Enabling Healthy Decisions | Category Archive

Wal-Mart: New PBM?

January 25, 2008 by George Van Antwerp 0 Comments

Well. I am back from vacation. I grabbed a WSJ on my way home from Orlando and was surprised to see an article about Wal-Mart potentially going into the PBM business. Not a surprise that they would go into the business, but a surprise that they would build it organically. (Although I don’t believe they have confirmed their exact intent.)

Of course, pre-stock market correction, the PBM stocks (Medco, Express Scripts, and Caremark) were all very expensive, but there are numerous smaller PBMs which could be bought and give Wal-Mart the adjudication systems, logic, and other processes to jumpstart the business.

Logically, Wal-Mart is strong at many of the core PBM functions – supply chain management, cost management, and distribution. But, this is not a retail play. There is no efficiency per square foot to compare to other functions. And, you are selling primarily to the payor not the individual. And, face facts, Wal-Mart hasn’t traditionally been recognized as the healthcare friendly company for many of its million workers. Would employers face backlash trying to convince their employers that they were simply containing costs or actually engaging Wal-Mart to educate and help employees make good health decisions?

So, it bears the question of whether they see a broader trend. Could consumerism spell the end of the traditional business-to-business PBM and drive a business-to-consumer PBM? Since the Wal-Mart Bank idea never took off, could they get into the space through healthcare. [The convergence of Health and Wealth has been written about numerous times.]

Obviously, CVS saw a strong play in the PBM space with its purchase of Caremark. Walgreens already has their own PBM. And, with Wal-Mart being the third largest retailer, it would seem like a logical trend to build out their PBM functions. [I think they have some PBM services that they provide today, but mostly for their own employees.]

Books / Articles, Consumerism, Healthcare, PBM / Pharmacy, Weblogs

Pharmacy Benefit Management

Coordinated Communications

January 15, 2008 by George Van Antwerp 0 Comments

A few days ago, I talked about a press release from Express Scripts around formulary change programs to encourage patients to move to a different drug (same therapeutic category different chemical entity). I mentioned in there a single frame that I created to organize the program. Happily, I found it publicly so I can share it. Here it is. The key points here were – identifying the different constituents, determining the best mode of communication, coordinating across channels, and determining how to sequence communications based on events (aka triggers) which might be a date or a percentage of their prior prescription being used.

While I was searching, I also found the presentation we gave on how multi-modal coordinations using a letter and an automated call impacted success for my retail-to-mail program. The key to remember here is that we targeted people who had already received one or more letters and had not responded. The results were great.

Books / Articles, Healthcare, Marketing / Communications, PBM / Pharmacy, Research, Technology, Value Propositions

Is Your Protected Health Information (PHI) In The Garbage?

January 9, 2008 by George Van Antwerp 0 Comments

We always hear about the need to protect your personal information (i.e., social security number, credit card numbers) from people. You can be paranoid about it (which may be appropriate) or simply smart about it. In general, you probably don’t have people rummaging through your garbage each week (unless you’re Bill Gates or someone like that).

I guess it is an older story (from 2006), but I was surprised to hear about pharmacies throwing out trash that includes prescription and patient information into unsecured dumpsters. Hopefully, it has been addressed by now, but here is a link to the story.

13 Investigates found legally-protected patient information on prescription labels, patient information sheets, pill bottles, prescription forms and customer refill lists in dumpsters in and around Boston, Chicago, Cleveland, Dallas, Denver, Detroit, Louisville, Miami, New Haven (Conn.), Philadelphia, and Phoenix.

As a corporate person, one of the things I found interesting was the responses. Regardless of the idiosyncrasies of the law, the CVS answer clearly seems more appropriate than the Walgreen‘s answer. I can imagine any patient wanting to think that their information is just being dumped.

“We are not safeguarding customer privacy as we are required to do,” said CVS corporate privacy officer Kristine Egan. “It’s sad and intolerable … and we need to do better. We will do better.”

A Walgreens spokesman said his company has not broken the law by placing patients’ personal information in unsecured dumpsters. Walgreens corporate communications manager Michael Polzin told 13 Investigates that federal law “doesn’t prohibit disposing of information in dumpsters.”

Books / Articles, Consumerism, Healthcare, Marketing / Communications, PBM / Pharmacy

Does Brand Matter?

January 9, 2008 by George Van Antwerp 1 Comment

As anyone who works in or with marketing or sales would tell you…Of course, brand is very important.

So, that makes this study from Gorman Group on Medicare very surprising.

“Seniors with the highest [Medicare Advantage plan] satisfaction levels don’t even know what health plan they’re in.”
Jeff Fox, president of Gorman Health Group, LLC, discussing his firm’s research that indicates brand is less important than it was several years ago.

If you’re interested in some good discussion on the topic of marketing, I would encourage you to look at Foghound. I had a chance to work with Lois Kelly from there years ago and was impressed. I think you will find their articles and frameworks very helpful.

Books / Articles, Consumerism, Healthcare, Managed Care, Marketing / Communications, PBM / Pharmacy

Medicare – Less Drugs Covered…Issue?

January 7, 2008 by George Van Antwerp 0 Comments

On 12/4/07, USA Today had an article titled “Medicare cuts back on drugs covered by Part D” which talked about the fact that the average number of drugs covered by the 10 largest Medicare Part D providers shrunk by 26% from 2007 to 2008. Wow! At first glance that seems pretty dramatic compared to a commercial plan [whose shrinking coverage was not quoted].

It seems like most of the changes were driven by Medicare which the article says reduced the list of drugs it would reimburse including drugs pulled by the FDA, no longer being made, or were deemed “less than effective” by the FDA.

Tom Noland (Humana spokesman) said “As the Part D program develops, the size of the formulary is becoming more aligned with utilization patterns, consumer preferences, health outcomes, and value for consumers.”

The article also quoted a study saying that low-income enrollees in Texas were being switch to coverage that had 14% fewer drugs and 15% of all drugs offered requiring a prior authorization. [15% sounds very high to me.]

In the big picture, controlling costs by focusing on value is essential for our healthcare system to survive. Having an easy exception process [which doesn’t exist today] would allow that be tolerable by the general public. It will be an interesting debate on value at some point…how do you value different side effects (for example)?

On of my first healthcare projects back in graduate school looked at two different cancer treatments. One involved much more labor and had only moderate improvements in outcomes. The question of course was what to do with that – charge more for the one option, don’t do both, focus on outcomes, etc.

Back to Medicare…Hopefully, these companies have a good strategy for communicating and providing tools to these patients to ease the transition to the other drugs rather than wait for them to get rejected or see an unusually high copay at the counter when they don’t have time to get in touch with their physician without risking missing a day of therapy.

Books / Articles, Healthcare, Managed Care, PBM / Pharmacy

Pharmacy Satisfaction: Communication is Key

January 6, 2008 by George Van Antwerp 0 Comments

It’s always great when you find research that clearly reinforces one of the things you always talk about – communications. At PharmacySatisfaction.com which is a website sponsored by WilsonRx and Boehringer Ingelheim, it lists the 10 steps to customer satisfaction for a pharmacy. A few key items that I think are relevant to a lot of what I talk about and do with customers in pharmacy and healthcare in general:

Know your customer (database marketing / management)
Speak up (you’re the expert…help them)
Educate the customer (reach out to them proactively and help them with information)
People skills (understand that different people respond to different messages, mediums, voices, times of day, etc)
Address compliance (refill reminders)

It also made me think about two topics which I think are relevant to communications success – Linguistics and Nuerosciences. As you might expect, there are lots of blogs on both. Here is a list of blogs and some definitions:

Linguistics is the study of the nature, structure, and variation of language, including phonetics, phonology, morphology, syntax, semantics, sociolinguistics, and pragmatics (per The American Heritage Dictionary of the English Language).

Neuroscience is a branch (as neurophysiology) of the life sciences that deals with the anatomy, physiology, biochemistry, or molecular biology of nerves and nervous tissue and especially their relation to behavior and learning (per Merriam-Webster’s Medical Dictionary).

Books / Articles, Consumerism, Healthcare, Leadership, Marketing / Communications, PBM / Pharmacy, Research, Value Propositions

Enhanced Communications Have An Impact

January 6, 2008 by George Van Antwerp 1 Comment

On January 4^th, Express Scripts put out a press release about consumers using a home delivery pharmacy being more likely to choose lower-cost therapies. It is an interesting study as published in the December 2007 issue of the Annals of Pharmacotherapy. I had the fun job of designing the program as one of my projects before I left Express Scripts. I will never forget my boss coming to me and asking me to think about how we could drive market share movement of several large drugs if we took them off formulary (i.e., Lipitor). He handed me a white paper written the year before on what to do. Since he was new, I didn’t give him too much grief since I was the author of the white paper from the year earlier about what we should have been doing for the past 12-months to prepare for this.

Anyways, I pulled a lot of input and created a great single-frame image which showed the major constituents and the tools/tactics we would use to drive market share both pre-formulary change and post-formulary change. I went back to my day job, but the image became the roadmap for a multi-modal communications strategy. As was my intention (since I was responsible for mail order), it looks like it worked both to move share and to show how mail could be better than retail.

Here are a few of the highlights from the press release:

Express Scripts evaluated consumer behavior after they made a change to the formulary positioning of cholesterol lowering drugs to prepare for Zocor going generic in mid-2006.
They looked at more than 200,000 retail and mail patients.
All patients got a formulary notification letter informing them of their therapeutic options, materials for their physician, a website for more information, and toll-free number to call. [2 years earlier I had created the business case for mass mailings of formulary notification letters.]
The IVR refill line included messaging about switching to a formulary agent, and we placed automated outbound calls to mail order patients [using Silverlink Communications].
Patients that were interested were queued up for a change at mail after 1/1/06 (so as not to lose rebates for our clients in 2005).
Obviously, other plan factors (i.e., copay differentials, step therapy) impacted choice. [I.e., if I only have to pay $5 more per month for a drug that I am used to, I probably won’t switch]
The results were great. 52% of the mail order patients and 33% of the retail patients chose to switch therapies.
Some of the retail patients were part of a rapid response program in which they received a letter telling them about their options in the therapy class right after they received their first fill of the non-formulary drug in the new year. [another program which I developed and launched for step therapy] Receiving this letter increased their likelihood of switching by 28%. [BTW – we tested this with letters vs. automated calls from Silverlink back in 2005 and the results were very similar.]

“Creating a dialogue with consumers is a crucial factor in successfully changing behavior and delivering value at the consumer level,” explains Emily Cox, Ph.D., senior director of research at Express Scripts. “Home delivery consumers received additional information and were more likely to seek further assistance through the Web and by calling Express Scripts. Enhanced communication clearly has an impact. The effectiveness of the rapid response program for retail consumers also supports the value of enhanced communications.”

As I have mentioned before on the blog, this was a great program. It proved that PBMs can influence market share. I was more than a little disappointed to see that after we moved all these patients to Zocor to take advantage of the generic then company than moves Lipitor back on formulary only to have to ask the patients to switch drugs again. [Fortunately, I was not there for these discussions.]

Books / Articles, Consumerism, Healthcare, Managed Care, Marketing / Communications, PBM / Pharmacy, Research, Value Propositions

Did You Know Factoids

January 4, 2008 by George Van Antwerp 0 Comments

I found this great list of factoids or Did You Know statements at PharmacySatisfaction.com. Here were some of my favorites or more interesting ones.

The biggest reason for not taking all medications as directed was simply, “I forgot.”
The number one concern across all pharmacy users is that their prescriptions are filled accurately.
The most useful feature those Web sites offer to them, the survey found, is the ability to order refills online.
Nearly three in 10 order their refills online.
Customers average three visits each month to their pharmacy.
Only about 1-in-5 pharmacy customers, overall, say that they use a loyalty card that provides points, discounts or other savings.
While the majority of loyalty card users are satisfied with the expected cost savings by using their card and with the ease of enrolling and understanding the benefits of their card, fewer than 1-in-4 card users are highly satisfied.
The drug store industry remains largely up for grabs, with nearly half of pharmacy customers saying they use more than one pharmacy to fill prescriptions.
Pharmacy use varies considerably by population. Chain pharmacies are most commonly used among residents of areas with more than 100,000 people. Independent pharmacies are most commonly used among rural respondents (areas with less than 100,000 people). Use of independent and mass merchant pharmacies decreases as population increases. Chain, food store, mail/online, and clinic pharmacy use tend to increase with population.
However, as pharmacy customers age, they are much less likely to use chains and considerably more likely to use mail/online and clinic pharmacies.
Seven-out-of-ten pharmacy customers indicate that they “definitely would” or “probably would” use their local pharmacy if they could receive the same amount of medication at the same price as their mail-order pharmacy.
The heaviest users of prescriptions are survey respondents in their 60s, averaging 5.4 new scripts and 29.2 refills per year.
How long patients have to wait for their scripts to be filled is a key component of customer satisfaction.
The average survey respondent is spending a considerable sum each month on drugs at their pharmacy—$82 on average (versus $57 a month on food and groceries at their pharmacy).
An average of 85.9% of computer owners/users use the computer to improve their health by looking for information about diseases.
Much has been written about the value of closer pharmacist-patient relationships, but Americans seem to feel far more connected to their physicians, dentists and nurses than to their pharmacists. That’s clearly not all pharmacy’s fault; the same survey respondents agreed that they were usually given the opportunity to speak with their pharmacist when filling their last prescription. What’s more, pharmacists ranked a close second to doctors as sources of information about medications.
Walgreens’ “Dial-a-Pharmacist” initiative, launched in February 2006, allows non-English speaking patients to connect with pharmacists speaking 14 different languages.
Independent pharmacy customers have the most trust in pharmacists, while mail/online customers have the least. Compared to last year, customers of all types of pharmacies place more trust in their pharmacist as a source of information.
More than one-third of pharmacy customers failed to fill all their prescriptions last year, and only 35 percent of all respondents said they were fully compliant on the medications they did take. Nevertheless, refill reminders from the pharmacy remain relatively rare, most patients profess.
In general, older patients tend to be more compliant than their younger counterparts.

I mentioned poly-pharmacy a few days ago, but here is some data about how many pharmacies patients use.

Books / Articles, Consumerism, Healthcare, Marketing / Communications, PBM / Pharmacy, Research, Value Propositions

Loyalty…Retention

January 3, 2008 by George Van Antwerp 0 Comments

I had a good lunch meeting today discussing loyalty in healthcare. The loyalty expert asked me what I meant when I use the word “loyalty”. Good question. I immediately jumped to points programs which is what I usually think about when I say loyalty. He asked about points versus information versus experience. I usually think of those as some of the key components of retention. Retention to me is a lifecycle program that address the patient experience from getting them to select you, welcoming them to the program, educating them, and exiting them at the right time. It involves information, tools, incentives and rewards, and has to be relevant to them.

Healthcare is unique in that you can’t simply incent on volume. I don’t want you to get an prescription if an OTC will work. I don’t want to you to go the physician unnecessarily. I want to incent you to do the right thing – go to your physician versus the ER; exercise; get appropriate tests done; participate in disease management programs; or use a generic drug. Some of these are easy to capture, but some of them become self-reported data which is hard to automate and collect.

So, we talked about the different constituents and what they might do:

Providers (MDs, clinics, hospitals): pretty difficult to see the right model here…obviously they want your business if/when your sick so a share of wallet concept could work, but there isn’t a clear alignment of incentives without a pay-for-performance (P4P) or capitated relationship.
Pharmacies or Durable Medical Equipment (DME) Providers: this is the easiest model to understand, but you still have to make sure you don’t incent inappropriate behavior
Managed Care or Other Insurers: this is where the biggest opportunity exists, but the question is how to you get companies to invest in rewarding preventative actions rather than running the odds of having a major cost factor for the patient prior to the patient churning (i.e., going to another payor)
Disease Mgmt Companies: this is a clear model since they are being paid to manage a disease and lower the costs. offering incentives or rewards that make a patient compliant (i.e., loyal) or drive behavior to a care plan would be in their interest.
Pharmacy Benefit Managers (PBMs): there is something here especially around mail order pharmacy, but I think the big opportunity here is reward for behaviors such as using self-service (web, IVR) or choosing the lowest cost option – OTC, generic, mail order, etc.
Pharmaceutical Manufacturers: here there is clear alignment. We used to do programs such as the 5-7-9 card which was for some drug (that I can’t remember). The patient got the 5th, 7th, and 9th fill free if they stayed compliant and enrolled in the program.

In researching this, I found this good loyalty presentation by Carlson Marketing. With healthcare being so behind other industries and struggling to figure this model out, the only place we are going to find a lot of research and information is going to be in other industries.

Consumerism, Healthcare, Managed Care, Marketing / Communications, PBM / Pharmacy, Value Propositions

Healthcare Gift Cards, Memberships, and Futures

January 3, 2008 by George Van Antwerp 0 Comments

Gift cards have become the popular holiday gift. [Here is the money I was going to spend on you but since I don’t know exactly what you want, please go spend it on yourself.] As copayments go up and consumers own more of their healthcare spending, I wonder how long it will be before we get healthcare gift cards. Or maybe discount clubs that you join and get preferred pricing (i.e., Sam’s Club). Or maybe big ticket items could be like stocks where you can hedge your bets. Gift cards are definitely a reasonable probability. The others may be too far fetched.

A $50 gift card good at your local pharmacy.
A gift card good for 2 visits to the clinic.
A $100 gift card good for one visit to the ER.
A annual “membership” good for up to 5 preventative visits at any physician or hospital within a certain network.
An option to buy “futures”…purchase a transplant which costs $100,000 for $30,000 today based on your current health.

Consumerism, Healthcare, Innovation, Managed Care, Marketing / Communications, PBM / Pharmacy

Where are the healthcare celebrities?

January 3, 2008 by George Van Antwerp 0 Comments

Over the past year, CNN has taken one of their morning anchors (Robin Meade) and turned her into a “celebrity” in some sense. The morning show on Headline News is now called Morning Express with Robin Meade. The news crew is called Robin and Company. Robin has a daily newsletter, and now Robin has a podcast.

So…why don’t health plans, large hospitals, and PBMs have branded personalities. It could be the Chief Medical Officer. It could be a nurse or (like pharma) they could use a celebrity. But, if CNN can take a good anchor and “brand” her, why wouldn’t healthcare companies do the same?

All your communications could come from the person. People would start to associate with that personality. That person humanizes the institution versus simply allowing it to be viewed as an annoymous corporate entity.

Healthcare, Managed Care, Marketing / Communications, PBM / Pharmacy

Academic Detailing

December 31, 2007 by George Van Antwerp 2 Comments

Their is a concept is the pharmacy world called academic detailing which essentially means educating physicians about the cost / benefits of prescription drugs. It can be done via letter, phone, and face-to-face. Many managed care companies and PBMs have tried it over the years. Does it work?…sometimes.

“It’s estimated the pharmaceutical industry spends about 90% of its $21 billion marketing budget on physicians each year.” (Journal of the American Medical Association article from January 2006)

Logically, it seems like a great idea. Get out and provide physicians with unbiased information about the drugs they prescribe. Provide them with published research. Show them how they behave versus their peers through benchmark data based on their prescribing habits.

Since I briefly owned academic detailing as a product line, I remember the challenge that our lead pharmacist had on proving the business case of why we should invest there. There were too many challenges:

Why does the physician care about cost? They care about what works. If you can clearly prove the compliance is tied to out-of-pocket costs, they might get interested, but the cost to the patient (at least if they have insurance) has historically not been significantly different between different options. [I do believe consumerism and consumer-driven healthcare might change this.] I always compare this to the expression “no one ever got fired for hiring IBM”.
To compete with the brand manufacturers who have 10’s of thousands of representatives out meeting with physicians, it would take billions of dollars. Who is going to fund this? You see change happen in small pockets where there is large marketshare by one dominant payor that can influence the physicians. With the government as the largest payor in healthcare, they could do this, but where is the money going to come from?
Do the physicians have the time? There are 10,000+ drugs out there. Physicians are busy and under lots of pressure. Some physicians have stopped seeing detail representatives. Others charge for their time. This is not a 2 minute discussion. (I believe that is the average for a manufacturer’s representative with a physician.) This is a 30+ minute discussion of clinical and cost information.

Perhaps P4P (pay-for-performance) may change this. I know that when physician’s were capitated for both medical and pharmacy costs that it could impact their prescribing habits. I always here about different groups trying academic detailing for all the right reasons…BUT, I never see any great proof.

Healthcare, Managed Care, Marketing / Communications, PBM / Pharmacy, Value Propositions

Another CEO Interview – ABC

December 31, 2007 by George Van Antwerp 0 Comments

I think a lot of times when I quick say ABC company people think I just mean any “generic” type company (i.e., typical MBA case study speak), but in healthcare, we have AmerisourceBergen Corporation which some people (probably no one in their corporate marketing) refer to as ABC. It competes with Cardinal Health and McKesson and is in many areas of healthcare especially in prescription drug distribution. (They are a $57B company in a market where the 3 of these companies control 90% marketshare.)

SmartMoney had an interview with their CEO (David Yost) in February 2007 (which I am just reading over the holidays). Since their margins are in the single-digits, the logical question was how do they grow. He pointed out that generics and specialty drugs represent the big opportunities. Interestingly on specialty drugs he talked how they can “tell the manufacturers where the patients are and how much insurance companies will probably reimburse on certain drugs.” This doesn’t strike me as the role I would typically look to them for.

It was also an interesting discussion around Wal-Mart’s $4 generics. I have been skeptical of the promotion, but he would have some visibility to data to understand the results. Regardless, the effort of the pharmacies to lower the cash costs for prescriptions (for those without insurance) is an important effort.

“The pricing difference Wal-Mart is offering isn’t enough to cause them [patients] to change pharmacies. Plus, a lot of people are going to Wal-Mart looking for $4 prescriptions and can’t find them.”

Books / Articles, General Business, Healthcare, PBM / Pharmacy

Polypharmacy Programs

December 29, 2007 by George Van Antwerp 2 Comments

I am sure that some people are focused on this, but I rarely hear about it. Although most people go to more than one pharmacy, today’s claims adjudication systems are programed to identify serious issues across pharmacies. But, since you can’t reject every claim, the edits in the system are focused on the serious issues which might leave some opportunity for improvement. If you add in OTCs and supplements that people take, there may be opportunities that aren’t captured by the system.

I found some results from a 2003 Premera BC program which I thought were quite impressive. They built a program that offered a medication review with your physician if you took 5 or more prescriptions. Their results included:

50 percent of the targeted members brought in their medications for the physicians to review.
One out of every three members received prescription changes.
Sixty four percent had a medication added.
Forty seven percent had one or more medication stopped.
Sixty five percent had the dosage of a medication changed.

Given results like this, it would seem like a program everyone should be doing.

Healthcare, Managed Care, Marketing / Communications, PBM / Pharmacy, Research, Value Propositions

Patient Comments About PBM Reimbursement

December 28, 2007 by George Van Antwerp 0 Comments

I understand the logic if I am the pharmacies of reaching out to the patients to motivate them and use that to compel the legislators to act but doesn’t it seem strange to have an end customer comment about the supply chain relationship of two entities. What am I talking about?

The Coalition for Community Pharmacy Action which is made up of the National Community Pharmacists Association (NCPA) and the National Association of Chain Drug Stores (NACDS) conducted a survey of 1,000 pharmacy patients about the slow reimbursement of Medicare Part D drugs by the PBMs and upcoming cuts in Medicaid reimbursement. Not that I don’t think it’s an issue, but I find it hard to believe consumers knew about the issue and weren’t “coached” into answers based simply on the way the questions were asked. Regardless, the results were:

83% said that it was unfair that “PBMs and prescription drug plans keep money as long as possible, allowing them to earn interest on it, while pharmacies must continue to provide their services and prescription drugs upfront to patient even though they haven’t been paid.” [Do you think the average patient would say that if you simply asked them what they thought about reimbursement policies for pharmacies?]

The survey is obviously to drive support for two bills – H.R.1474, the Fair and Speedy Treatment of Medicare Prescription Drug Act of 2007, and S.1954, the Pharmacy Access Improvement Act (PhAIM) of 2007 which require complete and accurate Part D claims submitted electronically be paid within 14 days by electronic funds transfer, and paper claims within 30 days.

78% thought it was unfair that “under the new rule, pharmacies that participate in the Medicaid program would have to sell generic drugs at a loss.” [I believe it’s possible, but I would like to see the math here. Is it net of their costs? Are their costs direct labor or is it a volume issue?]

“We have reached critical mass in our efforts to rectify the debilitating consequences of the Medicare Part D and Medicaid reimbursement systems,” said Bruce Roberts, RPh, NCPA executive vice president and CEO. “The sentiments expressed by community pharmacies, members of Congress, and organizations such as NCPA and the National Rural Health Association are well known. The missing voice has been the patients who are adversely affected by the consequence of community pharmacies being squeezed to the breaking point. Now we have a comprehensive scientific survey indicating patients find the reimbursement policies objectionable and are supportive of the pending legislative solutions that should spur action in the halls of Congress.”

I am a big believer in the independent pharmacy. They have and continue to play a vital role in many communities and serving patients in a very hands-on way. As the market has changed, it has been difficult. Seniors, who I believe are disproportionately represented at the independent pharmacies, were cash paying customers for a long time. Medicare Part D changed that and took away a great source of cash flow and margin.

Consumerism, Healthcare, Marketing / Communications, PBM / Pharmacy, Research

medicaid, Medicare Reimbursement, NCPA

Proactively Addressing Customer “Defection”

December 27, 2007 by George Van Antwerp 0 Comments

Where your customer (or patient) has the ability to defect (i.e., chose another health plan, go to another PCP or hospital, chose another drug or pharmacy), what are you doing to predict this and act in advance. As the old saying goes, it is cheaper to keep a customer than to attract a new one.

In wondering what other industries do, I was a little discouraged to find the following in CSC’s 2004 Customer Intelligence Diagnostic Survey:

“half of the respondent firms never, or almost never, perform defection analysis to identify customers who are on the verge of defection. Nevertheless, over half of the respondents claim that they have developed targeted programs to prevent defection.”

Even companies that ask about your experience or satisfaction often don’t act on it. For example, I have stayed at the Detroit Ritz several times for personal travel. Each time, check-in has been bad. Every time I check out, they ask how my experience was. I say it was okay. They say great and move on. [Which shouldn’t be acceptable at a place like the Ritz that prides themselves on customer service.] Never have they asked me for feedback. So, instead, I complain to the national office and get a gift certificate which costs them money…simply for not acting on my lack of satisfaction.

In healthcare, it may be a little harder to predict, but not filling a maintenance drug or not scheduling a follow-up appointment are definitely bad signs. A quick follow-up survey to any experience will tell you a lot. And, as I think I have mentioned before, for healthy people that never experience their healthplan, it makes a lot of sense to reach out to them prior to open enrollment when all they will see is another rate hike.

Books / Articles, Consumerism, Healthcare, Managed Care, Marketing / Communications, PBM / Pharmacy, Research, Value Propositions

If Trust is Important…What Do I Do With This?

December 21, 2007 by George Van Antwerp 0 Comments

I don’t think anyone would argue that trust is one of the most important components of corporate branding especially if you are communicating with consumers. How do you compel them to act (even if its in their self-interest) if they don’t trust you?

That being said, what does it tell us that the healthcare industry ranks so low in the annual Harris Interactive survey which asks “Do you think <industry> generally do a good or bad job of serving their customers?” Hospitals do okay with 74% of those surveyed saying yes. Even drug companies rank okay at 61%. [Cable is also at 61% and the phone company at 67%.] Health insurance comes in at 46% with managed care at 41%. The only lower companies are oil and tobacco companies. We have to figure out how to fix this if we are going to successfully drive wellness and change healthcare in this country.

Books / Articles, Consumerism, Healthcare, Managed Care, Marketing / Communications, PBM / Pharmacy, Research

Sticky Messaging

December 20, 2007 by George Van Antwerp 0 Comments

We used to talk a lot about stickiness of websites and eyeballs back in the late 1990s. The word still has some attraction and is a key point in the recent McKinsey interview with Chip Heath. Chip is a professor of Organizational Behavior at Stanford University’s Graduate School of Business.

“The key to effective communication: make it simple, make it concrete, and make it surprising.”

Although the article is primarily around what executives need to do to make their messaging and ideas stick with diverse audiences, it has a lot of relevance for healthcare.

“A sticky idea is one that people understand when they hear it, that they remember later on, and that changes something about the way they think or act.”

Think about all the things you want to tell your patients or members or employees (or vice-versa all the things you patients want your healthcare companies to tell you):

There has been a change to your X (copay, formulary, network).
You have an opportunity to save money by doing X.
We are missing X data that will delay your coverage.
We see that X happened and wanted to gather data on your experience or proactively address your question.
Welcome to our plan. Have you registered on the website? Have you received your ID card?
Please take this Health Risk Assessment.
Your credit card has expired. Would you like to update it?
Your order is delayed. If this is an emergency, please do X?
We see you were on the website. Did you find what you needed?
Do you need a copy of your X (formulary, provider directory)?
You have not yet picked a Primary Care Physician. Would you like to do that now?
Did you receive the information that we sent you?
Are you following your physicians orders? Did you do X? Why or why not?
Our records show us that you are due for a X. (Flu shot, screening)
Are you using any over-the-counter products that we should have in our database to identify drug-drug interactions?
Please remember to refill your medication?
Are you having any side effects or complications associated with your recent medication or procedure?
Have you enrolled yet in our disease management (or incentive) program? Would you like more information?
Welcome to the plan.
We know it is time for open enrollment. We hope you will renew with us. We are offering a local meeting to help you learn more about your benefits. Would you like to attend?
X has changed with your drug, condition, etc. There is new information available at Y.

Getting back to the article…He offers several good examples of sticky messages which are primarily what I would call rallying calls for organizations. In healthcare, the key is to find these simple messages that compel people to act. So, bottom lining it, he gives six basic traits:

Simplicity – short and deep
Unexpectedness – uncommon sense messages generate interest and curiosity
Concreteness – his example is don’t say “seize leadership in the space race” but say “get an American on the moon in this decade”
Credibility – this should be so easy in healthcare if you leverage all the people and stories out there
Emotions
Stories

He has a few great stories such as:

A Nordstrom’s person wrapping something bought at Macy’s just to make the customer happy. [And probably without point it out.]
A FedEx driver who forgot the key to a box simply unbolting the box from the ground and throwing it in the truck so they weren’t late.

These things reinforce the message while becoming a type of urban legend that stay with people. They evoke emotion in a simple way.

One good example I have from Express Scripts was around trying to motivate people to change from one drug to another. When Zocor was going generic, we decided to launch a huge multi-modal campaign to drive down Lipitor marketshare and move people to Zocor so that when it went generic everyone would win. [Clients would save; patients would save; and we would make more money.] It worked. But, prior to the program, we worked with linguists and others to design and test a set of messages. The one that resided best was “we have a secret that can save you money”. People were intrigued and listened. They felt like they were being let in on something that was important. We ended up positioning it similar to a Consumer Reports Best Buy. It worked.

Books / Articles, Business Tools, Healthcare, Leadership, Managed Care, Marketing / Communications, Methodology, PBM / Pharmacy, Value Propositions

Looking for an Acquisition – Speculation

December 20, 2007 by George Van Antwerp 1 Comment

With the stock market handsomely rewarding the PBMs especially Medco and Express Scripts, they have cash and stock value to go on the acquisition path. Express Scripts has grown through acquisition over the years leading up to its acquisition of several specialty pharmacy companies a few years ago. In the St. Louis Business Journal, David Myers (VP, Investor Relations) is quoted as saying “Acquisitions are Express Scripts ‘No. 1 priority for our strong cash flow'”.

[By the way, as I have previously disclosed, I own no ESRX stock or other stocks individually. I only invest in mutual funds…and do very well with it.]

Although it’s been out for a week, I just read it this morning so before I run into anyone there I want to have fun guessing what Express Scripts might acquire. Usually, all I hear about is speculation of who might buy them. It typically is either a retailer like Walgreens or Wal-Mart or occasionally a managed care company. I don’t see them getting bought with the valuation so high. And, there are very few payor other than United Healthcare (which is tied to Medco) or WellPoint that could swallow such an acquisition. And, I am sure Walgreen’s won’t do anything until they see what the CVS/Caremark deal looks like, but if it works, they would have to make a bid for Medco or Express Scripts to compete.

Buy one of the many regional PBMs that exist. This would be the easy play. It could be integrated. There is lots of synergy. But, people still go to the regional players for a reason, and you may lose a lot of the lives. Now, buying Walgreen’s PBM might be an interesting play and create a sticky relationship with them to align against CVS/Caremark.
Buy a niche PBM in an area such as Worker’s Compensation. Not a bad strategy. They used to have about 20% marketshare in this space. They could also go after the Third Party Billers here although I think that market space may collapse.
Buy another specialty PBM. I hope not. They have the assets already to be successful here. All you would be doing here is buying lives for people committed to one particular pharmacy. I think the premium would be too high.
Go into a related space like dental or vision, but they tried vision before and it never really took off.
Go into the data (e.g., IMS) or IT space (e.g., Ingenix), but they have also tried this and it never took off.
Continue to acquire in the consumerism space. They recently bought ConnectYourCare. There are lots of companies out there doing interesting things in this space and with the projected growth here there are lots of opportunities. The problem is valuation of these companies, maturity of the business model, their risk in going into this business, and their focus on the traditional PBM model.
Buy a technology company like an e-prescribing company (e.g., Prematics where Barrett Toan (founder of ESI) is an advisor) or a Physician Practice Management company (e.g., Pat McNamee the Chief Administrative Officer came from Misys which I believe was for sale) or healthcare IT company like Cerner or a pharmacy automation vendor like ScriptPro or a Personal Health Record company (like Aetna bought ActiveHealth).
Buy a disease management company. Medco has a 10-year (I think) deal with Healthways which I would assume is a “try and buy” type relationship (i.e., let’s try this out and if it works we will buy you at a pre-determined price). ESI has worked with LifeMasters in the past, but I assume there are lots of players out there with interesting models.
Follow Medco and buy in the disease space and DME (durable medical equipment) space. Medco bought PolyMedica earlier this year as part of their strategy to develop disease specific pharmacies called Therapeutic Resource Centers. This would probably be the most logical extension. It seems to be working for Medco.
Buy into the international health
space. This would probably be the most adventuresome with the biggest upside (if it could work). There is a lot of opportunity outside the US, but with limited investment, no managed care companies or PBMs have ventured too far. Express Scripts has a company in Canada. I know a few others have explored and/or tried small ventures.
Buy into the generic manufacturer or distribution space. This would probably be the most lucrative. They have a huge distribution channel. Why not buy a portion of an existing generic manufacturer, open a distribution company (like McKesson, Cardinal, or AmerisourceBergen), and create a single source relationship with the Express Scripts pharmacy and give the retail pharmacies a different reimbursement rate if they used them.
They could always try to become a retailer or go into the clinic business. There is something here, but it is a very different model and given the “training” they have done with the street over the past decade to focus on ROIC (return on invested capital), I don’t think they could do this.

Now, the two things I would suggest if I were still there would be:

Invest in IT. Look at how to automate more workflow activities. Look at technologies that drive patient self-service. Look at things that drive patient behavior (online tools, educational programs, incentive systems). Build out mass customization and personalization based on integrated data – medical and lab – so that no one can catch them. (But, if you are waiting to sell, don’t spend the money to overhaul the system.)
Create some mad money in a Venture Capital type relationship with someone like Google or Microsoft that are trying so hard to get into the healthcare space and would welcome the relationship to jumpstart.

Who knows? I certainly don’t know what they will do, but it is a fun position to be in. You have money. The market is at an inflection point. You want to be a catalyst. You have driven incredible results for a decade. What next?

Books / Articles, General Thoughts, Healthcare, Leadership, PBM / Pharmacy

Applying Technology Trends to Healthcare

December 19, 2007 by George Van Antwerp 0 Comments

McKinsey recently put out their 8 technology trends article (access available with free registration). I thought I would translate those to the topic of healthcare communications. Hopefully, we don’t have to be hit by a bolt of lightning to change, but we realize and can document the ROI of acting now and improving our system by involving and reacting out to patients.

Distributing Cocreation – This is the trend which is happening in many industries where consumers (patients) and suppliers (providers) are taking more involvement in product design and even advertising. New media and technology have enabled this to happen. This is a big opportunity for healthcare. In general, I see companies doing focus groups, but not letting product design be driven by the consumer. I don’t see competitions to design the next advertisement for a managed care company happening today.

“By distributing innovation through the value chain, companies may reduce their costs and usher new products to market faster by eliminating the bottlenecks that come with total control.”

Using Consumers as Innovators – This conceptually seems similar to the first trend although there are likely more differences than semantics, but the value remains in letting consumers push healthcare. How do we capture what they want and the value associated with it? How do we create business models that allow companies to exist to provide that offering? It’s not easy for individuals to drive innovation since we are often tied to what we know.
Tapping Into A World Of Talent – For the past few decades, many other industries have focused on getting their executives to gain multi-cultural experiences by working globally. There have also been studies that link innovation to diversity. With the exception of pharma, most healthcare companies aren’t global. Sure, all the big companies look outside the US for models and occasionally to sell to the government entities, but not much has taken off. The primary expansion in leadership that I have seen over the past five years is a lot more healthcare companies recruiting in executives from non-healthcare companies which will create some diversity and bring a new perspective to the table. Interestingly, I think this also is an issue in the patient outreach process. Are your communications taking into account the diversity of your patient population – e.g., language, messaging, channel, speed of voice?
Extracting More Value From Interactions – This is very true for healthcare. I would bet that the majority of communications in healthcare are either reactive (you call them) or required by regulatory issues (e.g., explanation of benefits or annual notification of change). These programs were originally designed to cost as little as possible so that someone could check the box. Well, guess what. Over the past few years, companies are realizing that these communications are their best ability to influence patients. So, what are the “golden moments” that exist where an interaction can drive loyalty, satisfaction, wellness, etc. Companies need to figure out what the potential value is and how to capture it.
Expanding The Frontiers Of Automation – Automation has been a focus for years. Healthcare is not an exception expect people struggle with how to provide care and a personalized experience while leveraging automation and technology. And, now with technologies such as web services, companies can be interlinked and automated which (when done right) can improve the consumer’s experience. Of course, the second challenge is that automation is best when it enables a process and people don’t often think, manage, or operate from a process perspective.
Unbundling Production From Delivery – I think the whole concept of unbundling could be very interesting given consumerism. Unbundling has already happened for the corporate buyer…they can buy health insurance separate from pharmacy. So, could I (the consumer) one day buy long term insurance separate from prescription coverage separate from my provider network separate from customer support. Could I choose my disease management company? What would that mean for group discounts, bulk purchasing, underwriting models, etc.?
Putting More Science Into Management – We are a lucky generation in that we have access to reams of data and information. Of course, the challenge is how to turn this into intelligence and use it. It is easy to get overwhelmed and frozen. But as managers, using information applying algorithms, linguistics, and neurosciences to it to create personalized communications that apply to each micro-segment of your population is a great opportunity. It translates success from luck to predictable outcomes.

“From “ideagoras” (eBay-like marketplaces for ideas) to predictive markets to performance-management approaches, ubiquitous standards-based technologies promote aggregation, processing, and decision making based on the use of growing pools of rich data.”

Making Businesses From Information – Healthcare has long embraced this trend. There are numerous companies (e.g., IMS) which are built around information. There are clinical companies that produce drug monographs for use by clinicians. There are aggregators of information (e.g., ePocrates). The point is that companies not only create data exhaust, but as they apply decision sciences, they become consumers of more and more data.

“Creative leaders can use a broad spectrum of new, technology-enabled options to craft their strategies. These trends are best seen as emerging patterns that can be applied in a wide variety of businesses. Executives should reflect on which patterns may start to reshape their markets and industries next—and on whether they have opportunities to catalyze change and shape the outcome rather than merely react to it.”

These seem like reasonable trend predictions that are applicable generally and make a lot of sense form a healthcare perspective.

Books / Articles, Business Tools, Healthcare, Innovation, Managed Care, Marketing / Communications, PBM / Pharmacy, Research, Technology

HCIT, healthcare technology, McKinsey, Technology of Communications, Trends

Medco on CDHC – Support Programs Are Important

December 17, 2007 by George Van Antwerp 0 Comments

In Managed Healthcare Executive (12/1/07), there is a CDHC (Consumer Driven Healthcare) article by Medco which I found very interesting.

A survey by the Employee Benefit Research Institute found that 70% of those in consumer driven healthcare plans consider costs when deciding to see a doctor or fill a prescription (versus 40% in a comprehensive plan). [This seems like the premise of consumer driven healthcare…you will be more careful with the costs of healthcare when they come out of your pocket.]
The study also found that people were twice as likely (35% vs. 17%) to avoid, skip, or delay healthcare services. [I’m feeling better so I don’t need to finish taking that prescription or no reason to go for my screening until my cash flow is better…here is the problem.]
The problem is compounded as an employer. Not only can your costs go up but you could lose productivity of an employee.
The author talks about a 2005 Medco study which showed the medication adherence is associated with significant medical savings (e.g., $1 spent on Rxs for diabetes leads to $7 in medical savings)
The article says that the average number of Rxs per household was just more than 21 in 2003. [I have never seen it presented this way. I always use the number of 13.1 Rxs PMPY which is from 2005.]
The article talks about RationalMed which is Medco’s patient safety system that looks at integrated data (pharmacy, medical, lab, and patient self-reported). [I think that this type of data integration is critical to healthcare. The challenge is integration of the data and taking action on it. I would also like to know the predictive value of the system compared to other tools such as ActiveHealth.]
It points to some data on generic drugs that is great and which was new to me.

“Generic drugs not only cost substantially less, but they also promote drug compliance. A recent study in The Archives of Internal Medicine found that patients who took a generic drug had close to a 13% increase in drug therapy adherence, compared with patients who took brand name third-tier drugs covered by their plan.”

The author goes on to talk about the need to provide patients with information and use tools to drive change. Here were a couple of the points being made:
- People who used Savings Advisor (an online tool that compares costs) were 60% more likely to switch to a generic.
- ¾ of people who discussed generics with their MD or pharmacist got a suggestion to use a generic. [I would like to see it for the percentage of people for which a generic was clinically appropriate. Was this 100% of the opportunities or 75% of the opportunities as implied?]
- Direct mail about generics increased generic conversion by 22% at a savings of $88 per switch per year. [This seems low.]

CDHC will only be successful when companies have figured out how to empower patients with information rather than simply shifting the burden of financial management to them.

Books / Articles, Consumerism, Healthcare, Managed Care, Marketing / Communications, PBM / Pharmacy, Research, Technology, Value Propositions

Bat Phones, Blue Phones, and On-Star

December 17, 2007 by George Van Antwerp 0 Comments

I was listening to a GM commercial for their On Star service earlier today, and it made me wonder. If GM can design a service, staff a call center, and make money in the highly competitive car market, why can’t healthcare?

Conceptually, it seems like such a great service. No interactive voice response (IVR)…you actually get to a live agent right away. You press a button and you are connected…no remembering numbers or having to find the right time to call. They help you with any issue…rather than route you to some other person for follow-up.

Many of you will remember the “Bat Phone” from Batman where (if memory serves me) the Commissioner could pick up the phone and be instantly connected with Batman to ask for his help. We tried a few programs to get at this at Express Scripts. We worked with BCBS of Massachusetts to pilot the “Blue Phone” which was placed at certain high volume pharmacies and allowed patients to pick up the phone and talk directly to an agent that could address questions about their claim (i.e., why has my copay changed? why isn’t this drug covered? the claim got rejected, why?).

“Customers seem to be willing to use the Blue Phone more each day,” said Jon Hersey, pharmacist at Stop & Shop. “The response from BCBSMA is routinely quick and customers don’t spend a lot of time waiting on the phone. This saves time for us and keeps the customers happy, because we can spend more time filling prescriptions and less time answering questions.”

The other thing we tried was setting up a tiered customer service model where high utilizers of prescriptions were given a direct dial that took them directly to a group of skilled agents. Patients loved both the Blue Phone and the tier service model. The challenge of course is staffing appropriately and managing costs. BUT, if companies were more proactive in call obviation, they could employ solutions like this. If companies mined their data to identify when patients would call and reached out to them before they called to address their questions, then inbound call volume would drop dramatically and would be more the exception than the rule.

Consumerism, Healthcare, Leadership, Managed Care, Marketing / Communications, PBM / Pharmacy, Technology

DTC Marketing Blog

December 17, 2007 by George Van Antwerp 0 Comments

I just discovered a blog this morning on DTC (Direct to Consumer) marketing around pharma. I read a few of the posts which seem to provide a good perspective on some of the recent things going on in the industry.

One that stuck out at me talked about the effectiveness of sales reps.

75 percent of pharma rep sales calls don’t involve a face-to-face meeting with a doctor, according to research by Leerink Swann & Co.

I never worked for big pharma doing detailing, but I had a brief chance to try it when I managed a small sales force detailing physicians on generic drugs, mail order, and electronic prescribing. The reps seemed to have decent access to physicians especially once they built a relationship with the office staff and understood his/her busy times. Of course, we were bringing a new topic to the table and in some cases were partnering with the local healthplan.

One of my biggest takeaways from that was that it takes at least 7 times (with the same message) to make an impression. The physician is so busy and has so much information coming at them that this is a long-term strategy. I am honestly surprised the industry hasn’t moved to online detailing or even “books-on-tape” type of detailing where the physician can get the information they need at the time they need it.

It was also interesting that some places were beginning to charge pharma or the reps for access to the physician. It would be interesting to really sit back and understand how reps can help physicians improve the safety, adherence, and wellness of their patients. That is in everyone’s interest assuming the market will bear the correct price for value-added therapies [which I think specialty drugs prove out given their ability to price the drugs at a 10x+ multiple of normal oral solids].

Healthcare, Marketing / Communications, PBM / Pharmacy, Weblogs

Generic Biologics

December 14, 2007 by George Van Antwerp 1 Comment

I mentioned this yesterday in a blog entry about The Right Prescription. But I found a few things in an AHIP article today:

Biologics are expensive, cutting-edge medical treatments made from living cells
$52.7B industry today; projected to grow to $90B by 2009

“We must focus our efforts on properly managing the costs of biotech drugs to ensure the pharmacy benefit is protected and preserved for the future.” (Steve Miller, MD, Chief Medical Officer at Express Scripts)

The say that the top two anemia drugs accounted for 17% of all Medicare Part B carrier spending in 2005. Two other biologics for cancer and rheumatoid arthritis made up another 3% of Medicare spending.
There is lots of discussion going on here at the legislative level to create a pathway for generic biologics to come to market.
PCMA estimated $14B in savings over the next 10 years if a pathway is created and Express Scripts estimated $71B in savings.

Books / Articles, Healthcare, PBM / Pharmacy, Research, Value Propositions

A Few Slides on Specialty

December 13, 2007 by George Van Antwerp 0 Comments

I only have one more post queued up on content from the Outcomes conference. Here is some data on specialty drugs that shows the growth, their percentage of the market, the prevalence, and the cost per patient.

Books / Articles, Healthcare, PBM / Pharmacy, Research

More From ESI Outcomes

December 13, 2007 by George Van Antwerp 0 Comments

Continuing to pull some facts from the prior Outcomes conferences…

When we first began using what we called AEC (Automated Educational Calls), we did a couple of quick pilots with control groups to see how they worked and if they increased lift in our existing programs. For one of my programs (retail-to-mail), we saw a boost on top of our direct mail program not only from those people that received a generic message but especially from those people who listened to the call. Here was a quick snapshot since over the course of multiple attempts we had a 5% success rate with direct mail and in certain programs had gotten our success rate as high as 16% in direct mail while still seeing additional “lift” in the success rate by coupling calls and letters together.

Another question answered was whether DTC (direct-to-consumer) advertising worked. Here you see that the most heavily advertised space had significant trend. In other studies, we showed that although DTC may not grow the specific drug in a 1:1 correlation it did grow the total pie for that therapy class.

As I mentioned yesterday in the entry about big pharma, the discovery of new products has dropped dramatically as shown here.

If you are focused on what’s happening from a generic drug perspective, this chart is a good picture of what’s expected over the next few years.

This is a little old (2004), but based on order of magnitude, it is relevant. The question is what is a theoretical maximum generic fill rate for some of the high cost therapy classes and what is this worth to a plan sponsor in terms of savings.

Another set of data that I always found interesting was the variation in use of generics by state.

Books / Articles, Healthcare, Managed Care, Marketing / Communications, PBM / Pharmacy, Research, Value Propositions

The ESI Outcomes Conference

December 13, 2007 by George Van Antwerp 1 Comment

It was always fun to prepare for our annual Outcomes conference at Express Scripts. What research did we have? Who would it surprise? How would it impact us or clients? Anyways, all of these presentations and even some audio are on the website (2004, 2005, 2006, 2007). I pulled a few slides / graphs with some key points below.

Is there compliance elasticity with prescription drugs? Of course. The research team replicated a published study and found results that were much less dramatic and echoed prior research supporting the following. (elasticity in this case meant that for each 100% increase in the cost of the drug what was the decrease in utilization of the drug)

The differential between your brand and generic copays makes a difference in your generic fill rate (GFR). The data supports the null hypothesis that would say that the greater the difference (i.e., the more the patient saves) the higher the use of generic drugs.

Why are people non-compliant (actually from the WSJ)?

A question I often hear is what percentage of people call into the call center. Obviously this varies by population, but as shown below, it also greatly matters by how aggressive the plan design is and how many changes they are making.

The next question should be whether disruption (measured by the proxy of inbound call volume) is worth it. So, the slides show the trend versus the call volume.

Sticking with the theme, the question is how long does the disruption last. Not too long.

It is never easy to get information out to patients in a timely and effective manner, but the question that also had to be asked is whether they wanted the information. From a 2002 Express Scripts survey:

74% “feel more valued” when they understand the rationale behind their benefit design.
85% “want information” about how to save money on their prescription drugs.
80% feel “more in charge” when they understand choices

Books / Articles, Events, Healthcare, PBM / Pharmacy, Research, Value Propositions

WSJ on the Future of Pharma

December 12, 2007 by George Van Antwerp 0 Comments

On 12/6/07, the WSJ had an article “Big Pharma Faces Grim Prognosis”. The manufacturers have been a good punching bag for a few years here as their creativity has slowed down (regardless of reality this is clearly the perception) and healthcare costs have become a front page issue. It is much easier to understand and compare drug prices than it is to look at provider costs. Now, with all the cost cutting at pharma, we will enter a new era.
In the article, the authors (Barbara Martinez and Jacob Goldstein) predict that “over the next few years, the pharmaceutical business will hit a wall”. Their statistics on the movement to generics is even bigger than I remember. They say that roughly half of the manufacturer’s US sales are scheduled to lose patent between 2007 and 2012 (or more than 36 drugs representing $67B in annual US sales). (See charts from the article)

“The rise of generics wouldn’t matter so much if research labs were creating a stream of new hits. But that isn’t happening. During the five years from 2002 through 2006, the industry brought to market 43% fewer new chemical-based drugs than in the last five years of the 1990s, despite more than doubling research-and-development spending.”

“It has never been easy to take a drug from the lab, through animal testing and into human trials. The industry estimates only one out of every 5,000 to 10,000 candidates makes it to human trials. And many drugs that work beautifully in animals fail miserably in people.”

The article goes on to talk about regulation and the FDA and whether the lack of new products is their issue or some other issue such as the R&D organizational model. It also talks about the fact that not much has changed since the 1800s in terms of the framework for developing drugs. Obviously, this has been the driver for biotech where the drugs are made of proteins and there is no generic competition.
Of course, targeting niche patient groups with biogenerics creates very expensive drugs such as the $200,000 a year that Genzyme charges for Cerezyme to treat Gaucher disease. [If you’re total market size is smaller but your costs to develop and bring a product to market stay the same, prices have to go up or no one will develop the products. It is a problem.]
Given the focus on generics in the market and by the payors along with the battle between brands and generics, I always find it interesting that some of the big companies own generic companies (e.g., Novartis owns Sandoz and Pfizer owns Greenstone). I guess if you can’t beat them…join them.
It will be interesting to see how the companies react. As I have talked about with friends for years, it is relatively easy to be a successful executive in a wildly growing company and industry. It is hard to be a successful executive and leader in a cost oriented industry that is contracting and where the competitive pressures are great. Can these guys make the transition?

Books / Articles, Healthcare, Innovation, PBM / Pharmacy, Research, Value Propositions

Is Prior Auth Purely For Sentinel Effect?

December 12, 2007 by George Van Antwerp 1 Comment

In talking with a few PBMs, it is clear that they approve 90%+ of all prior authorization (PA) requests that come in. With that, I instinctively think of two questions:

Why do it at all?
If you’re going to do it, why have humans involved?

I haven’t seen the data on prior authorizations and how many people who hit a reject at the point-of-sale (POS) actually get a fill ever, but I imagine it is like step therapy (ST). With step therapy, only 50% of the people who hit the reject get a claim. (As I have mentioned before, 90% of those that don’t get a claim get samples, buy an OTC, pay cash, or find another solution.) But, the huge step therapy savings that plans and employers realize is not really about the movement to generics but about the lack of claims. Reduce your claims by 50% in a category and you save money.

So, I have to assume that PA has a similar role. The people that don’t really need it (or don’t understand the process) will either pay cash or find another solution, but they won’t have their doctor call the PBM for approval. (aka – The Sentinel Effect) Those that really need it (and understand the process) will call in and get approved.

So the next question is why are people doing this. I have heard from some pharmacists that it has to be humans so that physicians can’t figure out the approval algorithm and “game” the system. Somehow, I doubt that is what they are staying up at night trying to figure out. And, the agents taking the calls are following a very tight script anyways. I have argued for years that either a website or an inbound voice IVR that asks questions and based on answers determines the next question until the physician either fails the request or gets approval. Only exceptions would require a live person.

BPM / Process, Healthcare, PBM / Pharmacy, Technology, Value Propositions

Medco Medicare Plan Options 2008

December 12, 2007 by George Van Antwerp 0 Comments

This came out a few months ago, but I am digging out while stuck in Philadelphia waiting for my 11pm flight which is delayed until 1am which means I should get to my hotel in Hartford almost 24 hours after I woke up this morning on the west coast.

On October 1^st, Medco unveiled their new plan which has three different options for seniors for Medicare Part D:

Access plan – a $0 deductible plan with copays for chronic medications available for as little as $2 for a 30-day supply (when purchasing a 90-day supply of a generic medication via mail), and generics coverage in the coverage gap;
Choice plan – which features a $0 deductible, $2 for a 30-day supply (when purchasing a 90-day supply of a generic medication via mail), and access to more than 3,400 prescription drugs;
Value plan – a low premium plan with access to thousands of medications including generic, brand name and specialty drugs.

“We’ve asked seniors what they want from a drug plan and they responded with value, choice and access – so that is what we’re committed to providing.” David B. Snow Jr., Medco chairman and CEO

Medco also talks up their Therapeutic Resource Centers as a feature of the offering. These are pharmacies that are focused on one disease state such as diabetes, cancer, cardiovascular disease, and pulmonary conditions. The pharmacists receive special training in the chronic conditions and can help patients to really understand their disease and prescription options. They also offer Medicare Advisors which was a new offering that I hadn’t heard of. I am not sure if this is their MTM (medication therapy management) solution or another group, but the 24×7 access for consultation seems like a nice feature.

They do talk about one thing which I have been surprised not to hear more people talk about which is alerts to members when they approach the gap in coverage (aka the donut hole) where the seniors have to pay for the full costs of their medications. I am still waiting to see someone come up with a plan to minimize this cost (e.g., manufacturer’s covering the cost for the patient as long as they have been loyal to their brand drug prior to hitting the donut hole). More information about Medco’s plans is available at www.medcomedicare.com.

Consumerism, Healthcare, Marketing / Communications, PBM / Pharmacy

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