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Walgreens vs. CVS More Thoughts

This was definitely the hot topic yesterday. I talked to lots of people about it.

I had a chance to give it some more thought last night. A few things dawned on me.

1. Timing. This was timed well from a Walgreens perspective. Managed Care RFPs are mostly over and employers are making their decisions now on PBM services. Managed Care would have been more likely to focus on the cost and understand how to mitigate the disruption. Employers will be much more sensitive to the disruption. That will be something that CVS Caremark will have to manage.

2. Who wins. Since one analyst told me that Walgreens represents only a single-digit of CVS Caremark’s revenue, the impact may not be huge. On the flip side, it’s likely some downside for Walgreens since they’ll stop serving some portion of CVS Caremark’s business. Consumers aren’t helped here. So, my only conclusion is that the other PBMs (i.e., Medco and Express Scripts) are best positioned to win from this if it causes any CVS Caremark PBM decisions to go their way. At a minimum, it creates FUD (fear, uncertainty, and doubt) which no sales person likes to have to deal with.

3. Validation. If I’m the product manager for Maintenance Choice at CVS Caremark, this seems like pretty strong validation that the offering works. As Adam Fein showed before, it does drive volume to their stores. Obviously, Walgreens was afraid of this taking off and having a larger impact on them.

So…what would I do?

This is interesting since one of my last tasks at Express Scripts was to come up with a strategy in late 2005 around CVS and Walgreens backing out of our mandatory mail network. My strategy (which I ultimately left to pursue) was to respond by opening onsite clinics and building out a pharmacy kiosk system that could be put in grocery stores (only 50% have pharmacies), large employer campuses, and high density sites in big cities. While Express Scripts didn’t choose that path, I still believe there is opportunity there and CVS Caremark could easily implement such a strategy. [It’s starting to get momentum in Canada.] CVS Caremark (or Walgreens for that matter) have the technology and business model to implement on-site pharmacies and to create a central fill using kiosks. If those could mitigate the effect of the Walgreens decision, it could be an interesting response. [BTW – If you’re interested in my pharmacy kiosk business model that I ultimately wrote up and pursued with some angel investors, let me know. I may try to post some of it here later.]

On the other hand, another response would be to look at the top 5 MSA (market service areas) where Walgreens is stronger than CVS. I’m guessing those are NY (post-Duane Reade acquisition), Delaware (post-Happy Harry’s acquisition), St. Louis (CVS just started operating here), and a few others. They could go into those markets and buy up independents or some smaller chains to immediately mitigate this.

There are several responses short of just folding and putting Walgreens in the network. Ultimately, I think it’s about whether CVS and Walgreens see each other as “enemies” or just competitors. Do they want to grow the pie or do they want to put the other out of business (if such a thing were possible)?

More to come I’m sure…

Walgreens and CVS Caremark – Coming to Blows

I’m surprised this took the 3 years to play out. I talked about this back in 2007. Today, Walgreens announced that they would no longer participate with CVS Caremark networks for new networks and renewals. (See the CVS Caremark response here.)

Personally, I’m a little surprised they didn’t limit it just to the Maintenance Choice contracts which is where they have issues (like Mandatory Mail). Walgreens has fought for years against PBMs that implement models that limit choice.

I guess one of the big questions here is whether CVS Caremark allows Walgreens into their Maintenance Choice network. Walgreens (for example) has multiple 90-day networks. One which is just with Walgreens and one that includes other retailers.

Other questions I would have are:
1. Will CVS Caremark pull out of the Walgreen’s PBM network or their 90-day networks?
2. Will other retailers pull out of the CVS network?
3. Will Walgreens be more aggressive with other PBMs or can they only “fight” one at a time?
4. Will this help CVS Caremark focus their retail acquisition strategy to areas where Walgreens is stronger than them really creating a retail battle and less of a PBM battle?

I’m sure in some geographies (e.g., St. Louis, NYC) this may present some challenges where the CVS presence is not as strong, but in the end, most consumers have access to more retail pharmacies than they need and most PBM decisions are heavily influenced by price. If CVS Caremark can offer a price point that takes into account the disruption to the member base of not having Walgreens in the network, they can win. If that hurts them too much or they can’t do it, they’ll have to figure out how to make nice with Walgreens.

It will be interesting!

Retail Pharmacies As Centers Of Health

One of the big ways that retail pharmacies make money is off their front end sales.  Now, a significant portion of those sales are the things that make us obese (candy, snack food, soda, ice cream, tobacco) which ultimately leads to many other conditions (diabetes, hypertension).

So, I guess the question is whether these places can play both sides.  [And, I’ll give the credit to Adam Fein for asking this question at a meeting last week.]  Can they sell us the convenient goods that we would buy anyways in a 24×7 easily accessible location AND become a health destination? 

On the one hand, they have all the assets – pharmacy, clinics, medical supplies, vitamins, health professionals, data, etc. – that we need to manage our health.  On the other hand, they enable us to easily be unhealthy.  Should they care?  Should they be like the soda companies who voluntarily removed soda from schools?  Or should they be smart business people and just capitalize on people’s wants?

It’s an interesting question.  What do you think?

Some of my notes from RESULTS2010

This week was our [Silverlink Communication’s] annual client event – RESULTS2010 (click here to see the final agenda). I’ve talked about this before as one of the best events.  It was great! Educational. Fun. Good networking.  

Here’s a few of my notes along with a summary of the twitter feed (using hashtag #results2010). Unfortunately, the two of us twittering were also fairly involved so there are some gaps in coverage. And, my notes are sporadic due to the same issue.

Overall themes:

  • Communications are critical to driving behavior change.
  • We have to address cost and quality.
  • Reform creates opportunity.
  • Systemic problems require systemic solutions.
  • Measure, measure, measure.
  • Automated calls – while not the whole solution – work in study after study.
  • People are different.
  • There is a gap in physician – patient interactions. 

Notes:

  • Reform basics – guarantee issue, requirements for coverage, income related subsidy.
  • Independent payment advisory board has an aggressive goal – get Medicare spending to equal GDP growth + 1% each year.
  • ½ of the $1 trillion needed to pay for health reform comes from Medicare savings / reform…the rest from taxes.
  • Everyone’s fear is that MCOs become “regulated utilities” that just process claims…unlikely.
  • Need to address underuse, misuse, overuse, and limited coverage.
  • Need to measure quality and cost at the person level.
  • CMS pilots around shared savings are working – outcomes improved.
  • Medicare Part D only got one complaint per thousand for therapeutic interchange programs / drug switching.
  • The decision around defining MLR (medical loss ratio) and what fits in there is critical.
  • Healthcare is like anything else…it’s not great and needs to change, but don’t touch mine cause it works ok. [frog in the pot]
  • How do we make each healthcare decision an informed decision.
  • Decision aids.
  • Pull, push, or pay – 3 ways to drive awareness.
  • Moving from information about your care to information being care.
  • The incentive rebound effect…what happens when you take away an incentive.
  • Social interaction affects our behavior.
  • Solving for how to change consumer behavior cost effectively and in a sustainable manner is a good challenge to work on.
  • How do we move people from desires to action? From “I’d like to exercise” to actually doing it.
  • The fact that some European programs take 3-5 years to see an impact makes me wonder what that means for our US investment strategy given the member churn across plans.
  • Great examples of ethnographic interviews
  • Good McKinsey data on people’s perceptions – Annual Retail Healthcare Consumer Survey.
  • Inform / Enable / Influence / Incentivize / Enforce
  • One way of categorizing – willingness to change versus barriers to change (rational, emotional, psychological).
  • Attitudinal segmentation – cool…but how to scale?
  • Provider staffs attitudes are important.
  • Design – delivery – measurement
  • Readiness to coach
  • A culture of health
  • Have to mix up your tools (incentives, channels)
  • “Communication Cures”
  • The chief experience officer is a new role in plans and PBMs.
  • The only experience you have with health insurance is via communications. Make it count.
  • Loyalty is a result of cumulative experiences.
  • People have to trust you so they listen to your message
  • Communication maturity model
  • Price is what you pay; value is what you get. (Warren Buffett quote…he wasn’t there)
  • Shifting paradigms:
    • Consumption to sustainability
    • Possessions to purpose
    • Retirement to employment
    • Trading up to trading off
    • Perceived value to real value
  • Simple…less is more
    • 1/3 of people feel their lives are out of control.
  • Inflamation causes 80% of diseases (really)?
  • If only 10% of outcomes are driven by costs, why do we spend 100% of our time trying to fix that problem. [tail wagging the dog] [It’s the same point on adherence.]
  • There are 45M sick days per year from 5 conditions – hypertension, heart disease, diabetes, depression, and asthma.
  • Have to look at clinical efficacy and elasticity of demand.
  • Commitment, concern, and cost.
  • Five components – plan design, program, community, communication, and provider engagement.
  • Need a multi-faceted approach to create a culture of health.
  • MDs much more likely to talk about pros than cons.
  • There would be 25% less invasive procedures if patients fully understood the risks.
  • Foundation of Informed Decision Making
  • Huge gaps in patient view versus physician views around breast cancer.
  • Preference-sensitive care
  • Dartmouth Atlas
  • Genomics tells you the probability of being on a disease curve, but not where you are in the potential severity.
  • Only 60-70% of women get at least one mammogram their entire life.
  • Statin study – barriers to adherence:
    • 37% didn’t know to stay on the Rx
    • 27% side effects
    • 15% convenience
    • 15% MD instructions
    • 11% cost
  • In healthcare, we’re all taught to speak a language that no one else understands.
  • It takes a village.
  • Challenge – Use communications to cure cancer.
  • Collaboration. Innovation. Evaluation.
  • Adherence is a great example of where everyone’s interests are aligned.
  • There is no magic bullet for adherence.
  • You need a multi-factorial approach to address adherence…Physicians are rather ineffective at addressing adherence.
  • Evidence-based plan design works to impact adherence (although I think another speaker said no).
  • You have to think about operant conditioning. (Look at dog training manuals and kid training manuals – very similar)
  • Think about all the failure points in the process.
  • What is the relative value to the patient.
  • Reward system has to reward at the failure points not just at the end of the process.
  • Using a point system successfully increased the use of a select (on-site) pharmacy by 57% at one employer.
  • 75% of PBM profits are from dispensing generics…that’s why Wal-Mart was able to be a threat to the industry.
  • Drugs only work in 20-80% of people.
  • There are people with a gene that doesn’t break down caffeine.
  • 3% of people are ultrafast metabolizers of codeine (which turns to morpheine in the body)…that can be a problem.
  • Epigenetics – turning DNA switches on and off.

“Tweets”

Rebecca from ProjectHEALTH closes #results2010 with a remarkable talk on this crucial program; they work with 5,000 families/year.

Reid Kielo, UnitedHealth: 93% of members validated ethnicity data for HEDIS-related program using automated telephony #results2010

25% of Medco pt take a drug with pharmacogenetic considerations. Robert Epstein, CMO Medco #results2010

Bruce Fried: the “California model” of physician groups facilitate efficiencies that improve delivery; an oppty for M’care #results2010

Bruce Fried on Medicare: 5 star ratings have strategic econ. importance, med. mgt. and cust serv. key #results2010

Fred Karutz: members who leave health plans have MLRs 2 standard deviations below the population. #results2010

Fred Karutz: Market reform survival – retain the young and healthy #results2010

Poly-pharmacy has negative impact on adherence. #cvscaremark
#results2010

1 in 3 boys and 2 in 5 girls born today will develop diabetes in their life. SCARY! #results2010

20% of all HC costs associated with diabetes. #results2010. What are you doing to manage that?

Messages to prevent discontinuation of medication therapy far more effective than messages after discontinuation. CVS #results2010

25-30% of people who start on a statin don’t ever refill. #CVSCaremark
#results2010

Maintenace of optimal conditions for respiratory patients increased 23.4% with evidence-based plan design. Julie Slezak, CVS. #results2010

Value-based benefits help control for cost sensitivity for medications; every 10% increase in cost = 2% – 6% reduction on use. #results2010

Pharmacists who inform patients at the point of dispensing are highly influental in improving adherence. William Shrank #results2010

The game of telephone tag in HC is broken. Pt – MD communications. #results2010

37% of Pts were nonadherent because they didn’t know they were supposed to keep filling Rx. #results2010

Last mile: 12% of Americans are truly health-literate; they can sufficiently understand health information and take action. #results2010

Only 12% of people can take and use info shared with them. #healthliteracy
#results2010
#DrJanBerger.

We need to improve the last mile in healthcare… clear, effective conmunication. Jan Berger #results2010

#McClellan used paying drug or device manu based on outcomes as example of “accountable care”. #results2010

72% of those with BMI>30 believe their health is good to excellent; as do 67% of those w/ chronic condition. #McKinsey
#results2010

Are incentive systems more likely to reward those that would have taken health actions anyways (i.e., waste)? #McKinsey
#results2010

Only 36% of boomers rate their health as good to excellent. #results2010

27% of people believe foods / beverages can be used in place of prescriptions. #NaturalMarketingInstitute
#results2010

Why do we spend so much time on impacting health outcomes thru the system when that only explains 10%. #Dr.JackMahoney #results2010

Using auto calls vs letters led to 12% less surgeries & 16% lower PMPM costs in study for back pain. #Wennberg
#HealthDialog
#results2010

MDs are much more likely to discuss pros with patients than cons. #Wennberg
#HealthDialog
#results2010

Should physicians be rewarded as much for not doing surgery? How do economics influence care decisions? #results2010

Physicians were 3x as concerned with aesthetics than breast cancer patients in DECISIONS study. #results2010

Fully-informed patients are more risk-averse; 25% fewer of informed pts in Ontario choose angioplasty. #results2010

Patients trust physicians over any other source (media, social connections) but only receive 50% of key knowledge. #results2010

Informing Patients, Improving Care. 90% of adults 45 or older initiate discussions about medication for high BP or cholesterol. #results2010

What is #results2010? #Silverlink client event.

#results2010#Aetna Medicare hypertension program leads to 18% moved from out of control to in control using auto calls (#Silverlink) …

About 2 of 3 medicare pts have hypertension. #results2010

John Mahoney describes how he connects payors, providers, and care via research. #results2010

As information becomes commoditized in healthcare, sustainability enters the vernacular. #results2010

Segmentation innovations of today will be tomorrow’s commodities. Measurement and learning must be “last mile” IDC insights #results2010

Plans are strategically investing in bus. intel to reach wide population for wellness, not just the low-hanging fruit. #results2010

The single most significant future market success factor is measurable results. Janice Young, IDC Insights. #results2010

Knowing our attendees’ preferences could have fueled segmented, precise invitations to #results2010. Dennis Callahan from Nielsen Media.

Drivers of those sereking alternative therapies: stress, lack of sleep and energy, anxiety, inflammation. #results2010

Only 2% of people don’t believe it’s important to lead a healthy lifestyle. Their behavior could’ve fooled me. #results2010

Are purity and simplicity the new consumption? Steve French of Natural Marketing Institute explores. #results2010

Gen Y is the most stressed out generation. #results2010

Less is more. 54% say having fewer material possessions is more satisfying. Natural Mktg Institute #results2010

Loyalty is a result of a cumulative set of experiences. Individual intervention ROI is sometimes difficult. #results2010

Sundiatu Dixon-Fyle of McKinsey; understand how beliefs shape an individual’s ability to change behavior. #results2010

Don Kemper: each of 300M HC decisions made each year need to be informed. #silverlink
#results2010

Medicare Part D: 40% lower cost than projected, seniors covered through tiered coverage powered by communication. #silverlink
#results2010

Mark McClellan: Brookings is engaging private insurers to pool data to understand quality of care. #silverlink
#results2010

Mark McClellan at RESULTS2010; bend the curves, provide quality care efficiently. HC reform >> insurance reform. #silverlink
#results2010

Who Is Dr. Obvious?

As someone pointed out to me today, there is now a character called Dr. Obvious which is featured on the Medco site – www.medcopharmacy.com.  He’s also on Twitter and Facebook.  So, who is he?  What’s the twist here? What’s the Institute for the Incredibly Obvious?

You might get some idea by watching the video on Facebook or some of the videos on YouTube.

Here’s one on automated refills (which is the push for most pharmacies – retail and mail).

 


Medco 2010 Drug Trend Report

Today, Medco Health Solutions released their 2010 Drug Trend Report (which looks at 2009 data). I haven’t had time to read the entire report, but here are a few highlights and comments from a conference call:

  • Overall drug trend was 3.7%. [They use their top 200 clients for analysis.]
    • Trend was 0.1% for clients with greater than 50% spend at mail.
    • Trend was 1.7% for Medicare.
    • [I still point out here that the question is whether trend is good or bad.] Dr. Epstein and David Snow pointed out that they work with clients on this to track metrics on adherence at the TRCs (Therapeutic Resource Centers) and report on this. The key here is knowing what classes show measurable impact to overall costs and outcomes by improving adherence and increasing costs.
    • Another point I thought was interesting was a comment that if the FDA saw the actual adherence on some drugs that require sustained utilization to achieve an outcome that they might make different decisions about drug approvals.
  • Inflation for branded drugs was 9.2% which was the highest in a decade. Generic inflation was 0.3%.
    • On a conference call, David Snow validated that this was associated with the tax on brand pharma so yes the high inflation on brand drugs was tied to reform. Someone asked a question about patent expiration (which historically drives prices up), but that doesn’t explain all the inflation here.
  • They saw a 3.4% increase in generic utilization.
  • Prescription utilization was up a minor 1.3%.
    • 5% for children 0-19.
    • 0.2% for seniors.
  • Specialty drug spending continued its rapid growth with a 14.7% increase including a 2.6% utilization increase.
  • Diabetes continues to be the largest driver of drug trend representing 16.7% of all drug spending and grew by 11.1%. [We can expect to see this continue to grow as more pre-diabetics are diagnosed.]
  • H1N1 drove up antiviral spending by 15.7%.
  • Pediatric use of medications grew faster than other groups.
  • 1 in 4 insured kids now take a medication for a chronic condition.
  • Increased utilization in kids occurred in diabetes, asthma, antivirals, ADHD, cancer, and rheumatology drugs.
    • There was a huge increase in diabetes over the decade (5x the adult population) and this was especially true with adolescent girls.
    • It’s amazing to me that you now have kids on lipids (high cholesterol), but it’s clearly an indication of the obesity issue. [We’re just at the tip of iceberg.]

  • ADHD surged for those under 35 – 9.1% increase in use leading to a 23.8% increase in spending.
    • The CDC says that 5M kids age 3-17 have and ADHD diagnosis.
    • [The other issue here is abuse of ADHD drugs.]
  • They also mention Nuvigil as a drug that could gain popularity for treating jet lag.
  • They forecast the drug trend will rise 18% thru 2012 driven largely by diabetes, oncology, and rheumatology.
  • About $46B in brand drug sales are scheduled to go generic by 2012.
  • They don’t expect biosimilars to impact the market until after 2012.
  • Not surprisingly, they showed a high correlation between states with frequent sleep deprivation and high drug utilization. As I’ve talked about many times, lack of sleep drives obesity which is highly correlated with many conditions. They also found a notable overlap of the use of Provigil (as stimulant used to treat daytime sleepiness associated with sleep apnea). [Seems like a drug that could get abused by college students like ADHD.]

“While H1N1 caused a spike in antiviral use among children last year, the far more alarming trend since the beginning of the decade is the increasing use of medications taken by children on a regular basis and in some cases, for conditions that we don’t often associate with youth, such as type 2 diabetes,” said Dr. Robert S. Epstein, Medco’s chief medical officer and president of the Medco Research Institute.  “The fact that one-in-three adolescents are being treated for a chronic condition points to the need for additional health education and lifestyle changes that can address the obesity issue that is likely a driving force behind such conditions as type 2 diabetes and even asthma.”

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Who’s Your Date To The Genetic Testing Prom?

Genetic testing (aka pharmacogenomics, personalized medicine) is certainly a hot topic these days.  There is lots of research around how to use the testing to manage drug spend by appropriately matching drugs with genetics at the individual member level. 

I find it interesting to see who’s going to the “prom” with whom here.  Another interesting perspective is how physicians feel about these (see survey).

  1. Medco acquired DNA Direct.
  2. CVS Caremark hired Per Lofberg from Generation Health and invested in the company.
  3. P&G invested in Navigenics.
  4. Walgreens was going down the path with Pathway Genomics before the FDA intervened.

So…what is Express Scripts doing?  I’ve heard some talk at a conference about their strategy which involves a broader focus on integrating data from multiple sources including genetic testing to help drive clinical decisions.  It seems like they’re either late to the party or smart in staying away.  The question is whether this is a nice to have, a differentiator, or something that consultants will start requiring the PBM to provide.  From their 2009 Outcomes conference:

[Genomics and personalized medicine]  The potential for improved outcomes and cost savings are attractive but still unproven.

CVS Caremark Split Up?

I guess I have to comment on this hot topic.  Since I’ve been an advocate since the beginning, I think my opinions are different than the masses.  Looking at Adam Fein’s blog this morning, he asks three questions:

How does patient care improve when a PBM owns a brick-and-mortar pharmacy chain? Where can a combined PBM-pharmacy chain improve performance on traditional PBM metrics? How exactly does a payer benefit when CVS increases its pharmacy market share?

1. How does patient care improve?  CVS Caremark just announced this week the rollout of their Pharmacy Advisor program (think response to Medco TRCs).  This leverages their 7,000 retail stores and their face-to-face interactions with patients to manage chronic conditions (beginning with diabetes).  Assuming this scales, it has the great opportunity to improve patient care.  AND, when they eventually roll-in Minute Clinics to this solution (which I don’t think has happened yet) there may be more opportunity.  The retail side of the company also added to their ExtraCare strategy a diabetes focus earlier this week which makes a lot of sense. It remains to be seen the effect this could have on super beta prostate.

2. Where can a combined entity improve on traditional PBM metrics?  This is a softball.  Traditional PBM metrics are GFR (generic fill rate), rebates, mail order penetration, and trend (see comments on trend).  Generic fill rate involves talking with patients about therapeutic alternatives and intervening with MDs to change the script.  A retail chain can do that and can make changes before the first fill and before the patient starts a routine.  They also have a relationship often with the MD.  Driving rebates (as a proxy for lower net cost) can happen the same way.  Mail order is a more difficult metric, but Maintenance Choice createst that option and a store with the right POS (point-of-sale) system could make a difference.  I would argue that the goal for a combined entity is to optimize the right channel for the patient.  And, since all of these lead to lower trend…a combined entity has power.

3. How does the payor benefit?  Again…a softball.  Just like a limited network (less stores), pharmacies have always offered lower rates to payors (or PBMs) in return for marketshare.  CVSCaremark could offer tiers based on marketshare to their clients (i.e., you get a 17% discount for all Rxs processed if your marketshare is 30% and you get 19% discount if your marketshare is 40%).  There are obviously fixed costs (real estate, transportation, technology, staffing) so there are incentives for store operations to optimize volume (without getting too much such that they have to hire additional staff).

Don’t Believe The Hype – Copay Waivers

Don’t believe the hype – its a sequel
As an equal, can I get this through to you
 

I talk about it all the time as most people do…non-adherence to prescription drugs is a real issue.  People don’t fill their initial script.  People who do fill their first script drop off after the first several fills.  By 12-18 months after a patient starts therapy, less than 50% of them are still taking their medications.  Here’s a few key articles on this: 

Common barriers to adherence are under the patient’s control, so that attention to them is a necessary and important step in improving adherence. In responses to a questionnaire, typical reasons cited by patients for not taking their medications included forgetfulness (30 percent), other priorities (16 percent), decision to omit doses (11 percent), lack of information (9 percent), and emotional factors (7 percent); 27 percent of the respondents did not provide a reason for poor adherence to a regimen.  Physicians contribute to patients’ poor adherence by prescribing complex regimens, failing to explain the benefits and side effects of a medication adequately, not giving consideration to the patient’s lifestyle or the cost of the medications, and having poor therapeutic relationships with their patients.  (NEJM article) 

Depending on what study you look at cost is certainly an issue, but it typically isn’t the primary issue.  I typically see cost as being a factor in 5-15% of the cases.  I think if you look at how Merck weighs cost in their Adherence Estimator that it is only a small factor.  A lot of this plays out in VBID (Value Based Insurance Design) which while not purely about copay waivers that certainly is an element of most solutions.  

A few friends of mine formed their own company (CareScientific) and had a paper published in AMCP recently.  From that article: 

  

VBID is receiving attention as a tool to increase medication adherence and lower medical costs. However, applying a “plausibility calculation” method to data generated from a recent VBID study involving reduction of drug copayments, this evaluation found that health plan sponsors are highly unlikely to experience net savings by implementing VBID programs, even under generous assumptions, for 2 reasons. First, the price elasticities of medications are too low to generate meaningful increases in medication adherence when copayments are lowered. Second, the potential reductions in the avoidable hospitalization and ER utilization rates across a commercially insured population with varying risk levels are generally not large enough to offset the additional plan costs of lowering copayments to increase medication adherence. 

I would also suggest looking at some of their tools that they’ve developed

So, getting back to how I’m tying in my reference to Public Enemy (rap musicians)… 

When I look at the upside for pharmaceutical manufacturers to grow the pie (get more Rxs through adherence), I often wonder why one of the default solutions is to fund copay waivers.  That happens by employers, health plans, and even the manufacturers.  There are many less expensive ways to get that lift by addressing things like reminders and tailoring information to individuals based on their personalized barriers. 

There are lots of high cost solutions that will make an impact.  The question is how to triage those resources to focus them on the right people.  It’s important to identify adherence risks (pro-active intervention) and adherence gaps (retrospective) and intervene with the patient.  

Here are a few of my other posts on this: 

 

Do People Self Diagnose?

I think we all venture a guess on why we feel bad – cold, flu, rash.  And, at least from my perspective, that might lead to an OTC (over-the-counter) medication.  BUT, apparently 30% of people use that self-diagnosis to self-prescribe and borrow medication from friends and family.  That has some more significant risks associated with it and can lead to an incomplete medical record if something happens to you (i.e., a severe side effect). 

According to the recent survey:

  • 3/4th of those that borrowed a medication did it to avoid seeking formal medical care
  • 1/3rd of those who tried to avoid a medical visit (or 1/4th of those that borrowed a medication) ended up at the physician anyways
  • 25% of those that borrowed a medication experienced a side effect (or believed they did)

I think we all know that borrowing medications is wrong.  The only time I would think you might be okay is you were prescribed the identical chemical entity and strength and had a friend that had changed medications and had some extra.  Since the reality is that there is a lot of excess medication out there given all the non-adherence.

Should Pharmacy Trend Go Up or Down?

As we enter the “drug trend report” season and we get to see everyone pull out their rules (not always equal) to show that their smaller, a friend asked me a good question the other night.  Is lower trend better?

It’s an interesting discussion.  We always assume that lower trend means the PBM is doing a better job shifting utilization to generics, moving people to mail order, driving specialty claims to the specialty pharmacy, implementing utilization management programs, etc.

BUT, if the PBM improves adherence, the trend’s going to go up.

If the PBM does a better job of moving specialty claims from medical to pharmacy, the trend’s going to go up.

If the PBM does a better job of making sure people get a claim after a step therapy reject, the trend’s going to go up.

If the PBM does a better job of getting people to fill their initial claims, the trend’s going to go up.

If the PBM does a better job of closing gaps in care, the trend’s going to go up.

I think this is one of the big reasons why a captive PBM (i.e., owned by the managed care company) should be viewed differently and has a unique opportunity.  They can make a convincing case that the trend should go up and be offset by lower medical costs.  That’s much harder for a standalone PBM to make.

Why Not Just Give Patients a 365 Day Supply of Generics?

There are certainly some exceptions where the drug is a narcotic or where the drug could be clinically abused.  BUT, in most cases, it probably is the most efficient solution for the market.  The cost of the waste is probably outweighed by the savings.  And, if you’re not a retailer looking for foot traffic, isn’t efficient what matters?  [Not always of course as this flies in the face of my last post on pharmacy as the cornerstone for communications.]

For example:

A – 30-day supply of generic

  • Assume the drug cost is $0.20 per day
  • Assume the cost of filling the drug is $5.00
  • Total cost every 30 days = $11
  • Total annual cost (12 fills) = $132
  • A 365 day supply would save $55 in dispensing costs with only a minor uptick in bottle costs.

B – 90 day supply of generic

  • Assume the drug cost is $0.18 per day
  • Assume the cost of filling the drug is $10.00
  • Total cost every 90 days = $26.20
  • Total annual cost (four 90-day fills) = $104.80
  • A 365 day supply would save $30 in dispensing costs with only a minor uptick in bottle costs and shipping costs.

Especially if you waited until the initial drop in adherence after the first 3-months, you would have less waste.

Why Is Pharmacy So Important For Healthcare Communications?

I’ve talked about pieces of this before, but I really believe that pharmacy is the cornerstone of a successful healthcare communication strategy.

Pharmacy is the most used benefit.  On average people have over 12 pharmacy claims per year.  And, if you take out the people that don’t have any, the number rises to around 20 pharmacy claims per year.

That’s 20 opportunities to intervene at a logical event and educate the patient about their condition, talk to them about saving money, stress the importance of adherence, capture feedback from them, drive them to take an action, etc.

Additionally, pharmacy is a very tangible event that consumers can control.  They get to choose (in most cases) their pharmacy – retail, mail, specialty.  They can talk with physicians about the options – generics versus branded.  It’s a space with lots of DTC (direct-to-consumer) information.

I don’t think most of us (even those in the healthcare field) would feel as open to debating one surgery versus another type or talking about the quality differences between one location and another.  The data’s not as accessible and therefore we’re more dependent upon the system to drive us to good decisions.

Thoughts On Express Scripts 2010 Drug Trend Report

As one of my favorite annual projects during my time at Express Scripts, I love the drug trend report. It has been a historical benchmarking tool for the industry and become a normal deliverable for many of the PBMs. Here are my initial thoughts after reading this year’s document which looks at 2009 data.

Individuals often are not rational.

  • As driven by their Consumerology initiative over the past few years, Express Scripts has shifted the dialogue around the B2C components of the PBM industry to one of behavior change versus simply plan design. This report continues to reinforce that messaging.
  • Waste has been an ongoing drum beat since my days there. This continues to be the message with a shift to include non-adherence to channel mix and drug mix.
  • They talk about the Healthy People 2010 initiative and that key to closing “the last mile” in achieving our objectives is the ability to influence behavior.
  • One of my favorite charts is below showing the waste by class. Not surprising, plan sponsors should focus on heart disease, depression, high cholesterol, and ulcer disease. [Diabetes is not in the top four but is one of the typical areas of focus.]
  • Key Performance Indicators (KPIs):
    • Overall drug trend – 6.4%
    • Specialty drug trend – 19.5%
    • Traditional (non-specialty) drug trend – 4.8%
    • $800.23 PMPY average drug spend
  • The top five classes are:
  • Specialty drug spend is up to $111.10 (processed under the prescription benefit) with a belief that this is only 50% of the total spend which includes specialty drugs processed under the medical benefit.
  • The top specialty classes include inflammatory conditions, MS, and cancer which represent 67% of total specialty spend.
  • I was surprised to see the member contribution to the drug costs had gone down while the actual dollars had stayed flat.
  • I was also surprised that they found adherence (as measured using Medication Possession Ratio) stayed flat from 2008-2009. I think most of the information available had implied thru survey data that it was going down with the recession.
  • I’m having some difficulty reconciling the MPR analysis below with the waste argument. If 80% MPR is ideal and most classes are above 80% MPR, I’m not sure I see the crisis in the data.
  • One of the key charts that I always copied and hung on my wall is the one below. It shows the classes by rank, the utilization, the average cost, and now the estimated behavioral waste (generics and mail).
  • You should certainly go into the document and look at the class level detail. They’ve included a utilization chart by gender by age which I really like. The sections also give some insight into future pipeline. I think I’ll pull diabetes out into a separate post.
  • It’s interesting that they identify only three segments for non-adherent patients with specialty medications versus more on the traditional side:
    • Active Decliner
    • Refill Procrastinator
    • Sporadic Forgetter
  • They project that utilization will continue to go up at about 3% per year and that trend will be mitigated with new generics coming to market.
  • Another interesting analysis is where the waste is by state:
  • They have some information on their Consumerology approach, but I’ve talked about that before.
  • I liked their simple plan design primer:
  • Towards the end, they talk about some of the changes they’ve made over the past few years to their programs to reflect their consumerism approach:
    • Step Therapy Choice
    • Formulary Rapid Response
    • Call4Generics
    • Select Home Delivery (which is gem of their new programs in my assessment)
    • First Generic Fill Free
    • Select Curascript
  • A simple graphic that points to the importance of understanding the consumer and developing programs to effectively drive behavior is below. [This is very similar to all the work we do at Silverlink with clients to help them drive health outcomes and behavior.]

I like it. Very humanized versus purely statistical document. Good job Emily, Steve, Yakov, Andy, Bob, Brian, and Chris. (That’s the core group that I know well.)

How Does Adherence Fall Off?

This is a nice simple graphic from a new Medco document that’s out – Case For Smarter Medicine.  We all know adherence is an issue especially in the first 3 months (for those that ever fill even their drugs one time), but this gives us a good picture of how it drops off over the first 12 months. 

The Best Healthcare Conference

In today’s budget conscious economy, people are constantly evaluating where to spend their time and money from a conference perspective.  Some conferences are good networking events.  Some of requirements to work in an industry.  Some are educational.  Some give you new ideas on how to run your business.  Some are in great fun locations with fun events.  Very few fit all of those.

I think our Silverlink Communications client event called RESULTS2010 does all of those.  [Hint – the conference is called RESULTS since that’s what we focus on with our customers.]  It takes on all the key issues we see in the market.  It brings in industry experts and clients to talk about what they are doing to address these issues.  Those problems are framed out by our industry experts that have line experience with these roles.  [Our leadership team comes from places such as Express Scripts, CVS Caremark, Gorman, and HCSC and our team includes people from McKesson, Humana, United Healthcare, IMS, DigitasHealth, Medco, and WebMD.  I challenge anyone to find a more knowledgeable vendor team.]  It gives people a chance to network and talk to their peers.  And, there’s some fun mixed in there.

This year’s event is focused on THE HEALTH CONSUMER.  I’m pretty sure it’s the only conference focused on communicating with consumers in healthcare.  The objective is to provide clients with ideas about how to educate, support, and motivate consumers to take actions which support health outcomes. 

Honestly, it was the original event that convinced me to come to Silverlink.  I was a consultant at my first event working with the company.  I met 75 users who were passionate about the company and had great first hand experience using the technology to make a difference in their companies.  I was able to ask them about the competition and understand why they choose Silverlink for their member communication partner.

So, what does this year’s event have in store:

  1. An amazing list of external speakers including Mark McClellan, David Wennberg, Don Kemper, Jack Mahoney, and Janice Young.
  2. A long list of client case studies – 14 so far.
  3. Specific tracks to cover our different client groups and allow for smaller discussion versus formal presentations – Pharmacy, Population Health, Medicare, and Managed Care.
  4. Industy experts on key topics such as consumer engagement, use of data in healthcare, consumer data, behavior change models and incentives, pharmacy economics, pharmacogenomics, medicare market dynamics, and the evolving retail healthcare model.
  5. Adherence experts such as Dr. Will Shrank from Harvard and Valerie Fleishman who led the NEHI adherence study that is widely quoted.
  6. Several fun events including golf, morning runs, and a few special sports related surprises.

There are several more speakers who you would know and I’m very excited to have come and speak…BUT, I want to leave something inside the package for you to want to rip it open and learn more.

How much does it cost?  Nothing (as long as you’re a Silverlink client).

Where is it?  Boston (a great city).

How do I learn more?  Well…if you work for a large managed care company, a population health company, or a pharmacy / PBM, you may already be a client.  We have over 80 clients today.  So, if you’re not on our invite list, think you might be a client, and want to learn more, let me know.  I’m at gvanantwerp at silverlink dot com.  [spelling it out avoids spam]

This year’s event is in late May so I hope to see many of you there!

Express Scripts’ Slides From Barclay’s Conference

I was reviewing the latest presentation from Express Scripts (ESI) and thought I would share a few of the slides here.

The first one is ESI’s new focus on Waste as a way of driving focus.

The second is a chart that everyone’s been using lately on behavior as the biggest impact on health outcomes.

The third is two charts on adherence.  The first is the one everyone is showing on mail adherence being better than retail.  The second one shows how few people actually have optimal adherence which they define as 90% medication possession ratio (most people I know would use 80%).

Prescription Growth Trends March 2010

These charts from IMS and Barclays Capital show 0.9% script growth for 2010 YTD. Retail continues to grow while mail continues to decrease volume.


So, I guess the question is what to make of this.  Is it right? 

  • IMS doesn’t get all the data (e.g., Wal-Mart and I think some mail order data).
  • The independent pharmacies all complain about the PBM’s taking business away.  This would say that’s not true. 

Let’s just take Express Scripts as an example.  In 2004, Express Scripts filled 39.1M mail Rxs out of 437.8M total claims.  In 2009 (after the Curascript, Priority, and MSC acquisitions), Express Scripts filled 41.8M mail and specialty claims out of a total of 530.6M total claims.  So, over 5 years and with lots of effort, the number of mail claims has grown slower than the total claims growth.  Some of this is due to client mix and plan design.  Some of this is due to things like the $4 generic programs at Wal-Mart.  But, how does this gel with the IMS data and the independent pharmacy complaints?

Or, is this due to the increased growth and focus on 90-day retail?

Express Scripts Drug Trend Report 2010

I knew the new report must be out when I had about 40 hits this morning on my blog based on Google searches for it.  Here’s the banner showing some segmentation.  I haven’t had the chance to read it and comment, but I will in the next 2 weeks.  You can search my blog to see my comments on all the PBM drug trend reports from the past few years.

[added later…my comments are now posted here.]

The Adherence Estimator by Merck

Merck did research that was published last year showing that their 3-question Adherence Estimator (TM) was 86% accurate in identifying patients at risk for nonadherence.  Pretty impressive. 

A copy of the questions are below and were on the Tuft’s website which also shows the scoring mechanism.  This is something patients can take to determine their risk or plans, PBMs, pharmacies, MDs, disease management companies, or others could use. 

Why Are Copay Waivers So Popular?

It seems like whenever I talk to companies about adherence one of first things they want to discuss is copay relief.  It’s a solution I’ve used before so it’s certainly rationale.  But, let’s not forget that cost is not the primary reason for non-adherence.  Forgetfulness and lack of health literacy are often big drivers of non-adherence with medications.  This is easily validated when comparing lift in medication possession ratio (or more tactically refill rate) by looking at copay waiver type program (value-based design) versus communication programs.

Given that copay waivers often require $10+ per month and other programs can be conducted for much less, I question the ROI.  I’d love to see a head-to-head test.  Try education and refill reminders versus copay waivers to see which yielded a greater MPR improvement.

Voice Personality Is A Powerful Lever To Motivate Health Behavior

This article appeared in HealthLeaders (3/3/10) by two of my co-workers based on some very interesting work they’ve been doing.  

It’s not what you say, but how you say it that matters. The “how” includes a number of specific voice attributes, such as inflection, rate of speech, and intonation—all of which contribute to an overall perceived “voice personality.” 

Voice is a powerful lever in the ability to effectively communicate your message to ultimately motivate behavior. Would you be more apt to trust the voice of James Earl Jones or the voice of your local car dealer? How do you perceive these voices overall? Which voice personality most effectively delivers a message? The answers, of course, depend on the listener, what is being communicated, and the behavior you’re trying to motivate. 

In healthcare, individuals are educated and supported in the decisions they make about their health through communications. This article highlights a recent study of the impact of voice in healthcare communications and how individuals perceive voice as it relates to health messaging. 

Specifically, this research analyzes voice selection for interactive automated calls, an effective outreach channel widely used in healthcare to reach and motivate individuals. 

Subjectivity in Voice Selection
If you put a small group of people in a room and ask them to describe the voice they hear, the answers will be wildly different: “This voice sounds too perky.” “That one sounds robotic.” “This voice sounds friendly and cheerful.” Reaching a final conclusion about which voice is “best” often is a highly subjective process. 

While we don’t consciously listen to an individual’s voice attributes, we do subconsciously assess the voice’s characteristics and create inferences about the speaker. Over the telephone or on the radio, when voice is the focus, we paint a picture of how someone looks, what kind of person they are, their age, gender, and generally whether or not you trust them. 

We’re sometimes surprised in the end at how different the person is when we meet him or her face-to-face. By itself, voice impacts our perceptions, which affect how well we understand a particular message. 

In healthcare, it is a common belief that people prefer a female voice when receiving messages about their health. Perhaps this is because female voices are perceived as more nurturing and caring; and women are often the caregivers in the home. 

But is a female voice equally effective when communicating to all people, of every age, in every region, and for every type of health related behavior? For instance, is a female voice as effective for people of poor health status hearing a message about an important health screening? What about seniors hearing a reminder to take their cholesterol-lowering medications? 

Voice Research
To answer these questions, we created a framework to map specific voice attributes with voice personality. We conducted an attitudinal study to learn how people of different age, gender, and region perceive and respond to different voices. We surveyed 3,000 people across the country, in a statistically representative sample of the commercially insured U.S. population. 

Participants heard the same short informational wellness message spoken by several different voices representing a variety of ages, gender, and unique voice characteristics. Survey responders were asked to provide their opinions on the following: 

  • Is the voice perceived negatively or positively overall?
  • Which attributes do people generally use to describe a particular voice? (e.g., rate, volume, and age)
  • Is the voice perceived as introverted, extroverted, formal, or conversational?
  • Is the voice perceived as coming from someone who is more caring and sincere, or someone who is trying to sell something?
  • Do people believe and trust the voice?

The survey results provide a powerful depiction of how different voices are perceived by different segments of a population. 

What’s in a Voice?
High trust and care/sincerity ratings are important factors when trying to motivate healthcare behaviors. Medication adherence, for example, is associated with the quality of relationship between the patient and the physician. When people trust the voice they hear, and feel that the person speaking to them is sincere, they are more likely to change their behavior. 

There are many interesting attitudinal findings from our study including: 

  • Both men and women across all age groups preferred a male voice to a female voice overall.
  • Voices described as fast paced, young, highly extroverted, perky, and animated rated poorly in the trustworthy and caring categories.
  • Voices described as moderately paced, middle-aged, and well-spoken/educated, were rated most trustworthy and caring.
  • Seniors (those 65+ years old) aren’t as sensitive to voice age as other groups and don’t perceive older voices as necessarily older sounding. By contrast, younger groups perceive “older” voices more negatively.
  • Seniors aren’t as sensitive to the rate of speech as younger populations; therefore, slowing the pace may not be as impactful as was once thought for older populations.
  • Younger people (18- to 34-year-olds) are significantly more sensitive to voice age and rate of speech, which means very careful selection of voices for young audiences is important to drive behavior.,/li>
  • Young people showed stronger opinions overall between men and women when rating the voice gender they prefer. In other age groups, there is general agreement on voice gender preferences. Gender selection is therefore a more important factor for the 18-to-34-year-old age group.

The use of voice to motivate health decisions
The results of this study provide us insight into how people of varying gender, age, region, and health status perceive the voices they hear. Our goal is to validate how specific voices can be used as a lever to change behavior. 

Voice, like other communications levers, such as messages and timing, can be selected based on the demographics, purpose, tone, and intent of communication, as well as how voice supports brand identity. By validating attitudinal voice responses against behavioral activity, voice can ultimately become a measurable behavioral best practice in healthcare communications. 

While the bulk of our experience supports the conventional wisdom that a woman’s voice is more effective for healthcare communications, our voice research suggests that there are opportunities to use a male voice to measurably move health behavior. A recent outreach program to educate individuals about the importance of colorectal cancer screenings supports our attitudinal research. 

The outreach asked if the individual had received a screening during the past two years, and if they planned to schedule a consultation with their doctor. The same message was delivered by a male and a female voice. All population segments, including men, women, Caucasians, Hispanics, and Asians, answered the survey at a higher rate when a male voice was used versus when a female voice was used. 

Conclusion
By applying science and measurement, we can determine the voice qualities that are the most impactful for a specific health behavior and for a group of people. There are measurable patterns in overall voice preference. Communications programs aimed at driving individual behavior should include voice analysis. 

By measuring and understanding perceived voice personality, our research sheds light on an objective way to effectively apply voice in healthcare communications to ultimately impacts behavior change. 


Jack Newsom, ScD, is vice president of analytics at Silverlink Communications, and Ryan Robbins is voice production manager at Silverlink Communications.

Health Reform And The PBMs

I’ve been getting a lot of questions about how health reform will affect the PBMs. While I will admit that I haven’t had the time to read all the tweaks and nuances of what was passed and realize it may change, my take is as follows:

  1. Assuming the PBMs stay part of any government type of solution, this will provide new covered lives for them to manage thereby growing business.
  2. Retail profits for combined entities like CVS Caremark may be negatively affected as cash patients are processed under negotiated contracts, but in so much as they can increase share at their stores, the ability to manage the distribution location (i.e., Maintenance Choice) may negate this.
  3. Generic biologics will be accelerated which will be a very positive play for the specialty business as generics have been for the PBMs. This will also allow the PBMs to use utilization management tools (e.g., step therapy) and formulary management tools which will drive savings and keep them as an essential entity.
  4. Financial disclosure may have a slightly negative effect by creating new reporting and auditing burdens and may ultimately affect client savings as deal parity becomes more normal versus allowing firms with better leverage and negotiating power to drive deeper deals. But, most PBMs are providing transparency today at a client level so this isn’t anything dramatically different.
  5. The focus on preventative services and wellness programs may actually create an expanded role for PBMs to step into the disease management void (which favors CVS Caremark’s model with clinics, retail, and PBM and Medco with their Therapeutic Resource Centers) and provide more services around critical conditions like diabetes and increase the focus on consumer engagement and adherence.
  6. The reduction in the donut hole and funding by pharma will negatively impact PBMs as it will encourage seniors to stay on brand drugs which are less profitable than generic drugs but it will increase adherence during the donut hole which will alleviate some of this downside.
  7. Overall, health reform should be a net positive for the PBMs allowing them to continue to be part of the strategy in reducing health care costs.

More thoughts from Adam Fein on his blog.

Gender Bias Of Statins

Statins are cholesterol lowering drugs (i.e., Lipitor, Crestor, Zocor). Millions of people take them and they account for about 10% of drug spend.

There is now some discussion of whether they work equally in men and women. I guess genomics would make you believe that it’s unlikely, but I’ve never heard anything about this discussion before the recent article in Time Magazine.

I don’t have the time to read all the research in depth and there appears to still be some debate so let me simply pull a few interesting things from the story:

* There is little evidence that statins prevent heart disease in women.
* There is evidence that women are more likely to experience the serious side effects of statins than men are. Those include memory loss, muscle pain, and diabetes.
* The data suggests that statins can reduce heart-related deaths but not deaths overall.
* For females to prevent one event (e.g., heart attack), 36 women would have to take Crestor for five years (from Jupiter study).

Google Health And SureScripts

I’m just catching up with this announcement from a few weeks ago. Google Health has added Surescripts to their partner list. This is interesting to me on a few fronts.

1 – Can this solve the portability issue? Today, if you change employers, your prescription history gets reset. If your employer changes health plans or PBMs, your prescription history gets reset. While this isn’t always a major issue, that history is important both for a DUR (i.e., drug-drug interaction) perspective but also from a research perspective (e.g., Medication Possession Ratio).

2 – Google is going to message users about potential DUR issues. That is a big value proposition of the PBMs. Given the other threats to their business model ($4 generics, direct-to-consumer mail order, claims administrators, legislation, pharmacy to employer contracting), is this another issue?

Walgreens Continues Acquisitions

I remember probably five years ago observing that Walgreens didn’t typically grow by acquisition. Well, a lot has changed. They’ve continued to grow by acquisition since then recently adding Duane Reade in NY and now USA Drug Stores in Memphis. I keep thinking they’ll either go on the acquisition path around the PBM or divest of their PBM. So far, I’ve been wrong.

With continued rumors of Aetna’s PBM being on the market, Walgreens would seem an unlikely but potential buyer. I suspect that they’re waiting to see if anything ever becomes of the pressure on the CVS Caremark merger and/or whether that can successfully be leveraged to drive significant multiples. I think CVS has shown that the merger can drive retail business especially with their Maintenance Choice offering.

The other question would be who to sell their PBM to, and one has to wonder if the recent reorganization means anything in this area. [Per Dave Snow’s (CEO of Medco) comments, I think they would be the most active potential buyer right now.] All of the non-retail business which previously reported up thru the Walgreens Health Services group is now reporting up thru the retail business. I personally doubt it, but I’ve always been a big believer in the GE model of wanting to be #1 or #2 in a market or trying to clean up my business to sell it.

I personally have always thought a Prime Therapeutics / Walgreens relationship would seem pretty interesting. They both have decent size books of business and together could probably capture lots of efficiencies.