SmithRx

💊 There's a convenient myth in the PBM world: "We can't control drug mix." It's repeated constantly. It sounds reasonable. And it's costing employers millions. Our Chief Strategy Officer, Alan Pannier, Pharm D,MBA, just published a piece calling out what really happens when PBMs say they "can't influence" which drugs members end up on. Spoiler: They influence it every single day. The question is whether they do it for the employer's benefit—or their own. Alan breaks down: → How biosimilars get added to formularies "in name only" → Why discount obsession actually drives up total spend → What it actually takes to move members to lower-cost alternatives Read the full article ⬇️ #PBMs #ModernPBM #PharmacyBenefits #Biosimilars #SmithRx

Learn how Fifth Group Restaurants saved $250K on pharmacy benefits with SmithRx.

Learn how Encore Enterprises achieved a 60% reduction in PMPM and increased employee satisfaction with SmithRx.

Every member's experience matters. From proactive communication, and clinical expertise, to on-demand resources, see how the SmithRx member experience is setting the bar on excellence.

I've spent the last two and a half years learning all about pharmacy benefits while building the phenomenal marketing team at SmithRx. It was fun to share that learning with the The Millennium Alliance this week on their podcast. Hear what makes a modern PBM truly different and why they actually benefit clients and members in a way that legacy PBMs do not.

The Citizen’s Guide to “What’s Wrong with US Healthcare”, continued... 𝗘𝗽𝗶𝘀𝗼𝗱𝗲 𝟯 - 𝗕𝗶𝗴 𝗛𝗲𝗮𝗹𝘁𝗵’𝘀 𝗜𝗻𝗰𝗲𝗻𝘁𝗶𝘃𝗲𝘀 In Episode 2 we established that Big Health is… big. But is that a bad thing? Couldn’t scale mean more efficiency? We see scale equating to efficiency in other areas of our economy (think Walmart and Amazon), so why shouldn’t that same principle apply to healthcare? Let’s look at incentives. Amazon and Walmart have an incentive to grow earnings, which means they are in the business of getting people to buy more gadgets, gear, and stuff. Big Health also has an incentive to grow earnings. Big Health makes more profit when total spending on healthcare increases. They take margin on all of the healthcare dollars flowing through their thousands of subsidiaries. Remember, the concept that these are “health insurance” companies and therefore want to keep costs down to increase margins is a bad mental model - see Episode 2. You might say: to increase earnings, couldn’t Big Health focus on increasing their % margins instead of growing their top line (our healthcare costs)? Good question. It turns out that increasing margin % is not a good option for Big Health, as profit margin % is very easy to see and understand in SEC filings, and the public doesn’t like the idea of Big Health having big margins. By focusing on increasing the top line (healthcare costs) instead of their margin %, Big Health can increase their $ earnings while shifting blame to others in the system about the rising cost of healthcare. That’s the basic playbook. The attached visual shows the outcome of this playbook. From 2010 to 2023, UnitedHealth was able to increase their profit per person served by 2.5x by doubling healthcare costs per member - and keeping margin % flat along the way! Their stock appreciated 1,800% during this time. The strategy is: (1) keep margin % flat, (2) increase the size of the pie (healthcare spend), (3) grow $ earnings per share, (4) stock price goes up. To illustrate how well this strategy works in terms of deflecting blame and attention, here are two examples of really smart pundits falling for the "flat margin trick": David Brooks on PBS: “It is just a simple fact that [UnitedHealth] margin, their profit margin is 6 percent, which is low by any corporate standards.” Noah Smith on his Noahpinion blog: “Insurance companies just don’t make that much profit. UnitedHealth Group… net profit margin is just 6.11%”. The fatal error that David, Noah, lawmakers, and many of us make is that we forget a critical elementary school fractions lesson: the % of a pie and the absolute size of a slice are not the same thing. Big Health is in the “grow the pie” business - and they're good at it! OK, so Big Health’s incentive is to grow costs, which is misaligned with our interests as employers, patients, and taxpayers. Isn’t this where competition comes in to save us from bad outcomes? Stay tuned for Episode 4!