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JC Scott (00:08):Welcome to the Pharmacy Benefit, a podcast that highlights all of the latest news on prescription drug costs, pharmacy benefits in the PBM industry. I'm your host, JC Scott. As employers confront a challenging economic environment caused by the COVID pandemic, they're having to examine their options to both reduce costs and improve healthcare quality for their employees. A new national survey of benefit managers and HR directors finds that the vast majority say "the programs implemented by PBMs have been effective at reducing drug costs for their organizations."JC Scott (00:40):On this episode, we're going to take a closer look at that research, how it was developed, why it's important and what it could mean for the future. Joining me today is Dan Judy, an analyst and polling expert from North Star Opinion Research, the organization that conducted the poll. To give you a little bit of background, in 2012, Campaigns & Elections Magazine named Dan a rising star in the political consulting industry.JC Scott (01:03):He has helped numerous successful U.S. Senate and gubernatorial campaigns and has offered polling and political commentary on network television, radio, and other major national news outlets. And now he's doing our podcast. Dan, thanks for joining me.Dan Judy (01:17):Thanks for having me.JC Scott (01:20):And Dan, I'll give you a heads up though, with that terrific background you bring to the table, I am going to want to get your thoughts on the upcoming election before we wrap up today.Dan Judy (01:28):Absolutely.JC Scott (01:29):Let's start by diving right into the poll. And before we get into what you found in the poll, can you help lay the groundwork for our listeners on how you put this kind of research together? How do you put together a sample? How do you make sure it's going to really reflect the actual perspectives of U.S. employers?Dan Judy (01:45):That's a great question. And it gets to the science of polling, which is making sure we have a random and representative sample of our target audience. We got the sample for this poll from Dynata, which is one of the largest and most trusted sample vendors in the country. And it is a carefully developed and regularly updated list of benefit managers and human resources directors from companies nationwide. We cast a very wide net and we sent survey invitations via email to thousands of potential respondents to ensure we had a random and a representative sample, which is the key to getting reliable data.Dan Judy (02:19):The sample is representative of employers ranging from large to very large. We have companies over a thousand employees with at least 1000 people under coverage and $1 million in annual drug spend. But over half the sample is companies with more than 5,000 employees and about a quarter of the sample has a drug spend of over $25 million. So we have a very large range of companies represented here within that.JC Scott (02:45):And to state the obvious as you cast that wide net, all of your respondents work with the PBM?Dan Judy (02:51):Yes they do.JC Scott (02:52):So then when you get into engaging with the folks who are participating in the poll, how do you determine what questions to ask and sort of what order and how to do this in a way that provides an objective scientifically-based result? In other words, why should we feel confident in the takeaways from the poll?Dan Judy (03:11):That gets to the art of polling and that is as critically important as the science part that we just talked about. And our job with a survey like this is not to create opinion, but to measure it. So we're very careful in making sure our questions don't lead respondents in one direction or another, or try to reach what seems like a desired outcome. Sometimes a client might like to hear a desired outcome, but that really doesn't serve them very well. And it's also not very ethical from our end.Dan Judy (03:38):A lot of the questions we asked in this poll are straightforward and kind of fact-based questions about employee benefits. So those are easy questions to write, but in cases where we want a more subjective opinion, we write the questions in a way that make respondents comfortable giving an honest response so that they don't feel like there's a correct response. And actually conducting a survey online, which is how we did this one makes that a little bit easier since there's not a live interviewer that sometimes people think they might need to please or might give a correct answer to.JC Scott (04:08):With that as background, Dan thank you for sort of pulling back the curtain a little bit for us to understand how this all works. What did you find? What were the big takeaways from the poll you just conducted?Dan Judy (04:19):Well, I would say that there were two big takeaways and the first is that benefit managers are overwhelmingly happy with their PBM. And we found that 93% of these benefit managers express satisfaction with their contracts, as well as the services and the benefits that their PBM provides to their employees.Dan Judy (04:37):The second main finding and this is related I think to that first point is that drug costs for most of these companies, about three fifths of these companies have been relatively stable over the last year. That is definitely an improvement from years past when a lot of companies we're seeing dramatic year-to-year increases in drug prices. And I think also feeds into that satisfaction with the PBMs.JC Scott (04:58):So having had a chance to take a look at some of the numbers, there was another takeaway that sort of stood out for me. And perhaps because we at PCMA are pretty close to some of the public policy discussions around drug pricing and PBMs and benefits. So the poll found that 82% of employers say their contracts with their PBM is transparent. And to me that's consistent with industry position, right? Because we promote and encourage transparency for PBMs clients, patients, prescribers, government, policymakers, all the kinds of transparency that can help lead to lower drug costs.JC Scott (05:31):But I'm also aware that there's a general desire for greater transparency in prescription drug costs writ large. There have been some calls for more transparency from PBM specifically. So as we think about the public policy questions that come with that, how would you have us interpret this particular data point from the poll that again, 82% of your respondents said their arrangement is actually pretty transparent?Dan Judy (05:58):Right. And that's a great question and I think there are two separate issues at play here and one, and this is the good news for your industry, as you noted, is that benefit managers are very happy with the contracts they negotiate with their PBMs. They clearly think that the financial relationship and other relationship between their organization and the PBM is transparent. So I think the job that you and your companies are doing with employers is obviously succeeding, which is great news.Dan Judy (06:27):But the second issue is of drug prices more broadly as you noted. And I think a lot of those concerns are driven by consumers who really have no idea how drug prices are determined. And they're frustrated by a system in which the same drug might cost them $25 at one pharmacy with one coupon, with one plan and $250 at another pharmacy with another coupon, with another plan.Dan Judy (06:50):We've talked to consumers a lot about these issues over the years and most of them regardless of sort of political ideology, would be happy to see the market determine drug prices, except drug pricing clearly doesn't work like a regular market. So I think that's where you see a lot of the calls from greater transparency coming from is this frustration with just not understanding how these prices are determined.JC Scott (07:15):And Dan, that gives us a chance to jump around a little bit. I want to come back and talk about a couple of the other findings you had from this particular poll. But I know that you've done some work over time about those general consumer sentiments on prescription drug pricing. And I'm curious if you can continue to talk about that. What have you seen change? What's remained consistent? What are consumers thinking about drug prices these days?Dan Judy (07:38):Well, we have seen a significant increase in concern about costs. I mean, people have always been worried about them, but now in our most recent work, 80% of voters have said that prescription drug costs are unreasonable. And people are genuinely worried that they might be in a position where they can't afford the drugs that they or their families need.Dan Judy (08:00):And cost has always been a concern. But what we've we've been seeing recently is that drug costs specifically, and even more than healthcare costs generally are voters top healthcare policy concern and by a wide margin. And that being a top concern is actually a relatively recent development.JC Scott (08:19):So if consumers concerns about drug costs just continue to elevate to the top of their area of worry, have you been able to measure their sentiment of those who are insured and how they feel about the drug benefit they get from their employer, from the PBM? How much does that help address some of the overall cost concern that you just shared?Dan Judy (08:40):Quite a bit. And another thing that we have consistently found going back over a decade is that consumers love their prescription drug benefit. And they are very, very satisfied with it. The people that have one. They usually don't know what a PBM is. I mean, if I ask folks, "What is a PBM?" People don't know, but if I asked them what their drug benefit is, they know exactly what it is. They know how it works. They know what they pay.Dan Judy (09:03):A lot of the times, it's the part of their health insurance coverage that they know the most about. They use it the most. They have the most sort of direct interaction with it in terms of getting a prescription and taking it to the pharmacy, knowing what they pay. And it's a part of their plan, their health plan that they usually like the best.Dan Judy (09:21):And one interesting thing we found is that while 80% of people think that drug costs are unreasonable, a majority of people don't think the costs that they themselves pay are unreasonable. And that's because of their prescription drug benefits. People are very happy to have that and I've actually heard a woman and a focus group say, "If it wasn't for my drug benefit, I couldn't pay my rent." And that goes to people's just deep concerns there that while what they have now is great for them and their families, people are very worried about what might happen should they lose that and what can happen in an environment of very high drug costs.JC Scott (09:58):So there concerns about drug costs, perhaps they're not personally experienced yet. They are worried about being exposed to that. And perhaps some of that sentiment about elevated concern with drug prices is because we're all talking about it quite a bit in the public domain.Dan Judy (10:14):Right. Exactly. I mean, it's a very high profile issue and it's something that gets talked about a lot. I mean, it's really become a political football. And so there's a natural urge there obviously to cast blame and say, "Who is responsible for these high prices and what can we do about it?"JC Scott (10:34):But the other takeaway there from this, for me, from this conversation, it emphasizes the importance of employer sponsored plans for individuals. They value the drug benefit. They need the drug benefit. It's really essential for their personal access and their personal affordability. So let's talk a little bit more about that, again, the poll that you just finished up of the employer community. And I'd like you to drill down for us, Dan, if you would, a little bit on which programs the respondents are finding the most effective at reducing drug costs for their organizations.JC Scott (11:06):And I recognize that some of these answers may get to programs that are less popular with the individual consumer who has to deal with them through the drug benefit. But I'm curious from the employer perspective, what do they find is working best?Dan Judy (11:18):Sure. We asked about a number of programs that PBMs use and ask how effective the benefit managers think they are in reducing costs. And we found that 81% say that a preferred retail pharmacy network helps reduce costs. 81% also say a tiered formulary that encourages the use of generic biosimilars and lower cost brands help reduce costs. 79% think real-time benefits tools for prescribers and patients help pull down costs. 74% said that mail order requirements for maintenance drugs help and 70% that utilization management tools like prior authorization and step therapy help reduce costs.Dan Judy (11:58):And I do want to note that these sorts of programs have become more visible to consumers in recent years. Five, six, seven years ago, people didn't know that much about them other perhaps other than perhaps mail order. But a lot of them over the last few years have become more prominent and people tend to like what they see at least the people who use mail order of love mail order. And people who have had exposure to the real-time prescriber tools, some of the utilization management things like adherence and those sorts of programs, as well as formularies that encourage usage generics, those sorts of things are becoming increasingly popular among consumers as well.JC Scott (12:37):That's really helpful context, Dan, thank you. And I assume that these respondents who are saying that they find these particular approaches to be most effective are those who are actively using them as part of their contracts with the PBM.Dan Judy (12:50):Right.JC Scott (12:50):And I don't know if you're able to measure this and it's just a curiosity, but I wonder if you just reflected that consumers are getting more exposure to and personal experience with some of these kinds of tools. I wonder whether the degree to which PBMs have been actively trying to reduce the abrasion points on some of these things so that the process moves more quickly, the tools are more easily utilized by the individual plan beneficiary. I wonder if that effort to reduce abrasion is reflected in what you just shared, which is that the consumer experience with some of these is actually pretty positive.Dan Judy (13:28):I think it likely is. I can't say that obviously for sure not seeing data, but it makes sense given the progression we've seen people go through over the last few years on these.JC Scott (13:38):So let me ask you a bit of a trickier question and feel free to say that this is a little bit out of scope for you with the poll. But I want to reflect that the bottom line from your research is it seems to be that employers find PBMs to not only be necessary for managing their drug costs, but pretty effective. And yet we oftentimes in industry are encountering something of a disconnect. So to put it plainly, we're told by some that employers are frustrated or dissatisfied with their PBMs.JC Scott (14:07):And the argument is the PBMs aren't giving employers all the information they need and that employer suspect PBMs could be doing a better job than they are for controlling their drug costs. And that's pretty plainly contradicted by the research you've just presented. So I'm trying to figure out what's going on here. Is there another agenda perhaps being pursued under the guise of employer dissatisfaction? Are we missing some takeaways from your research?JC Scott (14:32):Because if our company's stated goal is to try and provide the best service they can to their clients and your poll tells us the clients that feel well-served, but some employer groups are saying that's not the case. What is the industry needs to know to understand that disconnect?Dan Judy (14:47):I think there again are a couple of things going on here. One, as we talked a couple minutes ago in an era where concern about drug prices is high and the issue has become this political football, there's an urge to cast blame. And the views of consumers is clear on this point. They blame the drug company. In fact, about three fourths of voters blame the drug companies for high drug prices. And so I think what your industry has seen over the last few years is a concerted effort by the drug companies to shift the blame onto the "shadowy middlemen" that consumers don't really know that much about.Dan Judy (15:23):It's a coordinated and very well-funded effort, as you know, and I think trying to present employers as antagonistic toward PBMs, even if it's through anecdote or perhaps insinuation is part of that effort. And I also think it's possible that that effort is helped by just some of the changes that have occurred in your industry over the last few years with consolidation with health insurers.Dan Judy (15:48):Our survey shows that three fourths of employers use their health insurers PDM. That probably wasn't the case even five or six years ago. And so those sorts of changes may have led to some general gripes or dissatisfaction at the margins that can perhaps be exploited against PBMs as a whole. But our research clearly shows that those concerns really are only at the margins because companies are satisfied with their PBM.JC Scott (16:14):That's a really interesting perspective, Dan. And so to say it another way, the environment, the political environment on drug prices, one of the outflows of that is it's created a trust deficit between our companies and their clients in some ways. So even though the clients are saying, "Everything you're doing is working really well and we're very pleased with how you're managing our drug costs." There's still some questions in their mind. And so companies in our space should be aware that those questions exist as they're trying to understand how to even better serve their clients going forward.Dan Judy (16:47):Right. Right. Absolutely.JC Scott (16:48):Dan, this has been super illuminating for me and I appreciate you taking time to walk through these dynamics around drug pricing. And I don't want to close that off too quickly if you have other thoughts to share, but I do want to take advantage of having time with you given your background in the political space and shift gears just for a second to an off-topic question.JC Scott (17:09):So you've been involved with political polling for a number of years and it seems that in the last presidential election, perhaps the polling didn't necessarily reflect the realities of true voter sentiments. Do you think that the polling community has up their game this time around in terms of understanding what happened and applying that lesson? And for those of us who are more layman in this stuff, what do you suggest that we be watching as the real indicators of what's going to happen this November?Dan Judy (17:39):If I could just briefly defend polling a little bit.JC Scott (17:45):Absolutely.Dan Judy (17:46):The national polling in 2016 was actually pretty accurate, but there were problems and those came in the key swing states. So the states that were only one by one or two points, which of course ended up deciding the election. And part of the problem was there wasn't a lot of polling in those states and what there was wasn't very good. So I do think you're going to see a lot more frequent and accurate polling in swing states this cycle, which I think will help with a lot of those problems.Dan Judy (18:13):So as we go into the fall, I would recommend keeping a close eye on swing state polling and especially polling averages in those states over the last month or two, those tend to sort of smooth out some of the rough edges or outlier polls. Obviously all things Donald Trump, and then as well as what happens with the pandemic are going to be the central issues in the election.Dan Judy (18:36):But one thing to keep an eye on especially if the virus keeps getting worse as we head into the fall is how prepared various states are to implement mail voting, and how that might impact voter turnout. Are people going to be worried about voting in person? What options are they going to have to not vote in person? And right now we just don't know the answers to those questions, but they could be critically important as we get in the run up to Election Day. So that's something that beyond sort of the obvious things of Trump and COVID that I would keep an eye on.JC Scott (19:09):And as a polling professional who's done a lot of this work in a part of a community you're obviously passionate about. I'm curious if you ever have frustration that perhaps this work is done and then misinterpreted and miscommunicated by the media or at large in ways that we then all are in the broader audience are drawing conclusions.JC Scott (19:31):I mean, my conclusion talking to you about this, Dan, is I'm just going to call you to ask you some of these questions and not trust what I read in the paper. But do you have a perspective on that?Dan Judy (19:40):It's certainly frustrating, but it's also I think kind of like complaining about the officiating in a football game. It's something that you just have to kind of live with. I do think that most major media organizations have become fairly savvy at interpreting polling results. That's not to say that they're perfect by any means, but I do hope that there will be some lessons learned, not just among pollsters where I think there are certainly been lessons learned since 2016. But I'm hopeful that there will be lessons learned among the media as well after what we saw in 2016.JC Scott (20:14):So for my last question, I'm going to put you on the spot to make a prediction. Because obviously the outcome of the election is going to impact directly the debate around healthcare policy and drug pricing policy, and a lot of the questions that our listeners care about. At this point based on the data you've seen, what do you think happens in November?Dan Judy (20:34):If the election were held today, Joe Biden would win. I don't think a very controversial statement to make, but the election is not going to be held until many months from now. That time will go by quickly, but right now I do not want to predict, I mean, if you think about the election is what? About four months away, think about what the world looked like four months ago. That's why I don't want to make any predictions. So I would just say that people should buckle up, put on your mask and watch with great interest.JC Scott (21:04):Dan, that's great advice. And maybe we'll have to have you back a little bit closer to November to see how you've upgraded or updated your forecasting.Dan Judy (21:14):I'd be happy to.JC Scott (21:15):Well, Dan, thanks so much for spending time with us today and being a guest. I really enjoyed the conversation and I want to thank all of our listeners as well and hope that you found the conversation informative too. If you haven't done so yet, please subscribe to the Pharmacy Benefit on Google, Apple, Spotify, or any of your favorite podcast sites. Thanks for joining us and I hope you'll be back.