Kick PBMs to the curb | Howard Danzig, CEO The ECCHIC Group

This transcript was generated automatically. Its accuracy may vary.

[00:00:15] Mike Koelzer, Host: Well, good morning, Howard. 

[00:00:16] Howard Danzig: Hey, good morning, Mike. How are you this morning? I'm doing 

[00:00:19] Mike Koelzer, Host: well. Thank you, Howard. Give us a little snapshot of what your business is. Why are you here today? We're showing 

[00:00:27] Howard Danzig: small, medium size and any type of employer, how to get rid of the middleman, particularly in pharmacy, which reduces that cost.

Yes, it is. How did you 

[00:00:37] Mike Koelzer, Host: ever find this out about pharmacy? What's your connection with pharmacy? 

[00:00:42] Howard Danzig: Well, my background's accounting and, uh, you know, my, my background is not necessarily with pharmacy it's with, uh, finding where the fat is. In the structure of how we buy, uh, and pay for medical benefits, particularly pharmacy.

Gotcha. And pharmacy is really the, the, uh, the easiest one to be able to redefine and, and, uh, redirect and just get the middleman outta the way in a pharmacy should be working directly with employers. Why 

[00:01:09] Mike Koelzer, Host: Is that the easiest one? Is there just so much fat in pharmacy 

[00:01:12] Howard Danzig: or there's huge fat in the pharmacy and it's identifiable too.

Uh, because you have a, you have a, a given product involved, they're all maintenance drugs. And, um, generally you don't have the, uh, the fragmentation in. Uh, how people buy prescriptions as you have in how they buy healthcare, because there's so many variable needs in healthcare, but, uh, pharmacy is a little bit more 

[00:01:37] Mike Koelzer, Host: quantifiable.

Other healthcare. You might have so many different choices, but pharmacy, if there wasn't so much smoke and mirrors put in by the PBMs, it's actually a cleaner business. Yeah, it, it 

[00:01:50] Howard Danzig: really is. Uh, so in effect, employers are buying prescriptions from an insurance company with premium, and they're just using the pharmacies as pickup points.

And they're bypassing the pharmacy professionals' expertise and running to middlemen who are just adding cost. They gotta reverse that and bypass the middleman and get to the professional pharmacy who has the expertise to really help. 'em give 'em a chance. Now, 

[00:02:17] Mike Koelzer, Host: when you say they're running to the pharmacy, And they're bypassing what the pharmacy can do is that because pharmacies aren't getting paid enough to spend time with people.

I mean, arguably couldn't I say, well, people are still going to the pharmacy. And so aren't, they still getting pharmacy access, 

[00:02:38] Howard Danzig: they're getting pharmacy access, but they're too often using the pharmacy as a pickup point for their prescriptions and using insurance agents to give them guidance as to how to pay for it.

Insurance agents don't know anything about pharmacy. Uh, so therefore your professional pharmacists will give you a better value, a better guidance and a better result when the employer controls the money and what the pharmacist does has a direct positive effect. On what the cost is to that employer plan, the 

[00:03:12] Mike Koelzer, Host: customer will still have access to the pharmacist, but the pharmacist in years past, like when my dad was running the thing, they would have these cost conversations with people about, Hey, maybe you should switch to this generic or do this, or, or maybe this different kind of care and so on.

And now that's been really taken out of the hands of pharmacists because they can't control the formulas and things like that. The insurances are doing it and they don't 

[00:03:41] Howard Danzig: know what they're doing. Well, that's exactly right. Uh, whatever help the pharmacist can give them has no dollar impact on the employer because the premium they're paying the insurance companies is gonna remain the same regardless.

So the benefit is to the insurance company, not to the employer. The employer has to, uh, take this away from the control of the insurance companies in the PBMs and empower them themselves. To be able to empower the pharmacist to be able to work directly with each other. You 

[00:04:12] Mike Koelzer, Host: I have a son in the business.

[00:04:14] Howard Danzig: Yes, I do. How did 

[00:04:15] Mike Koelzer, Host: Does he get into pharmacy? 

[00:04:17] Howard Danzig: Well, his, his background was microbiology and, uh, uh, research, uh, is a very, very unstable field and pharmacy was much more stable and, uh, so he gravitated to that because he understood it. And, um, he's finding a very, very good niche. How has 

[00:04:34] Mike Koelzer, Host: It helped your knowledge to have him in the business or asked another way?

Does it help you at all that he's in pharmacy by being able to communicate to you and have you answer questions or would you be able to find all that just as easily without him? 

[00:04:56] Howard Danzig: Well, he has a partner he's in Cleveland, Ohio, and, uh, he has a partner who has a, an established, uh, Uh, uh, operation and, uh, I've tried not to interfere in that at all.

Well, he's, he's a tremendously capable young man and, uh, they're both doing very nicely, but when they ask my advice, I'll offer it. 

[00:05:17] Mike Koelzer, Host: Who are 

the villains in this? Who are the people that you think should be targeted that are carrying the fat? 

[00:05:26] Howard Danzig: Well, we're our 

own worst enemies. We really are the, our, our own villains.

You know, we're not recognizing, you know, the obvious, uh, you take the average pharmacy, independent pharmacy who is providing, uh, a medical program to their employees. And almost every one of 'em are using a blue cross United healthcare or Aetna type plan. So they're in effect buying their own product back from insurance companies at substantial markups in the form of the PBM spread.

Plus the insurance companies markup. And they don't even know what their costs are themselves because the carriers won't tell 'em what they're being charged. So, you know, we, can 

start there. 

[00:06:11] Mike Koelzer, Host: I read an article that you had written and it grabbed me because it explained what I think I go through where let's just take the pharmacy business.

As you talked about as a customer of the insurance companies, things are busy in the pharmacy and you're moving along and you're not thinking about stuff. And all of a sudden your insurance renewal becomes due again. And it seems like everybody. Pushing and pressing to say, make this decision quickly.

I think that's probably why you don't have time to make a good choice. And in your article it said, try to buy some extra time for the business to talk to somebody like yourself. How do businesses find that extra time when it seems like they're getting pushed to just go along with the flow? 

[00:07:11] Howard Danzig: Well, typically, um, health insurance, uh, uh, uh, plans, uh, have a calendar, not a calendar, but a 12 month basis.

And, um, you can change your career anytime you want. So if you have a blue cross plan, you may have to pay a little higher premium on a renewal for a month or two, but, um, there's no reason why you feel that, uh, uh, you're committed and held hostage for the balance of that 12 month period. you can change any time you want.

Well, many employers are their own worst enemies also because they completely Trump the substance of the actual costs. So if an employer decides they just because of a, a, uh, a calendar date, overpay premiums until that next calendar date, that's their choice, but they're throwing away tens and tens and tens of thousands of dollars.

And when you translate what they have to generate in revenue to net that back to the bottom line, that's the real cost of their program. That's unnecessary. you know, many employers operate on a net net, net bottom line that's uh, in the single digits. Yeah. It's 

[00:08:28] Mike Koelzer, Host: very interesting what you say that about the year, because there is no year, basically you're getting yearly rates from the insurance company, but you're not really signing up for a year's worth of service and to prove that just don't pay your bills some month and they drop you a quicker than a hot potato 

[00:08:44] Howard Danzig: That's right.

So this whole, whole exercise of, uh, uh, labels self-funded and fully funded and all that is quite frankly a loser because every group out there is self-funded and then they're insured you're self-funded by paying a full premium, which really is pre-funded. And then you're insured all you're self-funded by being funded, where you control the money.

And there's a point at which you're insured. Now, if the employer controls the money, they get the direct benefit of lower cost of, uh, of, of, of product. So the issue here is the comparison of what the cost of products and services are that you are using versus the premium we're being charged to buy it with instead of running from one company to another and just getting quotes from premiums, right?

No, one's doing an analysis or, or a comparison of cost to service, to premiums being charged to buy it with. Right. And the pharmacy happens to be, uh, the easiest aspect of this to be able to evaluate how do you 

[00:09:51] Mike Koelzer, Host: build up trust in a potential customer? Because it seems to me what happens is when I have a person come, who's trying to sell me.

Whatever at the business. And let's say they wanna sell me a new energy plan or something for my electricity I'm using. And they come in and they tell me all this stuff. And I say, okay, well, it sounds interesting, but this is so confusing. I'm just gonna sign up with a big name, blue cross plan or something.

How do you get people to take this extra time to really give this a shot? And then how do you give them that trust to say that they're going to be okay? Should they have cancer or be in a big car accident or something? I know from the inside, all the. atrocities that the PBMs are bringing along, but how do you build up that trust with either pharmacists or customers?

And I know part of, it's probably just information like this, getting the story out, but what brick walls do you come across when you're trying to get this message across? 

[00:11:26] Howard Danzig: That's really, that's a great question, Mike. Um, I'll tell you, this is not for everybody. Not because the economics and the numbers don't work.

It's, uh, the, uh, the philosophy and, um, the perspective of an employer. Um, the employers who are looking for solutions are people that are willing to listen and can be given the answers to, uh, uh, solve their problem. Those employers who want to continue. to, uh, defend what they're doing and debate. The reason for that defense, uh, is perfectly okay too.

But, uh, those are not, uh, prospects for solving their problem. Now, um, we are working with independent pharmacists to be able to bring a message of reality to the employer. I'm finding pharmacists are not really, um, bringing the appropriate message to the employer to get their attention in order to change.

Uh, now when we go into an employer, I prefer to go in with a pharmacist. Hmm. The first question we ask is don't you think you're gonna get a better value and a better result and better guidance from a pharmacy professional about your pharmacy benefit than an insurance agent? And the answer is yes, all the time.

I said, well, you know, let's stop going to insurance agents for solutions. Let's start going to your pharmacist. Who's right here down the street. And then, um, I said, I'm gonna let them tell you what they're getting paid for, the prescriptions you're buying and, and what you're getting charged through the system for the same prescriptions.

And now it's a it's I can't predict what prescriptions you're gonna need, nor can the pharmacist, nor can you. But if you can buy it from a pharmacist at a substantially lower price than what you're being charged by the PBM and insurance company with professional advice and knowledge of what your costs are, wouldn't that be a better model than what you're doing now?

Just getting quotes blindly from insurance, people who have skin in the game, in the form of commissions. I said it, and we tell 'em we have to, we have to, uh, disturb them about what's happening. A simple question is why do you think it's a value to pay an insurance agent, a commission added to the cost of every prescription you have to buy from the pharmacist?

and that is, that's really baked into your premium. And furthermore, on the anniversary, date premiums are going up about 10% a year. Yeah. Yeah. That's for sure. So on your anniversary date, the cost of your prescriptions just went up 10%, buying it from an insurance company. And as to pharmacist, if the, the cost of a product automatically goes up 10% while sitting on the shelf, you know, uh, on an anniversary date and the answer is no, I said, so why would you buy this product and pay 10% more from this venue when you can buy it for a lower price and a price, didn't go up 10% from another venue.

It it's, that's the context in which we have to discuss this, not insurance as the 

[00:14:37] Mike Koelzer, Host: pharmacist, if they got any 

[00:14:38] Howard Danzig: raise to . Well, that's my point. Yeah, 

[00:14:41] Mike Koelzer, Host: exactly. When you ask the companies this question, do they have access to those records of what they're paying? For certain medicines or is that all jumbled together?

So it's hard for the widget company to know this. When you say you're paying more, can you prove that to them, by them going into their invoices or whatever? Well, 

[00:15:07] Howard Danzig: if, if they're insured with the usual, uh, boilerplate, blue cross plans, they don't have access to that. And our point is until you position yourself to start having access to that, you're never gonna control the cost, right?

And you're never gonna get the right D uh, uh, advice nor the right direction. You have to start somewhere. But if you keep doing the same thing over and over again, you're not going to, uh, uh, come close to solving this problem. 

[00:15:32] Mike Koelzer, Host: And that starting somewhere might be. Looking at least at the pharmacy sides of the finances and they may never get it from the insurance side, but at least they have one side of the equation and they've got somebody who's willing to share one side of the equation, which should tell you something 

[00:15:52] Howard Danzig: Well, in order to position themselves, they've gotta change the whole structure of their health insurance program.

And they have to position themselves to, um, really have the same, uh, net model on healthcare itself. And they need to unbundle the administrative function from the control of the insurance system, possibly. And, um, minimize the premium net, paying to insurance carriers while maximizing the risk they put on their back.

Uh, and there are easy formulas to point this out to them so they can understand how to stay within a budget and remain within that budget year to year over a protracted period of time. You're talking 

[00:16:32] Mike Koelzer, Host: about the employer through all 

[00:16:34] Howard Danzig: this. Yes. This is really meant for employer sponsored plans. It's impossible to do it for the individual because of the legislation that has changed the, uh, marketplace.

Sure. How does a pharmacist 

[00:16:45] Mike Koelzer, Host: decide to hop in your car and go down to this employer with you? Is that, is it the pharmacist that's looking to do more of this, or do you try to get in touch with pharmacists and have them help you? 

[00:17:06] Howard Danzig: We're, uh, really, uh, um, trying to make contact with independent pharmacists, looking for those pharmacists that, um, you know, want us, uh, a way to bypass the PBMs and to be able to work within their community.

It works very, very well in, uh, uh, you know, small in small, uh, uh, outlying cities very well. Uh, now we're in the process of putting a model together right now. In the St. Louis area, because, uh, we've been looking for ways to do this in urban areas, um, which was a little bit of a challenge because of how, uh, spread out a workforce is Hmm.

And how fragmented the marketplace is. Right. But, uh, we're really close to accomplishing something with a, uh, a group of pharmacies right now. Uh, when I say close, probably within the next 30 days. Great. And we think the model is, has, uh, all the. Uh, elements for it to be effective. And it 

[00:18:05] Mike Koelzer, Host: will work in the rural areas besides the workforce not being so spread out.

And besides them not being so much fragmentation and competition. Can I put it that way too? That there's also maybe more involvement with the independent pharmacy and stuff that's going on in the township or city there's sometimes a higher level of association or trust built up? 

[00:18:33] Howard Danzig: Well, uh, the pharmacist, uh, and the business community, they know each other in the small towns anyway, so they already know each other.

Right. And you see what the average, um, consumer that is a participant in a group plan doesn't realize is that even though they might be getting their prescriptions at, uh, uh, you know, John's pharmacy right there in town, um, he's losing money. Yeah. He's not making any money. and, um, they don't know that.

Right. And, the lack of knowledge on the part of the employer and the lack of the appropriate education and marketing on the part of the pharmacist is really the problem here. There's a hole there, and that's what we're finding, uh, is necessary to be able to fill, you know, with, with common sense knowledge.

Well, here's an example. Uh, we are, we, we are implementing right now and have, uh, at, uh, um, in as of January one and February one, uh, bringing together the local pharmacies in a community around 6,000 in Missouri. Uh, and it's the city and the county now, both the city and the county, we talked to two years ago and now they're finally crying uncle because they're getting double digit rate increases way beyond what, uh, is justifiable from blue cross, both of them.

Right. Well now the, uh, uh, the, the program is being re. The funding that, uh, was here for the premium is now budget and it's soft dollars. And, uh, the, uh, uh, relationship in giving a preferred provider status to the local independent pharmacies is I sending the employees to go to the local pharmacies. Now the local pharmacies are gonna get a better margin because they can set their price.

And yet the cost is less to the plans because we've taken the, uh, uh, the PBMs markup, um, pretty much off the table. Uh, I, we did this for a, uh, a client of ours in Iowa city, or, uh, um, about the first quarter of last year. And, uh, they were, they'd been self-funded and they resisted going to their local pharmacy for a couple years.

Because they, uh, thought they were doing just fine with the PBM. Finally, after twisting their arm, we connected 'em to their local pharmacy, which is about a mile away from their facility. The very first month that we had this in place, one of the family members, who's a principal of the, uh, plumbing supply firm that we're working with here sent me an email telling me that, uh, his, his, uh, insulin supplies or his, uh, diabetic supplies from the PBM were running around $610.

Uh, every time he bought 'em and now at the pharmacy directly, it's 3 45. Hmm. All right. Now the pharmacy's making more money at the 3 45 than he was when he was paying six. And the cost to the employer is lower. 

[00:21:38] Mike Koelzer, Host: When you say they're self-funded, do they go out and piecemeal these different parts of the plan together, like catastrophic PBM, dental and other things.

I always thought that companies might go more and buy a package from somebody like we do in our pharmacy . As a company, we buy this package that has already combined all of these things together. Right. But it sounds to me like you're saying that this company says, here's how we're gonna do prescriptions.

Here's how we're gonna do dental. Here's how we're gonna do vision. Here's how we're gonna do surgery, healthcare. And so on. Explain that to me. Well, 

[00:22:18] Howard Danzig: I'll give you an analogy. Uh, uh, Mike, look, if you are gonna build a house, you have all these different components that go into the house, right? Mm-hmm so you go to a general contractor and he takes his specs and he goes to the subcontractors.

All right. Now, if you buy that house and build it with a general contractor, you'll pay one price. If you go directly to the subcontractors, you'll pay a lesser price. Right. Gotcha. Okay. Right now we're not saying that every employer's gotta go to those subcontractors themselves. We do that for them.

Gotcha. All right. But we, we wanna position them to be able to contract directly as much, as much as possible and everything will flow through an administrative, uh, uh, funnel, uh, so that they're not, uh, having to pay piecemeal, which is what, uh, they have to be made to understand. Okay. So in 

[00:23:13] Mike Koelzer, Host: This case, and that example you would come in as the smaller local subcontractor that knows more about the company, knows more about their needs and can work.

You're gonna work with the local plumber and local electrician. That's right. You trust them. And there's, there's all of that built up. Some of the companies, if they're big enough, they probably piecemeal this all themself. They become their own general contractor. Well, 

[00:23:40] Howard Danzig: they might, but they're still looking for somebody who has access to all these different components.

Gotcha. To kind of be, to be the funnel in the glue. But it sounds to 

[00:23:48] Mike Koelzer, Host: I, just as an independent pharmacy, are sometimes passed over for the chains that everybody is used to. There's also independent general contractors. Let's say that are passed over for the chains of the general contractors being these big healthcare companies.

Contractors, but as we know with our independence comes great care and great concern that also can be given to the local general contractor. Like you. 

[00:24:30] Howard Danzig: Yeah. You, you seem, um, most brokers don't know, uh, to do this. They have been indoctrinated to sell policies. They're not indoctrinated to compare costs.

Gotcha. I've been indoctrinated to, to compare cost and, um, I'm not a professional insurance guy. I'm uh, yeah. You know, I'm, I'm a, you know, a cost evaluator. Uh, I was in a family business years ago. I had to buy these plans. Yeah. And when we evolved to the P O H O uh, model with the, uh, um, the, the, uh, uh, pharmacy being integrated into these premiums, I realized pretty quickly I'm, I'm just, uh, pre-funding for services.

I'd like to know what my costs are and they wouldn't sell me. Yeah. Right. And that's what got me angry. So I studied what large employers did and found that they have better benefits because they're more cost efficient. Not because they're bigger. Right. So if we use the same model they use, why can't we accomplish the same effect they have and we can, right?

No, one's being no one's showing 'em 

[00:25:36] Mike Koelzer, Host: how to do it. And when you say the insurance agencies often sell policies, basically they're the sales people for these bigger 

[00:25:46] Howard Danzig: plans. Yes. Gotcha. Yes. 

[00:25:50] Mike Koelzer, Host: And I think what happens is typically that let's say, Howard, you're, you're doing this and, and you get better at it and get bigger and so on.

And, then there's economies of scale and so on. But I think what's happened in the insurance companies is where the hidden margins start to appear. And so we all would say, yeah, if you can get better economies of scale, we're probably gonna be able to cut your costs. What's happened in these big insurance companies is we can easily prove where there's fat and corruption and a lot of this shenanigans going on where a lot of companies get to that when they hit a certain size, that's where a lot of that hidden agenda is.

And that's where you wanna deal with someone who's big enough, but hasn't gotten to the corrupt stage yet. 

[00:26:49] Howard Danzig: Well, uh, the answer is, uh, uh, you know, to your question is, uh, yeah, you want, you want to, uh, eliminate that and here, let, let me give you, uh, you know, an analogy, Mike, and, and perhaps you can see how simple this really is.

Yeah. All let's say, you know, just take a, a, you know, you know, a pen that's sitting on your desk and let's say, right, that you are the manufacturer of that pen now to get it to market, you have to sell it to a distributor. The distributor marks it up from you, the factory. And now the distributor in turn sells to a retailer who marks it up from the distributor who sells to the customer.

Now, if that customer bypasses the retailer and goes to the distributor, they're gonna get a better price. If they bypass the distributor and the retailer and go to the factory, they'll still get a better price. They have no idea how many pens they're going to need from one year to the next, but it's impossible to spend more.

For the volume of what they buy, if they go factory direct or a wholesaler direct, then a retailer. Right. Okay. Now let's take the pharmacy in this context, the product already resides on the shelf of the pharmacy right now to get it to market. He in turn is in, uh, you know, uh, implicitly selling it to the PBM, right?

Yeah. All right. Now the PBM is marking it up from the pharmacy. The PBM in turn sells it to the insurance carrier. The, so the PBM affects the wholesaler and the insurance company is in effect the retailer who, and then in turn sells it to the, uh, uh, marketplace in a form of premium to the policy holder.

Sure. Now, if the policy holder can bypass the retailer, the insurance company and go to the PBM, they'll get a better price. that's what they've been used to doing if you're a little larger company. Yeah. But now if you bypass the insurance company and the PBM and you go right to the pharmacy, you're gonna get a better price yet.

So the pharmacy is a factory. Now that pharmacy can sell that product at a price somewhere between, um, where he's getting paid by the, the, what he's getting paid by the PBM, you know, uh, but a little bit, uh, higher and get a better margin, but not as high as the PBM. So everybody wins 

[00:29:23] Mike Koelzer, Host: In theory, the PBMs can say, well, but we force competition and all that kind of stuff.

The problem is there's so many smoking mirrors and they've forced out so much that they've done the opposite of what. Combining sales dead, and then they throw that layer of fat in there, but nobody knows what that layer of fat is. 

[00:29:47] Howard Danzig: There was a key, two keywords in what you just said, the PBMs will say in theory.

Yeah. All right. In reality, it's different. So that one of the, uh, uh, you know, one of the, uh, frustrations or exercise in futility that I see getting nowhere in your independent pharmacy world is you're spending a lot of time and a lot of money running to lobbyists and lawyers and, uh, and Congress people to do something about the behavior of the PBMs, none of which has any, uh, real effect.

Hmm. So a very simple solution just takes the business away from 'em on a local level. Yeah. All right. I, you know, just, uh, uh, this past month we took. Uh, two primary, uh, uh, uh, employers in this community, away from the PBMs. And when you take the dependence and the employees together, uh, it's almost, uh, about 8% of the population there, of, of the consuming population between the employees and dependents.

Yeah. Now we did that in 30 days. Right. All right. And that has much more effect market to market. Think about this number for just a minute. I know this would never happen in this pristine, uh, uh, model, but here's the, here's the power that the independence aren't for exercising there are, from what I've been told about 22,000 independent pharmacies in this country, all, we just took two employers away from the PBMs in this particular city for this, for this pharmacist, if every independent pharmacist in this country, Just took two employers in their community, away from the PBM to work directly with them, literally in a short period of time, you're taking 44,000 employers outta the hands of the PBMs.

Yeah. And that's not hard. That's easier to do than to be running to, uh, uh, legislators and lawyers and lobbyists and everything else. Yeah. These people go to church with each other, the kids play ball with each other. Yeah. Why shouldn't they be working with each other to solve 

[00:32:01] Mike Koelzer, Host: the problem? There's this entrepreneur that I follow online and he was talking to his audience and he said to these people, as soon as you have spent more time trying to patent something than to.

Your first sales you're you've already been beaten and it kind of makes me think of what you are saying there. And we, as pharmacists, are so used to not selling, I mean, we sell passively when people come into the pharmacy. Right. But we're so used to not selling that. We think that the government, as our only solution, is right.

When we could be out selling to these businesses, 

[00:32:46] Howard Danzig: Well, you know what, you gotta be careful about what you wish for, because if the government ultimately is the means by which you try to address the PBMs, you might end up in worse shape than when you started. Yeah. 

[00:33:00] Mike Koelzer, Host: Right? Yeah. Quite often we see that here's something I don't understand, Howard, and this is pretty simplistic, but when I, as a business person sign up for.

In insurance. And I know that we're going to get prescription coverage once the deductibles are met and so on, whether I use a lot of it or a little of it, I'm paying the same amount. When does that stop? Do companies pay the actual amount of the drug or are they doing similar to I'm doing as an individual of just paying a set amount per employee who actually pays for the medicine.

And when does that start? 

[00:33:43] Howard Danzig: Well, you're paying for that medicine, with the premiums that you're giving to the insurance carrier. It's all baked into that premium. It is. 

[00:33:50] Mike Koelzer, Host: I know, but it's kind of an all you can eat philosophy. When does that change? Who actually says I'm paying more because this person got an.

Prescription. 

[00:34:03] Howard Danzig: Well, the, you know, all our, um, group health insurance is it's a privatized version of socialized medicine, you know, uh, it, it boils down to what the group is spending on a per capita basis. Plus the insurance company's margin look, health insurance is the only thing that we call insurance that we use through these third parties to buy goods and services, you know, for when, if you have a diabetic in your plan.

Yeah. You don't need an actuary to determine if they're going to be a diabetic, you know, he's going to, he or she is gonna have a certain need for certain prescriptions and supplies for the rest of their life. Yeah. Right now, no insurance company is going to fashion. A premium that you know, is going to absorb the cost of that identifiable need.

Yeah. At a level, less than what the need really is. Yeah, they created a system to make you feel that way, cuz you're just focused on copays. But what you need is somebody to give you the right advice, to get the best value, you know, to meet that need in the best way to get the best result. That's not an insurance agent, that's a pharmacist.

You know, when I've sat down with people now with a pharmacist, uh, you know, um, not only do I ask them, does it make more sense to have a pharmacist give you advice than an insurance agent? But I said all these years that you've been trying to figure out how to pay for healthcare and pharmacy for your employees.

Did you ever have a medical or pharmacy professional in the meeting to help you evaluate, you know, the best way to address this? Right. And the answer's no, I said so let's start doing it now. 

[00:35:55] Mike Koelzer, Host: All right. So Howard, I'm a little slow here. I understand the actuaries and so on. Let's say though, that I'm on a prescription that costs a thousand dollars a month, right?

That's the true cost. Let's say a thousand dollars a month. If I get that filled 12 times instead of 10 times, right. Who is actually paying that extra $2,000, 

[00:36:22] Howard Danzig: the group is in the form of premium. The cumulative dollars that is being given to the carrier is where the money is coming from to pay for that.

[00:36:32] Mike Koelzer, Host: But isn't the premium agreed upon, let's say this is January through December, right? Okay. And let's say that I skip November and December, right. Or I do get November in December, right? The premium's already been paid for those you're right months. So they catch it up on the 

[00:36:53] Howard Danzig: renewal. Exactly. You see all these group health plans are or finance contracts.

Gotcha. They'll front the money to you. Gotcha. You know, you can have a, you can have a serious medical issue. They'll be right. They're contracted to front the money. Gotcha. Until the end of your policy year, then you get to pay it back in 12 equal installments the next year. 

[00:37:16] Mike Koelzer, Host: and there's a chance that you go to somebody else, but more than likely, you're just gonna sign up with a program and, and take the premium increase, which is gonna then catch them up from that's right.

The year before 

[00:37:30] Howard Danzig: you see, and you made a very interesting point too, Mike, because when you change carriers, those carriers do not really see any medical expense to speak of for the first month and a half or two months because of the, the timeframe from the time services are incurred until the time they hit the pay window.

Yeah. Right. So you're paying 12 months of premium for 10 months worth of activity. Oh, mm-hmm now the following year, then what, what you incurred in months 11 and 12 become the cost pay, you know, paid with your policy in months one and two the following year. Yeah. So that's when they catch it up. Yeah. And then they keep all the money that you, you didn't use at the front, at the front end, you know?

Yes. In perpetuity Howard, if said, look at your wall 

[00:38:18] Mike Koelzer, Host: there. I'm seeing all of these pictures. And one that jumps out at me is Charles Bronson. What's he doing up there? Well, 

[00:38:27] Howard Danzig: That's, it's kind of random. Uh, my entire office is wall to wall, uh, memorabilia from sports to movies, to music and you name it.

Yeah. And so it's more of a clubhouse than an office and we have a very, very lighthearted environment here. Are they 

[00:38:42] Mike Koelzer, Host: all pictures or do some actually hold a value? Are some signed or are they just a eclectic mix of 

[00:38:47] Howard Danzig: pictures at both? Both. Both. Yeah. Yeah. That's cool. I see 

[00:38:52] Mike Koelzer, Host: Bronson there and it makes you, you're just like coming across as a tough guy.

Like, I've gotta do what you say here, or you're gonna break my arm or something or anything, but that's all right, Howard. So our pharmacist, friends are listening to this and I'm gonna probably put some of my own feelings into this. They're listening right now. And they say, yeah, that's a good idea. And then they're like, uh, number one, I hate sales.

I love when people come into me and say, what can you give me for a headache? But I cannot imagine myself as a salesperson. And then they're also saying, where would I even start with something like that? It sounds like a good idea from Howard, but where, where, how could I do something like that? What advice do you have for the person that has asked those two questions?

[00:39:45] Howard Danzig: Well, first of all, that's a good point, but, uh, they are salespeople because unless they're salespeople, they're not gonna be able to do any business and generate any revenue. Yeah. So, I mean, we're all salespeople. Now it's a question of degree and, uh, you know, and package 

[00:40:00] Mike Koelzer, Host: there already salespeople by their nature because they, they sell 

[00:40:03] Howard Danzig: to people.

Well, they have to be because, uh, you know, how else do you get revenue without sales? I mean, by this very, very term sales and revenue are one of the same. And without that, you can't stay in business, no matter how much you charge for something or how little you charge, we might 

[00:40:19] Mike Koelzer, Host: have been more passive sales people in the past by saying, yes, insurance companies will let you right.

Be our customer. But now it's just a different form. We have to take, you know, we 

[00:40:31] Howard Danzig: really, uh, ultimately become a marketing partner with. And gotcha. We are really the ones that bring the message to the employer, but the, the pharmacist has to be the one to open the door to the 

[00:40:41] Mike Koelzer, Host: local employer, because you could send a letter or something like that, but the odds of them responding aren't gonna do anything.

[00:40:47] Howard Danzig: That's not gonna work, that's not gonna work. We have to get people to listen. Yeah. If they'll listen, you know, um, we, we can show them a whole different world. So take this, this, uh, city in, uh, um, in Missouri, uh, we happen to have put, you know, the, uh, changed the, the, uh, the structure of the, uh, health insurance plan for this particular pharmacist.

Uh, in two and a half years, we've saved this pharmacist on his health plan, uh, in nexus of a hundred thousand dollars. Hmm. And, and he's got about 26 employees, uh, and he's, and the pharmacy he sells to himself and he knows what his costs are. And of course we did something similar in getting the costs down.

Uh, from premium for identifiable medical services too. Okay. Gotcha. So it, the whole thing, uh, you know, is, is, is restructured. All right. Now the, uh, city manager, you know, is close to the pharmacist. The commissioners in the county are close to the pharmacist. Yeah. But they don't know me. I'm in St. Louis. I have a solution for them, but, um, I can't get to them unless somebody suggests that they take some time to talk to me.

Yeah. Right. So without that, you know, going in there with the pharmacist, the probability of them talking to me is very, very small. Yeah. Right. Without my being able to bring this message to them, however, the probability that the pharmacist could get, get their, their plan structured differently is very small.

Yeah, exactly. So we make a good partnership and we can do that anywhere. 

[00:42:26] Mike Koelzer, Host: How big does a pharmacy have to be? To attempt their own services. Like the story you just told, how many lives do they have to ensure in their own pharmacy company to test this out? 

[00:42:47] Howard Danzig: Well, uh, we just put a plan into place for a pharmacy in Minnesota that has four employees.

We're about to do one in Mississippi that has five employees. Really, we've already done 'em for small pharmacies. Um, but you know, depending upon the state that they're in for groups under 25 and, you know, uh, some states are a lot easier than others. If we're 25 or more, and that's not because of any type of law, it's because of the manner in which insurance, uh, uh, policies are structured and everything's an economy to scale.

We pretty much can go anywhere and accomplish anything. All right. Under 25, under 25, it's a little bit more difficult because it's underwritten more carefully. I gotcha. We've had a few that we've taken runs at, but we're looking for a spread in premium to cost a service. And, uh, if that spread isn't there initially, we don't want to put a square peg in around whole 

[00:43:45] Mike Koelzer, Host: and the smaller you are, you don't have that insurance theory to that's 

[00:43:50] Howard Danzig: right.

Cover the bumps. Yeah. But, uh, there are tools available in the market, in the insurance marketplace to be able to give an employer control of the pharmacy component. So a pharmacist consultant themselves, or a pharmacist can, uh, um, sell to others. But again, pharmacists are their own worst enemy. I've run into circumstances where, um, there's a pharma, a group of pharmacists who own their own PBM.

and they're having trouble selling their PBM services to the marketplace. Well, we can help 'em do that, but those same pharmacists still continue to insure their employees with either Aetna or blue cross United healthcare. So I'm pointing it out to them. I said, why would any employer work with you directly when you're buying from the same companies they are?

And you're subsidizing the very, uh, uh, uh, institutions that are crushing you. What's our answer to that? Well, one guy said my broker is a very good friend, you know? Oh yeah. 

[00:44:59] Mike Koelzer, Host: Um, and let me see if I have this right. I think I do where I can't tell my broker, find me a plan that just carves out to let me be my own PBM because they probably don't 

[00:45:09] Howard Danzig: exist.

Well. Um, he could tell his broker that, but his broker will tell him that it's a bad idea and he can't do it. And they listen to him. 

[00:45:17] Mike Koelzer, Host: That's right? Yeah. Cuz it does exist obviously. 

[00:45:19] Howard Danzig: Yeah. Yeah. You know that oftentimes is, uh, uh, the an is, is an answer. I mean, that's happened uh, more than once and um, yeah, right.

Or they don't want to take the time to change. So, you know, um, I, I could give you a number of examples like that. Uh, but so when I say that the villain in this is ourselves, you know, look in the mirror, that's where you find the problem, right? No, one's holding a gun to our head to give them control of the money.

We're doing it voluntarily. Well, you have to hold a gun to their head for them to take control of that money. 

[00:45:56] Mike Koelzer, Host: yeah. It's easy for you to talk about this, but you got Charles Bronson on your shoulder. Well, that's right. Why 

[00:46:00] Howard Danzig: do you think I have them there?

[00:46:06] Mike Koelzer, Host: It seems to me that a lot of insurance companies would use scare tactics on this. That's what they're selling. let's say you come to me and we're talking and all of a sudden I call up, you know, my broker or something and they're like, oh, oh yeah. But wait till your wife gets cancer or wait till this, or wait till that.

I think a lot of that is all based on, I think a lot of the objections are gonna be based on fear. 

[00:46:35] Howard Danzig: Well, it is, um, it is, uh, you know, we're working. We're working right now with a group of pharmacies in St. Louis and, you know, to, uh, take a public entity, a pretty high profile public entity directly to them. Now in one breath, they wanna sell directly to them and bypass a PBM in the next breath.

They're ensuring they're people with Aetna and they have no idea what, and Aetna is now vertically integrated with CVS Caremark. Yeah. Right. You know, so on one hand do, as I say, on the other hand, I'm not gonna do, as I say. I'm gonna do as I do. Yeah. You know, so if, if, if that's what they choose to do, that's what they choose to do, but it really is.

Self-defeating when you do that. Right. Why 

[00:47:22] Mike Koelzer, Host: Do you think that? I think you mentioned one, you said the broker, they know the broker, he's a friend of theirs. Why else do you think that they're not using their own PBMs? 

[00:47:36] Howard Danzig: Well, uh, a fear is, is, is primarily a very, very strong factor in all this habit is a strong factor in this.

And documentation is a strong factor in this. Right. Um, and, uh, they, uh, you know, quite frankly, um, have not been shown the true, uh, uh, uh, economics and the true dynamic of what can be accomplished. If you take control of this thing, let me, let me, let me give you something. That's, uh, very interesting. Yeah.

The way we normally begin and the benchmark that we use. Is what the premium is that that employer is paying at the time that we, that we would start a program. And the benefits that we provide are the same thing. Now we don't provide the benefits the employer does with what money they're putting into the system and the, and the combination of the employees.

That's where the benefits come from. No insurance company, no insurance policy. It all starts with the cash. All right. I have employers whose budgets today are no different than the premium that I was paying more than five years ago. And their benefits are the same and are sitting on six figures of unspent cash.

So their employees aren't contributing anymore. They're not allocating anymore. And if they have, uh, you know, something of consequence they're insured against. and they're sitting on a six figure surplus. Some of them, you know, accumulated so much, they went out and bought the equipment they needed and paid cash for it.

And still had six figures left after four, five or six years. That's how much spread there is between, um, uh, premium and reality. When you say sitting on 

[00:49:19] Mike Koelzer, Host: it, are you being figurative or is there any reason they have to sit on it? Do they have to keep some in escrow or something? No, they've made that much.

They've 

[00:49:30] Howard Danzig: saved that much. That's right. So it, it it's either allocated or sitting in a separate account or it's sitting in a general account and it's a journal entry or it's a 

[00:49:37] Mike Koelzer, Host: memory of going to Hawaii with it or whatever they wanted to do, but 

[00:49:41] Howard Danzig: there you go. That's right. Yeah. Well, another, uh, reason why, uh, we've run into a brick wall.

Yeah. As I've heard, this is too good to be true, right? It's not too good to be true. It's what is true. We've just been told. How many things. I, I, I mean, so many things 

that 

[00:49:58] Mike Koelzer, Host: aren't true. Yeah. And it seems like if people say that it's like, all right guys, listen, there's all this fat on the PBM side.

That's where that too good is. It's sitting there. That's right. And if you just depend on the government to take that fat, the government's never cured fat. They're gonna put that fat somewhere else. And so all this thought about it's too good to be true. It's like, well, let's take a look at this executive's compensation package.

That's where the two good parts are. Yeah. If you're looking for some 

[00:50:34] Howard Danzig: truth, that's right. Mike look, the state of West Virginia, there was a big article about them. Um, they had a forward thinking governor who got rid of the PBMs, uh, for their Medicaid program and took it in trust. they save $54 million a year.

Now contrast that to Illinois, that just expanded the PBMs role in their Medicaid program to the consternation of the independent employ independent pharmacists, because the lobbyists representing, you know, the Chicago interests where some of your big PBMs reside, you know, uh, bought their way past it.

Oh, sure. 

[00:51:17] Mike Koelzer, Host: You know now. Yeah. They also have their ex-governor sitting in the 

[00:51:20] Howard Danzig: slammer. Well, yeah, they say that, uh, Illinois's the only state where the governor actually makes the license plates for their constituents.

[00:51:30] Mike Koelzer, Host: Speaking of license plates, it's like all my license plates on a few of the cars, like the paint's bubbled and it's actually the paint coming off and it's like, you'd think. It's like they had one job to do is to find paint that sticks onto a license plate. 

[00:51:47] Howard Danzig: yeah. Well, listen, uh, when the governors are making the license plates, they really weren't trained to do that.

[00:51:54] Mike Koelzer, Host: Well, let me think of the things that a company would say. One is they would say my employees are so used to having the name brand of blue cross, or the name brand of this advertised thing. How are they gonna feel if I give them a crumpled up flimsy card that says Joe's insurance, is that argument valid as much as someone wanting to buy a name, brand something, even though they know it's maybe not the best they've heard of it before.

And at least they know that their results will be somewhat. 

[00:52:35] Howard Danzig: Well, that's a valid point. And, and, and, uh, that has been, uh, a factor from time to time. But our response to that is, is this name brand medical service or name brand accounts payable service, which is it. It's a name brand accounts payable service.

Don't give the payable, service your name, brand money, and see how many name brand medical services you're gonna get, or name brand pharmacy, uh, uh, uh, products you're gonna get it begins and ends with your cash 

[00:53:09] Mike Koelzer, Host: break. That analogy down Howard. I know analogies are supposed to be easier, but we're up here in Michigan and our brains are frozen.

So let me think through that a second. So the name brand medical service versus name brand cash. Break that down. What do you mean by 

[00:53:22] Howard Danzig: that? Well, if somebody comes into your pharmacy with a, uh, United healthcare card, a blue cross card, a MasterCard. or a checkbook is the quality of the drug that you give them across the counter.

Any difference? No. Is there a need for that? Any difference? No, but the price is different depending upon whose name is on the card or whose name is on the check. I 

[00:53:50] Mike Koelzer, Host: gotcha. So all the care they're getting is going to still be from Dr. Jones, the best surgeon in town, right. And, this brand name medicine. Right.

We don't care so much about the processor. You don't need a name brand processor. 

[00:54:05] Howard Danzig: No, you don't. Because whoever writes the check is writing that check drawn on the same funds that are being provided by that group, regardless of who's in the middle. Gotcha. All right. So the blue cross has nothing to do with healthcare.

United healthcare has nothing to do with healthcare. They have all kinds of people that have nothing to do with healthcare interfering in healthcare mm-hmm and the PBMs also. So when you have all these middle men, right, that stand between you and a guy across the counter, it's impossible to get a better value.

If you were sending your money all over the country to get it back across the counter. Yeah. Right. Just handed across the counter. 

[00:54:56] Mike Koelzer, Host: What about taking the jump to, I want the best heart surgeon when my wife has her bypass and things like that, I guess one answer would be from the pharmacist. When you two are going someplace together, they could say, well, look, you're gonna get arguably better pharmacy care.

Why wouldn't you also expect better? Heart surgeon, but is that fear gonna play in again where they're gonna say, don't go with that non-name brand because you're gonna get a generic heart surgeon instead of the best heart surgeon you could get that obviously participates with blue cross and so on.

[00:55:35] Howard Danzig: Well, what guarantee do you have that, that heart surgeon even accepts blue cross you don't or, or, uh, um, the Mayo clinic or, uh, in, in today's world of narrowing networks, your, your top tier, uh, uh, specialists are not accepting that kind of control. So it still boils down to whoever controls the cash controls, the.

[00:56:01] Mike Koelzer, Host: I'm playing both sides, but that argument that I just made there, at least that should be the opening to put your foot in the door and say, well, let's take a look. We've got the books, right? They're not going in blind. They're able to just like, I'm able to look at my current doctors and go through, let's say blue crosses directory and see who takes what?

And so on during this time that we're trying to buy a little bit of time to talk to the local companies, they can do the same thing. It's not a blind. No, it's not a blind thing. They're signing up where they can look for the providers and things. Right? 

[00:56:34] Howard Danzig: Yeah. But what guarantee do you have that those providers, um, that you see on their roster this month are gonna be there next month?

Mm. You don't have any guarantee there. That's right. You see. And also when you're beholden to these, you know, to these third party controls, you can go to a medical facility that lists itself as a network facility. but that doesn't mean that every practitioner within that facility is also a participant in that network.

Yes. Right. You see, now there are, there are, are, uh, moves of foot to begin to get to, um, more market based compensation to providers. Then through these third parties negotiated PPO contracts and PBM contracts. Now, the thing that I don't understand is that, um, you know, these PBMs that had gag clauses and I think that's being broken down a little bit more.

Yeah. Right. Okay. But that quite frankly, is a textbook example of violating the, uh, the antitrust laws in this country. Sure. Seems that way. Okay. Now there, I just saw an article. I posted it on my, uh, uh, LinkedIn a few months back about two months back. that, um, the executives of some food processing companies were prosecuted for price fixing cant.

Yeah. They actually were prosecuted for price fixing cant. Yeah. But nobody is, is, looking at price, fixing with healthcare and prescriptions, but can't. Yeah. Right. We better get that right in a competitive market. Otherwise we're gonna go to, you know, where in a, in a handbasket. 

[00:58:24] Mike Koelzer, Host: Yes. So the part that you said about the plans, the directories can change.

There's no guarantee that people will be on that program next month. And so on that wasn't to pivot around the question of saying that maybe a non-name brand plan will allow you to see the current directories of doctors. They have those, right. Yeah. Any plan is gonna say what doctors are in there at that moment.

Well, I, I it's, 

[00:58:53] Howard Danzig: it's not meant to pivot around. It's meant, it's meant to, to get them to look at this in, through a realistic prism that they're not now, let me be specific about that. When you give control to these insurance companies, they control your money. All right. So the point is that in some cases, now, if you're not working with a medical, a network provider, there is no benefit at all.

It's not even in a network and not a network, a higher copay or lower copay. Mm-hmm, , it's a benefit or no benefit. Right? Okay. They're called EPOS exclusive provider organizations. Yeah. All right. Now, if you take that same cash and take it from the control of that third party and put it into the control of the, um, consumer who can dictate to them that they can't go anywhere.

Sure. And who can dictate between the consumer and the vendor, what kind of price they can work out? Sure. 

[00:59:59] Mike Koelzer, Host: Nobody. All right. So let me hit this another time though. Uh, Howard, does that 

[01:00:04] Howard Danzig: Does it make sense? It makes sense. 

[01:00:06] Mike Koelzer, Host: But back on my question, though, if a company says I wanna take a look, they would be able to see at least currently what doctors are signed up with all 

[01:00:19] Howard Danzig: plants.

Yes, because we have to have a network that's connected to the, to the group. Gotcha. And there are many independent networks that can be, uh, you know, connected to a program. Gotcha. In other words, you can actually contract directly with an Aetna, um, uh, PPO network. Okay. Or a Cigna PPO network or a number of independent networks.

[01:00:42] Mike Koelzer, Host: Gotcha. And the point you're stressing is. Yes, you can do all that, which I didn't know, you could for sure. But yes, you can do all that, but don't be fooled by the one that has all this stuff going on. That's because you don't know for sure if that's going to work out or not. That's now you 

[01:00:57] Howard Danzig: see Mike, when you con, when you contract with the network, you're contracting for services from people who've agreed to sell them at a lower price.

The network doesn't control your money. When you sign up with a company that controls your money and the network you've lost that autonomy, you understand? Yeah. Right. Okay. So all of these components have to be separate from each other. Yeah. Right now, if quite frankly, um, they would, you know, our legislators wanted to solve this PBM problem.

What ought to happen is that there is no insurance company. Should have the exclusive, uh, uh, um, prerogative to dictate who the PBM is. The PBM should be a completely separate component and should be competitively, uh, um, sought to connect to any plan, whether it's blue cross United healthcare or otherwise. So all you have to do to solve this problem is to make the PBM world a competitive world.

Like the insurance premium world used to be. Yeah. Right. And is to a degree that's all 

[01:02:15] Mike Koelzer, Host: right. All right. Devil's advocate. 

[01:02:18] Howard Danzig: Does, does that 

[01:02:19] Mike Koelzer, Host: make sense? It makes sense. Let me play a devil's advocate. So the insurance comes back and says, wait a minute. Part of the service that we're offering here is we've worked out relationships with different people and you wanna carve out the PBM, but I've got all kinds of things that I am.

Trying to give as a package, I'm trying to give vision dental, psychiatric care, this, that the other thing, surgery, chiropractic physical therapy and so on. If everybody's able to do this, then I will be this bigger conglomerate of the insurance company. Well now I don't really do anything. I'm playing devil's advocate there.

Why would they allow PBM choice? But then you've got all these other choices that could happen 

[01:03:04] Howard Danzig: too. Well, you know, you have a choice of a, of a network. You have the choice of a network and, um, a network is nothing more than a, uh, um, a coalescing of, um, of, of, uh, providers that have agreed to sell their services at a, at a stated discount.

Gotcha. Okay. Now all a PBM is, is a, uh, a clearing house. For the pharmacy. Right? So, and, and all the, the insurance company is a clearing house to handle the paperwork. Yeah. 

[01:03:43] Mike Koelzer, Host: If it's more than that, that's your problem. If you've got all these sweetheart deals going on and all this black market stuff and all this with these couple PBM and you can't do that with everybody else.

Well, that's exactly why we're trying to 

[01:03:55] Howard Danzig: break this up. Well, I had a conference call with a pharmacist and a quote, transparent PBM last week. Yeah. And the PBM representative got angry with me, which is okay with me. But, uh, so this he's, they're presenting themselves as a transparent PBM and they're giving us all of the, the, the generalized platitudes about rebates and, and, and, uh, you know, discounts from average wholesale price and all that kind of stuff.

I'm a very simple guy. Tell me what your price is for this particular product. And then I'll see if it's a good deal. So I, I told him, I said, listen, this is all I wanna do. I'll give you a list of the prescriptions that are being used by this particular group. And tell me what the price is. Well, we can't do that.

We gotta do this and that and the price changes every two weeks. I said, okay. So they might change every two weeks, but you give me your price and these guys will gimme their price. And then let's see who has the best price he got mad and he said, I'm leaving the line, 

[01:05:02] Mike Koelzer, Host: Howard. You wouldn't believe it in an independent pharmacy.

I've been part of it for 40 years and I've run it for 25 years. My good acquaintances, these sales people coming from these wholesalers. And I used to every time I'd hold up a bottle of, let's say 800 Motrin, whatever. And I'd say, tell me how much this costs. Tell me how much I'm buying this for. Right. And they'd start getting into, well, it depends on your rebate this month.

And if you hit this and this, and if you'd ordered this while you were standing on one left foot, and if it was the, you know, a, a day that ends in Y and you know, and they'd go through all this, I said, you gotta be freaking kidding me. I'm spending X million dollars a year with you. And you are still talking rebates and discounts and that, right.

I said, that's something that you do for the first time at a restaurant until you find out which one you like. And I said, you're playing these stupid smoke and mirror rebates. Um, percentage generic BS. And just tell me how much it costs. And none of 'em can, none of 'em can, even though I'm ordering millions of dollars from them a year.

Oh, they can. 

[01:06:17] Howard Danzig: If they wanted to, they just wouldn't. 

[01:06:19] Mike Koelzer, Host: They won't. Yeah. Yeah. Well, I would argue that a salesperson standing there could not tell me, well, that's true. They've drunk the Kool-Aid of this bigger, or at least they've, they're getting the paycheck from this bigger organization that they're indoctrinated they're indoctrinated.

[01:06:32] Howard Danzig: Now that's true. But somebody knows, somebody knows, 

[01:06:36] Mike Koelzer, Host: of course they want it to be 

[01:06:38] Howard Danzig: smoking mirrors. Well, that's exactly right. So, you know, my, my definition of transparent is what do you charge for this particular drug? Not, you know, this is what we're charging you, you know, your plan, you know, based on this average wholesale price discount, right?

What is that? That's like the PPOs, well, we give a 50% discount off of what , 

[01:07:06] Mike Koelzer, Host: You know, I'm gonna pick on used car salesmen because they usually get picked on the most, but even with a used car sales person. Yeah. You might feel like. You just got abused when you're in there. But finally, when you leave the lot, no matter how creepy you feel, I, like I say, I'm picking on them.

You could pick a lot of different industries, but no matter how creepy you feel when you've left, you know, at least what you wrote the check for that's right. These wholesalers between the wholesalers and the PBM D IRS and on and on and on, you don't even know. And the audits and all that baloney, you still don't know easily 30 days later.

And arguably three years later, what you've paid for that drug? 

[01:07:51] Howard Danzig: Well, you know, one of the questions that generally I, you know, I, I I've asked when I've run into that, as I asked, you know, I've asked one of these guys, I said, look, if you, if you walked into, um, uh, you know, Walmart, I don't care what it is. All right.

And you bought a bunch of merchandise with your MasterCard. Would you pay that MasterCard bill? If all you got was a statement that said you bought a bunch of stuff and we're adding $2,000 to your balance, send me a check. And he said, no. I said, then why are you asking us to do it and call it the blue cross?

Yeah. Yeah. Because all blue crosses are secured credit cards. Yeah. With a finance con with a finance contract arrangement attached to it for you to pay it back next year. Yeah. That's that part we 

[01:08:35] Mike Koelzer, Host: talked 

[01:08:35] Howard Danzig: about. Yeah. That's all, it's no more complex than that. That makes it 

[01:08:39] Mike Koelzer, Host: really easy to understand. When you say you're paying it back next year with the higher premiums and if someone happens to die or changes insurance, ah, they've got that built in too, but in general, 95% of the people are just gonna renew and pay it then.

[01:08:52] Howard Danzig: So therefore, if insurance is meant to ensure the future, why is it then priced to recover what you paid in the past? . 

[01:09:04] Mike Koelzer, Host: That's right. All right. That's right. Yeah. You're paying that right. Somebody gets this humongous expensive treatment and they get that Midsummer and it's supposed to be insured for that.

And unless they die, the company goes out of business. They're gonna pay for that. Come January. 

[01:09:24] Howard Danzig: Yeah. He wants to hear something ironic. Mike, look, this was about two and a half years ago and I was brought into a small manufacturer. I had about 60 employees. They were paying United healthcare through a, uh, PEO you know what a P is.

Tell me, it's one of these employee leasing companies through the payroll companies. You actually lease your employees from an independent entity that collectively advises all these employees into an overall self-contained payroll system, payroll service, along with your health insurance and workman's comp.

So it's all bundled together, their premium. with the United healthcare that was tied to this program was going from 410,000 to 780,000. In one shot. When we got in there, we found out what the answer was. They had three very high price drugs. One was, uh, stolera, one was Humira and one was a cancer drug called Revlimid.

When you add the three of those things up, they add up to 200 and some odd thousand dollars. All right. Now the premium went up to bake the cost of those drugs into the premium plus the carrier's margin. Yeah. All right. Now we had some solutions for it and, um, they were just about ready to address this when they pulled the plug and they said we're being sold to a private equity firm and, uh, they don't want to be quite self-insured and they want to keep things as they are.

Yeah. Just this past week, I got a call from, uh, uh, a property and casualty agency that, uh, uh, we help with a, with a plan. Yeah. And the irony of this is that the private equity firm in New Jersey, you know, called, you know, there, there a, um, uh, an insurance, uh, branch that they are connected to yeah. To solve the problem for this particular employer.

It's the same employer. And they had the same problem. Yeah. We had it solved two and a half years ago. Yeah, exactly. You think they called us back no, no, no, 

[01:11:36] Mike Koelzer, Host: no, 

[01:11:37] Howard Danzig: no. Not, not, not at all. Now. What's really sad. Is this how many times you have heard employers say that we have to have our employees be more responsible consumers and, and watch this and watch that and so on and so forth.

Right? You hear that all the time. All right. While the people in the boardroom want the people in the lunchroom to be responsible consumers, the people in the boardroom are irresponsible consumers by not being willing to listen to what they can do to help their people in the lunchroom get a better value.

Yeah. Right, right. They go back to their friend of theirs. Who's the broker to keep their commissions high? Yeah. While they're spending their employees' money. Yeah, exactly. That's the 

[01:12:27] Mike Koelzer, Host: cycle. Exactly. One question. Let's just say I have a blue cross and let's say my company only has just a handful of employees that I have on a, let's say insurance plan.

I was always kind of under the impression that when I went back to my broker, Year after year. And they say, here's the new premiums? I didn't know. They were looking just at my five or six or 10 people. I thought they were maybe saying, all right, all of the grand rapids area, this is what they use. So let's raise a premium like this, but let's say like one of my people had cancer or something.

Are they actually looking just at my businesses' prior years' cost? Or is it the bigger picture of the county or something 

[01:13:19] Howard Danzig: for a group year size Mike? It's a combination of the two. Gotcha. All right. When you get to the size or the premiums, the size of what I just described to you. Yeah. Uh, it it's, it's not, it's not even actuarial anymore.

It's a cost plus price that I identify what, uh, you know, what's already known. yeah, right. You know, they, they, uh, uh, pencil it out. Yeah. Plus their margin, plus some additional premium to take a risk for what they don't know. That's all 

[01:13:48] Mike Koelzer, Host: That's right. That's right. Something small. Like mine, they might group that into a bigger, they might group that into a bigger group.

Uh that's 

[01:13:55] Howard Danzig: interesting. Think of every type of insurance you buy. Yeah. Workman's comp. Alright. Yeah. Life insurance, disability insurance, uh, car insurance, auto insurance, product liability. Everything is event based. 

[01:14:08] Mike Koelzer, Host: Right. You know, the one that hits me is car insurance. Because of all my kids, I know they're gonna, you know, they're gonna speed or get in an accident and it's gonna go up the next year.

[01:14:15] Howard Danzig: Right. But it's still event based. It's not utilization based on its event. Based. In other words, your auto insurance won't put tires on your car. It won't change the oil. All right. But if you have a crack up, it'll fix, it'll fix it or the liability. All right. Event based. Gotcha. Health insurance is not event based.

It's utilization based. Right. So it's funding. 

[01:14:38] Mike Koelzer, Host: It's funding. 

[01:14:40] Howard Danzig: And therefore, the exercise is where do you get the best value for what services you are providing to your people, right? In order to meet their needs, some of which are identifiable already. 

[01:14:55] Mike Koelzer, Host: Yeah. The analogy would be changing your tires on a car, buying gas, getting a car wash, vacuuming the car.

Those are all things that the individual has to do. The event would be a crack up or a crash. Yeah. Breaking that down to the health side. Where is that line drawn would, would physicals and, and buying some certain things. Those would be day to day costs. What would be a comparable event in health as in 

[01:15:24] Howard Danzig: auto?

Well, uh, something comparable to the diabetic, the diabetic needs insulin to run his body. A car needs gas to run the car. Yeah. Right now, the diabetic has a need that's identifiable and there's a cost associated to meet that need. Where do we get the best value? Where do you get the best value for tires for your car?

What we need is somebody to take a risk for what we don't know. Gotcha. But we're using premium to buy things for what we do know as well, and we've crossed that line. Gotcha. Does 

[01:16:07] Mike Koelzer, Host: Does that make sense? That makes sense. Yeah, because you would never call changing your tires or getting gas. You would never call that car insurance.

You would call that just maintenance day to day things. And you're trying to find a decent yeah. Service and decent price for it. Howard, if you were in the position as a pharmacy owner and you had. Not a crystal ball. You couldn't make anything happen. But if you were in the ownership position, what would you be doing right now after listening to us talk today?

[01:16:51] Howard Danzig: Well, if, if I were, if I were a pharmacy owner, I would be, um, allocating a certain amount of my time every single week to, um, talking with, uh, every employer within my immediate marketplace, showing them what of our compensation is and what they're being charged and what we can, uh, um, sell the same product to them for substantially less.

If they would be willing to listen to a main, a, a manner in which they could restructure their program. that would mirror what large employers have done. And I, and I would, I would document that with, uh, as, as much, um, data and I, and I hate to use data, but, uh, a validation of what has been written about this and what other, uh, VE and what other, uh, organizations are doing.

For example, there was an article in business week about, uh, two and a half years ago that caterpillar and the head, the, the headline of the article said drug costs too high fire, the middlemen. And it was about a caterpillar tractor bypassing the PBMs. And I would continue to pepper them with this information because it's a process.

Mike,

[01:18:17] Mike Koelzer, Host: when you say show them what. You got paid, what the pharmacy got paid versus what they're paying that has to just be anecdotal, right. Or information from other stores because they can't see what they paid per drug. Correct. Well, they, 

[01:18:37] Howard Danzig: uh, number one, if they can't see that's, uh, exhibit a of what's wrong because they're not being shown what their plan is being charged.

And the reason why they're not being shown is because, um, there's plenty to hide now when you have a plan that's already, uh, self-funded then they can see and they should see. And, um, you know, that is, you know, that is, uh, uh, uh, just a given, but there are articles out there now, cuz I'd go, I'd go. Uh, uh, and Google.

Some of these things where it specifically indicates that the pharmacy got $5 and the plan was charged $190. 

[01:19:28] Mike Koelzer, Host: But you're saying if they're self-funded, they should be able to see that 190 somewhere on their own 

[01:19:34] Howard Danzig: yes. On their own literature. Yes. And because if they're not getting that information, uh, you know, itemized by purchase, then, um, they are, are either not set up.

Right. Or, uh, you know, somebody's got an awful lot to hide and somebody's getting some tremendous compensation built into that. Oh, I 

[01:19:55] Mike Koelzer, Host: see. They're self-funded. So they're dealing directly with the PBM right in your estimation are most of 'em probably getting the per prescription price. 

[01:20:05] Howard Danzig: Well, the PBMs have to charge the, the, uh, uh, the, the, uh, uh, the.

and they have to charge a plan by sending the TPA, um, an itemized statement. I see, all right, now that TPA should have that itemized statement. Now, if the TPA and the insurance company are one in the same, because the blue crosses and signals of the world have a version of, uh, of self-funding, you know, but they still hide that into a lot of generalized information.

[01:20:38] Mike Koelzer, Host: Like in my example, earlier between the $10,000 per year or 12,000 per year, if I skipped a couple months, the PBM should be taking that information and showing that to the self funded director and saying we paid 12,000, or we only paid 10,000 for this, right. They're not gonna come back to the actual patient.

Level, but that's where they'll get it the next year 

[01:21:11] Howard Danzig: that, that they should be getting that every single, um, check run. 

[01:21:15] Mike Koelzer, Host: Oh, that's right. I don't pay it directly, but a self-funded company would pay it directly. 

[01:21:21] Howard Danzig: Yeah. You see, when a group is self-funded the only difference between being quite fully funded and self funded, is this when you're fully funded?

Um, and I, I I've mentioned something to you about that, that in regard to that kind of label, but, um, what you've done is you've bundled the funding for the utilization into a monthly premium. See? So you prefunded what you may or may not use. Gotcha. You get no information. All right. All right. Now, if you quote, self-funded you pay as you go, oh, all right.

Now you pay as you go based on what has been incurred and billed. Yeah. So when a PBM sends a bill to a TPA, there has to be an invoice. And that invoice indicates what has 

[01:22:12] Mike Koelzer, Host: been purchased. Gotcha. Okay. 

[01:22:16] Howard Danzig: Now, uh, any, any group that's self-funded should be looking at those invoices and I can't tell you how many groups I've run into that don't even know they exist.

Yeah. Right, 

[01:22:28] Mike Koelzer, Host: right. And if they're paying more like a premium, it's like, it's the same as an individual. It's gonna catch up next month. They're gonna pay for it. Yeah, exactly. I gotcha. I gotcha. Well, Howard, all right, let me break this down. There are times when, if I don't do something on a do list, it's because I haven't broken it down enough.

So you say that a pharmacy should talk to employers. At least once a week, spend time doing that. And it's gotta be more of a conversation than, okay, let's do it today. Right? Break that down. How do they do that? Do they wait for an employer to come in? Do they knock on a door? They knock on a door. Oh, that's too.

That's too nerve wracking for us. Pharmacists that haven't sold before. Well, 

[01:23:23] Howard Danzig: Listen, it's nerve wracking to, uh, get on a bicycle too. this is the first time it's nerve wracking to go on a 

[01:23:30] Mike Koelzer, Host: first date. It's also nerve-wracking to go out of business. 

[01:23:34] Howard Danzig: Uh, yeah. So, uh, look, if you're gonna continue to do the same thing, right.

And continue to get beaten up by the system and you do nothing to help yourself there. Aren't gonna be others out there to help you right now in our case, what we're offering our help, Mike. So if an, if a pharmacy will open a door, We'll, you know, we'll pick up the ball from that point so that employer can understand the system, but you gotta open the 

[01:24:06] Mike Koelzer, Host: door.

Is there anybody listening to this that can't do that? Are you only able to go to so many states or can you talk to anybody? 

[01:24:13] Howard Danzig: You can do it anywhere now, depending upon the size of the group, there are some states that are really, really tough because of the, the, the, uh, uh, uh, the, the regulations they put on things.

Yeah. The west coast is very tough, California. Uh, Oregon Washington, uh, are in their own world. Yeah. Um, the Northeast from New Jersey on, you know, on, up, uh, into new England, uh, they're in their own world, the, the state you're in Michigan. Is that where you are Mike? Yeah. That's a great state for this to happen.

Okay. Matter of fact, we have a small pharmacist, um, in McBain, Michigan that we're working with right now. Okay. Um, We, uh, uh, you know, mid all your Midwest states, Indiana, Illinois, Missouri, Wisconsin, Minnesota's a little bit more difficult, uh, Ohio, 

[01:25:07] Mike Koelzer, Host: the nasty ones that you've mentioned at the beginning.

Should they not even try on those or can they still connect with you? And you can, you, you 

[01:25:14] Howard Danzig: should try. Uh, and if a group is 25 or more, uh, we can overcome just about all of it. Gotcha. All right. 

[01:25:20] Mike Koelzer, Host: Gotcha. 

[01:25:20] Howard Danzig: It's that lower one, but the smaller groups that have got, uh, sign significantly more challenges. Yeah.

Only because, um, the resources that can be used as effectively as, uh, you need them to be, are not, uh, being offered in those states because of the mandates that the states put on these carriers. 

[01:25:38] Mike Koelzer, Host: Gotcha. Gotcha. And then Howard, when somebody connects with you, they could call you and then they could say, Hey, I, or maybe it starts with this.

They might say, Hey, I haven't. Maybe actually been to someone's place and knocked on a cold call, but I know a company, I know a company that I'm gonna approach and so on, they could contact your office and maybe see the next step 

[01:26:03] Howard Danzig: or absolutely we'll help them. You know, we'll, we'll go anywhere. Um, we're, you know, we're working with a group down in Tampa right now, another one in, in a small town in Mississippi.

Uh, I just got a call from, you know, a company in New Jersey. Uh, we just got another one, um, in Louisiana, you know? So the point is we're, we're willing to do anything for anybody. Good. Um, but they have to be willing to be able to, you know, uh, uh, be involved a little bit. Right. And I'm not talking about the nuts and bolts of it.

Yeah. But you know, to start to help, uh, open doors, to educate people. Yeah. Let, let me, let me give you, uh, you know, a, uh, scenario Mike. Yeah. Uh, you're in grand rapids, right? I happen to be a member of the Gerald Ford museum, by the way. Oh, you are? Yes, I am nice. I'm a big fan of Gerald Ford. Oh, cool. Um, alright, so you are in grand rapids, so let's say that somebody comes in with their, um, blue cross cart.

All right. Yeah. Now the blue cross of Michigan is in, uh, in Detroit or Detroit? Yeah. Detroit. All right. And who's the PBM that they use? Is it, uh, prime therapeutics express scripts or did they have their own now? It's express scripts, I think express scripts. All right. Yeah. Now urine grand rapids blue cross is in Detroit express scripts is in St.

Louis. Yeah. Right. Okay. Uh, and, um, let's take the school district. That's right there in grand rapids. Yeah. They come in with their, uh, with their blue cross card. Right. And let's say that, uh, and use a real simple model, uh, a hundred dollars prescription with a $25 copay. Yeah. Okay. All right. So the copay is $25.

The balance of the cost of the drug might appear to be a hundred, but you really don't know what the plan is being charged behind the scenes over and above that. Of course. Sure. All right. Now let's say that the school district, uh, has a premium of a hundred thousand a month or 1.2 million for a group, you know, for grand rapids.

I'm sure it's a lot bigger than that, but let's just use that for round figures. Sure. All right. So in order for that individual to get his hundred dollars drug for his $25 copay, that district has to send a hundred thousand dollars to Detroit at the beginning of the month. Gotcha. Now you in turn to get your, to, to get paid, have to send a request for your money to an express script in St.

Louis sure. Express Scripts in St. Louis now sends a request for the money to pay for this to blue cross in Detroit. Now the blue cross in Detroit then hits your account for an amount unknown to you. Mm-hmm then sends it, sends, uh, another unknown amount back to express scripts in St. Louis. And then when they get it, they take their share out and send you what little they send you 45 days later in grand rapids, right?

Both of you guys are in grand rapids. Yeah. Why do these, what value do these guys in Detroit and St. Louis add to this, but they add cost to this. Yeah, right now, wouldn't it make more sense if the two of you got together and worked directly with each other? Yeah. Now you take a small town of 6,000. And take that scenario where the pharmacist is literally across the street, practically from the school district or the city.

Right. Exactly. And take that model and apply that to the guys who are across the street from each other. Yeah. What logical sense does that make it 

[01:29:51] Mike Koelzer, Host: doesn't no, especially when you know, there's a lot of fat. 

[01:29:55] Howard Danzig: Exactly. But even if there weren't, what sense would it make? 

[01:29:57] Mike Koelzer, Host: Yeah, because there has to be fat because it's traveling 

[01:30:00] Howard Danzig: across the world and it's, well, you have middlemen.

They're not gonna do it for free and they're not gonna do it for less than what you're gonna get paid in the first place. Well, there you go. So while you're getting underpaid, these guys all over the country are getting overpaid and a local money is being sent all over the place and nobody knows what they're being charged with public money, but all they know is that they have a card that has a label on it that says this is healthcare.

When it's nothing more than accounts payable, 

[01:30:25] Mike Koelzer, Host: somebody. Fighting against that would say, well, yeah, but when you've got the big conglomerates and even with there's more hands involved, they're getting cheaper prices because of being bigger and so on. And that's where you just pull out these articles and your own information.

If you have and say, no, in fact, it's not, because now that the gag clauses are gone, you can clearly see here that we're only getting paid this and they're getting paid five times this and that argument of saying the economies of scales are there are not there. 

[01:31:03] Howard Danzig: The economies to scale are there for their benefit, not for the benefit of the policy.

Yeah, that's right. As a matter of fact, I have actually taken provisions out of a blue cross United healthcare and, uh, Aetna policy, each three of them and the provisions in different words, specifically stated in very clear English. That the, the, uh, carrier gets rebates and price, allowances and discounts.

And they specifically say we do not pass it on to the policyholder. Yeah. I put that right in front of 'em. I said, look. You're not getting the discounts. They're telling you that, right, right there in your policy, we had a little 

[01:31:40] Mike Koelzer, Host: bit of a glitch in the sound. And so Howard moved from a picture of Charles Bronson in the background to now in front of a bunch of bats from like, it looks like from goodfellas or what movie that was at that de Niro or someone.

I forget which one it was. Well, I tell people I have a 

[01:31:56] Howard Danzig: bunch of old bats working for me and they don't believe me. So there, I put it on, remember when we were kids, you had signature bats, you had the names of the players etched in all the bats. Oh yeah. Well that's what these are. 

[01:32:07] Mike Koelzer, Host: Well, Howard, I'm gonna tell our listeners.

I know one area that you and I connected to is LinkedIn. And so I'm gonna tell them that's one area. I know, even if they just wanna shout out to you and say, hi, I know that's one area. They can go. Is there a better method just to say hello to you that they heard you on the show and just at least reach out.

Absolutely. 

[01:32:24] Howard Danzig: Let me give you my telephone number. Sure. Uh, the office is 3 1 4. Okay. 9, 9, 7. 8 8 65. Okay. Our name is employers committed to controlling health insurance costs. And the acronym is, uh, Eich E as in Edward, C as in Carl, C as in Carl, H I C. So our email is the Eich group. That's the word? The T H E.

And then E C C H I C, group, G R O U P at E C C H I c.com. And also they can check out our website at E C C H I c.com. 

[01:33:08] Mike Koelzer, Host: We'll encourage the listeners. If they've heard something they like here, and the step is still too much to go across and to knock on the door of the place across the street at minimum, they should hop on the website and reach out and just say, hello.

[01:33:23] Howard Danzig: We'd welcome an opportunity to talk to anybody, Mike. And, uh, we'll go anywhere. And, um, all they gotta do is open the door and we'll help 'em, uh, uh, do something behind it. Yeah, that 

[01:33:34] Mike Koelzer, Host: sounds great. Hey, Howard, it was a real pleasure talking to you. Yeah, you 

[01:33:37] Howard Danzig: too, Mike. That was a lot of fun. Yeah. Even though the Tigers beat the Cardinals or World Series some years ago, I won't hold that against anybody up there.

[01:33:45] Mike Koelzer, Host: I was born in 66. Okay. And in 76, I was, let's say 10. I was 10. Uhhuh . So people would talk about the 68 tigers. And I would say, come on, you guys are a bunch of old farts. You're talking about black and white TV. This was ages ago. Well, of course it was only eight years ago, you know, 76 to 68. But now I will talk about the 84 tigers.

Like it was yesterday, you know, no kidding. And that was what, 35 years ago or something like that, Uhhuh, you know? So, um, but, but I, I lived in St. Louis for a year though, so, so I've got a little bit of St. Louis blood in me. 

[01:34:26] Howard Danzig: That's terrific. Well, I'm a fan of Gerald Ford. So, uh, right 

[01:34:29] Mike Koelzer, Host: back at you, it sounds like it's even now all right, Howard.

You take care. We'll be 

[01:34:33] Howard Danzig: following you. That's great. And, let's stay in touch. All 

[01:34:36] Mike Koelzer, Host: right, will do. Thanks Howard. You bet. Take care. Bye-bye.