March 2, 2012 
Last week, I gave a presentation at the PBMI conference in Phoenix. My presentation was on Organic and M&A Growth within the industry. Of course, Express Scripts’ proposed acquisition of Medco and their dispute with Walgreens were front and center since no discussion could be had without discussing these two topics.
But, the industry is about more than that. I began my talk by addressing some of the topics that PBMs are discussing today from specialty to copay cards to integration of medical and pharmacy data. I leveraged my interview with Mark Merritt about the adaptability of the industry as key to the industries growth. I went on to talk about how the shifts in the industry were creating more opportunities for other players from OptumRx to CatalystRx and even causing some of the captive PBMs to look more aggressively at business in other areas.
And while everyone waits to see what happens with Walgreens, the reality is that Medicare Part D has shown that limited networks can work and that consumers will respond positively to them. Additionally, as many have predicted, consolidation will continue in the industry given the challenges that some of the fundamental traditional metrics are under. Mail order utilization has dropped for the first year ever. More than 50% of all 90-day prescriptions are now filled at retail. Generics continue to grow which is decreasing rebates and allowing for more cash business. The shining star of the industry is specialty.
The three big areas of opportunity are around consumer engagement leveraging data and new technologies (i.e., mobile), adherence (especially relative to Medicare Star Ratings), and new growth in the areas of Medicare and Medicaid.
Here’s a copy of my presentation:
Enabling Healthy Decisions 
As a patient that is forced to use mail order for specialty meds, I know first hand the stress that comes with the monthly order- I always speak with a different person, some seem competent, others not so much. There is always the apprehension of what will happen if an order is mishandled. I’ve had meds delayed in transit so when they reach me the ice packs are completely defrosted- I was told they ‘should’ be fine, but how can this be if the required temps are 36f-46f, and the meds arrive at room temperature? Because my pbm won’t allow having extra medication on hand I don’t have much choice but to take it and hope for the best. I resent being interrogated each time I order, I’m asked how much medication I have on hand, did I miss a dose, what day of the week do I take it. It is degrading to be questioned as if I’m an addict, by a complete stranger, who doesn’t have any kind of medical degree, and doesn’t care in the slightest about me personally. It is bad enough to deal with an incurable, potentially crippling disease for the rest of my life, but then to have to jump through hoops to obtain and retain what for me is a life changing medication is ridiculous. These meds come with a long list of nasty side effects so it’s not as if I want to take an extra shot ‘just for kicks’.
So why on earth would I ever switch the rest of my meds to mail order? When I go to my pharmacy they know me by name, I’m treated like a human being, I get to keep my dignity. I don’t have to worry about medication sitting in a freezing or baking enviroment for who knows how long. I don’t have to worry that my meds will be ‘lost in transit’ and by the time the pbm decides to reship them I may have been without meds for weeks.
This is the kind of nonsense that real people have to deal with. If you want to know about the horrors of mail order, just visit one of the numerous consumer complaint sites for pbms like Medco or Express Scripts.
Can you talk a bit about the effect of co-pay cards on increased brand use. What is the cost to benefit ratio for a drug like lipitor?
The reality is that the data is not clear on copay card impact. Use of copay cards started to ramp up in 2009. Since then, 3rd tier utilization has gone down and generic utilization has gone up. Overall, they are supposed to generate a 4:1-6:1 ROI, but talking with several people, they could all quote examples where the copay card program offered no ROI to the manufacturer.
Are you able to comment about the drop in mail order prescriptions? I read your presentation but did not know if you gave an oral explanation for the decrease.
Good question Jarrod. I explain the drop in mail order for several reasons:
1. There has been a rapid growth in retail 90-day benefit design.
2. The increase in generic utilization actually works against mail order since the savings are less and people can get some generics for $4/$10 at retail.
3. The economy has also hurt the number of people that can pay upfront for 90-days of medication even if they save.