Tag Archives: $CVS

Gilead’s Sovaldi Is The $5.7B Canary In The Coal Mine For Specialty Medications

July 24, 2014 by George Van Antwerp 1 Comment

In case you haven’t been tracking specialty drug costs for the past decade, the recent news with Gilead’s Sovaldi ($GILD) is finally making this topic a front page issue for everyone to be aware of.  I think Dr. Brennan and Dr. Shrank’s viewpoint in JAMA this week did a good job of pointing that issue out.  They make several points:

  • Is this really an issue with Sovaldi or is this an issue with specialty drug prices?
  • Would this really be an issue if it weren’t for the large patient population?
  • Will this profit really continue or are they simply enjoying a small period of profitability before other products come to market?
  • Based on QALY (quality adjusted life years) is this really quick comparable cost to other therapies?

If you haven’t paid attention, here’s a few articles on Sovaldi which did $5.7B in sales in the first half of 2014 and which Gilead claims has CURED 9,000 Hep C patients.

But, don’t think of this as an isolated incident.  Vertex has Kalydeco which is a $300,000 drug for a subset of Cystic Fibrosis patients.  In general, I think this is where many people expected the large drug costs to be which is in orphan conditions or massively personalized drugs where there was a companion diagnostic or some other genetic marker to be used in prescribing the drug.

The rising costs of specialty medications has been a focus but has become the focus in the PBM and pharmacy world over the past few years.  This has led to groups like the Campaign for Sustainable Rx Pricing.  Here’s a few articles on the topic:

Of course, the one voice lost in all of this is that of the patient and the value of a cure to them.  Many people don’t know they have Hepatitis C (HCV), but it can progress and lead to a liver transplant or even ESRD (end state renal disease) which are expensive.  15,000 people die each year in the US due to Hep C (see top reasons for death in the US).  So, drugs like this can be literally and figuratively life savers.  These can change the course of their life by actually curing a lifetime condition.

This topic of specialty drug pricing isn’t going away.

At the end of the day, I’m still left with several questions:

  1. What is the average weighted cost of a patient with chronic Hep C?  Discounted to today’s dollars?  Hard dollars and soft dollars?  How does that compare to the cost of a cure?
  2. What’s the expected window of opportunity for Gilead?  If they have to pay for the full cost of this drug in one year, that explains a lot.  If they’re going to have a corner on the market for 10-years, that’s a different perspective.  (Hard to know prospectively)
  3. For any condition, what’s the value of a cure?  How is that value determined?  (This is generally a new question for the industry.)

And, a few questions that won’t get answered soon, but that this issue highlights are:

  1. What is a reasonable ROI for pharma to keep investing in R&D?
  2. What can be done using technology to lower the costs of bringing a drug to market?
  3. For a life-saving treatment, are we ready to put a value on life and how will we do that?
  4. What percentage of R&D costs (and therefore relative costs per pill) should the US pay versus other countries?
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The Era Of The Two-Tier PBM Strategy

June 27, 2014 by George Van Antwerp 0 Comments

After Aetna, Cigna, and Wellpoint all moved into different PBM relationships with CVS Caremark, CatamaranRx, and Express Scripts, it certainly marked the end of much of the debate on whether a captive PBM (i.e., owned and integrated with the managed care company) could compete with the standalone PBMs.  There are really only a few big integrated models left including Humana, OptumRx (as part of UHG) and Kaiser with Prime Therapeutics having a mixed model of ownership by a group of Blues plans but run as a standalone entity.  Regardless of where the latest Humana rumors take them, it made me think about what the market has become with these new relationships.

  1. Scale matters.  All of these relationships and discussions show that there are clear efficiencies in the marketplace.
    1. Drug procurement (i.e., negotiating with the manufacturers (brand and generic) and the wholesalers)
    2. Pharmacy networks (i.e., getting the lowest price for reimbursement with the retail pharmacies)
    3. Rebating (i.e., negotiating with the brand and specialty drug manufacturers for rebates)
  2. Outcomes matter.  If scale was all that mattered, there be no room for others in the marketplace.  But, we continue to see people look at this market and try to make money.  That means that “outcomes” matter in different ways:
    1. Clinical outcomes (i.e., does the PBM have clinical programs or intervention strategies that improve adherence and/or can demonstrate an ability to lower re-admissions or impact other healthcare costs?)
    2. Financial outcomes (i.e., does the PBM have innovative programs around utilization management (step therapy, prior authorization, quantity level limit) or other programs like academic detailing that impact costs?)
    3. Consumer experience (i.e., does the PBM’s mail order process or customer service process or member engagement (digital, call center, etc) drive a better experience which improves overall satisfaction and overall engagement…which drives outcomes?)
    4. Physician experience (i.e., does the PBM engage the physician community especially in specialty areas like oncology to work collaboratively to drive different outcomes?)
    5. Data (i.e., does the PBM use data in scientifically valid but creative ways to create new actionable insights into the population and the behavior to find new ways of saving money and improving outcomes?)

While I’ve been beating the drug of the risks of commoditization to the market for years, I’m going to make a nuanced shift in my discussions to say that there is still a risk of commoditization and driving down to the lowest cost, but we may be quickly approaching that point.  What I’m realizing is that there can be a two tier strategy where you commoditize certain areas of the business and let the other areas be differentiated.  And, that this can be a survival tactic where you either outsource the core transactional processes to one of these low cost providers or figure out how to be one of them while creating strategic differentiation in other areas.  

Maybe you can eat your cake and have it too!

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Getting To Zero Trend In Specialty Pharmacy – CVS Caremark – AHIP

June 24, 2014 by George Van Antwerp 6 Comments

When I was at AHIP last week in Seattle, I had a chance to see Alan Lotvin from CVS Caremark present on specialty pharmacy.  It was one of the best presentations that I’ve seen in a while.  

It was good because I actually heard things that I’d never heard discussed around specialty pharmacy before.  And, as he pointed out, specialty will represent 50% of the pharmacy spend and about $235B in total spend by 2018.  This is where everyone is focused and the opportunity for differentiation exists. 

  1. He talked about how to get to zero trend in specialty.
  2. He talked about the consumer experience in specialty.
  3. He talked about care coordination and its value in specialty.
  4. He talked about the need for a beyond the pill approach by the specialty pharmacy.

So, what does all this mean?  Let me share some highlights:

  • Specialty pricing is starting higher based on government pricing constraints.  You can’t raise price.  It’s easier to start high, discount, and/or come down over time.
  • Pharma is beginning to price based on Quality Adjusted Life Year (QALY).
  • 3.6% of patients drive 25% of costs (not a surprise)…but 43% of their total costs are not from the specialty condition but from their co-morbidities.  (Why treating the patient not the condition is critical.)
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  • Site of care (which is the hot buzz today) can save you 17% or more.
  • Developing an exclusion formulary is important to counteract copay cards and help reduce costs.

o   This article says that CVS Caremark is working on a formulary with 200 brand drugs excluded.

  • They are moving from 12-month contracting with pharma to 2-3 month contracts to really keep on top of market conditions. 
  • Coordinated care can drive lower costs in terms of readmissions and other total medical costs. 
  • You can use generics to replace biologics.  For example, he showed switching out an HIV biologic costing almost $3,000 / month with 3 generics costing $101 per month.  (I’ve never heard anyone else talk about this.)
  • He also reinforced the fact that today’s specialty benefits are not coordinated across medical and pharmacy.  For example, he used the RA example where there are 9 drugs with 4 of them commonly used under the medical benefit and 5 under the pharmacy benefit. 

But, the most important thing was their strategy to get clients to ZERO TREND for specialty pharmacy.  (It reminded me of the program I developed at Express Scripts where we actually guaranteed a 3-year zero trend…if you followed our very aggressive recommendations.)  He outlined the following:

  • 1.5% savings from their formulary
  • 0.5% savings from an exclusive specialty network
  • 1.9% savings from an aggressive generic policy
  • 1.0% savings from innovative pricing
  • 3.6% savings from optimizing site of care
  • 2.5% savings from medical claims editing and repricing
  • 6.0% savings from enhanced prior authorization

He also went on to talk about the consumer experience.  I think a lot of specialty pharmacies are thinking about the same things, but there were several things he shared that were new to me.  It was exciting. 

As I’ve said before, as specialty pharmacies really start to think about the patient and focus on the experience over time, we will start to see more coordination with pharma about going beyond the pill and driving lower total costs.  

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New CVS Caremark Offering – Specialty Connect

May 31, 2014 by George Van Antwerp 0 Comments

First CVS Caremark began offering mail order (90-day Rxs at lower cost) at retail stores (aka Maintenance Choice), and now with Specialty Connect, they are doing the same thing in specialty pharmacy.  

Specialty Connect was a pilot program that won the PBMI Innovation Award this year.  What it does is to allow consumers the choice of getting their specialty medications at either the CVS Caremark specialty pharmacy or picking them up at a local store.  This is a change since: (1) many pharmacies don’t typically stock specialty medications; (2) many PBMs require use of a specialty pharmacy (i.e., mail); and (3) specialty medications typically require some addition handling and counseling which may be difficult to do at a local store level.

But, this is a very consumer friendly solution, and it has had some positive initial success.  Here’s a quote and some data from their press release: (some additional data in the original PBMI document)

“Specialty Connect helps specialty patients with these critical therapies by helping to eliminate common challenges they had often faced and by offering them flexibility and choice,” said Alan Lotvin, M.D., Executive Vice President of Specialty Pharmacy for CVS Caremark. “The program makes it easier and more convenient for patients to submit and receive their specialty prescriptions either through CVS/pharmacy or by mail. What’s more, it increases medication adherence, improves outcomes and lowers overall health care costs for specialty patients and payors.”

 

Specialty Connect has demonstrated high levels of patient satisfaction as well as improved adherence for specialty pharmacy patients. In fact, pilot program results demonstrated a 13 percentage point increase (from 66 to 79 percent) in patients who were optimally adherent to their medication. Early program results also show that the program is improving upon the patient experience and reducing traditional barriers to getting started on medication, with 97 percent of patients successfully starting on therapy after only their first interaction at a CVS/pharmacy store. In addition, more than half of patients, many of whom were existing mail service pharmacy customers, chose to pick up their specialty medications at CVS/pharmacy.

Hopefully, this and many of the other CVS Caremark successes will make people wonder why they ever wanted to break the company up into different business units.  As I’ve said for years on the blog, in the press, and to many Wall Street analysts, the integration of the business units can offer huge value once the synergies are realized and the consumer experience is integrated.  

The other interesting things that I thought about when reading about Specialty Connect were:

  • It’s great to offer a centralized call center to support specialty but will that be enough at the local store level?  Will patients want some type of higher touch local presence?  Can that be achieved through a telemedicine or kiosk type solution?  
  • I remember about 5 years ago when most specialty people thought they had to treat patients with specialty diseases differently.  I kept trying to argue that they are just like other consumers.  You should think about the experience across channels and at the patient not just condition level.  This seems to signal a movement towards this.  They are using SMS (text messages) and other channels to communicate with them which was a foreign concept a few years ago.
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Care Is Coming To Your PBM

May 5, 2014 by George Van Antwerp 2 Comments

The creation of the “softer, gentler” PBM is one of my predictions driven by the rise in specialty pharmacy. While generic fill rates and mail order penetration still matter to earnings, the focus across the industry is on specialty. 

  • What can we expect in terms of pipeline?
  • How and when will genetic tests be required? (i.e., companion diagnostics)
  • How can we treat the patient not just fill the drug?

This will bring back a focus on how pharma and the PBMs work together which has had a bumpy past. Initially the two were very close. Then, with the rise of generics and more trend programs like prior authorization and step therapy, the PBMs and pharma butted heads frequently.

Of course, the situation for pharma has changed also. They are trying to figure out how to go “beyond the pill” and create new consumer relationship and make money. (Here’s a good article about pharma and digital from the other day.)

In case you missed them, here’s a few other things that are relevant:

And, I think this screenshot from the Barclays Global Healthcare Conference Presentation given by Express Scripts shows that they are focused on this care and delivery intersection by continuing to show the success from the Therapeutic Resource Centers.

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So, what do you think?  Will the PBMs become more care management focused?  Will they integrate with the other care providers?  Will this be the beginning of their focus on working with ACOs and PCMHs?  Will this change their approach?  Will we see PBMs differentiating around key, chronic diseases like the specialty pharmacies have done?  Will this create an opportunity for integrated PBMs (i.e., Humana, Cigna, Aetna) to differentiate?  

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CVS Caremark 2013 Drug Trend Report (Insights 2014)

April 24, 2014 by George Van Antwerp 2 Comments

The CVS Caremark publication Insights 2014: Advancing The Science Of Pharmacy Care came out the other day. They took a different approach than the detailed trend report which Express Scripts put out.  Their document is more of a white paper about “7 Sure Things”.

The 7 Sure Things are to help you know what to do with your pharmacy benefit and cover:

  1. Prescription trend is on the rise.
  2. Generics have peaked…and you’re going to feel the difference.
  3. Specialty drives trend.  But do you know how much?
  4. Price is King…Not much of a surprise there.
  5. Money matters to members.  Cost share does influence behavior.
  6. Adherence is the answer.  No one said it was going to be easy.
  7. Past performance is no guarantee of future results.

If you’re managing a pharmacy program and you’re surprised by any of these, I would suggest you look for another job.

So, let’s drill down into the report to see what it shows us:

  • Their trend numbers were:

o   0.8% for traditional (non-specialty) drugs

o   15.6% for specialty drugs (down from 18.3% in 2012)

o   3.8% overall

  • While utilization was up 2.1%, the primary driver was price which increased 8.2%.  These factors were mitigated by a 6.0% change in mix.

o   They hint at an interesting question of whether utilization is growing due to an improving economy.  (correlation or causality?)

CVS Caremark Drug Trend 2013

  • Their GDR (generic dispensing rate) was 81.4% in 2013.  (I’d love their perspective on a maximum GDR since they say it’s peaked.)
  • I like the chart below which shows trend with and without generics coming to market.

CVS Caremark DTR 2013 -trend wo generics.jpg

  • Of course, specialty continues to be the real story in all the PBM reports.

CVS Caremark DTR 2013 -specialty.jpg

  • They claim that 53% of total specialty medication costs were paid under the medical benefit in 2012 which is in-line with most projections.  (While they give some perspective on what to do here, this would be one thing I would have liked to see broken out in more detail as this is a critical area for PBMs which hasn’t been cracked yet.)
  • They share the AWP trend broken out below and give some crazy examples of AWP price inflation (e.g., 573% for clomipramine) with some explanation for why this happens.

CVS Caremark DTR 2013 -awp trend.jpg

  • Here were their top 10 specialty drug categories.  The top 5 are the same as the CatamaranRx list, but the bottom 5 are in a different order.

CVS Caremark DTR 2013 -top 10 specialty.jpg

  • A scary statistic (in isolation) is that over the past 5 years patient out-of-pocket costs for prescriptions have climbed 250%.  (But, I think their percentage of cost share has stayed the same.  It would be interesting to show this in real dollars and compare this to both price and wage inflation just to hammer home the point.)
  • They talk about CDHPs (consumer driven health plans) and how that is impacting utilization and cost.  (These are often high deductible plans where consumers pay out of pocket until they reach a certain amount…which often really makes the point in early January to consumers.  And, can lead to dissatisfaction when that prescription that was $30 in December is now $350 in January.)
  • They talk about adherence, and they certainly have continued to publish a lot of studies in this space.  (They also know have Dr. Will Shrank on their staff full-time after working with him for years.  I think very highly of Will as one of the best adherence researchers in the country.)
  • They give a real high level mention of some of their new efforts around adherence:

o   Simpler labels

o   Synchronizing refill dates

o   Reminder devices

o   Digital / mobile tools

  • They also provide this nice summary of how costs go up and where the savings come from.  (Of course, the challenge is in drug classes other than these three and getting clients to give you any credit for the productivity savings and also netting out the program costs.)

CVS Caremark DTR 2013 - adherence value.jpg

  • On a scary note, they predict that Rx trends may jump back into the double digits for the next 4 years.

At the end, they give 5 sure strategies that clients should do.

  1. Double down on generics.  (To me, this means – step therapies, formularies, setting copays right, mandatory generic programs, and generic substitution programs.)
  2. Look across benefits at specialty.  (This is a key one as I mentioned above.  You need to think through how specialty drugs are filled and billed under medical.)
  3. Tackle price.  (They are focused on distribution channel here, but I’d also think about copay levels, plan design, and value-based programs.)
  4. Be strategic about cost share.  (They are focused on how cost share affects adherence which is important, but only one component of an adherence strategy.)
  5. Keep the big picture in mind.  (They allude to it here, but I think this is a key point that ultimately it’s about outcomes and prevention.)

Overall, this was certainly the easiest “trend report” to read. It tells a clear story which is probably great for the average client and would drive more discussion with your account manager.

Healthcare, PBM / Pharmacy, Research
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Pharmacy Satisfaction – Retail Beats Mail

November 29, 2013 by George Van Antwerp 2 Comments

With the new JD Powers survey, the gap between retail pharmacy satisfaction and mail order has widened. The average mail order satisfaction score was 797 for mail versus 837 (out of 1,000) for retail.

I think one key comment from Scott Hawkins, director of the healthcare practice at JD powers was:

“One of the key things we’ve seen in the data is that if someone is feels compelled to use a mail-order [pharmacy] their satisfaction score is going to be lower than someone who chooses to use it on their own.” (From Nov 2013 Employee Benefits News article by Andrea Davis)

If I was still at a PBM, I’d push to see the results broken out both ways so I could compare apples to apples the then say the drag was from clients choosing mandatory mail.

The rankings for mail order were:

Kaiser – 868
Humana – 845
Walgreens Mail – 812
OptumRx – 798
Prime Therapeutics – 794
Express Scripts – 783
Aetna – 778
Cigna – 771
Caremark – 760

The two I find the most interesting are Prime Therapeutics and OptumRx as both of them have moved their mail order services in house in the past few years and seem to be doing well with it. Aetna has outsourced their solution to Caremark and Cigna just recently outsourced their mail order to Catamaran which wasn’t on the list (but may be in the survey).

Books / Articles, Consumerism, Healthcare, Marketing / Communications, Methodology, PBM / Pharmacy, Value Propositions
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Express Scripts Excludes 48 Drugs On 2014 Formulary

November 20, 2013 by George Van Antwerp 0 Comments

Is anyone really surprised here?  We saw CVS Caremark make some changes a few years ago that caught everyone’s attention.  (You can see a good list of 2013 and 2014 removals and options here for CVS Caremark.)  This year, it’s Express Scripts (ESRX) who’s caught the attention of the press.

Why do this?  I think Dr. Steve Miller did a great job of explaining it in a recent interview.  The most interesting thing to come out of this was the possible link to copay cards.

Pharmalot: Where to from here?

Miller: We obviously have a long-term strategy. This has sent a loud message to the marketplace that we have got to preserve the benefit for patients and plan sponsors and do things to rein in costs. As there are more products in the marketplace that are interchangeable, we’ll do more to seek the best value for our members. This is just the beginning of a multi-step process over the next several years.

Will there be more to come?  Of course.  The PBMs have to make a significant show of lowering the number of formulary drugs especially in the oral solid (traditional Rx) space to make the point to the pharmaceutical manufacturers that they control market access.  This is critical for them to create more opportunities in the specialty Rx space around rebates.  (Here’s the 2014 Express Scripts exclusion list)

Additionally, this is a low risk strategy for several reasons:

  • The disruption is minimal.  While 780,000 people sounds like a lot, it’s still just 2.6% of the population covered by these formularies.  The savings the employer will generate per disrupted member will pay for the extra customer service needed.  (Harsh reality to some people…I know)
  • As I’ve discussed before, the margins are in specialty pharmacy and mail order generics not in branded drugs which represent less than 20% of all drugs.  Therefore, this is a good place to make a stand.
    • From an old JP Morgan analysis from 2011, Lisa Gill estimated the PBM profits to be (all in 30-day equivalents):
      • $1.69 retail brand drug
      • $2.03 mail brand drug
      • $3.00 retail generic drug
      • $13.00 mail generic drug
  • This is based on a clinical review by an independent P&T committee.  Therefore, this is aligned with the health reform focus on outcomes and value.
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Trajectory Modeling On Adherence By CVS

November 2, 2013 by George Van Antwerp 0 Comments

No one who works with consumers or who studies adherence should too surprised that people are different in how they fill their medications. I think companies are finally getting a better handle on longitudinal member records and ways of studying those patterns to determine how and when to intervene.

Our past behavior is always a great place to learn from about our future behavior but at the same time, people view different drugs and conditions differently. For example, I might be very likely to take my pain medication everyday since it’s a symptomatic condition versus my cholesterol medication since it’s an asymptotic condition. I also may take a different approach yo medications that have significant side effects.

At the same time, these data is well known so the quest for the “best” segmentation approach and behavior change model continues.

With that in mind, I finally got a chance to look at some research from September that researchers at CVS Caremark and Brigham and Women’s Hospital published in the journal Medical Care. They used trajectory modeling to follow statin users for 15 months and came up with six groups:

  • Brief gap in medication use or filled irregularly during the first nine months, but improved during the last six months (11.4 percent)
  • Slowly declining adherence throughout the 15 month period (11.3 percent)
  • Used statins only occasionally across the 15 month study period (15 percent)
  • Rapid decline in statin use after initiation (19.3 percent)
  • Virtually no fills after their initial fill (23.4 percent

They also identified some characteristics associated with adherence:

  • Higher adherence was seen with patients who were older, had higher incomes and held a high school diploma.
  • The highest adherence rates were associated with Medicare Part D clients and people who live in New England.
  • Those with the lowest adherence rates tended to be generally younger, male and less likely to have an initial prescription that provided them with more than a 30-day supply of medication.

Troyen A. Brennan, MD, MPH, Executive Vice President and Chief Medical Officer of CVS Caremark:


“The use of trajectory models could help us more accurately identify patients at risk for medication nonadherence so we can develop and implement targeted interventions to help them stay on their medications for chronic health conditions.”

Books / Articles, Care Management, Healthcare, Marketing / Communications, Methodology, PBM / Pharmacy, Research
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Walgreens and Express Scripts Collaborate To Compete With CVS Caremark

August 5, 2013 by George Van Antwerp 0 Comments

The recent press from Walgreens and Express Scripts is interesting on several fronts:

  1. We worked for years even when I was there to try to figure out a win-win around 90-day with Walgreens.  It wasn’t easy.
  2. Walgreens and Express Scripts have a “colorful” past regarding working together.
  3. This is definitely in the best interest of the patient which we don’t always see everyday in healthcare.
  4. This is a definite recognition of the success of the Maintenance Choice program by CVS Caremark.

Here’s some language from the Walgreens’ press release.

Under the new option, plan sponsors that choose to include Walgreens as part of the Smart90 program for their pharmacy benefit will provide their members who have chronic conditions such as high cholesterol, high blood pressure and diabetes, the choice to receive 90-day supplies of maintenance medications through home delivery from Express Scripts or directly at a Walgreens retail pharmacy for the same copayment. Pending adoption by benefit plan sponsors, plan members could access Smart90 Walgreens as early as January 2014.

“Working together with Express Scripts, Smart90 Walgreens will offer more pharmacy locations and better member access coverage than any single retail chain 90-day maintenance medication solution in the nation,” said Kermit Crawford, President of Walgreens Pharmacy, Health and Wellness. “Through Smart90 Walgreens, our more than 8,000 Walgreens retail pharmacies will provide plan sponsors with cost savings and will offer their members safe, easy and convenient access to important in-person pharmacist consultations and a wide-range of health and wellness services that can further improve medication adherence and lower overall healthcare costs.”

“Members will be able to continue to receive the safety, convenience, cost savings and care offered from Express Scripts home delivery pharmacies,” said Glen Stettin, M.D., senior vice president of research and new solutions at Express Scripts. “Our data are clear: 90-day prescriptions delivered to a member’s home improve medication adherence and health outcomes, lower the cost of care and add convenience when compared to 30-day prescriptions. Over the past few years, our Smart90 program has driven more 90-day prescriptions for participating clients, and we’re pleased to now offer this additional option.”

Healthcare, Marketing / Communications, PBM / Pharmacy, Press, Value Propositions
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Walgreens Clinic Rebranding Is More Than A Name Change

July 30, 2013 by George Van Antwerp 2 Comments

As I talked about in my post about Walgreens and innovation, Walgreens has renamed their TakeCare Clinics to Healthcare Clinics at some locations.  This is more than just a meaningless name change.  This is the beginning of a business model change.  This is the shift from acute care to ongoing chronic disease management.  This is a big move that changes their place in the healthcare value chain.

It’s part of the overall strategy that has pulled them into the ACO space.

It will be interesting to see if CVS Caremark and their MinuteClinics follow them.  CVS Caremark already announced a different strategy in terms of providing advocates.  If I were them, I would jump fully into the remote monitoring / mHealth space and provide chronic disease management from a remote basis.  I think this would be different and innovative.

Walgreens Healthcare Clinics

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Why The Cigna PBM Deal With Catamaran Is Relevant?

June 12, 2013 by George Van Antwerp 1 Comment

Not a big shock to anyone, but Cigna announced yesterday that they were signing a 10-year deal with Catamaran (formerly SXC) to outsource the operations of their pharmacy (PBM) business.  (see WSJ article or the story on Adam Fein’s blog)

This PBM industry has been full of change over the past 5 years as I’ve discussed many times.  So, the question is why is this deal relevant or just another yawner.

Let me give a few reasons:

  1. This is the 3rd big managed care company (Aetna, Wellpoint, Cigna) to decide to create this type of long term relationship with one of the big PBMs.  They each picked a different one.  (Aetna/CVS, Wellpoint/Express, Cigna/Catamaran)  United brought their business in-house from Medco, and Humana has continued to expand their pharmacy business.  
  2. Eric Elliott (former head of Cigna’s PBM and now head of Prime Therapeutics PBM) and Dan Haron (current head of Cigna’s PBM) are both very smart executives who I believe saw lots of value in the integrated PBM story.

So, if I read between the lines here, I come to a few quick thoughts:

  1. Are they all structuring long term deals that get them through this reform period and minimize risk, but give them the chance to bring this back in house after this settles down?  
  2. Could this symbolize a further repositioning and commoditizing of the PBM industry that all of these companies want to retain marketing, engagement, strategy, and formulary but outsource call center, operations, contracting, network management, and other tasks?  Would this further accelerate a “race to the bottom” on price that I’ve talked about before?
  3. Does this have implications to specialty pharmacy?  Will that become split into two different businesses – operations versus clinical care?  (more on that later)
  4. I don’t know the bidding here, but scale used to matter a lot.  If CVS and Express Scripts didn’t aggressively bid for this contract, that might imply a point of diminishing returns in terms of scale.  (which I clearly believe exists)
  5. Under what circumstances does the integrated model work (i.e., what does Humana, United, and Kaiser see differently) or will all the payers look to outsource certain tasks to the big PBMs?

The interesting times in the industry continue.  It’s a head scratcher of what comes next!

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Why CVS Caremark Asking For Your Weight Is Good For You

March 30, 2013 by George Van Antwerp 0 Comments

I continue to annoyed by all the fear-mongering in the industry around what CVS Caremark is “doing to their employees”.  What about focusing on how they are helping their employees to get better?  (If interested, you should read some of the information they have on their blog.)

Our “Plan for Health” combines an evolving, best-practice approach to health coverage with preventive care and wellness programs. Our colleagues will be more accountable for taking control of their health and associated costs. The first step is getting to know your numbers by getting a health screening and completing an online wellness review each year. If colleagues complete both by the May 1, 2013 deadline, they will avoid paying an additional $600 for the 2013-2014 plan year. (from the CVS Caremark blog)

I was hopeful to hear someone come out strongly and speak about it yesterday on CBS, but instead the CEO of Mercer just talked about “soft” programs that depend upon consumers being proactive around their health.  I would rather hear about the value of screenings and how it helps employees.  In talking with one friend of mine at a biometrics company, he told me that in one case almost 40% of the people that they identified with diabetes (or pre-diabetes) and hypertension (or pre-hypertension) didn’t know they had the disease (or were at high risk).  That to me is a valuable insight to the individual especially when coupled with a program to help them learn and manage their disease (or risk).

For example, companies for years have been using Health Risk Assessments (HRAs) to try to baseline employee health and use that to accomplish several things:

  1. Help the employee to understand their risks
  2. Identify people who should be in coaching programs to improve their health
  3. Learn about their population and how to improve their health benefits

Use of biometrics is the right evolution from the HRA.  People have tried HRAs for years with some success.  Companies pay as much as $600 for people to take this online survey that has no necessary link to reality.  Most HRAs aren’t linked to lab values.  Most HRAs aren’t linked to claims data.  Most HRAs don’t necessarily trigger enrollment in health programs.  They are supposed to activate the employee to be proactive which doesn’t work for many sick consumers especially those in the “pre-disease” phase.  (Here’s a good study that does show some increased activation.)

As I mentioned the other day, this use of biometrics and link between incentives and participation (and ultimately outcomes) is normal and will ultimately improve the link between the workplace and the employee around health.

Let’s take a broader look at insurance to help set some context:

  • For life insurance, you have to disclose certain data and depending on the policy level you have to do other things like get a physical and have blood work drawn.  That effects your costs and their underwriting.  
  • For car insurance, if you get in accidents, your costs go up.  In some case, you can have a monitoring device put on your car to lower your costs.  (like getting blood work done)
  • For home owners insurance, your costs go up if you live in a flood zone or a earthquake zone.  It also goes up if you have lots of claims.

Whether we want to admit it or not, we do determine a lot of our healthcare costs based on decisions we’ve made or had made for us since we were kids.  Some of these are conscious and some are subconscious.  And, obesity which is a large driver of many of these chronic conditions and has an impact on your likelihood of having cancer.  So, a company asking for your BMI and other data to help understand your risks for healthcare costs (of which they typically pick up 80%) doesn’t seem unusual.

Certainly, some are environmental such as those that live in “food deserts” like Detroit.  In other cases, workplace stress can affect our health.  We’re just starting to get smarter about “sitting disease” and it’s impact on our health.  Or, we may take medications that affect our blood pressure (for example).  It’s certainly important to understand these in context of your lab values and discuss a holistic strategy for improving your health with your physician and any care management resources which are provided to you (nurse, social worker, nutritionist, pharmacist).

This idea of learning more about employees in terms of biometrics, food, sleep, stress, social interaction, and many other data points is going to be more and more of a focus.  Companies want to learn how their employees do things.  They want to understand their health.  They want to improve their health.  They want to invest in their workforce to improve productivity, innovation, and ultimately job satisfaction.

While the glass half-empty people won’t see this and there are some companies that don’t always act this way, I generally believe that companies are trying to act in a way to increase their top line and most intelligent executives understand the correlation between health and wealth and the link between employee satisfaction and growth.

Ultimately, healthcare costs are estimated to put a $240,000 burden on us after we retire (even with Medicare) so if someone wants to help me become healthier and thereby save me money which improves my ability to retire and enjoy life I’m happy for them to do.

Books / Articles, Care Management, Healthcare, Leadership, Marketing / Communications, PBM / Pharmacy, Value Propositions
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How The CVS Program Will Change The Employer – Employee Contract

March 22, 2013 by George Van Antwerp 1 Comment

Have you heard that CVS Caremark is requiring employees to go get biometrics and going to take action on it? OMG!

I’m not sure I understand why people are all upset. Let’s look at the facts:

And, by the way, have we forgotten how much healthcare costs have gone up over time and who pays that bill. It’s either the employer or the government. Both of those things impact our pay as individuals either in terms of lower raises to cover healthcare costs, shifting healthcare costs to us, or taxes. It’s not sustainable so the person who pays the bill has to step in since we’re not. (Which is also why I support the NY ban on soda.)

Now, let’s look at our healthcare system where in the current fee-for-service model, there isn’t an incentive for physicians to address this.

For now, people should be happy. They’re only being required to do the biometrics. The penalty isn’t linked to whether they’re fat or have high blood pressure or smoke or have high cholesterol or have diabetes. A recent study by Towers Watson shows that while 16% of employers do this type of outcome based incentive program today (2013) that this is going to jump to 47% in 2014. So, this will be the norm.

And, guess what…sticks often work better than carrots in some cases.

And, healthcare costs are making us uncompetitive globally as a country.

  • The cost of healthcare is greater than the cost of steel in a car.
  • The cost of healthcare is greater than the cost of coffee in a Starbuck’s cup of coffee.

And, health reform is allowing (even enabling) this to happen. It says that you can treat people differently and create up to a 50% differential in costs associated with their health. (Not a legal definition so read the fine print.)

But, what I think all of us (consumers and employers) will need to realize is that moving to this (which I agree with) will change the employer and employee relationship in several ways.

  1. You can’t put these programs in place without something to help me manage my obesity, cholesterol, and/or other chronic condition. This will drive wellness and disease management programs to be more engaging and successful.
  2. This will put pressure on employers to create a culture of health since we spend so much time at work and work contributes to our health conditions.
    1. Need more time to be active. Less sitting. Treadmill desks. Standing meetings. Nap time. Walking breaks. Use of devices to track steps. Incentives. Gym discounts. Healthy food discounts.
    2. Need less stress.
    3. Need more sleep.
    4. Better food choices at work.
  3. This will drive a lot of the new tools and run counter to some trends about limiting dependent coverage since you can’t address obesity without engaging the entire family and the social network.
  4. This will also create a whole exception process by which people who gain weight due to certain drugs have to be excluded. People who can’t exercise may have to be excluded. People may have to see short-term goals (i.e., dropping BMI from 35 to 32). Physicians will have to be engaged.
  5. Coaching will have to expand to include dieticians, social workers, and others to help people beyond the historical nurse centric coaching model.

If none of this motivates you, then just think about the “gift” we’re giving our kids and maybe that will be a wake-up call why someone has to do something here. (As I shared the other day, I struggle with my weight so don’t think I’m some super skinny, high metabolism person who thinks this is easy.)

Books / Articles, Business Tools, Care Management, exercise, Healthcare, Leadership, Managed Care, Marketing / Communications, Research, Value Propositions
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A Frustrating Pharmacy Experience Highlights Service Challenges #Fail

March 17, 2013 by George Van Antwerp 0 Comments

We all talk about the challenge of consumer engagement in healthcare.  If we can’t get consumers to engage, we’ll never get them to change behavior or be preventative.

But, as the recent Times article highlights, sometimes engagement still leads to failure which can be very frustrating.  As I think about my recent experience within the pharmacy system, I’m reminded of a comment that I re-tweeted yesterday.

In this case, I have connections which I suppose I could escalate this to, but it seems wrong that the only way to resolve my customer service issue is to call in personal favors from Express Scripts and CVS.

 

 

But, maybe that’s what I’ll have to do.  At this point, the only way I seem to be able to get my medication is to pay cash which seems like a total system failure.  (Thankfully, I can use the GoodRx app to figure out which pharmacies have the lowest cash price for me.)

So, here’s the scenario…

  • On 12/31/12, I requested a refill for my 90-day retail script that was getting filled at my local CVS store.  
  • I got busy and couldn’t go to pick it up until 1/2/13.
  • Obviously, my plan design changed on 1/1/13, and I was no longer eligible for 90-day retail scripts at CVS.
  • I asked the pharmacist to run it as a 30-day script.  They tried numerous times, but for whatever reason, they couldn’t get the 30-day script to go through.
  • I asked them to transfer the script to my local Schnucks (grocery store) pharmacy.
  • I filled the January 30-day script and a February 30-day script.
  • When I came back for my March refill, they were getting a RTS (refill-too-soon) reject from the PBM – Express Scripts.
  • The local pharmacist and I both jumped on our phones and talked to the pharmacy help desk and customer service at Express Scripts and got the same answer…”You should have another 59 days supply based on the 90-day Rx you picked up at CVS on 12/31/12.”
  • I tried explaining to the customer service rep that I never picked it up.  They said that I’d have to solve that with CVS since they show it in the Express Scripts system…which by the way had me very upset that it became my issue to resolve a problem between the pharmacy and the PBM.  The rep went on to explain to me that they don’t talk to retail pharmacies to resolve issues like this.  (This became one of very few times when I was shouting and upset on a customer service call.)
  • My local pharmacist called the CVS store that said they show the original claim, but it shows that they didn’t fill it.  They agreed to try to reverse it again.
  • One complicating factor here which I think is making this worse is that the 2012 plan was with Medco which has since been bought by Express Scripts.  As a new client to Express Scripts, I would assume Medco sent them an open refill file probably on 12/31/12 or 1/1/13.  A reversal after that day might never come over to Express Scripts.
  • So, I posted the above tweet out of frustration over a week ago.  Express Scripts’ social media team quickly followed-up and assigned someone to work the case…BUT, it’s still not fixed.
  • I talked to Express Scripts yesterday, and it was still something they were trying to resolve with CVS.
  • I talked with CVS who confirms that they never filled the script and show it never paid by Express Scripts.  They blame it on an issue with their software vendor that somehow the reversal was caught in the system.  They said it could get resolved in the next 48 hours.

Who knows when this will resolve itself, but everyone seems to be able to blame someone else here.  Never mind that the patient (me) can’t get their medication.  As someone who tries to look at this from the average consumer’s perspective, this is a nightmare and total customer experience failure.  I understand the system.  I understand plan design.  I know the pharmacists.  I know the teams at Express Scripts and CVS.  Even with all that, I’m stuck having to go outside the system, pay cash for my prescription, and hope that my paper claim will get processed and hit my deductible in my plan design.

fail-stamp

 

Healthcare, PBM / Pharmacy
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