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Express Scripts (ESRX) to buy Medco (MHS) – WOW!!

July 21, 2011 by George Van Antwerp 0 Comments

In maybe even bigger news than the CVS acquisition of Caremark, Express Scripts announced this morning that they were merging (buying) Medco (for more information go to www.betterrxcare.com) . I’ve imagined a lot of scenarios for the industry, but this was not one.

You now have one big independent PBM with one owned by a retail and the third biggest owned by a payer. A big difference from a few years ago. The 3 models represent fundamentally different approaches.

I knew the United Healthcare decision would prompt something radical to happen in the industry, but I saw Medco driving that not being acquired. This brings a lot of things to mind:

1. What does this mean for the Walgreen’s negotiations with Express Scripts?  (original post)

2. What will the combined entity look like in terms of Consumerology + Therapeutic Resources Centers, International, Specialty, rebates, trend management, mail order operations, call center, and leadership?

3. There will be some serious consolidation over time of people and facilities. How long will this take?

4. Which system(s) will be used?

5. Will this accelerate other consolidation? I would think this puts other PBMs in play.

6. Will United build on their PBM by being an acquirer of other PBMs? How will CVS Caremark respond?

7. With the FEP decision re: Medco, will this impact DOD at Express Scripts?

8. Which of the executives survive? For example, much of David’s team (Medco CEO) has been together for a while. Do they have parachutes? Do they all leave?

9. This becomes a huge client for a wholesaler and other vendors. How will they throw their weight around and what does that mean for the competition?

10. How will they leverage unique components across companies (e.g., different approaches to Medicare, systemed, worker’s comp)?

Of course, all of this assumes the SEC approves this, but I assume the parties feel this is very likely. The industry will look like the wholesalers from a concentration perspective. Will this simply be the beginning of mass consolidation across healthcare – payer, hospital, pharma, technology?

And, at the end of the day, what will the combined entity’s culture be and how will other’s react? I’m sure you’ll see lots of lobbying against the combined entity.

And, in all this, I think people probably missed an analyst report on another PBM that said they thought two captive PBMs with an estimated value of $200-400M would be up for sale in the near future. Who could that be?

Other articles on this:

Books / Articles, Events, Healthcare, PBM / Pharmacy

May Video On PBM Selling Season (CVS, ESRX, MHS)

July 20, 2011 by George Van Antwerp 0 Comments

I just came across this video from May of Lisa Gill from JP Morgan talking about the 2011 PBM selling season. My couple of takeaways were pretty basic:

  • Price is not the #1 decision factor in choosing a PBM.  (I don’t believe that no matter how many surveys there are.)
  • The model is creating differentiation.  People like consumerology or the Medco clinical programs or the CVS Caremark 90-day program (Maintenance Choice). 

I liked her quote from Florida relative to the CALPers issue at Medco that if they didn’t deal with people under investigation then there wouldn’t be anyone to do business with.  (A little jaded perhaps!)

The key question here is the success that the smaller PBMs have been having especially SXC and Catalyst, but even more interesting would be her take on what will happen as Prime and OptumRx focus more outside of their traditional payer markets. 

Everyone always talks about the 9x% of companies that don’t move PBMs, but the question really should be about lives that move.  It only takes a few big clients – Walmart, GE, BCBS, … to make a difference in a selling season. 

http://www.corporateresearchgroup.com/video-details.cfm?ID=263

Healthcare, Marketing / Communications, PBM / Pharmacy

5 Indicators Of Pharmacies Crossing The Chasm

July 18, 2011 by George Van Antwerp 0 Comments

I’ve talked about this several times before in my post about The Future Of Pharmacists and in my whitepaper “Innovate Or Be Commoditized“, but I continue to believe that pharmacists can play a bigger role in healthcare (see also Pharmacists to Prescribe).

I know that people sometimes perceive my support for mail order and/or PBMs as anti-pharmacist, but they’re not. Even my criticism of independent pharmacies isn’t on the great work they do with patients but is focused on the tactics used to try to even the playing field.

But, one of the things I’ve been watching for is what are some early indicators of how pharmacists are crossing the chasm from being dispensing-focused to being core members of the care team.

I’ve seen several:

  • A more outspoken push for pharmacist involvement in ACOs.

“I really think that CMS was remiss in not explicitly including the drug benefit in the Shared Savings model. Because the industry recognizes that it’s important, what we are seeing is that the people who are planning on participating in the ACOs are already reaching out to the PBMs to lean on them to develop programs. So by default, we will end up being participants in it indirectly versus directly…. It’s the most frequently used benefit. It’s hard to imagine that you’ll be able to have a successful ACO model without considering the effects of somebody involved in health outcomes.”  Brit Pim, VP and general manager of the Medicare/Medicaid division of Express Scripts, Inc. (from Drug Benefit News)

  • MTM moving from a required program in Medicare to an optional program for commercial populations.

The Academy of Managed Care Pharmacy (AMCP) recently conducted a survey of its members to get an update on current MTM programs being offered by payers. Out of 57 respondents — which included 43 health plans, six PBMs, five integrated delivery systems and three other organizations — only six reported using MTM programs for their commercial populations alone. Another 17 said they use MTM programs for both Medicare and commercial populations. (from Drug Benefit News)

  • Continued focus on pharmacists and distribution of vaccines.

Immunizations are crucial to protecting patients from developing and dying from vaccine-preventable diseases, and in order to be successful, a team effort is required for all health care professionals to increase immunizations.29 Pharmacists are in a pivotal position to increase awareness about the importance of vaccinations and identify those patients who may benefit from specific vaccinations. By continually increasing awareness about the availability and importance of vaccinations, patients can make informed decisions to protect themselves and their family members. (Pharmacy Times article)

Up to 50 percent of chronically ill people stop taking their medication within the first year. Pharmacists understand many of the contributing factors, which range from cost and side effects to the inherent challenges of taking multiple medications, and can help address them. In fact, CVS Caremark research shows a pharmacist in a face-to-face setting is the most effective healthcare professional at encouraging patients to take medications as prescribed. (CVS Caremark press release)

Books / Articles, Healthcare, Innovation, Leadership, Marketing / Communications, PBM / Pharmacy, Politics

Healthcare From 40 Years Ago…And Feeling Old

July 18, 2011 by George Van Antwerp 0 Comments

When I was at the U2 concert a few weeks ago in St. Louis, I couldn’t help thinking about their music and other things from growing up.  While it was a great concert, it really made me feel old.  Here’s a few of those things which then got me thinking about what healthcare was like 40 years ago.

  • We had record players not digital turntables (or iPad turntable apps).  [I still remember my first 45-single that I bought by Twisted Sister.]
  • I still want to call it a Walkman half the time not an iPod.  And, I think my kids were wondering why I had these big “beat boxes” in the basement that I finally gave away.
  • I actually remember when apartheid in South Africa was more than history and when Nelson Mandela was freed.  I saw him speak when he first came to the US. 
  • When I think of terrorists, I think of the IRA not al Qaeda. 
  • I remember that “the Wall” is not just a song.
  • I remember hyperinflation in Brazil not them as part of the emerging global marketplace. 
  • I remember using my friend’s dad’s car phone and how exciting that was.
  • I remember saving files I programmed in basic to a tape player.  Heck, I even remember having a tape player and recording songs off the radio.
  • I remember wanting a banana seat for my bike as a kid.
  • I remember celebrating the Centennial (200 years of freedom).
  • I remember kids played sports for fun not to become the next Tiger Woods.
  • I remember when China was “the Orient” and not a superpower looking over our shoulder.
  • I remember when people were politically incorrect.
  • I remember when seat belts were optional as were car seats for kids and bike helmets.
  • I even remember owning a black and white TV.

Anyways, I think you get the point.  Of course, I don’t remember what healthcare was like 40 years ago.  For that, I had to do some research. 

I think this YouTube video with Nixon and Kennedy is a good start.  Nixon is talking about spiraling costs and the need for well care.  (Full text of President Nixon’s speech is here.)

In the video, they talk about costs hitting almost $100B that year (while we’re at well over $2.4T per year in the US today).  And, in a quote that sets up well the ongoing technology struggles the industry has had:

Health Information Systems: Each physician, hospital and clinic today is virtually an information island unto itself. Records and billings are not kept on the same basis everywhere, laboratory tests are often needlessly repeated and vital patient data can get lost. All of these problems have been accentuated because our population is so constantly on the move. The technology exists to end this chaos and improve the quality of care. I have therefore asked the Secretary of Health, Education, and Welfare to plan a series of projects to demonstrate the feasibility of developing integrated and uniform systems of health information.  (source)

Does all of this sound familiar?  Scary!

One question I wondered a few months ago is whether we could offer a retrospective plan to people that was lower cost.  What if you stripped out all the “cool” new developments over the past decade, but gave people a safety net healthcare offering that leveraged generics and traditional treatments.  They would have to buy-up to the newer technologies and solutions that were available.  Could that work?  I doubt consumers would tolerate it, but perhaps it could create a reasonable, low cost offering.

Healthcare, PBM / Pharmacy

Can Demographics Predict Adherence – FICO?

July 16, 2011 by George Van Antwerp 2 Comments

Several people have asked me about the FICO adherence scoring tool.  I (like many of you in the adherence business) am fascinated by the concept on using data to predict adherence and subsequently customize programs around that.  On the flip side, consumers may be a little paranoid about this based on comments on the NY Times article.

Ultimately, there are a few questions:

  1. Can you predict adherence?
  2. What data do you need access to?
  3. How accurate is the prediction?
  4. Does the prediction change based on drug type, duration on therapy, health literacy, etc.?
  5. What can you do with the prediction to influence it?
Traditionally, a demographic centric model has shown some attributes such as acknowledging that females are less adherent than males.  But, most of the attributes that I’m familiar with as predicting adherence fall into two buckets:
  1. Healthcare centric data – number of prescriptions, copay amount, formulary status
  2. Consumer provided information – PAM score, Merck Adherence Estimator

I highlighted some of these things in my 15 Things You Should Know About Prescription Non-Adherence post.  The one item that seems to fall across both healthcare and non-healthcare data is past behavior.  This could certainly play into a credit score or even some type of preventative health score.  Do you get your screenings done?  Have you filled other medications on a regular basis?  Do you have and use a PHR? 

Lots more to come on this topic over time, but this is certainly an area with many eyes on it.

Books / Articles, Healthcare, Leadership, Marketing / Communications, Methodology, PBM / Pharmacy, Research, Silverlink, Technology

Copay Cards: Don’t Throw The Baby Out With The Bathwater

July 13, 2011 by George Van Antwerp 2 Comments

Prescription Copay Cards continues to be a hot topic (see list of articles at the end here), but I see a lot of FUD (fear, uncertainty, and doubt) versus a lot of facts. At the end of the day, there are certainly a few stories about cases where costs have jumped up due to copay cards overcoming formulary positioning.

But, no one knows the total market impact. I’ve spoken with six different organizations that would be well positioned to know, but they don’t. It’s not tracked or easily available in the data. Reasonable estimates from Dr. Adam Fein over at DrugChannels put the market at about 100-125M Rxs which is about 3% of the total Rx market (assuming 3.3B Rxs/year) or 12% of the total brand market (assuming 75% GFR). [I validated those numbers with a specialty pharmacy that shared that they were seeing 13% of their claims come in with a copay card.] Certainly, the market has grown as IMS estimated in one recent article.

The question of course is whether these are good or bad and whether their use is malicious or not. My conclusions are based on talking with about 30 people in preparation for my AIS webinar on this topic today. What I concluded was:

  1. There is a win-win. Copay cards can improve adherence. Adherence can reduce total healthcare costs. There is a point at which the increased cost curve crosses the savings curve and is something to be considered.
  2. Today’s approach is a shotgun approach by which cards are available online (e.g., www.internetdrugcoupons.com) and by physicians. They’re not focused on patients with need or on patients with adherence barriers. They play into the misperception that cost is the primary barrier to adherence WHICH IT IS NOT. [Cost is an issue in <20% of the cases according to multiple barrier surveys.]
  3. Copay cards are really a CRM Trojan Horse for pharma to build a 1:1 patient relationship (or should be if they’re not thinking that way). Due to HIPAA, pharma doesn’t typically know who uses their drugs. If I were a brand manager, I would gladly trade some copay relief in return for increased adherence and the contact information for my patients.

I think there are several ways that industry (especially pharmacies) should collaborate with pharma on how to leverage these copay cards at the POS with patients [call me to discuss]. But, to do that, I think the broader industry is going to require some type of rules which I am sharing shortly as a proposed “pledge”.

 

The other thing longer-term to watch is will this further change the PBM-Pharma relationship.  I think yes.  If the PBMs push for legislation on this marketing tactic or the manufacturers figure out that this is a better use of their spend than rebates, this will change the relationship. 

Additional Reading:

  1. Prescription Drug Coupons Bad for Patients
  2. Drug Firms Providing Kickbacks For Copays and Coinsurance
  3. DBN article – As Competitors Encroach, Pfizer Seizes A Few More Glory Days With Lipitor Promo
  4. Adam Fein blog posts
  5. Copayment Subsidies
  6. Coupons For Patients, But Higher Bills For Insurers
Books / Articles, Consumerism, Healthcare, Marketing / Communications, Methodology, PBM / Pharmacy, Politics, Press, Research, Silverlink, Value Propositions

How I Would Use Generic Lipitor To Improve Mail Order Utilization

July 8, 2011 by George Van Antwerp 0 Comments

The fact that Lipitor is scheduled to go generic towards the end of 2011 is the big news many have been waiting for.  The key question of course is whether payers see immediate savings in pricing or whether the price drop is only minor until there are more manufacturers providing the generic. 

I keep thinking about how to leverage this event in other efforts as a PBM or a pharmacy.  This seems like a great chance to drive to a preferred pharmacy (retail or mail).  If it was me making decisions (and I had my pricing and copays aligned correctly), I would do something like the following:

  • Reach out to all brand Lipitor users before their September / October refill.
  • Offer to refill their medication at no out-of-pocket cost to them (i.e., copay waiver) if they move to mail order (or a preferred pharmacy).
  • Provide them with a conceirge service (i.e., fax their physician to get the new Rx) to make it easy to do.
  • Convert them to the generic when available. 

Yes.  This will cost some money, but the 12-months savings (payer) or increased profit (pharmacy/PBM) should outweigh the costs.  It’s a great opportunity to co-mingle your messages and leverage a market event to everyone’s benefit. 

Of course, this should be only part of your broader strategy around the world’s biggest drug.  Your going to want something that addresses:

  • Inbound IVR messaging
  • Web messaging
  • Mobile application messaging
  • MD communications
  • Messaging integrated into outbound communications (print, call, pharmacy inserts)

This is similar to the control room concept my team designed at Express Scripts years ago around Zocor.

Healthcare, Leadership, Marketing / Communications, Methodology, PBM / Pharmacy, Silverlink, Value Propositions

Silverlink eBook: 13 Common Pitfalls In Consumer Health Engagement

July 7, 2011 by George Van Antwerp 1 Comment

After working on consumer communications in healthcare for most of the  past decade, I realized that there were some common pitfalls that happen.  Many of them are pretty straightforward, but when rushed, they may get forgotten.  I worked with Dr. Jan Berger (our Chief Medical Officer) to identify a short list of them, and then the Silverlink marketing team pulled them together in a beautiful eBook. 

Each of the pitfalls is set up with a quote and a great image:

Then, there is a brief description to explain the pitfall on the page across from it:

What are some of the pitfalls:

  • Not knowing how to declare success
  • Limiting design based on company constraints
  • Forgetting about health literacy
  • Not understanding the entire process
  • Thinking you represent the customer

To get a copy of the entire eBook, you can register online.  [Alternatively, you can e-mail me at gvanantwerp at mac dot com.]

Books / Articles, Consumerism, Healthcare, Innovation, Leadership, Managed Care, Marketing / Communications, Methodology, PBM / Pharmacy, Silverlink, Value Propositions, Words Matter

mHealth, Mexico, and HIV

July 6, 2011 by George Van Antwerp 0 Comments

I can tell I’m finally getting through my pile of interesting articles when I pick up an article from February 2010 in HealthAffairs, but it’s a good case study about Mexico’s use of cell phones and mobile technology.

The focus of the story is on VidaNET which is a cell-phone based system that sends text messages and e-mail to patients reminding them to take their medications, keep their physician’s appointments, and stay up to date on their lab tests.  The VidaNET program is for HIV patients and also provides them with other related health information.

“VidaNET is a technology platform that helps you self-manage your health.”

This solution is a partnership between the leading Mexican cellular company (Telcel) and the Carso Health Institute.  It built on their initial program called CardioNET which was focused on obesity related illnesses.  CardioNet featured a risk assessment tool that then drove the consumer to health related resources and provided them with facts to lead a healthier lifestyle.

Although a few of the statistics are now a year old, they are good on the access of the mobile channel:

  • 55% of the world’s citizens have mobile phones
  • It’s projected that by 2018 that there will be one cell phone per person in the world.
  • 80% of Mexicans own a cell phone and the country has more cell phones than people.
I also learned some interesting things about the Mexican healthcare system:
  • Patients don’t have access to their medical records (by law).
  • Doctors are often too busy to explain information to patients.
It clearly is a “physician as God” type of relationship where information is handed down for the patient to follow blindly.  That makes their use of telehealth even more radical by empowering the patient.
The article references two other studies on text messaging:
  • A Vodafone study that found that text messaging appointment reminders to patients in the UK reduced missed physician appointments by 33-50 percent.
  • A review of 14 studies in the American Journal of Preventative Medicine that found that text-messaging interventions produced positive behavior change in 93% of the cases.
I thought the article also did a good job of talking about why adherence is an issue for HIV patients and its importance:
  • Multiple doses of multiple drugs
  • Unpleasant side effects
  • Work only if drugs are taken at least 95% of the time
  • If patients go off their medications, it can lead to the growth of resistant strains of HIV
To some degree, the system is essentially sending you messages based on data you input which seems like a short-coming.  It’s not looking for refill data, planned appointments, and other information which might be electronically accessible.  You input data to set up your profile which then triggers reminders.
One of the cool features is a “stoplight” which tells you quickly your MPR (medication possession ratio).  If you miss your medications twice, you get a red light with the following:
“Don’t let the virus continue replicating.  LOOK FOR SUPPORT AND VISIT YOUR DOCTOR.”
At the time of the article, they were just working on DiabeDiario which is basically a Diabetes Diary.
Books / Articles, Healthcare, Innovation, Leadership, Marketing / Communications, PBM / Pharmacy, Research, Technology

Pharma Virtual Trial (like Remote Monitoring)

July 5, 2011 by George Van Antwerp 1 Comment

I think one of the most exciting things in pharma in the past few months has been the approval that Pfizer received to allow them to do a virtual trial.  This appears to build on a lot of the momentum around remote monitoring, mobile health, telemedicine, and other trends.  The key is that this opens up a gateway for broader trials at potentially lower cost.

But, I think the key with any solution like this is the blend of active and passive monitoring.  In passive monitoring, you wait for the patient to not provide data and then intervene.  In active monitoring, you are prompting them to provide data proactively.  Different patients will respond differently, and probably, like adherence programs, you need a mix of both.

Books / Articles, Healthcare, Innovation, Leadership, Methodology, PBM / Pharmacy, Technology

A Few YouTube Videos On ADHD

July 5, 2011 by George Van Antwerp 0 Comments

(Note: If you get this e-mailed to you, the videos may not show up without visiting the site.)

Here are a few videos on this topic:

Books / Articles, Healthcare, Marketing / Communications, PBM / Pharmacy, Social Media

Why Doesn’t The FDA Require Adherence Programs?

June 30, 2011 by George Van Antwerp 0 Comments

The one thing that kept jumping into my head while thinking about the FDA’s decision to require REMS programs is why they don’t require adherence programs.  They approve drugs based on clinical trials.  In the clinical trials, we see unreal adherence rates that are never duplicated in the real world.  If they saw the same adherence drop-off rates in the clinical trials, would they still approve the drugs?  I would venture a guess that the answer would be no because the outcomes would be much less. 

So, if drugs don’t work in people that don’t take them (as Dr. Koop would say), why do we have a bunch of drugs on the market that “don’t work”?  Wouldn’t the FDA want to address adherence of these ~9,800 drugs where 99% of the spend is and which have a huge impact (~$290B) on the healthcare costs of the US in addition to focusing on the ~120 drugs that have safety concerns that require REMS?

Healthcare, PBM / Pharmacy

REMS: A Few Learnings

June 30, 2011 by George Van Antwerp 0 Comments

I just finished reading Assessing the Impact of Risk Evaluation and Mitigation Strategies (REMS) Requirements on the Pharmaceutical Supply Chain by the Center For Healthcare Supply Chain Research. 

If you don’t know what REMS is, here is the FDA page on REMS.  Essentially, they are programs that the manufacturer is required to provide to mitigate risks associated with certain drugs. 

This study does a good job of describing the REMS landscape and sharing some challenges and opportunities.  As someone who was less familiar with this than many of you in the industry, I found it a good foundational piece which got my mind thinking. 

Overall REMS can be required to include five distinct elements:

  1. A medication guide
  2. A communication plan to healthcare professionals
  3. An ETASU (Elements to Assure Safe Use)
  4. An implementation system
  5. A timetable for submission of assessments of the REMS (required in all cases)

“As part of the REMS submission to the FDA, a manufacturer also must show that the strategy elements will not unduly burden patient access (particularly where patients have life-threatening diseases or difficult access to healthcare providers of the drug).”

Definitely, that access issue is key.  These programs add time and hurdles which need to be seamlessly worked into the workflow for physicians and pharmacies and show improvement in outcomes or reduction in risk.  And, ideally that should happen with cost in mind. 

Given the infrequency that some generalists might have with some specialty products, this can create communication and compliance challenges.

For distributors, this creates both a burden but also a financial upside as they charge to manage and implement the REMS.  On the flipside, for physicians, this creates extra effort which isn’t reimbursed.  As the study broke out different perspectives from constituents in the process, this along with several others from providers caught my attention:

  • Do the REMS requirements hold the physician liable for safety?
  • Will the perception of risk impact the likelihood of the patient starting or continuing on therapy?

Certainly from a communications perspective, REMS have led to the buildout of “hubs” that provide services around these drugs in the areas of data management, patient counseling, call center, registry, and content management. 

The study estimates the economic impact of these programs on both the distributor and the provider (physician, nurse, and pharmacy).  For example, they estimate that a pharmacist at a specialty pharmacy spends 100-165 minutes per patient per month for those on drugs with a REMS requirement. 

They pose a question towards the end around generics and biologics which gets at the heart of the cost / benefit tradeoff for bringing a product to market which requires a REMS when part of your value proposition is a lower cost. 

Anyways, for those of you interested in the topic, it’s a good read. 

 

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

Discount Code For AIS Webinar: Drug Copay Cards

June 29, 2011 by George Van Antwerp 0 Comments

For those of you that are interested, here’s a link for a $30 discount on the AIS webinar that I’m doing with Sean Brandle from Segal Company on drug copay cards.  As a teaser, here’s results from one of the survey questions that I posed earlier (noting that the sample size was small, but likely indicative of the overall market).

Healthcare, Marketing / Communications, PBM / Pharmacy, Research, Silverlink, Value Propositions

$5.2B In Savings From OTC And Patient Self-Diagnosis?

June 22, 2011 by George Van Antwerp 0 Comments

This is an interesting piece with some good data in it.  It estimates that 10% of physician visits are for minor healthcare items where an OTC (over-the-counter) drug could be used.  It then estimates that if 50% of those unnecessary visits were eliminated we could save $5.2B.  It will certainly get some political attention (which it already has).

I have a lot of questions:

  1. How does the patient know that their “ailment” is something to self-diagnose?
  2. Does self-diagnosis lead to new issues?
  3. What are the restrictions around OTCs versus Rx products?  [Look at Prilosec OTC which has labeling limiting it’s long-term use versus the Rx product which could be viewed as a maintenance drug.]
  4. Were there other benefits to the patient and healthcare system of them visiting the physician?

On the other hand, if I were a clinic company (think MinuteClinic or TakeCare Clinic), this would be great.  It’s proposing to move 26M physician visits to another channel.  I think the research believes this all jumps to Dr. Google, but I think it’s more likely that this gets pushed to clinics (and hopefully not to ERs). 

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

Here We Go Again – WAG and ESRX Network Dispute

June 21, 2011 by George Van Antwerp 2 Comments

This morning Walgreen’s announced that it could not reach agreement with Express Scripts on their retail network contract. This is a big deal (for both parties) as Walgreens processes approximately 90M Rxs for Express Scripts or approximately $5.3B worth of Rxs.

This has definitely happened before (see CVS Caremark and Walgreens before), but this year’s dispute is different for a few reasons:

  1. CVS Caremark clearly had their own retail network to fall back on. Express Scripts wouldn’t likely partner up with CVS so they’d be pushed into creating limited networks and partnering with everyone except the two biggest retail chains (in so much as PBMs partner with retailers versus simply negotiate with them).
  2. Last year’s dispute seemed focused on Maintenance Choice while this year’s dispute seems focused on contract terms (from press release).
    1. Express Scripts insisted on being able to unilaterally define contract terms, including what does and does not constitute a brand and generic drug, which would have denied Walgreens the predictability necessary to reliably plan its business operations going forward.
    2. Express Scripts rejected Walgreens request to be informed in advance if Express Scripts intends to add or transfer a prescription drug plan to a different Express Scripts pharmacy network, and to provide patients with equal access to Walgreens retail pharmacies.
    3. Express Scripts proposed to cut reimbursement rates to unacceptable levels below the industry average cost to provide each prescription.

As with last year (and year’s prior), I believe this will get resolved, but it creates an arbitrage opportunity for all the PBMs except Express Scripts in the short-term. [In the short-term, Express Scripts gets hurt in the sales cycle with this distraction. If this played out, Walgreens would take the brunt of the real impact by losing significant script volume. Ultimately, it’s a game of chicken with potential bad outcomes for all (as the picture indicates).]

My questions are:

  • These have been issues in contracting for a long time. Why now?
  • Why are these disputes with CVS Caremark and Express Scripts? What are Medco (or others) doing to avoid these issues?
  • Does Walgreens get these terms from other PBMs? Or, is Express Scripts able to get these terms from CVS and other large chains like Walmart?
  • Is this just a negotiating tactic which is to put public pressure out there? If so, it’s seemed to work in the past. Will it work again? [The UAW used to do this on a rotating basis to the big 3 auto makers. It worked well, but every once in a while they had to go on strike.]

I know one Wall Street analyst who is at Express Scripts tomorrow. That should be an interesting discussion.

If history is any indication, I would expect we’ll see an Express Scripts press release on their perspective by the end of the day.

Ultimately, the big question is whether something like this could be the final event to push the industry into limited / restricted networks (see Walmart post) and get it from the 5-10% of clients that use this today to a more meaningful number.

[FYI – As of right now, ESRX is down 1% and WAG is down almost 6%…buying opportunity?]

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

Is The PBM A Fiduciary? I Don’t Think So.

June 20, 2011 by George Van Antwerp 2 Comments

I’m not a lawyer, but with the potential repealing of the Maine law regarding PBMs, it’s time to think about this question.

Here’s a definition from USLegal.com:

A fiduciary duty is an obligation to act in the best interest of another party. For instance, a corporation’s board member has a fiduciary duty to the shareholders, a trustee has a fiduciary duty to the trust’s beneficiaries, and an attorney has a fiduciary duty to a client.

A fiduciary obligation exists whenever the relationship with the client involves a special trust, confidence, and reliance on the fiduciary to exercise his discretion or expertise in acting for the client. The fiduciary must knowingly accept that trust and confidence to exercise his expertise and discretion to act on the client’s behalf.

Just looking at this definition, it raises a few eyebrows:

  1. Can the PBM be responsible to its shareholders and to the clients?
  2. Does the PBM act on behalf of the client?

The fiduciary relationship basically makes the PBM into a cost-plus model where profits and costs are know. There are already lots of transparency standards for clients to leverage in designing their PBM contracts.

I struggle to see a comparable fiduciary business relationship out there. Suggestions?

On the second point, the whole PBM model around benefit design and interventions has been set up as consultative where the PBM provides ideas and models for the payer to select from. They don’t get to chose what’s best for them. I’m not sure that the lobbyists for the original plan would want this. If I’m a PBM with a mail order pharmacy, I believe that this is the best model to save money, drive adherence, and avoid errors. So, as a fiduciary, wouldn’t I have to put in a mandatory mail program with mandatory generics lots of utilization management programs and a closed formulary? That’s what’s best financially in most (all cases).

I’m all in favor of disclosure of conflicts of interest. PBMs should explain how they make money to their clients so it’s clearly understood.

In this older post on another blog, a physician talks about physicians having some fiduciary responsibility, but I don’t think this goes far enough. If the physician has a fiduciary responsibility to the patient, wouldn’t they have to disclose their profit based on different choices:

  • If you choose this medication and fill it from my in-office dispensing, I make $X versus you choosing this other drug.
  • If you get this procedure done, I get a referral from my colleague plus I make $X on performing the surgery.

Of course, maybe the issue is that Maine (and others) have tried to use fiduciary to focus on the financial controls around the PBM business model instead of the business practices about helping payers understand their decisions (the legal breakdown on MDs seems more business focused):

  • This will affect X% of the population.
  • This will save you $X compared to your other options over here.
  • This will be a win-win for us because we make money as your GFR goes up.
  • We charge manufacturers an administrative fee for managing the rebate contracts and will keep that.

When the DC regulation around PBM fiduciary responsibility went to court, it was struck down. Will Maine finally end up in the same bucket? Will others follow?

I guess the question for people to ask is what has happened to Maine’s pharmacy costs in the past few years. Has there been an advantage (or disadvantage) to this law?

Books / Articles, Healthcare, Methodology, PBM / Pharmacy, Politics, Value Propositions

Forrester On Automated Customer Service

June 17, 2011 by George Van Antwerp 0 Comments

I was reading a report that Nuance commissioned a few years ago with Forrester Consulting about using automation for customer service. It’s worth a read (and publicly available here) if you work in the customer service space and get questions from your clients about automation versus agents. Here are a few things that caught my eye:

  • Consumers who use cell phones to call into customer service are relatively more interested in using automated telephone systems for customer service interactions. (Hint: You could probably reverse that logic also to say that they are most receptive to outbound IVR also.)
  • Consumers rate automated customer service higher than live agents for certain straightforward interactions (including Rx refills).
  • Once they engage with automation, 74% of consumers typically stick with the process.
  • 12% liked automation because of privacy and not having to divulge information to a person. (Something we’ve seen at Silverlink in multiple healthcare scenarios.)
  • 81% of people surveyed were interested in proactive notifications around healthcare via automation (e-mail, voice, SMS).
  • People prefer being steered to answers versus just being able to respond and have the system understand them. (i.e., give me a list of options)

Very interesting. It maps well to a lot of our best practices and how we consult with our clients in designing healthcare engagement strategies. (Of course, you have to make sure you use create engaging, personalized messaging in these channels to optimize success. Van Antwerp household is the same as Dear Resident to me…and if I have 5 drugs and 3 conditions, a generalized call to action won’t get much response.)

Healthcare, Marketing / Communications, PBM / Pharmacy, Research, Silverlink, Technology, Value Propositions

What I Learned In PharmaVOICE

June 16, 2011 by George Van Antwerp 0 Comments

I’ve been reading the magazine PharmaVOICE for the past year or so. I really enjoy it. I occasionally pull a few articles out.

I was reading the March 2011 version on the plane and found a ton of interesting information. I thought I would share some of the nuggets from it:

  • In 2010, 112M people (48% of US adults) were e-pharma consumers (individuals who went online to find pharma information). (Manhattan Research)
  • Fewer than 20% of consumers who go online for pharma information mistrust pharma websites (branded and unbranded).

“We found the degree to which consumers are open to online content from manufacturers surprising, considering the common perception that consumers are generally critical of pharma generated information.” (Manhattan Research Healthcare Marketing Analyst Maureen Malloy)

  • Top Prescribing-Driving Sites (Manhattan Research):
    • Levitra
    • Chantix
    • Cialis
    • Nexium
    • Yaz
    • Lyrica
    • NuvaRing
    • Symbicort
    • Viagra
    • Lunesta
  • Talk about how research is now “peer reviewed” via social media – original article.
  • Talk about the Sanofi-Aventis blog – Discuss Diabetes – which enables two-way conversations with patients in public.
  • Talk about how Merck is helping patients engage with consumers using online videos and checklists.
  • Talk about a text messaging service focused at teens and young adults for adherence – www.ireminder.com.
  • An interesting article by Ogilvy about 8 Health Engagement Zones and 7 things to keep in mind about public and individual communications:
    • Technology is not a panacea…it has to be adopted and incorporated into everyday behavior.
    • Information must be communicated and interpreted effectively to change behavior.
    • To cut through the “clutter”, information will increasingly be communicated via story-telling and visualization.
    • Technology will allow us to create the right message with the right tone in the right place at the right time. [or already does allow for this with the Silverlink Platform]
    • Health messaging will become personalized. [already happening]
    • Highly targeted, persistent, positive messaging will be needed to help overcome fear and embarrassment.
    • Although health is a serious matter, we don’t always have to take ourselves seriously when it comes to health communications. (e.g., gaming)
  • In the year ending Oct. 2010, $4.4B was spent on DTC advertising around pharmaceuticals.
    • Pharma 3.0 success will be “based not on how many drug units are sold, but on how well pharma’s market offerings improve health outcomes, putting patients and payers at the center of the model”.
    • Pharma investments in condition support tools – smartphone apps, websites, devices, and social media – was up 78%.
  • In a recent Harris poll, only 11% of respondents perceived the pharmaceutical industry as generally honest and trustworthy.
  • According to SDI, there’s been a shift in spending from 2007-2009:
    • 30% decrease in print
    • 32% increase in online activities targeting physicians
    • 29% decrease in magazine DTC advertising
    • 300% increase in internet advertising
  • Learned about a physician “hotlink” (my name) by AstraZeneca where they can connect with the AZ medical affairs team by a feature on their iPhone – formulary status, adverse event reporting, request samples, …
  • Similarly, learned about an “Ask Pfizer” button in Sermo.
  • According to the Manhattan Research’s ePharma Consumer v10.0 study – almost 3/4th of the people visiting pharma websites take a product related action afterwards. (That’s amazing!)

“When pharma is thought of as a health-services industry, the possibilities for growth in revenue, engagement, personalization, and freedom from pipeline dependency are almost endless.” (Paul Simms, eyeforpharma)

  • A list of manufacturers and what percentage of their portfolio is at risk in the next 3 years for patent expiration:
    • #1 Pfizer with $53.6B and 68% of their portfolio
    • #2 Lilly with $20.8B and 66% of their portfolio

“The industry has to address the consumer population across multiple channels with information that is timely, easy to understand, accurate, and actionable.” (Deborah Schnell, Health Advice Networks)

  • There was an article discussing a great question about whether “brand equity” exists after patent expiration.
  • There was talk about the shifting “customer” of pharma from the physician to the consumer and the formulary committee.
  • There were some statistics from a Tufts study on REMS where 75% of people thought the program needed a major overhaul.

I shared a lot here to make a point…this is a monthly magazine packed with interesting content. If you’re in this space, you should be reading it.

Books / Articles, Consumerism, Healthcare, Innovation, Leadership, Marketing / Communications, PBM / Pharmacy, Research, Social Media, Technology

Will Copay Cards Doom Rebates?

June 15, 2011 by George Van Antwerp 0 Comments

Only 20% of the people I surveyed believe that copay card success could ultimately be the end to pharmaceutical rebates, but I think it’s a fascinating discussion topic.

If you’re a manufacturer, you have a finite budget to drive sales of your product. That budget can go to DTC advertising, market access (i.e., rebates), samples, copay cards, adherence programs, physician education, detail reps, and a few other areas.

The question of course is what do you get for your rebate dollar. Would I rather pay a $10 rebate to the PBM based on formulary status or would I rather offer a $10 “coupon” to the consumer to fill my drug?

This leads to a lot of questions:

  • What does formulary status gain you in terms of increased market share above national market share?
  • Could formulary status with Medicare / Medicaid get you trickle down effects that make you care less about formulary status within a plan or PBM?
  • Do copay cards work to gain new marketshare, get new starts, reduce primary adherence, reduce abandonment, or improve MPR?
  • Will your drug be affected utilization management programs?
  • Which builds better long-term brand equity?
  • Will health reform change anything in terms of the individual’s ability to access drugs (i.e., PBM of one)?
  • Which is more likely to influence a physician – formulary status or copay relief?
  • If there are less “me-too” drugs will the majority of relevant drugs be “on-formulary” due to clinical reasons so you can’t gain much?
  • How will personalized medicine impact the formulary concept in the long-term?

I’m in the middle of researching the topic of copay cards for my AIS webinar on July 13th. It has uncovered a few nuggets about changing PBM and manufacturer relationships, support for these programs, proof points, and other items I’ll share then.

Of course, if it became clear that these cards were being used for market access not for adherence and improving outcomes, that would put these two on a head-to-head collision course. Or, if these tools slow down the generic adoption curve post patent-expiration, that could also draw some attention across the industry. (I believe Lipitor will be a big test of this since the increased margin from generic Lipitor is already factored into the PBM valuations and impacting that would impact stock price which would be a big deal.)

Events, Healthcare, PBM / Pharmacy, Value Propositions

DAW Rxs Impacts Adherence

June 12, 2011 by George Van Antwerp 0 Comments

5% of the prescriptions analyzed by CVS Caremark in a study were DAW (or Dispense As Written).  Obviously, for SSBs (single-source brands) this doesn’t matter since there isn’t a chemically equivalent generic drug.  But, for MSBs (multi-source brands) this can make a difference since the patient is often required to pay significantly more based on either (a) the drug being on the 3rd tier or (b) the plan design requiring the patient to pay more for “chosing” the brand over the chemically equivalent generic.

I guess one easy answer would be to get rid of DAW, but there are NTI (narrow therapeutic index) drugs where DAW is much more  relevant or the rare consumer who has some allergy to the fillers in the generic. 

So, why does it matter?  It mattes because the researchers found that

“chronically ill patients just starting critical therapies were 50% to 60% less likely to fill prescriptions for expensive brand name drugs” (Drug Benefit News, 4/1/11)

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

400 Orphan Drugs In Development

June 11, 2011 by George Van Antwerp 0 Comments

A report from PhRMA looks at rare diseases and orphan drugs.

An orphan drug is a pharmaceutical agent developed to treat a disease that affects less than 200,000 people in the US.

While individually this may not seem like a big market, it is estimated that 25-30M Americans suffer from a rare disease.  And, developing therapies for these unique conditions can allow for price premiums. 

At the end of the document, they have some FAQs and suggest some websites.  Here’s one FAQ:

How can you find out about clinical research on rare diseases?

There’s a web site that was just set up a few years ago by the federal government. It’s called www.clinicaltrials.gov.  It’s important to remember “.gov” because there are some commercial sites that have similar names. Every research project receiving any money from the U.S. government must be listed on this site. It’s a requirement. You can type in the disease name and find all sorts of information about the studies, where they’re being conducted, what is needed to be eligible, and who to contact to learn more about participating. If you don’t have a computer, ask your local librarian to help you search on that web site.

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

$15 Compound Vs. $1,500 Injection – Price Gouging?

June 11, 2011 by George Van Antwerp 0 Comments

You don’t often get to see outrageous pricing examples like the one around KV Pharmaceutical’s Makena product.  Specialty pharmacies have been compounding and making a version called 17P for years.  17P sells for around $15 per shot and patients typically take 15-20 injections during pregnancy to help prevent pre-term birth. 

“As far as I know, most physicians are using the compounding pharmacies for 17P,” said Dr. George Saade, president of the Society for Maternal-Fetal Medicine. “If we feel there’s no extra advantage of a more costly treatment, then our obligation is to prescribe the less costly treatment … It’s not right to abuse the health care system by prescribing an astronomically more costly medicine when there’s no evidence that it’s better.”

KV Pharmaceuticals came out with a branded version of the compound to create easier access to the drug.  They initially priced it at $1,500 but had already dropped it to $590 per shot when an article with the above quote appeared at the beginning of May. 

For those of you less familiar with compounding, here’s a statement from an FDA study in 2006:

FDA regards traditional pharmacy compounding as the extemporaneous combining, mixing, or altering of ingredients by a pharmacist in response to a physician’s prescription to create a medication tailored to the specialized medical needs of an individual patient. Traditional compounding typically occurs when an FDA-approved drug is unavailable or a licensed health‑care provider decides that an FDA-approved drug is not appropriate for his or her patient’s medical needs.  By definition, pharmacy compounding involves making a new drug for which safety and efficacy have not been demonstrated with the kind of data that FDA requires to approve a new drug.  In virtually all cases, FDA regards compounded drugs as unapproved new drugs.

The unapproved status of compounded drugs notwithstanding, FDA has long recognized that traditional pharmacy compounding serves an important public health function.  FDA has historically exercised enforcement discretion and generally has not taken enforcement action against pharmacies engaged in traditional compounding.  Rather, FDA has directed its enforcement resources toward firms that manufacture large quantities of unapproved new drugs under the guise of traditional compounding, and whose compounding practices result in significant violations of the new drug, adulteration, or misbranding provisions of the FDCA.

Will managed care, managed medicaid, and PBMs aggressively limit the use of Makena or will they leave it to physicians?

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

CatalystRx Mobile Is “Health Entertainment”

June 10, 2011 by George Van Antwerp 0 Comments

I talked about this months ago after I saw Catalyst speak at a conference.  The mobile application is now fully deployed, and you can watch a video about it.  They describe it as health entertainment.

Here’s an example of their refill reminder:

(Note: In the spirit of disclosure, I do own some individual shares of Catalyst stock.)

Healthcare, Marketing / Communications, PBM / Pharmacy, Social Media, Technology

Medco Follow-up On Questions RE: 2011 Drug Trend Report

June 7, 2011 by George Van Antwerp 0 Comments

In my post a few weeks ago, I had four questions which my initial read of Medco’s Drug Trend Report had generated. I just got the answers to them…

Q: ADHD trend continues to increase.  With the new DSM-5 proposal, it looks like there will be more teens and adults diagnosed with adult ADD.  Do you see this accelerating the trend in this category even more? 

A: The proposed changes to the diagnostic criteria for ADHD / ADD in the DSM-V include changing the age of onset limit (on or before age 12, instead of age 7) and lowering the required number of symptoms which effectively will “loosen” the criteria and permit doctors to more easily diagnose the condition. If this indeed takes place, we would expect some further acceleration of the ongoing upward trend in ADHD drug use.

Q: As generics get closer to 80%, the remaining brand drugs will have to try new strategies to sustain utilization.  One of the growing tactics is copay coupons or cards.  Do you see this as an issue?  Are there tactics that you intend to use to address these through POS programs or other programs?  

A: Medco believes the best way to manage costs for both patients and payors is through the use of clinical and managed care programs that incentify the use of lower cost alternatives when clinically appropriate.  

Q: You talk about clients spending less PMPM on members age 0-18 which seems to run counter to the focus from last year on more, younger patients using maintenance drugs.  What do you attribute that drop in spending to? 

A: Because the prevalence in the pediatric category is so much lower than that of the adult population utilization/prevalence can trend higher than adults, but spend could be down, especially since there is much heavier use of specialty medications in the adult population. It’s a trend versus spend look.

Q: You bring up biologics.  It’s unlikely that biologics will generate large price drops as we’ve seen from generics.  What do you estimate will be the savings associated with biologics and will we see therapeutic interchange programs or will you manage the biologics more like a step therapy program? 

A: The industry is awaiting the final FDA guidance for approval and possible interchangeability of biosimilars. The estimates are that biosimilar will be priced in the range of 15% to 30% of branded product pricing. And as with generics, it is anticipated as biosimilars become increasing more accepted and completion begins within the biosimilar market itself, saving may increase overtime. 

Books / Articles, Events, Healthcare, Marketing / Communications, PBM / Pharmacy, Press, Research

Up To 200,000 MDs Require eRx Exemption From CMS

June 7, 2011 by George Van Antwerp 0 Comments

Electronic prescribing has been an effort for at least the past decade and significant progress has been made (see Surescripts latest report). That being said, we all know that changing behavior in the office setting is difficult. It has been the bane of many a technology vendor in the healthcare space.

On the one hand, I’m not surprised to see that lots of physicians might apply for an exemption from CMS around electronic prescribing.

BUT, I was surprised by several things in this article:

  1. Some physicians simply used electronic prescribing to write the 10 scripts required and then turned it off.
  2. The fact that there could be so many doctors that fit the approved exemptions.

The exemptions are for physicians who:

  1. Practice in an area with limited high speed Internet access.
  2. Work in an area where a limited number of pharmacies accept electronic prescriptions.
  3. Cannot prescribe enough drug orders electronically due to local, state, or federal laws (e.g., controlled substances).
  4. Have limited prescribing activity. [but yet still see a lot of Medicare members]
  5. Have insufficient opportunities to report the e-prescribing measures because of their patient type.

I didn’t think that could get you to 200,000 physicians (who were actively working with Medicare patients). The one that seems most feasible is for physician who register to participate in the Medicare or Medicaid EMR incentive program AND both adopt and use the technology by the 2011 deadline. They can also get exemptions.

Physicians care because they have to:

  • Prescribe electronically 10 times before June 30th to avoid a 1% penalty on all Medicare payments in 2012 or
  • Prescribe more than 25 times before Dec 31st to earn a 1% bonus in 2012.

Depending on your patient base, this seems like a pretty good business case to at least get a system in; write for 26 prescriptions; and collect your bonus.

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

Less Likely To Take Your Statin After Surgery

June 7, 2011 by George Van Antwerp 0 Comments

A recent study looked at people who were hospitalized for heart disease. It then tracked people’s use of statin medications (e.g., Lipitor) for the next year and looked at their adherence based on whether they had surgery or were simply discharged with a prescription.

SURPRISE – 70% of people who had surgery stayed on their statins for a year while 79% of those who didn’t have surgery stayed adherent. (thanks to Box Cutters for sharing this)

This begs a whole lot of questions:

  • How did they get the people to be so adherent in the first place? (this seems higher than the national statistics)
  • Did the surgery patients feel like they were “cured”? (see post on similar issue)
  • Was the statistical difference true at a location or prescriber level also? (i.e., was it simply that some locations or prescribers always wrote a script and talked about adherence or was it really a patient difference?)
  • Were the patients who had surgery sicker to begin with and therefore on more medications (which would reduce their likelihood of being adherent)?

On the other hand, this is perhaps another warning flag on the whole hospital readmissions issue where we have to address issues of health literacy, follow-up, discharge process, support network, and medication reconciliation.

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

New Moran Bill Uses Legislation As Business Model

June 3, 2011 by George Van Antwerp 1 Comment

The Moran bill in Kansas is another example of localized politics for independent pharmacies trying to legislate competition rather than find ways to differentiate their business.  I’ve talked about this before in:

This is focused (I believe) on the whole issue of limited networks and preferred networks as you can see from the NCPA letter about Maintenance Choice.  They throw everything but the kitchen sink at this model…why?  Because it works.  Maintenance Choice is saving consumers money and payers money.  And, it’s moving market share to CVS stores. 

This is the future.  This is what Walmart is focused on.  This is what Restat is focused on.  OptumRx (Prescription Solutions) just launched their limited network.  Humana is leveraging this in Medicare with Walmart. 

At the end of the day, isn’t it the payer’s option to decide how to design a benefit plan to offers a clinically effective solution at the lowest cost posible? 

Given that there are way too many pharmacies in the US today, someone (unfortunately) has to lose.  That is reality.  Based on the fact that there are more than 5x as many pharmacies as McDonalds in the US, we’re saturated.

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

Pharmacy Reimbursement Needs To Be Re-Aligned With Effort

May 28, 2011 by George Van Antwerp 0 Comments

I know this is not a popular topic, but I really believe that reimbursement on a per Rx basis in misaligned.  Today, a pharmacy (retail, mail, specialty) is paid based on either a discount off a standard price (e.g., AWP) or based on a MAC (maximum allowable cost) list.  They may also receive a dispensing fee.  According to the latest PBMI Benefit Design Report, those dispensing fees are:

  • $1.62 retail
  • $2.33 mail (noting that only 21% of their surveyed employers pay dispensing fees at mail)
  • $3.26 specialty

And, the reimbursement rate is the same whether it’s a new Rx or a refill.  Does anyone out there believe that the amount of effort to fill a new Rx and a refill is the same?  Why not pay differently?

An industry number that has held up anecdotally when I’ve talked to lots of people is that 40% of new Rxs require some type of work to become a “clean Rx”.  That might mean that they are subject to a utilization management program (step therapy, prior authorization, quantity level limit).  It might mean that there is a DUR issue such as a drug / drug interaction which has to be addressed.  It might mean that the drug isn’t covered.  It might mean that the cost is too much based on formulary tier.

Additionally, the first few times a patient fills a drug is when they have questions.  When do I take the drug?  Are there any side effects?  Should I avoid any foods?  Should I eat with my meal?  Are there alternatives?

Once the patient has titrated to the right strength and is taking their medication on a regular basis, the job is pretty much to count the pills and get them to the patient in a timely manner.  It has been my argument for a while that if we could fix this reimbursement misalignment then you would see a better coordination between retail and mail order.

The right model in my mind shifts reimbursement dollars through dispensing fees or some other payment structure to compensate for these cognitive services on the initial fill and acknowledge where the effort is.  I believe this would allow for a “mail at retail” type model of central fill or a kiosk model at the store or encourage retailers to better support mail order efforts when appropriate.

Everyone is aligned (at some level) with getting patients to:

  1. Start on the appropriate medication
  2. Understand their medication and their condition
  3. Make appropriate choices that lower overall costs to the payers
  4. Stay on their medications
With that said, it seems like there is an opportunity here.  It won’t be easy, and I don’t hear anyone talking about it…but I’ll continue on my soapbox for now.
Healthcare, Leadership, Methodology, PBM / Pharmacy, Research

Highlights From The CVS Caremark Insights Report 2011

May 26, 2011 by George Van Antwerp 0 Comments

CVS Caremark has been on a roll lately releasing lots of research especially in the adherence area. They just released another study this week that said:

In a study published online this week in the Journal of the American Pharmacists Association (JAPhA) the researchers said,”Approximately one-half of caregivers reported they are more likely to forgo their own medications than the medication needs of their caregivees, especially if cost was a problem, and that caring for their family members was more important than caring for themselves.” The researchers added, “Our findings indicate care-giving status may be an important characteristic for providers to identify and that caregivers may represent a fertile target for adherence interventions to improve chronic disease management and prevent chronic disease.”

But, today, I want to focus on their drug trend report called Insights which was released a few weeks ago. The report begins with a focus on change pointing out a few facts which will change our healthcare experience. Here’s part of the introductory letter by Per Lofberg, the President of Caremark Pharmacy Services.

We all know change is a constant, in this industry and in life, but the change we face over the next several years is monumental and unprecedented. The sweeping nature of the health care reform legislation makes it difficult, as even the government admits, to predict how the system and its stakeholders will respond. Regardless of how much is unknown and “still to be determined” about reform, all of us continue to face the urgent, ongoing need to reduce health care spending and simultaneously improve health outcomes.

They take a different approach than Express Scripts (see review of this year’s drug trend report) and Medco in their drug trend reports which are more encyclopedic in their breakdown of class by class. CVS Caremark poses questions by group and then presents data to address those questions.  They focus on health reform and overall changes to the market dynamic.  [Both Adam Fein and I review most/all of these reports every year so I’d encourage you to look at both of our blogs if you want historical facts or comments about comparing the drug trend reports.]

  • Employer: Benefit costs are hurting our profitability. Something’s got to change.
    • Only 6% of employers believe their company will be better off as a result of healthcare reform.
  • Health Plan: How do I compete, comply, and control costs in this new world?
    • 120M members will be seeking or changing coverage between 2012-2016.
  • Physician: My practice is already stretched to the limit.
    • The US will have about 159,000 fewer doctors than it needs by 2025.
  • Consumer: Where do we go from here?
    • In 2010, 1 in 4 households reported having trouble paying medical bills.

Key Statistics:

  • Overall trend = 2.4%
  • Non-specialty trend = 0.8%
  • GDR for 2010 was 71.5%
  • Specialty trend = 13.7%

Specialty now makes up 14.2% of their BOB (book of business) overall spending…[something that some people are predicting will be close to 40% in under 5 years].

I really like how they breakout the charts by type of client (employer, health plan, and TPAs) since they have different approaches to trend management. Here’s the health plan one:

They talk about some of the future trend influencers:

  1. Economy
  2. Aging population
  3. Chronic condition prevalence
  4. Changing condition guidelines
  5. Health care reform
  6. Adherence
  7. Generic launches
  8. Specialty growth
  9. Brand price increases
  10. Less predictable events – weather, flu impact

Like others…they are saying that GDRs (generic dispensing rates) of 80% are now possible by 2012! Talk about a change in the past decade and why there is so much pressure on the manufacturers.

They mention it in the publication, but they’ve also issued some press about their effort to target the specialty spend that happens under the medical benefit. They estimate that 80% of the drug spend in the medical benefit is from specialty drugs with cancer representing 46% and three other categories representing more than 2%:

  • Anemia and neutropenia
  • Osteoarthritis and RA
  • Immune disorders

Given their broad footprint, they pose an answer rather than a question from the next constituent – the pharmacist:

I know I can make a real difference for people.

One of the big areas of focus for leveraging that F2F relationship is adherence:

They provide an updated statistic on average Rxs PMPY of 12.6.

One of their big studies from the year was the one that was published around savings related to adherence:

I’ll end with a statement they highlight at the end:

“Every member interaction is an opportunity to improve outcomes for the plan and the member.”

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