CVS vs. Walgreens | Trouble Behind the Counter | 5

0:06I'm David Brown and this is Business Wars.

0:29When you hear CVS and Walgreens, what do you think of? Maybe your mind goes straight to retail. aisles loaded with candy, beauty products, cheap holiday decor. You know what I'm talking about. Or perhaps you think about the in-store clinics where you can go see a doctor in a pinch or grab your flu shot or COVID booster. Well, today's pharmacies certainly look a lot different and wear a lot more hats than they once did. But as big pharmacies take over more of the healthcare industry, patients, providers, and pharmacists themselves are finding themselves tangled up in a confusing and costly web without much agency.

1:05Today's guests are here to help us make some sense of this constantly changing industry. First, we're speaking with Dan Weissman, host of the podcast, and Arm and a Leg, co-produced with KFF Health News. And as the big pharmacies become more monolithic in the world of health care, Dan will be breaking down what that means for patients across the U.S. Later, we'll be joined by Liz Tong, a reporter for WHYY's health and science podcast, The Pulse. She untangled some of this health care web to dive deeper into the mysterious pharmacy benefit managers who are shaping the cost of drugs for consumers and challenging independent pharmacies nationwide.

1:41All that's coming up.

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3:54Dan Weissman, welcome to Business Wars. Thanks so much for having me. Hey, tell us about your Arm and a Leg podcast. I understand it's about the high cost of health care and how we got there, but what inspired you to dive deep into health care costs? Oh, man, how long do you have? Yeah, Arm and a Leg is a show about why health care costs so freaking much, what we can maybe do about it. And honestly, it's an underwitnessed topic and a really important one in our society. As a reporter, I'd come across it, you know, and in my life I'd come across and I was like, we don't talk about this enough. And I, you know, I started talking to people about it.

4:29Initially, I thought it was going to be like, you know, there's a lot of horror stories out there. And a good friend of mine who's a really big pro was like, well, who's going to tune into that on purpose? That sounds very depressing. who's gonna tune in on purpose that's hilarious well she was super right um you know uh in the same conversation she was like you know i survived breast cancer last year and i'm still fighting with my insurance over the wig they didn't want to pay for and i was like wow that's incredible yeah well yeah and everybody that i talked to to ask him about my crazy idea was like well that's an interesting crazy idea did i tell you about this thing that happened to me and i was like oh I see this isn't just the stories the horror stories you see in the paper this is like actually happening to all of us right now um and I was like I think this might be a show well Dan of course pharmacy is a big part of health care and and and CVS and Walgreens specifically the focus of our latest business wars season which one of those two CVS Walgreens which one do you see more commonly in your area?

5:36Well, it's a super good question. You know, I grew up in Chicago. I still live here. And Walgreens is from Chicago. So when I grew up, it was all Walgreens out here. Then sometime in the last 20, 30 years, CBS bought one of the other big local chains. It was a chain called Osco. Oh, I remember Osco's. Sure. Yeah. And CBS bought Osco's. And so suddenly there were a bunch of CBS around. I was like, well, OK, cool. And apparently that's, you know, from kind of reading up, that's what they've done around the country. Right. And Walgreens also, they both both of those chains have like basically bought up lots and lots of the other kind of regional chains around the country.

6:15So there are now these kind of two big national behemoths. You know, I'm curious about whether or not you've experienced something like this, too. I went into a CVS recently and frankly, blown away by how long you had to wait in the line. I mean, there are just a couple of folks behind the counter. The drive-thru was closed. Kind of a pain, but I didn't know who was hurting worse, me or the staff, right? Right. This is a I mean, this is a problem. I think that everyone who has had to get a prescription filled has experienced in the last few years for sure. Yeah. In our family, like we got a couple of prescriptions that come around every month and we like call around to see who has what we need in stock.

6:55We like time our days. I'll tell you what we do now is we've found an independent pharmacy that answers the phone, which Walgreens and CVS basically don't. But you'll be on hold a long time, at least around the CVS and Walgreens around us. And they deliver. Huh. That's interesting. We pay them five bucks. That is fascinating. And you went to an independent, like, mom-and-pop style pharmacy? Yeah. Yeah. My wife found it. And I'm like, this is good. I really want to. Like, we want to keep these guys in business. We're going to have to put a pin in that because I know later in our program, we're going to be talking about these independent pharmacies and what they're up against.

7:32Of course, Walgreens employees are talking a lot about walkouts as a result of being overworked. And I should point out, you know, we're talking, we're having this conversation in mid-October. And by the time some of our listeners may hear this, things may have, all sorts of things may have transpired. We're hearing CVS employees may join in the walkout as well. What is going on here? Well, I remember in the early days of the pandemic reading about this, and certainly that's when I first remember the phenomenon of like, wow, the late times at the pharmacy are super long. I mean, everything was pretty bananas at that time.

8:11But but that's when I first started reading stories where pharmacists from Walgreens and CVS were complaining that basically they were being super overworked and that they and I remember seeing comments that they were like, it's not safe. Like they were basically they couldn't have faith that they were going to fill everybody's prescription correctly, which is kind of a high stakes problem. So, yeah. So that's, you know, three and a half years ago. So it's not I mean, it's been brewing for a long time. Well, now, what happens when pharmacy staff move forward with these walkouts? I mean, how are patients affected?

8:49I mean, well, gosh, like anybody listening to this will have a clearer answer than we do now. Right. Right. Because you will have lived through it. But if you're somebody who needs a prescription filled and the pharmacists have walked out, it's going to be kind of a big deal. Like, you know, not I mean, like people who take, for instance, medicine for ADHD have to get that prescription refilled like kind of by hand every month. It doesn't just automatically happen because it's a controlled substance in a lot of those medicines. So that's very time sensitive. And obviously, if you like, I don't know, you have strep throat, you need or you have some other bacterial infection, you need it treated right away.

9:30You need insulin. People can't live without that. I mean, let's go on. Right. If you have COVID-19 and need Paxlovid like that, you can't only take that in the first few days of being infected. So like if you can't get medicine from your pharmacy, that's going to be a problem. Well, you know, what you've observed about the way pharmacies are operating these days is it's I think it lines up with what we've seen when we go to the drugstore. It seems like they're much more than just places to pick up medication. I mean, some cases they can feel like full fledged doctor's offices, you know, with flu shots, boosters, minute clinic and all that.

10:07How common is that? Yeah, well, I mean, I'm in where I am. It's it's pretty common for the CVS to have a minute clinic inside it. And then they also operate these MinuteClinic stores inside of Target stores. And I'll tell you, it's more than once I've been in a situation where I'm like, I'm worried I might have strep throat. And I don't try calling my primary care doctor because that's, I mean, that's a big investment of time. And they'll be like, well, is this, you can go to some urgent care. You can do this. Like I've gone to MinuteClinic a bunch of times to get checked out because it works.

10:39You can make an appointment online, show up and, you know, talk to somebody. And frankly, last time I did, the nurse practitioner there engaged with me more and had a more substantive conversation with me than I've sometimes had with a doctor at my doctor's office. That's kind of amazing. Is the quality of care, where do you put it on a scale? Well, it's really hard to say. And I'm not an expert on the quality of care. But nurse practitioners get training. But they do not go through as much training as doctors do. You know, I kind of think I would prefer to have a doctor, you know, caring for me because they have had a ton more training and just seen a lot more things in their training.

11:25But I mean, it's part of a bigger trend, right, where we have a big lack of primary care docs in our country. And we could talk a lot about the economics of that. Primary care docs don't make as much as folks in other specialties. There's lots of disincentives for folks from medical school to go into it. It's really hard to operate your own primary care practice for some of those reasons because primary care docs don't get paid by insurance as much. And so they tend to get their practice often get bought up by big local hospital systems, which then erect a lot of barriers to care. In my experience, right, you want to see your doctor.

12:00You've got to make an appointment through my chart and maybe it's several weeks out. And there's a lot more paperwork to fill out because they have all of this infrastructure in the big health systems to make sure they get every single dollar that they can from you and from insurance. But I'm wondering where this is headed and where we actually stand. I wonder if, in a way, what we're talking about is a kind of restructuring of priorities and of health care in the U.S., where it's sort of shifting and the pharmacy is taking a much more prominent role in that puzzle than any of us really realize.

12:41I've been kind of starting to starting to get my bearings. It's only been at this for five years, and I feel like I'm starting to get my bearings in the world of health care. But just beginning. But that that basically every player seems to feel like they have an incentive to grow because basically all the other players are growing. So, you know, United Health Group is the biggest of the big. And they, among other things, their Optum subsidiary is now the biggest employer of physicians in the United States by a considerable amount. And this is something they've just gotten into in the last maybe 10 years in volume.

13:18But they employ like 70 ,000 physicians. And like the nearest competition, which would be like Kaiser Permanente on the West Coast, is at least at least 20 ,000 behind them. They're they're like two or three times bigger than the VA. It's a huge thing. And the whole thing is they're all feel like they're competing against these giant sharks. Right. Like if you're an insurance company, you're like, wow, all these big health provider chains have gotten so big. We have to negotiate with them. wouldn't it be better if we like got bigger ourselves and had more bargaining power with them or even employed our own physicians if you're a hospital chain you also are like well we have to negotiate with united and blue cross and all the others we want to be as big as possible so we're in the strongest possible bargaining position and if you're cvs i mean cvs is kind of ahead in in that game of what i guess i'd call consolidation i don't know what to call it um because they're It's not like they're just consolidating themselves as a drugstore entity.

14:17They're like, well, we went and bought Minute Clinic and we went and bought all of Target's in-store clinics. And we went and bought Caremark, which is the pharmacy benefit manager. We went and bought Aetna, the big insurance company. So they're trying to be everywhere and everything. And Walgreens, as far as I can tell, is doing less of that. I know there have been some leadership shakeups at Walgreens recently with a CEO leaving. Rite Aid, another competitor in this space, although considerably smaller than either CVS or Walgreens, they've been in some hot water, too. What's going on here? What does it say about the industry?

14:52As we speak, Rite Aid has just filed for bankruptcy, and that's kind of a big deal. It appears like they fell behind in this game of getting really big. And actually, a few years ago, apparently they tried to sell themselves entirely to Walgreens and federal regulators were like, that's a little too much consolidation. But they did sell like half of their stores to Walgreens. So, you know, according to the Wall Street analysts who get quoted in the news stories that I'm reading, you know, they they fell behind and they don't they when you're smaller, you have less negotiating power with all those other players, with the insurers and the pharmacy benefit managers and the drug makers.

15:30You know, let's let's talk more about the competition here, because we've got grocery stores with their own pharmacies, right? I mean, you've got Walmart, Wegmans, Albertsons, and then you've got e-commerce entering this game, too. What's your sense of how this might affect patient costs and the health care experience overall? Well, pharmacies in places like grocery stores, I mean, I remember that as a kid. Like, Osco was always part of Juul. Osco Juul was the big supermarket chain. So that doesn't feel very new to me. Um, but the, what does seem like a bigger deal in the last few years are entities like on the one hand, good RX, anyone who's not familiar with it.

16:13Uh, it's a basically a website, good RX.com and you tell them what you need and they'll tell you, Oh, we can get you a deal on that at your local pharmacy. We've present your, our coupon to them. And the trick with good RX is if you're using a good RX coupon, then you can't be using your insurance at the same time. So but maybe you're maybe good or is a better deal than your insurance or something or maybe you don't have good insurance or maybe your insurance has a giant deductible that includes drugs. And so you're not going to meet that deductible. So for a lot of people, a solution like good Rx can be helpful.

16:47And then Mark Cuban, entrepreneur everywhere, has started in the last couple of years what he calls cost plus drugs, where his promise is, I'm going to go find for your medicine, if it's generic, especially like wherever it's cheapest, I'm going to buy it from them. I'm going to market up 15 % and sell it to you that way. And, you know, what's interesting is I went looking it up and, you know, there's a prescription that I get for like 10 bucks a month. And I was like, yeah, it's a pretty good deal. Mark Cuban was saying, like, I'd sell it to you for$6.50.

17:21Wow. I don't think it's worth it. I think I'd pay him a few dollars for shipping, but, you know. When you have people like Mark Cuban getting in on this game, I mean, that speaks to the likelihood that there's a pinch point, that he's not alone in identifying. And maybe we should gaze into the crystal ball here for a second if that's possible. What do you see coming for CVS and Walgreens? Where does this go next, do you think? It's a good question. I don't really know. They have competition from places like GoodRx. And I think, you know, the presence of that competition means because GoodRx and Mark Cuban also make money, right?

17:58What they're understanding is that essentially there's so much price gouging in this space that there's room for someone to come in and undersell and still make money. I wish I thought that were better news for the rest of us because I just think like whoever gets big market share will take the most advantage of it they can and raise their prices to the highest point they can as long as they don't see somebody undercutting them at scale. Well, Dan, we've been talking about some really serious, heavy stuff. But before we let you go, I got to ask, when you go to pharmacy these days, what do you do to lift your spirits?

18:38You visit the candy aisle. You got a favorite that you pick up.

18:44We're going to need a lot of Skittles for this one. I mean, I don't think they have a very good deal on anything at the drugs or when I go there. I try to get everything I can someplace else. You know, in a pinch, because there is a Walgreens a few blocks from me. I'll be like, I'm out of shampoo. I guess I got to go to Walgreens and I'll pay what they charge me there. Yeah, the big, but puts a smile on my face. It's like, ah, we found a locally owned pharmacy that delivers. We call them and they deliver our stuff. Like, I'm still like, that's the win that I'm going to take. I mean, I'll just ride it as long as I can.

19:21Independent pharmacies, where we're going to be talking a whole lot more about those in just a moment. But we've been talking with Dan Weissman, host of An Arm and a Leg, co-produced by KFF Health News, exploring how much we pay for health care and why. Dan, thanks so much for joining us. Thanks for having me.

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21:10Hey, welcome back to Business Wars. You ever picked up that prescription from the pharmacy and been surprised by the price tag? It's a common experience in America and one that can feel like playing something of a game of roulette. Who's responsible? Well, you know about pharmacies, insurance companies, drug manufacturers themselves. Well, there's another influential party you may not have heard about. They're called Pharmacy Benefit Managers, or PBMs, and they play a major role in determining drug prices at pharmacies big and small. Here to shine a light on this side of the healthcare industry, Liz Tong, a reporter for WHYY's The Pulse.

21:49She recently took a deep dive into these PBMs on The Pulse, And she joins us now. Liz, welcome to Business Wars. Hi, thanks for having me. Before we get into what pharmacy benefit managers or PBMs actually are, I'd love to know how you came across this story. I mean, it's just not like PBMs are widely publicized or even known about, really. No, it was really a confluence of things. So I trawl a lot of social media groups and profiles dedicated to health care workers. and I started seeing PBMs popping up all over these groups. And in particular, there was a video by a physician named ZDoggMD. And I tried to go back and find it and I couldn't.

22:34But in this video, he was just railing against PBMs and talking about how they're these shadowy figures that have such an influence on drug prices and on patient care. And then around the same time, our host, Mikan, approached me and said that her neighborhood pharmacist had come to her and said, you know what you guys need to do a story about is PBMs. They are putting stores like mine out of business and somebody really needs to look into these guys. So it just kind of seemed like fate that it was time for us to look into PBMs. Yeah, that was why I was chuckling there. When all these things are pointing one direction, how do you ignore all these multiple tips?

23:17So give us a breakdown on what pharmacy benefit managers actually do? Where do they fit in? So their official definition is companies that manage prescription drug benefits, which sounds incredibly innocent and boring. But in reality, they are one of the most powerful players in the prescription drug market. And the way they got so powerful is because of this unique position they occupy in the prescription drug ecosystem, which is essentially that they're middlemen. They exist smack dab in the middle of this web of players, drug manufacturers, pharmacies, insurance companies, patients. And they're sort of like the hub for how money flows from one player to another.

24:07It is extremely confusing. When I was first researching PBMs, I tried to make like a flow chart to figure out how PBMs were related to each of these other players and to try and follow the flow of money. And I finally just gave up because it was so confusing. You can, by the way, find some pretty good flow charts online. But it's enough to say that they're basically like the money managers for the whole system. They process claims, they negotiate drug prices, they pay reimbursements to pharmacies, they help determine out-of-pocket costs. They have this whole bundle of middleman roles that they play.

24:48But the way that they advertise themselves, like their stated purpose is lowering costs for health plans and for consumers. Now, I want to pick up from there because maybe it's since most of us are coming from this, from the perspective of a patient, someone who goes to the pharmacy and they're picking up their prescription. And they're quite often surprised by the prices. It's my understanding that if you follow that line from the pickup window through the pharmacy, then and onto the manufacturer, right in between there, you're going to find the pharmacy benefit manager. And it's my understanding that that benefit manager is responsible for what?