The Business of Pharmacy Podcast™
Oct. 24, 2022

Analyzing PBMs for Employers | Trevor Daer, BESc, Granite Peak Analytics

Analyzing PBMs for Employers | Trevor Daer, BESc, Granite Peak Analytics

Trevor Daer, BESc, CEO of president and founder of Granite Peak Analytics discusses how he analyses PBMs for businesses.

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(Speech to Text)

Analyzing PBMs for Employers | Trevor Daer, Granite Peak Analytics

Mike Koelzer, Host: [00:00:00] Trevor, for those that haven't come across you online, introduce yourself and let our listeners know what we're talking about today.

Trevor Daer: I'm Trevor dare. I'm the president and founder of granite peak analytics. And, uh, a lot of what we're gonna talk about today is PBM analytics, what lessons learned, allowed us to find a niche within the marketplace and understand that there's a substantial need for our services.

Mike Koelzer, Host: When you started this company, did you get to a point of discussion with the industry or was it just an inkling that there were some holes in the market?

Trevor Daer: Uh, I think discussion would be a very light way of putting it. Um,

Mike Koelzer, Host: That's a light way.

Trevor Daer: yeah, yeah. Yeah. I first started digging into the pharmacy, um, financing a piece of the market or PBM, if you will, probably about 10 years ago. And what I was doing then was advising, healthcare consultants and self-funded plans on their pharmacy spend and making sure that their PBMs were doing well.

Mike Koelzer, Host: How did you end up in that job?

Trevor Daer: I had no idea what I wanted to do when I graduated college. So, zero pharmaceutical background, graduated with a degree in environmental science and thought I would be out counting the number of elk in Montana and making sure their population was, you know, sustainable. And , I ended up having to grow up really quick.

I graduated college on a Sunday and my daughter was born on a Tuesday. And all of the plans I had for finding a job or being able to take time to find a job, kind of went out the window. And I was fortunate to have a, a leading third party administrator in the nation, in my backyard. And I could consider myself so fortunate to get that opportunity because it helped me understand all the different components of healthcare financing, all the pieces.

So all the players, um, the risk, all those things were extremely beneficial. And I got to a point about halfway through my tenure there, where they needed someone to just kind of manage the pharmacy, the PBM relationships. And we started our own cost plus mail order pharmacy. Well, before Mark Cuban did.

 It was always a very obscure market and. 

Mike Koelzer, Host: Did you guys,, talk as poorly of the PBMs as you would hear in a pharmacy or when you went into that relationship, was it a 50, 50 kind of thing? Or did you hear rumors of them being so dominant?

Trevor Daer: It actually came from our founder at the, when the third party administrator had got into the onsite clinic business and he always asked our PBM partners, what is the drug cost? And he never got the answer he wanted. They never told him, like, this is what it costs. They're like, this is, this is the ingredient cost.

He's like, I know, but what did they buy it for? Yeah. We can't tell you that. And so the onsite clinic allowed him to buy kind of at wholesale and he went, hold on a second. This pill is, you know, I can get this for a dollar 36 for a 30 day supply or whatever. and that's when the light bulb went off, that every client can't have an onsite clinic or near site clinic, but if we can use that same pricing methodology and pass that to our clients in a mail order solution, maybe that has some likes. Um, so that was, it was definitely a, you always kind of knew something was going on with the PBMs back then, but they were just sort of necessary. Like if, if you wanted your clients to have a card that said $5 copay or 20, that's what you used them for. And that's kind of where it started. And where I started getting involved was I would ask questions about formulary changes and never get an answer.

That was, that I felt was right. 

Mike Koelzer, Host: So your boss slash owner tipped you off, but then you were coming across it yourself. When you started dealing with them.

Trevor Daer: Yes. Yes, I did, and then we had a pharmacy too. So we were able to see, we had insight that most didn't and so I'll never forget it. A, it was an inhaler and one inhaler was going off the preferred list. Another one was coming on and all of our patients had to switch and we got this nice notification from the PBM telling us, this is, this is great.

Um, we review these things for cost and quality, and here's the new preferred inhaler. And here's the amount of people that are impacted. Send it out to us. I said, well, I called our pharmacy. I said, what's the cost of this one? Uh, you know, I was like, save 40 bucks. What's the cost of the one that they're preferring and it's 60.

Like, well, that doesn't make any sense. Why are they preferring a, a [00:05:00] higher cost item? And, and I'm like, there's no clinical difference, right? Like we're talking about, she goes, no, it's, it's, they're the same,

basically. And so I kept asking the question and they said, well, you know, we get a better rebate.

So even being as young as I was, I went, well, I'll go to my contract and see who gets the rebate. Well, we were getting some of the rebate, but it was just a flat amount. So it was very clear. I put two and two together and went, oh, you're making this change because it benefits you. And that's where I just got this burning desire to find something that would fix that because I knew that only one, one entity was winning in that scenario and, and it wasn't my clients, it wasn't their patience.

It was just the PBM

Mike Koelzer, Host: You kind of hope everybody could be winning, but I think the biggest issue there is you had no idea how much they were winning you. You didn't know, you knew they were winning and because they were keeping it secret, they were probably, starting 20 yards up and a hundred yard dash kind of thing.

Trevor Daer: Yeah, I think my biggest frustration with it was doing it under the guise of doing something right. And good. Like they, they were kind of, they were making it sound like it was really good. It, and it was so it, it just didn't seem ethical. And so that's where I got really frustrated and just started digging.

And I would ask question after question and they eventually just stopped responding to me. They like, we, we can't actually answer your questions, and right about that time, they didn't like that. We started our own meal order pharmacy either, cuz that was a revenue source as well. So we kind of had two paths, kind of merging and then diverging in the sense that it was like our, our PBM partner. We know they're not probably giving us the best deal and they don't like our cost plus pharmacy.

We need to find another partner. And that's what started this like quick movement of, okay, who's our partner and are there any good ones? Pass through and transparent that wasn't even a thing.

Then it was, you just didn't hear about it. Um, but we are fortunate to find one that kind of checked all those boxes where they're like, we don't get paid any different.

If you use your, you know, your mail order pharmacy, we don't care. We want to help you grow it actually. So. Here's how we'll hope that, and here's, you know, well, what your clients pay us is what we pay pharmacies like, oh, that's great. So if I say, how much does this drug cost, you can tell me. And that's exactly what the pharmacy got paid.

 So it all started adding up, but then you got to the point where we're still in an industry that was talking about discounts and rebates and, um, spreadsheeting healthcare was like, okay, how do we take this model and convince our clients that it's better when if you do a side by side, in the traditional sense, it's not gonna show up as well. I think that's where I really learned to kind of take a really complex topic and kind of filter it down into something that was very understandable and why would work. And sometimes it didn't work, you know, sometimes clients and brokers were like, yeah, no, how can that company get as good a deal as CVS on these drugs?

And it's like, at that point, you're like, well, they're not actually, you. Developing the drugs, manufacturing them and trying to educate 'em on that. Eventually you're just like, whatever, keep doing what you're doing. Plus there were a lot of financial incentives for people to keep the status quo of money flowing in.

So they didn't like us opening up that to say, no, you can actually see what everybody's getting paid here.

Mike Koelzer, Host: So Trevor, you spent about 10 years then in this third party administrator, Getting your feet wet with the PBMs and so on. At the 10 year point, you leave there and get in closer with pharmacies. What happened there?

Trevor Daer: uh, well, candidly, what happened is we had our fourth child and I was flying all over the country. Um, and I was, I was just spread too thin. I couldn't be home enough. I couldn't, uh, be at work enough. And it was, it was just kind of a, it was that moment that I think a lot of people come to where you just go, I have to make a wholesale change and, and have a little faith when doing it.

The short story is about the gentleman that handled the clinical pharmacy operations of the cost plus pharmacy. He and I had become friends working together. I'm not a pharmacist. He handled all the operations, the point of service software, all this stuff to actually run a pharmacy, uh, cost of goods.

I just handled the business development and PBM partner.

So I had known the gentleman for quite some time that, uh, he helped operationalize the cost plus pharmacy for my [00:10:00] time, uh, at the third party administrator. He and I had developed a pretty close relationship. I'm just trying to fight the issues that are occurring in pharmacies. And we both brought something different to the table.

And when I went to leave, uh, and do something different, I really only had a couple of options. You know, I live in Montana. There's a few insurance companies, there's actually three third party administrators. Uh, and then there's broker consultants. Um, and broker consultants really advise the plan sponsors on their benefits.

I mean, they hold a lot of the keys to the recommendations and the advice that the plan sponsors are going to eventually take and implement. So they kind of hold the PBM key as well. Um, cuz that's what their plan sponsors are paying them for. And that's kind of the direction I was heading.

And my good friend, Mike, uh Matovich is his name. he, he said, I ki I have this group purchasing, uh, organization that I started. And it's starting to take off before you do anything. Um, just, just gimme a call. Well, gimme a chance to put something together.

Mike Koelzer, Host: So you're at that place for 10 years and you both have similar ideas. At that point, Montana family pharmacies weren't together.

But he, but that was the idea in the air.

Trevor Daer: I think he had started it a couple years before with just a handful of pharmacies in Montana. I think it 

There were four pharmacies. 

Mike Koelzer, Host: So when Mike said, gimme some time to get it together, he already sort of had it, but it was gonna be another step for him to bring you on.

Trevor Daer: Yeah, correct. I didn't know anything about it. I didn't know that he had this company, um, him and I just worked exclusively with the cost plus pharmacy. And so when I went to leave, then he went, we're starting to get some momentum here. I feel like we're really doing the right thing for our independent pharmacy clients.

I could really use someone who understands the payment side, the insurance, the, um, the PDM games, uh, health insurance, all those things. And I was like, well, I, I know that pretty well. I don't know anything about the buying side or what independent pharmacies are doing or how they, how they do it. And he said, that's okay.

We'll work towards that. So when he said, gimme some time, he meant gimme a week to put together an offer. And, and he did. And the most intriguing part about the offer was, uh, work from home and not a lot of travel. So. Um, when I took that to my wife, even though there was a pretty substantial pay cut that was, uh, much more important at the time.

It's just me being around. So we took it and, and that's, that's when I took on the position of business development for Montana family pharmacies is the name of the, the GPO,

Mike Koelzer, Host: Independent pharmacies in Montana. Is that kind of where the name came?

Trevor Daer: Yeah. That's where it started was, uh, just Montana based pharmacies. And then, um, as we grew, we realized that it could go further and the name never changed, but right now I think they have over 90 pharmacies across six different states. Um, so definitely the name is kind of that homegrown. We're a family, we're an independent pharmacy group.

When I started there, I think they were in between probably around 60 pharmacies. Uh, but that's who I eventually was trying to develop business with. I was trying, I was cold calling pharmacy owners and saying here's our solution, uh, primarily on the cost of good side. But then we were doing a lot of other kinda unique things.

And, and that's where I really got firsthand what pharmacy owners were struggling with cuz um, they would just open it once. Or if I get them on the phone, they're like, well, you know, I'm already in a three year contract, but if you can help with this, this and this, like that would be great.

Mike Koelzer, Host: You're getting all their business history along with probably some psychological things. And you 

Trevor Daer: yeah, 

Mike Koelzer, Host: some that you could recommend to the, uh, the local, uh, parole board or something like that as a, as a threat to, shoot up these PBMs. 

Trevor Daer: Yes. Yes. And, it was some of the best experience candidly I ever had because, um, I really understood the psyche of the independent pharmacy owner and what they were struggling with. And honestly, what I found that blew my mind is the games that were happening at the PBM level.

It was just this light bulb of, oh my gosh, they're getting take it or leave it contracts that aren't paying them even at cost. And then what I was trying to sell them was a group purchasing arrangement where they could get a better cost of goods on the wholesale side.

And we could prove to them through running a data analysis that we could. Um, [00:15:00] substantially reduces the cost of goods. So that's what I was focused on was the cost of goods, but I was always interested in the PBM piece, cuz I'd never seen that, contract And the more I learned about it, the more I thought this is really, uh, again, um, discussed would be a good word for it to put it lightly in the sense that you've got these healthcare providers and I'm from Montana.

We've got a ton of rural communities where this is the only, this is the only healthcare a lot of these communities have, or is these, these independent pharmacies. And so it led us down a path to say on the whole sales side, what is the best possible opportunity for you to buy better? And nine times outta 10, we were able to show that what they were doing today was not, was not the best for them.

So then we could support them with. our solution, which is basically, you know, grouping purchases together, being transparent about, you know, the compensation that we're getting and validating that, you know, we, we are reducing your cost of goods. It's not just another percentage point or rebate, um, or what have you.

It's true. What we call it. Net costs. So net acquisition costs or net reimbursement is really what matters.

Mike Koelzer, Host: So Trevor, you are able to tell the pharmacies, look, we can do better for you,

Trevor Daer: Mm-hmm

Mike Koelzer, Host: But when you get these 60, 80 pharmacies, are you dealing with the manufacturer or are you going back to the wholesaler?

Trevor Daer: we're working with the wholesaler. So we're working with a primary wholesaler that allows us, yeah. With our 60 or however many pharmacies we have to collectively buy better.

So that's where we really started pushing was how do we get better pricing for rural Montana stores that don't have the volume and their volume's never gonna change.

Right. You've got a town of a thousand people. Your volume isn't going up anytime. You can never meet, you know, these different, generic compliance or ratio tiers that are gonna get you a better rebate. 

When I first started, we had a contract that did not have any, it didn't have any generic compliance ratio tied to it. And with that, we leveraged it to basically couple multiple generic wholesalers and then created kind of a lowest net price decision tree that would help them buy better.

So it wasn't the silver bullet, right? It wasn't like we said, Hey, we've just got a better, big three contract for you. It was like, we have a better structural contract. That's gonna allow you to. not get penalized for buying a lower cost item, 

but you're still gonna have to order somewhere different 

for some of your things,

Mike Koelzer, Host: Besides the GCR with the wholesaler, was there a little bit better buying from the wholesaler in the group or were the percentages about the same? Really? It just said they got outta the generic compliance.

Trevor Daer: We were actually part of another group. So we had latched onto another group that was a regional chain.

The more traction we got in the market and the more pharmacies wanted to join us outside of Montana.

Mike Koelzer, Host: It seems that the only reason the wholesalers want to deal with a buying group is the threat of you taking a big group away or potential customers away from somebody else.

 Is that the main chunk that the bigger the buying group is the more power you have to say. We're gonna go somewhere else. If you don't give us this deal.

Trevor Daer: I think that's the majority of it. What's interesting. So when we went out to bid, we went out to bid, um, at, at one point with 200 million in annual purchases and thought that would be a fair amount to get a wholesaler's attention that they would want the business. And what we found is none of 'em did, they didn't like the model.

We were replicating services that they were doing or selling. Um, and they just didn't like the model. It was, actually, now that I think about it, very similar to when we started a cost plus mail order pharmacy, and we had a PBM that owned a mail order pharmacy, and they're like, no, we don't really like that.

Right. You guys are doing a lot of the things that we're touting as our differentiator, so we're not touching it. 

Mike Koelzer, Host: So, they didn't want the 200 million because, well, it's like a lot of things. The revenue doesn't mean a lot, unless it's revenue coming in, that's profitable for them. 

Trevor Daer: mm-hmm 

Mike Koelzer, Host: jump at 50 million.

If it's a hundred percent profit, something like that.

Trevor Daer: right. And I think that's probably part of it as they looked at it and said, one thing we realized is, is having a [00:20:00] team of people that really understand the pricing dynamics within a wholesaler arrangement. Um, it's very few and far between people that actually understand all those moving pieces. And so what we did is we took it and said, we know this is all that occurs, and here are all the things that we want because we've identified all the issues in the past.

And all of 'em kind of went. I mean, I would love to have 200 million in purchases from a big wholesaler, a, um, with me wholesaler B, but not with all of these constraints, it's just not worth it. And that's the amazing part is like 200 million is 200 million. Like it seemed large, but, and maybe 10 years ago that would've been something where everybody was really aggressive and it seemed like the market just kind of, it just went flat.

Like none of them were being super aggressive to get business. There were a lot of them. There's a lot of, you know, merger discussions. So it just got hairy really quick. 

Mike Koelzer, Host: You're, going to them and saying here's 200 million and plus, uh, you know, you don't get to step on this follow line anymore and we're not gonna fudge this. All those kind of things that you had inklings of, or proof of, and they weren't willing to go along with that kind of oversight, I guess you'd say,

Trevor Daer: Correct. Yeah, that's a good way to put it.

Mike Koelzer, Host: All right, now, Trevor, I gotta ask you this. You're not one of us pharmacists, so don't take it easy on us, give it to us straight. But you said that in the industry, you saw all the games, how the PBMs were dirty and the wholesalers and the manufacturers, but you stopped short of the pharmacists.

If you were talking to somebody else, would you throw pharmacists in there too? Or are we in that conversation? Are we angels or could you throw us into that dirty pool category too?

Trevor Daer: I think that. a few bad apples, always seem to, rot the entire, you know, orchard 

and, and I don't want that to happen,

Mike Koelzer, Host: as a whole, we don't have the power even to maybe do something so dirty.

Trevor Daer: Right, right. I mean, you all, what I've observed with pharmacists is, sometimes you can be your own worst enemy. And part of it is because, um, what the industry has backed you into. So we've had situations where we'll contract a new PBM for a large employer, and the rates are actually fair and good for the independent pharmacies in the region, but the pharmacies are just so used to getting bad deals that they're like, no, I can't accept that.

Um, I talked to Roger down the street and RO, and it's like, you're not, you can't do that. , um, And then they end up getting, like, they they're like, this is what I want. And you're like, okay, well, that's actually worse than what we offered you, but if you want to negotiate that, um, so I feel like that's just part of the mentality where independent pharmacists have been beat down and had such a lack of control over how much their product costs and what they get paid for it.

That if that's your primary revenue source, you've, you're probably on the selling block or you've just got so much volume that you're, you know, you've got multiple, multiple pharmacies and, and I have empathy for that I think it's produced some pretty impressive entrepreneurs that we're able to shift and go, okay.

Clinical services, um, you know, point solutions, different things that pharmacies have to do. that is away from just like gross and net profit per script. 

And so they've adapted, I, I would say you're some of the most adaptable, um, folks I've ever met

for sure. 

But there's always a couple that are billing, you

know, creams or something that you're like, come on, you know, the me D plans that were, that were stood up and it's like, you guys killed your own med D plan.


come on. 

Mike Koelzer, Host: Our adoption almost two years to the day was, we stopped selling all brand names across the board. We don't have a brand name left in our store. Anything single source we don't do.

And it wasn't a choice between, do I do this or I do that, the choice was, do I lock the door, walk away from it or do I do this? And 

So it's, a couple years since we've been on it, so it saved us. But, uh, it's funny cuz I, I sit there some days and it's like, I had no idea how, if this would. But again, I didn't have a choice. 

I didn't have a choice, So now. You're with your acquaintance in the buying group. What's the next step then that brings you into the granite peak analytics.[00:25:00] 

Trevor Daer: yeah. So what, uh, what Mike and I started doing is kind of simultaneously with the business development with pharmacies . We really had two vectors of helping pharmacies in our state. One was to get the lowest possible cost of goods for. The other one was to figure out how to fix the reimbursement issue and to fix the reimbursement issue.

I had contacts from my prior job with brokers advisors in, in some large payers in the state. And so I just started reaching out to them and scheduling meetings to say, Hey, we'd like to talk to you about, you know, pharmacy, uh, a little bit about your PBM. And, we probably had five of those meetings with entities that controlled a fair amount of lives in Montana.

And every meeting kind of went like this, Hey, we represent independent pharmacies in Montana. Did you know that your PBM selection is actually putting them out of business? Wait, what? No. We've never heard of that. Or we've heard some pharmacies complaining about rates, but you know, it's our job to keep the rates low.

Then I would say, did you also know that you're probably not getting the best deal for your plan?

Mike Koelzer, Host: That's a big part, 


Trevor Daer: Right. They've heard from the whiny pharmacist already.

So that was how the meetings went and they would say, ah, we didn't have any idea of either of those things, we'd get to the end of a meeting and they'd say, what would you like us to do?

What are the next steps? And we said, well, number one, we just wanted you to be aware when you look at, you know, changing your PBM at some point or coming up for renewal, keep these things in mind. Here's maybe some people that you should talk to that could help you with that. you can probably guess what happened.

Nothing, nothing ever happens. Because they had 50,000 other things going on and they're like, whoa, those gentlemen from the pharmacy buying group, they were super nice to educate us on that. But you know, we've got a lot of other priorities. 

Mike Koelzer, Host: They've got priorities, but they're also got, uh, Trips to Hawaii from the PBMs and golf outings and things like that. Is that 

fair to say? 

Trevor Daer: Yeah. Um, definitely fair to say in many cases or, um, maybe not them directly, but their consultant broker advisor, was getting paid to place business there or, you know, getting a nice vacation as a bonus or something like that, whatever misaligned incentive 

you want to enter there. What I think a lot of times happened is they would say, thanks for the information then they would take it to their broker advisor and their advisor say, don't listen to those guys.

This is, you know, we've already done that. And 


so we kept pushing, we had a lot of contacts still that if something didn't smell right, they would send it to Mike and I, and they would say, Hey, can you just tell me if, uh, from an employer standpoint, I'm getting a good deal and we would just do it.

We'd take the spreadsheet full of data. We'd kind of trim it down, see what we could identify and send it back and say, yeah, you know, we looked at your contract, we looked at your data and here's where I have concerns. Here's where I don't. And we just did it cuz we wanted to educate them and help them out.

And they were a Montana employer and we said, man, wouldn't it be awesome if we had a backend kind of pharmacy analytics tool that we didn't have to use spreadsheets, cuz that's a terrible business model. and it could input all the data and then churn it back out into something meaningful. And then we could consult like just truly consult with that data.

It's unbiased. Come in and we can actually do the work that we're asking these people to do.

Mike Koelzer, Host: You mentioned the spreadsheet is just too much of a hassle. You're just punching numbers in and on a basic spreadsheet.

Trevor Daer: yeah.

Mike Koelzer, Host: And you thought you can make that easier, then you're spending more time with your history and your knowledge and things like that and wisdom instead of just spending all your time, to administrate all this spreadsheet stuff.

Trevor Daer: right. So we would get, you know, 12 months of prescription claims all in an Excel spreadsheet 

and then a pharmacist in a, you know, insurance guy, if you will, uh, not, not experts in, in using Excel. So we would go through it and then, and we weren't charging for it cuz we represented independent pharmacies. So we just wanted to give them good insight into their data.

And we thought, man, if we could come up with some type of. Of analytic tools that would do all of this for us. So we can focus on advising and less on the, you know, nitty gritty manual data entry. We might have something and we could, you know, provide the service that we're telling all these players that they should [00:30:00] do.

Like, Hey, um, we can expose all the things that we're talking about and do the work for him.

 The light bulb kind of went off there and we went, okay, let's, let's start looking for that type of analytic platform. And, um, we went down one path cuz we found an analytic platform, but they ended up being more of a competitive solution to what we would do. Um, and then we went down another path and it was a perfect fit.

All they wanted to do was provide the data. And they, and they wanted out of the actual individual consulting and advising. So we were able to subcontract our data platform that would then spit out unbiased information for these plan sponsors. And then it was all about, okay, once you have unbiased data, it's really easy to tell the story.

It's, it's, it's not a concept anymore. And you can show them very clearly that independent pharmacies are your lowest cost option. Go there, stop going to mail order. 

Um, you know, those are the insights that don't typically get brought up, but when you take the misaligned, uh, financial model apart, those are the things that you can advise clients on.

And so we went from, yeah, this is a pretty good idea to forming a company. And then unfortunately, Mike is, you know, he's an owner in multiple pharmacies along with the buying group. And in those, those contracts prohibit him from talking to an employer. so he had to divest.

Mike Koelzer, Host: Even if he became a, board member, et 

it doesn't matter how he's going through it. The fact that he's doing it, he can't do it.

Trevor Daer: Yeah. He's prohibited by many of his contracts, his pharmacy level PBM contracts, um, which tells you something right there. Right? Why wouldn't you allow a pharmacist to engage in? Well, we want to keep the secrets, right? We

wanna, well, if he tells you how much you're paid, then they know how much spread and away we go.

So he divested and we continued working together. We still, we still talk, uh, once a week. but the other problem we had, we had to come up with a different LLC. There's just certain things that need to be firewalled. I can't represent independent pharmacies and payers and he can't represent payers and pharmacies at the same time.

 It's a conflict of interest. And then what, you know, no matter how ethical we say we are, uh, who's gonna believe us. Right. Are you just trying to get independent pharmacies paid 

more? So that's, that's where we made the clean delineation and just said, okay, granite peak analytics, this is the company.

And this is what it does. It helps companies find the right PBM and we expose the data to the company to say that, Hey, this is actually what this pharmacy's getting compensated at an aggregate level. And a lot of 'em go, oh, that's why that, that's why that guy was so frustrated that's why he kept coming to me.

And saying, Hey, I'm losing money. So what I found with pharmacists is they usually take the tact of, Hey, I, you know, I'm not a charity, I'm losing money on all these. 

Well, virtually every employer in almost every broker advisor has no idea what's actually happening. 

They just hear the noisy pharmacist. And then the broker's like, well, that's the contract.

They signed exactly what I used to say. Well, that's the contract they signed? What do you want us to do? Where we kind of flipped the script and said, okay, if we expose all of the data to our client and allow them to make an informed decision, can't we actually improve reimbursements depending on utilization, depending on other cost containment mechanisms that we've put in place like for specialty drugs.

 I think we reduce costs for one of our trusts by $2 million annually. They're publicly funded. Um, counties and school districts, and they've always been very cognizant of the rural pharmacy network. And so we said, okay, we're, we're moving from this PBM to this PBM.

We're gonna reduce costs by 2 million. Here's what it would cost to maintain or improve your independent pharmacy, um, economics. And they're like, we're not a charity either, but as long as there's a balance there, um, we're totally fine with it. So they push six figures of plan assets back into the reimbursements over the year to make sure that their independent pharmacies were compensated fairly.

And that's always the balance, right? Because it's gone all the way down to, it's not fair, it's not appropriate. And there, there is a level of appropriateness and we can get there without overspending. Pharmacy dollars for these plans, cuz these plans have a fiduciary duty to manage their costs, but if everybody ends up going to a CVS in [00:35:00] Walgreens, um, all your costs are gonna go up.

 Plus you're gonna have an access issue in Montana. So why would we want this, you know, our plans to reimburse our community pharmacies at such a low rate that they can't even be in business. It 

doesn't make sense. 

Mike Koelzer, Host: How were you able to crack the nut of finding out the costs that the PBMs were buying their drugs for? Or didn't you have to do that, I guess. You really don't have to do that. You really just have to show how. A company's paying the PBM 

versus how much they would pay the independent kind of thing.

Trevor Daer: Yeah. What, what we expose is all of the overspend in their plan. So that's usually our first engagement is we get paid to do a full analysis of their claims data and their contract. And then nine times outta 10, we're able to show them, Hey, your claims aren't even matching what your contract says. Like they're not even meeting their contractual obligation.

Um, but the contract's written in such a one sided manner that you can't really go after 'em for that money. Cuz they basically told you they're gonna keep it all anyway in the

Mike Koelzer, Host: yeah. Or else they're gonna have arbitration, that's gonna be with their arbiter or and it's gonna cost more than a trial. What or something like that.

Trevor Daer: Right. Exactly. So we get to a point where as granite peak analytics started to gain ground prescription costs are going up. Plans are trying to figure out how to keep 'em lower. Um, we are fortunate to have some pretty substantial growth. It was at that point where Mike and I looked at it and said, I can have a greater impact on independent pharmacy by working with more employers and payers and showing them how much they're overpaying and getting them into an arrangement that is, that is more cost effective for them, their patients, and better for independent pharmacy.

And, and a lot of people don't think those things can coexist and win, but they can, they, they, we've done it successfully in, in multiple areas. We also have clients that aren't ready for that they're with a big three, they're going to continue for at least the next 12 to 24 months. We can still help them, but not as much.

And we kind of work. We work 'em down a path,

Mike Koelzer, Host: What's your revenue source with granite peak.

Trevor Daer: A hundred percent of our revenue stream is based on fully disclosed consulting fees. 

So just like you would pay your accountant or, um, you know, an attorney, we are paid either a flat fee for a project, or an ongoing per member per month to maintain, uh, oversight of the pharmacy program.

And our clients know every dime we make. it's clearly outlined in the contract and candidly what's unfortunate about that is that's a differentiator for us. There's a lot of folks that have used the complexities of the pharmaceutical market to perceived consultants or consortiums or resellers, but the PBMs actually paying them a bunch of money 

Mike Koelzer, Host: It's a financial advisor. Who's sending out half their people with, you know, whole life 

Trevor Daer: exactly. Yep, exactly.

 Our clients know exactly what we make and it's all coming from consulting. 

When I started out, that was very important because we came from this level of transparency. And, uh, I'm not gonna say it's the easier business model because it's not, it's actually quite a bit more difficult.

We just had to go out with, um, fee increases to our clients and most PBM consultants don't because they get an automatic increase every year. Um, they're getting a percentage or, you know, kickbacks and all these things and we're like, this is what we did for you. Um, here's what we are continuing to do. And here's what we need to charge this year.

So it is more of a challenge. Like I said earlier, it's the right thing to do. And it's the right way to align our compensation with their results, which is completely backwards from the majority of the market, which is how do we get paid more? Well, we allow costs to continue to go up 

under the guise of discounts and rebates and all the things

 Our fees also vary on a project basis, depending on which PBM we have to engage with. So, um, we've got some PBMs that play nice in the sand.

They're really easy to get data from. Um, they're gonna be very responsive, get us everything we need. And then we've got some that are like, Nope, sign this NDA. Oh, no, here's another NDA. Um, oh, we sent you the file you wanted, it's missing the five fields that we required. So that's where the dynamics of our fee typically change

Mike Koelzer, Host: you could charge more for a smaller company if you work harder.

Gotcha. At our pharmacy, until a year or two ago, I had never put a price in our, in any advertising period.

I never put a product in our advertising. It was all [00:40:00] our family service, you

know, feel good, this kind of thing. The reason is because I wanted to look as different from the chains as I could.

Anything I saw in a Walgreens ad or CVS ad on a Sunday that came into my paper. It crossed my mind that none of that will go into our advertising.

I just wanted a hundred percent different. Look

 You're spot on about, any language they use about discounts or cost, you know, anything that PBMs use, the more you can stay away from all those words and all those 

business practices, the better,

Trevor Daer: Yeah. A hundred percent. I actually talked to, um, a mega employer this morning, uh, 40,000 employees across the country. The way I got introduced to them was through an independent pharmacy owner and, and they talked to their local HR person and their local HR person was savvy enough to say, yeah, I think there is a problem.

And then people across the country in the different HR pods were going. Yeah, we're having that problem too. And I candidly. I offer that service to a lot of independent pharmacies that usually go nowhere. Um, but I actually got on the phone with them and they used one of the kind of reseller options.

And all I asked them was what did they project for savings in their renegotiated contract? And they go, wow, we can't remember. Um, but I'm gonna go back and look at that. And I said, do, because every year they come to you with a projected annual savings and a three year projection of savings.

But every year I can almost guarantee you that all your pharmacy costs have gone up.

So it's amazing, like even a very large company like that. And it doesn't matter 40,000 to a hundred, they forget to go back and say, did this really happen? Like I made the decision based on this and. No, I didn't, my cost didn't go down by millions of dollars.

They actually continued to go up. Why? Um, and sometimes that is that. One of the simple things that we helped do is just educate and it was a great call. I mean, the chances of me actually working with a 40,000 employee group, candidly are, are extremely low. But if I was able to impart one or two things for that, that person could kind of look into that and elicit some pretty big change.

So that's why we always provide value. Doesn't matter if you're prospecting an existing client, um, a call from a pharmacist. I have a voicemail on my, on my, uh, phone right now from a small pharmacy in Montana that they're like, Hey, we, we saw you talk. And we really think if you can get a hold of this employer, um, it would make a big difference in our business.

And so those conversations are huge. Um, I think sometimes because of the desperation in the market, We want something immediate, like, oh, Hey, you said this works. These are, these are one to four year strategies. I mean, they take time. So, um, I love when I get those calls, I love when I get to take 'em and engage and, and, try and help.

The win-win is definitely possible. Whether that one will be a win. I don't know. Um, 

It'd be really cool. It'd be a great story, but there's a lot of hoops to jump through there.

Mike Koelzer, Host: What is a good day gonna look like for you in 10 years? 10 years for me, I think will be, you know, being able to measure backwards and say we've impacted over a million patients. Um, that's a good day. When we set out to do this, um, knowing that we are essentially fighting the good fight and doing it in a transparent way, even if it's not always the easiest way, that's meaningful to us.

Trevor Daer: That's um, you know, that helps us sleep well at night, even though we have business challenges, just like everybody else, but being able to impact a million patient lives is our goal. Right. uh, and, and right now we're at 70,000,


uh, we've got quite a ways to 

Mike Koelzer, Host: Well sort of, but you know, you're seven hundreds of the way there. And, you'd be surprised at how things take off when you're doing things right. You're being truthful. You're being transparent. I think those things. Take off kind of exponentially somehow, because people liked it.

It takes a little bit of time to get the word out,

but with those kind of values, I think that kind of takes off 

Trevor Daer: Yeah, I appreciate that. Uh, one of the things, uh, that we found is I actually tried to start my own PBM. I went down the path and realized there were actually good PBMs in the market already. There are PBMs that do the right thing for their clients and treat pharmacies fairly.

and so that's what we ended up doing. We said let's help guide people to a good PBM solution instead of trying to create another one. There's plenty of 'em

Mike Koelzer, Host: Whenever I'm [00:45:00] talking to one of these transparent PBMs, I always tell them that when I say PBM, I mean, opaque, PBM. And I say that, I may not say it all the time while we're talking here, but do know that when I'm talking PBM, I'm talking opaque, PBM, because there are a lot of good, transparent ones out there.

It's just this oligopoly of the big three doing their thing with their power. 

Trevor Daer: They're the 80% of the market.

So, um, our goal is to expand 20% and you know, if we can do that with a million people, that's awesome. If 

we can do it with 10 million even better, 

Mike Koelzer, Host: Trevor, pleasure meeting you. Thanks for everything you're doing. Keep up the fight and pull down those smoke and mirrors. I think that's everybody's calling. If we can get rid of the smoke and mirrors, it may not clear up things overnight, but I think it then helps politicians to understand it better when there's less levels and it helps, legally understand it better when there's less levels.

So that may not be our final step, but any transparency helps.

Trevor Daer: Yeah, I'd agree with that. The more we can peel back the layers and I always say, use true unbiased data. 

Um, that's what any business wants unbiased data. That's gonna help us make decisions. So why can't we have that in our prescription?

Mike Koelzer, Host: Trevor, thank you very much. I look forward to staying in touch.

Trevor Daer: Yeah, thanks a lot for having me, Mike.