time Optimization

Brandon Newman, the founder and CEO of Xevant, emphasizes the importance of balanced regulation and transparency in the pharmacy industry. He cautions that proposed legislation could stifle competition and innovation if not carefully crafted, potentially leading to big PBMs exiting certain contracts. Newman argues that simply setting prices through government mandates does not necessarily achieve the desired outcomes, as manufacturers may raise prices elsewhere to compensate. Instead, he advocates for incentivizing positive behaviors and providing stakeholders, including pharmacists and pharmacies, with real-time access to claims data, rebates, and cost-saving opportunities.

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Q: With the push for more regulations and changes to PBMs, what does the future look like for PBMs, and how will this affect patients and pharmacies?

Brandon Newman: There's been some legislation, whether it's at the federal level or at the local, state level that spooked me. That would suggest that the competition declines. Some of the proposed bills, going back a few years, would stifle innovation, could potentially push some of the big 3 out, and getting the big 3 out isn't really the best for the marketplace, and so I think you have to be careful what you ask for and be really specific about what you ask for. This whole notion of eliminating spread based pricing isn't always the best gig, as it sometimes aligns all of the the parties to ensure the lowest net cost for all parties, or to to deliver the best environment for everybody. So as we move forward legislatively, I do believe the first step is transparency. Let's operate from the same set of requirements or the same set of understandings, so we're not having hidden games or unfair practices occurring. I think everybody agrees on that, proverbially, I know there's always some people that will disagree, but majority of people agree that transparency is how we need to operate. How we get there, is differing and giving the other one that everybody is agreeing to is let all stakeholders, we have PBM that has a say, you have a patient that should have a say, you have a payer that should have a say, but pharmacists and pharmacies also need to have a say in this approach. So when there is full balance, when there is transparency, then we can start seeing what we really should do, and I think we really should be careful, be methodical. We don't have to be slow, but methodical makes sense. The last I'd sort of add to that is don't do anything unless you have access to data that will tell you whether or not what you're doing is right for all stakeholders of care.

Q: Would increased competition among PBMs lead to lower drug prices and improved patient access, and if so, how so?

Brandon Newman: So the good news is we've been able to see this in the last, it's happened for decades, but in the last decade, we've seen some very meaningful new entrants into the PBM space. We've seen some not do so well, and we've seen some do well. So those that are doing well have proven, "hey, what can you do in order to win in this space?" And so I do believe that there are winning opportunities for up and coming, independent or smaller or niche PBMs to really work well, but we can go to their playbook and say, "What did you do to win? What are employers looking for? What are payers, health plans, looking for that they aren't getting from the big 3? And does that really deliver?" So it's not a question of, "hey, is there something out there?" There are things that are going on today and have happened over years that we can point to continue to invest into that thought process. I would say the word transparency is way overused. Transparency shouldn't even be a thing. It should just be what how we operate is just in full clarity. No one should be hiding how their business practices work, and the good news is is these up-and-coming PBMs have proven that, and they've seen the market shift, at least to some degree, over to utilizing these models to the point where now the big 3 have been forced to actually adopt permanently out in the front and open models that that do support transparency, that do support pass through models, those sorts of things, to give the market what they're seeing from other PBMs. So it really has self-regulated to some degree, and then they need to continue to look at potential other regulation that comes by way of not self regulated. There still needs to be some stick out there, if you ask me, but that's how the markets reacted.

Q: Are there any potential long-term implications of PBM regulation for the pharmaceutical industry, including drug development and innovation?

Brandon Newman: No, I've seen it right out in front of us today. There's been, again, as I described the last question, there have been some proposed regulation that we know will stifle competitiveness, and if those were in play, I would see big PBMs exiting out of certain types of contracts, and that's not, in my opinion, that great you use them to really ensure the market plays in a manner that's fair for all free markets. That's how they should work. But on the flip side, we've also seen practices, and this might go a little bit away from the PBM side, but mandating and setting prices by the federal government looks good for Medicare and Medicaid, and on the surface, the inflation Reduction Act, and setting specific prices, everybody applauded, "hey, let's ensure that diabetes is managed," and I don't disagree it needs to be managed better, but setting that price did not necessarily have the intended effect on the broader commerce of pharmacy benefits. Where what we did see, and we actually have heard, in actual not testimony, but coming forth and saying, "Hey, if I'm being told what to set my prices at here as a manufacturer, well I've got to make up for that elsewhere." So what do they do? Those same prices in commercial? They increase them, or they look at all of their drug mix and say, "Hey, I have to make up for where I just lost, and so they increase the prices elsewhere." It's like a tube of toothpaste, in my opinion, that's been closed off. You squeeze it, goes to one side. You squeeze it, goes the other side, until you start looking at disrupting the model just sort of saying, I want to change the prices doesn't, really work. And we've seen that proven.

Q: Is there anything else you would like to add?

Brandon Newman: I don't want to have this come across as selfishly, but most would agree, doing things out in the open, trying to create a free marketplace that is fair. Trying to do it with a stick sometimes doesn't really work. We're using with a carrot, and say, incentivize can work, but you have to have an ability to access claims, to access analytics, to access the ability to understand what's going on in real time. Largely the market as a whole operates way after the fact, even though, as you send a claim through and fill a prescription, you're checking to see if they gotten that medication before. But do you know what the rebate is? Do you what other opportunities to reduce the cost? Is there a copay card? Is there specialty copay savings that are available? All of those things happen, 30, 60, 90, even up to 365, days after the fact that if you move that up to real time and implement technology that is readily available to really ensure that these, whether regulations or business models that we're really trying to drive home, really play out. Well, you have to, really, have to drive home on that. So Alittle bit selfish, but you know whether you use Xevant, or whether you use anybody, for that matter, to really drive home real time optimization, that's how it's going to end up really being implemented for good. So that's how I would add. Regulation aside, is nice, but you really have to look in real world.