Kim
Hello, everyone. I’m Kim Thiboldeaux. Welcome to NEBGH Voices. I’m delighted to have you with us today for a timely conversation focused on pharmacy benefits, transparency, and how employers can navigate a rapidly changing healthcare landscape. I’m pleased to welcome Jon Koval, Vice President and General Manager of Pharmacy Care and Weight Health at Transcarent. Jon brings extensive experience across both traditional and innovative healthcare organizations with a background spanning retail pharmacy, health plans, and employer-focused care models. Jon, we’re so grateful to have you with us today. Thank you for joining the conversation and for sharing your insights with the NEBGH community.
Jon Koval
Thanks for having me.
Kim
Absolutely, so let’s let’s dive in, Jon, to start us off. How has the pharmacy benefits landscape changed over the past decade, and what feels most different for employers today, now.
Jon
Yeah, from the conversations we’re having, you know, I’d say the biggest shift is really that pharmacy is just no longer a supporting benefit. It’s become one of the most primary drivers of healthcare, their cost trend, and ultimately the member experience. And so we think about 10 years ago, you know, employers mostly viewed pharmacy as procurement exercises, you know, focusing on the rebates, the trend management, and really minimizing disruption. However, today, you know, pharmacy really sits at the center of some of the most biggest and largest and strategic issues that employers face, such as affordability, specialty drugs, chronic diseases, weight health, and employee trust. And so, what really feels different today is just the pace of innovation, you know, we’re seeing major breakthroughs in obesity, oncology, rare disease, and gene therapy, and clinically, you know, as a pharmacist, it’s incredibly exciting, but it also creates enormous financial complexity for employers, and so employers are becoming much more sophisticated buyers, they’re now asking, where’s the money actually flowing? Are our incentives aligned? Is the PBM optimizing for our members or just their own economics? And ultimately, are our members getting a better and more simpler experience? And so, really, the conversation shifted from what discount did I get to am I getting transparency, accountability, and better outcomes.
Kim
Yeah, Jon, you know, every September we do our pharmacy benefits conference, and last year we started to call that our Spicy Conference, because it’s gotten very interesting, and you’re right, our employers are getting much more sophisticated and taking a much more deeper dive, in this part of their, their benefit design, you know. Today, Jon, employers are hearing a lot about PBM reform right in Washington, DC, transparency, fiduciary responsibility, some of the things that you alluded to. So, what, what pressures are driving employers to reevaluate traditional pharmacy models right now? What, what are you seeing in the environment, in the ecosystem that’s bringing a greater focus on this part of the plan design.
Jon
Yeah, great question, Kim. You know, I’d say the three major pressures at a high level is around cost, transparency, and ultimately the fiduciary responsibility. And so, if we take a look at cost first and foremost, you know, we’re seeing specialty drugs continue to rise, and we’re seeing GLP-1’s in full force throughout the marketplace, and so employers are seeing their pharmacy spend outpace overall healthcare trend, and many CFOs, right, are looking at their HR leaders and questioning whether the current model is sustainable. Transparency and transparent is certainly a buzzword that I’m sure all of you are hearing throughout, and this is a major driver. You know, employers are really much more aware of how opaque the traditional supply chain is when it relates to things like rebates, spread pricing, where the amount you’re paying for medication isn’t actually how much the pharmacy is being reimbursed. Other things like formulary incentives, you know, why are we keeping high-cost medications on formulary when biosimilars are cheaper? You know, medications that are clinically one-to-one are not even available, you know, through the benefit design, and so many plan sponsors throughout the past one or two years have realized they don’t really have great visibility into what they’re paying for, and ultimately what the incentives are aligned to. And then the third is, you know, the fiduciary responsibility, you know, we’ve seen growing ERISA scrutiny and litigation, you know, members with class action lawsuits saying, why do I have to continue to use these higher cost medications when there are cheaper ones available, and so, at the core, you know what we’re really hearing from employers is they’re starting to ask very reasonable questions. You know, if pharmacy is one of my largest healthcare expenses, you know, shouldn’t I have more control and visibility into it?
Kim
Yeah, I think those are definitely the three things that are top of mind for our employers, and again, very complex and kind of multifaceted. So, I know that folks, our HR leaders, worry about disruption when leaving a PBM, and also, and also risk? Are some of these other models that are coming into the marketplace able to provide, you know the end-to-end that they’re looking for, so what concerns are you hearing about that? And how should employers think about risk versus reward in this moment when it comes to their PBM?
Jon
The biggest concern is just always disruption, whether it’s the employee disruption, formulary changes, operational headaches, member confusion, and frankly, for some, you know, career risk, you know, if something goes wrong and they make the wrong decisions, and so historically the large PBMs have always positioned themselves as, you know, the safe, right, because of their scale and their infrastructure. What’s changing, though, is that employers are increasingly recognized that the status quo also carries risk, it might be financial risk, fiduciary risk, an employee or member noise right into satisfaction, or becoming harder to ignore, and so the conversation becomes less about should we disrupt and more about what type of disruption actually creates value, and so the employer is navigating this best, or they’re taking a phased and strategic approach, they’re looking for partners who simplify the experience, they provide transparency, and they improve navigation, and they’re not just replacing one PBM with another. And so, employees, right, and what we’re hearing, you know, ultimately care about four things, right? Those members looking for the medications is one, can I get my medication, two, is it affordable, three, is the experience easy, and last, and certainly not least, if something goes wrong, is there someone there to help me, which really tends to eliminate some of the noise, right, in HR escalations, when members feel like, you know, there’s nowhere else to turn to.
Kim
You know, what? That formula sounds so simple, but it really is essential, and I think you’re addressing a lot of the roadblocks, right, that members face on that front, so I appreciate you outlining it in that way. Super helpful. Jon, with more scrutiny around ERISA and accountability, how are employer expectations shifting when it comes to pharmacy oversight and their partner selection?
Jon
Yeah, and so employers, you know, they increasingly want measurable accountability, and so historically, when you look at these pharmacy contracts, they were extremely complex, right? Employers relied heavily on, you know, consultants or intermittently interpret performance, you know, are we doing well? You know, what is the trend? How much is this actually costing us at the end of the day? And so now what they’re really demanding is, you know, number one, the transparent economics. What are we paying for, specifically? Things like audibility, right? How do we ensure that we’re auditing the different flows of money and understanding what’s truly being taken in each of these scenarios? Are there aligned incentives? How do we think about not just, you know, formularies that promote, you know, rebate growth or additional rebates, but really optimize lowest net cost at the same time, measurable outcomes and real-time visibility, and so they’re not really looking for someone just to kind of check these boxes right into kind of be a transactional administration or processing claims, they really want strategic partnerships, and so in the past, right, there were certainly vendors, you know, that could process claims for them, but that didn’t help them really improve outcomes or really help them define their longer term strategy, and so there’s this growing recognition that employee experience matters, right, just as much as the unit cost, and that a low cost program that does create confusion, right, or delays care, or frustrates members globally, you know, ultimately will undermine the value that the program is creating from a cost perspective,
Kim
And really could backfire, right?
Jon
Absolutely.
Kim
Yeah, yeah. Jon, I’ve heard you out there talking about a term that I’ve heard you use, called pharmacy-led navigation. When you say that term, Jon, what does that mean? What is it, and why is pharmacy such a powerful entry point for guiding broader care and benefits.
Jon
Yeah, I mean, certainly, as a pharmacist, I might be biased, but you know, pharmacy is one of the most frequent, right, and emotionally important touch points in healthcare for employers, and so people may only see their physician, right, a few times per year, but they interact with their, with their pharmacy constantly, especially if they’re managing chronic conditions, and so anytime someone fills a new prescription, right, or a new medication, something has changed, right, in their life, or in their health, or their status, and it really creates a moment that, with the proper, you know, understanding of not just their pharmacy benefits, but their broader benefits, we can support them, right, and so, whether it’s a member starting a diabetes medication or the inverse, right? They’re abandoning a prescription because of costs, they can’t afford it. If they’re continuing down their journey, right, and they’re escalating to a specialty therapy, or a trend that we’re seeing is they’re starting a GLP-1 journey. You know, how do we better support them holistically, right? And so the guidance, the education, the benefits, the navigation, the care coordination can happen in real time, and so historically, right, medical claims could take weeks, sometimes months, right, to kind of get into the systems, but pharmacy is real time, and so when you think about someone that’s discharged from a hospital, you know that PBM knows about that prescription, they know about the provider, they know about their location, even before it’s in the hands of that member. How do we take that as a signal that this member is going through a transition? How do we help them more, and so the future about pharmacy, right, isn’t just about one connected healthcare, it’s about one connected healthcare journey, instead of just this fragmented system of a medical carrier, a PBM, you know, potentially dozens of point solutions.
Kim
Yeah, I love when you say that, sort of those pharmacy moments happen in real time. I, you know, I have a family member who has bipolar disorder, and that person sees a primary care doctor and a psychiatrist, but as you’re suggesting, they have a very good relationship with their pharmacist, and that’s a much more frequent interaction, and there’s been a lot of trust that has been built there between this particular family member and the pharmacist, so I love that idea that these pharmacy moments happen in real time, Jon, but how can real time data improve the member experience and also potentially outcomes compared to sort of traditional claims-based approaches?
Jon
Yeah, and if you just look at our healthcare, you know, infrastructure and systems, you know, typically they just operate retrospectively, where once the claims hit the system, we try to identify what more can we do, but it could be weeks, months later, not to mention we might not even be able to get ahold, right, of the member based on things like, do we even have a right phone number on file, and so the problem is, when we’re actually making healthcare decisions, it’s real time, right? It’s in the moment that matters. And so, when we think about real time data, especially, you know, leveraging pharmacy, like an adjudicated claim that, you know, pharmacist is trying to get a medication available for their patient, we start to identify things like affordability issues, you know, suggesting alternatives, connecting member right to their broader benefits. If someone fills an antidepressant for the first time, you know, the vast majority, if not all, of employers have mental health, you know, EAP benefits available. How do you start connecting them outside of just those four walls of the pharmacy? And so, by creating a much better, you know, consumer experience, because, I mean, ultimately people expect healthcare to feel more personalized, right, more immediate and more connected, you know. We’re starting to see these pharmacy signals operate with navigation and advocacy and capabilities that have a much higher advantage in things like driving engagement and ultimately improving health outcomes.
Kim
John, you know, at NEBGH, we cannot have a conversation today without talking about GLP-1s, so I’m going to have to run this down with you as well. We know that the GLP-1 medications have really reshaped weight management conversations. Obviously, most of our, I think all of our employers are covering it for type two diabetes. There’s a current conversation and debate about obesity, about weight management and approaches beyond sort of the diabetes conversation. So how are employers, are you seeing employers approach, you know, access, affordability, sustainability differently today? We’re starting to see a few headlines that say that this is not sustainable financially for employers, they’re starting to pull back, maybe a little bit, on coverage for obesity or weight management, and looking at different approaches or cost sharing with their, with their employees. What, what are you seeing right now? And I think it’s going to continue to change and evolve, right? But I’d love to see what your current take is on that.
Jon
Yeah, absolutely, and I think the conversation around GLPs has really matured significantly, you know. A few years ago, the discussion was mostly just around, do we cover these drugs or not? As we continue to look at the data, right, that’s coming out, and the benefits, and you know, the value it’s having for members, you know, the employers are starting to ask much more nuanced questions. You know, which populations benefit the most? How do we support things like long term adherence? What clinical programs actually matter? How do we manage affordability? Right, Kim, to your point, they’re seeing the trends continue, and then ultimately, how do we measure outcomes just beyond utilization? And so employers increasingly recognize that obesity is a chronic condition, you know, rather than just a short term intervention, but at the same time, you know, they’re balancing different things, like employee demand, you know, their members saying we’re paying this money for healthcare and insurance, I can’t even get a medication that, you know, my doctor prescribed covered, as they remove coverage, which is causing potential, you know, issues more globally, such as competitive benefit strategy, you know, things like retention, but those that do cover it, right, their CFOs are constantly saying, is this financially sustainable? Can we continue on with these trends without really having to upend our, our benefits planned? And so, what we’re really starting to see a greater focus on for is things like contribution design, integrated weight health programs that go alongside of the actual prescriptions, and individualized support models, right, not just getting a medication that’s prescribed, but having that wraparound holistic support, and at the same time trying to wean these individuals off as they hit their goals, and so these are the different areas that we’ve never really seen happen where you know the majority of some populations want access to these medications, but the cost, right, don’t keep up with that demand, and so really those wraparound support models, also understanding which populations are eligible, are absolutely critical.
Kim
And also, I think Jon, part of the promise of these medications is a reduction in total cost of care, right? And maybe we’re a little bit too early in that data analysis to see those results, is that what you’re seeing?
Jon
Yeah, absolutely, and when you look at the actual pharmacy spend, right, and you know the costs continue to come down, but you know, it’s not significant enough to really make a dent on the balance sheet, you know, when you’re adding, you know, potentially $1,000 per month to a member and you’re preventing, you know, maybe a heart attack four to seven years from now, it’s hard, right, and that’s in like the lower acuity members, right, that may be just on it for obesity, compared to those right with congestive heart failure. You know, we actually had one patient that was on the heart transplant list, you know, started a GLP, had the wraparound support, and now it’s even a question: do they still need the heart transplant? And so that is certainly, you know, one amazing scenario where, you know, every employer, right, would support the access to it, trying to balance that, where you know some employers have 30 to 40% of the population, you know, that could be eligible for these medications. It’s just not sustainable in today’s economics.
Kim
Yeah, and these healthcare questions are not a short-term game, but the coverage decisions oftentimes are short-to-midterm, right? So, I get that. I think, Jon, we’re also seeing a shift from, in some instances, from traditional pharmacy models to direct-to-consumer, right? We’re all inundated with these ads on TV. How you can get these drugs directly, but also newly evolving direct-to-employer models, which I understand in some of those instances allows employers to have access to some of the data, as opposed to sort of a person going completely direct-to-consumer when the employer might not be aware of that. So, do you think, you know, does this approach give employers an advantage in expanding access, potentially in reducing costs, maybe engaging in some more cost sharing with the employee? I think the jury is still out on some of these new models, but what’s your take on that?
Jon
Yeah, the GLP-1 has been a really interesting trend to keep up with, you know, they came out through the traditional channels of, we’re going to leverage our, you know, PBM benefits and have access at local pharmacies, and, you know, as we’ve discussed, you know, many employers, unfortunately, had to remove access because they couldn’t keep up with, you know, the financials, you know, then pharma announces direct to consumer, right, and so they provide a lower cost alternative for members to access directly in cash pay, but for many Americans, right, that’s still the cost of something like a car payment and still unaffordable, and so when we go back, right, and we look at, you know, 20 or 30 years ago, when PBM started, you know, one of their value props was we’re going to negotiate, you know, on behalf of all of our employers with pharma to get the lowest cost medications, and now we’re in a world today where pharma is actually trying to circumvent that and work direct with the employer, right, to kind of, you know, reduce costs, and so this direct to employer, you know, model is is one that is continuing to grow, you know, starting off with GLPs, we’re seeing other, like autoimmune, you know, migraines, kind of fast and furious behind it, but it’s really removing those multiple intermediaries that create ready, fragmented experience, and ultimately a misaligned incentive. And so, for employers, there are advantages of this model. You know, there’s more predictable economics. You know exactly what you’re paying for, and you can define things like your contribution. You know, it’s not tied into your larger PBM formulary, where, you know medication fits a tier three, has to have a $30 copay, right? You can kind of adjust how much that contribution is, and more importantly, it gives them more flexibility, right? They can adjust their contribution amounts, they can kind of understand, you know, their usage rates across their population, and so it’s creating these different incentives for members to really think about, you know, their employer differently, where maybe this is more of a total rewards benefit, you know, it’s not just for the hard dollar ROI in the short term, but it decreases retention, right? It decreases, you know, things like absenteeism, and the experience, you know, feels dramatically easier. You know, typically these are digital first solutions. There’s integrated, you know, coaching, there’s things like home delivery, we don’t have to wait in line, you know, to pharmacy counter, and really, it’s just simplifying access to care. Now, I will say, right, that this doesn’t mean that every direct model automatically lowers cost, you know, it’s still about sustainability, but employers are really increasingly recognizing that by improving the consumer experience, by eliminating some of these barriers, by defining their contribution amounts, you know, they can really create a program that is sustainable and that gives members, you know, the benefit they’re looking for in a more controlled way.
Kim
Interesting, really interesting. As we wrap up this conversation on the GLP-1s, Jon, I, I can’t help but look ahead at some of the pipelines, right? Again, headlines, we’re inundated with these headlines, and we’re studying, you know, GLP-1s. I think there have been some indications recently, and things like sleep apnea. I know they’re looking at other sort of cardiovascular indications, looking at kidney disease, but also looking at things like addiction, drug addiction, alcoholism, gambling addiction, distance studies in potentially in Alzheimer’s, they talk about reduction in inflammation, things like cancer, right. It’s like there’s a lot out there, but what, as a pharmacist, because I know you also track these pipelines, what are we looking at? I mean, let’s say Jon, in the next one to three years, and then maybe like next three to five years, what’s in phase three? What are the more near-term indications that our employers should have on their radar?
Jon
Yeah, and so you know, to your point, we’re still really early, right, in the evolution of this category, besides, you know, the diabetic component that’s been around, you know, since the early 2000s and so today most conversations with employers, you know, really focus on diabetes and obesity, but Kim, you know, as you mentioned, it’s expanding to cardiovascular risk reduction, you know, sleep apnea, as you decrease the weight, you know, on the throat, you know, individuals are seeing better night’s sleep, things like fatty liver disease, you know, kidney disease, and then, of course, those potentially addictions and neurocognitive conditions as well. At the same time, we’re seeing different evolutions of the actual product, right, and so we’re seeing more oral formulations come to market, where a lot of members wanted to try it, but maybe they have a phobia of needles, right, or didn’t want to inject themselves. We’re also seeing combination therapies, where it’s not just the GLP-1, but there’s other different types of ingredients that aim to increase the overall weight loss as well. At the same time, we’re seeing longer acting agents, right? So, for those that didn’t want to inject themselves weekly, there’s products that we’re looking at once monthly and beyond, you know, in the pipeline to come. And last, but you know, certainly not least, there’s more competition, and so, in theory, right, more competition should bring down the prices, but as newer agents, right, better agents come out, you know, it’s hard to say there’s really sustained, you know, financial savings, you know, in the next kind of one to two years, per se, in the direct models. Now, at the same time, there are benefits of GLPs, but there’s even more studies coming out around some of the negatives, right? One of the interesting things, in terms of, you know, additional medications we’re seeing be prescribed, is things like hair loss, right? And so, if you look at things like minoxidil, you know, we’re seeing an uptick of individuals on GLP now suffering from hair loss. As we think about, you know, women around the menopause age, things like, you know, bone, their bone health, as well as their muscle mass, is also decreasing as well, which is scary at times, right? I mean, these medications work, but you’re supposed to pair it, right, with going to the gym, right, eating healthy, ensuring you’re doing it, but for a lot of individuals it’s just that appetite suppression that’s causing that weight loss, which is not sustainable in the long time, and so I actually think, you know, down the road, you know, we’re really going to see more of this, you know, the hair loss, the potential, the muscle, and the bone loss, you know, as the studies continue, and the data continues to come out in terms of the impact, but the organizations, right, that really focus on the GLPs and think just beyond the pharmacy spend, you know, how much are we paying per month. They should also look more globally at their membership population, things like productivity, absenteeism, you know, are they seeing long-term chronic disease reduction, you know, if they promote access to it, and then ultimately, what is their overall employee well-being? And so we’ve had, you know, some conversations with an employer recently, you know, that we’re looking at things like the AI chat bots for mental health, and even balancing, you know, for the money we were going to spend in this arena, could we put it towards a GLP, you know, contribution rate, and you know what type of impact could that have, which is just interesting when you kind of think about that total benefits factor and where all the dollars are flowing,
Kim
Yeah, and I think for us continuing to track these pipelines and track these studies is really important for our members at NEBGH. I think I saw a study that came out recently that said even for folks who are on these drugs who did not experience significant weight loss, there were other clinical benefits, particularly cardiovascular benefits for these medications, so it is a very complex kind of clinical area, but we appreciate you and others helping us keep on top of these pipelines and new indications, etc. So, we hope you’ll continue to bring some of those headlines to us, Jon, and help us kind of parse what the implications are for our employers. Jon, we’re getting to the end of our conversation. I could talk about all of this for days with you, but you have worked across both traditional and disruptive healthcare organizations. You look way too young to do all of the things that you have done. I’m just going to say that, okay? But I just, I’d be curious to hear from you, what you’ve learned about integrating pharmacy, medical, and point solutions in a way that actually works for employers and employees, and kind of helps to increase efficiency, reduce costs, create a better experience for the employees.
Jon
Yeah, you know, I’d say the biggest lesson is that fragmentation creates friction, and friction drives disengagement. And so, you know, most employers, as they’re creating the benefits design, they didn’t intentionally create these fragmented ecosystems, right? The carrier, the PBM, essentially dozens of point solutions, but from their members’ experience, right, it can feel really overwhelming. You have multiple apps, multiple vendors, multiple logins, really not sure where to go next. And so the organizations that succeed, you know, they really just simplify the experience around the member, right, the individual that’s getting the care, and to do that, you know, it sounds simple, right, but in our world it is always more complicated than it needs to be, and so things like integrated data, aligning incentives, coordinating navigation, and then ultimately, you know, consumer-grade experience that members want to turn to and use, and so the technology does matter, right? But the operational alignment matters just as much, and so at the end of the day, you know, employees and members, they don’t want to wake up thinking medical versus pharmacy, they simply just want healthcare to feel easy, affordable, and trustworthy
Kim
And integrated, yeah, yeah, absolutely. So, Jon, last question, as employers look ahead, what sort of mindset shift is most important when it comes to pharmacy benefits? Again, looking at this formula of sort of cost, experience, transparency, accountability, how should employers be thinking about that model a little bit differently as they look ahead? We’re moving into the season, right, where we’re starting to plan for 2027 and they’re looking at coverage, and so if there was one thing that you, one tip, one piece of advice you would give to our employers today as we wrap up, what would that be?
Jon
Yeah, I think the biggest, you know, mindset shift now is really moving from managing pharmacy as a cost center, right, more treating it as a strategic health and a workforce investment. You know, employers can no longer afford, you know, these fragmented solutions, you know, where they all operate independently. And ultimately, not one is really accountable for overall health, and so the future, right, is really about aligning the cost, the experience, and transparency with the outcomes in just one model. And so, for employers, right, what you should expect is, you know, transparent pricing and aligned incentives. Do you really understand those flows of the dollars, not something like the hidden spread, the hidden spread pricing, or even the rebate, you know, driven decisions? The member experience, right? Ensuring that members can access the care and understand the care, you know, based upon the real-time nature of pharmacy, their broader health benefits, and your broader benefits as well. Making sure that there’s accountability for outcomes, right, not just transactions, someone’s just continuing to go to the pharmacy and continuing to deteriorate, you know, ultimately, what are we paying for in that broader healthcare system? And then, the integrated care navigation, right, where the pharmacy, medical, and advocacy all work together, you know, instead of silos, and so the organizations that succeed will stop asking questions like, how do we manage pharmacy spend, and they’ll really start kind of asking, how do we improve health outcomes while making it more simpler and more affordable for our members,
Kim
Great, that’s a great summary, Jon. Thank you so much for joining us, and for sharing your insights on pharmacy benefits, transparency, and the evolving needs of employers and employees. I’d also like to recognize and thank the team at Transcarent for sponsoring this episode. Partnerships like this allow NEBGH to bring timely, practical conversations to our HR benefits and total rewards community. This has been NEBGH Voices. Thank you for listening, as always. We wish you wellness.
Closing Voices
and I am one of the voices, one of the, one of the voices…
Jon
I’m John Koval, and I’m one of the voices of NEBGH.
