Principal and consulting actuary, Milliman
Brian Anderson, MBA
The problem is not too much consolidation. Mandating transparency rules could be counterproductive. The worry about spread pricing is beside the point.
We don’t ask companies in other sectors how much they are making on what they bought and sold, says Brian Anderson, MBA, a principal and consulting actuary for Milliman. “I don’t know why we would home in on pharmacy. I feel it’s a forced distraction by somebody not to focus on the real issue, which I feel is utilization, getting people to low-cost generics, looking at low net cost of products and giving people the information to make their own purchasing decisions.”
Managed Healthcare Executive and the Pharmacy Benefit Management Institute (PBMI) have selected Anderson to be recognized as a PBMI Innovator in the program’s inaugural year to identify leaders in U.S. pharmacy. Anderson has built up Milliman’s consulting practice in the area from a handful of employees to more than 60, and his knowledge of what might be U.S. healthcare’s most convoluted industry has impressive breadth and depth. Anderson’s views may not jibe with some of the prevailing critiques of the industry, but he is not sleepily content with the status quo. He says payers should ask benefit consultants blunt questions. “Everybody should ask, ‘How are you being compensated?’”
Anderson says that, in theory, vertical integration should present opportunities to manage patients more holistically, “but we’re just not seeing it come out.” He sees plenty of reasons-to-be for pharmacy benefit managers (PBMs) in the present but has a vision for the future that is far more centered on individuals. “My goal before I retire is to see that consumerism finally instilled in the pharmacy benefits area, and people purchase drugs just like they purchase everything else.”
Anderson, 46, was to the PBM industry born. His parents, Ken and Jan Anderson, are pharmacists. His father worked for Medicare Glaser, a pharmacy chain based in Clayton, Missouri, outside St. Louis, which, in a joint venture with another company, started Express Scripts. The company that later bought Medicare Glaser went bankrupt in the early ’90s — Anderson said his father “was the last one to turn off the lights and purchased the items needed to start his own company, Independent Pharmaceutical Consultants, one of the first PBM consulting firms, while some of his colleagues went to work for and build up Express Scripts.
“I am one of the few people that can have dinner conversation with my parents and talk about copay management, PBMs and contracting,” says Anderson, laughing. At the beginning, his father ran the consulting business out of the basement of the family’s home in Lake St. Louis, Missouri, and Anderson and his older sister, Christine, helped with mailings and other office work (Christine also ended up going into the family trade and becoming a pharmacy benefits consultant).
After graduating from Columbia College in Columbia, Missouri, Anderson, a biology major, says he had “big plans” about developing new products for agriculture, but his wife and fiancée at the time, Pin-Chin, gave him the down-to-earth suggestion to ask his father for a job. “So I called him, that call of shame. ‘Say, do you have any openings?’ And he said, ‘Yeah, I need somebody to get the mail and cash the checks and enter eligibility [data], essentially.’ So it was grunt work for quite a few years, but it gave me the opportunity to sit outside his office and sit in on thousands of hours of phone calls and listen in and learn the skill set.”
Anderson says he had dealings with Milliman while working for his father, and he approached the consulting firm about a job. He saw an opportunity for Milliman to build up its pharmacy benefits consulting practice, especially on the West Coast.
The consulting firm’s San Diego office had approximately six employees. Under Anderson’s leadership, it expanded to more than 60. Milliman has also increased its pharmacy benefit business through acquisition. Anderson mentions the 2021 acquisition of SkySail Rx, a pharmacy benefit technology firm.
Anderson describes Milliman as taking a steady, behind-the-scenes approach to advising clients, which includes a variety of payers. “We’re not looking for glory or the face time. We’re really just looking to lower healthcare costs and improve access,” he says. Consultants play an outsize role in pharmacy benefits, and payer groups have complained about hidden conflicts of interest. Anderson acknowledges that there is a problem. “You’ll see a lot of consultants either building in credits or fees within fee processes to get reimbursed. They will be working for different sides of the party. You’ve got to find out where their interests and loyalty lie.” He says he offers full disclosure: “I have nothing to hide, so I’m more than happy to talk about those things. We’re paid directly by our clients and don’t accept money from the PBMs or the pharma side for performing services.”
Other parts of Milliman do work with a variety of healthcare sectors, but Anderson said the firewalls created by Milliman prevent conflicts of interest. Anderson says he “completely understands” potential clients who are not comfortable with those assurances.
He says he taps into the expertise of those other parts of Milliman. “I can call somebody in the pharmacy or pharma area and say: ‘Hey, a client asked about this. What do you know?’ That information is so powerful and good.” Anderson says the breadth of Milliman’s expertise is an advantage. “I feel like we know what’s happening before everybody else, and that first-to-market strategy has been a huge asset for us because we’re really in all areas of the [drug distribution] channel,” he says.
PBM business practices are described as being opaque — and far worse. A slew of federal and state laws has been proposed — and a good number have been enacted — with the stated purpose of making PBM dealings more transparent to their clients. Anderson is not a fan. His problem is not with payers having access to claims data; quite the opposite: “Every client should be able to say, must be able to say: ‘I need access to my data. I need access to my reports. Please provide this company that I’ve engaged with my claims data so they can help me out,’” he says. “If the answer is, ‘No, you don’t have access to your claims data,’ then they should never work with that coalition or firm that’s running the PBM contract.”
And, as a practical matter, Anderson said Milliman doesn’t have a problem getting the data it wants. “I feel like the relationships that we invested in with our clients and the PBMs and other partners in the industry, we get transparency. We get access to all the claims data. We were able to look at all the network and manufacturer agreements, and that’s by building the trust with an industry and treating people fairly.”
Laws and regulations in the name of transparency will only add overhead and reporting responsibilities, he says.
Anderson views other efforts and ideas about reforming PBMs through a similar lens of skepticism. To a question about spread pricing, he says we don’t ask other companies how much they make on what they buy and sell. He is not fazed by the growth of Express Scripts and its large market share along with two other large PBMs, CVS Caremark and Optum Rx. There are “big threes” in other industries, he says, and there are plenty of other PBMs for payers to pick from. “You can easily do a PBM RFP [request for proposal] and have more than 20 vendors that are qualified to provide services, so there’s plenty to choose from. We help our clients navigate that,” says Anderson.
What weighs on his mind is what he sees as harmful overutilization of pharmaceuticals. “We have a drug problem in the U.S. It’s not just the illegal drugs. It’s the legal drugs. The side effects from taking additional drugs that you probably don’t need are absolutely scary, and that’s what I worry about on a day-to-day basis, that people
are taking way too much medication. We’re not giving them the tools to find lower-cost options or informed decisions or drug-to-drug interaction issues, and that’s what we need to solve for.”
In Anderson’s view, part of the answer is making the much-talked-about transparency travel downstream to members and individuals — or more precisely, to their phones and computers.
“Whenever you talk to people in the industry, everybody talks about the pharmacy and the rebate contracts and the PBM, but they never actually talk about the patient. So how do we get that transparency where it’s the most important, down to the patient level? That’s the challenge. What we need is the transparency of the claims information to be on the patient level.”
PBMs are a necessity, in Anderson’s view, and here for the long term. Their clinical programs, claim adjudication and contracting strategies are needed, he says. But Anderson also sees them evolving into entities that do much more to deliver information to individuals and have them make their own shopping decisions.
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