Speaker 1: 0:00

How can we ensure that rural communities aren't left without vital pharmacy services and support, both everyday health and sometimes even emergency care? We'll find out on this episode of Shift Shapers.

Speaker 2: 0:14

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 shifts. And now here's your host, david Saltzman.

Speaker 1: 0:36

And to help us answer that question, we've invited David Blair, founder and CEO of LucyRx. Now, some of you who are paying attention may recall that back in February, in episode 505, we interviewed Susan Thomas, who's also at LucyRx. We don't usually do interviews with the same company so closely to one another, but David's here to talk about some really interesting new initiatives they've just rolled out on a particular challenge. So welcome, david.

Speaker 3: 1:03

Thank you, david, it's great to be here on a particular challenge.

Speaker 1: 1:05

So welcome David. Thank you, david. It's great to be here. It's my pleasure to have you. So I had a guest recently tell me that the average American sees their pharmacist 12 times a year and their physician or provider three times a year. Can that be accurate?

Speaker 3: 1:21

Yeah, I think so. If you think about the pharmacists, right, they're one of the most trusted resources in the healthcare delivery channel and most Americans are on at least one medication, and so they're seeing their pharmacist on a regular basis, whereas they're lucky to see a doctor you said three times. You know, I think my experience might be lucky to see him one time, but it's a vast difference, for sure.

Speaker 1: 1:47

Now we talk and we have talked a number of times because it's a subject that I care a lot about underserved populations and the so-called medical deserts. Can you give us a baseline definition of what those communities are and what they look like across whatever spectrum there is?

Speaker 3: 1:59

Sure, david. So we have a huge problem in the United States, which we call pharmacy deserts, right, and we define a pharmacy desert as only one pharmacy within a 10-mile radius, and the challenge with this is one individuals are less likely to get their medications if they're in a pharmacy desert. In fact, there was a report out that 27% less often they'll pick up their meds. But it's not just picking up their meds, and it's what it was. Your first question, dave, that I want to circle back to, which is this is part of the healthcare delivery system, right? So it's not just someone going in and seeing their pharmacist to pick up their meds, but maybe they have a question about an OTC product or a chronic condition or side effects. And so, as we see the pharmacies closing, there's more and more pharmacy deserts, and that's having an adverse effect on health outcomes.

Speaker 1: 2:50

Well, because pharmacies, especially in those areas, have, as I alluded to in our open, have become kind of more than just pill dispensing places, haven't they?

Speaker 3: 2:59

Absolutely. The pharmacist and I've said this for 20 years is probably the most underutilized resource that we have in the healthcare delivery system. Right, these are individuals that have gone through six, eight years of advanced clinical training and, because of antiquated regulations and inadequate reimbursement models, too often times they're just counting pills and we're not getting the full value from these pharmacists, and that's very much an untapped resource that candidly, as a country, we need to tap into because we are facing clearly a healthcare crisis with an aging population and we have a massive shortage in physicians. We've got to do a better job leveraging the assets that we have.

Speaker 1: 3:43

What are some of the things that folks we may not think about it in the audience, but some folks go to pharmacies about.

Speaker 3: 3:52

what are some of the things that pharmacists help with?

Speaker 3: 3:54

Well, so, david, this is really driven at the state level today. So I imagine that, regardless of what state a pharmacist resides in, they're going to be providing similar services, but it's whether or not they're getting reimbursed for those services and so like in Idaho is probably a great example of a state that has allowed pharmacists to prescribe certain medications for chronic conditions and minor conditions. You have other states, new Mexico, for example. They have a licensed designation I think it's called a pharmacy clinician where not only can they write prescriptions, they can request lab work, they can provide medication therapy management. So the pharmacist right as that trusted resource is answering questions to the patients as they come in and really guiding them to the most care and cost-effective solutions. The challenge we have is oftentimes we're not getting paid for it, right, and, david, in the last six or seven years, I think, I saw 1,200 independent pharmacies have closed. So we've got to do a much better job of keeping these pharmacies in business, and part of that is making sure they're getting paid for the work that they're doing.

Speaker 1: 5:03

And yet we see headline after headline about some of the big chains closing hundreds of stores. How do you explain the two? It seems like a dichotomy.

Speaker 3: 5:12

And I think, david, it's actually thousands of stores from Rite Aid, Walgreens and CVS have closed, and it's only going to get worse. Right, walgreens was sold in the last couple months and no doubt there's going to be more closures, and independents are actually closing at a faster rate, if you can believe that about two to one independent pharmacies are closing, and so one of the things that we've done at LucyRx is we've reimagined every element of how the prescription care is delivered in this country, and a key element is the pharmacist and making sure that we're getting the best value and service from them. That's part of the programs that we've introduced.

Speaker 1: 5:47

Is that what you call your SPARC program?

Speaker 3: 5:49

Right. So SPARC stands for Sustaining Pharmacy and Rural Care, and so what it does, it's really three prongs. So one we want to reimburse the pharmacies more money for those pharmacies that are in a pharmacy desert. They deserve that and they need that. They just have lower volumes. We also advocate at the state level for smarter legislation, and I gave you a couple examples about New Mexico and Idaho. But we really need guidelines from the federal regulators, because each state needs to be pursuing this. This is a national problem, right. And when you think rural care, you might think, oh, is this like Wyoming or Montana thing? No, 46% of all counties in the United States have at least one pharmacy desert. So this is a national problem. And then, lastly, david, we promote the pharmacy as a healthcare hub, right, because we know that that pharmacist can provide other services vaccinations, preventative maintenance, chronic condition management. So we promote that pharmacy. And so those are the three initiatives that we pursue through that SPARC program to help keep these independent pharmacies in business.

Speaker 1: 6:59

You mentioned that it's a nationwide problem, and indeed it is. Has anybody approached folks on the Hill and seen if there's an appetite for any kind of federal regulation, or would the states be a better venue for that? Then you've got 50 phone calls to make. But where's that at?

Speaker 3: 7:19

Well, it has to be right. And so we're fortunate that we're outside of Washington DC, and so we have connections with the new administration officials, and we've been advocating for federal regulations. And here's David, here's what I say. Okay, if you look at the American Medical Colleges, they had a report recently. They're projecting they're going to have 86,000 physicians shortage, a shortage of 86,000 physicians over the next decade or so. In round numbers, we have 400,000 licensed pharmacists in this country. 200,000 are in retail. Now, of course, a pharmacist can't completely replace a physician, but it can make a big dent. So when you think about this tidal wave that we have coming with this aging population and the physician shortage, the answer is right in front of us. We have 200,000 pharmacists that are around this country that have been trained for six to eight years in a clinical environment and we're not fully utilizing them, and so we've got to change their scope of services so that we can not only address the problem but keep those pharmacies in business.

Speaker 1: 8:26

So have you had any significant conversations so far with folks in the administration around the Hill?

Speaker 3: 8:31

I have, and here's what comes up with the new administration is a distrust for anything big right. So they're very skeptical about drug manufacturers, big PBMs, the big retailers. They absolutely believe that the average American is getting the short end of the stick and they're trying to figure that out. They're moving with urgency and when I've met with the healthcare officials, even before the new president was inaugurated, they already had their staff selected. There's a mission to get this done and, david, it's Washington DC and I've lived here my whole life and I have seen a lot of activity and oftentimes not much progress, I don't know. I mean, I think for sure we'll see more and more progress with the states, but I would love to see some federal regulations come in, at least to give the states guidance on how they can be, you know, expanding the scope of a, you know, pharmacist services.

Speaker 1: 9:33

My oldest daughter and her husband live in the district and so I completely understand and they both work at different pieces of that touch government. So I and I've been up a lot. You know, with my involvement with the National Association of Benefit Insurance Professionals, I've been up there a lot and so I understand it's kind of take one step backwards, two step, one step forward, rather two steps backwards sometimes, but it's tough. Let's, let's help the audience understand a little bit. But pharmacies don't run 7-Elevens because they want to. They've got grocery stores in the front of the store because their margins in the back, where the pharmacy is, aren't really good. What is a pharmacy average and what do they take on the work that they do in the pharmacy counter?

Speaker 3: 10:15

Well. So, david, you've got to. That's exactly right. So over the years the back of the counter has really become almost I'll call it a lost leader, because the price of generics, the margins, are laser thin, right. So a pharmacist might be getting 95% off on a generic drug, so super thin margins. But that could have been made up with front store sales. But now the problem is with, you know, let's say, amazon and other big box retailers. They've taken that share away.

Speaker 3: 10:49

And then the compound, the problem we haven't talked about this are the mandatory mail programs.

Speaker 3: 10:54

So 20 years ago the big PBMs oftentimes put in mandatory mail programs and, david, what you saw over that 20 year period is the delivery of medications for chronic conditions and specialty meds has gone from 20% delivered through mail to 40% through mail, and so that's taken business away from the pharmacy.

Speaker 3: 11:15

And so now you don't have people coming in to pick up their meds and maybe picking up sodas or whatnot on the way out the door. But also you've eliminated an interaction, a clinical interaction with someone. Perhaps someone was seeing the pharmacist once a month and a conversation. Especially in these rural areas with independent pharmacies, it's likely a conversation might have started around. Maybe it was allergy season or they had asthma or something along those lines, and now you've robbed the patient of that because now they have to go through mail, and so one of the things that at LucyRx is we don't have any mandatory mail programs. We want our patients to get their drugs where they want to get them right, meet them where they want them, versus trying to force them to. You know, one size fits all solution.

Speaker 1: 12:01

Well, and the whole carrot in that program was that you paid for two months and you got a three month supply. Is that something with a willing advisor and a willing client, let's say in a self-insured plan where they're building their own pharmacy plan? Is that something that you guys can accommodate?

Speaker 3: 12:17

Not anymore, david. So most of the drug costs in this country are out of control and we see employer after employer cutting back on benefits because they just can't afford it, and so that two for three that you said, that's gone by the wayside. That's no longer possible because employers just can't afford that. And there's not that big of a difference between 90 days at mail and 90 days at retail. The pricing has gotten compressed over the last 10 years.

Speaker 1: 12:48

Is it compressed to the point where you can make the argument that there's virtually no difference. So go to your local pharmacist.

Speaker 3: 12:55

Absolutely, absolutely, and I think it's the same. That's why, when we let's go back to what we talked about, david, about the independence and the retail pharmacy chains closing is because the margins have gotten so compressed. That it's you know. Here's something this happened just this week, david. So Arkansas passed yesterday that they're going to decouple PBM. You can choose. You can either be a PBM or you can be a retail pharmacy. You can't be both. Okay, because it's always been the Fox watching the hen house, right when it's like. If you're the PBM, you're going to and guess what CVS has said they're going to do? They're going to shut down. They have five locations in Arkansas. They're going to close those five locations, so they'd rather be in the PBM industry. So you can guess that there's. You know, this is this is a. They are on retail pharmacies, so they're going to close five more pharmacies and that might create five more pharmacy deserts for all we know.

Speaker 1: 13:48

It's just like the old story about. You know, they asked Willie Sutton, the famous Boston bank robber, why do you rob banks?

Speaker 3: 13:52

He said, that's where the money is yeah, I think that's the same thing, Like where's the money? It's in rebates and that's where the big PBMs run to.

Speaker 1: 14:00

Yeah, it's a mess and it's getting messier and messier and messier. It is nice to see that some of the bigger PBM players are being called on the carpet, and we've seen some of that in the news in the last couple of weeks, and so that's kind of interesting. But it's a formidable foe to fight, isn't it?

Speaker 3: 14:18

Absolutely, yeah, absolutely. And we often talk about cost versus price because the big three will show you the lowest price per pill, which makes sense because they sell more gas, but Exxon is going to put you in an SUV that gets like 11 miles to the gallon, right, when maybe you need a hybrid or something. And so we talk about cost. And to bring that back to pharmacy, if you think about it, if you're reimbursing these pharmacies so little that they go out of business, your healthcare costs are going to go up, right, because now you have patients that aren't taking the medications, they're going to end up in the ER, they're going to have chronic conditions. So, don't you know? Don't focus so much on price of a pill, but think about the overall, you know, healthcare equation and how you can get the most care and cost-effective solutions.

Speaker 1: 15:18

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Speaker 3: 17:13

So what it is is we have about 130 specialty pharmacies in our network and they're affiliated with major health systems. So think, like Boston Children's Hospital or Dana-Farber cancer, so they're within a health system and the the reason that's important is because there's great studies out there about how, if patients are getting their care and their medications at the same place, adherenceence goes up, er visits goes down, your quality outcomes goes up. There's actually a 32% lower spend for patients that are getting their meds where they're getting their care. And just think about it, david if you have, let's say, a cancer patient that's seeing their oncologist newly diagnosed, right, if they can walk out of that doctor's visit and pick up their oral meds, they're much more likely to be on those meds. Or, let's say there's a side effect the next day they're on the phone talking to their doc versus waiting, you know, 8, 10, 15 days for a central fill pharmacy to send it.

Speaker 3: 18:17

And that's how the big three have morphed, right? So if you're working with a big three PBM and many others for that matter they have a central fill model and they require you to go to central fill. And so what we found? Kind of reimagining how prescription care could be delivered, and in some respects it's similar to our pharmacy desert program, which is empowering the pharmacist right Because they're right there in the community, and so what we do is we have something called a specialty concierge and when someone's newly diagnosed, we'll tell them hey, did you know you can get your meds right here in the community, and why? That's ultimately going to be better for them and their health plan.

Speaker 1: 18:56

Is this a case of everything old is new again? I mean, I remember years ago and I can remember back a few more years than you can when it wasn't unusual for there to be pharmacies inside medical facilities. Is this a resurgence, or have they always been there, but people just don't know about them?

Speaker 3: 19:13

Well, I think the traditional pharmacy has probably always been there, right, where you could pick up your kind of we think of your old school brand and generic drugs. But the specialty drug market has, you know, gone through the roof right. It's going to be $700 million, $700 billion by the end of the decade, and so I think the specialty pharmacy is probably newer in the last 10 years and you see health systems investing in those facilities. But it was funny when you said old is new and new is old.

Speaker 3: 19:45

It reminds me back of if you go back 25 years ago, when Medco was owned by Merck, so you had a drug manufacturer owning PBM. You had Eli Lilly own PCS back then and the FTC came out and said, okay, this vertical integration is anti-competitive, it is not in the, i'll'll say, the country's best interest, and put all sorts of guidelines in place to separate those. You know, fast forward 25 years. We're right back to where we started, which is through vertical integration. You have a company that might be manufacturing a pill, selling a pill, getting paid to administer the pharmacy benefit, you know, insuring the patient, and there's no doubt that conflicts emerge when you're in that many businesses that are related.

Speaker 1: 20:32

I was a TPA back then and so I remember it well and I remember the craziness that it caused and how it just kind of somehow parts of it seem counterintuitive. But it's interesting that things go around and come around and, you know, kudos to you guys for bringing it to the forefront. It's nice. It's nice to see a firm like yours that's doing some innovative stuff and doing good stuff for the communities as well. There's not really an awful lot of that to go around. So we've got a few minutes left. Look into your crystal ball. What do you see in your industry in the next couple, five years?

Speaker 3: 21:06

Yeah. So I just want to go back to the first point that you said. It's not just Lucy. There's a dozen innovative PBMs out there that see the same opportunity that we see and are addressing the shortfalls in the market, and so we think we're a leader. But there's other great companies out there that see the same things that we do. Where is the market going over the next five years?

Speaker 3: 21:28

So disaggregation is one thing that I see a lot, which is health plans and employers saying, okay, I'm not going to have one contract with a PBM, I'm going to have five contracts, I'm going to have one person that's going to provide specialty mail claims adjudication network. And so you see this disaggregation model. Blue Cross, blue Shield of California kicked it off a couple years ago and they were the first to kind of jump in. And now you see more and more of that because I believe employers and health planners believe if you disaggregate it you can drive better transparency. You'll see it certainly more and more at the state level banning the pass-through of retention of rebates level banning the pass-through of retention of rebates. I've mentioned Arkansas earlier. The states have gotten a lot of momentum in driving smart changes. I'd say it's a jump ball.

Speaker 3: 22:17

Whether or not the feds will get into further regulating PBMs, I don't know. I wouldn't be surprised to see if the big three break up. If CVS ends up having to divest some of the assets there's a lot of pressure on Wall Street for them. Would that be a more valuable asset if it was split up in different companies? But no doubt middle market next generation PBMs like LucyRx are going to continue to pick up market share and we see that. You can read the press releases of companies like LucyRx, you know, winning new business in the market.

Speaker 1: 22:48

And that's a great place to end our conversation for today. David Blair, founder and CEO of LucyRx. David, great conversation. We hope you'll come back.

Speaker 3: 22:56

Absolutely, David. I really appreciate you bringing attention to this really important topic. Thank you.

Speaker 1: 23:06

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Speaker 2: 23:24

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