Archive | January, 2012

Uping The RxAnte: An Adherence Predictive Model

Those of you that have heard me speak know that I look at this topic of predicting adherence both from an area of fascination along with the eye of a skeptic.  While I love the concept of predicting someone’s adherence and therefore determining how to best support them from an intervention approach, I also believe that the general predictors are pretty straightforward:

  1. Number of medications
  2. Plan design (i.e., cost)
  3. Gender
  4. Health literacy and engagement (see PAM score research)

And, this is a hot topic (see post on FICO adherence score).  You can see my prior posts on some different studies, on the Merck Estimator, and some notes from the NEHI event on this topic.  It generated a good dialogue on Kevin MD’s blog when I talked about paying MD for adherence.

I had a chance to talk with Josh Benner the CEO of RxAnte the other day.  It sounds very interesting, and they have an impressive team assembled.  In general, they’re focused on:

  • Predictive modeling
  • Decision rules
  • Monitoring and managing claims to track adherence
  • Evaluating effectiveness of interventions
  • And creating a learning system

There are definitely some correlations to the work we do at Silverlink Communications around adherence.  We’re helping clients determine a communication strategy that might include call center agents, direct mail, automated calls, e-mail, SMS, mobile, or web solutions.  We’re looking at segmentation and prioritization.  We’re looking at past behavior and messaging.  The goal is how to best spend resources to drive health outcomes from primary adherence to sustaining adherence.  This is a challenge, and we all need to build upon the work that each other is doing to improve in this area.  We have a huge problem globally with adherence.

Why People Under 35 Are Stressed

This is a great list from what Beth Braverman calls “The Beaten Generation” looking at what’s happened since 2005:

  • Their home equity has dropped 51%
  • Their net worth is down 55%.
  • Their student debt is up 19%.
  • Unemployment for college grads is up 64%.
  • Their income is down 4.5%
  • 31% more are living with their parents.
  • The birth rate is down 7.1%.
  • 22% less think they’ll be able to retire by age 65.

And, we wonder why they’re pessimistic…

Stressed Out Workers Spend 2X On Healthcare

Are you stressed out? In today’s economy, many people are. Whether it’s being a caregiver, your job, or other concerns (like just paying the bills), have you ever thought about how much that costs you?

According to some data shared by Money Magazine, here are some examples of stress related ailments and their average annual costs:

  • Obesity – $2,600-$4,900
  • Back Pain – $1,300
  • Insomnia – $200-$1,200
  • Hypertension – $1,100
  • Teeth Grinding – $200-$1,100

That’s real money!

Some of their suggestions (other than going on a long vacation):

  1. Take advantage of the EAP (Employee Assistance Program) that your company might offer.
  2. Use the wellness programs that your employer might offer (since 74% of them do offer something).
  3. Go see a therapist and look into CBT (cognitive behavioral therapy).
  4. Workout.
  5. Take a break from e-mail (or your smartphone and constant Facebook updates).
  6. Stop multi-tasking.
  7. Meditate.

(Beat Stress For Less by Kate Ashford)

Be Happier To Be Healthier

Since happiness is correlated with better health, I thought this article in Money Magazine was relevant in the hints it gave about becoming happier. (Jan/Feb 2012 article by Donna Rosato)

  1. Spend a little a lot of the time. (multiple, small indulgences are better than less, large indulgences)
  2. Free yourself from credit card debt. (less satisfied in your relationship when have debt)
  3. Focus on having a rainy day fund. (best predictor of financial satisfaction)
  4. Find a new job. (if you’re not happy)
  5. Give more to charity.
  6. Use your vacation days. (even anticipation of a vacation increases happiness)

Here are a few more articles on happiness and health:

The New Post-Recession Consumer

I’m always fascinated by segmentation, and I think understanding how market events like the Great Recession have changed the fundamentals of the game is important. In November 2011, Money Magazine shared some data from a survey they did. Here are some of the results.

  • 53% of Americans aren’t sure their kids will better off then they are.
  • 67% are worked their quality of life will suffer in retirement.
  • 80% say they’re eating at home more.
  • 75% say time with family is more important than ever.

“Big periods of economic upheaval can define a generation. Not so much because of the depth of this recession, but because of its prolonged nature, it will have lasting impact.” Paul Flatters, Managing Director of Trajectory Partnership. (How The Economy Changed You by Dan Kadlec)

  • 85% spend more time looking for deals before they buy. (hence the couponing craze)
  • 57% are building an emergency fund.
  • 51% are pessimistic about the US economy in the next 12 months.
  • 61% are pessimistic about government officials spurring growth.

I don’t know about you, but I see a ton of nuggets in here about positioning generic drugs, preventative health, adherence, mail order, and many other cost savings actions in healthcare.

52% Of Patients Who Had A Second Opinion Had Changes

I don’t know about you, but this seems a little surprising to me. We know that it’s hard to figure everything out in the 8-15 minutes we have with the physician so perhaps a deep focus on key claims and key procedures is a necessary process. But, I think many of us worry that our physician will think we don’t trust them.

“Someone who has your best interest in mind will welcome that conversation.” Is what Dr. Jeffrey Cain, president-elect of the American Academy of Family Physicians says about telling your physician that you’re getting a second opinion

So, according to an article in Money Magazine, here’s what you do:

  1. Check your coverage. You may be covered if you get a second opinion. If not, you might be able to appeal that decision.
  2. Find the right doctor. The article suggests getting multiple names and finding MDs that work at different hospitals (to avoid group think).
  3. Get your documents together. Make sure the physician has all the documentation before you go or bring it with you.

(Get More From A Second Opinion by Anne Lee)

Why Use Facial Recognition Software At The Pharmacy…Retention?

I’m sure this is a little bit out there in terms of some of my ideas, but I like it. While a little Orwellian, I was talking with a retailer the other day about how to maximize the experience at the counter between the patient and the pharmacist. At a small independent pharmacy, the owner (pharmacist) probably knows a lot of this patients (customers) by name. On the other hand, this is a lot harder at the larger chains which are busier and with multiple pharmacists working different shifts.

I was thinking about how technology could address this. What if you had a camera that was monitoring customers as they came in the store (which most probably have today in terms of security cameras)? Could that be augmented by adding facial recognition software (which I have no idea how expensive it is)? Then, the pharmacy could know that George was in the store and tap into a CRM system that could remind Nancy the pharmacist that I have a dog and a fear of needles (for example). When I got to the counter, Nancy could greet me by name and ask about my dog. It would certainly make me feel welcome and should create some stickiness (although maybe less if I knew it was technology enabled).

Pharmacy Needs A Neuromarketing Study

I was reading this article in Fast Company about neuromarketing with a focus on the CEO of NeuroFocus. Companies like PepsiCo, Intel, CBS, ESPN, and eBay have used them and many others are trying work in this area. But, I’ve never heard of a healthcare company doing anything in this space. I’ve talked about this before in my article about the book Buyology. It’s fascinating, and the mobile tool that NeuroFocus has created could create new ways of capturing data.

One interesting example he talked about was the expression of a person on a poster (for example). If the expression is too easy to decipher, we simply move on…BUT if it’s hard to decipher, it causes us to pause and think.

He also talks about always putting images on the left hand side of the screen and words on the right. (Seems applicable to direct mail and maybe my next slide presentation.)

Another example is that the brain loves curves not sharp edges.

Given the shifting pharmacy marketplace, I would think this is a study that the industry needs. The PBMs should better understand what the consumer thinks about when they hear the word mail order. Manufacturers should understand the reaction to brand names or copay cards. The retailers should think about how brand equity plays into choice. There are endless opportunities here. (A business opportunity perhaps!)

(They Have Hacked Your Brain by Adam Penenberg)

Percentage You Pay For Prescriptions In Medicare

I thought this was a nice summary which Money shared based on CMS data. It shows you what percentage of cost for your prescriptions you pay based on total dollars spent on prescriptions during that calendar year.

  • For the first $320, you pay 100% of the costs.
  • For the next $2,610, you pay 25% of the costs.
  • For the next $3,727 (the donut hole), you pay 50% of the costs for the brand drugs and 86% of the costs of the generic drugs.
  • For everything above $6,658, you pay 5% of the costs.

Why A Big Mac And Coke Is Your Diet Meal

In an interesting study and other work, there appears to be a health halo effect which happens. We’re all familiar with Jared (from Subway) and his amazing weight loss journey. But, this leads us to perceive that the sandwich’s there are all low calorie…even though a lot of us order the 12″ sandwich. In one study, people eating at Subway had 56% more calories than people ordering at McDonalds. SCARY!

You add that to the perception that many people have that a diet soda is better than a regular soda, and you have an interesting problem. Of course, the best problem is to pick healthier foods and understand their calories. Of course, even when restaurants began sharing how many calories were in their meals that simply got people to consume more calories not less. And, a USA Today article points out that the listed calories don’t always match the actual calories (and not in a good way).

Good luck figuring it out.

Wellpoint Quote On Drug Copay Cards

This topic seems to be heating back up based on several posts on Adam Fein’s blog (Lipitor, adherence) and an article in Drug Benefit News where this quote appeared along with an AIS blog post questioning the PBM’s dislike of copay cards (from the same article that Adam mentioned).

“Copay offset programs [offered by brand-name drugmakers to compete with generics] mitigate the effectiveness of our tiered benefit design programs and [are] going against what we’re trying to accomplish for our members’ health and for employers.”

— Peter Clagett, vice president of pharmaceutical strategies and PBM oversight for WellPoint, Inc.


Customer Centric Segmentation

An article by this name appeared in the September 2011 PharmaVOICE magazine. I think it reinforced several things that are part of my evangelizing when I’m out on the road talking to healthcare companies. I pulled out a few comments and quotes that reinforce many of the things that I think about.

  • “Pharmaceutical companies need to develop tools and techniques that touch patients and physicians as they move along the disease journey together.” Derek Kealey
  • “Segmentation creates the ability to treat consumers as people, not transactions.” (article author)
  • “Insights into breast cancer patients reveal that adherence has little to do with age or stage of the disease and everything to do with how a person copes with the condition.” Jeff Burkel
  • “The key to successful messaging isn’t so much about finding target customers; it’s about using search marketing to make it easy for them to find you and ideally start a relationship.” Wendy White
  • “The industry’s business model has to morph from being about a pill to being about information and services around the pill.” Dr. Joseph Kvedar
  • “The big change will be moving beyond the siloed view and looking across all channels and understanding how every outlet can work together holistically.” Derek Kealey
  • Pharma needs to focus on the user experience and understand what the consumer needs and how to service it up to them. (paraphrased from Wendy Blackburn)

Adam Fein From Last Year’s PCMA Event On Copay Cards

Just revisiting what Adam Fein talked about last year as I work on my slides for this year. 

How Does Pharma Measure ROI?

I found this chart from Cutting Edge Information a good summary of what metrics pharma uses in measuring ROI.  (This was in the most recent PharmaVOICE magazine.)  I would assume copay cards address most of these with a 4:1-6:1 ROI being quoted in the Visante study by PCMA

Walgreens Interview As Follow-up To Their White Paper

As anyone who follows the pharmacy industry knows (and now millions of consumers), Walgreens and Express Scripts have had an ongoing contract dispute since mid-2011.  Most of us expected this to get resolved by the end of the year to minimize patient disruption, but it didn’t.

With that in mind, Walgreens has published several white papers to help articulate the results of their employer survey data and to help plans quantify the value of keeping Walgreens in the network.  As this is a fascinating case study that will someday make a great Harvard case study, I reached out to Walgreens to get their thoughts on a few points.

Thanks to their PR team, I was able to get responses from Michael Polzin, their VP of Corporate Communications, to my questions.

Consumers are always resistant to change.  After the initial disruption and assuming you eventually reach terms with Express Scripts, how will you get your consumers to return to Walgreens’ pharmacy?  Is the retail pharmacy experience able to be significantly differentiated?  How are you doing this today?

As we’ve previously stated, we are now moving on without being part of the Express Scripts network. While we are open to any fair and competitive offer from them, we also are fine with continuing to operate our business without Express Scripts.

We intend to retain patients affected by this situation over time by reaching out on both a consumer level and a business-to-business level. To date, more than 120 health plans, employers and other Express Scripts clients have informed us that they have either changed pharmacy benefit managers (PBMs) or taken steps consistent with their contracts to maintain access to Walgreens pharmacies in 2012.  That represents 10 million of the 88 million Express Scripts prescriptions we filled last year. We’re also in active negotiations with many health plans and employers to provide access to Walgreens in their networks as soon as their contracts allow. In addition to those 10 million prescriptions already retained, we also expect to retain many Medicare Part D patients who previously were in an Express Scripts-managed Part D plan and moved to a different plan during last fall’s open enrollment period. We will get more detail on those numbers when CMS announces the results of the open enrollment period later this month.

On the consumer level, they are very receptive to looking at options to continue using Walgreens pharmacies whenever possible. They want to retain their choice of pharmacy and are exercising that ability as best they can. For example, we’ve had great response this month with our Prescription Savings Club (PSC) promotion. The PSC offers savings on more than 8,000 brand name and all generic medications. During the month of January, you can get an annual membership in this program for just $5 ($10 for a family).  We have seen more than 250,000 patients sign up for the club just since Jan. 1, and we continue to have record sign-up days. The interest we’ve seen in the club has been extraordinary.

As for differentiating the retail pharmacy experience, that is exactly what we are doing through our new Well Experience store format, which has piloted so far in about 20 Chicago area stores and the entire Indianapolis market. The pharmacy, health and wellness area of these stores are truly a game changer. The pharmacist is more accessible by bringing them out from behind the pharmacy counter to a desk in front of the pharmacy. As a result, patient interactions are higher than our pharmacists have ever experienced. The format also allows for tighter integration between our Take Care Clinic nurse practitioners and pharmacists to create a real community health corner.

We’ve had many CEOs of major health plans and large employers tour these Well Experience stores, and their No. 1 comment is, “This is exactly what we need. How fast can you make this happen?”

The white papers are good summaries for the consultants. How are you taking your message to other constituents – consumers, MDs, Wall Street?

Our best ambassadors to consumers are our pharmacy staffs. They are the ones with the trusted relationship with our customers and are able to have individual, face-to-face conversations with them. They’ve done a tremendous job educating our patients, and that’s why we’re seeing so much interest in the PSC and have patients finding other ways to continue using Walgreens, such as using their spouse’s coverage, if available.

The same is true with physicians. Our pharmacy staff work with them every day and help them find the best options for their patients including generic alternatives that can be very competitive through the PSC card with a 90-day supply compared with the patient’s program under Express Scripts.

As for Wall Street, we’ve been quite active speaking at analyst conferences, addressing the issue on our earnings conference calls and at our recent annual shareholders meeting. The analysts also have found our white papers and other SEC filings to be helpful in understanding the situation.

Ultimately, payers/employers care about cost.  If a PBM creates savings for them thru a limited network, can you summarize what they lose by not including Walgreens and how that transfers to hard dollar savings?  Are Walgreens consumers more engaged with their health?  Are they more satisfied with their healthcare?

Our research demonstrates the importance of Walgreens presence in a payers’ network in addition to the cost factor. A Walgreens proprietary survey conducted in December of 823 executives and managers who are key decision makers for pharmacy benefit decisions or provide input found that 82 percent of employers said that they would not exclude Walgreens for less than 5 percent savings on their total pharmacy spend. Sixty percent of employers would not exclude Walgreens for less than 10 percent savings, and 21 percent would not exclude Walgreens from their network regardless of the amount of savings. These findings on employer attitudes are consistent with recent research published by several leading equity research analysts. Clearly, employers value having Walgreens as a pharmacy option for their employees, but Express Scripts wants to take that choice away.

Now, add to that the small variation in costs among pharmacies. We believe that the vast majority of pharmacies, including Walgreens, receive reimbursements per prescription that fall within a narrow band, typically within less than 5 percent of one another. Therefore, excluding any pharmacy with our 20 percent market share from a 5 percent pricing band can only result in savings on the order of 1 percent or less. And that doesn’t take into consideration the additional savings Walgreens can provide through our leading generic dispensing rate or the 7 percent savings that payers can see by adding a 90-day refill option at our retail pharmacies.

It’s also important to point out that during negotiations, Walgreens offered to hold rates for a new contract flat and did not seek an increase in rates. The response from Express Scripts was to insist on being able to unilaterally define contract terms, such as what does and does not constitute a brand and generic drug. Express Scripts also proposed to slash Walgreens reimbursement rates to levels below the industry average cost to provide each prescription.

Walgreens is focused on helping payers with their total health care spend, not just the 10-12 percent of their health care costs that are spent on prescription drugs. While a patient with asthma can lower drug spend by not getting refills on their medication, the resulting emergency room visit that could result will be much more expensive overall for the payer. So we are focused on expanding the pharmacist’s role among health care providers to lower overall medical costs rather than focusing on drug spend alone.

Adherence is a big issue these days especially in Medicare where it is one of the key Star measures for PDP. One of the key value points in the paper is about adherence. How has Walgreens improved patient adherence and are you collaborating with payers to do this?

Walgreens pharmacies provide many medication adherence services, counseling and other assistance that lowers medical costs by improving outcomes. These include monthly adherence calls to inform patients about critical upcoming blood tests that are required to continue therapy; next-day home delivery for medications; assistance programs to help patients minimize risk resulting from economic circumstances that may negatively impact therapy compliance; and alerts for missed doses, at-risk patient behavior or serious adverse side effects that are communicated to a prescribing physician. We also offer 90-day supplies of medication, further promoting adherence. Walgreens pharmacists have consistently demonstrated increased adherence to chronic medicines for high-risk conditions for the populations that we serve. For example, for patients in one study who filled their statin and thyroid medications at community pharmacies and who consulted with a pharmacist, a significant improvement in first refill rates resulted (from 55.7 percent to 70.4 percent) after the adherence program was implemented.

While CVS has opted to own a PBM, Walgreens has sold their PBM.  Has this experience with Express Scripts changed the way you interact and contract with PBMs?  Do you think this will have broader implications on the industry?

I think it has helped us tremendously in terms of building closer relationships with other PBMs and payers. We’re moving forward with partners such as Catalyst Rx, Prime Therapeutics and SXC Health Solutions, and health plans such as Coventry and Humana. All of us see this as an opportunity to create a differentiated offering during the upcoming selling season.

Have any PBMs stepped up to work more strategically with you to create a differentiated offering to take advantage of this disruption during the 2012 selling season?

See answer above.

What’s next?  As Walgreens looks to the future and focuses on creating new value, how are you embracing key changes in the industry around health reform and technology innovation?

See question 1 and our development of the Well Experience store and pharmacy format.

Speaking at the upcoming PCMA Event

I just got added to the agenda for the February PCMA event so look me up if you’ll be there.  I’ve spoken on the topic of copay cards a few times for AIS in the past.  Since then, there have been a few significant events:

  • The Pfizer Lipitor strategy and push around a copay card.
  • The PCMA study on the impact of copay cards.
  • CVS Caremark’s changes to their formulary of which some were attributed to the existence of copay cards.

As always, I welcome comments, articles, suggestions, or data to support this discussion.  It is certainly one where there is limited data or facts.  Thanks.

“Twight” (Twitter Fight) Between $ESRX and $WAG

This is either a massive validation of the perceived value of Twitter or a crazy distraction, but either way, it’s interesting to those of us who study the industry and/or study marketing and communications. 

As part of the ongoing dispute between Walgreens and Express Scripts, Twitter has become one of the latest tools.  (see June post and September post)  In an effort to sway public opinion and thereby pressure Express Scripts and its clients, Walgreens turned to bloggers and Twitter to push their messaging…but these were in some case paid comments which was surprising.  They already have strong messaging in their IChooseWalgreens website and whitepapers on the Value of Walgreens.  I also thought they were demonstrating some success in converting people to their discount program which was part of their overall growth strategy shared at their shareholders meeting

After Walgreens (with almost 84,000 followers) created a promoted hashtag of #ILoveWalgreens, Express Scripts (with 1,645 followers) countered back with several Tweets about the dispute (see below).  I guess the question is whether with millions affected and decisions made by the businesses and not consumers…does this forum matter?  But, journalists and analysts follow them so it’s important to keep the messaging up.  (Other articles on this are here, here, and here.)

Conveniently, I found this infographic on how Twitter is changing healthcare.  At the same time, this is an interesting fight because it’s a blend of B2C and B2B crossing paths.  More to come since I’m sure this fight is long from over.

United HealthGroup At CES – Two Videos

This is Dr. Crounse from Microsoft talking about worldwide healthcare and using technology.

This is Dr. Reed Tuckson from United Healthcare talking about creating cost effective healthcare leveraging technology.

The Value of the Family Dinner

Studies have shown that kids who eat dinner with their families do better in school, feel more socially connected to their parents, have better peer relationships, and are less likely to try drugs and alcohol.

Wow! That quote from Grace Freedman at certainly makes a compelling case. The article in Spirit magazine (Jan 2012) goes on to say that according to a 2010 Pew Research poll only about half of families make dinner a daily ritual and roughly 20% eat together only occasionally or never.

It certainly is a challenge with long workdays, commutes, travel, and kid activities.

Who’s the 1% in healthcare?

As we all have known, healthcare costs are driven by the minority. According to the Agency for Healthcare Research and Quality, the top 1% account for 22% of healthcare spending in the US or about $90,000 per year. (USA Today article)

So, what are the characteristics of these people:
– White, non-Hispanic
– Female
– In poor health
– Elderly
– Users of publicly funded healthcare

Only about 20% of the high cost consumers stay in that bucket for two straight years…which I think is good. But, I guess you have to look at what percentage die during that period since a lot of costs are concentrated at the end-of-life.

Obviously it’s critical to develop solutions to engage and manage these patients earlier in the process. As data gets better, our predictive algorithms around conditions will improve and we’ll be able to intervene and prevent or delay cost in the system. The key of course is doing that in a way that fully engages the healthcare team and the caregivers.

Only 2 of the top 25 “Companies for Leaders” from Healthcare

I don’t know about you but given the focus on healthcare and the percentage of our GDP that it consumes I had hoped this would be higher. 

According to Fortune’s rankings (published 11/21/11), the top 5 companies were:

  1. IBM
  2. General Mills
  3. P&G
  4. Colgate-Palmolive
  5. McDonald’s

Eli Lilly was ranked 12th, and UnitedHealth Group was ranked 20th.

Medicare and Medicaid Social Media Use For Healthcare

As people look at ways to engage the Medicare and Medicaid populations, I continue to talk about the facts from the Pew research that shows how these demographics use technology.  I was glad to see some research from PWC that also reinforced this.  As you can see in the three charts below, the Medicare population uses technology similar to the average respondent while the Medicaid population uses social media for healthcare more. 

Mouthguards For Non-Contact Sports

I wore a mouthguard when I played lacrosse, but I’m not sure I could see myself putting in a mouthguard for running or playing tennis or golf.  Under Armour is pushing a series of mouthguards for any sport now (see brochure).  But, from a purely academic perspective, it’s interesting.

The material says that:

  • It improves airflow.
  • It reduces stress.
  • It improves strength.
  • It reduces lactic build-up.
  • It improves response time.
  • It reduces cortisol production.

It just makes me think that you’ll create this casual athlete with:

  • A mouthguard.
  • Nose strips to improve breathing.
  • Dark compression socks pulled up to the knee (perhaps with no bottom to allow for barefoot running).
  • Compression arm sleeves.
  • Heart rate monitor with GPS.
  • Googles to protect the eyes.
  • Magnetic band for strength and balance.

You get my point.  All of these things offer either some type of protection and some improvement in results, but it can go too far (IMHO).  Although on the flipside, the competitor inside me is anxious to try them out.

Why We Need Recess At Work

More exercise = higher GPAs

More activities = better grades especially in math, English, and reading

Exercise = greater productivity and less sick days

Physical activity = increased blood flow to the brain fueling memory, attention, and creativity

Physical activity = hormones that improve mood and suppress stress

Any more information needed?

I was reading an article about research into why recess is important for kids in school.  I couldn’t agree more, but it got me wondering about the need for running clubs and other fitness breaks within the corporate work day.  I’m pretty sure  working through lunch and eating at your desk doesn’t help.  On the flipside, I’m not sure if fuzzball tables and other “dotcom” activities meet the activity level.

Food for thought…and of course this doesn’t account for potential hard dollar savings associated with better health and lower healthcare costs.

Presenting at PBMI in February

I am excited about the opportunity to present at PBMI in February.  I hope many of you will be there.  If you want to meet up, send me a quick note at gvanantwerp at mac dot com.  Thanks.

Here’s the description of my presentation:

The PBM industry continues to consolidate through mergers and acquisitions.  At the same time, new PBMs and niche PBMs continue to grow.  While the majority of the green space is gone, there is increasing focus on the individual market through exchanges and the Managed Medicaid market.  But, this maturing of the market has forced PBMs to look at more organic growth opportunities also.  How do you retain business?  How do you innovate?  How can you increase profitability per member?  With a few large market dynamics playing out in 2012, we’ll begin to look at what the future might hold and what we can learn from the past.  It is an interesting time for all PBMs, pharmacies, and manufacturers as they embrace the role of pharmacy in improving overall health outcomes.   

PBMs As A Short-Term Story…I’m Doubtful

While I certainly think the PBM market is going to evolve with increased use of generics, the Express Scripts acquisition of Medco, and the growth in specialty pharmacy, I have to disagree with Matthew Herper from Forbes and Richard Evans of Sovereign & Sector who talk about them as a short-term solution that will struggle (see point 5 in this article). 

I think Mark Merritt from PCMA did a nice job of talking about this when I interviewed him last year about how PBMs have continued to change and will continue to evolve over time.  I also think that Per Lofberg’s comments from earlier today reflect this.  There is still a lot of opportunity around specialty spend.  Certainly, the market dynamics put pressure on the traditional margin areas of generics and mail order for oral solids, but these companies are here to stay and I believe valuations will stabilize even if not at the highs of 5 years ago.  

And, while in general specialty management has been a stagnant space for innovation over the past 5 years, I expect that to change.  I think we’ll see more collaboration with manufacturers both around REMS programs and outcomes-based contracting.  I think we’ll see continued evolution in the area of genetic testing and clinical support.  I think we’ll see the traditional utilization management programs and formulary management programs show value with the growth of competitive products and bio-similars.  I also believe that understanding how to help patients manage their condition and start to take a broader role in overall condition management will and should create PBM opportunities.

Interview with Per Lofberg (CVS Caremark) on the Future of the PBM

After sharing my forecasts about the PBM industry for 2012, I reached out to several people to get their perspective. One person for which I have a lot of respect is Per Lofberg. Per’s now the President of CVS Caremark’s PBM and has an impressive background at companies like Medco, BCG, and Generation Health. Everyone who’s ever worked for him has nothing but great things to say.

Given the change we all expect to see in the industry, I was glad that Per agreed to participate. Here are his answers to some of my questions:

1. 2012 is shaping up to be an exciting year in the PBM industry. Do you think this will finally be the year that limited retail networks take off?

Payers are always looking for new savings opportunities, and limited retail networks provide another avenue to increase savings without compromising access or quality. I have always believed it is quite possible to service large nationwide customers with retail networks that are smaller than the large 60,000 plus networks that are so common today. The current debate in the marketplace will only draw further attention to the topic of limited retail networks, which may result in more PBM clients, including clients who have not previously considered a limited network, engaging in a dialogue about this approach. As a result, I believe that during the 2013 selling season, benefit consultants will be quite focused during the RFP process on understanding the types of savings payers can realize with smaller networks. PBMs like CVS Caremark will need to be able to address this topic clearly with our clients and prospects so they can accurately weigh the benefits and impact of narrowing their network and consider how best to manage the natural disruption factor that will occur.

2. As the generic wave passes in the next few years, how do you expect PBMs to differentiate themselves going forward?

We can’t discount the importance of taking advantage of the large number of blockbuster drugs that will be going generic in the next few years. Being able to deliver strategies designed to drive generic utilization and work with clients to ensure that they appropriately move members to safe and cost-effective generic alternatives should become a best practice standard across the industry. Increasing GDRs will no longer be differentiators, but rather will be expected by clients as a basic PBM offering. As a result, during the generic tidal wave, PBMs need to sit tight, refine their standard formularies and perfect the implementation of programs that drive generic utilization.

As PBMs continue to drive GDR, those that are also successful at offering clinical solutions that support adherence, effectively manage the growing costs related to specialty pharmacy and helping clients manage the intersection of pharmacy and medical benefits to reduce waste and improve health are the ones that will stand out from the competition. Now and in the future, a best in class PBM is one that can accomplish all the basics that used to define differentiation (e.g., GDR, MDR) effortlessly, while bringing value to their clients through an integrated approach to managing the patient’s pharmacy care across the entire spectrum of care. The hallmark of a best in class PBM will be one that effectively addresses access, quality and cost for their clients.

Another consideration for PBMs will be around stricter formulary management strategies to counter increasing, and increasingly frequent, price hikes by pharmaceutical manufacturers. Brand manufacturers are using two basic strategies to protect their market share and we are seeing increased activity as generics erode the profitability of drug blockbusters. Unfortunately, these strategies – brand co-pay coupons and high and frequent price increases — ultimately raise costs and undermine the cost-controls used by employers and health plans to effectively manage their pharmacy spend. To help our clients manage pharmacy costs in this environment, PBMs will need to construct clinically appropriate formularies that provide our clients with options to manage sky-rocketing drug costs without compromising access or outcomes. CVS Caremark is combating price increases by pharmaceutical manufacturers by tightening what is offered on our recommended prescription formulary. As you know formularies are the list of approved drugs that an insurer or employer makes available to beneficiaries and, up until now, the formularies have been quite broad, including most FDA approved drugs, so that doctors and their patients have choice. However, physicians and pharmacists have long recognized that many drugs within a therapeutic class are essentially equivalent, and a “narrow” formulary can be comprehensive while also providing for substantial cost savings.

3. The role of the pharmacist continues to evolve with vaccines and their involvement in more patient management. Given your unique set of assets within the industry, how do you see CVS Caremark leveraging your POS resources to strengthen your focus on clinical outcomes and partner with clients?

As a pharmacy innovation company, we will continue to further develop our unique clinical offerings that leverage the pharmacist interaction and intervention in order to improve the health of our PBM members and drive costs savings for our clients. Our flagship products, Maintenance Choice and Pharmacy Advisor, developed to build on the member’s relationship with their pharmacist, are gaining increasing traction in the marketplace. These programs leverage the clinical expertise and insights of our PBM business along with the broad reach and face-to-face engagement in our retail business to deliver innovative solutions that are unmatched in the marketplace today.

Moving forward we will continue to build on this model by finding ways to further expand member access to these programs. For example, in 2012 we are expanding on our successful Pharmacy Advisor program, originally launched to increase adherence and close gaps in care for diabetes patients, to encompass patients with chronic cardiovascular conditions who are at risk of becoming non-adherent. We are also enhancing Maintenance Choice to make our integrated capability more broadly available to the CVS Caremark book of business and easier for members to use. In addition to enhancing our existing programs we are also continuing to innovate as a PBM by piloting new programs, including one we are piloting in 2012 that leverages pharmacist counseling to better coordinate drug treatment for patients recently discharged from hospitals in order to reduce rehospitalization rates and finding ways to fully integrate our Specialty Pharmacy business so clients and members get the full benefit of the entire CVS Caremark enterprise—PBM, CVS/pharmacy and MinuteClinic.

4. Medicare has pushed quality to the forefront with some of the new Star ratings. Additionally, some PBMs are looking at outcomes-based contracting with pharma. How do you see the marketplace engaging and leveraging pay-for-performance structures within the PBM industry?

Pay-for-performance based on outcomes is an extension of the guarantees that most PBMs negotiate with their clients today. These guarantees are in place to specify a level of service that clients should expect from their PBM with regards to such activities as response time on calls to the customer care center and performance for measurements such as a minimum GDR or MDR to be achieved within a specified time period. Adding in a level of clinical accountability is in line with how the PBM industry is evolving from one focused on channel/access and pure pharmacy cost savings through generics to one that encompasses health outcomes, adherence and the resulting overall health care cost savings associated with these measures. As PBMs get even better at implementing clinical programs and managing adherence across the spectrum of care, I would anticipate we will see more requests by our clients for contracts that either reward or penalize PBMs for their performance in these areas.

5. There is lots of talk about the value of carve-in versus carve-out pharmacy and the integration of medical, pharmacy, and ultimately lab data to provide improved management and identification of at-risk patients. Given your relationship with Aetna and ActiveHealth, how do you see CVS Caremark leveraging these assets even when they work in a carve-out relationship to help clients?

In our current partnerships with health plan clients, our main objective is to find ways to smoothly integrate our pharmacy management activities with the health plan’s focus on solid medical management. This integrated approach—one that balances traditional utilization management with programs to improve adherence, close gaps in care, improve outcomes and reduce negative health events – can deliver better results than a carve-out model that simply focuses on minimizing pharmacy spend. As I mentioned earlier when talking about how PBMs will differentiate their offerings in the future, a best in class PBM delivers on more than increasing GDR or moving members to mail order, it is about managing the whole patient and delivering results that address access, quality and cost. Being able to integrate a full view of the patient and their health works because it makes pharmacy care an integral component of overall health management for the member


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2011 Blog Overview and Press Hits Update!

2011 was a great year for the blog with over 120,000 visits and 365 new posts (conveniently averaging 1 per day).  You can see the top posts here.  The blog led to several new opportunities at Silverlink, and it generated numerous press opportunities. 

The blog now has over 400 people who get an e-mail every time a new post is published.  The content is then syndicated to the 930 people who follow me on Twitter and to my 1252 contacts in LinkedIn.  I’m happy with this for something I do in my spare time.

In August, I shared my press hits YTD which numbered 25 times.  Since then, I’ve had 27 more which are listed below:

  1. Dec 26th issue of Health Plan Week about Express Scripts and Walgreens
  2. Jan 1st issue of Managed Healthcare Executive on limited networks
  3. Dec 2nd issue of Drug Benefit News on Lipitor
  4. Dec 2nd issue of Drug Benefit News on Prime Therapeutics Retail MTM solution
  5. Dec 2nd issue of Drug Benefit News on PBM Deal Making
  6. November Frost & Sullivan newsletter on consumer engagement
  7. PBMI Report
  8. Nov 11th issue of Drug Benefit News on Pfizer’s Lipitor strategy
  9. Nov 11th issue of Drug Benefit News on the PBMI Report
  10. Oct 28th issue of Drug Benefit News on OptumRx
  11. Oct 28th issue of Drug Benefit News on CVS Caremark case study
  12. AIS webinar on copay cards / coupons
  13. AIS webinar on PBM outsourcing
  14. Oct 7th issue of Drug Benefit News on Outcomes-Based Contracting
  15. PCMA Smart Brief on Oct 5th regarding PBM disclosure of profits
  16. Sept 23rd issue of Drug Benefit News on Mobile Apps
  17. Sept 23rd issue of Drug Benefit News on Anthem study
  18. Drug Channels mention of my post on the Prime Therapeutics Trend Report
  19. PCMA Smart Brief on Aug 11th re: NY bill
  20. Sept 9th issue of Drug Benefit News on the Prime Therapeutics Trend Report
  21. Sept 9th issue of Drug Benefit News on the proposed Express Scripts acquisition of Medco
  22. Sept 9th issue of Drug Benefit News on Generics
  23. Aug 22nd issue of Health Plan Week on Generics
  24. Aug 24th Reuters article on the proposed Express Scripts acquisition of Medco
  25. Aug 19th mention in Health Reform Watch
  26. Aug 19th issue of Drug Benefit News on Part D
  27. Presentation with Aetna at the Care Continuum Alliance on engaging the hard to engage
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