Tag Archives: Feature

Penn And Teller On Vaccinations

This is a video that everyone should share.  It’s a funny, short, and blunt video on why to get your kid vaccinated.

There was a recent article in USA Today about vaccines which said:

Vaccines are widely available across the country, doctors say, and poor children can get them for free. The biggest impediment to vaccinating kids today is not cost, but fear, says William Schaffner, a spokesman for the Infectious Disease Society of America and professor at Vanderbilt University School of Medicine in Nashville. Around the world, millions of parents began skipping or delaying vaccines because of an infamous (and since retracted) 1998 study in the British medical journal The Lancet. The study’s author theorized that a combined measles-mumps-rubella shot caused autism.

It became one of the greatest myths in modern medicine, says Offit, author of Deadly Choices: How the Anti-Vaccine Movement Threatens Us All. He points to nearly two dozen studies showing no link between vaccines and autism. Last year, The Lancet issued the retraction after learning that information had been falsified. British health officials also stripped the study’s author of his ability to practice medicine in England because of professional misconduct.

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

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

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

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

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

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

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

4. Which system(s) will be used?

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

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

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

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

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

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

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

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

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

Other articles on this:

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

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

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

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

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

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


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

Additional Reading:

  1. Prescription Drug Coupons Bad for Patients
  2. Drug Firms Providing Kickbacks For Copays and Coinsurance
  3. DBN article – As Competitors Encroach, Pfizer Seizes A Few More Glory Days With Lipitor Promo
  4. Adam Fein blog posts
  5. Copayment Subsidies
  6. Coupons For Patients, But Higher Bills For Insurers

Eight Studies To Share With Your Soccer Mom Friends

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.

Here We Go Again – WAG and ESRX Network Dispute

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?]

What I Learned In PharmaVOICE

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

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

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

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

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

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

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

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

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

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

Will Copay Cards Doom Rebates?

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.)

Up To 200,000 MDs Require eRx Exemption From CMS

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.

Highlights From The CVS Caremark Insights Report 2011

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.”

Walmart: Good or Bad for the PBMs

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.]

PBM Mobile Applications – CVS, Humana, Medco, Express, Catalyst, Prescription Solutions

This week, Medco released their mobile application that they’ve been working with Verizon on.  Not a big secret in my mind since I’ve been hearing about it since last Fall.  I’ve talked about CVS Caremark’s application (CVS mobile), Humana’s application, and CatalystRx’s application.  So, this made me wonder why I hadn’t heard about one from Express Scripts.  It seems unlikely that they wouldn’t have one.

There doesn’t seem to have been a lot of fanfare, but they launched one in March.  Here’s a quick summary of it:

The new Express Rx mobile app works across multiple platforms, and is now available for a free download at both the Apple iPhone App Store and at the Android Market (simply search ‘Express Rx’).  In addition, members using a Blackberry or other smartphone device with web browsing capability can access our mobile optimized website at http://m.esrx.com.

With our new mobile app and mobile optimized website, Express Scripts members will be able to securely access the following functions:

  • Start Home Delivery – transfer available maintenance medications to the Express Scripts Pharmacy
  • Order Refills – select and schedule prescriptions to be refilled from the Express Scripts Pharmacy
  • Check Order Status – check to see if an Express Scripts Pharmacy order has shipped, the ship date and by what method
  • Find a Pharmacy – locate a nearby retail pharmacy using the GPS technology built into a smartphone
  • Drug Information – access Drug Digest database to look up drug information, common uses and possible side effects

The app consists of three features: My Rx Choices, which delivers on-demand, personalized out-of-pocket costs, interactions and other information for any prescription drug; My Medicine Cabinet, which allows patients to view the medications they’re on, including prescription and over-the-counter drugs, and set reminders for themselves; and Prescription ID Card, which allows convenient access to a member’s prescription drug card.

Of course, Walgreens also has a mobile application as does Walmart.  Neither of them are PBMs, but they are both critical players in the pharmacy space.
Next on my list to check out is Prescription Solutions.  They also have a mobile application which does:
  • Refill mail service pharmacy prescriptions
  • View your prescription history
  • Set up text message medication reminders
  • Check the status of and track orders
  • Locate a pharmacy by ZIP Code
  • Search your formulary by generic or brand name drug, status, or class
As one might expect, mobile web or mobile apps are quickly becoming the norm.  The key to look at is what is the functionality.  Is it simply putting their websites on a phone or are they developing other technologies that take advantage of the mobile environment (e.g., location based services or enhanced reality).  I’ll share some thoughts on those in another post.

Summary Of Big 3 PBM Drug Trend Numbers

All of the big 3 PBMs have now reported their drug trend for 2010.  How do they compare?  [acknowledging that methodologies are different]

  1. CVS Caremark = 2.4% (0.8% without specialty)
  2. Express Scripts = 3.6% (1.4% without specialty)
  3. Medco = 3.7% (1.1% without specialty)

Now, I’ll reiterate my points from the past which are:

15 Things You Should Know About Prescription Non-Adherence

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.

Should You Pay Physicians For Medication Adherence?

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.

The Royal Wedding Symbolism For Healthcare

This is a day most of us will remember.  I still remember the wedding of Princess Diana.  Regardless of how you feel about the monarchy, it is a joyous celebration of life.

It made me think of several words that are key to healthcare – trust, passion, and engagement.  (Another great example here is the real Patch Adams.)

Let’s start with trust.  You have to trust your physician.  You have to trust that the course of treatment will work.  You have to trust that your actions can make a difference.  Those are fundamentals to getting better. 

Passion is another critical element (even if the royal couple was light on the PDA).  Healthcare runs the risk of becoming a “hot industry” with sustainable business which draws people towards it to be employed and get paid well.  That’s very different from the traditional people who were in healthcare because they felt passion for curing people.  I talked with one researcher recently that mentioned one of his client had to increase their staffing by over 10% to get the same jobs done.  They attributed that to a lack of passion for the job.  (On the flipside, healthcare needs those from outside the industry to help reform ourselves.  Change has to be a mix of internal and external.)

Engagement is a word I use often.  The idea here of the long-term engagement process, transition into being a royal, and the commitment the royal couple feels is very different than the quick engagement and wedding of Princess Diana.  I see that as very similar to the need for long-term solutions that engagement people around intrinsic motivators not the short-term boosts we see from things like financial rewards or quick diets.  Healthcare is a change.  Engagement is a process NOT an event.

The people over at Seduce Health pulled out a few other lessons from the wedding which I agree with. 

So…engage your employees, your family, your members, and your patients.  Build up their passion for life and health and help them believe that they can be successful.

Does Changing Drugs Erode Trust

One of the big tools that PBMs use to manage drug trend and improve generic fill rate is step therapy. Another one is therapeutic substitution. Both of them rely upon the patient to change medications.

Based on a study published last year, one of the issues identified for adherence was the patient’s belief or trust in their physician. Switching medications (I.e., trial and error) was viewed as eroding that trust.

It creates an interesting question about these tools. Do they erode trust? Do they impact adherence? I think the standard perception would be that lower cost medications would improve adherence. I know research by Shrank has shown that starting on generics leads to better MPR. Is that true for patients that start on a brand and move to a generic?

On the other hand, the research points to the need for the physician to explain to the patient about the plan for care which might include “trial and error”. Certainly personalized medicine may change this need in the long-term, but in the interim, does this create a chance for PBMs to support MDs in a new way by providing this context to the patient?

More questions here than anwers, but an interesting topic.

Patient Educ Couns. 2010 Jul 30.
“Practicing medicine”: Patient perceptions of physician communication and the process of prescription.
Ledford CJ, Villagran MM, Kreps GL, Zhao X, McHorney C, Weathers M, Keefe B.
George Mason University, Fairfax, VA, USA.

OBJECTIVE: This study explores patient perceptions of physician communication regarding prescription medications and develops a theory of the effects of perceived physician communication on the patient decision-making process of medication taking.

METHODS: Using a grounded theory approach, this study systematically analyzed patient narratives of communication with physicians regarding prescription medications and the patient’s resulting medication taking and adherence behavior.

RESULTS: Participants described concern about side effects, lack of perceived need for medications, and healthcare system factors as barriers to medication adherence. Overall, participants seemed to assess the utility of communication about these issues based on their perceptions of their physician as the source of the message.

CONCLUSION: The theory generated here includes patient assessments of their physician’s credibility (trustworthiness and expertise) as a critical influence in how chronically-ill patients process information about the need for prescribed therapy. Trial and error to find appropriate medications seemed to deteriorate patients’ perceptions of their physicians’ credibility.

PRACTICE IMPLICATIONS: A practical application of this theory is the recommendation for physicians to increase perceived expertise by clearly outlining treatment processes at the outset of treatment, presenting efficacy and timeline expectations for finding appropriate medications.

QR Codes – The Ultimate Opt-In Tool

You probably are starting to see them more (those 2D barcode boxes).  They’re called QR codes.  Here’s a few articles about them:

I find this a fascinating area.  Imagine a few examples here:

  1. You want to get a member to opt-in to a program (e.g., auto-refill).  You can put a QR code on their invoice.
  2. You want to offer an educational video about a condition.  You can put a QR code on the Rx label.
  3. You want to get consumers to opt-in to a SMS program.  You can put a QR code on a mailing.
  4. You want to offer a physician access to the clinical studies about a drug.  You can fax them some information with QR codes on it. 
  5. You want a patient to learn more about a condition.  You could put up DTC materials in the provider’s office with QR codes. 

I think you get the point.  I expect this will grow rapidly especially as the smart phone market grows and more and more people have cameras in their phones (devices). 

One of the biggest uses right now in pharmacy is from Walgreens where they allow you to order a refill by scanning the QR code on their bottles using their mobile app.

The Express Scripts 2010 Drug Trend Report – Waste and Intent Focused

As I’ve talked about in the past, after working on the Express Scripts Drug Trend Report (recent copy here), I really enjoy getting the chance to read through them every year (see 2009 review or 2008 review). Over time, they’ve become less about the clinical side of the business and more about the programs used to engage the consumer with consolidated class specific data still included.

This year’s report is similar, but it is built around a new study that Express Scripts just completed with Harris Interactive. It comes to a rather surprising but interesting conclusion –

We discovered that the majority of people want to engage in the same behaviors plan sponsors seek to promote, but these desires often remain dormant. That is, there is a persistent intent–behavior gap. The key is structuring interventions that close the gap between what patients already want and what they actually do.

What’s the key point here? The point is that this says that consumers really want to move to generics and move to mail order, but they don’t do it. Is it that simple? I’d love to think so. And, for generics and mail order, I’m more likely to believe that inertia is a large factor. BUT, as I’ve talked about before, adherence has lots of complicating dimensions.

They focus on the gap between the physician and the optimal outcomes. This is certainly a major factor, but beyond consumer intent, there are issues of health literacy and physician beliefs that have to be addressed. Regardless, the point is correct…how do we engage and motivate consumers to change behavior especially if they are pre-disposed to change (when presented with the right facts).

They did continue to build on last year’s focus on WASTE. They estimate that the waste in 2010 was over $403B as broken down below:

As adherence is a key issue here, they highlight the difference in adherence rates between retail pharmacy and mail pharmacy.

The focus of the report and the early press I’ve seen has been on the following chart. What it shows is some of the data from the Harris study saying that 82% of people would chose a generic (that are on a brand) and (depending on copay savings) 55-71% would chose retail.

One topic that I was glad was in the survey was limited networks. This is a topic everyone’s talking about from ReStat to Wal-Mart to Walgreens to CVS. Here’s what the research said with some explanation for what it means:

Of note is that about 40% said they would be willing to switch retail pharmacies to save their plan (or employer, or country) money. This fi gure is not as low as it fi rst appears because before a plan implements a more narrow retail network, a large fraction of members already use these pharmacies and therefore don’t have to switch pharmacies. It is not unusual, for example, for a client using a broad network to have 70% of prescriptions processed through pharmacies that are in the narrow network; members currently using these pharmacies do not have to make any changes. When a narrow network is implemented, if 40% of the users of the remaining 30% of prescriptions would willingly move to a lower-cost network pharmacy (as suggested by the survey), we estimate that the resulting overall market share within the narrow network would rise to 82% {70 % + (30% x 40%)}. (page 14 of the DTR)

All of this tees up their family of “Select” offerings (see Consumerology page) which builds on the success of Select Home Delivery and applies the concept of “Choice Architecture” from the book Nudge.

They talk about some of their work with adherence and their Adherence IndexSM. This metric is certainly one that has the industry’s attention as people wonder about the predictive value, how this is used, and how to craft solutions around such an index. My perception has been looking at studies like this one by Shrank and colleagues that past behavior remains the best predictor of future behavior, but I’m happy to be wrong.

So…what were the trend numbers?

  • 1.4% in the traditional (non-specialty drugs)
  • 19.6% in specialty
  • 3.6% overall

One of the other lists that I always find helpful to have is what are the top 15 drug classes and the PMPY spend.

Of course, in today’s world, you really want to know this for specialty medications:

So, as always, I would recommend you read the report. Lots of great information in here. Interesting research. Good thoughts on consumer behavior and how to change it.

I think this week is their Outcomes conference which was always a good event.

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