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The ShiftShapers Podcast
#509 Is Prescription Pricing Transparency and Oxymoron? with Vinay Patel
In this episode of ShiftShapers, host David A. Saltzman sits down with Vinay Patel, PharmD, founder of MakoRX, to expose why prescription pricing remains so confusing—and what can be done to fix it.
Patel breaks down how pharmacy benefit managers (PBMs), vertical integration, and opaque pricing structures are driving up costs for patients—while limiting access and undermining local pharmacies. From subscription pharmacy programs to cash-pay and compounding models, Patel shares bold, practical solutions for bringing real transparency back into the healthcare system.
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🔑 Key Takeaways from This Episode
- The Truth About Prescription Pricing
Patel explains how PBMs and vertically integrated systems distort drug pricing—making it difficult for patients to know what they’re really paying and why. - The Power of Local Pharmacies
Community pharmacies often serve as the most frequent healthcare touchpoint for patients. Their role in building trust, offering consultations, and providing accessible services is critical to public health. - How MakoRX’s Subscription Pharmacy Program Brings Real Cost Transparency
Patel details a model offering 300 commonly prescribed medications for a flat monthly fee—providing predictable costs and supporting a national network of independent pharmacies. - Breaking Up Healthcare Oligopolies
To fix what’s broken, Patel supports breaking up vertically integrated giants, allowing regional players to compete on quality, service, and fair pricing. - The Role of Compounding and Cash-Pay Pharmacies
With growing demand for affordability, Patel highlights how compounding and cash-pay pharmacies are offering lower-cost alternatives and bypassing insurance constraints. - A Vision for Integrated, Transparent Care
Patel explores a future where technology enables collaboration between pharmacists and medical providers—creating a more coordinated, transparent, and patient-focused care model.
⏱️ In This Episode
00:00 Introduction and Guest Welcome
00:54 Vinay Patel's Career Journey
04:28 Challenges in the Healthcare System
05:49 Political Perspectives on Healthcare Reform
14:17 The Role and Importance of Community Pharmacies
20:02 Subscription Pharmacy Programs
25:30 Future Trends in Pharmacy and Healthcare
27:20 Conclusion and Farewell
Is the term prescription pricing transparency an oxymoron? We'll find out on this episode of Shift Shapers.
Speaker 2:Change either energizes or paralyzes. The choice is yours. This is the Shift Shapers podcast, bringing the employee benefits industry interviews with individuals and companies who are shaping the industry's shifts. And now here's your host, david Saltzman.
Speaker 1:And joining us to help answer that question is Vinay Patel. He's a PharmD and founder at MAKO Rx. Vinay, welcome to the program.
Speaker 3:David, thank you so much. It's an honor to be here, an honor to be in front of your audience that is helping to change the healthcare landscape.
Speaker 1:Oh boy, I know they are and we're all working real hard at it and some days it just it's a higher slope than others. That's right. We always like to ask our guests what was your path to being the head googa-mooga at MangoRx? Because most of us don't have careers that go in straight lines.
Speaker 3:So it's always fascinating to ask the question.
Speaker 3:That's right.
Speaker 3:It's been a fascinating path for me to get here and unlikely for me who wanted to start off being a clinician.
Speaker 3:I did a residency out in Kaiser Permanente in California, learned how integrated care is sort of efficiently delivered with minimal patient disruption and clinicians get to communicate and collaborate on patient care and not be worried about insurance although it's gotten a lot more complicated than it used to be, than it used to be and then taught at a university as a pharmacist, taught pharmacy students and medical students and medical residents and learned the basis of not only how to train and educate other rising pharmacists and medical professionals but also set up a clinic inside of a university medical center that served the community, served the Medicaid community actually in California, and got to see firsthand issues and concerns and this was before Obamacare, before the ACA, where we just had to figure out how to help people get access to their medications, how to care for them better.
Speaker 3:Patients that were taking medications that required a lot of monitoring. Patients that had diabetes. Patients that had a specific blood thinner that we don't, we rarely use today, that had even more side effects than the ones that they have today called Coumadin and Warfarin, and how to monitor them and keep them in mind so that they didn't have adverse events, and so that was my.
Speaker 3:That was sort of the basis of my clinical training. I got to learn a lot from clinicians that worked there.
Speaker 3:I was working side by side with physicians that said hey, we have a pharmacist on our team and just go down the hall and meet with them and they're going to help straighten out your medications and help me better care for you. We work as a team together and that was really powerful and impactful to me in my training and understanding of real patient issues, real things that doctors, offices have to deal with, and that was the days before there was a ton of health care, health insurance oversight but we helped out and understood that flow process at the time as well. And then shift over here to North Carolina after a couple of years of training and being out in the beautiful sunshine. That's California and the things that are to do there.
Speaker 3:It's a wonderful state but couldn't afford to live there. Family grew up in the East Coast, came out here and worked at an independent pharmacy with a colleague of mine from pharmacy school and worked for the state and worked for doctors making house calls, an organization that goes out to long-term care facilities and helps care for the elderly. We were the first here to set up what was called annual wellness visit insurance billing, and so, as a non-traditional practitioner, we were able to actually build Medicare under the umbrella of doctors making house calls, and we were the first, to the best of our knowledge, to do so here in North Carolina as a pharmacist, and it was a wonderful system.
Speaker 3:Medicare had just authorized that review.
Speaker 3:It was like a full system review of a patient once a year that they would reimburse for, and got to learn again all the nuances of taking care of Medicare people and then work for a home delivery pharmacy and throughout all of this.
Speaker 3:My point here is that the, the, are the insurance system accelerated after Obamacare, the vertical integration and the control that they had.
Speaker 3:No matter where you practice as a pharmacist, you had this cloud hanging over you. That was the pharmacy benefits companies that told you what to do, how much you could, what you could tell patients at some point at one point, how much you would make, so on and so forth. And so we decided OK, if there is chocolate and vanilla in the marketplace, we need to create strawberry, because that's what everyone's asking for, but they're not getting it. It was a transparent model. It was cost plus pricing at the time, the first in the country to put together a network of pharmacies that would accept cost plus pricing on drugs and a new level of transparency where we weren't telling you a made up price for medications, we were telling you what the pharmacies bought the drugs for and how much you were going to pay them to dispense that medication to patients. So that's what led me here to this six years ago, putting this together and fighting a good fight.
Speaker 1:Well, and to our friends in North Carolina, and I know you love it where you are. Yes, you know there are some differences between California and North Carolina. It's just like you know, california is tipped on its side. It's kind of North Carolina. You got the ocean on one side and the mountains on the other. So you know every place has great stuff, but you know both great places to be Absolutely Well. Let's level set here. We're recording this on Friday, january 31st, and a couple of days ago Robert F Kennedy Jr had his second set of hearings as the nominee for US Department of Health and Human Services head and he said this. He was talking about President Trump and he said, and I'll read Trump is absolutely committed to fixing the PBMs. I think we need to reform the PBMs. I think we need to get all of these vested interests out that are draining money from the system. Trump wants to get the excess profits away from the PBMs and send it back to primary care to patients in this country. Fair statement 100%.
Speaker 3:I couldn't agree more with RFK Jr and the Trump administration's talking points on helping to reform the healthcare system from the oligopolies that we have today to a future vision and to a future path that has yet to be created, has yet to be legislated to figure out what that is.
Speaker 3:To add to that, david, there was Elizabeth Warren sent, penned, a letter if we still do those things today, in this year, to the Department of Government Efficiency, doge, run by Elon Musk, and in that letter one of the statements he made was if we break up UnitedHealthcare and OptumRx, it will save the government money. So you should consider that as part of your efficiency efforts. And it seems like there's a groundswell of over the last five to 10 years, not only the left, not only the right, but together all around there is this chorus of voices saying we need to do something about healthcare, we need to do something about drug prices, and there's a million different ways to get there. And there's the camp of we need to regulate and reform and put more sort of policies that they can narrowly do business in which, in my opinion, I think they've already found ways around that, they've already got loopholes sort of factored in and there's going to be it'll have little effect, in my opinion.
Speaker 3:The other camp was let's break them up, like we did with Ma Bell so many decades ago. I think that I'm in the breakup camp. I'm saying let's break up these organizations into smaller pieces to allow the regional players in that area to compete on quality, price and service. And if we can all have access to the same pricing because we're all about the same size, then it's really going to be focused on who can deliver the best quality care and who can deliver the best service to these patients.
Speaker 1:Yeah, I mean, I think the stumbling block now is not patients, because I think patients have finally started to wake up and it's not even you know, some of my friends in your end of the pharmacy industry where they're trying to do stuff right and do it the right way. I think that the challenge is Congress. I remember back when they were first started talking about ACA, the first person in the front door of the White House was a guy named Billy Towson and he was a congressman from Louisiana, but for a long time he's been the head of Big Pharma and there's tons of money floating around and you know the question is if they break them up. I guess that just has to go to the Federal Trade Commission. It doesn't have to go through Congress. So maybe there's a chance.
Speaker 1:But you know you're asking people to vote against their vested interests and that's. You know that's tough and that's why I think there's been a lot of talk around this, but there hasn't been a ton of action until recently, other than Doge and some of the things that are being talked about. What are the factors that are driving this new wave of? Okay, we're at the corner of anything goes meets enough already with pharmacy and pricing.
Speaker 3:It has to do with the experience not only of patients. Patients experience this frustration every day when you deal with insurance companies. But now you also have the tentacles of this vertical integration going into every single area. Healthcare sector, area, healthcare sector. Before it was okay. We had our insurance business and we would we partner with plan sponsors, whether that's government, state agencies or private companies, to get revenue from and we sort of ran it as an insurance business. It's now grown out of that into.
Speaker 3:We're going to find a way to get revenues from pharmacies. We're going to find a way to get revenues from pharmacies. We're going to find a way to get revenue from health care providers and practitioners in clinics. We'll find a way to get revenue outside of through patients, just patients saying this is a really bad experience for me and it's only gotten worse. But you have health care providers now that are standing up and saying you've got to pay attention to this. It's disseminating, it's decimating excuse me communities that now we have pharmacy deserts in many parts of rural parts of America where there are no pharmacies that are there to serve those members, and now you have let everyone going to their state legislature say you've got to do something about this.
Speaker 3:And then the state's telling federal okay, we got to figure out how to do this at a federal level as well. There's only so much that the states can do. So I think it's gotten into so many parts of the country that it's just gotten louder and everyone's paying attention of the country that it's.
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Speaker 3:where people are finally realizing that wait, I can pay less for the drug if I pay cash and use this goofy card than I can if I use my insurance. Awareness and education were always key in healthcare. It was inordinately complex and for people to understand it they had to experience it differently. And that was absolutely. The transparency and awareness that CodeRx brought to drug pricing to a certain extent when it was first created, allowed people to see and open their eyes to say, okay, well, it's not just my insurance company's prices that are important, it's also this cash price. And now I can search for the price now and I can find there's a difference. There's a big difference in the price I'm getting charged Absolutely.
Speaker 1:Isn't that amazing, just like everything else that we buy.
Speaker 3:Yeah, exactly no, the price up front.
Speaker 1:It's a strange world, isn't it? So you know you mentioned.
Speaker 3:You mentioned local pharmacies.
Speaker 3:And I know one of the areas that you guys work in a lot, and maybe listeners aren't quite as aware of as they may soon be, is the role of what we'll call community pharmacies. Can you talk a little bit about what a community pharmacy is, why it's important to the eco-structure and what we need to know about them? Yes, absolutely, they are so important, not just speaking as a pharmacist, but the way that they serve communities is multifaceted, oftentimes. An interesting statistic a patient will oftentimes visit a pharmacy 12 times a year, versus on average, seeing their physician three times a year or their medical clinic. And so the touch, the health care touch point in the community is more oftentimes than not, a pharmacy.
Speaker 3:And community pharmacies are brick and mortar stores that exist in communities, in communities, whether it's big box pharmacy stores, grocery pharmacy stores or the mom and pop shops that are in strip malls and sort of hidden out of plain, out of the main street view sees these people knows their community. They live and work and have families in this community. They contribute to the community and they do more than just care for the patients that walk through their doors. There's more than just there's consults that happen, with these patients saying, hey, my kid, you know, it's the middle of the night, my kid's sick and I'm going to need something to hold me over until I can go see my doctor tomorrow morning. Great, let me help you out. Let's talk about what's going on and you on and how's your grandparents doing, and so on and so forth.
Speaker 3:Right, there's this community effect and it's so vitally important. And also there's other services you can get at a pharmacy. There's so many more services you can get now, except a bit outside of just getting your medications. You can get vaccines at a pharmacy. You can get as we learned through the pandemic COVID testing at pharmacies. And the access, the accessibility of a healthcare practitioner in the community through these pharmacies all over the country is so vital for these communities to thrive.
Speaker 1:How do we keep them going? What a lot of people may not realize is that the margin on pharmaceuticals at the pharmacy level is very, very, very thin. It's almost, you can almost see through it. That's how thin it is. How do we help those community pharmacies that aren't the three or four biggies? How do we help them stay in business? What can we do?
Speaker 3:it's a. That's a tough question, david um, and I'll tell you why. Even if every patient in the community decided they wanted to use a mom and pop pharmacy, the one of the first bears they're going to run into is do I take your insurance when I walk? When I walk into the pharmacy, can the pharmacy take your insurance, and is it going to be a better price for you at the community pharmacy versus the big box store, depending on on what insurance card you have in your wallet? It's going to dictate that, and that's sort of navigating patients to all these different pharmacies around the country, and so I wish there was an easier answer to say what we can do to help them.
Speaker 3:What you can do is, when you have medications that you're filling at a big box store, you can always ask your local pharmacy how much these medications would be at your pharmacy without using insurance.
Speaker 3:Just how much would the cash price be for these medicines? Oftentimes these community pharmacies can beat the good or X price without having to run that card and run that program at the pharmacy. It just takes a little bit of asking and then also talk to your pharmacist about other options for medication so they can discuss drugs that can be compounded that may be more affordable, or a different formulation that would be more palatable for them, customized for their need. If it's appropriate, and really just having that relationship with a community pharmacy, even if you don't use them for your medicines to go in and have a conversation, establish that relationship. If you can purchase something at a small business we talk a lot about this a lot Shop local, shop small. If there's a way to work or patronize a local business, it would be a local pharmacy. It just gets a little dicey with the prescriptions alone, but there's other services that you could use there.
Speaker 1:You know I think some people are finding with this now big discussion about semaglutides that pharmacies that compound can actually get you the same medication that you need at a much lower cost than the brand name. Do you think that's going to be a driver of folks maybe looking, taking a second look at some local pharmacies that do still do compound?
Speaker 3:Yes, there's been a ton of demand for these medications and there's been a need to educate the public between you know the difference between a MediSpa and a licensed regulated compounding pharmacy, that you know the difference between a MediSpa and a licensed regulated compounding pharmacy. That you know that's accredited by health care bodies. So, yes, there's been more interest and more education and awareness of compound pharmacies. There is some FDA statements that have come out on the continued use of these drugs or compounding pharmacies, on the continued use of these drugs through compounding pharmacies. The resolution of that has yet to be seen, but for now, sometime next month, individual patient prescriptions may not be able to be filled through compounding pharmacies and then, beyond that, sometime in March, what we call bulk compounders won't be able to supply these medications.
Speaker 1:Gee, he said not being at all cynical. I wonder how that happened.
Speaker 3:Yeah, I think we can trace the dot, connect the dots? Yeah, I think we can.
Speaker 1:Even if you've got a really big old fat crayon, it's not hard to connect those. One of the things I wanted to talk to you about that I know that you've been working on are these things called subscription pharmacy programs. What are they? What's the market for them? How can they help? What's the market for them? How can they help? We have a unique.
Speaker 3:Patients have been exposed to these subscription products through services like you mentioned, like GoodRx, and there's certain grocer pharmacies that offer these subscription programs as well. The program that we've developed is really interesting and really unique. It provides access to 300 of the most commonly used medications in the country. We're talking about drugs for mental health, cardiovascular disease, antibiotics, birth control and various other therapeutic areas, but most commonly used prescriptions in the country these 300 medications at no cost, through our network of preferred cost plus pharmacies that are about 22,000 and growing across the country, and so for a monthly fee. In exchange for a fixed monthly fee, about $30 a month, depending on what plan you select you can get access to these 300 drugs at no cost through your local pharmacies.
Speaker 3:As the value and this is something that is really important, david, when we create products, we want to understand what is the value we're bringing to patients. What is the value we're bringing to the healthcare market? Today, it feels like we pay a ton for health insurance but we're not getting any value. No one's talking about the value of healthcare, and so we really wanted to make sure we had a good value proposition that includes access to these drugs and then every other drug that you might want to take that's not on the list is cost plus prices you pay directly to the pharmacy. That's fair reimbursement to them and that you know that can help to accelerate this adoption and survival of these community pharmacies.
Speaker 1:And where are you marketing that Is, that large group, medium sized group, any kind of group?
Speaker 3:Anyone, any employer that wants to offer it, they can offer it. Any size employer, whether you're fully self-insured. You don't offer healthcare or health insurance like we see in the hospitality industry, so anyone can offer it. Anyone can pick it up and offer it and it's a monthly contribution for those members that want to sign up for this plan and as members come on and off the plan on a monthly basis, we are flexible to that and it's not an annual commitment. You don't have to worry about thousands of dollars in health care costs. It's very specific and it's a value add. That's our bronze program, which is just access to the drugs, and then we have a silver program that does drugs plus access to telemedicine. So if you need, you know any time to chat with a doc via telemedicine to get access to some of these drugs. That gives them access through the silver plan that we have as well.
Speaker 1:You know, kind of taking a little bit of a left turn. You know there was with the Johnson Johnson lawsuit a year ago and changed now, a heightened awareness of the fact that employers and plans particularly have a fiduciary responsibility to ensure that they're paying fair prices for prescription drugs. What's the role of the PBM in helping them get there? How do you see that?
Speaker 3:In getting. I just want to clarify what's the role in the PBM in helping patients.
Speaker 1:It means helping plans understand and assure themselves that they are making wise choices when they use a PBM.
Speaker 3:So the PBMs, you know if truly an advisor to the plan to help them understand drug costs and how to manage those drug costs effectively. And PBM can help the plans understand that there's many different ways to access a medication. And where you go will determine what the price is for a drug, which is what we see every day. And there's three big buckets of drugs. There's generic medications. These are the least expensive drugs and the most commonly used drugs in the country. Then there's brand medications and then there's specialty medications.
Speaker 3:And that's sort of the lens that we see the PBM landscape in terms of these three buckets of drugs.
Speaker 3:And so if they were advising their clients, they would tell them we want to maximize as much as possible utilization of generic medications because they're the least expensive and there's a lot of brand drugs that have alternatives that are generic. That not only helps the plant saver but also helps the patient at the pharmacy. Today, when you have a brand medication, the patient has to pay the full retail price of that drug and then the rebate goes back to the employer in terms of savings. So the patient never gets benefit of any rebate dollar savings, just by design of the way the system works. But if you take a generic, both the plan and the patient get the benefit at the pharmacy. And so just helping to educate and understand and break down demystify the pharmacy and I think that's a great first step that PBMs can take to help plan sponsors just understand healthcare. It's extremely complex and just breaking it down into simple concepts for them to understand this would help and benefit everyone in society, but there's a lot of barriers to that.
Speaker 1:Yeah, well, certainly. You know, demystifying PBMs is a heavy lift because there are so many corners and layers and other pieces that maybe are not as transparent and others that are opaque by design, so it's a big job. We've got a couple of minutes left. What do you see coming in the next couple of years in your industry? What are the trends that you're watching?
Speaker 3:We're seeing today as the status quo of the healthcare market continues, pharmacies finding other ways to diversify away from the insurance market to continue to serve their communities. Cash pay pharmacies we talked about compounding pharmacies. Cash pay pharmacies we talked about compounding pharmacies. Cash pay pharmacies are particular pharmacies that don't take any insurance at all. They're just going to try to get you the best price for the drug and transparently show you what drugs cost without having to worry about insurance at all up front. We're seeing models like Mark Cuban's Cost Plus Pharmacy go to market and say there's a better way to do this. There's a way to change the marketplace. If employers wake up and decide they want to get engaged in changing healthcare, they have the ability to do so with publishing contracts soon and publishing these drug prices.
Speaker 3:On the care side, I really think there is a model, there is a vision, there is a push to have this care team model come into the community, with your pharmacy in a separate place in the community than your doctor's office, but then collaborating through technology, through efforts that exist in parts and pieces today, where we can now include that pharmacist onto the care team and provide their expertise and their care outside of just sort of the specific issues that they find when prescriptions come in through their doors, but it actually be involved in that patient's care and collaborate with the medical providers in the community. And telemedicine is a great example of that sort of greasing the skids to getting to this integrated care model for patients, and maybe we'll see something like the model that Kaiser put together in more communities through technology, intervening on the care and making it more coordinated.
Speaker 1:Well as the solutions evolve. We hope you'll come back and chat with us some more. Vinay Patel, founder at MakoRx. Thank you so much for sharing your wisdom with us.
Speaker 3:Thanks so much for the time and opportunity, David. You made it so easy.
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