Archive | Value Propositions RSS feed for this section

Eight Studies To Share With Your Soccer Mom Friends

July 10, 2011 by George Van Antwerp 1 Comment

I was at a swim meet yesterday and started talking about recovery drinks after working out.  I then went on to share a few studies with people.  I can’t promise that this make you “cool”, but you can get a few interesting discussions out of these.

  1. The best recovery drink is chocolate milk.
  2. Use sports drinks as appropriate, but don’t make them a common drink for your kids.
  3. Stretching is over-rated and in some cases not productive.
  4. Just because your kid’s at practice for 2 hours doesn’t mean he exercised for 2 hours (although this doesn’t seem to be true for swimming).
  5. Exercise games are good; let your kid’s play them for exercise.
  6. Make sure your kid gets enough sleep.  Sleep effects both health and decision making capabilities (another article comparing alcohol and lack of sleep).
  7. Cross-training and playing multiple sports may avoid injury at an early age.
  8. Cheerleading is the most dangerous sport for girls, and basketball creates more injuries than any other sport.
exercise, Healthcare, Research, 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

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

Prior fMRI Research Would Say That New Smoking Labels Won’t Work

June 28, 2011 by George Van Antwerp 0 Comments

I talked about this briefly in my review of the book Buyology, but in the book, the author talks about an fMRI study that showed exactly the opposite.  Warning labels don’t discourage smoking.  Of course, the logical question is whether graphics have a different impact than words.  It would be interesting to test, but I wonder if the FDA even considered this study in their analysis.  And, if they did, did they not believe it?

Here’s the labels which definitely get your attention but is it like believing you’ll win the lottery…it won’t happen to me; I won’t get addicted; I’ll only smoke socially.

BTW – A quick search tells me that I’m not the only one skeptical of the labels.  Discovery magazine has a more thorough story on this.

Books / Articles, Healthcare, Marketing / Communications, Research, Value Propositions

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

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

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

The Customer Experience Matters Healthcare Nuggets

June 2, 2011 by George Van Antwerp 1 Comment

Are you focused on the customer experience?  If yes, then you should know who Bruce Temkin is and look at his research.

I follow his research mostly through his blog, and you can find teasers of information on healthcare by what he posts.  I thought I’d pull together a few of those things here:

1. In his loyalty ratings, Walgreens was one of the top 20 companies recommended to friends while Cigna, Aetna, Humana, Anthem, and BS of CA were all in the bottom 20.  [I’m not sure this should surprise us.  I would expect CVS was close to the top with Walgreens.  I’d assume many people don’t “recommend” their insurance companies in general.  I’ll have to try to find out if the PBMs appear on here.]

2. In his forgiveness rankings, retailers like CVS, Walgreens, Walmart, and RiteAid scored well.  TriCare scored very well.  Medicare and Medicaid had good scores, and Kaiser was the only health plan in the top 70.  [This is a key issue for retention and important in the retailization of healthcare…you will make mistakes so the question is how much good will you have to overcome those mistakes.]

3. In his loyalty rankings, you find out that African Americans are much more loyal to their health plans than Hispanics or Caucasians.  [How does this change your engagement strategy?]

4. Bruce even goes on to quantify the value for different industries.  For healthcare, he estimates that a $1B company could improve it’s topline by $179M / year by improving its customer experience.

5. In his experience ratings, he shares some specifics on health plans (see below):

And, I suggest you read some of his thoughts on changing how we analyze data.  I think his points about “contextual insights” make a lot of sense.

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

The Cost Of Being Fat

May 29, 2011 by George Van Antwerp 0 Comments

With over 60% of Americans overweight or obese, this is a real issue for us as a nation.  You see more and more focus on it on TV, in our schools, and in the overall healthcare system.  So, what are the costs of being overweight:

I could go on about linking depression and obesity and to talk about genetics, but I think you get the point.  While it’s not easy (from personal experience), it’s an important topic for us all to continue to focus on.  For us to fix healthcare in the US, we have to think outside the system itself.
Books / Articles, exercise, Healthcare, Research, Value Propositions

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

Pharmacy Kickoff At #RESULTS2011

May 24, 2011 by George Van Antwerp 0 Comments

I’m currently presenting at our client event (see twitter hashtag #results2011 for real-time comments). My presentation is an extension of my white paper on the future of the PBM / pharmacy industry along with a blend of data from our annual client survey and Silverlink Communications best practices with a focus on our work around medication adherence. It also builds on my thoughts from NCPDP that I shared late last year.

Here are a few of the points I touch on:

  • Avoiding being commoditized by adding value
  • Keys to success with a focus on:
    • Evidence-based approaches
    • Consumer engagement
    • Patient experience
    • Cross-channel coordination
  • Adherence and other priorities
  • How to use SMS to drive self-service
  • An approach to condition management in hypertension and diabetes
  • Focus on the “un-engaged” but don’t forget about the engaged consumers
  • Case studies and research around adherence
  • Timing and sequencing of direct mail, automated calls, and e-mail
  • Measuring “trust”

Here’s a teaser of some of the slides I’m presenting:

Consumerism, Events, Healthcare, Innovation, Leadership, Managed Care, Marketing / Communications, Methodology, PBM / Pharmacy, Research, Silverlink, Social Media, Technology, Value Propositions

Walmart: Good or Bad for the PBMs

May 23, 2011 by George Van Antwerp 4 Comments

I think this is a question many of my PBM friends would like to know. Fortunately, a few of the Walmart people that read my blog and are part of their Health and Wellness group agreed to sit down and talk about their strategy.

Let’s start with setting some background:

  • Walmart was the first to introduce the concept of $4 generics which originally caught the market off guard and has created lower generic costs and free antibiotic programs at several pharmacies. [I would also argue that it highlighted the fact that generic copays were getting too high.]
  • Walmart was the first to work directly as a pharmacy to create a limited network contract direct with an employer (Caterpillar).
  • Walmart has partnered with Humana on a limited network offering for Medicare.
  • Walmart came out with a direct to consumer mail order pharmacy offering.

If you follow the industry, you know that all of these things were potential game changers (if they’ve worked).

This creates some tension:

  • Is Walmart simply a catalyst for change in the healthcare space?
  • Does Walmart (pharmacy) want to disintermediate the PBM?
  • Is Walmart able to make money where others can’t?
  • Does Walmart get more foot traffic such that pharmacy can be a loss leader?

Here is the Q&A [interpretive not literal] from my dialogue with Marcus Osborne (Sr. Director, Business Development, Healthcare, Walmart) and Tom Hill (Director, Health Services Development, Walmart).

What is Walmart’s Health & Wellness strategy?
Walmart wants to help consumers “save money and live better”. That is our DNA and our fundamental approach to the market. Pharmacy has presented a unique challenge since consumers often have the same copay regardless of which pharmacy they went to. Even when it’s a percentage copay, the savings differential might not be much to the consumer. Walmart was disconnected from the consumer in the traditional pharmacy pricing approach. That has driven us to look at unique ways that we can create savings.

How does Walmart decide what “offerings” to bring to market?
Walmart looks at ideas that focus on our EDLP (Everyday Low Price) concept and leverage our supply chain efficiencies. We are constantly looking at non-store operational opportunities to work directly with key companies. We currently have over 20 direct relationships with managed care companies and PBMs where we are working with them to drive down consumer costs in the pharmacy and broader healthcare area.

Obviously healthcare is bigger than pharmacy. What other things are you doing to drive healthy eating, management of critical conditions, or other programs? We’re constantly looking at what’s needed in the healthcare sector and where to invest. We focus on our two key advantages:

  • Willing to trade profit for volume
  • Value of the total “box” [store]

A good example is the work we’ve done around “Healthy Mom Healthy Baby” in Medicaid. We looked at the issues of high pre-term labor and the high rates of injury post-birth. We felt like we had a moral and cost imperative to take action. As part of this, we worked with several managed care groups to redefine the entire process and look at our unique assets. Our solution includes:

  • Free pregnancy tests
  • Free pre-natal vitamins
  • Rewards for free diapers and other supplies tied to physician visits and other health activities
  • Free car seats
  • Leveraging our physicians and clinics

[I was impressed…this was a broad solution that looked at a lot of their assets.] We’ve also created several diabetic specific solutions; a smoking cessation program with Healthways; weight management programs; and women’s and men’s health programs. The focus is on payers that are at risk for their healthcare spending with more to come from clinics.

Will Walmart become a PBM?
No. We’re not looking to go into the PBM market. We’re supply chain experts. We see value in the PBM model. [We talked a little about the fact that “you are what your profits say you are” meaning that the PBMs have painted themselves into a profit corner where their profit comes from generics at mail order so any threat to that is a challenge.]

If the Caterpillar model was so successful, why haven’t others adopted it?
The reality is that over 400 employers have contracted directly with Walmart for a limited network model similar to Caterpillar. They are all seeing significant savings.

Does Walmart see the market through “different glasses” than others?
No. We still want to have the pharmacy be a profit center. We’re not looking to bottom out the market, but we are willing to trade lower profits per transaction in return for more market share. At Walmart, it’s not about maximizing revenue/Rx or profit/Rx…it’s about total revenue and total profitability. [A very different strategy than other CFOs which would say you can’t expect volume to make up for lower profitability.] Obviously, we also have the opportunity to get non-pharmacy sales associated with food traffic. One thing that may be is different is the fact that we believe scale should drive down costs. In pharmacy, the biggest players are always trying to command a premium. We think it should be the other way around. We also have been able to get our cost-to-fill to be the same at retail and mail so we’ve become channel ambivalent.

Have these programs improved market share in any significant ways? You have to look at the programs separately, but overall we’ve seen our market share increase from 6% overall [when the $4 generic program launched] to 10% now. The network design strategy has had great success. We look at three types of programs:

  • Incentive based networks
    (Caterpillar 1.0) where all the pharmacies are in the network, but there is a lower copay to go to certain pharmacies. If only 15% of pharmacies are preferred, their market share doubles. If Walmart is the only preferred pharmacy, their market share goes up 4x.
  • Limited networks where some pharmacies are removed from the network. If you drop the network significantly, they’ve seen their share go up 2-3x.
  • Limited networks with preferred pharmacies where you some pharmacies are removed from the network, but within the remaining pharmacies, there are still incentives to go to certain stores (Caterpillar 2.0). In these cases, they’ve seen their share go up 10x.

The $4 generics program has helped increase market share by an estimated 150 basis points. In many cases, companies that initially jumped to offer similar programs have dropped them. They couldn’t sustain them.

The Medicare program with Humana has been very significant and successful [as demonstrated by Humana’s huge jump in Medicare lives].

The direct-to-consumer (DTC) programs for mail have been pretty limited and haven’t had a huge impact, but they’ve been offered in markets where we have no stores (e.g., Detroit and NY) and therefore almost no share to begin with so any share is a gain.

People complain about the pharmacy location within the store. Would you ever consider a direct access point to the pharmacy which didn’t involve going through the entire store? This is a very hot topic. We did a lot of research about store design and what goods should be located next to each other, but in the end, we’re considering moving the pharmacy closer to the front entrance. Right now, 25% of the stores have a drive-through pharmacy which gets utilized at a very high rate. But, this does lose the pharmacist face-to-face benefit. [At the end of the conversation, my take is that they are looking at lots of scenarios here and trying to figure out the balance of convenience to the pharmacy only consumer and how to optimize the entire footprint.]

The partnership with Humana really seemed to help them grow their Medicare lives this year. How did this come about? We both were looking for new solutions to leverage the fact that scale matters and how to operate within the CMS parameters. We felt like there was an opportunity to do something different and began speaking with plans about some limited network ideas. We know that Walmart is over-indexed in the 65+ category based on store visits per week. Based on that, we were looking at what we could do to offer them more value as compared with our traditional, core customer of 35-50 year old females. Through a series of conversations, the partnership was born. We’re very happy with the relationship and believe they are also.

Limited networks have been around for a long-time with limited adoption. Do you think their time has finally come? What has changed? They have been around, but historically the networks weren’t limited enough to create enough savings to overcome the “costs” of disruption to the payer. Based on our experience at Caterpillar, we believe that you will see a transitional period where companies first move to incentivized networks and then 1-2 years later move to limited networks. [Something I would compare to the transitions which have happened in formulary over time.] The one area where we do see limited networks happening more rapidly is in the area of Managed Medicaid. [This plays into the focus of PCMA and others on the PBM opportunity around Managed Medicaid.]

It was a great discussion. I learned a lot. They allowed me to ask them a lot of questions about their programs and approach that honestly had led to some skepticism in the past. It sounds like they’ve brought together a great team with a broad vision of what they can do in pharmacy and in health and wellness overall. It has gotten my mind thinking about ideas, and I look forward to learning more.

[BTW – You can sign up to get posts like this e-mailed to you whenever I write them.  A registration link is in the right hand column.]

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

10 Things To Know About Engaging Patients

May 22, 2011 by George Van Antwerp 0 Comments

I just finished reading this publication by the Institute for Health Technology Transformation. Lots of quick nuggets of information summarized here. Let me share a few:

  • 88% of American adults with Internet acces research health information online; 60% say that the information they found influenced a decision (Pew)
  • Top sites (Alexa rankings) are NIH, WebMD, and medicinenet
  • 94% of patients say they at least sometimes forget important things they were told by their MD (Markle Foundation)
  • Only 3% of people have been harmed or know someone that’s been harmed by health information they found online (Pew)

They go on to provide some good usage statistics by age group; data around caregivers; data around who’s trusted and PHRs; and research from AARP and with Dr. Hibbard that shows the impact of engagement on outcomes.

Books / Articles, Consumerism, Healthcare, Marketing / Communications, Research, Social Media, Technology, Value Propositions

Your Refill Logic Has To Be Dynamic

May 15, 2011 by George Van Antwerp 0 Comments

I signed up for an auto-refill program recently.  It quickly made me realize how stockpiling happens.  (Stockpiling is where a patient ends up with a large supply of their medication over time…typically due to refilling too soon.)

Imagine the following:

  • I get a 90-day supply of a medication.
  • At day 75, I get a refill of the medication.  (I have 105 days left at this point.)
  • 75 days later, I get my next refill.  (I now have 120 days left at this point.)
  • 75 days later, I get my next refill.  (I now have 135 days left at this point.)
The problem here is what I would call “static refill logic”.  The auto-refill program is triggered to fill the drug 75 days after it was last filled.
What is needed is “dynamic refill logic” which calculated days supply on hand.  This isn’t easy, but it makes a lot of sense.  The risk (if I’m a mail pharmacy) is that without this, I get gaps-in-care and/or create a short-term retention issue.
Imagine the following:
  • You ask me to refill, but I have 30 days on hand so I say no.
  • Now I forget to refill on time and I have a choice – (a) skip my medication for a few days or (b) go back to retail.  Neither is ideal for the mail pharmacy.
BUT, all of this could have been fixed if the logic was dynamic and they called to confirm my refill when I had just a few weeks left (i.e., enough to be thinking about refilling but also enough to have time to get it shipped to me).
BPM / Process, Consumerism, General Thoughts, Healthcare, Marketing / Communications, Methodology, PBM / Pharmacy, Technology, Value Propositions

Are Limited Distribution Deals Good For Patients?

May 14, 2011 by George Van Antwerp 0 Comments

People with complex conditions such as RA, cancer, hemophilia, MS, HepC, and other diseases that are treated with specialty drugs (often injectibles) are subject to several unique complexities in filling their prescriptions:

  • Potentially significant cost burdens
  • Limited locations at which to fill their medications
  • Prior authorization requirements
  • Scheduling complexities for delivery or home infusion or coordination with their physician’s office
But, there can also be another complexity called “limited distribution” which is where the manufacturer has only allowed the drug to be filled by a select list of pharmacies.  So, imagine the following situation:
  • You are a patient with multiple co-morbidities.
  • You have several chronic oral medications along with several specialty drugs that you have to fill.
  • You fill one of your chronic medications at retail since you forgot to refill it in time one month at mail and just haven’t gone back since the saving is minimal (as it’s a generic).
  • You have two other oral, chronic medications that you fill at mail order.
  • You fill two of your specialty medications at the preferred specialty pharmacy under your benefit (i.e., limited network).
  • You fill your last two specialty medications at two other specialty pharmacies since both of them are limited distribution products neither of which have contracts with the preferred specialty pharmacy in your network.
You now have to coordinate between five pharmacies.  What ever happened to people worrying about poly-pharmacy?  Is it an issue?
Now, this is important since complexity of therapy (# of drugs and # of pharmacies) appears to be a key factor influencing likelihood of adherence, but I never hear anyone worry about it anymore.
So, I ask…are the limited distribution deals which limit access to a specific specialty drug an undo burden on the patient or is the value of specialized care and monitoring more valuable to the patient?
Healthcare, Marketing / Communications, Methodology, PBM / Pharmacy, Research, Value Propositions

How To Improve Use Of A Preferred Pharmacy

May 9, 2011 by George Van Antwerp 1 Comment

One of the key questions from PBMs, pharmacies, specialty pharmacies, and payers is…
 

How can we drive utilization of a preferred channel (retail, mail order, specialty)?

 
I’ve worked on 15+ different “retail-to-mail” type programs (or even just 30-day to 90-day).  They typically follow a pretty standard profile:
  • Identify who to target
    • Plan design (does the member save?  the payer?)
    • Maintenance drugs
    • Categories (is titration an issue?)
  • Score individuals for prioritized outreach
    • Likelihood to convert (drug, prior experience, costs)
  • Create personalized messaging
    • What’s In It For Me (WIIFM) – cost, convenience
  • Create business rules
    • What’s the best channel?
    • What’s the best time to call or e-mail? 
  • Engage people and quickly transfer them to an agent who can answer their questions
    • How do I get started?
    • How much will I save?
    • Why should I do this?
    • Who are you?
  • Make the process easy…call or fax their provider and get a new prescription for the new pharmacy
  • Implement a process of continuous improvement
    • What works?
    • What could be better?
    • Are their differences within certain sub-segments?
    • How can I test and validate my assumptions?

At the end of the day, this approach can also be used for formulary support and many other programs.  The important things are:

  1. Engage the consumer in a dialogue about their options
  2. Be clear about the value of change
  3. Make the process easy
  4. Answer their questions
Healthcare, Marketing / Communications, Methodology, PBM / Pharmacy, Silverlink, Value Propositions

15 Things You Should Know About Prescription Non-Adherence

May 5, 2011 by George Van Antwerp 1 Comment

One question I frequently get is “what should I know about adherence”. This is then followed by “so what should I do about it”.

Here’s my starter list of what you need to understand about medication adherence.

  1. It’s a $290B problem.
  2. Patients fall off therapy quickly.
  3. There are a lot of reasons for non-adherence…it’s not just about reducing out of pocket spend. AND, to make it more complex, there are variations by gender, culture, medication, condition, trust, copay levels, etc.
  4. There are lots of predictors of non-adherence (old study, Express Scripts, Merck tool), but generally the best predictor is past behavior.
  5. Interventions can improve adherence (CVS Caremark study, Express Scripts study, Silverlink data). BUT, physicians generally don’t see non-adherence as an issue they can address. (see also White Coat adherence)
  6. Patients don’t think they’re non-adherent (see “Rx Adherence Hits The Ignorance Wall” by Forrester that says only 8% of people think they are regularly non-adherent).
  7. Adherence reduces total healthcare costs (CVS Caremark study, Sokol study).
  8. Communications matter (misperceptions, physician-patient gap, health literacy, what physicians tell patients).
  9. There are lots of cool technologies that will work for different people (talking bottles, monitoring devices, iPhone reminders, websites, pill boxes). BUT, improved labeling and bottle design may not be the answer (analysis of Target improvements).
  10. Starting on generics (or lower cost drugs) improves the probability of adherence.
  11. Pharmacist involvement is key and impactful (CVS Caremark study, Ashville).
  12. 90-day prescriptions lead to better medication possession ratio (Walgreens study, CVS Caremark study, Kaiser study, Express Scripts study).
  13. Complexity of therapy (e.g., number of prescriptions) increases the likelihood for non-adherence.
  14. Electronic prescribing gives us new visibility into primary adherence and should also create opportunities to improve this issue.
  15. It’s an area where everyone wins and there’s lots of research…but there’s no silver bullet.
Blogroll, Books / Articles, Healthcare, Innovation, Marketing / Communications, Methodology, PBM / Pharmacy, Research, Silverlink, Value Propositions

Should You Pay Physicians For Medication Adherence?

May 4, 2011 by George Van Antwerp 3 Comments

I’d love to hear some physician perspectives on this. It’s a question that comes up every once in a while.

Let’s start with a few facts:

The question of course is what to do about that. Most of the programs focus on consumer or patient interventions.

  • Refill reminders
  • Gaps-in-care
  • Off-therapy reminders
  • Auto-refill programs
  • POS consultations by the pharmacist

But, interestingly, I’ve seen a few other studies recently that show that prescription programs targeting physicians can influence behavior (example here). I’ve also heard a few companies talk about paying physicians to keep patients adherent.

There are a few arguments that happen here:

  • Should the physician play a role in adherence?
  • Does the physician know if a patient is adherent? Should they get this data? From whom?
  • If the physician asks the patient, will they tell them to truth or will it simply be a case of “white coat” adherence?
  • Should this be a performance metric in a pay-for-performance environment?
  • Will PCMHs and ACOs structures change this and make adherence a critical issue for discussion between the patient and physician?

In general, I think most people believe that physicians (as indicated in studies like this one) don’t see prescription adherence as a big issue that they can or should influence. Is that true? Would “incentives” change that?

Of course, the debate isn’t limited to paying physicians as multiple companies are paying consumers to be adherent. Here’s a post from last year from another blogger called “Paying Patients To Take Their Medications Is Stupid” which is similar to one of my posts from last year.

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

Automated Calls And Messaging Impact MPR

May 3, 2011 by George Van Antwerp 0 Comments

One of the big questions I’m often asked is how automated calls can impact Medication Possession Ratio (MPR).  This is both a technology question, but also a messaging question.  I was happy when I recalled this image from an Express Scripts investor presentation.

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

Could CVS Caremark Become A Kaiser?

April 20, 2011 by George Van Antwerp 1 Comment

I know the popular opinion is to talk about CVS Caremark splitting up.  Let me go radically in the other extreme. 

I think everyone has an appreciation for what Kaiser has created – insurer, provider, pharmacy, …  They’ve created an integrated system with impressive outcomes, passionate consumers, and a connected technology backbone.  There are a few other organizations that have had regional success doing the same – HealthPartners, Geisinger, … 

The question I would have is who is in the best position to build themselves into an integrated system.  The two companies that jump out at you are United Healthcare and CVS Caremark.  Of course, neither of them have the provider (aka hospital) assets. 

But, I think the point here is that most people I talk to agree that an integrated model is the right model “on paper”.  It can (in theory) offer the best patient experience.  It can drive the best integrated data.  It can coordinate across business lines to accomplish the best outcomes. 

So, it makes me wonder why we let Wall Street dictate the strategy here.  In many cases, structural changes take time.  If building an integrated model is the right concept, why isn’t the talk about CVS Caremark buying a health plan and subsequently jumping into the provider space with ACO models?  Why isn’t the discussion about United Healthcare buying up hospitals and physician groups?

Maybe I’m just trying to present a different scenario or maybe I have rose-colored glasses on, but I think it’s an interesting question to ponder.

(Note: As I’ve disclosed before, I both own CVS Caremark stock and have a business relationship with them.)

General Thoughts, Healthcare, PBM / Pharmacy, Politics, Value Propositions

Can (Should) Generic Rx Companies Differentiate Themselves?

April 14, 2011 by George Van Antwerp 2 Comments

With the traditional brand market getting smaller every year, generic pharmaceutical companies are filling the majority of the billions of prescriptions filled here in the US.  Right now, there is a premium paid if they are first to market with a new generic, but that’s it.  The rest of the market is essentially a “how low of a price point can I maintain”.  At Express Scripts, we did a blind, reverse-auction process for generics that rewarded the company that could (would) sell their generics at the lowest price.

We’ve certainly seen commodity products like potatoes being branded.  We’ve seen fish and beef get branded. 

So, why not generic drugs?  I would certainly want to escape the “race to the bottom”.  It’s the opposite of the specialty discussion from the other day about justifying their premium, but I think one solution is the same. 

How can you wrap services around your generic that makes people want to pay a premium for it?  (That’s likely much less expensive that trying to build a consumer brand so people ask for Dr. Reddy’s generics or Teva’s generics.)  But, in this case, you don’t have the specialty dollars to fund a complex offering.  You want something simple, scalable, low-cost, and effective.  It’s not easy.

Has anyone tried this?  Do you think it’s feasible?

Healthcare, PBM / Pharmacy, Value Propositions
Newer Entries
Older Entries