Do You Know How Much Cancer Centers Get Paid to Put Patients on Drugs? With Aaron Mitchell, MD, MPH (Encore! EP282) In this Encore rebroadcast, Stacey Richter revisits her conversation with Aaron Mitchell, MD, MPH, an oncologist and health services researcher at Memorial Sloan Kettering, about "buy and bill" — the payment model that pays cancer centers a percentage of drug cost to infuse chemo, creating a built-in incentive to reach for the more expensive drug. WHAT YOU'LL LEARN ✅ How the "buy and bill" payment model works and why it rewards oncology centers for choosing costlier drugs ✅ Why some provider organizations make four to six times the cost of a drug in profit under this model ✅ Why financial toxicity from cancer drug costs is a form of clinical toxicity for patients ✅ What reimbursement reform and capitated systems could look like as alternatives to buy and bill ✅ Why patients are the only real losers in the current system, and who needs to lead the charge for change WHY THIS MATTERS Buy and bill isn't a minor billing quirk — it's a payment structure that financially rewards oncology centers for choosing the most expensive drug rather than the most appropriate one, with patients absorbing the cost-sharing consequences. Understanding the mechanics is the first step toward the reimbursement reform Dr. Mitchell argues is overdue. === LINKS === 🔗 Show Notes with all mentioned links: Episode Page ✉️ Enjoy this podcast? Subscribe to the free weekly newsletter 🫙 Support the podcast with a small donation to the Tip Jar 📺 Subscribe to our YouTube channel 🎤 Listen on Apple Podcasts 🎤 Listen on Spotify === CONNECT WITH THE RHV TEAM === ✭ LinkedIn ✭ Threads ✭ Bluesky ✭ X 00:00 Introduction 04:34 Following the drug and following the dollar. 04:56 The "buy and bill" system. 05:43 The perverse and problematic incentives of the system. 08:38 "It creates the incentive for us to gravitate toward the more expensive drug." 08:42 The hesitancy to address the financial toxicity of drugs for patients. 09:53 Why the only person losing in this situation is the patient. 10:51 The financial impact from the patient perspective. 13:57 Are patients realizing this impact? 14:42 Solving the problem of oncology drug choice. 16:45 Reimbursement reform. 18:24 Capitated systems and incrementalist impacts to reimbursement reform. 23:30 Are we at a tipping point? 23:51 "The current system…works too well for too many people." 25:01 Who isn't well served by the current system. 25:32 Who has to lead the charge for change. 28:28 Large oncology providers vs small oncology providers in the buy and bill system.

The Real Deal on PBM Rebates and Drug Pricing Contracts, With Scott Haas. Why the Word "Rebate" in a PBM Contract Can Mean Whatever the PBM Wants It To. Episode 365. Stacey Richter talks with Scott Haas, senior VP at USI Insurance Services, about the true mechanics of PBM rebates—how much of the so-called rebate a plan sponsor actually gets back, why formulary exclusions punish cheap generics, and what it takes to negotiate a PBM contract with real, absolute pricing terms. WHAT YOU'LL LEARN ✅ Why "rebates" comprise only about 40% of the back-end dollars PBMs collect from pharma, with the rest hiding under fees like administration, data, education, or clinical program fees ✅ How the two-part rebate transaction works: pharma pays PBMs cash back for formulary access, then PBMs promise plan sponsors "100% of rebates" while redefining what counts as one ✅ Why cheap generics get excluded from formularies—they don't generate rebates, and PBMs lose money when a high-priced brand goes generic ✅ Haas's bottom-line advice: contracts need to define the actual final price in absolute dollar terms, not percentages off AWP or WAC ✅ Why plan sponsors need to understand the five things that go into getting a fair PBM price ✅ How GPOs formed by the "Big Three" PBMs aggregate and maximize rebate collection even further WHY THIS MATTERS As long as "rebate" can mean whatever a PBM decides it means, plan sponsors negotiating for "100% of rebates" have no real guarantee of savings—they need contracts that specify actual per-unit prices, not percentages or acronyms that can shift at any moment. Haas's plan-sponsor perspective gives employers and their advisors the specific contract language to insist on before signing. MENTIONED IN THIS EPISODE EP342 with Christin Deacon: Apple Podcasts | Spotify | Other Apps (link unavailable) === LINKS === 🔗 Show Notes with all mentioned links: Episode Page ✉️ Enjoy this podcast? Subscribe to the free weekly newsletter 🫙 Support the podcast with a small donation to the Tip Jar 📺 Subscribe to our YouTube channel 🎤 Listen on Apple Podcasts 🎤 Listen on Spotify === CONNECT WITH THE RHV TEAM === ✭ LinkedIn ✭ Threads ✭ Bluesky ✭ X 10:29 What's the major flaw with the buyer-seller relationship between plan sponsors and PBMs? 12:04 What are the five things that need to be considered in order to get a fair price from a PBM? 13:16 Why does using average wholesale price cause problems for plan sponsors? 15:05 What does it mean to put the network risk on the PBM? 17:10 What's happening with drugs moving from specialty brand to specialty generic? 19:14 "A generic is a generic; in our world, it's binary." 23:31 "The term 100% of rebates is really irrelevant." 23:54 What does it mean to have a minimum guarantee in drug rebates? 26:39 "When you do a line-item assessment … is it producing an optimal result in comparison to competitively achieved … pricing for generics … and for specialty?" 27:52 "Plan sponsors need to grow a backbone." 29:05 Why do you need to understand your consultant's process as a plan sponsor? 29:30 Why do you need to understand formulary exclusions as a plan sponsor? 29:41 Why is it important to create a more equal PBM contract? 30:52 "Rebates inure to the benefit of the plan sponsor; they don't necessarily benefit the consumer." 31:45 What does Scott do at USI?

Buy and Bill vs. Pharmacy Bagging: Weighing the Options for Plan Sponsors, With Erik Davis and Autumn Yongchu. Buy and Bill, White Bagging, Site Steering, or Home Infusion—Which Actually Saves Plan Sponsors Money? Episode 371. Stacey Richter continues her conversation with Erik Davis and Autumn Yongchu of USI Insurance Services, comparing the real trade-offs among buy and bill, pharmacy bagging, site-of-care steering, and home infusion for plan sponsors trying to control specialty drug costs without shortchanging patients. WHAT YOU'LL LEARN ✅ Why specialty drug procurement has to be managed case by case, unlike retail drug spend, since a single patient can cost as much as the rest of the member population combined ✅ How white bagging can be used as leverage to reduce markups, and where it does and doesn't actually save money compared with buy and bill ✅ Why vulnerable patients on specialty drugs require extra care when plan sponsors change site-of-care or bagging arrangements ✅ How comparison shopping for infusion sites can become "a vicious circle" when consultants aren't educated enough to guide the decision ✅ Why transparency initiatives have sometimes been used by health systems to keep buyers' eyes off the real cost drivers ✅ Why plan sponsors need a collective understanding of every variable—contract terms, site of care, drug type—before making specialty pharmacy decisions WHY THIS MATTERS There's no single right answer between buy and bill, white bagging, site steering, and home infusion—each carries different savings potential and different clinical risk depending on the drug and the patient, which is exactly why plan sponsors get taken advantage of when they don't understand the full menu of options. Davis and Yongchu's case-by-case framework helps plan sponsors ask the right questions before locking into one approach. MENTIONED IN THIS EPISODE EP369 with Keith Hartman, RPh: Apple Podcasts | Spotify | Other Apps EP365 with Scott Haas: Apple Podcasts | Spotify | Other Apps === LINKS === 🔗 Show Notes with all mentioned links: Episode Page ✉️ Enjoy this podcast? Subscribe to the free weekly newsletter 🫙 Support the podcast with a small donation to the Tip Jar 📺 Subscribe to our YouTube channel 🎤 Listen on Apple Podcasts 🎤 Listen on Spotify === CONNECT WITH THE RHV TEAM === ✭ LinkedIn ✭ Threads ✭ Bluesky ✭ X 04:45 Can you actually save money by carving out specialty infused drugs and making them a pharmacy benefit? 06:28 How can plan sponsors use white bagging as leverage to reduce costs from markups? 06:47 Does white bagging save money compared to buy and bill? 07:42 "You also need to understand that with some of these drugs, you're dealing with very vulnerable people."—Erik 11:10 "When your insurance carrier is married to your PBM, it doesn't matter where the money goes."—Autumn 12:00 "You need to have a collective understanding of every variable … when you're making those … decisions."—Erik 14:53 How can comparison shopping save plan sponsors money when it comes to specialty infusion costs? 16:51 How can comparison shopping be a vicious circle in the wrong setting for plan sponsors? 18:43 "That's part of the problem: It's not just the plan sponsor not being educated enough; it's also the consultant … that they believe is supposed to be that isn't."—Erik 19:03 How has transparency been used by healthcare systems to keep buyers' eyes off the ball? 26:55 "It is very case by case, but it comes down to your risk appetite."—Autumn 28:19 "It's something that you have to, as a plan sponsor, really continue to monitor throughout the plan year."—Autumn 28:38 "The more you know, the better equipped you're gonna be."—Autumn 29:27 What can employers who are feeling aggressive do? 31:19 "The dollars circle, whether people realize it or not."—Autumn

Brown Bagging, White Bagging, and Clear Bagging Explained, With Keith Hartman, RPh. A Field Guide to Specialty Pharmacy Bagging and Who Profits From Each Kind. Episode 369. Stacey Richter talks with Keith Hartman, RPh, CEO of ContinuumRx, about the evolution of specialty pharmacy "bagging"—brown, white, clear, and gold—and how each variation shifted which party captures the profit on increasingly expensive infused and injected drugs. WHAT YOU'LL LEARN ✅ How brown bagging (drug shipped to or picked up by the patient, then brought to the provider) gave way to bigger money once specialty drug prices skyrocketed ✅ How "buy and bill" lets provider organizations profit more from more expensive drugs, since a percentage of a bigger number is a bigger number ✅ How white bagging emerged as PBMs stepped in to buy drugs directly and ship them to providers, promising savings to plan sponsors ✅ Why clear bagging—where one organization owns both the pharmacy and the administering provider—solves some clinical issues with white bagging while letting hospitals capture a cut ✅ Why oncology providers, on average, are reported to collect roughly six times the cost of some drugs they administer ✅ What gold bagging is, and how this whole "who gets the money" fight between providers, PBMs, and hospitals continues to evolve WHY THIS MATTERS Every iteration of specialty pharmacy bagging is really a reaction to the last one—a cascade of "equal and opposite market distortions" as providers, PBMs, and hospitals each try to capture a share of the profit on increasingly expensive infused and injected drugs. Understanding the brown/white/clear/gold bagging taxonomy gives plan sponsors and clinicians the vocabulary to see past the jargon to who's actually profiting and where clinical care might suffer along the way. MENTIONED IN THIS EPISODE Encore! EP216 with Chris Sloan: Apple Podcasts | Spotify | Other Apps EP337 with Olivia Webb: Apple Podcasts | Spotify | Other Apps === LINKS === 🔗 Show Notes with all mentioned links: Episode Page ✉️ Enjoy this podcast? Subscribe to the free weekly newsletter 🫙 Support the podcast with a small donation to the Tip Jar 📺 Subscribe to our YouTube channel 🎤 Listen on Apple Podcasts 🎤 Listen on Spotify === CONNECT WITH THE RHV TEAM === ✭ LinkedIn ✭ Threads ✭ Bluesky ✭ X 08:09 What kinds of patients and/or drugs is the concept of bagging relevant to? 08:53 What is brown bagging, and what are the issues with it? 10:28 What is white bagging, and how is it different from brown bagging? 11:30 Who are the key players in pharma bagging? 12:25 Why does a PBM want a specialty drug to go through them? 12:49 From the physician's perspective, why is buy and bill ideal? 16:46 How does white bagging impact patient clinical care? 23:05 What are the two main reasons patients might not continue their therapy? 23:29 "We've got to leave some authority with our prescribers to be able to make a clinical decision of what's best for that … patient." 24:41 What is clear bagging? 26:51 How does a hospital specialty pharmacy get in network with a PBM? 28:57 What is gold bagging? 30:11 "Outlook really needs to be what's best for the patient."

How Specialty Pharmacy Rebates and Formularies Really Work, With Pramod John, PhD. Inside the Rebate Math That Decides Which Specialty Drugs Make Your Formulary. Episode 353. In part 2 of her conversation with Pramod John, PhD, founder and CEO of VIVIO Health, Stacey Richter breaks down the mechanics of pharmaceutical rebating—how PBMs use rebate walls and exclusive formulary deals to maximize their own revenue, often at the expense of patients and plan sponsors footing the bill. WHAT YOU'LL LEARN ✅ How PBMs collect rebates from manufacturers in exchange for formulary placement or exclusivity—and why bigger rebates mean fewer competing drugs on formulary ✅ How "rebate walls" make it nearly impossible for cheaper new entrants to compete against an already-exclusive incumbent drug ✅ Why patients with coinsurance pay a percentage of the pre-rebate list price, not the discounted price the PBM actually negotiates ✅ How self-insured employers use rebate dollars to lower premiums, effectively having the sick subsidize the well ✅ Why some plans are saving 30% or more on drug spend by moving away from rebate-driven PBM models ✅ How psychology around drug risk shapes prescribing even when the underlying data is the same WHY THIS MATTERS The rebate system that determines which specialty drugs land on a formulary is optimized for PBM revenue, not patient outcomes or total cost of care—and plan sponsors who don't understand the mechanics end up subsidizing that system through their premiums. Moving toward pricing and formulary design based on what actually works for patients, rather than rebate size, is where John sees the real savings. MENTIONED IN THIS EPISODE EP315 with Bob Matthews: Apple Podcasts | Spotify | Other Apps EP289 with Bishal Gyawali, MD, PhD: Apple Podcasts | Spotify | Other Apps EP345 with Paul Simms: Apple Podcasts | Spotify | Other Apps === LINKS === 🔗 Show Notes with all mentioned links: Episode Page ✉️ Enjoy this podcast? Subscribe to the free weekly newsletter 🫙 Support the podcast with a small donation to the Tip Jar 📺 Subscribe to our YouTube channel 🎤 Listen on Apple Podcasts 🎤 Listen on Spotify === CONNECT WITH THE RHV TEAM === ✭ LinkedIn ✭ Threads ✭ Bluesky ✭ X 08:31 How does drug efficacy affect pharmacy rebates? 09:39 Do purchasers have the power to change the course of Pharma? 12:11 How do formularies affect the supply of effective drugs? 14:07 "This is about science, and it's about published data and facts." 15:39 How do you fix high drug costs and wasteful spending? 19:06 "Where's the money to be made or saved?" 19:28 Why do we pay for benefits? 23:04 "About 1.5% of the population spends over 60% of all dollars that are spent on drugs." 26:45 "Does anybody want to be a traffic cop in this [situation]?" 27:58 "We all make assumptions about how things work … and if there's one thing that we've learned from this COVID experience … is that we need to be able to separate the beliefs of experts from the facts." 29:47 "We can build a better system. And that's what we do every day."

How Hospitals Hide 6x Markups on Specialty Drug Bills, With Erik Davis and Autumn Yongchu. The Billing Tricks Behind 6x Markups on Infused Specialty Pharmacy Drugs. Episode 370. Stacey Richter talks with Erik Davis and Autumn Yongchu of USI Insurance Services about how some health systems manage to charge up to six times the cost of an infused specialty pharmacy drug—and the specific billing tactics, from miscellaneous J-codes to bare revenue codes, that make those markups nearly impossible to catch. WHAT YOU'LL LEARN ✅ Why Medicare Part B caps buy-and-bill markups at ASP + 6% for commercial-like patients, but no such guidance exists for commercial payers negotiating off chargemaster rates ✅ How J-codes identify the specific specialty drug used in a procedure—and how hospitals obscure markups by billing a vague "miscellaneous chemotherapy" J-code instead ✅ How revenue codes function like a menu category header, letting a hospital bill for "some seafood" without disclosing which dish or how much ✅ Why requesting line-item charges, per Marshall Allen's advice in Never Pay the First Bill, is the essential first step to catching inflated bills ✅ How hospital charges make up over half of many employers' healthcare spend, making these opaque billing practices a high-stakes problem ✅ Why coding opacity, more than any single contract term, is what allows 6x markups to survive scrutiny WHY THIS MATTERS A patient's coinsurance and an employer's premium both scale with the size of the bill, so when a hospital bills a vague code instead of the actual drug used, no one downstream—patient, payer, or auditor—can verify whether the price is fair. Davis and Yongchu's breakdown of J-codes and revenue codes gives plan sponsors the specific vocabulary needed to demand transparent, auditable bills instead of accepting opaque ones. MENTIONED IN THIS EPISODE EP369 with Keith Hartman, RPh: Apple Podcasts | Spotify | Other Apps === LINKS === 🔗 Show Notes with all mentioned links: Episode Page ✉️ Enjoy this podcast? Subscribe to the free weekly newsletter 🫙 Support the podcast with a small donation to the Tip Jar 📺 Subscribe to our YouTube channel 🎤 Listen on Apple Podcasts 🎤 Listen on Spotify === CONNECT WITH THE RHV TEAM === ✭ LinkedIn ✭ Threads ✭ Bluesky ✭ X 07:33 How do hospitals maximize inpatient bills? 08:05 How can hospitals upcode on specialty pharmacy products? 09:44 "It's really not uncommon to be overbilled and overcharged."—Autumn 11:11 Why do marked up bill charges actually affect the price commercial payers pay? 12:49 "If your payer's not double-checking … how do you know that fraud's happening?"—Autumn 12:52 "If the payer doesn't have the detail to validate what that drug actually is, then are they really checking?"—Autumn 13:33 Why is it so hard to verify what you're actually paying for on a hospital bill? 16:28 How do hospitals maximize profit with outpatients? 17:12 "Really it comes down to contracts and how [the] contracts are written."—Autumn 21:54 "There are … silos within healthcare, and none of them actually talk to each other."—Autumn 24:56 "There are these rules out there, but there are also big loopholes out there."—Autumn 26:13 How can hospitals maximize payments for Medicare patients on drugs that have been out for a while? 29:30 "We just have a tendency to assume … that Medicare has a rate for everything, and Medicare doesn't."—Autumn

In Episode 337, Stacey Richter talks with Olivia Webb, PharmD, author of the Acute Condition newsletter, about what it would take to build a "patient-first specialty pharmacy" — one dedicated not just to giving patients a decent experience but to actually improving outcomes, in a system where the patient is too often the product, not the customer. WHAT YOU'LL LEARN ✅ Why the specialty pharmacy operational model isn't built to serve patients, but to fight over revenue and captive patient populations ✅ What makes a drug qualify as a "specialty" drug — and why there's no single definition ✅ What a patient-centric specialty pharmacy would actually look like ✅ Why infusion centers can become high-drama places, and who has a vested interest in patients taking specialty medications correctly ✅ Why the time may be ripe for disruption in specialty pharmacy, and what barriers stand in the way WHY THIS MATTERS The whole PBM/insurer/specialty pharmacy vertical stack rarely deals with patients directly — and when a patient asks a simple question about a six-figure therapy being injected into their arm, it's too often the case that no one has a good answer. There's a strong financial and clinical case for building specialty pharmacy around the patient instead of around the fight for revenue, but that would mean confronting the root cause of why it isn't built that way already. MENTIONED IN THIS EPISODE AEE15 with David Carmouche, MD, of Ochsner: Apple Podcasts | Spotify === LINKS === 🔗 Show Notes with all mentioned links: Episode Page 🔗 Healthcare Industry Acronyms and Terms ✉️ Enjoy this podcast? Subscribe to the free weekly newsletter 🫙 Support the podcast with a small donation to the Tip Jar 📺 Subscribe to our YouTube channel 🎤 Listen on Apple Podcasts 🎤 Listen on Spotify === CONNECT WITH THE RHV TEAM === ✭ LinkedIn ✭ Threads ✭ Bluesky ✭ X 00:00 Introduction 04:11 Why did Olivia start thinking about a patient-centric specialty pharmacy? 05:33 "There's really no layer on top of it to make it look nice." 06:23 "You're kind of dealing with this vertical stack that doesn't really deal with patients frequently." 06:35 Is the specialty model more patient friendly or less? 07:08 What would a patient-centric specialty pharmacy look like? 07:58 "There's a lot of fragmentation; there's a lot of friction." 08:11 What's unique to specialty pharmacy prescriptions? 10:38 Why can infusion centers be a high-drama place? 12:15 What's "the question" around specialty pharmacy? 12:42 Who has the vested interest in ensuring patients take their medications correctly in specialty pharmacy? 14:39 "It's really just a unique area of healthcare where the people that I think of as the good guys and the bad guys completely flips." 16:05 Why might the time be ripe for disruption in the specialty pharmacy area? 19:56 "There's no one with a clear incentive to cap the prices." 20:09 What are the barriers in specialty pharmacy? 20:31 "The patient just isn't at the center, the financial incentive, in any direction." 29:22 "I think people who are designing these things need to see how patients are actually doing it." 29:50 "I think there's a lot of money here; I think this market is going to only increase in size." 30:10 "I think you need scale." 30:20 AEE15 with David Carmouche, MD, of Ochsner.

Efficacy vs. Effectiveness in Specialty Pharmaceuticals, With Pramod John, PhD. Why Only 2% of Patients Get the Expected Benefit From Some Expensive Specialty Drugs. Episode 352. Stacey Richter talks with Pramod John, PhD, founder and CEO of VIVIO Health, about the gap between a specialty drug's clinical trial efficacy and its real-world effectiveness—and why limiting a formulary to just one or two drugs per category can mean paying huge sums for treatments that don't work for most of the patients taking them. WHAT YOU'LL LEARN ✅ Why specialty drugs are less than 2% of prescriptions but account for roughly half of the $500 billion the US spends annually on prescription drugs ✅ The difference between a drug's efficacy (how it performs in trials) and its effectiveness (how it performs in the real world) ✅ Why limiting formulary access to one or two drugs per therapeutic category reduces the odds that any given patient lands on the drug that actually works for them ✅ How the concepts of NNT (number needed to treat) and NNH (number needed to harm) should factor into patient decision-making ✅ Why expanding access to more drugs in a therapeutic category, rather than narrowing formularies, can improve outcomes and lower total cost ✅ How VIVIO's model has generated 35% to 40% savings on drug acquisition costs while improving outcomes WHY THIS MATTERS When formularies are built around rebate economics rather than which drug actually works for which patient, purchasers pay enormous sums for treatments that a majority of patients get no benefit from—and sometimes serious side effects instead. Understanding efficacy versus effectiveness, and NNT versus NNH, gives employers and plan sponsors the vocabulary to demand a formulary strategy built around what actually helps patients. MENTIONED IN THIS EPISODE EP334 with Sunita Desai, PhD: Apple Podcasts | Spotify | Other Apps EP303 with Anna Kaltenboeck: Apple Podcasts | Spotify | Other Apps === LINKS === 🔗 Show Notes with all mentioned links: Episode Page ✉️ Enjoy this podcast? Subscribe to the free weekly newsletter 🫙 Support the podcast with a small donation to the Tip Jar 📺 Subscribe to our YouTube channel 🎤 Listen on Apple Podcasts 🎤 Listen on Spotify === CONNECT WITH THE RHV TEAM === ✭ LinkedIn ✭ Threads ✭ Bluesky ✭ X 05:34 What does a good response mean in pharmaceutical products? 06:06 "Different people get different utility out of something." 06:31 Why doesn't efficacy mean what you think it means in terms of pharmaceutical products? 08:40 What is the difference between efficacy and effectiveness in Pharma? 09:10 Why aren't drugs' major side effects factored into a drug's efficacy and effectiveness? 10:14 "What's the benefit of this versus what's the harm in this?" 13:35 "Clearly as consumers, we all feel that we're special. But what about physicians?" 14:14 "The benefit itself—what does it have to be?" 17:11 "We tend to think of things as a binary distribution—it works or it doesn't." 18:22 "The default choice that we start with is often the wrong one." 20:54 "It doesn't matter why if we can't fix the reason." 22:02 "At some point, the question becomes, 'Do we have any information?'" 22:36 Why do other developed countries pay less for their drugs? 24:21 How do we end up with crappy drugs on the market that don't really move the dial? 27:22 "We can build a better system. And that's what we do every day."