AH001 - Building a PBM: Tech, Navigating Growth, and Delivering Value with AJ Loiacono

January 19, 2024

Capital Rx

Listen to AJ describe the benefits of developing technology - JUDI® - while being a "client," the challenges of growing through the pandemic and dynamics of a distributed workforce, why plan sponsors NEED to know their per member per month (PMPM) trend, and much more!

Episode Transcript

Lightly edited for length and clarity.

Justin Venneri: Hello and thank you for listening to the Astonishing Healthcare podcast. This is Justin Venneri, Director of Communications at Capital Rx, and for the first ever episode we're joined by Capital Rx Co-founder and CEO, AJ Loiacono.  

We're going to discuss the evolution of the business model here at Capital Rx with a focus on opportunities, maybe some hurdles, to growing a technology enabled healthcare services company, how to overcome them, responsible growth, and more.

AJ, thanks so much for joining us today to share your experience and insights.


AJ Loiacono: Thanks for having me, Justin.


Justin Venneri: All right, to start off: AJ, anyone who's heard you speak before knows your background and how you started in pharma supply chain software way back in the early 2000s. Can you discuss what led you to the conclusion that you needed to start a PBM late in 2017, early 2018? And then, why evolve the business following JUDI’s launch in 2021?


AJ Loiacono: Yeah, I think it's -- I find it funny now that we say way back in the early 2000s. But yes, way back in early 2000, I was working in pharmaceutical manufacturing on the plan side, doing supply chain software consulting and installs. And I would like to say for the first eight years of my career, it was a non-event. I thought that pharmaceutical manufacturing followed the same kind of principles as any manufacturing in the United States, where there's a manufacturing layer, there's a slight markup to a wholesaler layer, with a slight markup to some sort of retail distribution. And I thought, “I don't care if we're talking sneakers or semiconductors. It's the same thing with pharmaceutical products.”  

Around 2010, I moved over to the payer side. So, this is dealing with patients, insurance, and carriers. And I was introduced to these three letters: PBM - pharmacy benefit managers, and I thought, “Oh, this must be the retail layer.”  

If you think about pharmaceutical manufacturing, you start with manufacturing wholesalers or people at McKesson and Cardinal and AmerisourceBergen. And then, really, it's the insurance layer in the United States, which is where you're dealing with the patient or consumer experience – so that retail experience – and that's where I was exposed to it.  

The first thing that really challenged me was [when] I read my first pharmacy benefit contract, and it was, you know, 50 to 100 pages long, like all PBM contracts.

But what really struck me as odd is there were no drug prices in these agreements. And I’m like, “Really what we're talking about is cost, and we’re purchasing on cost.”  

And I would hear these quote unquote industry experts from the payer side, and they would talk about, well, “You have to understand, it's so complex, and it's an average over time, and there's price variability.”  

I'm like, “What are you talking about? Once I sell something in the supply chain, it has a fixed price, and it's sold to wholesalers, and they're selling to pharmacies, and they bought their inventory at a fixed price. Why are there no prices?” They make it sound like prices don't exist in the US supply chain. And I'm like, prices exist. You're just not getting them.

The other part that bothered me was price variability. This notion that prices are changing every hour of every day for every drug. And that's not the way the supply chain works. If you wanted to see a stable drug pricing environment, you would go into the pharmacy. And I often say don't go back to the register to the pharmacist, go to the over-the-counter section and buy a bottle of Advil, or Tylenol, or eye drops, or whatever it may be, and something magical happens.

Doesn’t matter if you're insured or uninsured, you work for the biggest employer or the smallest, go figure -- it's the same price. And if I come back an hour later, it's still the same price. And it could be weeks or months before the price of those products change. And if they were to change, it's because of supply and demand and market dynamics that would be pressuring price or changing price.

If I were to go across the street or online, the price of these products is very, very similar. But you walk 50 feet back to the pharmacy and you fill a prescription, and no one knows the price of anything. To my earlier point, there's no fixed pricing in contracts. In addition, if you think about it, the price of drugs, apparently, appears to be changing every hour of every day because there's this concept of averages and these very complex formulas that consider everything from handling to limited supply to single source and multi-source variance.

The reality is nothing else in the United States has this level of opacity and complexity. I felt like there was no need for this. And I tried in my prior career for eight years to change the way this process worked, but I couldn't. If you're not involved with the actual plan administration or claim adjudication, you know, unfortunately you can't change much. It's too little, too late. You're just not responsible for those actions.  

So, in order to fix the problem, I felt like we had to become the problem -- become the PBM. And that's exactly what we did.

Justin Venneri: Got it. All right. How exactly does becoming the problem, creating a proprietary electronic claims processing platform, help address the problem? How does that help or impact health care stakeholders and ultimately patients or plan members?


AJ Loiacono: The first thing that you're able to do when you're in charge of the benefit plan -- you're the PBM and you're processing the claims on behalf of this payer, or you're a technology company and someone's using your platform -- you now have the ability to engage and help each one of these entities improve the process.  

So, let's take the employer side for a second.

You know, I always say if you could just focus on being the best plan administrator possible, you're going to provide an invaluable service. And pricing really isn't the main goal of an administrator. People are like, “Well, what do you mean?” If you have an efficient market where buyers and sellers freely communicate on price, price settles itself. I don't care if we're talking about gasoline or big screen TVs, markets that have efficiency and are communicating on price just magically settle themselves.

And so, if you're focused on allowing the endpoints of fulfillment – this is retail pharmacy chains, mail order facilities, specialty pharmacies, and rebate aggregators with the pharmaceutical manufacturers – if you're allowing these dollars to freely flow and people to compete on price openly, and [you] allow people of any plan size to access the same prices where there's no artificial price disparity, then you are creating efficiency. And really, what your job then is, is to create the best plan experience, the most accurate claim processing experience, and to make the best patient experience.  

And that's both services and outcomes. If you're focused on these things, you're going to require a modern platform. And what does the modern platform allow you to do? It allows you to do all of these services and solutions at the lowest possible price point.

I often say, what's the difference between an old MRP platform and a more modern ERP solution in supply chain? And the ERP solution, in my personal opinion, contemplates more workstreams, more workflows, leveraging automation and optimization. And it's really getting at efficiency and bringing down operating expense to administrate any benefit plan and service any patient. There is an operating expense to that.

By having a modern technology platform, you can bring down these costs and no longer burden the price of the drug to ensure the administrator is making a fair margin for its services, and the patients in plan are exposed to a reasonable price that enables them to control costs and manage the disease states the different members obviously require therapy for.  

So, doing these things on a platform, a modern platform, was central to our thesis.

We must build this massive enterprise health platform to not just process claims. When people think about pharmacy technology, they think of, “Oh, it's processing electronic claims.” That's one action.  

What a PBM does is hundreds of critical administrative workflows, eligibility files. Who's in the plan? Who's not in the plan? Plan set up. Underwriting. What is the offering for this membership? Clinical workflows, network management, patient workflows, network reimbursement, prior authorization, billing. All of these services require, at some points, human intervention or just cost of setup. And if you can reduce that cost of setup or remove the friction point where you're having someone focus more on high quality, high value activities, and less on maintenance and recurring structure or infrastructural system issues, you can create a much better solution.  

Because really what was, again, our main focus of the company is: how do I administrate 1/5 to 1/6 the cost of existing services today? That was really the benchmark. And that's exactly what we did by developing JUDI.  

JUDI is short for adjudication. You mentioned it – our launch in 2021 – but it took us years to build towards that. And to be perfectly frank, I often say it's very easy to build some sort of point solution or mobile application, but to build true enterprise software at scale, it takes hundreds of millions of dollars and a decade of your time.

This is not easy. It's why some of the largest payers are still using systems that are 20 or 30 years old.


Justin Venneri: Alright. And never mind while you're actually delivering the benefit to several, you know, unions, employers and others that are trusting you along the way to administer the plan. And obviously, we've been fortunate and appreciative of the growth we've experienced due to our clients putting their trust in us. As a leader, how do you think about that growth or responsible growth along the way?

And what needs to happen to get further down the road toward our ultimate goal?


AJ Loiacono: Yeah, I often say we're two companies in one. One side of the house, we’re a full-service health care company where we are servicing employer groups, unions, municipalities, health plans, etc. And the other side of the house, we're a software company where we offer SAAS and platform-as-a-service solutions to large carriers and health plans to administrate their pharmacy benefit program.

And I think for us, when we think about growth or responsible growth, you have to balance both of these divisions at the same time. You can't take away from either one of these. It's critical for us that we deliver the best customer support and experience possible. So, you're supporting your healthcare company side of the house. And on the other side, you have a software company.

And it's not just what I call break-fix maintenance, but it's hefty R&D, because you're constantly evolving to meet the ever-emerging regulatory requirements that are placed upon you – state and federal level. But in addition, you're also investing in what you believe is going to be beneficial to your client base, developing technology and services that will benefit your customers as well.

So, when you talk about responsible growth, you are certainly going to have to balance both of these because they're critical for the success of this company. I often say if we were just a software company, I don't think we would write the same type of software, quality of software, we write today, because by actually using our own systems and support, we're our own best customer and we can experience these friction points in real time. By being a customer and the author of our own software,

I think it is giving us an incredible opportunity to write the best workflow and claim administration solutions in the market today. And I think that's the other part of that responsible growth -- is supporting both sides of this. Because, I think healthcare software and healthcare administration requires a personalized view more than anything else. Otherwise, you're going to write something to spec and it's going to be very mediocre.

Justin Venneri: Got it. Along the way of running these parallel businesses, what would you say are one or two of the biggest challenges you've – or we've – had to face in the last couple of years as we've grown? And how did you approach dealing with them.

AJ Loiacono: I mean, the first one is you can't be a high growth business and have gone through the pandemic and said nothing changed. So, I would say the biggest change for me was if you, going back to your earlier -- I think it's a comical statement, back to the early 2000s where there were horses and buggies – but I'm just saying, if you go back to the early 2000s for a second, I grew up in a culture of everybody goes to an office Monday through Friday, roughly 9 to 5 -- in software, that could be 9 to 9, you know, for software development.

But the whole point of it is we're all together and we have a centralized hub. Yeah, you might have a few people that are remote, but for the most part this was the business model I was taught, and this is the business model we started with at Capital Rx. We were all in New York City, probably 90% of our workforce.

We would all come in five days a week; there were no flex hours. And there are so many benefits from that. And there were also many hindrances or wasteful moments. I myself probably commuted roughly an hour and 20 minutes each side of my commute. There's close to 3 hours of my day that’s missing every day for 20 years.

But if you really think about it and look at the pandemic, it completely changed our entire organization. So, we went from 90% in New York City to now we're in 36 states. We [had] 70 employees; we’re over 600 now. If you continue to think through that, we also have decentralized leadership. The C-suite was all in New York City; now we're in multiple cities. My board was very centralized. Now they're all over the United States as well.  

When you go from a footprint that's hyper centralized to decentralized, working round the clock in different time zones and different hours, you have to suddenly think, how do I still maintain a culture? How do I still train people? How do you still create mentorships or bonds with people? How do you scout and see your next generation of leaders?  

Generation isn't necessarily time. Like think of generations of families, generations as business generation. Like, hey, this three years was Gen one of the company. The next three years is Gen two, the next three years is Gen three, and so on.

Each generation, think about it, people that are associates are becoming managers or directors, People that are managers or directors are growing into VP. People that are junior engineers are becoming senior engineers. And this evolutionary process must continue for business to be successful, because at the core, you want people that have grown with the company not constantly rotating through attrition. You want your most talented people always, if you can, to retain them and to bring them with you [on] the journey.  

So, when you look back and you say, what was the biggest challenge: hands down, pandemic, surprise, surprise. However, the existing challenge is you can't put the genie back in the bottle. We're not going back to 9 to 5 in a centralized setting, but we're going to embrace the benefits, and really try and address the weaknesses, some of them that I've mentioned.  

I think that's what we're focused on still, to this day. So, that big challenge; it's still here, but it's also an advantage at the same time where people are given more time. They’re having more time with their family, more flexibility, the ability for people that were primary earners in their family household to also take on roles of helping the family.

And I think that's a real blessing in this. You just have to obviously navigate the other parts and balance it out.

Justin Venneri: That's a good one. I guess I've got a slight pivot now. What's the number one thing you're hearing from plan sponsors that they need or want at this time? And how do you think they can get or achieve it?

AJ Loiacono: Well, plan sponsors that are not my customer want lower costs and better service. People that are presently customers of Capital Rx are really on the more elevated or thought-provoking questions, which are more around, “Hey, let's look at different populations that are more vulnerable or require more care. How do we think about making our population healthier? How do we think about precision medicine? How do we think about expensive therapies that are entering market that could have benefit relative to the cost? And how do we balance that rather than, you know, go straight to a particular topic?”  

I'm going to be like, cough, GLP-1s. But I think that's today's soup du jour; there'll be something tomorrow and the next day, and something will come up five years from now, and that will be the new therapy everyone's focused on.

There's always going to be a new therapy. And I say, it is great to believe we live in a time where there are cures now emerging for many disease states, starting with smaller disease states or limited distribution drug sets. But as we begin to look to the future, I'm assuming this is going to continue to expand to more common disease states, be it better treatment of [them] or outright cures.

There's a cost to these things. And so, the biggest challenge, I would say, for our customer base today – and we're very well designed to meet these challenges – is the data and accessibility and alignment to make sure we're making the right decisions together.  

One of the beautiful things about the Capital Rx model is every decision we make is for the benefit of the plan or the patient, because we don't make any more or less money on anyone's drug spend. So, someone would be like, “I want to cut 50% of my drug spend.” I'm using an extraordinary example to just make a point here, but it doesn't change our payment because we're paid on, obviously, per member per month. Or, you know, if it was on per script even, again, it wouldn't bother us. Our whole point is we're aligned.

While, if someone has a business model predicated on more drug spend, that can be a very difficult decision potentially. And so, the other part of it is, do you have a system that ties together, efficiently, all the data streams? Not just pharmacy, but medical data, time, and attendance. And yes, JUDI was designed to ingest all these data points.

The other part of it is, how do you make thoughtful recommendations? How can you easily model things on JUDI? Can you also design and implement something? So, you go through the data, you come up with an idea -- can I implement that idea? For a lot of people, they’d be like, “The system won't support it.”

One of the cool things about JUDI is it's designed to contemplate the future of care, which is precision medicine or value-based care decisions. A lot of the legacy systems terminate at a group level. So, the lowest point in which you could administrate something is at a plan level. With JUDI, the lowest point that you can administrate something is at a patient level.

So, I could create a formulary for a patient. I could create a, if you wanted to -- people that are ERISA purists would be like, well, you can't do that – but if you wanted to create incentive models for certain populations, you could. If you wanted to create global programs for certain disease states, you could very easily implement these things on JUDI. You could very easily analyze the data to come to these conclusions.  

And I think the last part is, when you're speaking with anyone in our organization, you always know that we have your best intent or the best goals in mind because we're aligned. We took a business model and tried to make it as pure as possible, which is we're paid to administrate the plan at the end of the day.  

I could have two plans that are the same exact size. I could have two 5000 life employer groups, but one's a municipality and they're on a fixed budget with their budgeting protocols, and they're very concerned about cost. And then I could have a 5000-life case, which is a wealthy technology company, and they're less concerned about cost and their very focused on trying to find ways to create a better member experience and even create a healthier workforce.

And they're not necessarily mutually exclusive cost savings and better outcomes and better access. They do create breaking points where you can't move all the way towards an open formulary and precision medicine and not have, today, some sort of cost impact due to formulary noncompliance as well as other issues. It’s just something to always be mindful of.

But I always go back to, you are being brought in to engage with your customer as a thought leader, not just a vendor that processes things. Our job is to help them solve for what is most important for their membership and for their organization.

Justin Venneri: It makes a ton of sense, and I think a lot of people attribute the slowness of change to misaligned incentives. A lot of money is at stake. And then we see the regulatory focus and legislative focus finally breaking down some of those barriers, or it seems to. So maybe twofold. What's your outlook or expectation for more reforms to pass and how will the market deal with it?


AJ Loiacono: Well, I don't think legislation is going to slow down anytime soon, I think, until we have a couple bills fully pass the House, and the Senate, and be signed by the president. There's also regulatory oversight or governance from the pen or procedure that CMS and HHS continue to create, I think, thoughtful procedures or oversight to help protect the consumer or create better care.

So, I don't see it slowing down until costs slow down. You know what I mean? I think the reason why there's so much concern in these areas is because -- the thing that I point to on pharmacy is, back to the horse and buggy days of the early 2000s, drug spend domestically was $110 billion, $120 billion, you know. This past year we've crossed $600 billion domestic US spend, top line. Did we increase our population 500%? No.  

And people would be like, “Well therapies are getting more expensive.” Like, sure, but what, 94%, 95% of all therapies from even ten years ago are off patent at this point.  

So, we have an extraordinarily large generic and biosimilar market. The question is, are costs finally going to come down?  

There’s always new drugs and new therapies that are becoming available to market that are increasing costs because they're not a true replacement cost. For example, someone's on a stat, and then a different stat, and one price is, you know, 10% different than the other – then it's just a 10% cost increase. But if there's a brand-new drug that's entering, and there's never been utilization at scale before – again, going back to GLP-1s – it's 100% cost. That's new.

The question becomes how much more expensive is this therapy than the average cost of the drug? And again, not to focus on GLP-1s, but it's fresh in everyone's mind. If it's five times the cost of the average cost of a drug – average cost is $120 to $130 in the United States for 30 day supply – then suddenly you're like, “Well, wait a second, something is not a replacement cost and it's five times the cost of the average drug.” That's going to move drug trend 10%, 12%. How far can it go?  

Again, I think legislation and regulation will continue until we feel as if we have our arms around the cost of care for prescriptions in the United States. Until that happens, I see plenty of attention over the next 5 to 10 years.


Justin Venneri: All right. We're going to just jump to the last question here. So, A.J., what's the most astonishing thing that you've seen or heard – that you can share, of course – as it relates to our discussion today or the pharmacy benefit or benefits industry?


AJ Loiacono: I think it's a recurring theme that I started to get a glimpse of six, seven years ago at my old company, and continues to this day, which is when we talk about pharmacy benefits – and specifically I'm talking from the lens of plan administration; you are a plan sponsor, you're an employer, a municipality, a union, a health system, and you're offering an employee plan that has pharmacy benefits – what’s very distressing to me is no one understands costs.  

So, the question I ask, even when in the room with the consultant or broker for a self-insured entity, is, “What is the cost to administrate your plan?” And they're like, “Well, what do you mean?” I go, “Well, if you add one KPI, if you add one key performance indicator, to manage a pharmacy benefit plan as an employer group or union, you would want to say, what is the cost per member per month, or per employee per month -- I don't really care -- to administrate this plan?”  

And I would like to know -- my question is always the same -- what was the cost five years ago? Four years ago? Three years, two years, one year? And more importantly, what are you expecting it to be this year, if we're in the new year? What are you expecting it to be this current year?

I've asked this question hundreds of times in my career. Nobody has an answer. Think about that. The most important thing -- it should be tattooed on your arm; it's that important as a plan administrator. You should read it off your arm: ours is 112 per member per month, and last year it was 109. The year before that it was 102, and before that it was 96, and we think it's going to be, you know, 119 coming up. Who knows?  

But the whole point is nobody knows. What does that tell me? Nobody knows what they're even doing. It's frightening. And the reason why is because the entire industry has been trained to talk about discounts and rebate numbers that mean nothing. I mean, you can hit every single performance indicator in a contract and be like, “Look at me, I have a great contract”, but your trend is up 7%, 8%., 9%.

And people are like, “Oh, well, that's not bad.” And this is what's so distressing. We have these bid scenarios. We as vendors, we bid -- there's an RFP (request for proposal). And what's interesting is the RFP should be asking for the very KPI I'm talking about. The KPI should be: what do you think the cost of our plan is going to be next year?

And instead, it's what is the average wholesale price with a discount over an entire year with different classifications and different overrides. I just sit there and I'm saying, “What?”  

And they'll run these RFPs, consultants and brokers, and they'll say, we're selecting this person because they're going to save 25%. This one's going to save 28%. This one's going to save 30%.

And I'm just like, “Timeout. Is anyone going to guarantee the actual cost of this stuff?” They're like, “Well, we have a contract”. I go, “That's not what I'm asking. Your contract is just saying you're going to hit these discounts over time off of fictitious WAC prices or AWP prices. That means nothing. The only thing that you know is what you pay in your bill.”

Oh, and here's the other trick. People say, “Well it was in the claims data.” The claims data is only one part of this puzzle. What you pay as a plan is in your bill. The claims data in your bill never will match. Never in my lifetime I've ever seen it. And I've said that as an auditor. I've said that as a claim processor, as a PBM, because you always have claims moving.  

But more importantly, it's not capturing all the costs. You have ancillary costs. You have clinical costs in these workflows and in your contracts as well. So, the cost of the plan is your invoice. That's where you should be looking for your cost and your KPI, not your claims data.  

And someone will be like, “Well, what do you care about the claims data?” Of course, we care about the claims data. It's going to help us make some informed decisions in our underwriting. But the point in the plan is they don't understand thousands of different drugs and thousands of different therapies.  

They understand cost and they understand their members’ happiness. These are the two things you should be gauging. But the point of it again, and [what] I'm getting back to, is you run these RFPs and they have these fictitious results and they’re fictitious because, ask an actuary in the United States if they were to take an employer group’s drug spend and look to the future – I don't care what happened in the RFP -- and go below a 0% trend. Because these RFPs are saying you're going to save 20% or 30%. There's not an actuary in the United States that would take that risk. They're making a professional assessment. They can be sued if this information is inaccurate. What's odd is the broker or the consultant in this can say any number and oh, well, it was a best guess.

It was an estimate. And is the broker consultant, are they at risk for providing this information? Absolutely not. So, the consultant says you're going to save 25% and your drug spend is plus 4% next year – so it's a 29% miss -- they're going to be like, “Well, I'm not paying for that. And the PBM is not paying for it.”

The only person who's paying for it is the payer, the employer, the union group, again, or the municipality. And I find this very interesting. You know, if you were to ask a risk bearing entity, most risk bearing entities can't even rate risk below 110% attachment point. That means they're trending 10% above whatever it was you were doing last year.


Justin Venneri: You mean like a stop-loss.


AJ Loiacono: Yes, exactly. This is again where I try and focus on reality. And the reason why this would be such a clear argument is, if people knew the KPI that I was talking about, if you tracked your cost per member per month over the last five years -- people are like, “That's really complex.” I'm like, “It's third grade math.” It's your invoices in totality over 12 months. So, this is the plan pay portion, less rebates for that same period, divided by monthly eligibility. There's the number. That's it. And you do that every year and you're not going to see your drug spend going down 20%. You would be around zero after a certain point, just taking in, you know, 12-year cycle of contracting.

And that's not the truth. Inflation is what people miss in all of this so much. And people are going to say, “Well, drug prices are always going up.” Again, I'm going to throw out a little bit of my bull$*&t card here, which is, generic drugs are deflating. Every year, generic drugs deflate 10%.  

And people will be like, “Well, brand drugs and specialty drugs are going up in price.” I go, “Yes, they are going up in price in list, but in net price, they're negative.” You know, so, if you have a large population, outside of catastrophic risk, and you're passing everything through and you have thoughtful utilization and continuation of therapy within FDA or ICER guidelines, what you're going to see is a negative trend. But you have to manage that. But it's not going to be to the extent that is sometimes seen in these RFPs.

So, what I want everyone to understand more and more is we need to step away from this nonsense of “I have good rates.” I don't even know what that means because, as I stated earlier, no one knows the price of any drug in the United States. And you can put a panel of five subject matter experts, and we can play “Let's debate the price of this drug.”


Justin Venneri: That's astonishing by itself.


AJ Loiacono: It's true. You know, and I hate this argument. People are like, “Well, drugs are so complex. They’re very hard to make. So, it's so difficult to get a price.” I go, “That is completely absurd.” And the example I always give is something like graphical processing units like GPUs, like Nvidia or AMD. It's the same price anywhere you're standing in the United States, literally. And it's one of the hardest things to manufacture on the planet. Yet it's not just the same price in the United States, it's the same price literally anywhere in the world outside of currency conversion. And even then, it's going to adjust for it. That's a hyper efficient market. Hyper transparent, hyper efficient.  

Yes, we can have prices on drugs. Yes, we can have net prices on drugs. And yes, we should be broadcasting price efficiently. But we should be managing to absolute price, managing to the absolute cost of the plan. That's what everybody in the United States has been missing the last 20 years. What is the KPI? The KPI you should care about first and foremost is what is the cost to administrate this plan.

The second one would be patient satisfaction. Obviously, member satisfaction is critical in this, but these things go hand in hand. Managing cost effectively and delivering the highest level of service. This should be the thesis statement and goal for every plan administrator and plan sponsor in the United States. And this is what everyone has been missing, and it's been driving me crazy.

And thankfully we have plenty of customers that have seen the light, plenty of customers that have come over to Capital Rx and have had an extraordinary experience. And the thing I want to say is, we couldn't do this without JUDI. We couldn't put together this type of plan, this type of experience, this type of member experience, without the capabilities of JUDI. Everything comes together on our technology platform and this ability to managing to cost is, again, critical to, I think, the success of the United States overall in bringing down the cost of pharmacy benefits.

We need to move away from this antiquated modality of averages over time and list prices that mean nothing and [instead] focus on cost to manage a plan, making sure that we have visibility and you can set a budget to whatever is being told to you by the PBM or consultant in the process.  

And I do want to caveat this. We're working with more and more consultants and brokers that appreciate, see, and realize that we're speaking a logical truth and moving the business model. The paradigm is shifting faster and faster in this direction, because we don't buy anything else with an average over time, with different prices, and different exclusions, and different classifications of the very thing that needs to be priced.

I have a price and I'm setting it, and I'm managing a service or solution around that. I think that's what's been missing for far too long.


Justin Venneri: I think it is encouraging to see a lot of the channel partners understanding this and working toward something better. So, A.J., really appreciate you taking your time to speak with us today. I definitely have to have you back on soon for a discussion on these topics that we can peel back a little further, whether it's drug pricing or, you know, maybe regulatory updates -- we'll see how the year unfolds. But thanks a lot for joining us.


AJ Loiacono: Episode 100. 100 more episodes, Rick and Morty style.

Outro: Thank you for listening to Astonishing Health Care by Capital Rx. Head over to www.cap-rx.com/insights and visit the podcast section for show notes and other relevant content. If you liked this episode, be sure to subscribe so you don't miss the next one, and definitely share the link to the show with your network if you enjoyed it.

Have a great rest of your day.

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