Richard Lowenthal

But they do require prior authorization and we're trying to remove that restriction because it is a burden on the doctors to have to deal with writing a prior authorization.

It takes up their time and costs them money, time in doing that as a part of the process.

Caremark has been very difficult in dealing with it and we're still working on the final details of that agreement.

Now with all these agreements, there's now what's called a group purchasing organization.

So all of these PBMs have tried to create these group purchasing organizations so that the group purchasing organization is the one negotiating the contract

And the PBM is making the medical decision to cover or not, but not negotiating on dollars.

As part of all these agreements, there's also a fee that goes to the GPO.

So that's clearly kind of a portion of the prescription cost fee.

that is going directly to the PBM or to the organization and is very clear now that that is a fee.

What that fee is for is always a question.

And I won't get into that on this call, but certainly they are charging a fee in the order of about 10%, 8% to 10%.

And that fee, again, is added on top of the cost of the prescription.

And then they also negotiate rebates.

Presumably these rebates go to the downstream payer.

but that depends on their agreements with the downstream payer and how much of that rebate the PBM keeps is really not known to us.

As far as PBM reform, I'm not seeing anything specifically that's happening.

I know there are some efforts in Congress to try to come up with some ways to reform the system, but it is very convoluted because when we price a drug,

we have to take into consideration these rebates and PBM fees, and we have to actually price our drug to include that additional cost as opposed to simply if that was reformed, if there was PBM reform and those fees were removed and rebates were removed and decisions were made purely on medical benefit of the product,

We would be able to easily cut our price significantly so that the downstream payer and the consumer definitely benefited.

But in the current system with these, we have to price that into the entire cost of the drug.