Given his background working with pharmacy benefit managers (PBMs) and medical insurers, as well as in helping individuals to fill their prescriptions, Dr. Simon Leung, vice president and head of pharmacy for Conner Strong & Buckelew, has in some ways seen all sides of the prescription drug industry.
Leung’s experience has shaped his approach to pharmacy benefit consulting and his view on transparency for drug costs. He discusses where all the different industry players disagree, which cost-saving levers employers can access, and the value of different types of data that inform client strategy.
Read the Transcript
Disclaimer: Podcast transcriptions are computer generated, please excuse errors. For the most accurate version of the conversation, please refer to audio.
Dr. Simon Leung:
To solve for that disconnect I think we must start understanding the client. Where do they stand in terms of tolerance with regards to plan expense? Let’s face it, it’s our job to help peel back the layers of the onion and see which way they lean.
Katie King:
Welcome to the Leader’s Edge podcast. I’m Katie King, VP of health policy and strategy at The Council. In this podcast, I sit down with Dr. Simon Leung, vice president and head of pharmacy at Conner Strong & Buckelew, to talk about how his past experience as a PharmD informs his new role, as well as his take on the value of transparency in the pharmacy benefits space. Dr. Leung sits in a unique position where he’s been behind the curtain with major health insurers, transparent PBMs, with patients at the pharmacy counter, and now in the consulting space. He believes that all of the different industry players agree that it’s about serving the patient, but that people have different views on how to achieve that goal. Take a listen.
Dr. Simon Leung:
I have 20 years in the pharmacy industry experience. It’s almost 20 years to the date, because I remember specifically taking my pharmacy board exams and getting officially licensed the day before my birthday 20 years ago, and I just celebrated my birthday yesterday. Almost to the date, 20 years in the industry as a registered pharmacist, working across many realms of the industry, working as a retail pharmacy leader. After that, I decided to branch out and go into other aspects of pharmacy. Now that I have experience in everything, working for health plans, PBMs, both large and small ones, new and old ones, as well as pharmacy consulting. Here at Conner Strong, I take great pride in being able to bring all that expertise and experience together to help our clients design impactful and meaningful pharmacy programs that improve not only their employees’ health but ultimately to help mitigate costs whenever possible.
I will say, however, that I think my collective experience is somewhat unique in this marketplace. I can appreciate and understand all sides of a typical pharmacy or prescription drug transaction, the provider, the payer, as well as the member or patient side, having that retail experience working behind the bench. I know what it’s like for members to be told their medicine isn’t covered, or that their prescription needs a prior authorization, or even working through a change in their insurance at the beginning of the year. You have a mom and dad coming in New Year’s Day with a sick child, and they can’t get their prescription covered because they forgot they got a new prescription insurance card in the mail. I’ve helped members work through these firsthand. At the same time, I also know what it’s like on the pharmacy consulting side to help businesses craft their pharmacy benefit plans to drive plan savings. I could truly appreciate and understand the balance that’s needed there. Ultimately, though, the member experience is what drives member benefits. My prior experience with the members, the consumers themselves, isn’t all that common in the pharmacy benefit advisor space.
Katie King:
That absolutely is a unique place that you sit just given your experience. Obviously, prescription drug costs are continuing to rise, and patients feel that. They feel that at the pharmacy counter. It’s felt differently among employers or if you’re a pharmacy consultant or if you’re some other player in the industry. I’m curious, given your experience and the fact that you’ve spent time with different segments in the industry, maybe you can a bit about some of the disconnects or some of the miscommunication that you see happening between all those different players and what that means.
Dr. Simon Leung:
It’s a great question. I have to think back to when I first moved into the pharmacy consulting space. A former mentor of mine affectionately called me a reformed bank robber, because I was able to bring that knowledge, the insights, the experience gained from the inner workings of PBMs and carriers to the client side of the table, all the while, having intimate knowledge and experience, working on the front lines with patients at the point of service. Having seen all sides, while there are certainly disconnects amongst all these parties, every player is connected by the universal understanding that the most important part of pharmacy and benefit plans in general is taking care of that patient’s health.
What everyone fights over and truly is at odds about, however, is how to get to that outcome while making sure the financials make the most sense for their own interest, not necessarily for everyone’s interest, but for their own interests. To solve for that disconnect, we must start understanding the client. Start there. We have to understand the client, the company’s philosophy, where do they stand in terms of tolerance with regards to plan expense. Let’s face it, it’s likely increasing and putting financial pressure on the business. Then you have to balance that with tolerance to member disruption. Do they want to cut costs by any means, or are they truly trying to build the richest plan to attract and retain top talent, especially in this competitive workforce?
Needless to say, though, most clients out there are probably somewhere in the middle, which is okay. It’s our job to help peel back the layers of the onion and see which way they lean. From there, once we understand the baseline that we’re working with for each individual client that we’re working with, us as pharmacy benefit advisors, we can better help them tailor their solutions to achieve their goals.
Katie King:
That makes sense. Simon, I’m curious, sitting at a brokerage and a consultancy, do they have different levers to try to move the dial on pharmacy costs? They’re sitting in a unique position just between the client and some of their other partners. What do you see as an advantage to where they’re sitting?
Dr. Simon Leung:
Generally speaking, I don’t think it’s necessarily about brokers and consultants having or not having access to things, but it’s more about understanding how to help their clients navigate all these different levers that are out there to help manage costs. Going back to my earlier point, it all starts with understanding the client’s strategic goals. That said, there are some exceptions, one of which would be those proprietary pharmacy coalitions some brokers have access to, some don’t. In the world of pharmacy benefits, size and scale does matter. That’s how these aggregator models, these collaborative models, add value.
At Conner Strong, we do have access to a proprietary pharmacy coalition called Level Health or Level Care Pharmacy. We offer this coalition to our clients, but most notably, we don’t own or operate it, or even administer it, for that matter. At Conner Strong, we simply help manage it from a pharmacy consulting standpoint and help market it, but that’s it. What this means, ultimately, is that we’re product and vendor agnostic, unlike some of our bigger competitors in the marketplace. We don’t benefit from clients using it as a company. Since we began offering Level Health Pharmacy coalition, it has cumulatively saved upwards of $1.8 billion dollars for our clients that have decided to use this pharmacy coalition program.
Back to my point about pharmacy coalition, we consider these low hanging fruit for clients. They’re particularly beneficial for clients who are otherwise too small to go out into open marketplace and get best price during competitive pricing. Again, size and scale does matter in this industry, and by joining a coalition, these clients can gain access to competitive pricing. That said, some coalitions are indeed proprietary and can only be accessed through a specific broker or consultant relationship, but many are broker and consultant agnostic. Meaning theoretically, a self-funded plan could access these directly with or without a broker relationship or a consultant relationship.
When I think more aggressively, there are aggressive levers that require more careful evaluation, more careful navigation, and just be more judicious in the vetting process and decision-making process. One that comes to mind would be those patient assistance programs that are out there. They present more hurdles for clients and more hoops to jump through for the members, but they can lead to significant savings. Many clients and their members aren’t even aware that these patient assistance programs are out there, or if they’re built into their plan design. They can greatly benefit members by helping apply savings and financial assistance from the drug manufacturers. The key is creating a successful and effective communication strategy around the existence of these programs so that members can leverage these programs to generate savings, not only for the member but also the plan.
Another lever of these cost mitigation strategies, they’ve been around for a while but not as frequently deployed, is using pharmacies that are international, or what we call drug importation programs, either directly or indirectly, through their benefits plan. There are more and more vendors that are administering these types of programs. It is critical that clients understand the pros, the cons, and the risks of these very aggressive solutions. Would I generally recommend this for my clients? Absolutely not. Could they be a viable solution for clients who are ultimately faced with a rising healthcare expense that is acting as an existential threat to their business? Possibly. I wouldn’t be doing my job if I didn’t bring all viable solutions to the table. It’s my job to help vet those solutions, weigh all the pros, cons, risks and help my clients make the most informed decision.
Katie King:
It’s interesting that you brought up how effective a communication strategy could be here. In some ways, it’s a basic idea to say that people don’t necessarily know all of the benefits that they have access to. Do you see that happening widespread with different types of clients, that it’s really just that they’re not targeting certain classes of employees who could really benefit from patient assistance programs or things like that?
Dr. Simon Leung:
Absolutely. When you think about how complicated healthcare benefits is, in general, and how convoluted the process is, how many different vendors that are out there. There’s a term, vendor exhaustion, a saturation of vendors out in the marketplace. I think a communication strategy that targets members and helps them truly understand their benefit plan is key to not only making these solutions effective, but also helping that member navigate and making it less stressful for them. These members are already dealing with some type of health condition that they’re trying to treat with medication, and the last thing they need to do is be stressed about the process of how to get that medication. An effective communication strategy that the client put out there, with the help of their broker or consultant, or even the vendor themselves, is critical to success of these programs.
Katie King:
Let me switch gears now. I want to talk about the theme of transparency. In the pharmacy space, that’s obviously a word that you hear a lot, but it means different things to different people. There’s a lot of new transparency data available. There’s mandated prescription drug reporting to HHS, there’s transparency and coverage data, machine readable files that detail in-network negotiated rates. Have you used this type of data in any way to help inform your client strategy?
Dr. Simon Leung:
We certainly use data all the time when informing client strategy. In my opinion, because these new transparency data sets are so fresh, I believe there are a lot of kinks that need to be worked out, of not only the collection process, but also the reporting process, the methodology behind all that. Because of that, we currently rely most heavily on any given client’s historical data to inform strategy. This provides us with micro-level detail and insights so we can view it as more valuable than any national data that’s currently out there.
It also allows us to take a deeper dive into an existing client’s data to help inform solutions that are either client-specific, or at least more aligned with the client-specific industry or like-minded peers. There’s certainly a place for nationwide benchmarks to increase transparency. I really think that there’s still a lot of work to be done for that data to be fully representative at a macro or nationwide level. To my earlier point, more importantly, you have to get down to that micro or individual client level.
A perfect example for instance, would be when you talk about NADAC, the National Average Drug Acquisition Cost data. It’s publicly available, it’s collected and published by CMS. The most important piece is to understand that the data is collected by surveying thousands of retail community pharmacies. We saw earlier this year, in April, when the data set noticed this huge shift in the data because a large chain started or stopped reporting. The methodology of data collection, if it’s modified just a little bit, the data itself can be turned on its head. Unfortunately, a good benchmark simply doesn’t exist yet. I do agree that if or when it does, this type of data will be very valuable to, not only plan sponsors, but also us consultants.
Katie King:
There have been two lawsuits at this point focused on fiduciary responsibility on health and benefits side of the business. Johnson & Johnson and Wells Fargo are the employers who have been named. The plaintiffs claim that the companies’ group benefit plan fiduciaries breached their duties in selecting the plan’s PBM because they relied on a biased consultant to do that, and they failed to negotiate more reasonable contract terms with that PBM. In the J&J case, they rely on the new reporting data to HHS that encompasses plan related contractual arrangements and expenditures, and they use that to make their case. What’s your take on suits like that? Are we going to see more of them? Is there merit to cases like this?
Dr. Simon Leung:
I think it’s frankly inevitable that there will be more of these to come. And for this reason, I think it’s important for employers to understand the incentives and the compensation that are going to their partners, be it their brokers, the PBMs, TPAs, or any vendor partner for that matter. You truly don’t know who is acting in your best interest unless you have that transparency. Right now, it’s difficult to get to that level of understanding. Working with the right partners can certainly help bring clarity to all of this. It’s a benefit for plan sponsors to work with fiduciary partners who are independent, especially in an industry where there’s so much opacity around the financials.
At Conner Strong, we view independence as being paramount to the way we do business. We approach pharmacy consulting in the way that we do. We are vendor agnostic, we consult our clients, and our objective is to advise them with their best interest in mind, full stop. We have a suite of effective solutions, we’ve pre vetted them, sometimes pre-negotiated them with competitive pricing and terms. At the end of the day, our job is simply to arm our clients with the information and knowledge to help them make the most informed decision, not to push solutions on them, because Conner Strong has vested interest in that client making that decision. To answer your question, I don’t think there could ever be too much transparency, especially when you consider the industry like we’re talking about here. I think more can be done moving forward.
Katie King:
It’s interesting, at least congressionally, there’s been a lot of discussion and activity related to PBMs and the role they play in rising prescription drug costs. There’s been a lot of different proposals about how you achieve transparency in that space. There’s fully passing through rebates at the point of sale or making PBMs fiduciaries. There are all these different ideas around just trying to inject more transparency into the space.
There’s another piece related to compensation which made me think about that when you said that earlier. In the Consolidated Appropriations Act of 2021, and brokers have to adhere to this now too, you need to disclose your compensation related to how you are servicing the health plan, but a lot of the larger PBMs and TPAs have taken the position that they don’t need to be disclosing their compensation in that way. The whole idea is that plan sponsors could benefit from knowing this information. Do you think that if brokers, if employers, had access to this compensation information, that would help inform their strategy around pharmacy benefits?
Dr. Simon Leung:
To my earlier point, the more transparency, the better. The trick is, there’s so many ways to “hide the money,” but you’re not going to be able to solve for all that at once. The more transparency the better. I don’t think there’s ever a situation where there’s too much transparency, especially when we’re talking about compensation for vendors, whether it be PBMs, brokers, consultants, TPAs. That’s why you need to, as clients, choose a vendor who is independent and is going to be a partner fiduciary in those decisions so that you can hold everybody accountable. You don’t want to make a decision blindly without knowing where everybody has some vested interest, and to do that, you need to choose a broker and consultant that views independence as the only way that they do business. That’s what we’re doing here at Conner Strong.
Katie King:
That was Dr. Simon Leung of Conner Strong. I hope you enjoyed this conversation. Thank you for listening. For more Leader’s Edge podcasts, go to leadersedge.com.
