February 6, 2008 
A common discussion point that I have had with many people is why don’t companies adopt more cost control mechanisms. Some typical programs from a pharmacy perspective would include:
- Limited formulary (cover less drugs)
- Percentage copay versus flat dollar copay
- Mandatory generics (you have to get the chemically equivalent generic if available or pay the difference)
- Mandatory mail order (you have to fill any maintenance drug at mail after the 2nd fill)
- Limited retail network (you can only use certain preferred retail pharmacies)
- Step therapy
- Prior authorization
- Quantity level limits
- Intervention programs (you are taking a brand name drug with a therapeutically equivalent generic. if you switch to the lower cost drug, with your physician’s approval, we will waive your copayment for the next 6 months.)
Since the reality is that the most effective programs have traditionally been programs that contain a hard edit or reject at the pharmacy or ones that clearly transfer cost to patients if they don’t take the preferred route, these programs cause disruption. Some people hate that word, but it is the reality. People call into the call center. They call HR. They log onto the website. They talk with their friends. They have to call their physician to get a new script. It is not business as usual.
So, in a theory proposed by Larry Zarin (Chief Marketing Officer at Express Scripts), you could visualize a glass ceiling which blocks adoption of new programs. So the question is how to raise the glass ceiling such that those paying the bill would be willing to be more aggressive in managing their drug trend. (The same theory applies to managed care also.)
I agree with the null hypothesis that says that education is the key. The question is how to drive information at a broad scale when you don’t know who will be affected necessarily. And, the reality is that those that aren’t immediately impacted will likely ignore the general educational message. We want targeted, personalized messages that are timely and come exactly when I am about to be impacted.
You are likely to be going to refill your prescription for ABC in the next 3 days. If you continue using this drug, your copayment will have increased from $25 to $50 as the drug has moved to the third tier of our formulary. Please say help to talk to a live agent or log on to our website at www to see your alternatives.
So, it is really a question of creating generalized information and then having a communication campaign that is triggered by events – a claim, a diagnosis, logging into the website, calling a call center agent, etc. Something has to happen that tells you the person is a likely target and receptive to the message. Then, you can target them with a personalized communication.
Enabling Healthy Decisions 
Your “prescription” is one that has been executed at different levels by many MCOs including my employer for us as employees and with some groups. While the theory is sound, its the reality is that is often much different. The reality is that the sponsor or employer has to be willing to implement such a program…AND most have not! Yes certain aspects have been adopted by a few employers….differential copays for using mailorder, mandatory auto substitution of generics when available or the member pays more, restricuted formularies and prior authorization to get drugs not on formulary. All have effect. However, most employers have not been willing to effect such changes in the recent economic environment, which for us has been one of high growth, competition for employees, moderate wage growth and expansion in housing prices. This is, however, changing rapidly and has been for the last 6-7 months with expectations for this to worsen in 2008. This may create more of an environment where employers under economic duress are more willing to enforce these kinds of cost sharing, behavior changing programs. Overall, this would probably be good in terms of causing employees/members to take on more responsibility for their care and consumption. We are laying much of the groundwork for this to occur under the concepts of transparency, consumerism etc. It is a true cultural change for us and for the employer and employee. As one who worked in consumer goods for 18 years following 3 in health care and now full circle am back in health care, it is amazing to me how little this industry still knows about its consumers and customers, buyer behaviour, usage and attitudes among the various stake holders, how to compete etc. It is a long way from other industries in the US delivering or financing a product to a consumer end user. It is also one that is bound by many limitations…including government imposed mandates which are not often discussed. Most legacy systems for claims and membership are structured only for what those functions needed….there was and is a resistance to them containing data as basic as phone numbers and email addresses since these were not needed to pay a claim. That is basic data used to communicate by most other consumer businesses. Beyond that, consumption or usage data that is a basis for various programs is also HIGHLY PROTECTED and controlled….very different from the financial services industry, the most similar in terms of its reason for existence, where your info is not your own and is routinely sold then used to market to you….think of those calls for mortgages, credit card offers, car insurance offers etc. In terms of your thesis above, those are the kinds of structural and cultural impediments that start to affect your ability to execute what you suggest as the holy grail—education. Yes, it can be done in certain instances, more likely farther away from the transaction or incidence than you postulate. Good concept but it needs some more attention. The PBM industry has in many respects more opportunity to do this than MCOs because they are more removed from the overall care delivery process, they are driving efficiencies as a core mission to save costs and improve their bottom lines, and they have newer systems with less restrictions on their operations.
Keep pushing this rock though…I like your approach and have shared many of your thoughts internally.