Why Health Plans Pay $10,000+ For Drugs That Don't Even Work

Feb 24, 2026

Pramod John, former Silicon Valley entrepreneur turned healthcare innovator focused on drug management and transparent market solutions. He exposes why current PBM economics inflate prices, explores how tiny patient cohorts drive most drug spend, and argues for data-driven, open-market transaction models and point-of-fill checks to cut waste and realign incentives.

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INSIGHT

Healthcare Is An Economic Problem Not A Tech Problem

Healthcare's cost crisis is solvable with common-sense economic fixes rather than more technology alone.
Pramod John realized after McKesson that incentives, not lack of tech, prevent cost reduction and quality improvement.

ANECDOTE

From Lockheed To McKesson To Drug Management

Pramod John described his path from defense tech to McKesson to healthcare entrepreneurship.
Living in Silicon Valley he expected tech to solve healthcare but learned at McKesson that following the money revealed misaligned incentives.

INSIGHT

Drug Spend Is Steeply Concentrated

Drug spend is extremely concentrated: generics are 90% of fills but only 13% of spend, while specialty drugs are 2% of people and ~55% of cost.
That skew means a few high-cost cases drive plan costs and distort incentives.

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"Why are we paying $10,000 for a $30 drug?"

My guest this week is Pramod John, a former Silicon Valley tech entrepreneur who entered the healthcare space to tackle the largest economic problem in the country: skyrocketing healthcare costs. Pramod quickly realized that healthcare's dysfunction is actually not a technology problem - it is a deeply ingrained problem with economic incentives.

In this episode, we dive into the murky waters of Pharmacy Benefit Managers (PBMs) and why the traditional model is designed to drive up costs rather than lower them. We discuss the shocking statistics of drug spend (where 2% of people account for 55% of the costs), why FDA approval doesn't always mean a drug is effective (using the infamous Alzheimer's drug as an example), and the implications of recent fiduciary lawsuits like the one against J&J.

Pramod explains how we can bring common sense back to healthcare by treating drugs like any other consumer purchase. By utilizing an "open market" drug management model, he argues that we can effectively replace traditional PBMs with transparent transaction processing software - saving plans 30% to 50% without relying on restrictive formularies or rebate games.

Tune in this week for a clear roadmap for how to actually fix the irrational economics of our healthcare system.

Thank you to our 2026 sponsors!

ParetoHealth: ParetoHealth empowers midsize employers with a long-term solution to reduce volatility and lower overall health benefits costs. Visit ParetoHealth.com to learn more.

Samaritan Fund: A program that connects those who need help to the support they need. We are proud to offer the Samaritan Fund Program. Visit SamaritanFundProgram.com to learn more.

Vālenz Health: We're Vālenz Health, your partner in improving health literacy, reducing plan spend, and delivering high-value healthcare. Visit ValenzHealth.com to learn more.

Imagine360: Imagine360 helps self-funded employers save on healthcare with smarter health plans. Cut expenses by 20-30% with custom solutions. Contact us today at Imagine360.com.

Chapters:

(00:00:00) Intro: Why We Talk About Cost Instead of Quality

(00:02:42) From Silicon Valley & Defense Tech to McKesson

(00:10:43) Why Healthcare is NOT a Technology Problem

(00:15:53) Fiduciary Responsibility & The J&J Lawsuit

(00:19:03) The Butter Knife vs. Pareto: The Math of Drug Spend

(00:23:54) Building an "Open Market" Alternative to PBMs

(00:29:40) Why Doctors Fly Blind on Drug Pricing & Formularies

(00:35:42) FDA Approval vs. Real-World Efficacy

(00:45:44) How to Actually Fix the Model: The Real-Time "Pause"

(00:58:36) Why International Sourcing & PAPs Aren't the Fix

(01:11:00) Replacing PBMs with Simple Transaction Software

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