Episode 4 – Health Care Headlines LIVE at the 2026 Annual Benefits Forum

Madison Connor (0:10)

Well, Mike, we made it.

Mike Stull (0:11)

We made it.

Madison Connor (0:12)

Health Care Headlines Live.

Mike Stull (0:13)

Right. So you said that this was a record-breaking crowd and…

Madison Connor (0:20)

Pre-post-pandemic.

Mike Stull (0:21)

Post-pandemic.

Madison Connor (0:22)

Post-pandemic. Record-breaking.

Mike Stull (0:23)

Record-breaking crowd. And they say correlation isn’t necessarily causation, but…

Madison Connor (0:28)

Coincidence?

Mike Stull (0:29)

I think having Health Care Headlines Live might be part of the reason, at least.

Madison Connor (0:34)

It’s definitely it.

Mike Stull (0:36)

Definitely part of it. So thank you all for being here, and it is nice to be able to kick off the Annual Benefits Forum with our back-and-forth, and hopefully many of you have been able to check out one of our new episodes of either Health Care Headlines or Benefits Bite. We also have the HR Benecast that we do every month, and it’s hard to believe we’ve been doing the HR Benecast now for 10 years.

So that was a big milestone this year, and we’re just slowly but surely working our way up the chart when it comes to podcasts. So we typically do like to keep these episodes short. Today we’ll go a little bit deeper, because we have a lot of content that we want to make sure that we hit on today.

And to get started, I’ve been in the health benefits space now for a little over 20 years, and I want, for those of you who have been in the space for that long as well, I’d like you to go back with me 20 years ago to a much simpler time. It was always sunshiny days, and it was just… It was nice.

Rebates were like $5 a script if you even received them. The biggest formulary decision we had to worry about was, do we have Lipitor on our formulary or Crestor or Zocor? Specialty wasn’t even a thing back then.

And you go forward to the Affordable Care Act in 2009 and 2010, so a big federal legislative effort that we had to combat.

Madison Connor (2;19)

And it had its 16th birthday yesterday, Affordable Care Act.

Mike Stull (2:22)

Yeah. Yeah. So we had that.

We had time to implement that. In 2011, CVS introduced formulary exceptions or formulary exclusions for the first time, so that was a big change that we had to deal with. We said about the same time that specialty would be 50% of our total pharmacy spend.

And at the time, we thought, how in the world is that going to happen? And it did, and it’s above that. And then we got to the introduction of biosimilars, and really the point is, as we make that arc, that all of these things happened individually to us in the marketplace, and they were each challenges or opportunities that we had to address.

But we never had them hit us all at the same time like we have today. So a very dynamic marketplace out there. We have federal legislation, we have state legislation, we have biosimilars, we have new specialty drugs, we have AI, we have all kinds of new technology.

So a lot of changes for plan sponsors and consultants to work through. And the one thing that I want everyone to know is that here at Employers Health, we see our role as really a reassuring voice, a calming hand, a trusted partner to help navigate through these changes that are out in the marketplace. So with that, should we get started?

Madison Connor (3:59)

I think that sounds great.

Mike Stull (4:00)

All right, so let’s start with the Consolidated Appropriations Act. There’s a lot in there as it relates to pharmacy benefits managers. Let’s let the folks know what the key parts of that are.

Madison Connor (4:15)

Big piece of legislation, it was the government spending bill that passed earlier in February this year. Lots of provisions impacting the Medicare marketplace, but also some provisions that were notable for commercial plan sponsors. And I like to think about it in three different buckets.

The first requirement is that PBMs now must pass through 100% of rebates to plan sponsors. The second requirement is now that PBMs owe pretty comprehensive disclosures to plan sponsors about the specific spread pricing and compensation derived under their agreement. And then thirdly, there’s a requirement that now plan sponsors must notify plan participants on an annual basis of these reporting requirements, the availability of this information, and that it can be provided upon request.

Mike Stull (5:06)

So three big pieces. Let’s go through each of them and unpack those.

Madison Connor (5:12)

Yep. The devil’s really in the details here. So whenever we think about the requirement of 100% pass-through of rebates, one of your first questions may be, are rebates defined in the legislation?

And the answer is, no, they are not. But there is a pretty strong indication that it is a very expansive viewing of the term rebates, because PBMs and affiliated entities must pass through those rebate amounts. So those could also be rebate aggregators and group purchasing organizations, all fees, remunerations, and discounts from all of those entities.

When it comes to the PBM reporting requirements, this is going to be a massive reporting requirement. So this is by drug and therapeutic class level, the amount reimbursed by the PBMs to pharmacies, the amount that the plan paid the PBM, the amount of spread derived from each of those drugs, as well as drug-level rebate information. The plan sponsor-specific reporting requirement cannot be ignored either.

Now plan sponsors will have to annually provide notice to participants of this information and make sure that they’re aware that plan summary information is available.

Mike Stull (6:25)

Yeah. You know, we’ve been asking for drug-level rebate information for years and years. And so I think that there’s a real opportunity here if we can get that information.

The benefit to plan sponsors is that we can make better decisions about, particularly for certain drugs, do we do more clinical management and try to change the drug mix, or do we take the rebate? And without the drug-level rebate information, it’s difficult sometimes to make that decision. And this should certainly help us perform that task a little bit better.

You talked about the requirements. Are there any penalties for not complying?

Madison Connor (7:07)

There are. There are civil monetary penalties in this law. So $10,000 per day where a party fails to provide required information.

So remember that penalty can be against the PBM for not providing to the plan, but also for the plans and ability to provide that information to participants. So it will be key to have this information readily available. And certainly that’s something that the PBMs will help aggregate.

There’s also a $100,000 fine for each false statement that is disclosed or reported. But of course, there will likely be some safe harbors for innocent plan fiduciaries who reported information to plan participants that they didn’t necessarily know was incorrect or false.

Mike Stull (7:52)

Yeah. So a lot of changes here. There’s penalties for noncompliance.

How about effective date? When do we expect this to take effect? And you talked about Department of Labor rules.

When do we think that they’ll issue those rules?

Madison Connor (8:07)

It takes effect 30 months from the date of enactment. So that’ll take us to August of 2028. But it applies at plan renewal.

So for most plans, for calendar year plans at least, this will take effect 1-1-2029. And you’re exactly right. We have this piece of legislation that’s really only a few paragraphs in total.

But what are the details? That’s what we’ll receive from the Department of Labor. And the Department of Labor will release and issue those final implementing rules within 18 months is the deadline.

So I would say that mid-next year, we’ll have a pretty good idea of what this is going to look like ahead of the requirements going into effect. Well, I think that’s enough for the CAA there. Always a lot when it comes to a piece of federal legislation.

But we’ll keep you updated. Do you think that we should switch to the Federal Trade Commission proposed settlement?

Mike Stull (8:59)

I think that’s a good place to go next and maybe get us started by reminding everyone how this all got started.

Madison Connor (9:07)

Yeah, this all started in 2024. You’ll recall that the FTC launched, they didn’t even call it an investigation. It was a probe.

So a preliminary investigation into the big three PBMs. And then as a result of that investigation, there was an administrative action filed by the Federal Trade Commission. And it really all had to do with insulin pricing. So it’s very surprising now that as we come out of that administrative action, because it’s not a lawsuit, it’s an administrative action, we have this proposed settlement in which Express Scripts has agreed to major structural changes to its standard offering.

Mike, what are some of the key provisions in these proposed changes?

Mike Stull (9:47)

Yeah, there’s two types of changes in the proposed settlement. And one set of changes will impact the way that Express Scripts does business, will impact all plans. The other part and the other set of changes really are those that Express Scripts has to put into what the settlement defines as a standard offering.

So it’s something that Express Scripts will have to make available to all of its clients. Its clients can contract under different terms. But the caveat is, if you do that, you have to sign off on an acknowledgment that you were made aware of the standard offering and that you chose to contract under a different set of terms.

And so that is a template acknowledgment. So there’s no going back to legal and having them soften the language. It is what it is.

So let’s talk about the big changes that will impact all deals. And maybe one of the biggest ones is the delinking of Express Scripts’ compensation from list drug prices. So today, all of the GPOs get a percentage of the list price as part of their compensation.

And so part of this settlement is that Express Scripts, in this case, will delink. So take away as a percentage of list price that inherently creates a conflict, right? More compensation for the PBM for higher list prices.

So if you delink that, the idea is hopefully it will give more flexibility for prices to naturally come down. Also, we know that there are certain drugs where the manufacturer puts out both a low WAC product and a high WAC product, and it would stop Express Scripts from preferring the high list price drug, disclosing all compensation to brokers and consultants. So for some employers, that may be standard practice, but for others, certainly it could be a surprise.

Pay retail pharmacies on a cost-plus basis, and we’ll talk more about this as we go through our discussion today, but certainly that is a big change from the traditional AWP minus some sort of discount. And then onshoring the Express Scripts’ GPO, which is called Ascent, that is probably more of a political win than anything else, but currently that GPO is domiciled in Switzerland, and so part of this settlement is on shoring that back to the United States. So those are the changes that are going to affect the way that Express Scripts does business generally.

In terms of a standard offering for clients, we’re talking about applying the value of rebates at the point of sale, and so that’s all about getting participants to share in the value of rebates. This one is interesting. I looked it up last night just to get a little more clarification, but no guarantees on the predetermined amount of compensation from rebates.

So basically, stop offering rebate guarantees is in there. No spread pricing, the drug-level product cost reporting that you talked about, and then including patient payments to TrumpRx or other direct-to-consumer offerings in the member cost share accumulation, so deductibles and max out-of-pockets. So we’d have to figure out how we administratively include those in deductibles and max out-of-pockets.

I think one of the big takeaways from all of this is that when you eliminate spread, when you cut down on the compensation from rebates, you’re going to see more fees from the PBMs as we move forward that are specifically called out.

Madison Connor (13:57)

And I just have to get on my soapbox for a moment here, because many of those requirements that you just listed off, so the requirement to report broker compensation and as well as drug-level reporting, those are now already required by federal law. So there’s some stuff in there that’s going to apply regardless and now has become a part of federal law, so there’ll be some harmonizing of those requirements as well. So we talked about the settlement with Express Scripts, the other two parties of the litigation, CVS and Optum.

What are we hearing about those settlements?

Mike Stull (14:30)

Yeah, we know they’re in the works. We know that there’s an initial court hearing in the middle of June, so if there is a settlement, we would expect that it would occur prior to that date.

Madison Connor (14:44)

A few weeks ago in one of the filings for the Express Scripts action, the FTC indicated that significant progress was being made with the other parties, and actually last Friday, the Federal Trade Commission launched the, it’s a healthcare investigation task force that will now look at other healthcare arrangements and will try to identify whether or not it’s worth pursuing litigation in other areas in the healthcare industry. So definitely more to come out of Andrew Ferguson’s Federal Trade Commission.

Shall we move on to TrumpRx and direct to consumer?

Mike Stull (15:21)

I thought you would never ask.

Madison Connor (15:22)

Oh yes, Mike’s favorite.

Mike Stull (15:23)

I can’t believe we didn’t lead with this. So talk about how patients are accessing TrumpRx prices.

Madison Connor (15:31)

Absolutely, a couple of different ways. So TrumpRx, the platform is not actually buying and purchasing drugs and selling to consumers. In most cases, it is an aggregation of existing manufacturer websites, so you’ll go onto the TrumpRx platform, it will launch you to the manufacturer’s website where then you can purchase the drug.

In other cases, it will link you with a mail order pharmacy that is contracted with TrumpRx to provide the medication at that pricing, and in other instances, it is a drug coupon that’s available. So through a partnership with GoodRx, there’s a coupon at the bottom of the screen and it will list that TrumpRx price where then you can present at the pharmacy.

Mike Stull (16:14)

Does it have the big golden eagle on it?

Madison Connor (16:16)

Oh, it sure does. Absolutely. Check it out.

Mike Stull (16:18)

Excellent.

Madison Connor (16:20)

There are some issues though, I will say. Something that was surprising about the TrumpRx platform is that there is not a requirement for pharmacies to honor that negotiated price. So if you go to a pharmacy, present the TrumpRx coupon, that may not be the price that you end up getting.

And this falls back to many of the reimbursement issues that we see because you’re supposed to be getting a coupon that has a certain price, but pharmacies are still buying and acquiring these drugs based off of the list price. So if they’re going to operate at a loss, may not ultimately honor that price.

Mike Stull (16:54)

Right. They have to figure out how am I going to get reimbursed for the difference in what I’m buying it for versus the lower price that this coupon’s offering it for. And I had posted when Lilly came out with its direct to employer announcement, I had posted on LinkedIn, and that’s a shameless plug.

If you don’t follow me on LinkedIn, you can.

Madison Connor (17:19)

I’m surprised that’s the first one so far.

Mike Stull (17:21)

First shameless plug.

Madison Connor (17:22)

Yeah, wow.

Mike Stull (17:24)

But certainly, I posted just lower the list price.

We don’t need to send patients to all these different places because we can’t get a lower list price that’s more reflective of what you actually want to sell the drug for within the benefit plan. So I think that with the direct-to-consumer stuff, we are seeing some impact on list prices. Novo Nordisk had its announcement in terms of lowering the price of Ozempic and Wegovy, which is a welcome news.

And we are waiting to see whether Lilly follows suit with its GLP-1s. And we know that there’s an oral version that is slated to get FDA approval sometime around April 11th. We know that the next Lilly earnings call is April 30th.

And so hopefully sometime in the month of April, we’ll get a little more clarity in terms of where we’re heading with list prices of these GLP-1 drugs that are driving most of your budget. It’s also driving a big portion of the rebates that you’re getting back. And so we expect that it’ll have a big impact in terms of what we’re paying up front and what we’re getting on the back end in terms of rebates.

Madison Connor (18:50)

Well, great. And you know what time of the year it is? It’s March Madness.

And that has to do with basketball, I’m told. But it also has to do with state legislation. There’s lots going on this year, as in pretty much every year that we’ve talked about this so far since 2019.

Mike Stull (19:06)

We should have had some jock jams going for this.

Madison Connor (19:08)

Yeah, right. Trying to add some music here and there, but there’s this thing called copyright infringement. So we’re trying to avoid that as well.

Mike Stull (19:16)

This is what you get when you have a lawyer as your co-host, yeah.

Madison Connor (19:20)

State legislation. So I mentioned the March Madness component just because many states do adjourn in the months of April and May leading into June. So we’re coming up against some statutory deadlines in certain states.

So legislation, if it is going to pass, is going to start moving very rapidly. We’re continuing to see states pass or states introduce legislation that would mandate minimum reimbursement levels to pharmacies within the state. It depends on how broadly this applies, whether it’s certain types of pharmacies or all pharmacies in the state.

Many times that’s accompanied by a minimum dispensing fee that also must be paid. These laws are increasingly broad in that they are applying to ERISA plan sponsors as well. Sometimes the legislation is vague, and it doesn’t address specific entities that it applies to.

That’s a hint that they’re going to enforce that in a very broad manner. But whenever it comes to major pieces of legislation that may require minimum reimbursements to pharmacies but also may have some of these anti-steering components. So not being able to steer towards a narrower in-network set of pharmacies, not being able to offer participants an incentive to fill at a mail order pharmacy, whether that be by getting a higher day’s supply or paying a lower copay for filling at that mail order pharmacy.

And there’s been a lot of litigation on this front as well. And federal courts are routinely finding, as well as the Supreme Court, that when it comes to these reimbursement laws across the states, those are going to apply to ERISA plan sponsors. So regardless of what type of plan sponsors you are, unless there’s a specific exemption in that law, that minimum reimbursement law is going to apply because they classify that as cost regulation.

But whenever we get to those parts of laws that truly do dictate plan design, so what type of network you can set up, what type of copay structure the plan may have, that is the piece that courts are routinely finding to be preempted by ERISA. So not applicable to ERISA plans so that you don’t have to address state-specific requirements across the many states you may operate in. The problem is there’s not been a nationally binding ruling on this from the Supreme Court.

So that may contribute to the patchwork of legislation that you may be hearing about from Employers Health as well as your PBM vendor on calls.

Mike Stull (21:52)

So you talked about the themes that we’re seeing. I want to ask you, and we don’t have time to walk through all of the individual state laws but maybe highlight just a couple of them.

Madison Connor (22:03)

Yes, because we have a lot of Ohio employers in the room today, and I think that this is a good example of what we see in other states. I did want to highlight Ohio House Bill 192, which is a bill that says that any willing pharmacy must be admitted to a plan sponsor’s network. Those pharmacies need to be treated equally, so no ability to distinguish between in- and out-of-network pharmacies.

It also has that minimum reimbursement provision, so pharmacies will have to be reimbursed at their actual acquisition cost for the drug. And also a minimum dispensing fee will apply that is tied to the state Medicaid survey, so that’s currently around $12. Something that’s important to call out whenever you do see these state-mandated pricing laws, all of those claims are excluded from the contractual guarantees of your PBM contract.

And what’s especially interesting about this particular Ohio piece, and we see this across many other states as well, it’s not narrowly tailored. So this reimbursement and the dispensing fee would apply to all pharmacies in the state. So it’s not just the independent pharmacies that they’re talking about, the same would apply at Kroger, Walmart, CVS, any pharmacy that you fill out.

Mike Stull (23:19)

And who do you think will pay for that $12 dispensing fee?

Madison Connor (23:24)

It’s not the PBM, like the legislators think.

Mike Stull (23:28)

Patients, plans.

Madison Connor (23:29)

It’s patients in the pre-deductible phase, so costs will certainly rise. And that applies for mail order specialty and retail as well.

Mike Stull (23:38)

Yeah. I think one of the disappointing things about state legislation is they’re all couched as lowering drug prices. And I don’t know that any of them lower drug prices.

Most of them raise drug reimbursements to the retail pharmacies and, in effect, will raise the prices to patients and to plans. So just a mismatch in terms of what we’re trying to accomplish and what the public policy is coming out with. So let’s move on to ERISA fiduciary litigation.

We could spend the whole conference talking about this topic, but let’s give an update on developments in key cases this month. And we’ll start with the Wells Fargo dismissal.

Madison Connor (24:31)

We originally weren’t even going to make a huge portion of this talk, but there were two major dismissals that occurred, really, in just the last three weeks. So I thought it was worth mentioning, especially here. So the Wells Fargo case was dismissed, and these findings were similar to what we’ve seen in many of the other dismissals of the Johnson & Johnson case as well.

What courts are finding routinely is that the plan overpaying for certain specialty generic medication, plan participants are not able to prove that as a result of those overpayments, plan participant premiums were higher. They contrasted PBM and health deals from 401K benefits. They said, in the 401K fee litigation that we saw decades ago, you were able to quantify the actual benefits lost, whereas in this case, in defined benefit plans, participants are receiving all benefits due to them under the plan.

So how do you quantify an actual financial injury here?

Mike Stull (25:34)

Go ahead.

Madison Connor (25:35)

And then I was just going to say, the other piece here, the JP Morgan Chase dismissal as well.

Mike Stull (25:41)

Yeah, it was like a week later.

Madison Connor (25:42)

A week, yes.

Mike Stull (25:43)

They partially dismissed the JP Morgan Chase case.

Madison Connor (25:46)

Yes. A partial dismissal, and what I think is an important call-out here for plan sponsors, is that the court distinguished between plan design decisions and fiduciary decisions. So it threw out the fiduciary breach claims because it said, whenever a plan sponsor is looking at whether or not to have traditional or pass-through pricing, whenever they’re wondering, looking into having a specialty carve-out vendor, their formulary design, they said, those are plan design decisions.

They’re not fiduciary decisions. They’re not subject to the fiduciary standard. It’s a way of recognizing that employers also have a business interest in designing and forming a benefit plan.

So the pieces then that remained, the court kept some prohibited transaction claims on the table. I see this as, people are wondering, does that mean that JP Morgan Chase did something wrong? Doesn’t necessarily mean that at all.

What now happens, from a legal posture of the case, is that the employer has the ability to show, I made reasonable decisions. This was a reasonable contract for necessary services under the plan, and I paid no more than reasonable compensation. So this is why we talk about, to employers, on every call, it seems I’m having a call explaining this, you need to be able to point to a very sound decision-making process that is well documented.

Whenever you are selecting vendors in that ongoing monitoring of plan performance and your vendor’s performance, you want to be able to point to a strong file of evidence that shows that you made reasonable decisions. I think that the transparency rules and regulations that continue to pass it’s forcing a lot of this information out into the open, and so it’ll now be an interesting time where plan sponsors have to look to that information. How do they use it?

And how does it inform their decision-making process?

Mike Stull (27:43)

Yeah, the transparency will certainly help, but it doesn’t necessarily do the job for the employer or the plan sponsor, so they need to still do it.

Madison Connor (27:53)

And reasonable, ERISA doesn’t require that you always choose the lowest-cost vendor. It requires you to make a reasonable decision. So cost is but one of many factors that it may take for you to consider what vendors that you work with, so.

Mike Stull (28:08)

Excellent. Well, we asked, through our promotion of this, we asked for individuals, whether you were going to be here or not, to submit some questions, and I know we got a few of them.

Madison Connor (28:24)

We did.

Mike Stull (28:25)

So why don’t we, shall we go to those questions?

Madison Connor (28:28)

What’s the point of a live podcast if we don’t do some Q&A? Mike, first one for you, this listener asked, I’m used to big rebate guarantee increases. What should I expect from market checks in 2027?

Mike Stull (28:41)

Yeah, I think market checks in 2027, it’s not going to be the same as you’re used to seeing. We talked about the cost-plus reimbursement mandates and so discounts historically haven’t necessarily gone up substantially over time, and I wouldn’t expect, at least on the retail side, to see big changes in the discounts going forward. On the rebate side, we talked about GLP-1, so if Lilly follows Novo’s lead and lowers its price, I mean, from a diabetes perspective, you’re talking about $10 to $13 per member per month in less upfront costs, but less rebates.

And if you also cover weight loss, you’re talking about anywhere from $20 to $25 per member per month, and lower upfront costs, and lower rebates on the back end. So in terms of what you’re used to seeing in terms of big rebate guarantees jumping out off the page from year to year, I would not expect that for 2027. The only way that that will happen is if a PBM loads up the rebates with a bunch of drugs that have already lowered their price and they take rebate credit on all of those medications and our approach is there are plenty of games being played out in the marketplace.

Being a part of Employers Health doesn’t need to add more games to that. We want to cut through the noise, provide a predictable, provide a reliable contract. So that’s what we’ll aim to do is as part of our 2027 market check.

All right, Madison, question for you. Is there overlap between the new federal PBM disclosure requirements and the RxDC reporting? How are they related?

Madison Connor (30:45)

This was a good one. They’re not related or they may seem to be. So if you recall RxDC reporting that is due annually by June 1st.

There’s some required reporting from the plan as well as the PBM that needs reported to HHS through a secure portal. The purpose of RxDC reporting is really looking at rebates, highly rebatable drugs under the plan and whether or not those rebates increased or had any type of effect on participant premiums that are paid. So it all has to do with how are rebates tied to participant premiums.

That information has been historically criticized just given that that information is reported at the state and market segment level. So it’s not each individual plan sponsor getting insight into their actual plan data. It’s all similarly sized self-insured employers in the state of Arkansas are lumped together and reported by the PBM.

What is interesting about the CAA of 2026 is that that is actually your plan data and it’s reported directly to you from the PBM. So one would think if and one would hope if the reporting requirements are clear enough that this can be really actionable helpful data that is specific to your plan. Obviously, it’ll come with a hundred plus page instruction booklet as the RxDC reporting did so probably some future headaches to parse through that information but if they can get it right it can be useful information.

Mike Stull (32:22)

As a sarcastic member of this team I think it’s only appropriate to say that what I heard you what I think I heard you say was it added a lot of administrative burden added administrative cost hasn’t been useful.

Madison Connor (32:35)

Yes, and I think anytime that is the key piece if you’re asking for information from the PBM don’t put the requirement on the plan sponsor to then get the information from the PBM. This part is helpful because it’s PBM reported directly to the plan sponsor but yes.

Mike Stull (32:52)

Excellent.

Madison Connor (32:54)

My question for you a lot has now let’s do this one. Opportunities for plan sponsors as we look to 2027 where are the biggest opportunities that you see?

Mike Stull (33:05)

Yeah, I’ll break it out into both non-specialty and specialty. So on the non-specialty side we talked about GLP ones lowering their price so that should have a good impact at least from a cash flow perspective and a participant cost share perspective. We have Farxiga going generic this year so that is typically in your top 25 drug spend so hopefully there’ll be some opportunities there.

I know the clinical team is already starting to look at that. Weight loss decisions so do you cover, do you not cover and I know that our colleagues will have a slide a little later on showing the difference in per member per month and trend. It’s quite a noticeable difference when you cover weight loss versus not.

We’re doing some work around prescriber outreach so typically we think of prior authorization, step therapy, those types of claim adjudication edits that we put into plans but also looking at how can we reach out to prescribers and get more information in their hands to help them better serve their patients. And then the Employers Health custom clinical edits so these edits have been around for a long time. They typically provide some early opportunities for savings aimed at getting low value high price drugs out of your plan spend and typically between one to three percent of pharmacy costs that that we’re able to get out in terms of folks participating in that.

And we have over 90% of our clients that use at least one of those custom clinical programs. On the Stelara side or on the specialty side I jumped the gun there on the specialty side we have the Stelara biosimilar for our CVS clients that we are implementing on 4-1. We have I’ve heard 92% I’ve heard 95% in terms of the number of or percentage of clients that are putting that in place.

So again a unique benefit to our clients. Also looking at the dermatological space so a lot of dollars being spent on dermatologicals and with some of the new biosimilars are there opportunities to do step therapy in those classes. I think it’s a good chance to remind folks that if you wanted to do specialty PA carve-out or you wanted to do full specialty carve-out we do have clients that that do that today under our programs.

And so I think the big takeaway there is you have the flexibility to do that inside of your current arrangement with Employers Health. PrudentRx so that’s the CVS version but certainly all PBMs have some sort of co-pay assistance program. Those continue at least on the specialty side to drive upwards of six seven dollars per member per month and in savings.

And so who knows with all these price changes and new legislative requirements what the future of those types of programs hold but certainly as it exists today those continue to provide a good amount of savings for clients. So non-specialty specialty lots of opportunities out there and certainly our team is here to help parse through which ones might make the most sense for your specific plan. All right Madison the question was wasn’t there supposed to be a federal directive on co-pay accumulators and adjustment programs have there been any developments?

Madison Connor (37:15)

Yes, there was supposed to be a federal directive so many of you may recall in early 2023 a DC federal district court invalidated the federal rule that allowed co-pay accumulator program. So this was the rule that gave employers the discretion to choose how they counted manufacturer assistance so whether it was included or excluded from a deductible and max out-of-pocket. Recognizing the widespread disruption that this court ruling would have on the marketplace the then Biden administration entered a period of non-enforcement of this court ruling.

So maintaining the status quo for plans while the federal government then had the opportunity to rewrite a draft or rewrite a drafted rule that could be very specific about whether or not this was allowed. We still don’t have this rule here we are three years later, and it wasn’t included in the proposed rulemaking for 2027. So until this point, we could earliest we could hope for is a rule in 2028 but for the time being the status quo has remained for plan sponsors as the government is in a non-enforcement policy of that rule.

Question for you Mike a lot has been made about what’s called a modular PBM what do you think about them?

Mike Stull (38:37)

Well breaking news on Health Care Headlines live we need a sound effect for that. So we are working we’re not ready to formally announce yet, but we are working on putting the finishing touches on a modular PBM for Employers Health and I can share what some of our learnings have been through this process and the big one is don’t try to drink the ocean keep it simple. So finding a core PBM claims administrator customer service website mobile app all of those types of things find a core PBM to serve as the foundation for it and we’ll be announcing a fourth option here and then finding opportunities in the market where it makes sense.

So we’re looking for mail-order generics specialty generics, those are definitely areas that came up in our the fiduciary lawsuits biosimilars bringing biosimilars to plan quicker and obviously there’s opportunities to do it at a cheaper price if you’re able to get patients where they need to be in the marketplace. So what we know is that we need to make sure that we can connect patients with these opportunities. It has to be financially viable, and it needs to be a great experience because we know that plane sponsors aren’t going to accept a subpar experience for participants.

So what it can’t be is just a bunch of point solutions that you loosely tie together that we know will not work. So we are in the process like I said of putting the finishing touches on this. I think a lot of the modular components of this, and I already talked about some of them in terms of specialty PA and specialty carve-out those types of things will be able to fit on all the different PBM options that that we have available.

Madison Connor (40:48)

Related question do you ever truly get away from the big PBMs in this market? It seems even when employers split up their PBM responsibilities they end up using one or more of the big three.

Mike Stull (41:02)

Yeah, so Sam loves the line I use which is it’s not if you’re going to use the big three it’s how you’re going to use the big three. And I think whether it’s looking at the GPOs that the big three have a lot of mid-market PBMs utilize those GPOs for rebate contracting today, some for-retail contracting, specialty pharmacies so the big three all own a very large specialty pharmacy. So when you think of limited distribution drugs even if you know we’re looking at a specialty carve-out vendor that can fill 60 to 70 percent of the specialty drugs.

So there’s always LDDs that you’re going to have to find access for and so having them as a wrap network. So I don’t know that you know whether it’s through the GPOs or through the specialty pharmacy I don’t know that you ever get away from using the big three GPO or big three PBMs and it’s because you know at the end of the day the fact of the matter is they have a lot of value out in the marketplace and I think regardless of what happens here they’re going to continue to have a lot of value and so how do you appropriately tap into it so that your plan and your participants can get some of that value.

Madison Connor (42:32)

All right shall we open it up to our live audience?

Mike Stull (42:34)

I think so we have what five minutes?

Madison Connor (42:36)

We have five minutes if you have a question, please raise your hand or stand up and our mic runners will come to you.

Mike Stull (42:46)

And if it’s a hard question make sure

Madison Connor (42:47)

Give it to Mike.

Mike Stull (42:48)

Make sure it’s legal in nature and we can’t see you.

Madison Connor (42:56)

Yeah, we can’t see you. Oh I see a point someone’s.

Mike Stull (43:02)

Okay.

Audience Member (43:03)

So what you talked about participation in the rebate by the member what does that look like a $4,000 drug they pay $100 at the pharmacy what does rebate participation look like for something like that?

Mike Stull (43:23)

Yeah, so what it what it looks like is the traditional point-of-sale rebate so if you had a $4,000 drug that had a $2,000 rebate on it the members cost share would be based on the net price of $2,000 versus the way it is today where they’re paying member cost share based on a $4,000 discounted price. Does that answer is that what you’re looking for?

Audience Member (43:56)

I have a set copay of $100 because for that class of drug.

Mike Stull (44:02)

Yeah, then it doesn’t matter if you have $100 flat copay participants will continue to pay $100 unless the unless the net cost of the drug is less than that flat dollar copay.

Audience Member (44:15)

Okay.

Mike Stull (44:18)

Others?

Madison Connor (44:28)

All right Mike, I’m moving on to one from our question submission. Will we ever get completely away from rebates?

Mike Stull (44:40)

Yeah, how much time do we have?

Madison Connor (44:43)

Two minutes.

Mike Stull (44:44)

I think the shorter answer is not anytime soon so I think the mechanism of rebates as a way for PBMs on behalf of plan sponsors to negotiate additional discounts off the price of drugs is something important and it was set up that way it was set up in the way that it is really to avoid some of the price discrimination lawsuits were around in the late 90s and so there were settlements they said you can’t discriminate except for plans that are able to significantly move market share you can give them additional discounts and that’s what a formulary is aimed to do and that’s what rebates are meant to reward is the ability to move market share.

It’s also worth noting that the federal government or the state governments and the federal government through Medicaid also get rebates and so until we’re willing to change the overall dynamic of how drug pricing works in the country I don’t think we’re ever going to get away totally from those types of rebates.

Madison Connor (46:00)

Good job just over a minute.

Mike Stull (46:02)

Yeah.

Madison Connor (46:03)

Well with that folks thank you so much for listening to our discussion if you have any questions for us please feel free to find us during the breaks we will be around. Thank you Mike. Health Care Headlines Live.

That’s a wrap.

Mike Stull (46:14)

That’s a wrap. Thank you Madison.