#675 How Affordable Insulin Happened
Scott Benner
Martin Van Trieste is the President and Chief Executive Officer, Civica Rx. Civica is making affordable insulin.
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Scott Benner 0:00
Hello friends, and welcome to episode 675 of the Juicebox Podcast.
On today's show, we're gonna have a conversation that I didn't think I'd ever have on this podcast. It's with the CEO of a pharmaceutical company whose goal is to make insulin and make it affordably. I know that's weird, right? Please remember while you're listening that nothing you hear on the Juicebox Podcast should be considered advice, medical or otherwise, always consult a physician before making any changes to your healthcare plan. We're becoming bold with insulin. If you have type one diabetes, and are a US resident, or are the caregiver of someone with type one and a US resident, you are eligible to take this survey AT T one D exchange.org. Forward slash juice box. It's a quick survey. It's not hard. Your answers help people with type one diabetes. It also supports the podcast. It's completely HIPAA compliant. Absolutely anonymous, simple to do, you really can't go wrong. T one D exchange.org. Forward slash juicebox.
This episode of The Juicebox Podcast is sponsored by the Contour Next One blood glucose meter. Learn more about my daughter's blood glucose meter and buy it even if you want at this link. Ready, I'm going to say the link contour next one.com forward slash Juicebox. Podcast is also sponsored by us med. US med offers white glove treatment to its customers, you can get your free benefits check at us med.com forward slash juicebox. Or by calling 88087211514. Start getting your diabetes supplies from us Med and get rid of the headaches that you have now, wherever you currently get your diabetes supplies.
Martin Van Trieste 2:19
My name is Martin Van Trieste, President and CEO of civica. civica is a nonprofit Generic Pharmaceutical company whose mission is to bring quality medicines that are always available and affordable for everyone.
Scott Benner 2:33
Okay, I want to find out how you got to this. So I'm gonna go back pretty far. What did you do in college?
Martin Van Trieste 2:40
So I'm a pharmacist by training. So I got a degree in pharmacy from Temple University School of Pharmacy. And as I was graduating pharmacy school, I had a chance to do an internship at Abbott Laboratories in Chicago, and I decided to take that. And ever since then I've worked in the pharmaceutical industry.
Scott Benner 3:01
Did you go to college with the intention of dispensing pills? Or did you think you were always going to go into Pharma?
Martin Van Trieste 3:06
No, I went to college that game on Sunday with all my own little pharmacy.
Scott Benner 3:10
Really? That's great. That's really interesting. Is there something about it that moved you was just the opportunity and you enjoyed it and just kind of stuck with it?
Martin Van Trieste 3:20
Yeah, I think the first I had the opportunity to go into industry and experience what industry were like when I was an intern. I thoroughly enjoyed that. At that time, I began to become aware of the little mom and pop pharmacies were closing faster than others were opening. And I said, you know, probably don't want to work for a chain pharmacy, or hospital. And so I went into industry, I don't want to date you, but about what year was that? So I graduated pharmacy school in 1983. Okay,
Scott Benner 3:51
so yeah, it's interesting, right? You you grew up with this idea in your head, and then the landscape shifts right out from under your feet, I guess.
Martin Van Trieste 3:58
That's it within a really quick time period. So when I went into pharmacy, there was definitely an opportunity to have a viable pharmacy and when I came out that opportunity had been gone. So just five years
Scott Benner 4:10
well spent that change. It's really fantastic. How quickly could happen. Okay, so you above what did you do the for that first job? Were you in compliance where you
Martin Van Trieste 4:21
say I was in I was a research pharmacist, so I did formulation development. So I was the one who took the active ingredient and made it into something that was pharmaceutically elegant that you could actually administer to a patient. So they could consult to be effective.
Scott Benner 4:39
Yeah. Did you work on anything that you're particularly proud of?
Martin Van Trieste 4:45
Not when I was an intern.
Scott Benner 4:50
You weren't allowed back close to the I
Martin Van Trieste 4:51
guess. I guess I have to be careful about that comment. So I met my wife who was also a an intern at Abbott at that same time, so I worked on Making a family I
Scott Benner 5:01
guess. There you go. Yeah. So you're you're definitely proud of that. But I know my wife will tell me all the time. My wife's in drug safety. And very interestingly, she went to college to be a doctor. And when she got out, she had a little, a little kind of falling out with her family and she just couldn't afford to apply to med schools. So she got a Kelly Services job, they Kelly does scientific stuff, too. And she just was really good at the safety stuff and stayed with it. And she tells me all the time about her second job out of college was with a very small pharma company called forest labs. So she worked on Celexa and, and she's, she's really proud of of what she did with that when she was younger. So that's what what made me ask. Okay, so do you jump on? I mean, Pharma is one of those jump around jobs. Did you bounce around a little bit?
Martin Van Trieste 5:52
Yeah, I mean, I think you know, what I would have to say is, I worked at Abbott for 21 years. Wow. And why was it Abbott, I did numerous kinds of roles. I was a formulation pharmacist, I worked in manufacturing, and then I was in quality. And I left Abbott as the head of quality for the hospital products division. And what happened is, when I was at that point, my career, Abbott had spun off the hospital division to become Hospira. And I said, you know, what, I spent too much time building the organization that I didn't want to be part of the one that was probably going to tear it down, you know, as a standalone company. So I left there, I went to bear healthcare is their global head of quality for their biologics group, based in Berkeley, California. So from Chicago to Berkeley, and then I moved after two years at in Berkeley, I went to Amgen and 1000 Oaks, California, where I was their chief quality officer.
Scott Benner 6:56
You have a little the Chicago in your voice. I don't go Yeah. So when you were moving around inside the company like that, was it a case of you getting bored? Was it a case of you wanting to learn more, or were people poaching you because they saw your work?
Martin Van Trieste 7:14
I think it was a combination of my leadership wanted me to be a well rounded, professional. So Abbott was good at making sure people got exposure to different parts of the company. So when they became an executive, they were well rounded and understood how the company were. So it was partly that it was a little bit partly because, you know, I didn't get bored, but I always wanted to do something different.
Scott Benner 7:44
I understand at some point, you start feeling like you're doing a repetitive job. And that feels like it's time to move, right? Yeah, yeah. I when I was in eighth grade, my guidance counselor said you should be an attorney. And I said, but then I'd be an attorney every day for the rest of my life. And I just, I couldn't imagine even as a little kid, like, doing the same thing over and over again. Anyway. So what I guess the question is, is that what did you pick up along the way or see that made you want to make this leap from Amgen to what you're doing now? Well, it's
Martin Van Trieste 8:15
very interesting. So I retired from Amgen Oh, I retired from Amgen and went into retirement. And one day my phone rang. And I typically don't answer my telephone unless I know who it is. And it rang. I had no idea who it was it says a Utah area code. And for some reason, something said answer this phone call, which is like I never do that. And I answered the phone call. And it was a gentleman by the name of Dan Lilly quest. He was a chief strategy officer at Intermountain Healthcare. And he was talking to me about starting a nonprofit, pharmaceutical company, and he was telling me about his ideas. And he asked if I would come to a meeting that they were having in Utah, where he's bringing in various advisors to, you know, beat up on his idea to see how it'd be how they make it successful. And they were politicians, health system executives, pharma people, academics, so wide group of people came to this meeting in Utah. And I had known no interest in going, right. But I looked at my wife, I said, we haven't been to Utah. All right, let's go to Utah and make your day better vacation. And then one thing, you know, led to another, I kept providing advice over some time to them. And they got to the point where they're gonna announce the official name of the company and started the company. And he had called me about it and I go, Dan, do you have any employees the company yet? He goes, No, thanks. So you can announce some company, whether snow would work. So They said, Well, can you hire some people for me? So I hired the original team at the company. And then I said, Okay, Dan, what are you going to do? Now you need a CEO, someone needs to leave these people I just hired. And I gave him some names to some people. And they came back and they said, no, none of those that they want to do a bigger national search. I said, guys, you're gonna delay you know, the start of this company by a year from do a big national search. I said, You got to, you really got to look at these people are. And one thing led to another dad called me one day and says, we got the answer. I go, good, who to hire, because I got to tell the other ones why they didn't get hired. He goes, No, we want you to be the CEO. I said, you know, what, don't you understand about retirement? I'm happy. I'm retired. I'm just dabbling on the edges helping you? No, no, we want you to be the CEO. And I think I said no, on eight consecutive days, multiple times during the day, when Dan is a very persistent individual,
Scott Benner 11:06
I gather.
Martin Van Trieste 11:09
Finally, my wife tapped me on the show or said, Look, you should probably do this job. It's, you know, it's exactly what you've been preparing for your whole life. You know, your your experience in developing all the drugs that are on the list of drugs we're gonna make are on drug shortage. And I may either formulated them as a pharmacist, I manufactured Deb, where I oversaw the quality of them when I was at Abbott. So So I said, Okay, I'll do it. I told Dan, I said, I'm going to do this job, so you can find her my replacement. So I'm only giving you six months to find my replacement. Four years later, I'm still doing that.
Scott Benner 11:51
Are you Are you pleased about it?
Martin Van Trieste 11:53
Oh, yeah. No, I thoroughly, thoroughly love the work. And you know, it's more of a volunteer assignment for me, because I get no compensation from the company. Oh, no. All Pro Bono. So it's really, it's really been interesting and fun. And I have loved the team we've put together I mean, how many times in someone's career do you get the higher your entire team from scratch? Right. So it's a great team. It's been a lot of fun. And we've had great success. We've done a lot of great things. And so, so yeah, it's been it's been a real pleasure.
Scott Benner 12:29
I interviewed the gentleman that put together the production floor for Omni pod. And his story is so similar to yours. It's fascinating. He was retired from a soda company. And, you know, somebody said, Hey, come take a look at what we're doing. You have any thoughts? And then the next thing you know, he's not retired anymore. But you're not taking a salary. So you were retired and comfortable. And, and you're doing this? I mean, okay, I see why you helped in the beginning and I even see why you took the CEO position. How come you didn't bail on in six months? What kept you there?
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Martin Van Trieste 17:09
Oh, why imbalance expense? Because there was always another challenge? You know, we did we achieved our first big objective, right? And then what's the next object? Right? So there's always a big challenge ahead of us. And at some point, you know, you got to look at it and say, though, always will be a challenge. If you do your job correctly, if you're trying to change the industry and transform and disrupt the way things have been done, but front of you, there's always going to be challenges ahead to keep it interesting.
Scott Benner 17:38
Excellent. So what did you I mean, what were your first steps? Obviously, you set up the company had needed employees. But you're I mean, can you talk a little bit about the difficulties and some of the things that came up in that room when people were trying to shoot holes in this idea of like, what what are the I guess my question is, what are the big obstacles into getting into such a? I mean, into a space that makes a lot of money for the companies that are in there. When you're saying we don't? That's not our goal? How do you get into that? How do you not end up in an alley beat up by?
Martin Van Trieste 18:14
A lot of people ask, Are you afraid that someone's going to kill you? I said, you know, the pharmaceutical industry is so used to competition, right? And for people to try to do things differently, that it doesn't pose a big threat to them, right? Because they know there's always going to be someone doing that and they prepare for it. And they have something new that they're introducing in the marketplace. The other thing is remember we're working on old generic, very old generic drugs that are on shortage. And by just that definition that they're on shortages. People don't want to make them anymore. Okay. Right. So there's, there's limited competition, the drugs are on shortage. So So that's part of it. The other part is, you know, people took us for granted, they didn't think we could do it. I remember one quote from the CEO of a very large generic company, who said to one of our members, the CEO of a large health system, go you know, you guys don't know how to make drugs, you're not going to be successful. You don't bother me. And I think that was a prevailing thought process. When we introduced the company that they thought, you know, a bunch of hospital executives aren't gonna know how to make drugs. They didn't realize that the hospital executives are really smart and they hired a pharmaceutical executive. Pharmaceutical team knew how to do
Scott Benner 19:42
that. Did you go look at his back catalogue of drugs and decide which ones you could make? Just to show him
Martin Van Trieste 19:50
actually, how we select our drugs is really, really interesting. So civica is a member driven organization, right? So large health says firms are members of the company. And they decide what drugs we should make. So they look at their portfolio of where they're having trouble finding a drug. And then they look at what is the patient impact for not having that drug, okay. And they prioritize it together to say, here's what we want you to make. Now, it's a great idea on paper. But when we went to execute it, I thought this was going to be total chaos. Right? We had 60 people in a room, hospital pharmacists supply chain professionals, nursing nurses, in a room to say, we can only do 10 drugs to start in the first year, what 10 Do you want us to make, and her over two, at that time, there were like 280 drugs on the FDA drug shortage list. And over half of them were sterile injectable products were, which is what our focus was on. And I thought this was going to be total chaos. Right? It was a four hour meeting. And after the first hour, we had consensus on the first 25 drugs that we should work on. And they actually prioritize them one through 25. So I was pretty impressed, because that really showed what was important for the patient was into getting a bunch of people in a room who could agree on something that quickly says they're really focused on what that patient needs. Yeah.
Scott Benner 21:28
And it means they all they're all seeing the same thing over all right, yeah, was insulin on that initial list of 25.
Martin Van Trieste 21:35
Insulin was not on that list of 25. But it was something that people were asking us about, because insulin is not was not on shortage, it was high price. But it wasn't on shortage, right. So we want to focus on the drugs that were on shortage. And I was in I was, I really did believe that the marketplace would fix the insulin problem. As generic insulin would come to the market, the marketplace would correct itself. And we watch that market very carefully, hoping that the marketplace would correct itself, and it hasn't. And so we had a bunch of philanthropic individuals come to us and said, Can you make insulin. And we said, we can that we did look at it, we know how much it costs to bring it to the market. And they said Walmart will raise the money to make it happen. So Dan, Lilly quest led that initiative for us. And we set a goal of $125 million in capital to be raised to bring the three different insolence to the market. And those three insolence would be the generics of Lantis, human live, and overlock, which is about 80% of the insulin used in the United States. And that's why we picked those three, and they were off patent, which is important. And we're on well on the way we've raised over two thirds of that 120 $5 million to bring those three molecules to the market. And I'm pretty sure by the end of the summer, we'll have all of that money.
Scott Benner 23:09
Wow. up when you said you thought that the market would correct on insulin, it never did. Do you have an idea about why or a guess? Yeah, I'm
Martin Van Trieste 23:19
pretty confident. I know why. And it's these perverse incentives that creeped into the market. So the higher the someone raises the price on insulin, and gives giant rebates to a pharmacy benefit managers, these are middlemen between the pharmaceutical company and the patient. And they're negotiating contracts for insurance companies in large employers, and they develop these formularies. So if you go into the pharmacy, there's a formulary. And depending on who the insurance company is, that drug that's higher on the formulary has a higher probability of being dispensed. So you have three insulins out there, they're very similar in the way they work. And so the what they want to do is to be very high on that formulary, they want to be the first choice. So what they do as they raise their price, and provide big rebates, the Pharmacy Benefits managers, who then put them higher in the formulary than anybody else. Now you have three players in the marketplace that are competing by seeing who can give the biggest rebate. And so it's estimated that probably 80% of the list price of insulin is a rebate is rebated to the PBM. So if you look at that means $100. If the if Lilly raises they've crossed $100 For VIOME Lilly insulin, that means $80 has been given to pharmacy benefit
Scott Benner 24:50
managers so they put you higher on the list. So that
Martin Van Trieste 24:53
puts you higher on the list. Now what happens is for those who have no insurance Right, they pay that list price. And insurance company negotiated a lower price through that pharmacy benefit manager. So an insurance company's paying the $20 per $100 spent, right? So the person with no insurance, or have big deductibles in their insurance plan, pay that list price until they can get something, you know, till they meet their deductible or they pay it the entire year. Okay, so what that says is, the sickest people in society pay the highest price for their medications. And that seems the that's the perverse way what insurance is supposed to do, right? Insurance is supposed to say, the healthy of us take care of the sickness. Right. But because these perverse incentives have creeped into the system is broken the insulin market and it's an it's not going to get fixed easily.
Scott Benner 25:58
How did if you know how to pharmacy benefits managers wiggle their way into this system? Was it through large employers?
Martin Van Trieste 26:06
I honestly don't know the history of how that all started. Okay.
Scott Benner 26:11
Yeah. So this, it's kind of crazy, because it's almost like it's a little like three card monte when you're talking about it. So. So the insurance company is are they paying more like who's paying for this? Because if the people who were insured, I mean, there, I pay, I don't know what I pay it, to be honest with you. 20 $40, when my daughter gets insulin, I don't think it's much I think my health care probably cost. I hate to think about it, but I have recently, I've a family of four, we might be around eight $9,000 a year, like when you know, what comes out of the check what's out of pocket, etcetera, etcetera. But I mean, after that, who's, who's paying for this.
Martin Van Trieste 26:57
So, the way the system is set up, the benefit never reaches the patient, right? So you would assume that if there's rebates being paid the pharmacy benefit managers that some of that rebate makes its way to the patient, and that doesn't happen. So pharmacy benefit managers are providing money to the insurance companies to large employers. And it's being dispersed through the system. But the vast majority of that of that rebate stays with the pharmacy benefit manager.
Scott Benner 27:29
So these people are just passing money around to each other. That's right. Okay. What percentage of patients do you think aren't covered by insurance? So who is really being hit by this numbers wise?
Martin Van Trieste 27:44
Yeah, that's a good question. It's and there's not a good statistic on that, that I've been able to find. But I hear enough horror stories about people and the cost of their insulin that says that we'll be able to have a pretty significant market impact. Great. And remember, it's not just those without insurance. It's also those who have those high deductible plans. Yeah, no, sure. Right, that unique need to meet your deductible. And we're and at the end of the day, if we can transform and disrupt this system, really helpfully premiums can be lowered for people who have insurance.
Scott Benner 28:21
Why? Why are they not fighting more about this? Where are they are they just see you described earlier, a scenario that made me think the the way the NFL works, which is offense is developed something then defensives figured out how to get through it, and then the offense changes? Are they just changing their offense right now? Are they letting you do this?
Martin Van Trieste 28:42
Yeah. So I think they're, they're not taking us for granted because we have a proven track record that we can disrupt and transform. But it's part of our society is what have you done for me this quarter? Right, I have to meet my quarterly objectives to my shareholders are rewarded. So they're not focused on something that's coming out in 2024. They're focused on what's coming out in May, August, right. So it's that short term view of the world that I think, but I do see, as we get closer to the launch of civic insulin, we will see a bunch of gnashing of teeth of those pharmacy benefit managers. But they also will shift the rebate game away from insolence some other product.
Scott Benner 29:31
Okay. Just some other vectors gonna get hit by this.
Martin Van Trieste 29:35
That's right. Yeah. So if you think about it, the first big rebate drug that comes off patent will be humera in 2023, used for arthritis and psoriasis, and so forth. That's the first big drug that pays a lot of rebates. It's going to come and get generic competition. And we'll watch what happens in 2023? Will the generic companies play the rebate game to try to get better preference on the list? Or will the generic company one generic company say I'm going to try to break the system? So we're going to watch that closely. Okay, I the actress or Milan slash NaVi actress Aviatrix, now they have generic insulin called sem sembly. Right. And when they introduced it, they tried to break the marketplace with a low price. But they then had two versions of the same product, one that played the rebate game, and one that just has a low price. Okay, we're trying to serve two different marketplaces with that,
Scott Benner 30:43
well, that work because that's always what I've wondered, I've always wondered why the big companies don't just, I mean, from my, I have a bit of a hippie attitude, you know, and I always just thought, like, well make the money the way you're making the money off the insured people and everybody else just give it to them. Like, who cares? Right? Is that not viable?
Martin Van Trieste 31:02
Well, they're not doing it. Yeah, no.
Scott Benner 31:06
Well, why don't have the viable and palatable are the same thing. But you know, I was, you don't mean, like, at some point, do you just? Well,
Martin Van Trieste 31:15
they're all these companies have patient assistant programs. Right? The really, really poor people have access to the medicine. But it's more affecting your the middle class, I would say, Okay, who don't have the insurance or in between jobs, you know, things of that nature?
Scott Benner 31:35
Yeah, yeah. How are you? So in this idea, where you just kind of keep paying attention to drugs? Like how many drugs do you manufacturing right now.
Martin Van Trieste 31:43
So we offer 60 products to our members. We don't manufacture anything right now. We acquire them through other suppliers. So remember what I was saying drugs around shortage, that means people used to have a license to make something and they stop, or they're having difficulty making it. So we try to find alternate suppliers, bringing them back into the marketplace, by providing them a better economic model than what's currently in the system?
Scott Benner 32:14
And are you able to accomplish that because of the collection of hospitals that you're feeding, so you have enough need for them to go back into manufacturing?
Martin Van Trieste 32:22
Right, so we guarantee them a certain market size, and a certain market price for a five year period. Okay, so they we've taken uncertainty out of the system for them, right, know how much you're gonna charge how much they need to make over a five year period. And the other thing we do that's different than the current system, is we go to them and we say, You know what, we want to buy this product from you. And we'll pay you the day you deliver the batch to us. Current system doesn't do that current system, you take it and put it into the wholesale network. And the whole seller pays you after they sell it. Yeah. So it could take you six 810 months a year to be paid for a batch when we pay you instantly. So we're changing the model. And we also then tell the supplier, you don't need to keep inventory, we keep all the inventory, and we'll keep six months of the inventory. So there's always resiliency in our supply chain, so we won't have a shortage. When I
Scott Benner 33:27
was growing up, my buddy worked in a bookstore is a long time ago now. Over 1300, Geez, how old am I it's over 30 years ago. And you know, paperbacks would come out. And they sell as many as they could. And when they were done and the interest was gone. If they had 10 books left, they'd return eight of them. But the way they got returned was they rip the covers off of them sent the covers back to prove that they hadn't sold them. And then the books were just destroyed. And I don't know what about what you just said made me think about that. But I think that most people who don't understand how this stuff works, would be shocked to know that you don't I mean that that, um, so that you're paying up front? Is that got to be a huge comfort to them. And are you actually using the drugs? You're not? Are you? Are you getting stuck with stuff that you are doing books with covers ripped off from laying around?
Martin Van Trieste 34:17
No, no, we've not had any product. We have 60 products we offer our members. Remember, we have guaranteed business from our hospital systems. Right? We can forecast off of that. So we don't have product that expires because we know what the health systems needs are, what their buying patterns are. And so we build our inventories to support that
Scott Benner 34:39
it's amazing. It really is.
Martin Van Trieste 34:42
Now insulin is going to be different, right? Insulin is not going to be just given to our members. Insulin is going to be provided to anybody and everybody.
Scott Benner 34:50
Mark You're good at this. Hold on. Let me just scratch off my next question from my little tip sheet in front of you that I was writing. My next question was how do you get it out? side of the system to the people go ahead, how are we doing that?
Martin Van Trieste 35:03
So, so we're gonna give it to anybody and everybody. And of course, we're gonna have the help of diabetes advocates. So you know, JD Rh, right? Beyond type one. So these organizations that have raised money to support us to bring insulin to the market, are going to be advocates for us and let their pay their membership, know where our insulin is available, how much it's going to cost, etc, etc. So they'll be advocates for us, we will provide that insulin to anybody who agrees to our pricing policy, right. And so our pricing policy is for a vial of insulin, it will not be more than $30. And we're going to communicate that through those advocacy organizations, we're actually have a little QR code on our product labeling, so that you can read that QR code, you get the package insert, but more importantly, you know, there'll be a note that says you shouldn't pay more than $30 for this. So we're trying to give that information to the people with diabetes or their families. Let them know that if you pay more than that, you know, find another pharmacy. Somebody
Scott Benner 36:17
is up charging you. Hey, just for clarity you misspoke a second ago, you meant JDRF?
Martin Van Trieste 36:24
JDRF. Yeah.
Scott Benner 36:25
You said, Ah, that was oh, I'm sorry. No, don't be sorry. I just I was like this. There's someone I don't know about. I wanted to double check to see, okay, this has to go to pharmacies, then. I mean, there's no other way to distribute it right?
Martin Van Trieste 36:39
Well, it's what your call your definition of a pharmacy, right? So clearly has to be dispensed by our pharmacy. But a pharmacy can be at Walmart, or Costco, or Amazon, or a bunch of these new pharmacies that are being developed called Digital pharmacies. Okay? Right. So has to be dispensed by a pharmacy, but there are different kinds of pharmacies today than the brick and mortar ones on the corner.
Scott Benner 37:06
So this can be on this may be online as well, then. That's right, it could be online. And so you're, you're gonna direct ship from your, from your stock.
Martin Van Trieste 37:16
We it depends on how we're doing and who we're working with. But we could direct ship from our stock, I don't think we'll be using wholesalers.
Scott Benner 37:24
Okay, this was I sat in a room once, I don't want to say with what company and I kept saying, Can't you guys just ship it directly? Like, why don't you get out of this model. And it seemed like something no one was interested in at the time. But it made sense to me in the moment, like listening to the wash of what they thought their problems were and their things to overcome. I was like, just sell directly to people like start your own. Like, I remember saying in that room, like start your own. Just do it. I was like you could pay yourself I was I was kind of genius, Nolan. Everybody's like. So is the real thing here is that the way this is getting accomplished is through desire. And that and that somebody had to step outside of the system and and want to do this because inside the game, no one person could make this change, right? Like you couldn't, if you would have stood up and had this idea at a big pharma company, everyone would have just turned their back on you and walked out of the room because like, I need this job. I don't want to talk about this. Like, that is the thing, right? It had to start over.
Martin Van Trieste 38:26
Ya know, clearly, it needed a disruptive, transformative and innovative approach to be successful. And, and, you know, it takes startup companies to do that. You know, Big Pharma is traditionally very conservative. And conservative organizations try not to be disruptive.
Scott Benner 38:53
Okay. Yeah, yeah, that's what I see, too. I just, I mean, there was, because people are always saying, like, why don't you just why don't you just and I think to myself, like, if you were there, you'd know, that's not possible. Like it's theoretically possible. But once you get into the system, you're not breaking free of that idea. I mean, you know, you know, in your regular job, good luck getting rid of the birthday cake they bring out on Friday for people like you couldn't, you couldn't get consensus on stopping that, you know, so how are you going to get involved in this? Well, this is really kind of amazing. How, how long ago? Was that meeting in Utah? Tell me again.
Martin Van Trieste 39:32
So that meeting was, I want to say January 2017.
Scott Benner 39:39
Wow. So over five years ago, yeah, yeah. And just for people to understand, like the length of time that things like this take to happen. And because that person you've met with he had that idea prior to that even so you're you're over five years of just thinking Planning and trying. And then the next step is I'm trying to imagine how you get startup money from people when you're not trying to profit. That seems like that might have been a daunting task as well or no.
Martin Van Trieste 40:14
So it wasn't that hard. Okay, but it was, but it wasn't easy. Don't get me wrong, it wasn't easy. But it wasn't that hard. There was a there, there was a giant problem impacting patients lives in hospitals. But also, it was driving any efficiencies and higher costs in hospitals. So traditionally, what most hospitals have a drug shortage team consisting of pharmacists, supply chain, nurses, and even physicians, and they meet on a regular basis. And sometimes they move even daily, to say, what can we get today to treat the patients? And how are we going to have to do something different a different procedure, or buy a different drug. So now you have these people meeting every day, they're coming up with alternative ways of treating a patient, which means you got to train people in the hospital. And then you maybe have to buy more expensive drugs than the ones that were on shortage. It is estimated by like, you know, the Government Accounting Office vizient, which is a large group purchasing organization, that that's somewhere between 600 million and a billion dollars annually, that's added costs in the health system. So you have that pain and suffering that's going through the health system, patient care, and financially. And you want to solve this problem. So you have a big problem that wants to be solved. And we asked you for some startup capital to go do it. And it's not a hard sell. Okay? Right. So we very quickly brought in about 1/3 of the hospitals in the country into our membership group. Now, when we just go and talk about insulin, that's another type of different kinds of thing. The pain and suffering that diabetics deal with every day, with die price insulin and rationing their insulin, not taking their insulin right leading time really bad consequences for them for doing that. Over the long term. There are a lot of people who are wealthy, that want to change that that paradigm, and they gave us money. You talked about the length of time. You know, we're building our own manufacturing plant in Virginia. And that plant was originally designed to make these drugs that are on drug shortage, that that process from the time you say, let's go and do it to the time you're completed is about five years. Yeah. Right.
Scott Benner 43:07
It's a it's a long haul. It really is. Do you think other? Well, I have a question before that question. When you're talking about the flange, the flange? Where did that word just come out of people who want to help you? I'm not gonna sit here and try to say, say that word that won't come out of my mouth for some reason that I clearly know. When you when you're trying to get money from those people. And it's coming in? Do you think it does it need to keep coming or once you're up and running, you'll be okay.
Martin Van Trieste 43:38
So our entire business model, both on the drug shortage side, and on the incident side, is once we're up and running with any particular product, that product has to be self sustaining. Okay, so we have to charge enough for an individual product, that it's self sustaining. So we operate on a cost plus basis, what does it cost us to make a particular product? Let's add a little bit of margin to that. So the product is self sustaining.
Scott Benner 44:10
Okay, that's amazing. So the end, these donors are not expecting any return on their money at all, or they are. They're not. Okay. Wow, I didn't know if that was part of your business model where eventually the money comes even just their initial money comes back to them or not. Do you think? Do you think that this is something that you can scale to keep impacting things? Or do you imagine other companies might start up like you and do similar things in other spaces?
Martin Van Trieste 44:38
So clearly, there's there's enough things that need to be corrected in the in the marketplace that there's room for lots of competition? Yeah. And we don't view it as competition. Right, because our whole goal is not how much market share we get. That's not our goal. It's how much market impact we make. Right? We fix To America, but there are other nonprofits starting up that are trying to do similar things and other pieces of the of the area. You have other organizations that are for profit that want to break the system and do things differently, all those digital pharmacies, they're trying to break the system. You have Amazon, they're trying to break the system. Right? So you have lots of lots of people trying to do things different in this marketplace to try to change it.
Scott Benner 45:26
Do you think if the system was successfully broken down, would that drive the major players out of the insulin game or other drug companies from making drugs?
Martin Van Trieste 45:36
I don't think people would leave the market. Especially the insulin market, you know, Lilly and Nova and Sanofi right are heavily invested in insulin. And they're always working on how to make improvements. So I just read yesterday that one of Lily's drugs, that lowers blood sugar causes weight loss, and just like novice drug does, and so they're looking at taking that a product that lowers your sugar levels to drive weight loss, right? So they're always working on something in the space are always figuring out how to make improvements. And like I say they're used to generic competition. They've right since 1984, the hatch Waxman Act has encouraged generic competition. And so they're used to it and they're always trying to innovate. So if their product goes off patent have something to replace it.
Scott Benner 46:29
You didn't get any pushback politically for this.
Martin Van Trieste 46:32
Oh, no, everybody, the entire political spectrum, basically loves us. Okay. It's a bipartisan issue. Right? Patients are Republicans, Independents, and Democrats, they all hear the pain that patients have gone through. Every time I go to Washington, it's amazing. Every time I sit with a congressman or a senator or their staffers, how positive they are about us, they're encouraging us to be successful. And so no, it's it's very positive from Washington. Now, I know others are lobbying against us Sure. Every, every time I go sit with the senator or congressman, they, they basically say, when you're going to do insulin, when you're going to do insulin, that was from day one, when you're going to do insulin,
Scott Benner 47:23
do you find that what they're saying in the room is reflected in their actions in public?
Martin Van Trieste 47:29
You know, in public, they can't agree on anything. Right? Right. I mean, they wouldn't even be able to agree that Washington's Birthday should remain a holiday. Right? So to me, you know, what they do publicly is, you know, is is very, is very partisan. And this this issue, you know, at least insulin, they're talking about a $35 cap on insulin. And that actually is very complementary to what we're doing, okay? Because if you do a $35 cap, the pharma companies are still going to charge the price they charge, you're still gonna give rebates to pharmacy benefits managers, so someone has to backstop what the current price is to the $35 cap. Yeah, right. So whoever is paying that backstop, if it's the government, and we're charging $30, they benefit from what we're doing. Right? If it's an insurance company, they're benefiting from that backstop. And by the way that that $35 cap only affects someone's copay. Okay. All right. So if you're uninsured, that doesn't help you that $35 backstop.
Scott Benner 48:44
Right. Well, you know, it's it's just it's almost, it's angering it is for me, it's angering to think that this entire problem is built off of people just like basically lining pockets to stay higher on a list so they can sell their thing. And at the same time, I actually understand how they fell into it. Like once it was there, I understand why they played the game, you know, where they wouldn't be selling.
Martin Van Trieste 49:08
And I think the game started with EPI pens. Really. That's where someone was smart enough to figure out. Okay, generic competitions coming from my epi pen. I charge right now $300 For two epi pens. What I'm going to do is I'm going to and when I was charging $300 for two epi pens, I was keeping $260 and the pharmacy benefit manager was getting 40 Okay, I'm gonna raise my price, I'm gonna double my price. I'm going to double it to $600 and I'm going to give $300 to the pharmacy benefit manager to keep me at the top of the list and not put the generic guys anywhere on the list at all. And I now know I don't keep to under $60 I keep $300. And the pharmacy benefit managers, they don't get $40 they get 300. So now I want to bring a low cost epi pen to the market, I have to go to those pharmacy benefit managers. Right, I have to go through them for the get the insurance companies to pay for me. And I got generic epi pen I want to bring to epi pens for $50 to the market. And they go, but you gotta give me 300 to get on the list. Why can't give me 300 I'm only charging 50. It's
Scott Benner 50:36
like trying to get into a club in the 80s. Right, you just you grease some palms at the door to get in. I have two questions here. So my first one is, and I just want to kind of come from this from the other angle for a second. Is there how to I mean, this making a drug is not easy. You're obviously a bright person. Right? And and you have a lifetime worth of experience. And I think that as a as a layperson, I want bright people with lifetime's worth of experiences making drugs. Is there. Is there a world where you break the system so much that a kid coming out of college won't choose Pharma? And do we weaken the system that way? I know that's a real big picture idea. But I was wondering if you ever thought about
Martin Van Trieste 51:24
it? I mean, well, we think about it from a different perspective. Okay. So we say we do not want 100% of the volume for any drug. Because if we do that, eventually will become the problem that we're trying to solve. Right? Right, if we provide one or percent of any drug, and if something goes wrong in our supply chain, will no longer be able to provide that drug. And that's not good. So we try to limit the amount of a drug that we produce to no more than 50% of the market. And we work with our members to kind of worked through that those calculations and those forecasts and those commitments we talked about. So we're trying not to do that, from that perspective. Could we break the market in such a way that no one would want to go into the, into the pharmaceutical industry in the future? I think that's hard to do. I mean, one company can could hurt another company, right? I could take all the sales of insulin, for example. And, and Sanofi and Lilly and Nova would be really financially hurt by that. But that's just three companies in an industry that has 1000s of companies making pharmaceuticals. So I think it's hard for us to do to break the model so bad that people won't want to go into pharmacy
Scott Benner 52:57
and civic as an example. Are you compensating employees similarly to how they're they be compensated in a foreign?
Martin Van Trieste 53:05
Absolutely, I'm the only one that makes nothing.
Scott Benner 53:10
somebody's walking,
Martin Van Trieste 53:12
otherwise, we pay very competitive salaries, or I would not have been able to hire the team of people that I have. Yeah,
Scott Benner 53:19
I get that. It's just It's, uh, you know, in my mind, those people, they go to Expensive Colleges, and they come out and they have, you don't I mean, there's still people and they still have dreams, and they want to put kids through college, etc. But I think what we're really hearing is that some people civic are walking around with Martin's money in their pockets. It's a really, it's a really kind thing you're doing, I have a couple more questions, I'm gonna let you go. Have you ever considered open sourcing what you're doing going to other companies and sharing what's working and what's not working so it can grow?
Martin Van Trieste 53:52
We were very transparent organization, and we actively teach our model to anybody who wants to learn it. And so not only companies, but I've had foreign governments call me and say, How did you do this? What are you doing? What can we learn from it? So we're very transparent, and we do teach the model to people.
Scott Benner 54:14
It's wonderful. It really is. Okay, well, we have painted a really rosy picture of of insulin pricing in the future for people who I mean, you imagine mostly this is going to be people who don't have insurance, right? This is going to help?
Martin Van Trieste 54:28
Well, so it'll definitely help those people people with high deductibles. Right. But also, right. It'll help insurance companies, right, because insurance companies are paying a higher price and then we'll be selling it for so to help insurance companies and hopefully the insurance companies then lower their premiums based on those savings.
Scott Benner 54:53
I guess if I just want to stick it to the man I could buy your insulin if I wanted to. Right. But
Martin Van Trieste 54:57
clearly, I mean think about it, right? I go to buy some generic drugs for myself, right? I, I'm an old white guy, I have hypertension and high cholesterol and things, bad knees. And so you take take all your medicine. And so I know the cost of generic drugs and what it is, and I'll go to a pharmacy, and my insurance deductible might be $10 $15, right. And I go and pay cash and I pay $7. Or sometimes some of the generic drugs that I had take, there was one example, where I went to the pharmacy, and they wanted to charge $250 for the drugs, right, and my insurance company, that was my deductible with the insurance company to their $50. And I went on good RX. And I found out if I go next door to the pharmacy next door, it'd be $25. Right. So clearly, there's games going on, in, in the insurance space, too, that people should be aware of tools like good RX, and things like that, to get that information to have the power.
Scott Benner 56:08
So you might not I don't know if you'll be comfortable commenting on this. But I'm just asked me a question. So there are for profit, people who are still delivering drugs at more affordable and really affordable prices, their people are still being well compensated. We're talking about like obscene wealth at the top of organizations, right? Like, I don't have a Maserati, I have seven miles or Audis. And so does my wife and my girlfriend like that kind of thing. But right, it's just, it's a piling of money at some point. Am I right about that?
Martin Van Trieste 56:38
Well, CEOs in all industries are highly compensated. Yeah. But that doesn't, that has very little to do with the price. Right? Because you can deduct, you can say that person gets no money, it's not going to significantly lower the price of any of the medications, right? Because one, people are trying to maximize the, for a for profit company is designed to create shareholder value. Yeah. Right. So the way you create shareholder value is either you increase your sales, increase your price, or cut your cost, right, there's no other way to create that shareholder value. And that's, that's what people are supposed to do in a for profit space, right?
Scott Benner 57:20
I had a person come to me once and with this idea, and they said, Well, why don't they just stop marketing, if they put so much money into marketing, and I said, you're gonna fire the marketing guy, I was like, He's 50. He's got two kids, one of them just went off to school, he's got diabetes, now he can't afford his insurance like, and by the way, when they fire him, they're not going to take his $100,000 Or two, whatever the hell he makes a year and split up between all of us. And even if he did, the, you need a quarter of a penny that badly, you know, like, it's, it's a big, you really have to understand the space to impact it's so great that you were able to pull that group of people together, or those other people as invested in like, a civic, I guess, is the feeling I get from you. Is it pervasive? Or you don't I mean, like, sometimes people are just selling widgets, you know what I mean?
Martin Van Trieste 58:09
So I would say clearly, the clearly the leadership team is, is looking fast, right? I mean, it's hard to get people to change jobs, right, who are highly successful in their industry? Sure. And they change jobs, because they believed in the mission and what we were doing. And it's interesting that the rest of the organization, the number of people who come to us, say, I want to work for you, I want to make that difference. Yeah. Right. And I can't make that difference where I'm working today. I'm like the cog in the gears, right?
Scott Benner 58:49
That's very interesting. My wife talks about that all the time that she, she felt she felt more fulfilled as a as the parent of somebody with diabetes when she worked at a company who just made diabetes stuff, you know, and not that she doesn't enjoy her job now, but that she there was extra for. It's amazing.
Martin Van Trieste 59:09
And it is true, we found out after we made the announcement that we were going to do insulin, the number of people who want to come to work for us that had that diabetes connection, like you said with your wife was was overwhelming and not just coming to work for us. A bunch of people who are at the end of their careers said I'm going to retire I've come to work for you for free. Wow. Do what I did. Right? Because of that diabetes connection.
Scott Benner 59:38
That's terrific. All right. Well, all right. I'm sold Martin. When When does this happen?
Martin Van Trieste 59:43
So we'll deliver our first insulin and we'll be the biosimilar of Lantus Claridge clergy in early 24.
Scott Benner 59:52
No kidding. You think first quarter or do you not say out loud but you think I always say out loud Guess you're not publicly held, you can say whatever the heck you want. But
Martin Van Trieste 1:00:04
we're really pushing for the first quarter of 24. Okay? It's got to be a tight schedule and a green light schedule to get there. But it will happen in 2024
Scott Benner 1:00:15
is the similar human lager Novolog. Next,
Martin Van Trieste 1:00:19
so everyone will have a little bit of a lag behind it. So right, we've developed the first insulin, the our partner who's making the active ingredient does, he then makes the first one that has a turnover and makes the second one a turnover and makes the third and repeats the process. So Glargine will be first. And then the other two will follow
Scott Benner 1:00:42
shortly thereafter, in sequence, give a timeline for those are the All of those will
Martin Van Trieste 1:00:47
be in 24. It's about a quarter between each one to get the first ones to the market.
Scott Benner 1:00:53
Do you have to do you have a an amount of time you'll need to ramp and scale? Or will it happen pretty immediately?
Martin Van Trieste 1:01:01
Well, when I say we're coming out in 24, we've built that ramp and scale into Oh, that's beautiful. Now we anticipate that in our fourth year of operation, we'll have about 1/3 of the market for those products. That's based on a forecast. Yeah, you know, forecast are wildly incorrect, right? They're not they're not an accurate thing. So. So we'll say that it will all depend on how the Marketplace responds, right?
Scott Benner 1:01:31
Well, if you ever want to come back on here and let people know about it, I'd be thrilled to talk to you more. I think it's a really wonderful thing that you guys are doing. Am I not asking you anything that I should be?
Martin Van Trieste 1:01:44
No, you asked all the right questions, did I because I'm
Scott Benner 1:01:47
surprised by that. Martin, when we sat down what I knew was your name was Martin. So I just went with the conversation. Good, good.
Martin Van Trieste 1:01:56
I mean, you go through this, you, you you have association with diabetes, you know, what it's like, I have a question for you. Okay. So we hear from diabetics, that they keep large quantities of insulin, stored in the refrigerator for fear that there's going to be a shortage of insulin, or they can't afford to pay for it, change companies, whatever it is. I find that amazing that people feel the need to do that, in our very, you know, well to do society, right. Do you, does your family do that? Do you keep large stocks of insulin?
Scott Benner 1:02:41
So I have, I think because I'm gonna have to, I think because of a job change that my wife experienced, at some point, we got into a position where we had to send scripts to a new insurance through a new insurance company, and we got insulin that we kind of didn't need. And so we had some left, and then more came in. And then since then, I've been able to maintain that backlog, I guess, as a lack of a better way to put it. Prior to that, I would have felt uncomfortable. It's funny, I would have felt uncomfortable under four vials. And my daughter probably uses what she uses 200 units every three days. So it's not a I don't have that fear that you're talking about. But I have spoken to many, many people who have it. And I do generally subscribe to what you said there are literally four pharmacies within a mile of my house and I have insurance and if I needed insulin, I could go get it. I'm not pressured by it, but I understand when people are you know, I guess that's my answer.
Martin Van Trieste 1:03:51
Oh, good. It's really nice to meet you, Scott.
Scott Benner 1:03:53
You as well, Martin, this was this was absolutely terrific. Thank you, I wish you all the best with this thank you again for what you're doing. Right? You want to take a printer out of that place or a pack of paper or something you know what I mean? One time just be like this is Martin's and just leave with it. I like to see you compensated
Martin Van Trieste 1:04:15
I've been very fortunate in my life. We you know from a family we're having a great family and three great kids and you know working in great companies and you know I'm well to do and you know, this didn't it just didn't seem nice start take
Scott Benner 1:04:28
us out really lovely. And there's no diabetes in your family. Is that
Martin Van Trieste 1:04:31
right? No diabetes in my family. Okay, well, from all of us.
Scott Benner 1:04:35
Thank you very much. I really appreciate it. All right. Yep. Take care you too.
Well, let me start off by thanking Martin for coming on the program. This was an excellent conversation. I'd also like to thank the Contour Next One blood glucose meter and remind you to go to come contour next one.com forward slash fuse box to get started today. And let's not forget us med I wasn't going to forget them. I just you know, it's a way to start talking and let's not forget us med white glove service, always 90 days worth of supplies and fast free shipping. Get your free benefits check at us med.com forward slash juice box or by calling 888-721-1514
I have to go get knee surgery tomorrow. So I'm going to keep this brief. If you're enjoying the podcast, please tell a friend subscribe in a podcast app. That's pretty much it. Thank you so much for listening. I'll be back very soon with another episode of The Juicebox Podcast. It's a simple knee surgery please don't worry about me. I'll be fine.
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