Archive | November, 2013

Pharmacy Satisfaction – Retail Beats Mail

With the new JD Powers survey, the gap between retail pharmacy satisfaction and mail order has widened. The average mail order satisfaction score was 797 for mail versus 837 (out of 1,000) for retail.

I think one key comment from Scott Hawkins, director of the healthcare practice at JD powers was:

“One of the key things we’ve seen in the data is that if someone is feels compelled to use a mail-order [pharmacy] their satisfaction score is going to be lower than someone who chooses to use it on their own.” (From Nov 2013 Employee Benefits News article by Andrea Davis)

If I was still at a PBM, I’d push to see the results broken out both ways so I could compare apples to apples the then say the drag was from clients choosing mandatory mail.

The rankings for mail order were:

Kaiser – 868
Humana – 845
Walgreens Mail – 812
OptumRx – 798
Prime Therapeutics – 794
Express Scripts – 783
Aetna – 778
Cigna – 771
Caremark – 760

The two I find the most interesting are Prime Therapeutics and OptumRx as both of them have moved their mail order services in house in the past few years and seem to be doing well with it. Aetna has outsourced their solution to Caremark and Cigna just recently outsourced their mail order to Catamaran which wasn’t on the list (but may be in the survey).

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If E-Prescribing Doesn’t Have All The Data…Is It Helpful?

This is an interesting dilemma.  At this point, I think everyone is pro e-prescribing even if it’s simply for the benefit of reducing errors.  But, I think the original intent of the solutions were to do a lot more than reduce errors.

The hope was to improve adherence (which I think may have been too lofty).  The idea was that e-prescribing would reduce the abandonment rate at the pharmacy.  I’m not sure picking up a prescription is the same as taking a prescription.  And, taking a prescription once isn’t the same as staying adherent over time.

Another hope was that the use of e-prescribing would drive formulary compliance and increase generic utilization.  The idea was that putting this information in the hands of the prescriber would allow them to make more real-time decisions that were aligned with the consumer’s interests (i.e., lower out-of-pocket spend).  The latest report doesn’t seem to support this at all.  It also echos my prior posts about whether e-prescribing was aligned with pharma at all.

Fewer than half (47.5%) of the 200 PCPs polled said they have access to formulary information when e-prescribing, and fewer than a third said they have access to prior authorization (31.0%) or co-pay (29.5%) information. Among physicians with formulary information access, that information was available 61.1% of the time and was said to be accurate 68.6% of the time.

Physicians with an EMR (54.1%) were more likely to have access to formulary information than physicians without an EMR (29.6%). And differences were seen depending on the EHR vendor: Allscripts physicians (32.2%) were less likely to have access to this information than “All Other” software suppliers (60.5%), Epic physicians (62.5%) and eClinicalWorks (68.8%). 

Another big effort that e-prescribing and integration with EMR was going to have was to push utilization management (UM) to the POP (point of prescribing) rather than having the pharmacy and the PBM dealing with it.  I never really thought this would work.  If the information isn’t there or they don’t trust the information, the prescriber isn’t going to want to deal with this.  It’s already work that they let their staff handle and isn’t something they want to deal with during the patient encounter.

While e-prescribing is definitely here to stay and becoming the norm, the question is whether it’s creating simply a typed “clean” Rx to transmit electronically or whether it’s actually an intelligent process which will enable better care.

Given multiple studies and surveys recently about transparency in healthcare billing and the general push with Health Reform to drive to outcomes, I’m not sure the “dumb” system process can be a sustainable value proposition.

Three Recent Specialty Pharmacy Reports

Last week, I noticed three recent reports that have come out about specialty pharmacy.  I haven’t had a chance to really dig in to them , but I thought I’d pull out a few of the PR highlights and share the report links here.

The first report is from the Center for Healthcare Supply Chain Research and Health Strategies Group — “Specialty Pharmacy: Implications of Alternative Distribution Models” — which looks at how providers are using buy-and-bill and white bagging.

Karen J. Ribler, Executive Vice President and COO of the Center, notes, “Distributing specialty pharmaceuticals is complex; curbing costs is just one of the many facets of providing patient-centered healthcare. Site-of-care and day-of administration dosage requirements revealed themselves as determining factors for supporting the use of one method over another. A critical look at unintended consequences leads to our conclusion that Buy and Bill is, for the time being, the preferred model for practitioners of medium to large oncology clinics, but that could change as specialty treatments evolve.”

CVS Caremark just released their report Specialty Trend Management – Where To Go Next.  In there, they say:

Infusions are increasingly being done in a hospital setting where the costs for both the drug and its administration can be the highest of all potential sites of care.  For example, costs for a standard dose of a drug for rheumatoid arthritis can vary from $3,259 for the drug and $148 for administration when infused at the patient’s home to $5,393 for the drug and $425 for the administration when infused as an outpatient procedure at a hospital. In fact, the hospital setting is typically the least cost-effective site of care for infusions. (source)

As I’ve been doing lots of work lately in identifying and segmenting the population for Population Health Management, I found this chart interesting:

Image

http://lab.express-scripts.com/prescription-drug-trends/specialty-drug-spending-to-jump-67-by-2015/

And, last month, Prime Therapeutics released a report on Specialty Pharmacy which I blogged about.

Obamacare Will Be A Great Case Study

When I think back to business school, I can only imagine in a few years that Obamacare will be a great case study for business school students to use.  It begs lots of questions that really test someone’s decision making ability.

  1. You know healthcare is a huge issue for the country.  How do you respond?
  2. You create a law that divides the country.  How do you get people to focus on the benefits of the law?
  3. You create a law that no one understands and has to go to the Supreme Court.  How do you defend it?
  4. You have to negotiate with lots of powerful groups to get everyone on board.  How do you manage that?
  5. You decide to go with a web based strategy for sales and distribution.  How do you develop and test that?
  6. You find out early that your web portal has functionality and security risks.  What do you do about it?
  7. You have a failed launch and need to fix it.  How do you do that?
  8. You made a promise to people about keeping their healthcare which everyone in the industry knew wasn’t true.  What do you do now?
  9. You make changes on the fly that affect your partners and will affect other long-term components of the plan.  Do you sacrifice for the long-term for short-term political gain?
  10. You have a chance to admit the complexities of the healthcare system and move forward.  Do you take it or stick to your guns?

I could go on, but it is fascinating.  I think these last few weeks of decisions have been crazy.  I hope there’s some group of healthcare people that really understand the current US system advising him, but it doesn’t seem like it.  Or, the administration is deliberately making choices to shift blame.

Allowing health insurers to extend individual plans that they’ve already cancelled is crazy.  It’s driving mass confusion with consumers.  It’s lighting up the call centers.  And, ultimately, if those healthy consumers go back to the plans, the underwriting for the exchanges will be garbage meaning that they health insurers will lose their shirts.  This will then mean that they underwrite with even higher prices for 2015 which will create a vicious cycle.

Like I’ve said before, this started with good intentions, but it has been a series of bad decisions.  Some things had to happen.  Nothing happens without some failures, but at some point, we need better decisions to be made.

Express Scripts Excludes 48 Drugs On 2014 Formulary

Is anyone really surprised here?  We saw CVS Caremark make some changes a few years ago that caught everyone’s attention.  (You can see a good list of 2013 and 2014 removals and options here for CVS Caremark.)  This year, it’s Express Scripts (ESRX) who’s caught the attention of the press.

Why do this?  I think Dr. Steve Miller did a great job of explaining it in a recent interview.  The most interesting thing to come out of this was the possible link to copay cards.

Pharmalot: Where to from here?

Miller: We obviously have a long-term strategy. This has sent a loud message to the marketplace that we have got to preserve the benefit for patients and plan sponsors and do things to rein in costs. As there are more products in the marketplace that are interchangeable, we’ll do more to seek the best value for our members. This is just the beginning of a multi-step process over the next several years.

Will there be more to come?  Of course.  The PBMs have to make a significant show of lowering the number of formulary drugs especially in the oral solid (traditional Rx) space to make the point to the pharmaceutical manufacturers that they control market access.  This is critical for them to create more opportunities in the specialty Rx space around rebates.  (Here’s the 2014 Express Scripts exclusion list)

Additionally, this is a low risk strategy for several reasons:

  • The disruption is minimal.  While 780,000 people sounds like a lot, it’s still just 2.6% of the population covered by these formularies.  The savings the employer will generate per disrupted member will pay for the extra customer service needed.  (Harsh reality to some people…I know)
  • As I’ve discussed before, the margins are in specialty pharmacy and mail order generics not in branded drugs which represent less than 20% of all drugs.  Therefore, this is a good place to make a stand.
    • From an old JP Morgan analysis from 2011, Lisa Gill estimated the PBM profits to be (all in 30-day equivalents):
      • $1.69 retail brand drug
      • $2.03 mail brand drug
      • $3.00 retail generic drug
      • $13.00 mail generic drug
  • This is based on a clinical review by an independent P&T committee.  Therefore, this is aligned with the health reform focus on outcomes and value.

New/Old Accusations About PBMs And Their Margins

PBMs (or Pharmacy Benefit Managers) are big business.  Just look at a few of the names and their place on the Fortune 500 list:

Not surprisingly, none of those are non-profits.  There is real money being made here.  It’s all part of the mark-up game in healthcare.  The question of course is does the money being made justify the profits.  For example, I’m happy to pay my banker lots of money as long as he’s earning me more than he’s making (and significantly more).

This is a complicated question.  (see past posts on What’s Next, Why People Don’t Save With Mail, and Growing Mail Order)  I’ve also presented on this topic several times in the past pointing out that the model needs to change, and re-iterating the fact that PBMs made a mistake by putting all their profits in the generic space.  I’ve always said that disintermediation would happen by focusing on generics at mail which is where all the money was at Express Script (8 years ago).  [People remind me that some of this has changed and is different across PBMs.]

The new Fortune article by Katherine Eban called “Painful Prescription” certains shows a dark story.  It focuses exactly on one of these scenarios which is the gap between acquisition cost and client cost.  The article talks about paying $26.91 for a drug but selling it to the client at $92.53.  I’m always reminded of the fact that at one time we used to buy fluoxetine (generic Prozac) for about $0.015 per pill.  On the flipside, we had brand drugs that we bought for more than we got reimbursed and lost money.  It was strange model.

So, here’s my questions:

  1. Do you want transparency?  If so, there are lots of “transparent PBMs” and many larger PBMs will do transparent deals.  You can also follow the Caterpillar model.  (Don’t forget that pharmacy represents less than 20% of your total healthcare spend so you can find yourself down the rabbit hole here trying to shave 2% of spend on 20% or 0.4% of your costs with a lot of effort.)
  2. Are you focused on anamolies like this one or average profits per Rx?
  3. Do you have the right plan design in place?
  4. Do you have a MAC (maximum allowable cost) list both at retail and mail order for generics?
  5. Are you getting the rebates and any admin fees from pharma for your claims passed through to you at the PBM?
  6. If you pay the PBM on a per Rx basis (i.e., no spread allowed), what are they doing to keep your drug costs down year over year (i.e., they have no more incentive to push down on suppliers)?
  7. Are you benchmarking your pricing?  Look at reports from places like PBMI.  For many smaller clients, I often wonder if the savings they find you is worth the costs.

I’m sure there’s more since I’ve been out of the industry for a few years, but while I don’t intend to be the defender of the industry, I do like to bring some balance to the conversation.

Can You Keep Your Prior Health Insurance – No

“That means that no matter how we reform health care, we will keep this promise to the American people: If you like your doctor, you will be able to keep your doctor, period. If you like your health plan, you’ll be able to keep your health plan, period. No one will take it away, no matter what.” President Obama, June 15, 2009, from a speech to the AMA

You know what…that was a great campaign soundbite. It might have even been what he wanted. But, it’s not reality. They made a mistake. Move on. Everyone in healthcare knows the industry needs reform. I think the administration would be better off to admit they were wrong and focus on the benefits of reform and stop trying to defend what they’ve said.

Instead, they continue to try to justify this statement – see whitehouse blog. Stop kidding yourself or get out of the ivory tower. It’s like trying to build a website without any experience. It makes no sense.

As I said the other day, just like healthcare.gov isn’t the same as Health Reform (PPACA).  The same goes for this statement.  Healthcare needs to change.  There are some good things here, but healthcare is complicated and the administration made some mistakes.

At the end of the day, I think we have all been surprised at the rate of change especially for big companies:

People are jumping on this opportunity to drop coverage and shift coverage to the exchanges. Someone should have been able to model out all these scenarios years ago. What if this drives lots of companies to lower hours so that people don’t get coverage and they don’t get penalized. That would be a disaster. We don’t want a society where everyone’s balancing 2-3 jobs just to get to full-time hours. (Of course, some people do it just to pay the bills.)

On the flipside, the idea of creating better healthcare coverage for individuals was a good one, but I’m not sure why anyone thought this would be price neutral. In establishing a baseline offering which everyone has to have (e.g., maternity benefits), this is going to drive up costs. By requiring pricing for 2015 before anyone has experience with 2014 is just going to require companies to underwrite a lot of risk and drive premiums up.

As a good summary read of issues, read 31 Things We Learned in HealthCare.gov’s First 31 Days.

Should Physicians Be Taught To Stop Trying?

With several recent articles about $100,000 plus cancer drugs, I was reminded of a conversation I’ve had with several oncologists. We were discussing how to use advanced illness counseling from companies like Vital Decisions to help people and their families manage through a terminal diagnosis.

On the one hand, that seems like a conversation that a physician could / should have, but I’ve highlighted some research on this before. On the other hand, in a FFS (fee for service) world, there is an incentive to keep doing everything possible regardless of costs and how long it extends life. Will this change in a value based payment model? I’d like to believe it will. There is so much money spent on care in the last few months of life with limited extension of life and questionable impact on quality of life that this may become more relevant.

But, what struck me in my discussions is that the oncologists said that no one ever taught them how to “give up” on the patient. They see success in curing the patient or getting the cancer in remission. Is that success? Is it giving up to stop pumping them full of drugs with minimal value? Is there a rationale price for each day of extended life?

We typical think of healthcare as an endless bowl of funds, but what if it was limited? What if we couldn’t just keep printing money and raising the debt ceiling? Should that $200,000 be spent to get two weeks of life for a 90-year old patient in pain or should it go to feed a family and provide them with medical care for several years?

I’m not sure who wants to make those decisions but I think there will be a day when we need to think differently about some of the healthcare choices we make.

Trajectory Modeling On Adherence By CVS

No one who works with consumers or who studies adherence should too surprised that people are different in how they fill their medications. I think companies are finally getting a better handle on longitudinal member records and ways of studying those patterns to determine how and when to intervene.

Our past behavior is always a great place to learn from about our future behavior but at the same time, people view different drugs and conditions differently. For example, I might be very likely to take my pain medication everyday since it’s a symptomatic condition versus my cholesterol medication since it’s an asymptotic condition. I also may take a different approach yo medications that have significant side effects.

At the same time, these data is well known so the quest for the “best” segmentation approach and behavior change model continues.

With that in mind, I finally got a chance to look at some research from September that researchers at CVS Caremark and Brigham and Women’s Hospital published in the journal Medical Care. They used trajectory modeling to follow statin users for 15 months and came up with six groups:

  • Brief gap in medication use or filled irregularly during the first nine months, but improved during the last six months (11.4 percent)
  • Slowly declining adherence throughout the 15 month period (11.3 percent)
  • Used statins only occasionally across the 15 month study period (15 percent)
  • Rapid decline in statin use after initiation (19.3 percent)
  • Virtually no fills after their initial fill (23.4 percent

They also identified some characteristics associated with adherence:

  • Higher adherence was seen with patients who were older, had higher incomes and held a high school diploma.
  • The highest adherence rates were associated with Medicare Part D clients and people who live in New England.
  • Those with the lowest adherence rates tended to be generally younger, male and less likely to have an initial prescription that provided them with more than a 30-day supply of medication.

Troyen A. Brennan, MD, MPH, Executive Vice President and Chief Medical Officer of CVS Caremark:


“The use of trajectory models could help us more accurately identify patients at risk for medication nonadherence so we can develop and implement targeted interventions to help them stay on their medications for chronic health conditions.”


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