Breaking the Model: Can Value-Based Insurance Deliver?

Most cancer drugs today are more effective and accessible than ever—yet patients often face crushing costs because our healthcare system still values profit over patient benefit. What if the key to transforming cancer care affordability lies in rethinking insurance design, reforming PBMs, and empowering employers with transparent data? 

In this eye-opening episode of Value-Based Voices, host Jayson Slotnik, JD, MPH, Partner, Health Policy Strategies, Inc., and Member of the AVBCC Board of Directors, sits down with healthcare thought leader John O'Brien, PharmD, MPH, President and CEO of the National Pharmaceutical Council, and healthcare policy strategist Brian Reid, MS, Senior Fellow at Tufts-CEVR and author of the Cost Curve newsletter. They explore how recent policy shifts, advances in medicine, and innovative data tools could finally create a healthcare environment where high-value cancer treatments reach those who need them most—without unnecessary barriers or skyrocketing costs. 

Discover the revolutionary potential of value-based insurance design and how new approaches to drug pricing, formulary placement, and patient cost sharing could reshape the future of cancer care. You'll learn about the critical barriers—such as rebates, rebates-driven formulary decisions, and cost-sharing hurdles—and how a data-rich, employer-led movement could finally tip the balance toward affordability and access. We break down the crucial role of employers, PBMs, and policy reforms in enabling this shift, as well as the clinical, economic, and patient-centered benefits of prioritizing value. With insights from recent research, upcoming innovations in cancer medicine delivery, and a forward-looking view of industry trends, you'll understand why this is the moment to watch for change—and be part of it. 

Perfect for healthcare professionals, policymakers, advocates, and anyone impacted by cancer treatment costs—this episode offers a compelling look at the potential to dramatically improve how we deliver and pay for life-saving medicines. If you're ready for a future where affordability meets innovation, this conversation is essential listening.

Resources & Links:

- National Pharmaceutical Council

- Health Affairs 

- Cost Curve Newsletter 

- Brian Reid's Website 

Connect:

- Dr. John O'Brien 

- Brian Reid 

- Jayson Slotnik 

Contact Value-Based Voices

- Follow AVBCC on LinkedIn  

- View our podcast lineup 

- Contact us at info@avbcc.org

Thanks for listening! 

Transcript

Jayson Slotnik (00:00.408)
Hello, everybody, and welcome to another exciting episode of Value Based Voices, a podcast from the Association for Value Based Cancer Care. Each episode dives into the shifting terrain of cancer care in the United States, exploring what value means in today's clinical, policy, and patient-centered environments. Our mission is to spark informed dialogue, promote transparency, and equip every stakeholder—from providers to payers to patients—with the insight they need to navigate cancer care with clarity, confidence, and purpose.

Jayson (00:38.638)
And let's get into it. Today's episode really takes all those words to heart when we will have an in-depth conversation on value-based insurance design: who should take the lead and what impact it could possibly have on patient cost sharing.
My name is Jayson Slotnik. I'm a partner at Health Policy Strategies and an AVBCC board member, and I'll be your host for today's episode. It is really an honor for me to welcome back a huge friend of value-based cancer care, Mr. John O'Brien, who was Mr. Everything at the National Pharmaceutical Council. Really just no needs, no introduction. He has evolved into that sort of just one-name person like Cher and Madonna—he's just known as O'Brien in healthcare circles.
So, John, please give us a few minutes, introduce yourself and your organization, and then we'll kick it over to Brian to do the same. Then the three of us will have an informal interview conversation. So thank you very much for joining us today, John.

John O’Brien (01:41.538)
Well, thank you so much, Jayson. I've enjoyed learning from you over the last couple of decades, and it's great to be with you and Tim.
I'm John O'Brien. I'm the President and CEO of the National Pharmaceutical Council. We're a 73-year-old health policy research organization based in Washington, DC. And I'm really lucky to get to come to work every day with a team of researchers who join me in envisioning a world where prescription medicines are accessible to patients, valued by society, and sustainably reimbursed to ensure continued innovation.
I'm a pharmacist by training. I've worked for drug companies and health plans, and I think most people know me from my time in the first Trump administration as Secretary Azar's senior drug pricing advisor.

Brian Reid (02:28.184)
So I'm Brian Reid. I'm a Senior Fellow at Tufts-CEVR. I write the Cost Curve newsletter. I go back a little bit with John as well, and so I'm excited.
John, we’re grabbing you earlier this month—you and your colleagues wrote a piece for Health Affairs Forefront on basically suggesting that we are perhaps, if things go well, on the cusp of a new era when it comes to value-based insurance design.
And that was the thesis, based on the idea that we are at an inflection point with PBM reform and PBM business practices. The joke on Wall Street is that the four most dangerous words in investing are, “this time it's different.” So I want to start by saying: what is different this time about the PBM environment that might give us a crack into really making value-based insurance design a thing?

John (03:21.068)
Well, first, thanks, Brian, for not just reading but sharing the Health Affairs Forefront piece that came out, I guess, a couple weeks ago. That was a fun piece to work on with Yav and Kimberly.

And the backstory is, you know, as loyal Cost Curve apex readers, we read with great interest your discussion of what Cigna said in regards to their announcement about how they wanted things to be different, and Dave Ricks at Lilly's response when he said, “Look, we wish him well. We'd like to see a world where value drives formulary placement as opposed to the size of the rebate.”

And like me, Kimberly Westrich has been doing this for a long time. And we kind of looked at each other and said, “My gosh, this feels like the mid-2000s,” when Michael Chernew and Mark Fendrick were just beginning to write about the work they were doing with Pitney Bowes and other employers around designing benefit structures that actually made it easier for patients to get drugs that delivered more value.

So we went back to that work and the many years of work that NPC has done on that topic and juxtaposed that over where we are today.

I'm a big Sean Gremminger fan. I've heard Mark Cuban speak a lot. And if there's one thing I'm sure of, it's that employers are aware of how the current system might not be serving them well.

We've known for quite some time now that the current PBM model is broken. I think we published the first peer-reviewed publication talking about the role of rebate guarantees and how that was driving formulary decision-making.

So we wanted to write a piece that talked about a conversation that was 25 years old and yet has real meaning today, when employers are saying, “Hey, maybe it's not rebates that we should be looking for,” and the big three PBMs are realizing that the writing’s on the wall and starting to talk about building new mousetraps.

John (05:41.592)
And we wanted to put a stake in the ground that said, “Hey, anyone who's thinking about doing things differently, let's start with getting high-value medicines to patients without making them jump through hurdles like high coinsurance or utilization management.”

Jayson (05:56.096)
So, John, just to pick up on that, you mentioned Mark. Mark was a keynote speaker at Value-Based Cancer Care a few years ago and made an indelible impression on a lot of the audience on those ideas.

He was talking about having screenings be free and preventative medicines be free—your standard value-based insurance design enhancements, right? Investing in our future self, to say succinctly.

How different do you see those as still being the primary drivers? And how would that be more specific for cancer care?

John (06:31.064)
You know, that was a great room to be in. You could almost feel people running for the pitchforks and getting ready to march on the insurance system to build a better mousetrap.

But when I was in government, there were two problems we were trying to solve: one, why isn't our healthcare system interested in the best drug at the lowest price? And two, why are prescription medicines the only healthcare good or service where patient cost sharing is based on the billed amount or list price, not the allowed amount or net price?
So I think the importance of this moment is making sure that this isn't a cost containment conversation. Employers need to understand the pivot from “how much are we spending” to “how well are we spending.”

And when we talk about people living with cancer, there may be no more important population to make sure that the patient is front and center in that conversation and that we're actually making sure high-value medicines reach them.

Brian (07:34.872)
And talk about a little bit more about what—so when we talk about making sure high-value medications reach them, what are the barriers that we're getting rid of here? And is there a cost to getting rid of those?

John (07:48.366)
You know, there are a couple barriers that jump to mind. First, if you think about the advances that we've made in cancer today, many of the medicines that are around would have been considered science fiction when I was in pharmacy school. And we're now treating breast cancer, for example, at home with a tablet or capsule.

And we actually have three medicines in that class, and that's a really big deal.

And I just came back from the ISPOR meeting in Philadelphia, and there was a really important conversation that Sean Sullivan and some others led when they compared the traditional cost-effectiveness analysis price—something I’m not a big fan of, but it gets talked about a lot—against the MFPs that Medicare published for their most recent round of negotiations.

What they found was that for about four drug indication combinations, CMS might even be paying too much. For another four, the price might be just about right. And for 11 different drug-indication combinations, the MFP is far below the traditional cost-effectiveness price, which excludes a lot of things that are really important to patients.

So my fear is that manufacturers who are doing the hard work of:
A) taking the risk to develop a medicine,
B) getting that drug through an arduous approval process, and
C) developing real-world evidence to document how this effects things like living longer without your disease progressing or actually living longer. That value is not showing up in the CMS price-setting process.

So my fear is that when companies go through the hard work of demonstrating value and they do that in medicines that you know would have been unthinkable when I first started learning to treat cancer, 

John (10:06.562)
Those medicines have less of a chance to reach patients today because our healthcare system doesn't value that evidence as much as it values the margin that could be extracted from the price of that medicine.

We could go around the horn and talk about how 340B drives those decisions, how rebates drive those decisions, how specialty pharmacy payments drive those decisions—but at the end of the day, I don't think there's a single person out there treating cancer who believes the most important decision should be anything other than the value that medicine creates for the patient and the people who love them, not some financial incentive.

Jayson (11:00.00)
See, I'm a little bit more optimistic. I am optimistic that the PBM reform we've been discussing—and the work you've been doing, John—is actually going to make a difference this time around.

To answer Brian’s question, I’ll tell a quick story. PBMs are creating a lot more transparency, and there’s going to be a lot more data sitting on HR desks.

I’ve had conversations with employer consultants who say HR departments are actually scared of this—they’re going to have all this information, they’re now fiduciaries under ERISA, and they’re concerned the plaintiff's bar will be all over them for making coverage decisions now based upon greater transparency of data and greater value of outcomes because now there will be greater opportunity for them to understand, to your point John, about value and have all this data and AI tools and sandboxes and Claude and everything else will hopefully create a better opportunity for HR to do value-based assessments, value-based formularies, and more broadly the insurance design. So maybe I’m being overly optimistic because I know Pharma companies are going to start motivating around that point of sale which is the HR department and say, “Look, we have multiple oral therapies that treat breast cancer at home—why are we doing all these shenanigans with rebates, go for pricing parity and let the physician choose and really take a hard look at benefit design in this regard. Because unlike what we’ve seen when Mark came last year, we have greater amounts of data and the tools to analyze the data. 

So I’m more optimistic as a result of that so we might actually see change over the next few years. And I don’t know if your research bears this out John and Brian I know you’ve been covering PBM reform.

Brian (13:11.246)
I think John hit on it, and it comes up in the Health Affairs Forefront piece. The question is always—and there’s a great Axios newsletter on this—I think the question comes down to is there transparency and how do we use it. Particularly how do employers use it. 

The box is being opened. The question is: will anyone look inside it, and what will they do with what that especially given the system isn’t set up for simplicity. So my view is that there’s reason for optimism, but it’s not going to happen without some sweat equity of a lot of people’s part and I’m thankful for what John has done to grease the skids on that. John I don’t know if you have a more optimistic take on exactly how we take what I hope will be a deluge and make it into the kind of benefit designed policies that are going to do all the things, lower cost reduce the burden on patients.

John (14:19.472)
I share the optimism—with some caution and that’s what you do as a research organization. We’re going to follow these changes closely, because the changes we’ve seen so far haven’t always been patient-friendly.

You know, we had a piece in in Health Affairs Scholar that looked at changes in patient access to specialty drugs over the last few years. And we saw an increasing number of restrictions or exclusions in health plans on specialty medicines, including oncology, including orphan drugs for some rare cancers and other people living with rare diseases.

 So again, I just feel that the system that we have today is:
A) focused on cost containment, and
B) using leverage to try to generate margin extraction instead of viewing medicines the way patients do: something that helps them live longer, stay healthier, and reduce overall cost of care.

Brian (15:23.884)
Let’s talk about the patient piece a bit more. I'm curious for your thoughts about cost sharing. At this point, if you are a cancer patient, you're going to be subject to all manner of copayments and co insurance for medicines, for procedures, you name it. Is there a point to that or does this just become, you know, did this just become a financial transaction for everyone and the patient is kind of you know put in the middle?

John (15:50.766)
Look, we have a healthcare system where everybody in the system benefits when the price of a medicine goes up, except for the patient. And all too often that's because we have a system that sort of prioritizes buying low and selling high. And the way that you do that is the way that you can extract those large you know, rebates and other incentives is by restricting access. And restricting access is essentially leveraging patients for financial gain, or what our friend Antonio would call the you know, money from sick people, or Scott Gottlieb described it as the sick subsidizing the healthy. 

So that's what it that's what it feels like today. And the PBM reforms that have been put in place have seemingly signaled that it doesn't have to be this way unless an employer says, “Hey, you know what, like we're gonna waive our rights under all this stuff and keep doing things the old way.” So the importance of making sure that the patient voice is heard and saying, “No, I don't want to jump through giant financial hurdles that that have been shown to increase abandonment at the pharmacy or decrease adherence. I would rather my insurance worked like insurance. I put money into a system so that it was going to be there for me when I got sick. I or my loved one got this diagnosis. 

The good news is there’s a medicine that's available to help me. The bad news is you've put it on some high-cost sharing tier that has a huge coinsurance. And because I may be in a HSA eligible high-deductible health plan, I'm paying my cost sharing until I reach that deductible. And more often than not, that cost sharing is based on the list price of the medicine. And it doesn't include any of the discounts that the manufacturer is providing to the health plan.”

Jayson (18:15.692)
Yeah, I've often proffered that patients, if given the choice, would spend an extra five to seven dollars a month on an actuarial value in premium to self-insure themselves against a large medical expense in the future. And so if we could eliminate patient copays or deductibles by sort of spreading that risk over every patient, and it was explained the right way to your question, Brian, and to John's point.

We could get to a place where those copays and the insurance system actually works because you're spreading all the risk to a much broader population and becomes an affordable exercise for the patients. It truly is what insurance should be.

John (18:52.718)
Yeah, and this argument created some strange bedfellows. I think it was it Aaron Carroll and the Incidental Economist that basically said that cost sharing has no place in oncology care? And Peter Kolczynski you know, will frequently say, like, no one's gonna fake a cancer diagnosis to get a medicine. Why are we using a demand-side cost control to make them jump through hoops?

So when I see those kinds of diverse voices agreeing on a topic, I think it's something for us to pay attention to.

Brian (19:28.256)
And obviously there's, you know, there's clinical reasons to, you know, not make things more difficult in general. So I've been looking at stats lately on, you know, advanced or metastatic cancer. The chance of you going from a first line therapy to a second line therapy is kind of a coin flip. You know, you if you're a cancer patient, your care team, you get one chance to pick the right regimen. It's not like, geez, we're just gonna step through this and hopefully we'll get it right the next time. 

There's a real cost in outcomes to having fewer options available to you. So you know I think there's that cost thing, but there's also this clinical decision making that you know I feel like cancer cancer's unique in that respect.

John (20:12.78)
Yeah, and you know, Brian, this this brings something else up to me. I think it was a 2019 JP Morgan meeting. And I'm and I'm listening to the J & J presentation and I'm taking notes and I thought I heard Scott White say that they were making progress on a subcutaneous version of a treatment for multiple myeloma. And like I looked up and I said, “Are we really now able to treat cancer subcutaneously? Like with an injection in an office as opposed to having someone need to need to sit in a clinic.” So I'll tease some upcoming ASCO research that we have you know being displayed next month. Now that we have more and more versions of oncology medicines that are available subcutaneously as opposed to making patients, you know, go to that infusion center and sit in that chair.

We're watching to see what payer coverage looks like. I think it's safe to say that today most plans view IV and sub Q at par. But nobody's preferring sub Q yet. So that's a space that we're gonna be watching to make sure that it doesn't go the wrong way. And heaven forbid we, you know, make patients receive the IV unless they can demonstrate some good reason to get the subcutaneous formulation and in fact what we should be seeing is it becoming easier for people to get access to the form of the medicine that is most friendly and convenient to them.

Brian (21:54.208)
And that's not just about patients either. I mean you talk to the providers themselves and there's a lot less healthcare you know, resource utilization when you don't have to bolt on a whole other, you know, process for, you know, infusing a medicine. You know, so if you want to just be the green eye shade guy, there's reasons not to treat them as equal value too. I mean, it's great trust me, it's great news for the patients, but like there's all these other benefits too that, you know, to your point are not necessarily usually considered when we go through that cost analysis process, you know. Or when payers look at you know where their bread's gonna get buttered.

Jayson (22:33.272)
So my question for the both of you is as follows. We've spent the last twenty minutes or so talking about levels of optimism, perhaps some changes to insurance design because of regulatory oversight, publications like what John has been describing, much better tools, data. So tell our audience, what should they be watching for to see this first domino? To shift, to fall, to sort of drive this. Who's gonna be the first player you think that has an impact on this? Is it gonna be the big three vertically integrated? Is it gonna be the smaller, more nimble PBMs and health plans? Where should our audience be looking for signs that our optimism is becoming reality? So I don't know, John, you wanna go first or Brian, you wanna go first, but to me, I think it's gonna come from the smaller PBMs. I'll give you guys a second to think, right? I think it's gonna come from the smaller, more nimble, more technology savvy entities entering the marketplace. they're gonna go to their employers, like I said a little bit before, and say to them, “Hey, look, we have this new design, we have these new approaches towards patient cost sharing and rebating and data,” and they will gain market share and then force attention from the bigger guys. But I could be wrong. So John, why don't we start with you?

John (23:57.026)
Jason, I'd like to see the PBMs be less the visionary and more the vendor. And for me, my focus is on the large employers. I would like to see the large employers say, “Hey, there's all this attention over here. There's been some policy making. All of that work has opened our eyes to the fact that we offer health benefits. So that we can recruit and retain a high-quality workforce and have them show up and be productive for us, as opposed to being homesick or having to take time off to care for a loved one. So, for that reason, we want to start designing benefits that matter to patients and having insurance that functions the way insurance does.” 

And whoever can offer that for them, whoever can build that for them, whether it's you know the big three using their market share to you know build change, or whether it's a more nimble PBM. I think that remains to be seen. But again, as Sean Greminger reminded me, stop talking about insurers as payers. The real payers, the real purchasers are the employers of the 230 million Americans, which represent the largest source of insurance coverage in the United States.

Brian (25:24.258)
I mean it's super tempting to agree with both of you. I mean what I'm curious to see is the first case study from an employer to say we did X and here's what happened, you know, why for our employers costs went down or you know out of pockets went down or premiums went down or they didn't but satisfaction went up or we took some other kind of static out of the system.

And at this point, you have some high-profile employers who have obviously gone to smaller, mid-sized PBMs. You know, Lilly got a lot of attention for that. Tyson Foods got a lot of attention for that. And clearly the big three PBMs kind of are have been awoken to the fact that there is not only regulatory demands around this, but there's demands among their customer base. So I, you know, I would love to see one of Sean's you know, member companies or member coalitions, come out and say, “look, we did this, we put this in place, and here's the and here's the after effects.” Because I think to John's point, that's the kind of thing that's going to drive people's attention. 

You can talk about theoretically, you know, how your benefits should be designed up one side and down the other. And we've been having that conversation at both the big and little PBM level, you know, for most of the last half decade. But I think it's when you start seeing these success stories that it starts to become tangible to, again, the people who actually at the end of the day write the checks for healthcare in America.

Jayson (26:53.868)
Right. And as a self-insured employer, I agree. Right. Those that are paying for it, right, should be the one that they'll likely be driving the innovation. So as we head towards the end of our time together, John, give us a preview of sort of what's next for NPC. What are you working on? What are you excited about over the next couple of months, from your organization's perspective?

John (27:15.67)
You know, there's a lot happening in healthcare right now. And you know, we're gonna continue to generate evidence that matters. Another big takeaway that I had that was really energizing for me coming back from ISPOR is Inma Hernandez, you know, longtime friend and researcher, now working at CMS, presented this chart.

And this chart showed IRA, MFP, 340B, ASP, right? And showed this audience of health economists how all of these things fit together. And my concern as a drug wonk is you go on LinkedIn and like here's the 340B crowd, here's the ASP spiral crowd, here's the commercial gross-to-net bubble crowd. And there's not a realization that all of these things feed into each other. And that's why more than half of what we call drug spending today is going to someone other than the manufacturer that takes the risk of developing that medicine and actually bringing it to a patient. So while it's tempting for policymakers to view all of these, you know, programs as like little cuts.

My fear is that we're starting to cut deeper and deeper and we run the risk of hitting an artery. And by that I mean we could reach a point where the revenue being generated on a new medicine is no longer able to generate the kind of research and development that leads to the next medicine, particularly in an environment where only one of ten medicines that that that are investigated you know, will ultimately be approved and reach a patient. So I'm concerned about the focus on cost containment. I'm concerned about you know, sort of a demonization of programs like accelerated approval that that allow, you know, medicines to reach a patient on average, you know, three years earlier. Many of those medicines have gone on to be converted to traditional approval. And our research and J & J's showed that

John (29:41.602)
There have been some 250,000 lives gained or life years gained in oncology alone since 2022 as a result of the accelerated approval program. So again, I just feel this coming pressure on patient access to new medicines, whether that's insurance access to medicines that are available today, or the ability to generate new medicines for people in the future. And as someone who's been caring for two parents, you know, with cancer over the last decade and a half. I want there to continue to be medicines available.

Jayson (30:20.088)
Brian, what are your thoughts?

Brian (30:22.382)
Well I'm super curious on how big Inma's chart was if she captured all of that in a single document. That's an accomplishment. 

But honestly, like it's hard to add anything to what John said. There's clearly a path forward to a more rational system that's going to check all those boxes. And you know, I think the question is whether or not we have a current system that is so unwieldy that it's gonna make getting there more difficult than it needs to be. But I'm thankful that we got the right people pushing the right policies.

John (30:58.286)
Look, we're living in a golden age of biomedical innovation, and we can't pay for today's treatments and tomorrow's cures with yesterday's reimbursement system that was built for blood pressure drugs and cholesterol medicines.

So we're going to continue to do the important research on the things that matter most for patient access, because good policy begins with good evidence. So we'll keep at it, and I appreciate you having us on today.

Jayson (31:25.09)
Thank you very much for those insightful words, John. I really appreciate it—and your time today, and Brian’s time.

And that wraps up this episode of Value-Based Voices, brought to you by the Association for Value-Based Cancer Care.

Special thanks to both Brian and John for sharing your insights, and to you, our listeners, for joining the conversation. If you found today’s discussion thought-provoking, be sure to subscribe to Value-Based Voices wherever you get your podcasts.
Stay tuned for more episodes that spotlight the voices shaping the future of oncology. Thank you very much.