June 28, 2011 
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I’ve had the privilege to hear Guy Kawasaki speak and have read a lot of the stuff he’s written over the years. I haven’t read the new book Enchantment, but these infographics might get me to go out and do that.
I’d love to think about similar graphics which blend his work and the work of David Shore on trust in healthcare…how to you engage and build trust as a healthcare entity!
June 22, 2011 0 Comments
This is an interesting piece with some good data in it. It estimates that 10% of physician visits are for minor healthcare items where an OTC (over-the-counter) drug could be used. It then estimates that if 50% of those unnecessary visits were eliminated we could save $5.2B. It will certainly get some political attention (which it already has).
I have a lot of questions:
On the other hand, if I were a clinic company (think MinuteClinic or TakeCare Clinic), this would be great. It’s proposing to move 26M physician visits to another channel. I think the research believes this all jumps to Dr. Google, but I think it’s more likely that this gets pushed to clinics (and hopefully not to ERs).
June 21, 2011 1 Comment
The impact of sleep on health is an important topic.
Let’s begin with a list of the sleepiest states from CDC/WebMD which I came across. It reports the percentage of adults who report not getting enough sleep:
Some of the facts that I took from the other article I was reading in Experience Life magazine (Dec 2010) were:
Sleep impacts weight because leptin decreases and ghrelin increases when you don’t have enough sleep (2004 study in the Annals of Internal Medicine). These are both hormones that control hunger. Leptin tells the brain when the body has had enough food and ghrelin indicates that our energy reserves are running low.
June 21, 2011 2 Comments
This morning Walgreen’s announced that it could not reach agreement with Express Scripts on their retail network contract. This is a big deal (for both parties) as Walgreens processes approximately 90M Rxs for Express Scripts or approximately $5.3B worth of Rxs.
This has definitely happened before (see CVS Caremark and Walgreens before), but this year’s dispute is different for a few reasons:
As with last year (and year’s prior), I believe this will get resolved, but it creates an arbitrage opportunity for all the PBMs except Express Scripts in the short-term. [In the short-term, Express Scripts gets hurt in the sales cycle with this distraction. If this played out, Walgreens would take the brunt of the real impact by losing significant script volume. Ultimately, it’s a game of chicken with potential bad outcomes for all (as the picture indicates).]
My questions are:
I know one Wall Street analyst who is at Express Scripts tomorrow. That should be an interesting discussion.
If history is any indication, I would expect we’ll see an Express Scripts press release on their perspective by the end of the day.
Ultimately, the big question is whether something like this could be the final event to push the industry into limited / restricted networks (see Walmart post) and get it from the 5-10% of clients that use this today to a more meaningful number.
[FYI – As of right now, ESRX is down 1% and WAG is down almost 6%…buying opportunity?]
June 21, 2011 0 Comments
I was reading Ralph Keeney’s article “Personal Decisions Are the Leading Cause of Death” over the weekend. It’s very interesting. He attributes 1M of the 2.4M deaths in 2000 in the US to personal decisions that we make. And, unfortunately, he says that retrospective analysis would suggest we’re on a bad trend line of increasingly being responsible for a greater percentage of our deaths.
The article points out that the fact that these are personal decisions makes this a manageable issue.
“A personal decision is a situation where an individual can make a choice between two or more alternatives.”
“A premature death resulting from a personal decision is defined to be one where an individual dies sooner than would have been the case if a different choice had been made.”
The premature deaths attributed to personal decisions in the article are:
If you go read the paper, you can see how he breaks down each of these areas.
What I also found very interesting was the breakdown of the percentage of deaths by age group that are attributable to personal decisions. [I honestly expected it to peak earlier, but I think the fact that 80% of the impact is from smoking and weight that it takes time to see that impact.]
“Take control of your own health. Studies show that at least two-thirds of cancer deaths can be prevented by not using tobacco products, maintaining a healthy weight, getting plenty of physical activity, eating health foods, and avoiding the midday sun and protecting the skin with a hat, shirt, and sunscreen.” (Quote from the American Cancer Association)
A key question is whether people feel responsible for their own health. A 2009 survey by Thomson Reuters showed that those with a higher education level had a much stronger sense of that ownership (71.2% for those with a college degree versus 47.5% for those with less than a high school education).
The article made me think of a few things:
Much like Silverlink Communications, many healthcare companies are very focused on consumer engagement. As this article points out, getting consumers to understand the impact of their decisions on their health may be a very effective way of reducing premature deaths. That should also reduce the burden of chronic conditions on our economy.
“Seven chronic diseases…have a total impact on the economy of $1.3 trillion annually. Of this amount, $1.1 trillion represents the cost of lost productivity.” (Milken Institute)
While we typically focus on throwing money or incentives at the issue, this may not always be the answer (see post on the book – Drive). There are many simple interventions to help address health literacy and help consumers understand the need to take action (see post on cured after the first fill). Creating personalized communications that address people’s barriers is a critical success factor for healthcare organizations. There are several critical success factors to consider:
June 20, 2011 2 Comments
I’m not a lawyer, but with the potential repealing of the Maine law regarding PBMs, it’s time to think about this question.
Here’s a definition from USLegal.com:
A fiduciary duty is an obligation to act in the best interest of another party. For instance, a corporation’s board member has a fiduciary duty to the shareholders, a trustee has a fiduciary duty to the trust’s beneficiaries, and an attorney has a fiduciary duty to a client.
A fiduciary obligation exists whenever the relationship with the client involves a special trust, confidence, and reliance on the fiduciary to exercise his discretion or expertise in acting for the client. The fiduciary must knowingly accept that trust and confidence to exercise his expertise and discretion to act on the client’s behalf.
Just looking at this definition, it raises a few eyebrows:
The fiduciary relationship basically makes the PBM into a cost-plus model where profits and costs are know. There are already lots of transparency standards for clients to leverage in designing their PBM contracts.
I struggle to see a comparable fiduciary business relationship out there. Suggestions?
On the second point, the whole PBM model around benefit design and interventions has been set up as consultative where the PBM provides ideas and models for the payer to select from. They don’t get to chose what’s best for them. I’m not sure that the lobbyists for the original plan would want this. If I’m a PBM with a mail order pharmacy, I believe that this is the best model to save money, drive adherence, and avoid errors. So, as a fiduciary, wouldn’t I have to put in a mandatory mail program with mandatory generics lots of utilization management programs and a closed formulary? That’s what’s best financially in most (all cases).
I’m all in favor of disclosure of conflicts of interest. PBMs should explain how they make money to their clients so it’s clearly understood.
In this older post on another blog, a physician talks about physicians having some fiduciary responsibility, but I don’t think this goes far enough. If the physician has a fiduciary responsibility to the patient, wouldn’t they have to disclose their profit based on different choices:
Of course, maybe the issue is that Maine (and others) have tried to use fiduciary to focus on the financial controls around the PBM business model instead of the business practices about helping payers understand their decisions (the legal breakdown on MDs seems more business focused):
When the DC regulation around PBM fiduciary responsibility went to court, it was struck down. Will Maine finally end up in the same bucket? Will others follow?
I guess the question for people to ask is what has happened to Maine’s pharmacy costs in the past few years. Has there been an advantage (or disadvantage) to this law?
June 20, 2011 0 Comments
I found this quick list of facts in HealthLeaders (May 2011) which I thought was worth sharing:
So, what’s the issue here:
Or, I guess the flipside of the coin is that this is ok. My impression has always been that the ER is overused and has lots of inappropriate use.
June 16, 2011 0 Comments
I’ve been reading the magazine PharmaVOICE for the past year or so. I really enjoy it. I occasionally pull a few articles out.
I was reading the March 2011 version on the plane and found a ton of interesting information. I thought I would share some of the nuggets from it:
“We found the degree to which consumers are open to online content from manufacturers surprising, considering the common perception that consumers are generally critical of pharma generated information.” (Manhattan Research Healthcare Marketing Analyst Maureen Malloy)
“When pharma is thought of as a health-services industry, the possibilities for growth in revenue, engagement, personalization, and freedom from pipeline dependency are almost endless.” (Paul Simms, eyeforpharma)
“The industry has to address the consumer population across multiple channels with information that is timely, easy to understand, accurate, and actionable.” (Deborah Schnell, Health Advice Networks)
I shared a lot here to make a point…this is a monthly magazine packed with interesting content. If you’re in this space, you should be reading it.
June 12, 2011 0 Comments
5% of the prescriptions analyzed by CVS Caremark in a study were DAW (or Dispense As Written). Obviously, for SSBs (single-source brands) this doesn’t matter since there isn’t a chemically equivalent generic drug. But, for MSBs (multi-source brands) this can make a difference since the patient is often required to pay significantly more based on either (a) the drug being on the 3rd tier or (b) the plan design requiring the patient to pay more for “chosing” the brand over the chemically equivalent generic.
I guess one easy answer would be to get rid of DAW, but there are NTI (narrow therapeutic index) drugs where DAW is much more relevant or the rare consumer who has some allergy to the fillers in the generic.
So, why does it matter? It mattes because the researchers found that
“chronically ill patients just starting critical therapies were 50% to 60% less likely to fill prescriptions for expensive brand name drugs” (Drug Benefit News, 4/1/11)
June 11, 2011 0 Comments
A report from PhRMA looks at rare diseases and orphan drugs.
An orphan drug is a pharmaceutical agent developed to treat a disease that affects less than 200,000 people in the US.
While individually this may not seem like a big market, it is estimated that 25-30M Americans suffer from a rare disease. And, developing therapies for these unique conditions can allow for price premiums.
At the end of the document, they have some FAQs and suggest some websites. Here’s one FAQ:
How can you find out about clinical research on rare diseases?
There’s a web site that was just set up a few years ago by the federal government. It’s called www.clinicaltrials.gov. It’s important to remember “.gov” because there are some commercial sites that have similar names. Every research project receiving any money from the U.S. government must be listed on this site. It’s a requirement. You can type in the disease name and find all sorts of information about the studies, where they’re being conducted, what is needed to be eligible, and who to contact to learn more about participating. If you don’t have a computer, ask your local librarian to help you search on that web site.
June 11, 2011 0 Comments
You don’t often get to see outrageous pricing examples like the one around KV Pharmaceutical’s Makena product. Specialty pharmacies have been compounding and making a version called 17P for years. 17P sells for around $15 per shot and patients typically take 15-20 injections during pregnancy to help prevent pre-term birth.
“As far as I know, most physicians are using the compounding pharmacies for 17P,” said Dr. George Saade, president of the Society for Maternal-Fetal Medicine. “If we feel there’s no extra advantage of a more costly treatment, then our obligation is to prescribe the less costly treatment … It’s not right to abuse the health care system by prescribing an astronomically more costly medicine when there’s no evidence that it’s better.”
KV Pharmaceuticals came out with a branded version of the compound to create easier access to the drug. They initially priced it at $1,500 but had already dropped it to $590 per shot when an article with the above quote appeared at the beginning of May.
For those of you less familiar with compounding, here’s a statement from an FDA study in 2006:
FDA regards traditional pharmacy compounding as the extemporaneous combining, mixing, or altering of ingredients by a pharmacist in response to a physician’s prescription to create a medication tailored to the specialized medical needs of an individual patient. Traditional compounding typically occurs when an FDA-approved drug is unavailable or a licensed health‑care provider decides that an FDA-approved drug is not appropriate for his or her patient’s medical needs. By definition, pharmacy compounding involves making a new drug for which safety and efficacy have not been demonstrated with the kind of data that FDA requires to approve a new drug. In virtually all cases, FDA regards compounded drugs as unapproved new drugs.
The unapproved status of compounded drugs notwithstanding, FDA has long recognized that traditional pharmacy compounding serves an important public health function. FDA has historically exercised enforcement discretion and generally has not taken enforcement action against pharmacies engaged in traditional compounding. Rather, FDA has directed its enforcement resources toward firms that manufacture large quantities of unapproved new drugs under the guise of traditional compounding, and whose compounding practices result in significant violations of the new drug, adulteration, or misbranding provisions of the FDCA.
Will managed care, managed medicaid, and PBMs aggressively limit the use of Makena or will they leave it to physicians?
June 10, 2011 1 Comment
In the spirit of my “words matter” theme, I found it interesting that the military has stopped using the term “posttraumatic stress disorder” and changed it to “posttraumatic stress” arguing that “disorder” ‘unnecessarily stigmatizes soldier’s natural response to the emotional and violent experience of battle’.
“I drop the d. That word is a dirty word.” General Peter Chiarelli, US Army (Time Magazine, 6/20/11)
June 9, 2011 0 Comments
Here’s another great infographic on healthcare premiums and the cost of care.
June 9, 2011 3 Comments
The idea that local healthcare in a physical setting doesn’t work seems to be the crux of many solutions for leveraging limited resources (MDs) and addressing the geographical pricing differences which exist. Given what we know about engagement and the value of the physical and personal relationship, there should be a better way.
BUT, without trying to solve for that…I thought I would share a few things that I recently saw.
BridgeHealth Medical is a Colorado based company that is focused on domestic medial tourism. We’ve all heard about international medical tourism (i.e., flying someone to India for a surgery) and the savings there. The key (and interesting) question is whether there is some middle ground within the US.
At least according to the brief story I read in Inc. Magazine, they are getting some traction:
I was amazed that the article said that Americans spend $2.1B outside the US today. Will this replace that or will it be a new category of spend to track?
And, it will be interesting to track outcomes here and see whether savings translates to better survival rates or improved quality of life. There will be challenges to the model as I’m sure there have been for international medical tourism.
Cisco on the other hand has rolled out their telemedicine initiative called HealthPresence which uses videoconferencing and high-tech medical equipment to share data. Obviously, telemedicine has been a tool that’s been tried several times over the years with varying levels of success. Can Cisco’s efforts and model finally push this from a fringe technology approach to mainstream?
It’s certainly possible. Timing may be right. We’ve seen some success with AmericanWell’s efforts. The question is how will the consumer respond. Will they appreciate the easier access? Will it impact the caregiver / patient relationship?
Who knows…there is still a lot to learn especially in a country where we’ve been traditionally over-served with our access to healthcare.
June 7, 2011 0 Comments
In my post a few weeks ago, I had four questions which my initial read of Medco’s Drug Trend Report had generated. I just got the answers to them…
Q: ADHD trend continues to increase. With the new DSM-5 proposal, it looks like there will be more teens and adults diagnosed with adult ADD. Do you see this accelerating the trend in this category even more?
A: The proposed changes to the diagnostic criteria for ADHD / ADD in the DSM-V include changing the age of onset limit (on or before age 12, instead of age 7) and lowering the required number of symptoms which effectively will “loosen” the criteria and permit doctors to more easily diagnose the condition. If this indeed takes place, we would expect some further acceleration of the ongoing upward trend in ADHD drug use.
Q: As generics get closer to 80%, the remaining brand drugs will have to try new strategies to sustain utilization. One of the growing tactics is copay coupons or cards. Do you see this as an issue? Are there tactics that you intend to use to address these through POS programs or other programs?
A: Medco believes the best way to manage costs for both patients and payors is through the use of clinical and managed care programs that incentify the use of lower cost alternatives when clinically appropriate.
Q: You talk about clients spending less PMPM on members age 0-18 which seems to run counter to the focus from last year on more, younger patients using maintenance drugs. What do you attribute that drop in spending to?
A: Because the prevalence in the pediatric category is so much lower than that of the adult population utilization/prevalence can trend higher than adults, but spend could be down, especially since there is much heavier use of specialty medications in the adult population. It’s a trend versus spend look.
Q: You bring up biologics. It’s unlikely that biologics will generate large price drops as we’ve seen from generics. What do you estimate will be the savings associated with biologics and will we see therapeutic interchange programs or will you manage the biologics more like a step therapy program?
A: The industry is awaiting the final FDA guidance for approval and possible interchangeability of biosimilars. The estimates are that biosimilar will be priced in the range of 15% to 30% of branded product pricing. And as with generics, it is anticipated as biosimilars become increasing more accepted and completion begins within the biosimilar market itself, saving may increase overtime.
June 7, 2011 0 Comments
Electronic prescribing has been an effort for at least the past decade and significant progress has been made (see Surescripts latest report). That being said, we all know that changing behavior in the office setting is difficult. It has been the bane of many a technology vendor in the healthcare space.
On the one hand, I’m not surprised to see that lots of physicians might apply for an exemption from CMS around electronic prescribing.
BUT, I was surprised by several things in this article:
The exemptions are for physicians who:
I didn’t think that could get you to 200,000 physicians (who were actively working with Medicare patients). The one that seems most feasible is for physician who register to participate in the Medicare or Medicaid EMR incentive program AND both adopt and use the technology by the 2011 deadline. They can also get exemptions.
Physicians care because they have to:
Depending on your patient base, this seems like a pretty good business case to at least get a system in; write for 26 prescriptions; and collect your bonus.
June 7, 2011 0 Comments
A recent study looked at people who were hospitalized for heart disease. It then tracked people’s use of statin medications (e.g., Lipitor) for the next year and looked at their adherence based on whether they had surgery or were simply discharged with a prescription.
SURPRISE – 70% of people who had surgery stayed on their statins for a year while 79% of those who didn’t have surgery stayed adherent. (thanks to Box Cutters for sharing this)
This begs a whole lot of questions:
On the other hand, this is perhaps another warning flag on the whole hospital readmissions issue where we have to address issues of health literacy, follow-up, discharge process, support network, and medication reconciliation.
June 3, 2011 1 Comment
The Moran bill in Kansas is another example of localized politics for independent pharmacies trying to legislate competition rather than find ways to differentiate their business. I’ve talked about this before in:
This is focused (I believe) on the whole issue of limited networks and preferred networks as you can see from the NCPA letter about Maintenance Choice. They throw everything but the kitchen sink at this model…why? Because it works. Maintenance Choice is saving consumers money and payers money. And, it’s moving market share to CVS stores.
This is the future. This is what Walmart is focused on. This is what Restat is focused on. OptumRx (Prescription Solutions) just launched their limited network. Humana is leveraging this in Medicare with Walmart.
At the end of the day, isn’t it the payer’s option to decide how to design a benefit plan to offers a clinically effective solution at the lowest cost posible?
Given that there are way too many pharmacies in the US today, someone (unfortunately) has to lose. That is reality. Based on the fact that there are more than 5x as many pharmacies as McDonalds in the US, we’re saturated.
June 2, 2011 1 Comment
Are you focused on the customer experience? If yes, then you should know who Bruce Temkin is and look at his research.
I follow his research mostly through his blog, and you can find teasers of information on healthcare by what he posts. I thought I’d pull together a few of those things here:
1. In his loyalty ratings, Walgreens was one of the top 20 companies recommended to friends while Cigna, Aetna, Humana, Anthem, and BS of CA were all in the bottom 20. [I’m not sure this should surprise us. I would expect CVS was close to the top with Walgreens. I’d assume many people don’t “recommend” their insurance companies in general. I’ll have to try to find out if the PBMs appear on here.]
2. In his forgiveness rankings, retailers like CVS, Walgreens, Walmart, and RiteAid scored well. TriCare scored very well. Medicare and Medicaid had good scores, and Kaiser was the only health plan in the top 70. [This is a key issue for retention and important in the retailization of healthcare…you will make mistakes so the question is how much good will you have to overcome those mistakes.]
3. In his loyalty rankings, you find out that African Americans are much more loyal to their health plans than Hispanics or Caucasians. [How does this change your engagement strategy?]
4. Bruce even goes on to quantify the value for different industries. For healthcare, he estimates that a $1B company could improve it’s topline by $179M / year by improving its customer experience.
5. In his experience ratings, he shares some specifics on health plans (see below):
And, I suggest you read some of his thoughts on changing how we analyze data. I think his points about “contextual insights” make a lot of sense.
May 29, 2011 0 Comments
With over 60% of Americans overweight or obese, this is a real issue for us as a nation. You see more and more focus on it on TV, in our schools, and in the overall healthcare system. So, what are the costs of being overweight:
May 26, 2011 0 Comments
CVS Caremark has been on a roll lately releasing lots of research especially in the adherence area. They just released another study this week that said:
In a study published online this week in the Journal of the American Pharmacists Association (JAPhA) the researchers said,”Approximately one-half of caregivers reported they are more likely to forgo their own medications than the medication needs of their caregivees, especially if cost was a problem, and that caring for their family members was more important than caring for themselves.” The researchers added, “Our findings indicate care-giving status may be an important characteristic for providers to identify and that caregivers may represent a fertile target for adherence interventions to improve chronic disease management and prevent chronic disease.”
But, today, I want to focus on their drug trend report called Insights which was released a few weeks ago. The report begins with a focus on change pointing out a few facts which will change our healthcare experience. Here’s part of the introductory letter by Per Lofberg, the President of Caremark Pharmacy Services.
We all know change is a constant, in this industry and in life, but the change we face over the next several years is monumental and unprecedented. The sweeping nature of the health care reform legislation makes it difficult, as even the government admits, to predict how the system and its stakeholders will respond. Regardless of how much is unknown and “still to be determined” about reform, all of us continue to face the urgent, ongoing need to reduce health care spending and simultaneously improve health outcomes.
They take a different approach than Express Scripts (see review of this year’s drug trend report) and Medco in their drug trend reports which are more encyclopedic in their breakdown of class by class. CVS Caremark poses questions by group and then presents data to address those questions. They focus on health reform and overall changes to the market dynamic. [Both Adam Fein and I review most/all of these reports every year so I’d encourage you to look at both of our blogs if you want historical facts or comments about comparing the drug trend reports.]
Key Statistics:
Specialty now makes up 14.2% of their BOB (book of business) overall spending…[something that some people are predicting will be close to 40% in under 5 years].
I really like how they breakout the charts by type of client (employer, health plan, and TPAs) since they have different approaches to trend management. Here’s the health plan one:
They talk about some of the future trend influencers:
Like others…they are saying that GDRs (generic dispensing rates) of 80% are now possible by 2012! Talk about a change in the past decade and why there is so much pressure on the manufacturers.
They mention it in the publication, but they’ve also issued some press about their effort to target the specialty spend that happens under the medical benefit. They estimate that 80% of the drug spend in the medical benefit is from specialty drugs with cancer representing 46% and three other categories representing more than 2%:
Given their broad footprint, they pose an answer rather than a question from the next constituent – the pharmacist:
I know I can make a real difference for people.
One of the big areas of focus for leveraging that F2F relationship is adherence:
They provide an updated statistic on average Rxs PMPY of 12.6.
One of their big studies from the year was the one that was published around savings related to adherence:
I’ll end with a statement they highlight at the end:
“Every member interaction is an opportunity to improve outcomes for the plan and the member.”
May 25, 2011 0 Comments
Another story from Fast Company June 2011 that I found really interesting was about the Information Blanket. This is a tool being used in Uganda to address their infant mortality rate.
It includes information on:
I think this is a few cool and creative solution.
May 25, 2011 1 Comment
Fast Company had an article the other day with some great stats on email:
May 23, 2011 4 Comments
I think this is a question many of my PBM friends would like to know. Fortunately, a few of the Walmart people that read my blog and are part of their Health and Wellness group agreed to sit down and talk about their strategy.
Let’s start with setting some background:
If you follow the industry, you know that all of these things were potential game changers (if they’ve worked).
This creates some tension:
Here is the Q&A [interpretive not literal] from my dialogue with Marcus Osborne (Sr. Director, Business Development, Healthcare, Walmart) and Tom Hill (Director, Health Services Development, Walmart).
What is Walmart’s Health & Wellness strategy?
Walmart wants to help consumers “save money and live better”. That is our DNA and our fundamental approach to the market. Pharmacy has presented a unique challenge since consumers often have the same copay regardless of which pharmacy they went to. Even when it’s a percentage copay, the savings differential might not be much to the consumer. Walmart was disconnected from the consumer in the traditional pharmacy pricing approach. That has driven us to look at unique ways that we can create savings.
How does Walmart decide what “offerings” to bring to market?
Walmart looks at ideas that focus on our EDLP (Everyday Low Price) concept and leverage our supply chain efficiencies. We are constantly looking at non-store operational opportunities to work directly with key companies. We currently have over 20 direct relationships with managed care companies and PBMs where we are working with them to drive down consumer costs in the pharmacy and broader healthcare area.
Obviously healthcare is bigger than pharmacy. What other things are you doing to drive healthy eating, management of critical conditions, or other programs? We’re constantly looking at what’s needed in the healthcare sector and where to invest. We focus on our two key advantages:
A good example is the work we’ve done around “Healthy Mom Healthy Baby” in Medicaid. We looked at the issues of high pre-term labor and the high rates of injury post-birth. We felt like we had a moral and cost imperative to take action. As part of this, we worked with several managed care groups to redefine the entire process and look at our unique assets. Our solution includes:
[I was impressed…this was a broad solution that looked at a lot of their assets.] We’ve also created several diabetic specific solutions; a smoking cessation program with Healthways; weight management programs; and women’s and men’s health programs. The focus is on payers that are at risk for their healthcare spending with more to come from clinics.
Will Walmart become a PBM?
No. We’re not looking to go into the PBM market. We’re supply chain experts. We see value in the PBM model. [We talked a little about the fact that “you are what your profits say you are” meaning that the PBMs have painted themselves into a profit corner where their profit comes from generics at mail order so any threat to that is a challenge.]
If the Caterpillar model was so successful, why haven’t others adopted it?
The reality is that over 400 employers have contracted directly with Walmart for a limited network model similar to Caterpillar. They are all seeing significant savings.
Does Walmart see the market through “different glasses” than others?
No. We still want to have the pharmacy be a profit center. We’re not looking to bottom out the market, but we are willing to trade lower profits per transaction in return for more market share. At Walmart, it’s not about maximizing revenue/Rx or profit/Rx…it’s about total revenue and total profitability. [A very different strategy than other CFOs which would say you can’t expect volume to make up for lower profitability.] Obviously, we also have the opportunity to get non-pharmacy sales associated with food traffic. One thing that may be is different is the fact that we believe scale should drive down costs. In pharmacy, the biggest players are always trying to command a premium. We think it should be the other way around. We also have been able to get our cost-to-fill to be the same at retail and mail so we’ve become channel ambivalent.
Have these programs improved market share in any significant ways? You have to look at the programs separately, but overall we’ve seen our market share increase from 6% overall [when the $4 generic program launched] to 10% now. The network design strategy has had great success. We look at three types of programs:
The $4 generics program has helped increase market share by an estimated 150 basis points. In many cases, companies that initially jumped to offer similar programs have dropped them. They couldn’t sustain them.
The Medicare program with Humana has been very significant and successful [as demonstrated by Humana’s huge jump in Medicare lives].
The direct-to-consumer (DTC) programs for mail have been pretty limited and haven’t had a huge impact, but they’ve been offered in markets where we have no stores (e.g., Detroit and NY) and therefore almost no share to begin with so any share is a gain.
People complain about the pharmacy location within the store. Would you ever consider a direct access point to the pharmacy which didn’t involve going through the entire store? This is a very hot topic. We did a lot of research about store design and what goods should be located next to each other, but in the end, we’re considering moving the pharmacy closer to the front entrance. Right now, 25% of the stores have a drive-through pharmacy which gets utilized at a very high rate. But, this does lose the pharmacist face-to-face benefit. [At the end of the conversation, my take is that they are looking at lots of scenarios here and trying to figure out the balance of convenience to the pharmacy only consumer and how to optimize the entire footprint.]
The partnership with Humana really seemed to help them grow their Medicare lives this year. How did this come about? We both were looking for new solutions to leverage the fact that scale matters and how to operate within the CMS parameters. We felt like there was an opportunity to do something different and began speaking with plans about some limited network ideas. We know that Walmart is over-indexed in the 65+ category based on store visits per week. Based on that, we were looking at what we could do to offer them more value as compared with our traditional, core customer of 35-50 year old females. Through a series of conversations, the partnership was born. We’re very happy with the relationship and believe they are also.
Limited networks have been around for a long-time with limited adoption. Do you think their time has finally come? What has changed? They have been around, but historically the networks weren’t limited enough to create enough savings to overcome the “costs” of disruption to the payer. Based on our experience at Caterpillar, we believe that you will see a transitional period where companies first move to incentivized networks and then 1-2 years later move to limited networks. [Something I would compare to the transitions which have happened in formulary over time.] The one area where we do see limited networks happening more rapidly is in the area of Managed Medicaid. [This plays into the focus of PCMA and others on the PBM opportunity around Managed Medicaid.]
It was a great discussion. I learned a lot. They allowed me to ask them a lot of questions about their programs and approach that honestly had led to some skepticism in the past. It sounds like they’ve brought together a great team with a broad vision of what they can do in pharmacy and in health and wellness overall. It has gotten my mind thinking about ideas, and I look forward to learning more.
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May 22, 2011 0 Comments
I just finished reading this publication by the Institute for Health Technology Transformation. Lots of quick nuggets of information summarized here. Let me share a few:
They go on to provide some good usage statistics by age group; data around caregivers; data around who’s trusted and PHRs; and research from AARP and with Dr. Hibbard that shows the impact of engagement on outcomes.
May 21, 2011 4 Comments
This week, Medco released their mobile application that they’ve been working with Verizon on. Not a big secret in my mind since I’ve been hearing about it since last Fall. I’ve talked about CVS Caremark’s application (CVS mobile), Humana’s application, and CatalystRx’s application. So, this made me wonder why I hadn’t heard about one from Express Scripts. It seems unlikely that they wouldn’t have one.
There doesn’t seem to have been a lot of fanfare, but they launched one in March. Here’s a quick summary of it:
The new Express Rx mobile app works across multiple platforms, and is now available for a free download at both the Apple iPhone App Store and at the Android Market (simply search ‘Express Rx’). In addition, members using a Blackberry or other smartphone device with web browsing capability can access our mobile optimized website at http://m.esrx.com.
With our new mobile app and mobile optimized website, Express Scripts members will be able to securely access the following functions:
- Start Home Delivery – transfer available maintenance medications to the Express Scripts Pharmacy
- Order Refills – select and schedule prescriptions to be refilled from the Express Scripts Pharmacy
- Check Order Status – check to see if an Express Scripts Pharmacy order has shipped, the ship date and by what method
- Find a Pharmacy – locate a nearby retail pharmacy using the GPS technology built into a smartphone
- Drug Information – access Drug Digest database to look up drug information, common uses and possible side effects
The app consists of three features: My Rx Choices, which delivers on-demand, personalized out-of-pocket costs, interactions and other information for any prescription drug; My Medicine Cabinet, which allows patients to view the medications they’re on, including prescription and over-the-counter drugs, and set reminders for themselves; and Prescription ID Card, which allows convenient access to a member’s prescription drug card.
- Refill mail service pharmacy prescriptions
- View your prescription history
- Set up text message medication reminders
- Check the status of and track orders
- Locate a pharmacy by ZIP Code
- Search your formulary by generic or brand name drug, status, or class
May 20, 2011 0 Comments
Medicare has been a big area of focus for a lot of plans and subsequently for a lot of PBMs who manage the PDP plans. The biggest area of discussion is around the STAR Ratings. And, that’s important because if you look at data from the WilsonRx reports there is certainly a correlation between PBM satisfaction and health plan satisfaction.
So, the question is who has the Medicare lives today and who are the big winners YTD (source – CMS and Citi Investment Research and Analysis – summarized by Carl McDonald and team at Citi):
For a detailed breakout of PDP lives and the huge win by Humana going into 2011, I would suggest reading Adam Fein’s post from a few months ago on DrugChannels.
And…if you haven’t been following it, it looks like Medicaid is the green field that everyone is eyeing. The savings from managed Medicaid are getting discussed in multiple states especially around pharmacy. I just had a call today where the executive predicted that managed Medicaid would be the feather that finally broke the back to get limited networks more traction (interesting!).
May 20, 2011 0 Comments
Based on the feedback I got on my post on KevinMD about paying MDs for adherence and other research out there, it would seem that this new campaign called Script Your Future is facing a significant uphill battle. While I completely agree with the concept of pushing adherence discussions to the point-of-prescribing, the question is whether this will happen during the physician encounter. The other challenge is whether patients realize that they are non-adherence. Prior studies have indicated a lack of awareness around how non-adherent they are.
May 18, 2011 0 Comments
CVS Caremark announced earlier this week that they were launching a pilot to improve the prior authorization process. They are partnering with Navinet, Allscripts, and Surescripts to do this. This should be an interesting pilot to monitor. They plan to share the transactions and the results with the market to hopefully drive industry standards.
“CVS Caremark understands the opportunities that innovations such as electronic prior authorization provide to prescribers and patients looking to embrace a more efficient and effective way to share critical prescribing information,” said Troyen A. Brennan, M.D., M.P.H., chief medical officer of CVS Caremark. “The prior authorization process is currently evolving to keep pace as prescribers transition towards electronic prescribing and electronic patient records to better manage their patients’ pharmacy care. This pilot is an important step toward demonstrating how the industry can integrate ePA with e-prescribing to streamline and speed up processing of prior authorizations to ensure that members have quick access to care that is medically appropriate and cost-effective.”
May 18, 2011 1 Comment
All of the big 3 PBMs have now reported their drug trend for 2010. How do they compare? [acknowledging that methodologies are different]
Now, I’ll reiterate my points from the past which are:
WSJ Health Blog Drug Channels KevinMD Blog Health Populi e-Patients
Contact me at gvanantwerp @ mac.com.
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