If you are looking for the most egregious profiteering and fleecing of American consumers of healthcare, there is no better example than that of the giant industry of middlemen called pharmacy benefit managers – PBMs for short – that are systematically gouging American businesses.  Most people are familiar with the few bad actors in the pharmaceutical industry.  For example, we think of the infamous “pharma bro” Martin Shkrelli that jacked up the price of his company’s drugs – and then smirked his way through subsequent court proceedings.  However, the inner workings of the drug pricing game fostered by the non-transparent PBM industry is actually a far worse scenario that it is million times bigger – and more expensive – than the games of the pharma bad actors.  PBMs who collectively manage pharmacy benefits for 266 million Americans, routinely fleece American businesses using clever shell games that are the absolute antithesis of Value-Based Care. But there is good news…there is an upstart PBM – Capital Rx – that provides a more transparent, sustainable, consumer-centric, and ethical model in the administration of pharmacy benefits.
Joining us this week is A.J. Loiacono, the CEO and co-founder of Capital Rx.  A.J.’s company is the fastest-growing healthcare company in the country, serving more than one million lives across its customer base of payor entities, employers, unions, health systems, and municipalities. It grew by 400% in 2020 and doubled in size in 2021.  Capital Rx are the “good guys” in the PBM industry – they offer a pharmacy benefits spending platform that links providers, patients, pharmacies and plans to bring cost-effective care to employers and their workforce. On average, Capital Rx saves its clients 27% on drug costs, mainly by refusing to use the industry standard model for drug costs: average wholesale price. As a result, Capital Rx has achieved a 96 NPS score, compared to the industry average of 14 in healthcare. A.J. is a visionary leader in the health value movement and was recently named an Entrepreneur Of The Year® 2022 New York Award finalist by Ernst & Young. Under A.J.’s leadership, Capital Rx is modernizing our healthcare infrastructure to reduce costs and deliver superior care, and they have the highest satisfaction scores in the industry. In this episode, A.J. provides you with an unfiltered perspective on our need to reimaging pharmacy benefits in our country.
Episode Bookmarks:
01:30 Pharmacy Benefit Managers (PBMs) – the traditional PBM model is an egregious example of healthcare profiteering and consumer fleecing
02:00 The drug pricing game and non-transparent PBM industry has a far worse negative impact on society than “bad acting” in Big Pharma
02:30 Introduction to A.J. Loiacono and Capital Rx (the “good guys” in the PBM industry)
04:30 Prescription drugs are the fastest growing healthcare expenditure and consistently outpace other health spending.
05:30 Some employers devoting >30% of their health plans’ total cost of care on pharma!
06:00 Half of patients with chronic conditions take their medications as prescribed due to high drug costs.
07:45 The slow compounding effect of incremental drug price increases year over year
08:00 The higher base of drug prices in the US (compared to other nations) and how R&D is recouped by fleecing American consumers
08:30 The opaque and inefficient PBM industry as another reason for escalating prescription drug costs
09:00 Consultant and broker compensation models are misaligned with goals of cost containment.
09:30 The three largest PBMs (CVS Caremark, Express Scripts, and OptumRx) manage 80% of all prescriptions and provide no transparency.
10:00 PBMs are making sick profits from rebates and “the billing spread”
11:00 A.J. provides a comprehensive explanation of what a PBM really does and why they are more than just middlemen
13:30 “PBMs are a problem because of the non-transparent pricing model they use – not because of the inv...

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