AH099 - Providing the Right Level of Guidance & Expertise in this Business is About as Hard as Driving Change, with Hannan Allen

Transcript

Lightly edited for clarity.

[00:22] Justin Venneri: Hello and thank you for joining us for this episode of the Astonishing Healthcare Podcast. I'm Justin Venneri, your host and senior director of communications at Judi Health. And today I'm excited to have the pleasure of chatting with Hannan Allen, senior vice president of Consultant Relations here. I've got to take a moment to welcome you to the team too, Hannan. So glad to have you on this mission with us.

[00:42] Hannan Allen: Well, thanks, Justin. Appreciate it. Thanks for the warm welcome. It's been a great month or so since I've joined. Appreciate that.

[00:48] Justin Venneri: Absolutely. So before we get into some questions, can you share a bit about your background and your experience in the pharmacy benefits and benefits consulting business?

[00:56] Hannan Allen: Yeah, sure, I'd be happy to. I go back many years in the pharmacy benefits space. It's scary to think that I've been in this business for 30 years. I don't see myself as a 30-year veteran of anything. But yeah, I started my career way back in the mid-90s when drug trend was probably 15% for a lot of our clients. And I didn't really understand it at that time, but I worked for a company called Medco that's long gone at this point. And it was a great experience kind of starting my career there and learning about the craft a bit and, you know, the ins and outs of the business, and spent about 10 years there.

And you know, after a while, I sort of had this itch to understand a little bit more about the business from a different side. Got an opportunity to kind of get into consulting and spent a number of years as a pharmacy benefit consultant. I started over at the Segal Company in New York City. And you really kind of honed my craft around really understanding contracts and data and really getting into the weeds on what was going on in the pharmacy benefits space. And you know, it was eye-opening to say the least. But I graduated from Segal and ultimately ended up at Aon Hewitt in their national pharmacy practice. I got exposed to a lot of very large entities, health plans, unions, hospital systems, large employers, and you know, again, super eye-opening.

It was at the time sort of a dream job of mine. But the entrepreneurial side of me around the business started to really kick in at that point. I had always talked to clients like, "If I had my own PBM, this is what it would look like." And lo and behold, I sort of got that opportunity. I was introduced to a gentleman who was also a Medco guy, so we had that in common, who owned a PBM consulting firm, and he wanted to at the same time start a PBM. So I got the opportunity to start at the ground up from an employee number one perspective of another PBM. And I've spent about four or five years at that PBM, seeing it kind of lift off the ground from the earliest stages. And we were super successful, super stressful at the same time and you know, with a number of young kids, you know, that I really was not spending enough time with, I decided to part ways after a number of years. But it was really one of the greatest experiences of my career. And just having that opportunity to see a company launch off the ground like that and be successful was really awesome. I love being part of that.

But I ended up going back into consulting, where I've really been for the last seven or eight years. And I had a lot of great years working with lots of different types of clients on, you know, everything in pharmacy benefits. And it was eye-opening in the last couple of years spending time with Gallagher and MMA and working with lots of different kinds of clients that were really being exposed to significant changes in the marketplace. Lots of the kind of things that we hear about, GLP-1s and others, that were a lot different than when I kind of started in this business. So really been great, but that's kind of my background. I've been in the space for a long time. I'm kind of a, you know, a true pharmacy nerd when it comes down to it.

Why Join Judi Health/Capital Rx?

[03:50] Justin Venneri: That's awesome. Between the pharmacy nerd comment at the end there and then your diverse experience over the years, I can totally see why you're here. So what's your "why"? I'm curious. You were at a, you know, a startup PBM. You had some success there. Multiple different angles on the consulting side and big PBM side at Medco back in the day.

[04:10] Hannan Allen: Sure.

[04:10] Justin Venneri: What's your "why" for coming back to a PBM like Judi Health and Capital Rx sitting in the seat you're in now?

[04:16] Hannan Allen: Yeah, it's a great question, Justin. I think a lot of it goes back to that sort of entrepreneurial spirit. It's not that you can't be creative as a consultant and it's not that consultants don't do great things, but when it comes to really enacting change in the marketplace, and having worked with folks at Capital Rx and Judi Health for the last couple of years and also knowing so many people here, it just sort of struck me one day as I was probably having a little bit of a frustrating kind of day, that if I want to really be impactful, if I want to be able to take the experiences that I've had over the years and really help clients lower cost and help patients see better outcomes and have a greater member experience, ultimately then felt like there was going to be more of an opportunity for me to do that at a PBM.

And why not do it at the one that is growing exponentially over the last couple of years and really at the forefront of enacting that change that I'm so interested in? Because when you look at healthcare, there's just so many gaps and it's so fragmented that, you know, it becomes frustrating at times. And even as a consultant trying to wrap your arms around all those different things at one time, it's frustrating because they're not all available in the marketplace. And when I look at Capital and what we've done, I think this gives me the best opportunity to be at the epicenter of really change in the marketplace.

[05:37] Justin Venneri: It's cool to hear you say that. I know several of our colleagues, some that have been on the podcast, whether it's Kristen Begley or others. Josh Golden, same sort of path, same sort of rationale for trying to either get back into the PBM business as Kristen did, or just kind of coming over to the side to really try to affect that change and help people bring it—Malvina, too, coming from the client side to come here.

[05:57] Hannan Allen: I'll cut you off for a second. I mean, yeah, please. A lot of it—a lot of it also is just like what I said, like knowing so many people that have, you know, similar diverse backgrounds that I've worked with before and some new folks. Like, no offense to anybody here, but I feel like we're all like PBM nerds a little bit. Like we're all kind of at the forefront of this business and we all kind of have that same mindset and same mentality. Everyone seems to be beating to the same drum at the end of the day and wants the same for our clients.

Trends Impacting Benefits Consulting

[06:25] Justin Venneri: That's great. So it's actually been a while since Brian Ten Eyck joined me on the show, and he was on in one of the first 10 episodes, actually, and we talked a lot about what was going on with our channel partners during that episode. We always, you know, we're out at meetings, at their offices and see them at conferences, and we're working on bids all the time. RFPs. Can you bring us up to date? It's early 2026 here. You know, what are a couple of the major trends you see in the benefits consulting space right now that are top of mind?

[06:55] Hannan Allen: Yeah, I mean, pharmacy benefit consultants have a really tough job right now. It's such a dynamic market. And, you know, at the end of the day, you know, our mutual clients, you know, they need help. They need all the help they can get. So being a consultant today is not an easy task. And there's a number of reasons why. And when I look at the marketplace, I mean, it's probably four or five things that are really kind of pressing on the market. They're not things that people are not hearing about, but they're hard as a consultant to kind of wrap your arms around because there isn't necessarily a right or a wrong answer in all cases. Right?

So, you know, when you look at the explosive growth of a lot of the high-cost therapies that are out there and the magnitude of what's happening around this GLP-1 market, whether it's for diabetes or for chronic weight management, you know, it's difficult. When you look at gene therapy, gene cell therapy, you know, some of these drugs can exceed a million dollars per patient, right? You look at the GLP-1s, you know, they're surging. And now we're seeing the advent of oral GLP-1 for Wegovy, which can potentially have a major impact to the marketplace. And, you know, consultants are, you know, tasked with having to develop a lot of new strategies to try to control the utilization of these new drugs. At the same time, they're listening to their employees, you know, being frustrated at times because they don't always have coverage for these medications. And it's different than where we were five or 10 years ago. When you look at some of the specialty medications that were out there, they were—they were already very costly. But the volume, the types of medications that were out there and the per patient costs that are there today has significantly grown.

So big challenges, just from a cost perspective and a coverage perspective. Same time, you know, you look at the regulatory and legislative environment that PBMs are facing right now. I mean, that creates a real challenge for consultants as well as, you know, they've got to be, you know, highly versed on, you know, a lot of these regulatory changes, whether they're coming from the federal or state levels. You look at the PBM reform over the last couple of years alone. There's like 30 states out there that have enacted, you know, specific laws and regulations around PBM governance. And as I said, 10 years ago, that was an afterthought. There was no regulation of the PBM space.

[09:09] Justin Venneri: I think 40-something, if not all 50, have proposed something in the last five, six years. It's nuts, right?

[09:15] Hannan Allen: There's so many bills on the table right now that will have even further-reaching impact on the marketplace. So again, the expertise just to keep track of that is—it's incredible. We've seen continued fiduciary risk and litigation concerns as well. And you've probably heard about a number of lawsuits that some of which have been closed and some are pending in the marketplace. But these considerations, 10 years ago we didn't think about this kind of stuff. But today, when you look at the litigation risk and regulatory expectations that a lot of our clients have, you know, they require another level of expertise from a pharmacy benefit consultant that it just adds and compounds to what they do all day. So really difficult.

Transparency mandates and the disruption of the traditional business model, I mean, that's our business, right? But when you look at the scrutiny in the last three to four years of the PBM market as a whole, there's been a whole new surge in appeal of looking at different ways to put together pricing structures that clients are really concerned with, you know, and really starting to take a good look at alternatives that are out there in the marketplace. And the elimination of spread pricing and changes related to traditional PBM tactics that have been around for years and years and years are really kind of coming to light. And I think that's a good thing from the standpoint of bringing more transparency and better focus onto the marketplace.

Evaluating the PBM Model Goes Beyond the Spreadsheet - Biosimilars, Member Experience, and More

[10:39] Justin Venneri: Yeah, no, that's a good segue to my next question for you. Or want to dig a little bit further? Like in those things that have become a little bit or a lot, as the case may be, more complex to evaluate and compare. If you're running a, you know, new RFP for a client, you know, today's consultant versus the consultant of years ago, what are one or two of the things that you never would have thought you would have had to evaluate that seemed to add value on the spreadsheet that you want to kind of explain or just share your take on why it's been such a challenge? One of the things that comes to mind is rebates, obviously the impact of rebates and comparability. But in other international sourcing—there's all these things that come up during the RFP process that I think you could probably shed a little light on for us.

[11:22] Hannan Allen: There's a whole host of things that have taken center stage in the last, I don't know, two years or so, Justin, like evaluating the complexity of biosimilars. And you think that, hey, you know, biosimilars are going to be great for the market, which they in theory are. And you know, in all cases, they're going to be great for patients. Lower costs, you know, in many cases, interchangeable. It's like the generic drugs of the bio world. But at the end of the day, they've created a whole other level of gamesmanship. In many cases amongst PBMs, they've created challenges around understanding formulary positioning, and certainly around rebates. Right, when we thought that biosimilars are just going to kind of hit the marketplace, the rebate will kind of fall off. But the PBM market has again sort of flexed its muscles around this spot. And it's just another area that becomes more complex for not only for PBMs to administer and consultants to understand, but creates that confusion in the marketplace for members. And I think that's what's really most important. And you know, for the PBMs, that can really create the biosimilar strategy that is, you know, low cost, neutral to the patient, where the patient's always going to get the lowest net cost, the lowest priced available product. It's going to be best for the patient. And that's what's most important in my mind.

[12:39] Justin Venneri: Along those lines, when you're looking at, you know, what's best for the patient—you know, access, cost, level of care or member experience—how do you tend to think about evaluating that and helping clients think through what's best for their unique populations?

[12:53] Hannan Allen: I mean, that's a great question. I mean, that goes with being aligned very well with all the different PBM stakeholders and really having a real expert level of understanding of exactly what each PBM does. And you know, in many cases, in my experience, what I had seen was, you know, the lack of attention on what that member journey really looked like and how, you know, all those decisions—whether they're, you know, formulary, whether it's utilization management programs, whether it's kind of bolt-on programs, whether it's the specialty pharmacy, whether it's, you know, the customer service or the level of data that customer service reps actually have access to—how does that all kind of play in into understanding what the member's journey is gonna look like at the end of the day?

And really my focus always was on, you know, how disruptive are these programs gonna be? And it just always shocked me at times on where price took precedence over the member journey and the disruption at the end of the day. And it's something that a trained eye will be able to understand. It doesn't always come down to a spreadsheet at the end of the day. It's that level of understanding and expertise and really being able to partner with, you know, pharmacy benefit consultants, being able to partner with PBMs and clients and having that understanding of exactly how that program is going to impact the member.

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[14:13] Justin Venneri: Curious. Just a quick rank order question, just a couple more for you. Appreciate you spending your time with us in the studio today.

[14:19] Hannan Allen: This is great.

[14:19] Justin Venneri: No, if you had to rank order, like if you're running an RFP today and you're going to overweight certain attributes of a PBM. And I don't want to get too salesy here, just trying to be straight up helpful, you know, like when you mentioned price takes precedent and then member service and disruption, like if you were running a brand new RFP, like what do you put at the top of the list in terms of questions you want to figure out from the folks that are providing you offers or bids?

[14:42] Hannan Allen: I mean, at the end of the day, you know, like what I said, in many cases price is precedent and I think that's wrong. I think you've got to recalibrate kind of the thought process to understand exactly what I just mentioned earlier, like how all the different programs are really going to impact the cost and how they're going to impact the member at the end of the day. So I kind of look at, you know, one PBM's ability to impact drug mix over another. Right? And that has a significant impact, if not the biggest impact on what the client will ultimately pay, but ultimately what the impact and the level of disruption is going to look like for the patient. So if you're just looking at spreadsheet value and you're just looking at discounts and rebates, you're really only looking at half the picture. And if you're not focusing and giving sort of center stage to all of the different programs that one PBM can offer—the formulary, the utilization management programs, the alternative funding program, the fraud, waste and abuse programs, the ability to eliminate waste, things like that—you know, what is the downstream impact going to be both to the financial end of the analysis but also to the patient? And what do those programs do to improve outcomes, to improve adherence to medication therapy and really impact not only the pharmacy benefit, but the entire health strategy?

[16:03] Justin Venneri: That's really interesting here. Like, you try to look at each of those things and say, okay, here's the financial impact, here's the member impact and what the member has to deal with as a result of these programs. So it sounds like much more sort of tailored, which jives with the jobs getting more complex. You have to understand the details.

[16:19] Hannan Allen: Right.

Sports Prediction?

[16:19] Justin Venneri: All right, a fun one. Give me a sports prediction, Hannan. Sadly, the Bills and Bears are out, so I'm sad. And Ryan Kelly's prediction went by the wayside. And so we've only got Lloyd's Stanley Cup prediction left. Dallas Stars. And then I've got one more question for you, but give us a sports prediction for this year. What are you looking at? What's top of your list from—or give us a dark horse?

[16:38] Hannan Allen: Well, Justin, I will tell you that every one of my teams is... seems like they're in the basement. The New York Giants are long eliminated, but we have a new head coach.

[16:47] Justin Venneri: That's exciting. That's exciting.

[16:49] Hannan Allen: My New York Rangers are abysmal. Although they won last night. That was good. You know, the Knicks seem to be fluttering a little bit and the Yankees are a whole nother story. But I think... I think the Seahawks win the Super Bowl. See that? That would be great for Sam Darnold, guy who spent a number of years in New York with the wrong team. But I love to see his—the resurgence that he's had. That's been pretty amazing.

[17:12] Justin Venneri: Cool. All right, so we'll have to keep tabs on that one. It's only a couple weeks out.

Reflections - Astonishing Opportunity Cost

[17:12] Justin Venneri: Last question. The most astonishing thing you've seen, again, I know you've been in the industry for 30-ish years, so you've seen a lot. Keep your compliance hat on for this one. You know, funny story, positive, negative, whatever. Just tell us a good story. That's compliance safe. Send us off here.

[17:30] Hannan Allen: You know, that's one I wish I had a good answer for. I mean, I've seen so many different things. I've seen clients pass up literally multimillion-dollar opportunities, you know, where they've had to save literally millions and millions of dollars that would require them to switch their PBM and they've backed out for all the wrong reasons. You know, at times appeared to be too disruptive. At times it appeared that they may not have understood the savings at the time. We were talking to all the wrong people, right? The financial folks, the CFO folks. They weren't necessarily in the room. But you know, when I look back at that now, you know, a lot of those decisions were earlier in my career.

And you know, I think and question to myself sometimes whether or not I provided the right level of expertise and guidance for them to really want to understand, you know, the savings that were on the table. Were those savings actually realistic? I like to think that I did a good job and really evaluated everything from, you know, the price points to the clinical programs, the impact of the formulary and the specialty pharmacy programs and everything in between. But when I look back at it now, I think to myself, like, did I do a good enough job in really helping them understand the—the long-term impact of those opportunities that were in front of them? But you know, those are the kind of things that I've seen. And it's hard being a consultant, as I mentioned earlier, and trying to give an exact answer because again, like I started with, there's not always a pre-answer, there's not always a right or a wrong answer. It's sort of trying to find that middle ground in the conversation and try to just educate. But sometimes we fall a little short.

[19:07] Justin Venneri: Seems like the reluctance to change, it's getting better. I think it has often been mentioned as one of the most astonishing things is that people just kind of say, "You know what? I'm gonna stick with the devil I know," so to speak, versus the devil I don't. And then you kind of look back and of course hindsight's 20/20 and if we could predict the future, we'd all be sipping piña coladas or a non-alcoholic beverage of your choice on the beach.

[19:29] Hannan Allen: Yeah, that would be great. But yeah, it's unfortunate that so hard to enact change whether it's, you know, changing PBMs or changing mindset or changing pricing structures. And at the end of the day, I think that goes back to your question about why I'm here and you know, hopefully we see, you know, more change for the better. And the good news is, you know, at least it seems like here at Capital Rx that that's happening and I think we're getting the right message to the marketplace and our results are stellar. That's what it comes down to.

[19:58] Justin Venneri: Awesome. Hannan, thanks so much for joining me today. I look forward to staying in touch and hopefully having you back on.

[20:03] Hannan Allen: Thanks, Justin. Appreciate it.

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