Episode 96: Rethinking Drug Pricing and Accessibility – What Biotech Needs to Know

When the copay hits harder than the side effects, it's time for a conversation. Join us in talking about prescription pricing and different models. You're listening to BIO from the Bayou, empowering biotech leaders with the tools, assets, and expertise to improve healthcare outcomes.

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Serving the entire Gulf South, but recorded in the heart of New Orleans. Welcome back to BIO from the Bayou. I'm your host, Dr. Elaine Hamm, the Executive in Residence at Tulane School of Medicine. And today's guest is Vinay Patel. As the founder of MakoRx and Chief Pharmacy Officer of ProactiveMD, he's a pharmacist executive dedicated to transforming the traditional healthcare system and making healthcare a little bit more obtainable for the rest of us. Welcome to the show, Vinay.

Elaine, thank you so much for having me. It's an honor.

Well, it's great to chat with you, and especially such a hot topic of healthcare and pricing. And it's a challenging thing here in the US. It's a complicated market. It's contentious, and there's always There's probably not one size fits all solution either. But before we dive into our topic about accessibility and drug pricing, I'd like to ask about you. Lal, walk us through the journey in healthcare and really what led you to where you are today.

Great question. So as a pharmacist, as you mentioned, I've seen and done quite a few different things working with patients and patient care, worked in health systems. Worked in academia, similar to you, Dr. Hamm, and teaching pharmacy students and medical residents, worked in community pharmacies and, you know, retail pharmacies, home delivery pharmacies, independent pharmacies. We've constantly over the years, didn't matter where you worked in as a pharmacist, the invisible hand of the pharmacy benefit companies sort of followed you everywhere you go. It's just sort of—

Mm-hmm.

It dictated what you could tell patients and how you cared for them. As a pharmacy, it dictated how much money you made on each prescription. You had no control over that, and how much patients would have to pay, and how much employers specifically got charged for these medications. These insurance companies or these middlemen, drug middlemen, dictated a lot of that. And so throughout all this, you know, we had patients, just increasing number of patients every year, come to the pharmacies and tell us, Doc, I gotta make a decision. Either I'm gonna afford rent this month, or I'm gonna afford my medications. Or I have to figure out how to survive. You know, food and rent and prescriptions were all in the mix here. And it was really heartbreaking. And so we, a group of pharmacists and myself, decided, let's do something about it. And our focus was going to be for specifically the 60, close to 60% of how most people in the country access health insurance or healthcare, which is through their employer-sponsored healthcare. And so we focused on that and said, if there's a model that exists that hasn't been built yet, what would it be? And so we said, okay, well, Why don't we take the cost-plus model? No one seems to be doing that because healthcare is always about how do we increase reimbursements. And so we'll start at the bottom and work our way up. And we sort of put this model together for employers and have been at it ever since, since 2018.

That's amazing. Well, so tell us a little bit then about Makorx and then ProactiveMD. Describe these 2 different organizations.

So Makorx was created as a pharmacy benefits solution, alternative pharmacy benefits solution, or pharmacy benefits administrator. Where we go in and say, we're the consultants on your plan. We help your members access prescription medicines, and we've built a network of over 20,000 pharmacies where you can access cost-plus pricing. And I know there's, as you mentioned, a big buzzword in pharmacy today because of the one individual who has a megaphone, and it seems like every time he does something, we hear about it. So Mark Cuban decided to come together and create—

Yeah.

Mark Cuban's Cost Plus Pharmacy. The difference between that and what we've done is we've created local pharmacies. You can go to a lot of the pharmacies in our network, our mom-and-pop pharmacies. A lot of people don't know about the mom-and-pop pharmacies in their communities because they're sort of hidden in shopping centers, or they're not as visible as the corner drugstore, chain drugstores that you see going to and from work. And so we built this to tell people that work in these communities that you can go access this special pricing through this network of pharmacies, through pharmacies that provide great customer service in addition to now good pricing and saving you money, and then we can save your employer money as well. So started with the network, it started with the model, which is cost-plus, starting with the basis that we don't control the cost of these drugs. We're taking this national average price of, of how much pharmacies are buying the drug for, adding a markup for the pharmacies to make, And then we're going to market and telling these employers there's a better way to manage prescriptions, steward your members to better quality care and lower cost, and help you access and understand the complex world of pharmacy. And that's really helped to open a lot of eyes around just how pharmacy works, drug pricing, helping people access lower-cost drugs in the model, and helping a ton of people save money and really reconnect back into their local pharmacy relationships, which were really broken with the advent or the pushing of mail-order pharmacy. And then we, as of earlier this year, we've merged with a phenomenal advanced primary care company called ProactiveMD. They establish, set, and operate employer onsite clinics for large employer groups across the country. So they do primary care services, as much as you can consume primary care. It's not the typical 5 to 7 minute primary care. It's, there's a relationship with a provider. They're there for the company and all their members and dependents, and you can see them whenever you want. It's typically no cost to the members to access primary care for their, for these clinics that are established for these employer groups. And we're coming in and we're providing a pharmacy consult service to these clinics and helping the members find better ways to access lower cost drugs, not interfering with the health plan. We're not there to replace the health plan or the pharmacy benefits. We're strictly there as a clinical pharmacy consultant for the providers of the clinic and for the members. And then of course, advising the employer on how they can access drugs directly for lower costs.

That's great because there's so, I mean, so many things to tackle in what you just talked about. I think that a lot of people view drugs and pharmacy as very sort of like narrow viewpoints. You know, as a consumer, if you're not familiar with the biotech or pharmaceutical world, you have just the sort of the one interaction of, being prescribed a drug and going to a pharmacy. And, and that can look like a lot of different things. But when you're in biotech and you're actually doing drug development, you get to see a lot more about how a thing becomes a drug. But we rarely think about the other side once it comes to it. I mean, my goal, if I'm still working on drug after it gets done with the phase 1 clinical trial, I've done something wrong with my job. I am a preclinical to phase 1 girl, and I don't think about it after that. Someone— that's someone else's job to figure out that piece. So we do some cursory sort of market numbers and trying to understand what our drug, if it ever makes it, I'm in the 10%, you know, chance of success range right now. So, but we have some good sort of extrapolations of what we think it should cost. But, you know, in reality, I don't ever get to that point. And so I see it in a number of sort of shorter lenses. But then as a small business owner, I've had to, and to me, providing healthcare to my employees, whether it's at my drug companies or my wine bar that I own, is such an important piece. I cannot be in the healthcare industry without being able to provide something for my employees. And it's so expensive to do that when you're a startup company and you're not required either. Like, you know, there's this— we're a small company, we're not required to do it, but it's so important. So having these alternative models is one, I think, eye-opening. If you never have anything but your sort of, you know, standard, I go to a Walgreens and get the drug that my doctor gave me and you have your corporate health insurance, you don't think about the other ways to access healthcare. And this is such a great I think that having these alternatives, especially for small companies, is really important.

Absolutely. And you make an excellent point. We've been trained over our lifetimes now in modern history that using your insurance is the best way to access medical care and pharmaceuticals. And increasingly over the last 5 to 7 years, it's actually crazy to think That you can pay less when you don't use your insurance. It's ironic, it's paradoxical, it's crazy, but we are able to help people, show people that, you know, in fact, paying cash for this generic drug that costs a couple pennies a pill is more valuable to you than paying, you know, $20, $30, $40, $50 because your insurance company says that's what you have to pay for this medication. And people are just like, every time they just— Freeze. And they don't know what to say. They're shocked. They're like, why do I have this insurance?

Why do I have this? I've asked myself that myself. You know, I've, I've had a number of different corporate, you know, provided insurance companies, and it's always funny what they cover and don't cover. And then, oh, I've learned to ask like, well, what is this without insurance? And it becomes a completely different story. And I also like the idea of having these clinics too accessible for larger employees. For my wine bar, we're a smaller company, obviously. I think we have 3 employees. We've had to find an alternative model, and it was great. It was local. They, it was a bunch of clinics that banded together and they can access that care without having to go to the really expensive traditional insurance route. And that was affordable for us and also provided them an opportunity. So these non-traditional sort of clinic options are really great for small businesses too.

Oh, absolutely. Yeah. Especially with direct primary care blossoming all over the country that can help folks and small businesses like yourself and their employees. Absolutely.

I love that. Well, so from your perspective, so let's kind of go back to the, I'm in the drug development piece where I'm thinking about, I am thinking about pricing. pricing and what that will look like, because I'm raising money and I got to convince our investors that we're worth investing in and that we have an idea of what our drug should cost. But from your perspective, what should we know about the world of drug access and pricing when we're developing a new therapeutic? Because a lot of our listeners are in the drug development world.

I'll distill it to a couple of key points here that I think it's super important. I think you bring up an excellent point that if Just for a random example, if you're making a drug or if you're building a car, you should know that the ultimate end user of that car is going to be a person who drives it, and you got to know how they're going to buy it and what it's going to cost them. And that applies specifically to drug development as well. So after they're done with phase 1, phase 2 clinical trials, after you've fine-tuned the dose and gotten the right safety profile and efficacy profile and you're Making sure it works well in humans at those doses. The next step is you have everyone accesses these medications, whatever it is, through an insurance company. That market share that you're looking at, the millions of patients that could benefit from taking the drug that you just made, is sitting— that those millions of patients, there's an insurance company sitting between you and that company that made the drug and the drug that, that patient that the drug needs. So you have to think in the lens of an insurance company and the way that today's structure works, unfortunately, because I, I'm advocating to change the entire model, but today—

Agreed.

The way that it works is that you have to charge enough so that you can pay a rebate to the insurance company. The insurance company says, if I'm going to put your drug on my formulary so that members that go to a pharmacy can access it, or people that go to a doctor's office can get this medication administered to them in a medical setting, Well, it's coming through me and I get to decide how much I create barriers to access this medicine or how easy it is. And the easier it is magically happens to correlate with how much money they get in terms of rebate dollars. So now you have high, high list prices, thousands of dollars per dose or per supply of this medication, that then most of that money goes to the drug company to provide access to that market share, that patient population that drug is useful for. And so that's one key factor is that how are we going to incorporate rebates into this? If you're a particular manufacturer that's manufacturing biosimilar medication, so that's a branded drug that's already out there, a specialty medication, and yours is the lower-cost alternative that now patent has been expired and you've created a way to manufacture it. Well, in that case, there are opportunities to go direct. And we saw this happen fairly successfully with a drug called Eucimri, which is the biosimilar for Humira. And they went to Mark Cuban, Cost Plus Drug Company, and said, we're gonna give you a special price on it. People can go directly to you. What happened was there was only a 2% market share, barely, of that drug that made it to consumers, made it to the people that could benefit, even though the price was so great. It's, it's really cost over probably $100, $150 a month is a big barrier for—

Yeah.

The majority of Americans to afford. And so they go through the insurance because the insurance says, Well, you still need to get the Humira, and it's going to cost you a very low cost-share copay because that's what we prefer and we recommend. And so now, even as a biosimilar manufacturer, you got to think of how do I go direct, either B2B sales, or how do I go direct to consumers? Because that price point is going to be sensitive to that. So these are just a couple of considerations around what are the competitors in the landscape doing, how is that priced. You'll have to match that pricing to be able to get Access to that. And then of course, the marketing. Make sure everyone knows about it as soon as it is, it's available.

Yeah. Yeah. Unless you're an antibiotic and that's a different story, I'm sure, where—

Yeah.

And things are changing around that space as well. I mean, there's usually like, you wanna save the latest and greatest for the most dire of situations, and there's lots of challenges because of that. But that's another podcast, I'm sure, in and of itself. So, you know, as we're thinking about new therapeutics, When it comes to reaching patients affordably, I mean, because we do wanna make money, we wanna recoup the cost that it took us a considerable amount to, I mean, I'm in the middle of raising a $20 million Series A just to get my MS drug into a Phase 1 clinical trial. So the significant costs go into developing a drug, but ultimately it doesn't mean anything if you can't reach patients and it doesn't get to patients. I mean, the reason, and this is gonna sound like a Miss America answer, but I mean, we want to Our drugs to help patients. That's why we got into this business. And I know people think that we just are in it for the money, and we do have to make money for our investors, but we wanna make sure that we're reaching our patients affordably. So what can we do to help overcome some of these hurdles and challenges that you've seen in reaching patients?

Here's something, I'm going to give you a hot take, and I want you to call me out on it, Elaine.

Okay. Love it.

If it's just too way out there, this is my personal opinion as a pharmacist, and what I've seen. seen with drug launches, new manufacturers that manufacture drugs, and they say— and oftentimes, and we've seen it with, you know, DME providers, durable medical equipment providers as well.

Yeah.

We ask the question, who's the patient for your drug? And invariably we hear, everyone that has this symptom should take this medication. And I feel like that's disingenuous to What everyone's advocating for in the country, which is how do we go to a value-based model to think about drugs? Okay. So that means that, okay, there is a fixed price point. We've never in this country talked about setting a budget for Medicare or Medicaid. It's sort of an unlimited—

Yeah.

Whatever we spend this year, we're going to figure out how to pay that amount to everyone. And that's led to runaway costs all across the board.

100%.

But the point being here is that find the clinical scenario, find the patient that best matches what you want. It's not going to be everyone. It's not going to be twice as many people as you think it should be taking this drug. There are so many nuances in medical care, and this gets down to the physician-patient relationship, that says the patient that meets these criteria, if you tell me who is not a good fit for it, then you're going to find more people that successfully take your medication, that are going to need the medicine, and that get benefit from it as well. So that goes down to, you know, they've tried X, Y, and Z drug, they're the patient that has, you know, all these symptoms, their diagnostic criteria this, and they also have— here's all the other options that can be treatment for this condition that need to be understood, need to be evaluated. Those are the, you know, essentially being a steward of You know, healthcare would mean that you at least evaluate all that and not go straight to this. This isn't the first-line therapy that says sort of wherever it fits, right? That's just sort of the the way to be able to outline that and say, "This is the patient population we're targeting. These are the people we we know are not a good fit for this drug, and this is how we're going to put it in therapy." Where does this fall in the treatment spectrum for patients with the conditions that we're treating? And I know that there's. Now, you know, genetic markers and things like that.

Yeah, I was gonna say, we call that, you know, the sexy term is personalized medicine, but it isn't. I mean, when you think of personalized medicine, you do think of the, oh, I have this genetic background that makes this drug more applicable to me than somebody else that has my condition. But the value-based piece, you said that piece that I think was really interesting, like, does it make sense for this patient population regardless of this sort of genetic background and personalized medicine piece? Does this make sense for this patient population? Specifically. It's an important piece. We don't think about that.

That's right.

But yeah, we go with like, it's going to go for everyone. No, probably not. And not just from a scientific reason, but just from a people are people reason. And accessibility means different things to different people.

That's right.

Well, this is one last question. What keeps you motivated to stay in this space? Because it's complicated and hard and getting harder, and it seems like It's a very stagnant cruise ship that's hard to turn, and it, the system seems so resistant to change.

Oh yes, you are absolutely right. Um, you found me on a, on a really good day.

Oh, good. Hooray.

I have a lot of motivation.

I'll follow up with you when you have a bad day.

I, you know, we could spend a whole nother podcast talking about all the failures we've gone through and the learnings from that. And it's, you are absolutely right. The hardest, I, I've, I truly feel this, the hardest thing to do is to be an entrepreneur in healthcare today. I don't care if you're in the health tech space, if you're a provider, if you are a nurse, a physician, a PT/OT person.

You're screaming into a very big void. Yeah.

Healthcare sucks the life out of you. And when you do healthcare and change it, that's a whole nother level of, you know, nihilism. Anyway, so a couple things keep me going. One is that it's the patients. I'm— the reason We say this, you know, when we get into medical school and we get into pharmacy school, we're doing it for the patients. I can truly tell you that despite all that's happened, if you get to talk to a patient that you were able to help, that makes up for all of the other times where you were just defeated, beat down, pushed down, not able to get to the goal of helping an employer, so on and so forth. So that truly, really helps. It personally motivates me when you get to talk to a patient and you're like, you know, did you know that there were these alternatives or there's these other ways to access the drug or that we have these programs available to you? Oh my God, I didn't know that. That's so great. You know, we just, we helped a family the other day access an inhaler medication that they just thought that was not available. In fact, their doctor told them to take one of the branded inhalers that doesn't happen to be on our formulary. And they're like, we've never taken anything else. This is my daughter's first time. And so that's really fulfilling. That really gives, energizes you for the next sort of set of challenges that are coming your way. The second thing really is that being aligned with this primary care organization and the fact that we can change now not just thousands of lives, but there's access to millions of lives through these employer populations that have a trusted advisor that have been working with them. You have the primary care doc at the table telling them, this is what we need to do. And oh, by the way, I brought the drug expert with me because they know a whole different set of knowledge or perspective that we don't have. Honestly, pharmacy has never been at these tables. And I'm just thankful.

I know. I was just thinking about like, that would be so great. I mean, people don't think about you using their pharmacist as much as they should. I mean, they have such an incredible knowledge. They took way more organic chemistry than your doctor did. So—

That's right. That's right. Yeah, just having a seat at the table and then being active to see just a little bit of the change that we made now accelerate because of our new partnership and, and that we have a voice that people are willing to listen to it. And, you know, we just went live with a clinic that we've embedded a pharmacist into up in Michigan, and we're Starting that. And before we went live, we announced this new service offering to all the members that use the clinic. And I was overwhelmed by the fact that people said, people reached out and said, we have questions, we want to use this new service. It's not just something that sort of fell flat. It was, we already had a handful of people reach out and say, I have a question, I want to talk to the pharmacist. Thank you very much. Let's go. So that was really exciting.

Helping patients and then getting validation that your, your model is working. That's a good reason to keep going for sure. Thank you so much for talking with us, Dr. Vinay Patel. We'll be sure to keep an eye on your work in the future. As always, we will have Vinay's contact information and informational links about his companies posted in our show notes. Make sure you check them out to learn more. Thanks again for joining us.

One last thing, Elaine.

Yeah.

To your audience, we encourage the collaboration. We're not gonna solve this problem alone. In fact, all the people that are making drugs out there, all the people that are involved in the healthcare ecosystem, that we just don't know about, we'd love to collaborate with them. Please don't hesitate to reach out, even if you have an idea, you just wanna discuss things. If I can be a resource to you and your audience, I encourage them to reach out because it's gonna take all of us to change this very broken system for these patients.

100%. Well, be careful what you wish for. You may get a glut of questions, so, which we love. So thank you again. We appreciate it.

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