Bridget joined Erickson Senior Living to manage pharmacy costs and develop the pharmacy program, and she ended up applying what she had learned over years of working in various pharmacy settings and in pharmacy procurement to their pharmacy benefit programs. In this episode of The Astonishing Healthcare Podcast, Bridget shares why it's so hard to control pharmacy costs, as well as her thoughts about reining in specialty drug costs, rebates, coverage of GLP-1s, and the most astonishing thing she's seen (hint: it relates to cost savings)!
Lightly edited for length and clarity.
[00:27] Justin Venneri: Thank you for joining us for this episode of the Astonishing Healthcare podcast. I'm Justin Venneri, Director of Communications at Capital Rx, and I'm so excited to have Bridget Mulvenna join us for this episode to share a bit about her story and her experience as a pharmacy program director, including how she was able to control pharmacy spend at Erickson Senior Living. Bridget recently joined Capital Rx on the commercial team to cover Texas and the southeast region. But before we get to the questions, Bridget, thanks so much for being here, and can you share a little bit more about your background?
[00:56] Bridget Mulvenna: Hi Justin, I'm happy to be here. And sure, I've been in the pharmacy industry for 35 years, which seems like a long time, but I started when I was really young. In the late ‘80s, I lucked into a job with a small pharmacy owner down in Louisiana and he taught me everything about how a retail pharmacy operates, both from the pharmacy perspective – dispensing and receiving and all of that type of stuff -- but also the financial piece and what goes into running a business financially. I was very lucky to have a friend in him and a mentor in him and really got me started in pharmacy and helped me develop just a deep love for the industry.
And then after college I did a short tour in the army where I was trained as a pharmacy technician, which was a remarkable experience, and that taught me a lot of discipline and gave me a skill set that really carried me throughout my entire career.
Over the next few years as I was raising my children, I worked as a pharmacy technician in a variety of different retail pharmacies, just part time, when the kids were very young. And then in 2006, when the baby was ready to go to school, I went back to work and was hired at Omnicare Long Term Care Pharmacy and really did everything you can imagine that can be done in a pharmacy: customer service, call center support, project management, external customer account management. I did a little bit of electronic health record sales. I was the general manager of one of their pharmacies, and I ended my career there as a key account manager. Erickson Senior Living was one of my accounts, and they hired me to come over and run their clinical procurement, mostly because they liked the fact that I had a poker face, and they couldn't rattle me when they were yelling at me about pharmacy issues. But I got in there and did what I always do: I just learned everything I could about the company and the processes, and I implemented a bunch of great saving strategies for the pharmacy and for other vendors as well.
In 2016, they had seen the results of the work that I was doing. I started in 2014 there, and the benefits team came to me and said, “Hey, if you've done all this great work, and you've saved us this money in long-term care pharmacy, do you think you could apply those same principles?”
So, I went about trying to get the data. And immediately, upon trying to seek data, I started to see issues in the pharmacy benefits management industry that I really wasn't aware of. And so, as I did more data mining, and discovered more, and uncovered more of the games and the challenges inherent with legacy PBMs, I recommended to the team in 2019, “Let's look at moving away from everything we've ever done, and let's go out and find a vendor that'll do the five things that I think could fix this plan.” And a lot of it was around a pricing model that made more sense. A cost-plus pricing model was how I described it. And then about having control of the formulary and not being forced to pay for drugs just because there was a rebate. And that's when we found Capital RX.
It was a really good thing for us at Erickson Senior Living. We were able to save a whole lot of money. I was very successful at Erickson Senior Living. I really loved the team. You know, I contributed millions and millions of dollars to their bottom line over the years. But I was most proud of what we did in that pharmacy space, and building pharmacy programs, and specifically setting up the pharmacy benefit for those employees so that it's something that is going to benefit them for years to come.
[05:12] Justin Venneri: That's awesome. And we're obviously happy to have you, and it's great to get to know you a little bit more before we get into some of the questions. I've got to ask, though, why did you leave the employer side to join a PBM?
[05:25] Bridget Mulvenna: Well, you know, one day I'm looking for a direct member reimbursement form on the Capital Rx website, and I come across the mission. For some reason that day. It just really resonated. It was, to change the way prescriptions are priced and patients are cared for to create enduring social change – that's what was on the front page. And I was like, you know what? That's my mission, too. And it's hard not to want to work for a company that shares the same mission as you when that's been your personal mission throughout your career.
But I also had spent a considerable amount of time with a large part of the Capital Rx team over the years. Obviously, the account manager and I had developed a great relationship. I had relationships with the commercial markets team, with the Chief Growth Officer, just really great relationships with everybody. And whenever I was around the Capital Rx team, I felt a really deep sense of belonging, and it just made me feel like the time was right. Like perhaps I had taken Erickson Senior Living as far as they wanted to go with their pharmacy programs. And I could have stayed there and continued to push more pharmacy programs and improve the pharmacy experience for employees and the residents for those 50 or 60,000 lives. Or I could take what I know and take what I believe to be true about this wonderful company and go out into the marketplace and help a lot more people get the advantage of being a part of this monumental shift in the industry that Capital Rx is initiating.
[07:09] Justin Venneri: Got it. Well, let's dive right in. Several surveys toward the end of 2023 showed similar pharmacy cost trend data. I mean, 6%, 7%, 8% inflation year over year, and expectations for another year of inflation in 2024. We'll include a link or two in the show notes. But my question is, why has the management of pharmacy benefit costs been such a challenge for employers and other plan sponsors for so long?
[07:35] Bridget Mulvenna: Well, that's interesting. And as a supply chain person, I always think of the cost versus price conversation, which I think is a really important side note to make now. Right? Because price is what you pay, right? Price is what manufacturers set as the cost that goes out to market. But cost is what goes into the provision of that product to an end consumer.
And so, an average patient thinks the price of their medication is their co-pay, while a plan sponsor is looking at the cost of the medication, which is inclusive of the price of the drug – or what we like to call the ingredient cost – the dispensing fee, and then there's this little muddy area embedded in a lot of the legacy PBM arrangements, where sometimes there are rebates taken out, sometimes there aren't rebates taken out. And those rebates don't always go back to the plan sponsor – at least not 100% of them. And so, it's hard for plan sponsors to manage pharmacy benefit costs because there's no clear and transparent method for them to go back and review what those costs are and get a true number.
I think what folks probably are doing now is they're contracting with pharmacy benefits consultants, or they're using their brokers of record to help, because they have a pharmacy practice embedded within. Or they're going out and they're hiring an actuary and they're having those folks do assessments. But it piles more cost onto the plan. And so, I think folks need to get educated on what's happening. They need to insist – you know, the Consolidated Appropriations Act is actually a huge benefit and a great negotiating tool for plan sponsors to say to their PBMs, “Hey, we get that you're submitting the data for us, and you're submitting it in aggregate, but you've got to give us our data so that we can see what's being submitted.” And plan sponsors should really get specific and forceful about requesting data because that data belongs to them.
[09:59] Justin Venneri: So, it sounds like not having or not knowing that you could have access to the data or once you have it, what to do with it has been a big part of why the cost trend has continued to be what it has been for a while now.
[10:14] Bridget Mulvenna: Yeah, absolutely. There are other factors that go into cost trend because you can get the best price. But if your drug mix leans heavily towards specialty and high-cost brands, then best price may not matter at that point because the volume that you've got going to those drugs is going to drive your overall costs up. And it makes it become sort of like the circular management thing where you have to continue to go back and forth instead of having just a clear path.
The other thing that a lot of plan sponsors don't do, that we did at Erickson Senior Living, because I knew how to analyze the drug data, is they don't pay $20,000, $30,000, $40,000 a year that it costs to access Medi-Span and pull down drug pricing and then compare it to the price that they actually paid. They're missing a lot of the elements of data that they need. They don't have their claims data, they don't have access to Medi-Span. And so, there is really no way to reconcile. And that's why you've seen this rise of all these pharmacy cost management companies that are coming in and they're doing this overlay product, and they've got five or six pharmacists on staff, and they're doing this for plants, doing audits or whatever. To the tune of $30,000 or $50,000 or $100,000 a year. Like I said before, it’s just this vicious cycle where anything you add to help you manage doesn't take cost away; it actually adds more cost in addition to the lack of clear and transparent contracts.
[12:06] Justin Venneri: Makes sense. Okay. We hear a lot about specialty drug utilization and the cost of the specialty medications. 2% or so of claims are driving 50% plus of pharmacy spend for many plan sponsors. And I've got two questions for you. The first – is that right, on average? And then two, is there a way to control drug mix to help with the uptick plan sponsors are seeing in specialty and high-cost brand drug use?
[12:32] Bridget Mulvenna: Yeah, that is pretty close to accurate. In my experience, about 2% of claims – and it varies, obviously – but on average, 2% of claims are accounting for around 50% of pharmacy spend. And in some plans, it's a lot more.
The way to control drug mix is with rigorous prior authorization processes. You're going to have folks that go to the doctor, and they say, “I saw a commercial for this drug and everybody in the commercial looked happy, and they weren't in pain, and I want that life. Write me that drug.”
[13:11] Justin Venneri: Right. Of course.
[13:12] Bridget Mulvenna: Right? And if you're with a legacy PBM, if that drug is on the formulary and it's highly rebatable, and the plan hasn't requested any additional measures, the likelihood exists that that is going to hit sort of like this automatic prior authorization approval process, and it's going to hit the bottom line before it gets clinically vetted. And what plans really need, I'm not going to say they want it, but what they really need is a pharmacy benefits manager who is not jumping and automatically approving any medications under that prior authorization process without first making sure that the diagnosis matches what diagnosis that drug is supposed to be for, and that they've met all of the clinical criteria, including looking at their lab work, and speaking to the physicians, and digging into the medical record, and getting that done in a manner that is efficient and reliable. But also, where you're not having 90+% approval rates – that your approval rates are somewhere between 70 and 75%.
And that may seem counterintuitive because people think lower approval rates means less access to drugs. And what I've seen in practice, over the course of my career, is that lower prior authorization rates with a PBM actually improves access to the correct drugs. And that's really what we want, right? We want them on the right drug.
[14:52] Justin Venneri: That makes a ton of sense, too. It's interesting because prior authorization is generally a source of frustration. How, as a plan sponsor, do you kind of measure, quote unquote, success there, and whether that's working for you?
[15:06] Bridget Mulvenna: Utilization tells a big part of that story. I think the biggest frustration in prior authorization for plan sponsors – or at least it was for Erickson Senior Living when we were working with them on their plan – is the amount of time that it takes from the initiation of the initial prior authorization to when the patient actually gets the drug, and the number of phone calls and customer service touches that that generates.
I think you want to look for something where you've got a really rigorous process where your approval rates are a little lower, but the window of time in which they're accomplishing that mission is much shorter. I think anything more than 72 hours is unfair to patients. And it's also unfair to physicians, because physicians and providers need to be able to move on to helping all of their patients, and customers, for that matter – because let's face it, all patients are also healthcare consumers – so that they can take care of all their patients. They need to be able to move on from these things, and they need the process to be seamless.
I think a high touch prior authorization process that involves making phone calls and not sending faxes, that involves being more present with the members, the patients at the end of the process and the physicians and connecting them all together in the middle, I think that is the thing that really solves a lot of problems for folks. And I don't know of many PBMs that do that or that do it well.
[16:42] Justin Venneri: That's good insight. It's definitely a topic of consistent interest. So just digging into some high-cost drugs and more recent news, I think it's interesting. Like GLP-1s -- Wegovy, Zepbound, of course, Ozempic (in case someone isn't aware, those are for weight loss and diabetes) – they’ve been a very hot topic since the 4th quarter of 2022. Right? I mean, I'll just ask it this way, Bridget: with so many questions swirling about what plan sponsors can or should do about covering these, or what brokers or consultants can do, or suggest to help their clients, what are your thoughts generally on covering GLP-1s for weight loss? And what conversations do you think plan sponsors should be having? What options can they consider for members?
[17:24] Bridget Mulvenna: We need to be very considerate of folks that are wanting to use these drugs, and it's because there's an element of desperation when your BMI has gotten to a place where this is your only resource. Right?
They are expensive, and there's a lot of questions about safety and stuff like that. I think it's important to consider, and to be very aware this is an emotional thing that's happening with patients – the members at the end of the process. They're desperate. They need to lose weight. They believe that their health is going to be positively impacted if they lose weight. And many plans, in fact, have chosen not to cover the drugs that are specifically for weight loss and many plans have chosen to cover the GLP ones that have a secondary weight loss indication, or that a secondary use for weight loss that are typically for type two diabetes, that many folks have not yet opened their formulary for those off-label indication uses. Right?
And so I think we need to look at the fact that these are expensive drugs. They definitely drive the total cost of care for plans that cover them. There are all kinds of health care issues to consider as you move through the supply chain when you're thinking about GLP-1s. But the most important thing is figuring out a strategy so that you can provide access to those folks that need it.
And I believe it's really important for the non weight loss, the ones that are strictly type two diabetes -- Ozempic, Munjaro, that class -- those are going to be on most formularies. Those have rebates associated with them. Those have, in some cases, co-pay assistance programs. And so, it's important to make sure that you're leveraging all those available programs and accessing the money that's available to the plan within those programs.
But I think it's also important to consider at what point do we say Ozempic, Munjaro, those are just for diabetes, and we're going to cover, in isolated cases, Wegovy and Zepbound instead of doing, say, a gastric bypass.
Potentially, the cost of the drug is going to save on the cost of an exorbitant surgery -- or try the drug to the tune of $1,500 a month versus paying $300,000 for a surgery, and all the treatment that leads up to the surgery, and all the post-surgical care. Right?
I think it's about just weighing the risk versus the reward on GLP-1s and listening to members. Actually, most plans have call centers – ask HR or a call center associated with the plan or some sort of nurse utilization management system, and there's always somebody that you can call – track how many people are calling and actually asking for the benefit. If you're covering 10,000 people and you've gotten five phone calls about weight loss drugs, it might not be a problem. If you have 5,000 people calling about weight loss drugs, it's definitely something that you need to address. I think it's also about understanding your population and the demographics within your population.
And I'll reverse back to the prior authorization. A rigorous prior authorization process is critical in the management of GLP-1s. Since we had already talked about it, I didn't mention it first, but that is extremely important in the management. If you do decide to cover drugs for weight loss, I would consider some forced engagement in health management programs because there are articles coming out every day. Everybody that I know forwards me all the articles about anything pharmacy. I get them from my mom, from my husband, from all my friends. “Oh, I saw this and I thought of you.”
I got one today just about one of the side effects of Semaglutide, which is the ingredient in Ozempic, and some of the bad news that comes with that. And I think that we just have to be mindful of the fact that there are going to be side effects with these drugs. It's really important to make sure that we're managing our lifestyle so that we can minimize the side effects.
[21:57] Justin Venneri: Got it. Okay. And then I've got a bit of a pivot here, but it's definitely related because you mentioned rebates, and because those are usually attached to higher cost drugs. So, if you're a plan sponsor and you've got a growing rebate check, but your spend is also growing, what's going on there? Can you kind of walk through that dynamic and what would your advice or suggestion be to deal with it better?
[22:21] Bridget Mulvenna: Well, first, I would advise everybody to break their addiction to rebates. If you're used to getting $5 million a year in rebates, in order to get the same $5 million next year, you have to spend the same money. And who wants their spend to grow? I guess having your spend stay the same is great, but who wants their spend to grow year over year?
There are going to be things that happen that we can't control, like a new onset of cancer, and aging populations, and all those types of things. I think we need to break our addiction to rebates, but I also think we need to look at rebates a little bit differently. Instead of saying, “I want $5 million back next year on my $20 million plan,” we need to look at it as a percentage of total spend and make sure that we have a contract where we're not just getting the rebates that were promised on a per claim or a per brand or a per specialty basis, but that we're getting rebates based on what we spend, based on all of our prescriptions.
You also want your rebates to be passed fully through to the plan because what most people don't understand about rebates is that the revenue from a rebate gets paid to a PBM. The PBM then is responsible for passing that rebate through to the plan sponsor. Sometimes that happens with the rebate. But if a PBM is rebating a drug that they've given preferred formulary placement to, and they've done this for all their customers across the country, and they're getting an additional benefit because, let's just say, they got a rebate – if you sell from zero to a million units of this, your rebate is X. But if you sell over a million, your rebate is going to be X for the first million and X plus Y for the second million. And plan sponsors never see the X plus Y for the second million.
And trust me, the way the formularies work, and the way the prior authorizations work with legacy PBMs, that behavior is embedded, and those rebates don't get passed through. The difference can be significant.
And so, what I'll share is that when we were with Erickson Senior Living in the first year, if I compare total dollars spent to total dollars spent, we saw a significant decrease. And if I compare total rebate dollars to total rebate dollars, we saw a slight decrease in the rebate dollars. But when I compare the percentage to the total of both of those years, my rebate percentage grew.
[24:59] Justin Venneri: Oh, interesting.
[25:00] Bridget Mulvenna: In the second year as a percent of total spend because I was getting 100% pass through of rebates. So, it's all about how the contract is written and how rebates are defined. And I think that one of the best things I'm seeing happening right now is proposals that include an all Rx rebate guarantee. You say, “We're going to expect your rebate to be this. And based on the scripts that you spent last year, your rebate guarantee is this.” And it looks a lot different, and it's a lot lower number than before, but it's a lot easier way to measure rebates.
If you really want to find out if you have a good transparent contract, then ask for claim level rebate detail. If the answer is no, there's probably a reason they don't want to give you that detail, because there are things being hidden that they don't want you to see.
[25:51] Justin Venneri: Well, this has been amazing, Bridget. Thank you so much. One last question. Given your experience and our discussion today, and the title of the podcast, I've got to ask: what's the most astonishing thing you've seen and can share with listeners?
[26:04] Bridget Mulvenna: Well, honestly, the most astonishing thing that I’ve seen – and now, as a Capital Rx employee, it's a little interesting because it's my job to go out and talk about this and sell this – but part of my sales pitch is going to be when I was a Capital Rx customer, our team worked together. We went out to the marketplace, we did an RFP. We searched for the best PBM. We thought it was Capital Rx, and we selected them. We implemented on January 1, 2021. And I monitored spend. Every two weeks, I would watch the invoices flow in. I would track it on a spreadsheet. I had some visibility into utilization, which is a totally different conversation. But none of that mattered because it really looked good in the beginning because of the difference between the pricing.
What really told the story is when I came back to work in January of 2022, and I got my final invoice, and I had everything that I needed to see that we were able to, in one year, cut plan costs 24.6%. So, let's round that to 25, because I like to round things. So, 25%. And I had never, in any part of my career, been able to cut anybody's cost 25% in a year. I'd done great, like 15%, 17%, but I had never gotten to 25%. So that, to me, was astonishing.
And there were some factors included in there that weren't all attributable to making the transition to Capital Rx. The pandemic and the senior living setting was not fun for any of us, and we were certainly subject to the Great Resignation. But the difference in plan participants from one year to the next was only like 500. And quite frankly, that didn't impact our utilizer numbers because your utilizers tend to be the same people year over year. But really, a lot of that savings was attributed to more transparent pricing and a better rebate arrangement, which allowed for a guaranteed pass through of 100% of all rebate revenue.
[28:15] Justin Venneri: What? That certainly is an astonishing amount of savings. And with that, all I can say is thank you, Bridget, so much for joining us today and sharing your experience and thoughts.
[28:24] Bridget Mulvenna: Thank you, Justin and I will see you soon.
[28:29] VO: Thank you for listening to Astonishing Healthcare 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.
If you would like to learn more about Capital Rx’s full-service PBM or PBA solutions, CLICK HERE to get in touch with our team.
Want to stay apprised of the latest Capital Rx news without having to feverishly refresh our Insights page? Sign up for our newsletter!