Archive | April, 2014

CVS Caremark 2013 Drug Trend Report (Insights 2014)

The CVS Caremark publication Insights 2014: Advancing The Science Of Pharmacy Care came out the other day. They took a different approach than the detailed trend report which Express Scripts put out.  Their document is more of a white paper about “7 Sure Things”.

The 7 Sure Things are to help you know what to do with your pharmacy benefit and cover:

  1. Prescription trend is on the rise.
  2. Generics have peaked…and you’re going to feel the difference.
  3. Specialty drives trend.  But do you know how much?
  4. Price is King…Not much of a surprise there.
  5. Money matters to members.  Cost share does influence behavior.
  6. Adherence is the answer.  No one said it was going to be easy.
  7. Past performance is no guarantee of future results.

If you’re managing a pharmacy program and you’re surprised by any of these, I would suggest you look for another job.

So, let’s drill down into the report to see what it shows us:

  • Their trend numbers were:

o   0.8% for traditional (non-specialty) drugs

o   15.6% for specialty drugs (down from 18.3% in 2012)

o   3.8% overall

  • While utilization was up 2.1%, the primary driver was price which increased 8.2%.  These factors were mitigated by a 6.0% change in mix.

o   They hint at an interesting question of whether utilization is growing due to an improving economy.  (correlation or causality?)

CVS Caremark Drug Trend 2013

  • Their GDR (generic dispensing rate) was 81.4% in 2013.  (I’d love their perspective on a maximum GDR since they say it’s peaked.)
  • I like the chart below which shows trend with and without generics coming to market.

CVS Caremark DTR 2013 -trend wo generics.jpg

  • Of course, specialty continues to be the real story in all the PBM reports.

CVS Caremark DTR 2013 -specialty.jpg

  • They claim that 53% of total specialty medication costs were paid under the medical benefit in 2012 which is in-line with most projections.  (While they give some perspective on what to do here, this would be one thing I would have liked to see broken out in more detail as this is a critical area for PBMs which hasn’t been cracked yet.)
  • They share the AWP trend broken out below and give some crazy examples of AWP price inflation (e.g., 573% for clomipramine) with some explanation for why this happens.

CVS Caremark DTR 2013 -awp trend.jpg

  • Here were their top 10 specialty drug categories.  The top 5 are the same as the CatamaranRx list, but the bottom 5 are in a different order.

CVS Caremark DTR 2013 -top 10 specialty.jpg

  • A scary statistic (in isolation) is that over the past 5 years patient out-of-pocket costs for prescriptions have climbed 250%.  (But, I think their percentage of cost share has stayed the same.  It would be interesting to show this in real dollars and compare this to both price and wage inflation just to hammer home the point.)
  • They talk about CDHPs (consumer driven health plans) and how that is impacting utilization and cost.  (These are often high deductible plans where consumers pay out of pocket until they reach a certain amount…which often really makes the point in early January to consumers.  And, can lead to dissatisfaction when that prescription that was $30 in December is now $350 in January.)
  • They talk about adherence, and they certainly have continued to publish a lot of studies in this space.  (They also know have Dr. Will Shrank on their staff full-time after working with him for years.  I think very highly of Will as one of the best adherence researchers in the country.)
  • They give a real high level mention of some of their new efforts around adherence:

o   Simpler labels

o   Synchronizing refill dates

o   Reminder devices

o   Digital / mobile tools

  • They also provide this nice summary of how costs go up and where the savings come from.  (Of course, the challenge is in drug classes other than these three and getting clients to give you any credit for the productivity savings and also netting out the program costs.)

CVS Caremark DTR 2013 - adherence value.jpg

  • On a scary note, they predict that Rx trends may jump back into the double digits for the next 4 years.

At the end, they give 5 sure strategies that clients should do.

  1. Double down on generics.  (To me, this means – step therapies, formularies, setting copays right, mandatory generic programs, and generic substitution programs.)
  2. Look across benefits at specialty.  (This is a key one as I mentioned above.  You need to think through how specialty drugs are filled and billed under medical.)
  3. Tackle price.  (They are focused on distribution channel here, but I’d also think about copay levels, plan design, and value-based programs.)
  4. Be strategic about cost share.  (They are focused on how cost share affects adherence which is important, but only one component of an adherence strategy.)
  5. Keep the big picture in mind.  (They allude to it here, but I think this is a key point that ultimately it’s about outcomes and prevention.)

Overall, this was certainly the easiest “trend report” to read. It tells a clear story which is probably great for the average client and would drive more discussion with your account manager.

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Is Your PBM Really Different?

Every time I talk to a PBM, they want to convince me that they are unique.  And, that is important to me (and should be to you).  If they are simply driving generics, getting network discounts, and filling mail and specialty scripts, they’re clearly in a commodity space.  It’s a race to the bottom, and they’re fighting very large companies – Express Scripts, CVS Caremark, and CatamaranRx.  And, none of those companies are standing still.  Of course, the other PBMs that are part of United Healthcare, Humana, and Kaiser are all looking at how they leverage the care assets and broader solution which they can bring to the client.  (And, I’d put Prime Therapeutics somewhere in the middle based on their ownership by the Blues.)

But, as I’ve seen, value isn’t just about cost. That maybe one leg of the stool, but you need to improve outcomes and the consumer experience (i.e., The Triple Aim).  With that in mind, I created a checklist of what I want to know to see if a PBM is really different.

  1. Engagement – What channels do you use to engage the consumer? How do you integrate those channels? What percentage of members engage with you when you outreach to them?  What is your A-B testing strategy?  What consumer insights can you share with me?  How do you measure engagement (e.g., PAM score)?  What is your segmentation approach?  Do you have someone in charge of the consumer experience?  Can you show me your customer journey maps?
  2. Digital – What is your digital strategy? What percentage of your members have downloaded your app? How often do they use it? Why do they use it? How long do they keep it on their phone? What value do they get from it?  How are you using other channels?  Are you using social media with a purpose or just trying everything (see new whitepaper on digital transformation)?  Where do you members congregate online?  How does this vary by age, gender, condition, number of Rxs, etc.?  Does your involvement make a difference in engagement, outcomes, adherence?
  3. Innovation – What’s your biggest innovation?  Are you making money off it?  How does it help you sell?  How does it help your customers to differentiate themselves?  Do you have a budget?  Resources?  Is it just an ivory tower exercise?  How do you sustain it?  How are you using crowdsourcing?  Are you working with any VC firms or incubators to develop new ideas?  What percentage of ideas come from your clients?  From your employees?  What’s your innovation funnel look like?  How many ideas die after a pilot?  Are you able to scale pilots that are successful?
  4. Big Data – What types of data do you get – medical, lab, EMR, patient reported, device? Do you buy data? How do you integrate this data? Do you have predictive models? How are they used? Do you have published studies on the results?  What insights have you gained from the data?  How have you integrated the data into your solutions?  How do you move things from data to insights to action?
  5. Integration – What type of integration do you have – with POS systems and retailers, with physicians and practice management systems, with providers and EMRs, with mobile solutions, with remote monitoring companies?  How do you create a simplified consumer experience across the care continuum?  Are you working with wellness and disease management companies?  Are you coordinating care for complex patients?  Do you provide support for cancer survivors?  How do you work with pallative care companies?  How do you support the family or the caregivers?
  6. Partnerships – Who are your partners?  How does 1+1=3?  What’s unique about the relationship?  How do customers benefit by your relationship?  How do consumers benefit?  How do providers and pharmacies benefit?
  7. Physician Strategy – How do you work with physicians?  What data do you give them about their patients?  What insights do you give them?  Do they just see you as a block or have you found a positive way to collaborate?  What do you do to influence physician’s prescribing habits?  How are you working with physicians to address adherence?  How are you using your data and predictive models to integrate them into providers evidence-based medicine algorithms?
  8. Outcomes – What programs do you offer to clients and consumers that are focused on an outcome that may reduce Rx utilization?  How do you work with dieticians or social workers?  What percentage of your members have a PDC of greater than 80%?  How do you track lab values and clinical values versus just an Rx count?  What are you doing to reduce readmissions?  How are you impacting all of the STARS measures (not just the pharmacy ones)?
  9. Pharma – How are you working with pharma?  Are you helping them to extend “beyond the pill”?  How early do you get involved in their pipeline?  For complex conditions, are you helping them to demonstrate outcomes?  Are you looking at how to collaborate with key medications – e.g., oncology?  Have you looked at how to blend care with prior auth with Rx for conditions like obesity?
  10. Payment – What’s your approach to transparency?  Is it just pass-through pricing?  Do you do risk based pricing?  How?  How do you contract with pharma?  Have you worked directly with any ACOs?  Have you taken risk?

This isn’t new…I’ve been talking about this for years.  Here’s my whitepaper on this from 3 years ago.

And, here’s a presentation that I’ve given on this topic at several conferences.

2013 CatamaranRx Drug Trend Report

I just finished reading the 2013 CatamaranRx Drug Trend Report (2014 Informed Trends: Moments of Opportunity) and wanted to share some of the things that caught my eye. (BTW – CatamaranRx was formed by the merger of SXC and CatalystRx.)

One of the early comments in the document caught my eye. While simple, it is still so true in healthcare.

“Bringing consistency through a national perspective on best practices, a “local” understanding of how health care is practiced and deep insights at the individual level, to promote the very best outcomes.”

CatamaranRx Trend

  • They did a good job of tackling the impact of healthcare reform on the PBM marketplace and why this creates more opportunities.

“The looming pharmacy demand is also driving the healthcare market toward expanded cost containment and coordinated care measures. Industry estimates are projecting more than 30 million new PBM customers as a result of the ACA. This influx of new customers will stimulate creative cost management paradigms and entice new entrants into the PBM sector.”

  • 50% of the new drugs approved by the FDA in 2013 were specialty drugs.  (reiterating the fact that specialty is really the focus of the PBM today in terms of opportunity to influence trend)
  • 30% of the new drugs approved were oncology drugs.  (similar to years past)
  • Orphan drugs without competition were 2.6x more expensive than orphan drugs with competition.  (not too surprising)
  • They point out that no true biosimilar has been approved in the US (which I didn’t realize).  They also point out that international experience is that biosimilars will save 10-15% not the 40% projected by the CBO.
  • They have nice clean charts around price inflation (deflation) for brand and generic drugs.

2013 CatamaranRx Brand Rxs

2013 CatamaranRx Generic Rxs

  • The average cost of a specialty drug rose to $2,860 in their book-of-business.
  • The top 10 specialty drug classes represent 86% of specialty drug spend.

2013 CatamaranRx Top Specialty Classes

  • The report talks about medication adherence using PDC (proportion of days covered).  They show some good adherence rates in key classes (which always brings up questions about methodology).

o   Over what time period?

o   Is this all members prescribed an Rx?

o   Is this all members with one Rx?

o   What is the percentage of members with over 80% PDC (versus the average PDC)?

o   (Note: These are the same questions for every PBM that shows you adherence numbers.)

  • Here’s their forecast for the next few years in terms of trend.

2013 CatamaranRx Trend Forecast

  • They are projecting a generic fill rate of as high as 90% by the end of 2016!
  • I like that they break out their highly managed clients to show they got an overall trend of -0.1% even though they had higher specialty trend driven by oncology.  They shared a list of key things that those clients were doing:

o   Member risk scoring and personalized interventions.

o   Tailored clinical programs, including step therapy, quantity limits and prior authorization.

o   Aggressive management of controlled drugs to reduce misuse and abuse.

o   Formulary management tailored to address client-specific, high-cost medication classes.

o   Exclusive specialty through BriovaRx, a high-touch, patient-centric model.

o   Plan designs with copay differentials that promote cost-effective choices.

o   Multi-channel communications that engage members in their healthcare.

  • I was excited to see them dedicate a whole section talking about engagement.

o   The need for the right message.

o   The need for targeting algorithms.

o   The need to vary channel based on preference.

  • They share some details on their hospital discharge program which sounds right from a PBM perspective – focused on medication reconciliation and adherence.  My key question would be understanding if they address the other risks of re-admission while they have the patient on the phone (i.e., treating the patient not the Rx and not the disease).
  • I haven’t heard as much about MTM lately so it was nice to see them talk about it and see some results which seem really good.

2013 CatamaranRx MTM

Two miscellaneous comments here:

  1. This seems to be a much improved document than the one I reviewed years ago from SXC.
  2. My only challenge with the format was that it prints the two pages on one page in the PDF (but that could be user error).

Comparing the PBM Drug Trends – Corrected

This is the “exciting” time of year when the PBM Drug Trend Reports come out.  With the exception of last year, I’ve reviewed them every year.  I reviewed the 2013 Express Scripts Drug Trend Report the other day, and I’ll try to do both the CVS Caremark and the CatamaranRx reports this week.  The only one I’m still waiting to see is the Prime Therapeutics report.  And, as far as I know, there aren’t any other PBMs that publish reports annually.  (but please correct me if I’m wrong)

I’ll reiterate several points:

  • The methodologies used by each PBM can and may vary.  Therefore, these are not necessarily perfect comparisons.
  • I would question whether trend is the right metric in isolation to view the PBM.  (more to come in another post on PBM differentiation)
  • The client mix by PBM does matter (see chart below from the CVS Caremark report this year which shows the differences by client type).

CVS Caremark Drug Trend 2013

Here are the summaries from the 3 Drug Trend Reports showing the trend in PMPM costs based on traditional categories, specialty medications, and an overall trend.

PBM Drug Trend Comparisons 2013

Express Scripts 2013 Drug Trend Report

I always enjoy reviewing the PBM Drug Trend Reports.  Even though these past two years I’ve been focused more on the care management side of healthcare, I continue to see these two paths colliding in interesting ways in the near future. 

Here’s my big takeaways from the report some of which you can get in their Executive Summary

(I’d also encourage you to look at Adam Fein’s review…where he unfortunately beat me to the punch again.)

  • Overall trend was 5.4% which they did a nice job of breaking out according to different lines of business.
    ImageImageImage
  • They also showed the breakout of trend comparing specialty drug trend versus traditional oral solid medications. 

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  • Specialty trend was up 14.1% based on a 2.5% increase in utilization and an 11.6% increase in unit cost.
  • A key point is that specialty now makes up 27.7% of the total drug spend for a payer (and that doesn’t even count the ~50% of specialty drugs billed under the medical benefit).
  • Diabetes was the standout category within traditional drug classes with increased utilization and price increases.  [Which isn’t surprising to those of us working on the clinical side that see huge innovation and investment in the diabetes area – Omada Health, Telcare, and Welldoc (for example).]
    Image
  • While they make a key point with data that member cost share is going down and actual out-of-pocket costs are only going up marginally, I think it ignores the reality that consumers are feeling the pain of out-of-pocket spending more especially with all the High Deductible plans out there.
    Image
  • They do reinforce their previous messaging around waste and also introduce their Health Decision ScienceTM approach.  (I personally would have liked to see more on this.  How is the blending of Consumerology and the Therapeutic Resource Centers impacting utilization, adherence, waste, clinical outcomes, patient satisfaction, or other key metrics?)
  • As always, you can dig into their forecasts by drug class.  I choose cancer as one area to look at.  (While this is focused on the basics, I would have loved more about what’s going on around cancer.  How are genetic tests impacting use?  What about survivorship?  How do Centers of Excellence affect outcomes, drug selection, pricing, and adherence?)
  • On top of being able to drill down on Medicare and Medicaid, you can also look at a Worker’s Compensation specific version of the drug trends.  This is interesting since that business is different than the traditional PBM market and is an area that Express Scripts has gone aggressively after in recent years. 
  • One thing I couldn’t find in the document (which is hard to read in the current format) is the average number of Rxs PMPM or PMPY which is just a good stat that I personally track. 
  • One note I will offer on methodology is the definition of specialty drugs.  This could lead to some differences between PBMs as we try to compare their trend numbers.  Here’s the definition Express Scripts offers:

“Specialty medications include injectable and noninjectable drugs that are typically used to treat chronic, complex conditions and may have one or more of the following qualities: frequent dosing adjustments or intensive clinical monitoring; intensive patient training and compliance assistance; limited distribution; and specialized handling or administration. – See more at: http://lab.express-scripts.com/drug-trend-report/appendix/methodology#sthash.dhJhFIZs.dpuf” 

 

#mHealth and Innovation – 2 Recent Reports

We all know that healthcare is clearly one of the darlings in the market right now.  One doesn’t have to look any further than these stories:

You can see companies building innovation teams and innovation labs within healthcare.  You see lots of new entrants trying to figure out how contribute in this space (e.g., Qualcomm Life).  But, some of these just become ivory towers where they pontificate and put out cool ideas.  Others disappear because they can never be commercialized.  Others fall into the “fast fail” bucket of companies, and only a portion of those actually innovate well.

Of course, it begs the question of “What is innovation?”  Is it:

  • Something completely new
  • Something re-engineered
  • The same thing delivered differently
  • Combining of multiple things (i.e., product with services)
  • Solving old problems with new technology

With that in mind, I was reading two reports which I thought I’d share with some initial reactions.

The Boston Consulting Group report “Fulfilling the Promise of mHealth Through Business Model Innovation”.

This is a nice report, but it’s a little too high level for me.  It has some great frameworks about what to do and some nice graphics, but it’s not operationally practical (although that may not have been the purpose).  Here’s a few things I highlighted:

  • “Mobile Health – The use of mobile applications and devices to deliver medical information, access or record data, or provide clinical services – has the potential to revolutionize patient care.”  [good definition]
  • “The gap between the current market size and five-year projections is significant.”  [so is it a warranted gap or will it get closed…I think it will be a challenge to meet expectations.]
  • Their big example of success is Welldoc’s BlueStar “mobile prescription therapy”.  [it’s an interesting product with some interesting studies, but I’m not sold yet…will the Rx process work for a device?  Can they justify their price?  Will buyers do more than pilot?]
  • They hold out 3 barriers – entrenched behaviors, reluctance to pay, and fragmented infrastructure.  [I would agree but how do I work through these…they provide some thoughts.]
  • They talk about creating a “must-have app” that would consolidate multiple offerings into a single solution.  [I don’t even think this silver bullet approach should be considered…It won’t happen.]
  • They seem to fall into the traditional trap that people other than the payers and employers will fund these programs (telcos, pharma, device companies).  [Everyone wants that, but I think that’s the wrong framework.]
  • They talk about an option of creating and charging a premium for mHealth offerings because some of them “deliver objectively better outcomes or lower costs compared with traditional health-care offerings”.  [Really?  That’s great news, but I wouldn’t consider that a fact.  I’d say we’re seeing some promising studies.]
  • They talk about “an orchestrated ecosystem” and integration of data.  [This would have been a perfect time to highlight what Vladic is doing or what Dossia is doing.]

There were some things missing that I personally would have called out.

  • What about learnings from prior models like electronic prescribing?
  • What about things like EMR integration and the difficulties there?
  • What about the issue of privacy and security?
  • What about the fact that people abandon devices and apps very quickly?
  • What about learnings from gamification or incentive management?
  • What about prescribing apps to patients? (like Happtique or IMS)
  • What about the whole issue of FDA approval of apps and devices?
  • What about what the large companies are doing – Aetna, Cigna, CVS, Walgreens, WalMart?  I think understanding their view of this market is so critical.

Triple Tree report “Connected Health”. 

It starts with a great tag line from IBM – “Does Your Kid Have Better Technology Than Your Business?”  They reference Steve Case’s framework from a presentation he made (see below):

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What I liked about this report is that it’s based on lots of real world examples.  (It’s still not operationally helpful, but these are investors not consultants so it met my expectation.)  They certainly could have gone deeper to explain why certain companies they highlight got acquired such as Diversinet, Epocrates, BodyMedia, CardioCom, Healthagen, Vitality, and ConsultADoc.  But, if I look at their list of companies, I see a lot of the innovative companies that I would have on my list – Proteus Digital Health, Healthrageous, iTriage, TelaDoc, Telcare, Eviti, Change Healthcare, and Asthmapolis.  (I know Healthrageous shut down – see postmortem – but I think they had some great vision.)

I also think they’re list of major inhibitors to growth was very believable:

  • Physician adoption
  • ROI
  • Regulatory hurdles
  • Security and governance
  • Lack of standards

The report shares an interesting stat that 45% of the companies that applied for their rewards were led by MDs in 2009 while it’s only 21% now.  To me that shows the movement of IT and business executives into the healthcare space.

Triple Tree does talk about remote monitoring and CMS which I think is important.  While the Veteran’s Administration was mentioned in the BCG report, I think that the government efforts here and influence was generally overlooked.

Overall, two interesting reports.  Worth a read although I would choose the Triple Tree report over the BCG one if I had time to only read one.

Two other places that I would recommend going if this topic is interesting are:

Why Should Grocery Stores (and Retailers) Be In The Healthcare Business

Short answer = they appear to understand the customer experience.

Obviously some companies like CVS and Walgreens are both retailers and pharmacies.  They are clearly in the healthcare business and with CVS stopping selling cigarettes, they are clearly trying to show their commitment to healthcare.  

Other retailers like Walmart are clearly in the pharmacy business.  They’ve also done lots of different programs around healthcare, and there are always rumors of more.  And, they are also in the grocery business.

Target is an example of a retailer that has gotten into the pharmacy and clinic business and now in the grocery business.

Kroger is a very traditional grocery store company who has had pharmacies (like about 50% of grocery stores) and has made several steps to get into the healthcare space.  

I tee this up because whenever I see the Temkin Experience Ratings I’m always amazed that the grocery chain with the worst experience rating is similar in value to the best healthplan experience.  

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I think by now we all understand that the healthcare experience actually matters…and will matter even more in an exchange world where they have more freedom to find a plan that works for them.  

We’ve  seen some companies focus on this (e.g., Cigna with their Chief Experience Officer who is now the Chief Experience Officer at Prime Therapeutics).  You can see PWC’s report on this and also compare different industries to healthcare.  You can go and visit this deck on 13 great healthcare experiences.  At the end of the day, the healthcare experience is one leg of the Triple Aim and is a key opportunity for differentiation.    


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