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John Sculley, former Apple and Pepsi CEO, is now founding investor and vice chairman of RxAdvance, a cloud-based pharmacy benefits management system vendor. Sculley talked with SearchHealthIT about the advantages of a cloud pharmacy benefits management platform and using a pharmacy benefits management system to drive down costs for prescriptions for chronic and other conditions.
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This is part one of a two-part Q&A. Read the second part, in which Sculley discusses optimizing the pharmaceutical transaction cycle, as well as interoperability in pharmacy IT and the MACRA healthcare law.
What is a collaborative cloud-based pharmacy benefits management system? How does it work?
John Sculleyfounding investor and vice chairman of RxAdvance
John Sculley: The Rx (prescription) ecosystem is the largest sector inside the $3 trillion health system. It's about $840 billion in revenues. Pharmacy benefits management (PBM) services facilitate what's called a pharmaceutical supply chain. That represents only $370 billion of that $840 billion ecosystem of everything to do with medication, therapy management, specialty drugs, anything involving the care of patients as it relates to pharmaceuticals. Collaborative cloud-based services go way beyond what the current PBM industry has focused on. Remember the current PBM industry is about 30 years old and it's built on technology that was first designed 30 years ago. And that was back in the client-server era. We're now in the cloud era. We're now in the big data analytics era. We're now in the machine learning era. You want to be able to take advantage of the same technologies that have been successfully deployed in other industries. Healthcare has been a late adopter of a lot of these technologies.
What we are doing is taking technologies that have been made reliable, that have been scaled to huge deployment and which have now been greatly reduced in their cost as well as becoming more powerful. These are called the exponential growth technologies. The opportunity to reduce and eliminate incredible inefficiencies and costs using a cloud-based and machine learning platform is also huge.
If you look at other industries, at companies like Amazon, Google, Facebook and LinkedIn, you see that these businesses scale in what's called exponential time, not linear time. And we're all used to thinking in linear time. That's kind of intuitively how humans have always thought. But we're really living in this era of exponential time where it's possible now to take technologies that just weren't available even a decade ago and be able to apply them to an industry that hasn't had this kind of innovation before.
What is disruptive about this technology? Aren't there some existing pharmacy benefits management system vendors that have deployed some newer technologies?
Sculley: Well, there's some very big successful PBMs, no question about that. But we don't need to necessarily replace the existing PBMs. Remember the PBM is focused on facilitating the physical supply chain of moving pharmaceuticals from the manufacturer all the way through the health system, to the patient, through the formularies out to the point of sale. But there's a lot more that can be done with that data that can go in and look at things like unnecessary prescriptions. When a patient who may typically have six or seven chronic care diseases is getting prescriptions from six or seven different specialists, in many cases, these patients are taking up to 15 meds a day.
If you could have the data that could be able to show where there's duplication in terms of the prescriptions that are being written for a patient, you could say, "Wait a minute. Yeah, maybe that patient doesn't need 15 meds a day, maybe they can get along just fine on 10 or 11 meds a day because of the duplication of these drugs." It's the ability to be able to make even more generic substitutions for branded drugs, the ability to look at dosage, the ability to track the patient to see whether they actually are taking their meds.
Sculley: Well, smart pill bottles don't really get integrated into the health system. For example, if you take a smart pill bottle, it can tell you when you took the pill. But you should be integrating back that information to all the health professionals, back to the primary care physicians who often are the gate keepers, back to the care managers, back to the formularies, and be able to track all that throughout the whole health system. The reality is that the health system has not had very good interoperability of data between the various parties.
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