Walgreens 2009 Trend Report

I must admit that I have been reading these reports by Walgreens for less time than those by Express Scripts, Medco, and CVS Caremark so there were a few more questions that jumped out in my mind here. From the beginning, one thing that I noticed was that Michael Nameth signed the introductory letter. I only pull that out to wonder how that compared to Express Scripts and CVS Caremark (which are the other two 2009 reports currently available).

  • The Express Scripts report was signed by George Paz (CEO).
  • The CVS Caremark report doesn’t have an opening letter.

Their trend numbers were:

  • 5.6% including specialty
  • 4.1% without specialty

They rolled out a new 90-day program called Walgreens90 which matches the Maintenance Choice program from CVS Caremark.

  • Member pay the same at mail or Walgreens store for 90-day Rx.
  • Same cost to the payor at either channel.

A semantical issue for me was that they call their program “step care therapy” versus the rest of the industry that calls it “step therapy”. Are they implying a level of care in the intervention that is different from others?

In the opening section, they talk about some general data which I found interesting:

  • 1 in 7 Americans went without a prescription in 2007 because of cost related concerns
  • 1 in 10 working age adults with private insurance also went without a prescription

    (Both stats from study by the Center for Studying Health System Change)

Their PMPY costs were $912 including specialty. $812 excluding specialty.

78.1% of their members take a prescription medication.

Their population had 13.6 Rxs PMPY.

Members aged 60 years and older used 2.6x as many Rxs as the younger members.

I was surprised that they claim that a 1% increase in generic fill rate produces a 2% savings for their clients. This is double what CVS Caremark claims. I always thought it was between 0.75% and 1.5%. Is their pricing different or is there something else that generates this increased savings per percentage?

The average annual member cost was $178.40 (PMPY).

They say the average ingredient cost was $146 for a brand and $26 for a generic. The brand price seems really high to me.

Their generic fill rate was 65.6%.

Members paid 16.6% of brand drug costs and 29.8% of generic drug costs (or 19.6% overall).

They say that 37.4% of all their prescriptions were filled as 90-day Rxs (retail or mail), but they lost me when they broke it down.

What surprised me (and maybe it shouldn’t) is that 7.4% of their clients drug spend is on 3 drugs that have easy savings programs associated with them:

  • Lipitor – split the drug or target it for therapeutic substitution with generic Zocor (simvastatin)
  • Prevacid and Nexium – step therapy for generic Prilosec (omeprazole) or move people to Prilosec OTC

Specialty drugs accounted for 0.5% of total Rxs but 10.9% of total spend.

The average specialty drug was $2,032. [for a 30-day supply I assume]

They provide a few case studies, but they point you to www.walgreenshealth.com/casestudies for more information.

One thing that jumped out for me in one of the case studies was their mention of different copays based on whether a member went to an in-network pharmacy. I wonder if (as a retailer) they have a smaller network or actually used a tiered network design. Most plans (that I’m familiar with) seem to have all (or the majority) of retail pharmacies in the network.

In their end section on the landscape, they mention new combination drugs. I would be very interested in their opinion on these…should they be covered? Are they a waste of money?

Finally, at the end, I looked at the methodology. A few things caught my eye:

  • They excluded managed care clients. Why? Wouldn’t they be the most aggressive?
  • They excluded Medicare Part D clients. (which is consistent with Express Scripts and CVS Caremark)
  • They excluded clients with a custom formulary. Again, why?

They use a discounted AWP to calculate total cost, but they don’t tell what the discounted rate is.

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