Replies to post #72681 on Biotech Values

[rph_in_wi]

Re: TRC’s efficiencies of scale

On a recent investor presentation, Medco said the above can’t be done because Medco’s disease-specific TRC’s have efficiencies of scale that even a large hospital group can’t match. I presume you disagree with this claim.


Medco is correct for traditional pharmacies. I'm talking about placing in-house, closed door pharmacies in medium to large employers main employment centers. Because the pharmacies are not open to the general public, they are able to purchase at a better trade of sale, or special contract pricing. While this reduced price may or may not always be at a lower cost than the large PBM, ALL of the savings goes to the sponsor as opposed to being, at best split with the PBM.

I would not expect Medco to admit to this as the above concept is still not widely accepted, and it was their presentation.

RPh

[rph_in_wi]

re: The three largest PBM’s

If these companies are as useless to their clients as you suggest, the PBM industry ranks as one the largest corporate scams of all time.

I know I'm going to sound like a nut, but basically, I agree with your conclusion. The PBM is nothing but a middleman, changing money from one group to another, taking a large cut, and providing little to no verifiable benefit. They are experts in hiding what they actually do, and,in general, Benefit Coordinators are not trained to understand the true costs associated with pharmacy benefits. In my meetings, the Coordinators were not aware that PBM's use multiple AWPs when paying pharmacies and billing sponsors. They don't know that the PBM pays the pharmacy a different rate than they are billed. This spread is usually 2-4%. They definitely don't understand that PBM's keep more of the rebates than they give out. Please feel free to google lawsuits and any PBM to see many of the settlements regarding these issues.

Basically, businesses are ill equipped to manage these costs so PBMs fill this need. From an investors perspective, PBMs make money. From a global perspective, just because PBMs make money doesn't mean they are effective at lowering costs.

I really am not a communist. I like profit in business. I beleive there would be more profit in all businesses if there were less middlemen in healthcare.

RPh

I'll respond more later if I can