Dr. Nick van Terheyden aka Dr. Nick
Host of News You Can Use
LinkedIn: Nick van Terheyden, MD
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In this week’s special edition of “News You Can Use” on Healthcare NOW Radio I sat down with Adam Russo, CEO and Co-Founder of The Phia Group, for another edition exploring the weirdness of healthcare in the United States.
Listen to the Conversation
Breaking Bad: My Eye-Opening Discussion on PBMs and How to Fight Back
If you’ve been doom-scrolling lately, you’ve probably heard the term “PBM” thrown around. But for everyone else this term will likely bring a lot of emotions, especially if you are in need of any medications. So I was excited to sit down again with Adam Russo, CEO and cofounder of The Phia Group and break down the already broken system we call healthcare. PBMs, or pharmacy benefit managers, were originally created with good intentions: to manage prescription drug benefits and help control costs. But somewhere along the way, the incentives went haywire. As Adam put it, PBMs are middlemen, and the real question is why we even need them anymore with today’s technology. The core problem? These companies are often owned by the same parent organizations as insurance carriers and brokerage firms, meaning they’re actually incentivized to push higher-cost drugs. Why? Because securing an 80% discount on 1,000 drug looks far more impressive than getting no discount on a 10 dollar drug. That is even though you’ve just overspent by $190. It’s a classic case of following the money, and the behavior it incentivizes is deeply troubling.
The weirdness doesn’t stop with the PBMs themselves. As Adam shared when his four-year-old daughter was struggling with reading, the doctor’s first instinct was to prescribe Ritalin. Not therapy or after-school programs. And most parents, especially those juggling multiple jobs, would walk out saying “thank you” to that magic pill solution. Add in direct-to-consumer advertising (the US and New Zealand are the only two countries that allow it), and you’ve got patients walking into appointments already demanding specific brand-name drugs they saw on TV. The result? Over-prescription, skyrocketing pharmaceutical costs, and a system where approximately 90% of doctors have no idea what the drugs they’re prescribing will actually cost you.
So what can we actually do about this? Adam’s answer is surprisingly empowering and similar to our last discussion (Ditch the Broker, Mobilize the Workforce), incentivize the patients themselves. His firm hired an independent audit team of doctors and pharmacists who proactively reach out to patients and say
“You’re paying a $100 copay for that brand-name drug, but there are three generic alternatives that would waive your copay entirely. Can you ask your doctor to consider switching?”
The result? Eighty percent of the time, the doctor agrees. Even better, patients can receive recurring savings deposited directly into their bank accounts every single month.
Listen in to hear us highlight the absurdity of state-by-state rules, where depending on where you live can decide is your direct primary care doctors can hand you generic drugs right in the office for pennies or not.
Stop Paying the PBM Tax
The bottom line?
Read your contracts, align incentives with employees, and don’t accept the status quo. This system may be weird, but that doesn’t mean we have to be passive victims of it.
Until next week, keep solving healthcare’s mysteries before they become your emergencies.
This article was originally published on the Dr. Nick – The Incrementalist blog and is republished here with permission.
About the Show
News You Can Use gives you a quick insight into the latest news, twists, turns and debacles going on in healthcare with Dr. Nick and Dr. Craig and where every diagnosis comes with a side of side-splitting humor. Your hosts are Dr Nick a long-time host, innovator and healthcare wizard who can prescribe a digital dose of innovation to cure even the most ailing operational inefficiencies. And Dr. Craig Joseph is the healthcare guru who can diagnose both patient and software glitches with equal precision, making sure hospitals run smoother than a well-oiled robot doc.
So buckle up, because we’re diving into the ER of excitement, the ICU of irrationality, and the waiting room of wacky wisdom.
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