Noshing With Antonio Ciaccia – November 9, 2023

Ira's Everything Bagel

President, 3 Axis Advisors

In this enlightening episode of Ira’s Everything Bagel Podcast, host Ira Sternberg delves into the complex world of prescription pricing with Antonio Ciaccia, the president of 3 Axis Advisors. Known for his deep expertise in the pharmaceutical industry, Antonio discusses the findings of a groundbreaking study conducted by his company, which explores how prescription prices are set. This episode uncovers the intricate role that Pharmacy Benefit Managers (PBMs) play in determining the prices consumers pay at the pharmacy counter and raises important questions about the transparency and fairness of the current system.

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The Role of Pharmacy Benefit Managers (PBMs) in Prescription Pricing

Understanding PBMs and Their Influence

Pharmacy Benefit Managers (PBMs) are intermediaries in the healthcare system that manage prescription drug benefits on behalf of health insurers, Medicare Part D drug plans, large employers, and other payers. In this episode, Antonio Ciaccia explains how PBMs, which were originally introduced to help contain drug costs, have evolved into powerful entities that often do the opposite. The study conducted by 3 Axis Advisors revealed that the overwhelming majority of prices paid by consumers at the pharmacy are based on price points established by these PBMs. This means that rather than negotiating lower prices, PBMs often contribute to the inflation of drug costs.

The Broader Ecosystem: Overpaying for Brand Drugs

Why Are Consumers Overpaying?

One of the key findings discussed by Antonio Ciaccia is the phenomenon of overpayment for brand-name drugs. In the broader ecosystem of drug pricing, consumers are often forced to overpay due to the complex and opaque pricing strategies employed by PBMs and health insurance companies. Ciaccia explains that these entities frequently set higher prices for brand drugs, which can result in significant out-of-pocket expenses for consumers. This overpayment is further exacerbated by a lack of transparency in the pricing process, making it difficult for consumers to understand why they are being charged such high prices.

Health Insurance Companies and PBMs: Cost Containment or Cost Inflation?

The Role of Health Insurance Companies

Health insurance companies are supposed to act as a check on drug prices, ensuring that consumers get the best possible prices on their medications. However, as Antonio Ciaccia points out, the reality is often quite different. Instead of containing costs, health insurance companies, working in tandem with PBMs, often contribute to the inflation of drug prices. This is because PBMs and health insurers can benefit from the higher list prices of drugs through various rebates and fees that are not always passed on to consumers. This practice creates a perverse incentive for PBMs and insurers to prefer higher-priced drugs, even when cheaper alternatives are available.

The Call for Transparency and Ending the Anti-Kickback Exemption

Proposing Reforms

In response to these troubling findings, Antonio Ciaccia advocates for greater transparency in the drug pricing process and calls for an end to the exemption to the anti-kickback law that currently allows PBMs to receive rebates from drug manufacturers. This exemption has been a key factor in the misaligned incentives that drive up drug prices. By eliminating this exemption and increasing transparency, Ciaccia believes that the market can be reformed to better serve consumers, ensuring that they are not overpaying for their medications.

Antonio Ciaccia’s Background and Expertise

From Pharmacy Technician to Industry Leader

Antonio Ciaccia brings a wealth of knowledge and experience to his role as president of 3 Axis Advisors. His journey began as a pharmacy technician, where he gained firsthand experience in the pharmaceutical industry. He later pursued dual degrees in communications and political science from The Ohio State University, which paved the way for his career in research and association management. For several years, Ciaccia led government affairs for the Ohio Pharmacists Association, where he became a vocal advocate for drug pricing transparency.

3 Axis Advisors: Shining a Light on the Pharmaceutical Marketplace

Research and Advocacy

Under Antonio Ciaccia’s leadership, 3 Axis Advisors has become a leading voice in the push for transparency and fairness in the pharmaceutical marketplace. The company specializes in conducting in-depth analyses of drug pricing practices and advocating for reforms that protect consumers. Their work has shed light on some of the most dysfunctional aspects of the pharmaceutical market, exposing how complex pricing structures and hidden incentives can lead to inflated drug costs.

The Future of Prescription Pricing

What’s Next?

As the episode concludes, Antonio Ciaccia offers his thoughts on the future of prescription pricing. He expresses hope that with greater transparency and regulatory reform, the market can be realigned to prioritize the needs of consumers over the profits of PBMs and health insurance companies. Ciaccia’s insights provide a clear roadmap for the changes needed to create a more equitable and efficient pharmaceutical marketplace.

Connect with Antonio Ciaccia and 3 Axis Advisors

For those interested in learning more about Antonio Ciaccia’s work and the ongoing efforts to reform drug pricing, you can follow 3 Axis Advisors on their social media platforms and visit their official website for the latest updates and research findings:

🔗 Useful Links:

• 3 Axis Advisors Official Facebook
• 3 Axis Advisors Official LinkedIn
• 3 Axis Advisors Official Website
• 3 Axis Advisors Official Twitter

FAQS About Antonio Ciaccia

Who is Antonio CiaCCia?

Antonio Ciaccia is a prominent figure in the pharmaceutical industry, known for his expertise in pharmacy benefit management (PBM) and drug pricing. He has a strong background in pharmacy advocacy and is recognized for his work in bringing transparency to the complex drug pricing system in the United States.

What is Antonio Ciaccia known for?

Antonio Ciaccia is known for his role as a thought leader and advocate in the pharmaceutical and healthcare industries, particularly in the areas of drug pricing and pharmacy benefit management. He is the CEO of 46brooklyn Research, a nonprofit organization focused on providing accessible data and analysis on the U.S. drug pricing system. He is also known for his role as the President of 3 Axis Advisors, a consulting firm specializing in healthcare research and advisory services.

how long has antonio ciaccia been in the pharmceutical industry?

Antonio Ciaccia has been involved in the pharmaceutical industry for over a decade. He started his career working in pharmacy advocacy and policy, gradually moving into roles that focus on drug pricing and healthcare transparency. His work spans various sectors of the industry, including both the public and private sectors.

is antonio ciaccia married?

Information regarding Antonio Ciaccia’s marital status is not publicly available. He is a private individual, and personal details about his family life are not typically disclosed in public forums.

who is 3 axis advisors?

3 Axis Advisors is a consulting firm co-founded by Antonio Ciaccia. The firm specializes in healthcare research and advisory services, with a focus on drug pricing, pharmacy benefit management, and healthcare policy. 3 Axis Advisors works with various stakeholders in the healthcare industry, including policymakers, healthcare providers, and pharmaceutical companies, to provide insights and strategies that aim to improve the efficiency and transparency of the healthcare system.

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Antonio Ciaccia Podcast Epsiode Full Transcript
Ira Sternberg: Welcome to Ira’s Everything Bagel, where I talk with intriguing people about everything: their passions, pursuits, and points of view. $500 billion is spent on prescription drugs every year. The question is, why do prescription drug out-of-pocket costs remain so high? The answer may surprise you. In a recent study by 3 Axis Advisors, they set out to determine just how prices are being set, and what they found is that the overwhelming majority of prices paid by consumers at the pharmacy counter are based on price points established by health insurance corporation intermediaries known as pharmacy benefit managers. My guest today is Antonio Ciaccia, president of 3 Axis Advisors, who will explain the study and its implications. For everything about Antonio and his firm, go to 3axisadvisors.com, and you can follow them on LinkedIn, Twitter, and Facebook. Antonio, welcome to the show.
Antonio Ciaccia: Great to be with you today, thanks.
Ira: So, just before we start with the actual information, tell us a little bit about 3 Axis Advisors and why you named it that, because that would not have been popular during World War II.
Antonio: (Laughs) My background was in pharmacy. I was born and raised in a pharmacy household. My dad’s a hospital pharmacist of about 40 years, my sister’s a Walmart pharmacist of about a decade. I worked as a pharmacy technician for about three years and said I wanted to be just like them. Then I hit organic chemistry and said, “There are better things to do with my life.” I switched over to journalism and political science, and shortly out of college, I found myself right back in pharmacy, that time working for the Ohio Pharmacists Association, a trade association that represents pharmacists licensed in the state of Ohio. Within that time period, I was introduced to the wild world of drug pricing from a pharmacist’s perspective. Pharmacists, you know, they are clinicians, but primarily their compensation comes through the dispensing of medicines. So, when there’s pressure put down on reimbursement for medicines, pharmacists as a profession will feel the pinch. What I learned was that on the other end of the transaction, when pharmacists were feeling the pinch, meaning that reimbursements were being cut, the people on the other end of the transaction weren’t saving any money. What we found was that there was this growing gap that lived in between what pharmacists were paid for medicines and what patients and payers—employers, Medicaid programs, etc.—were being charged for those same medicines. We started essentially a journey of drug pricing journalism. I started a nonprofit organization in 2018 called 46brooklyn Research, which was intended to be a sandbox for drug pricing journalism and something to annoy my wife between the hours of 9:00 p.m. and 12:00 a.m. After we launched that, it kind of took over in a way that I didn’t necessarily envision, and so it necessitated creating a side hustle that I call 3 Axis Advisors. The 3 Axis machine was actually developed as a flying machine for the Wright brothers years ago when they were discovering flight through a series of failures. Since we are in Ohio, as were the Wright brothers, and “axis” obviously has a connotation around graphing, which we dedicate a lot of our time to visualizing drug pricing data, we kind of intersected all those things together—success through a series of failures, which anybody who’s navigated trying to pay for drugs in an affordable way would know it’s going to be many failures along the way.
Ira: Oh, yeah.
Antonio: But our firm, you know, we started in 2019. The side hustle became a full-time hustle just because of demand. Today we do work with Medicaid fraud control units, state attorney generals, state auditors, Medicaid programs, employers, law firms, benefits consultants, and industry disruptors like transparent pharmacy benefit managers or groups like the Mark Cuban Cost Plus Drug Company. So that’s who we are and how we came to be.
Ira: So, you’re still in a way in the pharmacy world; you just couldn’t get past that organic chemistry class.
Antonio: (Laughs) I don’t know if I would have been able to or not. I made the choice that I wasn’t ready to find out. I was interested in other pursuits at that point.
Ira: I would think you’re indirectly helping your family as well, the ones that are actually pharmacists, when they hear about what you do.
Antonio: There’s no question that they find what I get to do very compelling since, you know, as pharmacists, they are clinicians, and so they’re more focused on how the medicines work for a patient within their particular disease states. Usually, most pharmacists will tell you they’re just passengers in the vehicle when it comes to the financing of drugs—they don’t have a material impact. We could actually discuss that as part of our study, but pharmacists are just kind of, you know, ornaments on a larger tree. So, oftentimes, pharmacists through no fault of their own just say they leave the pricing stuff to the side and focus on what the drug actually does for that patient.
Ira: Sure, or interactions with other drugs as well.
Antonio: That’s right.
Ira: Tell us, before we get into the study, just for simpletons like me, how it works. You have a drug manufacturer who then gives it to this intermediary, who then prices it in a certain way before it gets to the pharmacy. Is that roughly it?
Antonio: So, there are many layers in the proverbial layer cake of drug pricing, but from a big-picture perspective, you have a drug manufacturer who sells a drug to a wholesaler. For those who may not know what a wholesaler is, think of them as like the warehouse for a lot of medicines—they’re buying from multiple manufacturers: Pfizer, AstraZeneca, GlaxoSmithKline, etc. Then the wholesaler, which are companies that many people may not have heard of, but maybe you’ve seen their trucks on the highway—McKesson, Cardinal Health, AmerisourceBergen—they are essentially the warehouse, and pharmacies buy their drugs from wholesalers, and then pharmacies sell those drugs out in the open market. Now, over 90% of drug transactions in this country occur with a third-party intermediary, meaning that health insurance or a government program are buying those medicines, and typically they’re buying their medicines through another vendor that they hire known as a pharmacy benefit manager, or PBM. So, from a product flow perspective, the physical product is made by the manufacturer, sold to a wholesaler, who sells to a pharmacy, and then gives it to a patient. That patient will pay some of their own money sometimes to pay for that medicine at the pharmacy counter, or they’ll receive cost-sharing or assistance from their PBM and health insurance company.
Ira: Okay, so that’s where they fit in the chain. Is there another cost that is not included in your study? And what I mean by that is, you mentioned the manufacturer—or I mentioned the manufacturer initially, and you obviously talk about it—what if the manufacturer is overseas? Isn’t there an additional cost coming from the manufacturer to ship it to the United States?
Antonio: Without question. You know, when a manufacturer is setting their prices, they’re factoring in a slew of factors. Let’s say I was a manufacturer and I was, you know, located in Norway. I am going to factor in the actual cost of physical production, the cost of paying rebates to Medicaid programs, paying rebates to the Department of Veterans Affairs, factoring in any sort of increased price I want to create because of, let’s say, failed drugs that are in the pipeline or drugs that I’m trying to get over the finish line, or other drugs in my portfolio that maybe haven’t made it to market yet. They’ll factor in other things like transportation and things like that, payments to drug wholesalers, etc. So, there’s a big stew that is cooked when a manufacturer is factoring in how they want to set their prices, and some of that will be the cost of transportation.
Ira: The study itself—why did you decide to embark on the study? How long did it take you to conduct the study? And were you surprised at the results? I know that’s a three-part question, so take it away.
Antonio: (Laughs) It’s okay. We are curious by nature. What I mean by that is most people would assume that drug pricing is relatively straightforward, and I could tell you my perception when I entered a more sophisticated degree of research in this space. My perception was drug makers set the price, and now we are all subject to that price. So, at the beginning of every year, brand drug manufacturers—that’s usually when they take all their… a majority of their increases that will occur over the course of the year will occur in the month of January. Usually, folks will see the headlines in January that, “Oh my goodness, hundreds of drugs went up in price, and they went up by X amount of percent,” and the impulse reaction is, “How dare those manufacturers do that again?” Right? And not to shift blame by any stretch—certainly, the manufacturer is creating our starting point experience. But if I’m being honest, we’re telling a very small portion of the story. If a brand manufacturer sets a price for a drug, there are other things that we have to consider from a system perspective. So, as an example, what are brand drugs? In the United States, we allow brand companies to produce new medicines, and in exchange for that, we want to incentivize them to bring new innovative products to market. That incentive takes the form of a patent. We grant a patent to a drug manufacturer who brings something new and innovative to the market. Now, we can debate whether or not it is of high quality relative to other drugs that are already in the market, etc., but the idea is that if you’re a manufacturer and you bring a new formulation or a new product to market, we’re going to give you a patent. That patent gives them exclusivity that allows that manufacturer to set the price however they choose, and they’ll do so based upon what they can maximize in the marketplace or essentially what the market will bear. We could say that’s a good thing or a bad thing, but that’s the structure we have in the U.S. There’s a catch, though. After a certain period of time, that exclusivity period lapses, and even though that manufacturer holds that patent, the recipe, if you will, of that drug is gifted to the marketplace, where other manufacturers can produce generic or biosimilar versions of that innovative product. That ultimately creates competition where perhaps it didn’t exist before. So, from a system perspective, we rely on the incentives of patents for brand companies to continue to bring new innovative therapies to the marketplace. Eventually, their exclusivity runs out, generic manufacturers get the recipe for the drug, and that competition between those manufacturers is meant to bring down the underlying cost of that drug, such that the previous manufacturer, who was making so much money off that brand product, now loses their breadwinner. If they want to continue to be profitable, they have to bring a new product to market. So, if I’m telling a story about drug pricing at the beginning of the year and saying, “So and so raised their price for a drug,” it’s relevant, it’s important, and we need to track it. But it’s also important to view that experience of a drug price increase or a new drug launch price within a broader ecosystem, where we’re supposed to overpay for brand drugs because they eventually will become cheap generic drugs, and then the circle continues.
Ira: But now the PBMs step in, and somehow, based on your study, you found that’s where the pricing gets dicey because of the PBMs.
Antonio: It is. So what we did is we said, “Look, everybody complains about drug affordability,” and far be it for me to say they should or shouldn’t. When I worked as a pharmacy technician up in Cleveland, Ohio, for a regional grocery pharmacy, I’ll never forget—I would see patients walk away from the pharmacy counter if they had a cost-sharing of $5. So, everybody has their own economic situation as individuals, and far be it for any of us to opine as to what equals affordability because it will be very different for different people. But we talk about the prices of medicines, and usually, when we talk about the prices of medicines, we do so with anger because we know that broadly—or we think we know broadly—that medicines are unaffordable. Well, I don’t like living in aggregate stories. I love living in detail because the truth is, there are many drugs that are insanely affordable relative to my perception—drugs that, from a cost perspective, are less than $10 a month all in. And then there are other drugs that are thousands of dollars per month, or there are some drugs that are gene therapies that are a million dollars or $2 million for a one-time administration, but you never need it ever again—that’s the idea. So again, without taking sides as to what is affordable and what isn’t, what we asked was, “Well, usually when we talk about affordability, there’s a number of constituents that we think about when we’re concerned about whether medicines are affordable for them.” What I mean is, what about the employers who are providing health benefits for their employees, the Medicare program that’s providing benefits to seniors, Medicaid programs that are providing coverage for the sick, the poor, the disabled, and a number of other programs, right? Usually, when politicians talk about affordability, they’re talking about the patient. So what we said to ourselves is, “Well, a lot of times, the headlines of a drug price increase or a pharmacy price or whatever price leave out what’s actually the patient experience.” And so, being pharmacy guys, we said, “Let’s take a look at how prices are being set at the pharmacy counter so that when the patient actually walks up to the counter, who can we point the finger at to say who created this price or how was that price derived?” What we found was that an overwhelming majority of the time, these intermediaries, these PBMs, who work on behalf of health insurance companies, were the ones creating the price at the pharmacy’s point of sale—the one that’s ultimately the experience of the pharmacy and the patient.
Ira: So the question then is, are they doing so in a way that is aligned with the interest of the patient or the plan sponsor in mind?
Antonio: In addition, understanding that there’s significant market concentration in the PBM marketplace, how might we see the prices that are being set by larger PBMs versus smaller ones, or can we see how the price might be different from one pharmacy to another? What we found was that the PBMs are setting prices the same way that I would blindfold myself and throw darts at a dartboard—because it makes no sense. Our report is very much in the weeds, and it deals with very technical aspects of how we pay for medicines within health insurance benefits, but it was meant to demonstrate that if we care about affordability from a patient perspective, we need to have a much better understanding of how these Fortune 15 PBMs are operating and how they’re choosing to set the pricing experience at the pharmacy counter.
Ira: Now, the people that would— I won’t say benefit from the study, but who would use the study, I assume, would be state legislatures, national legislatures, the Senate, and the House—Congress in the United States—to set public policy. Would that be a fair assumption?
Antonio: I think it’s impossible for us to divorce the report from the larger, you know, scuttlebutt that’s happening in Washington, D.C. right now. PBMs are— I was going to say enjoying, but they’re probably not—but they are having their moment in the sun, if you will, within Congress and the Federal Trade Commission and state attorney generals across the country. So, certainly, the report drops right in the middle of that backdrop. But if I’m being honest, you know, I certainly would intend for people who are serious about setting drug pricing policy from an affordability perspective, I would task them with better understanding what we’re actually teaching them in these reports. But we also offer it as a way of helping patients better understand how the system works. Again, when I worked in pharmacy, you know, I didn’t pay attention very much at the time, but I could tell you that I paid attention enough to say it was a roll of the dice as to what patients were going to be charged for a particular medicine. The first patient would walk in—zero dollars. The next one walks in—five dollars. The next one—ten dollars. The next one—twenty dollars. The next one—fifty dollars. And then you see hundreds of dollars, right? Again, I wasn’t sophisticated at the time, so I wasn’t thinking about it clearly. I was in high school at the time—I had other things going on. But, you know, it was just very fascinating to me, looking back on it, how it just felt like the spin of a roulette wheel.
Ira: Yeah, sort of like airline tickets.
Antonio: That is exactly right, except at least with airline tickets, when you go online and you get a quote for your flight, you will get it right then and there. With drug pricing, it’s absolutely not the case. One of the things that we saw within our study—to me, it was the most fascinating thing. Some policymakers sometimes will gloss over this phenomenon. There’s a drug called duloxetine. It’s a very popular medicine. We see it—you know, employers are paying a lot of money for it, patients are paying a lot of money for it—but it’s a generic drug, which means there are multiple manufacturers that create different versions of that medicine. So what we did is we said, “Look, we understand that a PBM might like flexibility to pay different rates to different pharmacies or maybe pay different rates based upon which manufacturer’s product is being purchased.” That’s not really how it works in practice, but walk with me down the road here. So what we said is, “Let’s take a single one, a unique identifier for a single prescription made by the same manufacturer, and let’s see how the exact same PBM on the exact same day at the exact same pharmacy chose to price that drug.” And what we found was, because this drug is so popular, we found a pharmacy that dispensed over five different claims for this version of duloxetine on the same day to the same PBM, made by the same manufacturer, and they set five different prices. The prices ranged from $9 and change per prescription all the way up to $96 per prescription.
Ira: Amazing.
Antonio: So how is that possible when our perception of drug pricing is that the drug manufacturer sets a price or the pharmacy sets a price, which they do? The question I ask is, then, how is the PBM creating five different prices on the same day at the same pharmacy for the exact same drug?
Ira: Is there an answer to that?
Antonio: I have not received one yet.
Ira: (Laughs) Okay, you’ve raised the question, but there’s no answer yet.
Antonio: Yeah, and I could tell you a simplified version that is going to be somewhat unfair, and I’ll offer it in the absence of getting a good explanation from the PBMs themselves. This is profit maximization, right? They are running a casino. If we backtrack, what we talked about at the front end—how the physical drug flows through the distribution channel—a drug manufacturer makes it, sells it to a wholesaler, who sells it to a pharmacy, who sells it to a patient. Those three layers I just mentioned—those are publicly traded companies, for the most part, from a market share perspective. We should trust that drug manufacturers want to charge as much as the market will bear. We should trust that they will sell to wholesalers who want to do the same thing. And we should trust that they will sell those drugs to pharmacies who will want to do the exact same thing. The health insurance company and the PBM were brought in to act as a necessary friction against the incentives of that one end of the drug supply chain, who left to its own devices would love to mark up the drugs as much as they could get away with. But that’s not what’s happening. Over time, health insurance companies and PBMs have actually vertically integrated, and now they start making money off the very transactions they were hired to control. So they make whatever money they can by maximizing the same allowances that the old drug supply chain members used to. We offer the study not as a way to say, “Hey, it’s all the PBMs’ fault,” because at the end of the day, the PBM experience—the price that the PBM sets—will often be less than what the manufacturer charged or what the pharmacy chose to charge. But in my experience, those sticker prices charged by manufacturers and pharmacies are aspirationally characterized at best, meaning they set bogus inflated prices understanding that that will be the starting point for their compensation. So drug manufacturers overprice medicines relative to what their net prices are—same thing with pharmacies—because PBMs will ultimately negotiate a lesser rate off that starting point. We should trust the PBM at that point to be a good negotiator on our behalf and to ensure that whatever savings they render, they push back to the patients and plan sponsors. Instead, it’s a series of them trying to maximize what they can get away with, charging differential rates based on what their marketplace will bear. So it begs the question, who’s holding the middleman accountable when it comes to setting these prices?
Ira: And do you see it from your perspective that that’s going to be a function of government? Because middlemen always get the negative attention over the centuries, but middlemen are essential to an economy, especially a free enterprise economy. In this case, there seems to be some abuse—allegedly. And so, are you recommending perhaps some governmental intervention through legislation, either state or national, to deal with it?
Antonio: Well, I could tell you what’s necessary before we get our hands too dirty in trying to overregulate a marketplace, which I’ve certainly seen cut in the wrong direction as well. To me, the drug industry is dysfunctional and unique from a number of perspectives. In the old days, we used to take a rational approach to the pricing of medicines, and it’s just really evolved away from that. Years ago, PBMs and insurance companies, along with drug makers, got an exemption to federal anti-kickback laws. Ronald Reagan signed anti-kickback laws in 1987. The drug industry and the drug supply chain got exemptions in the 90s that allowed them to engage in pay-to-play, where all of a sudden, competition doesn’t lower prices—it actually inflates them. And so, as a result, we’re stuck with a system of bogus inflated prices in the United States that are not born out of traditional competition. Add to the fact that we’re talking about life-saving drugs, and we as consumers are kind of stuck. So one of the things that we advocate for is maximum amounts of transparency—in fact, uncomfortable degrees of transparency from a business perspective—such that the employer and the patient can have better information with which to navigate a very convoluted and opaque system. We also believe that the special exemptions made to anti-kickback laws aren’t worth the trouble that they’re currently presenting in the marketplace.
Ira: Two questions before I let you go. One is, how long did the study take to do? I think I asked that earlier, and I always remember a question I asked that was not yet answered. So how long did the study take to do?
Antonio: The study took us about six months. We had over a thousand pharmacies who participated, who voluntarily handed over all their reimbursement and drug pricing data for the purposes of us being able to analyze their experience so that we could create these findings. It was sponsored by an organization called the American Pharmacy Cooperative Incorporated. This is an independent pharmacy cooperative based out of Alabama, who, obviously from an independent pharmacist’s perspective, I think they have an ax to grind with the way that they’re treated in the system as well.
Ira: And is the study available on your website?
Antonio: That is correct. So the entire study, if you’re well-caffeinated and you have the stomach for it, it’s 88 pages, and it’s over at 3axisadvisors.com.
Ira: Last question for you before I let you go: What would be, if you looked at the study in its totality, and you look at the reality of what’s going on in the American pharmaceutical world, what would be your ultimate recommendation or suggestion for improvement or change?
Antonio: I do think that we need to repeal those anti-kickback exemptions that were given to the drug channel. Again, they result in an environment where competition inflates prices rather than lowers them. The system is so weird—you know, these kickbacks, they walk and talk like rebates. If you and I were to go buy a dishwasher at the local hardware store or department store, we’d see a $1,000 price tag, and then there’d be a $100 rebate associated with that. We, as the ones purchasing that dishwasher, would be the ones getting that $100 rebate. That’s not how it works in the drug channel. We, as patients, overpay and generate rebates that are then harvested by intermediaries like PBMs and health insurance companies.
Ira: I promise this actually will be the last question—I thought I was done, but I had one more question. What’s the reaction been so far to the study?
Antonio: Shock and awe would be the best way that I can describe it. Because, you know, I think a lot of people assume, yes, PBMs are going to have a role in creating the prices that we pay—obviously, that’s by design. If manufacturers and pharmacies are setting inflated prices, and the PBM aims to negotiate from them, of course, the PBM will have an impact on the price. But in Capitol Hill, PBMs are saying drug manufacturers—and drug manufacturers alone—set prices. It’s just not true. Everybody has a hand in setting the experience that we have as consumers when we buy our medicines. I think people assumed that yes, PBMs had a role—they certainly didn’t assume that they would price the same medicine on the same day five different ways at the same pharmacy.
Ira: Well, that’s a great way to leave it. My guest has been Antonio Ciaccia, president of 3 Axis Advisors. For everything about Antonio and his firm and the study, go to 3axisadvisors.com, and you can follow them on LinkedIn, Twitter, and Facebook. Antonio, thanks for being on the show.
Antonio: Ira, great to have the conversation—appreciate you having me.
Ira: Absolutely. And join us every Thursday for a new “schmear” on Ira’s Everything Bagel.

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