February 17, 2015 
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For those of you that have followed me here, I thought I would share three things with you:
June 27, 2014 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.
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!
June 6, 2014 0 Comments
This was just one of the really great data points I got from the Medication Adherence Clinical Reference page from the American College of Preventative Medicine. It’s worth a read.
But, let me highlight a few other points:
I think this is important because a lot of the industry solutions focus on the pharmacy and the consumer. They don’t (IMHO) go back to the initial discussion with the provider. How are we helping to enable those conversations to last longer than 99 seconds in the average encounter in which time they have to explain the medication, the side effects, and help the patient feel like the medication is going to make a difference? (Of course, this always make me think of my favorite placebo effect video.)
Additionally, this chart from the Adult Meducation publication was a great list of factors reported to impact adherence. (Sources: Miller et al., 1997; Nichols-English and Poirier, 2000; Vermiere et al., 2001; World Health Organization, 2003; Krueger et al., 2005; Osterberg and Blaschke, 2005)
They also share this chart (which I’ve seen a version of many times):
[Source: National Association of Chain Drug Stores, Pharmacies: Improving Health, Reducing Costs, July 2010. Based on IMS Health data]
April 23, 2014 3 Comments
I just finished reading the 2013 CatamaranRx Drug Trend Report (2014 Informed Trends: Moments of Opportunity) and wanted to share some of the things that caught my eye. (BTW – CatamaranRx was formed by the merger of SXC and CatalystRx.)
One of the early comments in the document caught my eye. While simple, it is still so true in healthcare.
“Bringing consistency through a national perspective on best practices, a “local” understanding of how health care is practiced and deep insights at the individual level, to promote the very best outcomes.”
“The looming pharmacy demand is also driving the healthcare market toward expanded cost containment and coordinated care measures. Industry estimates are projecting more than 30 million new PBM customers as a result of the ACA. This influx of new customers will stimulate creative cost management paradigms and entice new entrants into the PBM sector.”
o Over what time period?
o Is this all members prescribed an Rx?
o Is this all members with one Rx?
o What is the percentage of members with over 80% PDC (versus the average PDC)?
o (Note: These are the same questions for every PBM that shows you adherence numbers.)
o Member risk scoring and personalized interventions.
o Tailored clinical programs, including step therapy, quantity limits and prior authorization.
o Aggressive management of controlled drugs to reduce misuse and abuse.
o Formulary management tailored to address client-specific, high-cost medication classes.
o Exclusive specialty through BriovaRx, a high-touch, patient-centric model.
o Plan designs with copay differentials that promote cost-effective choices.
o Multi-channel communications that engage members in their healthcare.
o The need for the right message.
o The need for targeting algorithms.
o The need to vary channel based on preference.
Two miscellaneous comments here:
January 23, 2014 10 Comments
It’s been a few years since I’ve worked on medication adherence solutions. It seems to have become a big focus again in the industry both with the Medicare Star Ratings program and with all the emphasis on waste.
As I started thinking about adherence, I thought it would be good to create a list of solutions and vendors. I couldn’t find one anywhere on the web. So, here’s my initial list of almost 100 companies.
I’ll make this a dynamic list so please comment or send me suggestions to add.
Here’s some old posts on adherence that I think are still relevant here:
I’ve divided the list of solutions and vendors into the following:
Devices
Mobile / Digital
Platform
Communications
Big Data
Tools / Enablers
Medicare focused
Condition specific
Packaging
Pharma
International (recommendations send to me without English sites)
What other companies am I missing? Send them to me directly or add them in the comments section here. Thanks.
November 29, 2013 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).
November 25, 2013 0 Comments
This is an interesting dilemma. At this point, I think everyone is pro e-prescribing even if it’s simply for the benefit of reducing errors. But, I think the original intent of the solutions were to do a lot more than reduce errors.
The hope was to improve adherence (which I think may have been too lofty). The idea was that e-prescribing would reduce the abandonment rate at the pharmacy. I’m not sure picking up a prescription is the same as taking a prescription. And, taking a prescription once isn’t the same as staying adherent over time.
Another hope was that the use of e-prescribing would drive formulary compliance and increase generic utilization. The idea was that putting this information in the hands of the prescriber would allow them to make more real-time decisions that were aligned with the consumer’s interests (i.e., lower out-of-pocket spend). The latest report doesn’t seem to support this at all. It also echos my prior posts about whether e-prescribing was aligned with pharma at all.
Fewer than half (47.5%) of the 200 PCPs polled said they have access to formulary information when e-prescribing, and fewer than a third said they have access to prior authorization (31.0%) or co-pay (29.5%) information. Among physicians with formulary information access, that information was available 61.1% of the time and was said to be accurate 68.6% of the time.
Physicians with an EMR (54.1%) were more likely to have access to formulary information than physicians without an EMR (29.6%). And differences were seen depending on the EHR vendor: Allscripts physicians (32.2%) were less likely to have access to this information than “All Other” software suppliers (60.5%), Epic physicians (62.5%) and eClinicalWorks (68.8%).
Another big effort that e-prescribing and integration with EMR was going to have was to push utilization management (UM) to the POP (point of prescribing) rather than having the pharmacy and the PBM dealing with it. I never really thought this would work. If the information isn’t there or they don’t trust the information, the prescriber isn’t going to want to deal with this. It’s already work that they let their staff handle and isn’t something they want to deal with during the patient encounter.
While e-prescribing is definitely here to stay and becoming the norm, the question is whether it’s creating simply a typed “clean” Rx to transmit electronically or whether it’s actually an intelligent process which will enable better care.
Given multiple studies and surveys recently about transparency in healthcare billing and the general push with Health Reform to drive to outcomes, I’m not sure the “dumb” system process can be a sustainable value proposition.
November 20, 2013 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:
November 8, 2013 0 Comments
PBMs (or Pharmacy Benefit Managers) are big business. Just look at a few of the names and their place on the Fortune 500 list:
Not surprisingly, none of those are non-profits. There is real money being made here. It’s all part of the mark-up game in healthcare. The question of course is does the money being made justify the profits. For example, I’m happy to pay my banker lots of money as long as he’s earning me more than he’s making (and significantly more).
This is a complicated question. (see past posts on What’s Next, Why People Don’t Save With Mail, and Growing Mail Order) I’ve also presented on this topic several times in the past pointing out that the model needs to change, and re-iterating the fact that PBMs made a mistake by putting all their profits in the generic space. I’ve always said that disintermediation would happen by focusing on generics at mail which is where all the money was at Express Script (8 years ago). [People remind me that some of this has changed and is different across PBMs.]
The new Fortune article by Katherine Eban called “Painful Prescription” certains shows a dark story. It focuses exactly on one of these scenarios which is the gap between acquisition cost and client cost. The article talks about paying $26.91 for a drug but selling it to the client at $92.53. I’m always reminded of the fact that at one time we used to buy fluoxetine (generic Prozac) for about $0.015 per pill. On the flipside, we had brand drugs that we bought for more than we got reimbursed and lost money. It was strange model.
So, here’s my questions:
I’m sure there’s more since I’ve been out of the industry for a few years, but while I don’t intend to be the defender of the industry, I do like to bring some balance to the conversation.
August 24, 2013 0 Comments
This seems like the type of headline you’d expect to see in a 3rd world country not the US. But, we’ve been talking about drug shortages for years, and while it may be better in a few areas, cancer isn’t one of them.
I was recently reminded of this in an AJMC article which was discussed at ASCO and had this data point about 94% of oncologists and hematologists from a University of Pennsylvania study.
Looking back a few years, I think IMS did one of the best studies on this topic. Here’s a few of the items they highlight from the study (with links to their charts).
It can be a little mind-boggling.
June 12, 2013 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:
So, if I read between the lines here, I come to a few quick thoughts:
The interesting times in the industry continue. It’s a head scratcher of what comes next!
June 11, 2013 2 Comments
While I’ve moved most of the infographics I find to my Pinterest account, I wanted to capture and share this one from Stephen Wilkin’s blog since it hits so many of the points that I try to make with people.
May 22, 2013 1 Comment
Those of you who know me know that I’ve been a huge advocate for generic prescriptions since the early part of my PBM/pharmacy career in 2001. It wasn’t long ago that I talked about unresponsible reporting when slamming generics and scaring the population. But, we all enjoy a good conspiracy theory which is about the only thing that makes sense reading the new Fortune article – Dirty Medicine – about Ranbaxy. Both articles are written by the same author, but this one scares me a lot more than the other one. This article reads like a fiction book but appears to be true. It should scare you also and put a spotlight on the FDA.
Here are a few things from the article.
On May 13, Ranbaxy pleaded guilty to seven federal criminal counts of selling adulterated drugs with intent to defraud, failing to report that its drugs didn’t meet specifications, and making intentionally false statements to the government. Ranbaxy agreed to pay $500 million in fines, forfeitures, and penalties — the most ever levied against a generic-drug company.
The company manipulated almost every aspect of its manufacturing process to quickly produce impressive-looking data that would bolster its bottom line. “This was not something that was concealed,” Thakur says. It was “common knowledge among senior managers of the company, heads of research and development, people responsible for formulation to the clinical people.”
It made clear that Ranbaxy had lied to regulators and falsified data in every country examined in the report. “More than 200 products in more than 40 countries” have “elements of data that were fabricated to support business needs,” the PowerPoint reported. “Business needs,” the report showed, was a euphemism for ways in which Ranbaxy could minimize cost, maximize profit, and dupe regulators into approving substandard drugs.
But, we know that generics have worked. People have gotten better so one has to assume this isn’t a massive fraud especially when 50% of generics have traditionally been made by the brand manufacturers themselves who would never risk their companies to do what Ranbaxy did. So, it made me wonder about the Placebo Effect. Did some drugs work simply because of that? Is there anything else that would make sense for why this wasn’t discovered more quickly?
I’ve talked a lot about the Placebo Effect. There’s now even an app to make you feel better using the Placebo Effect.
I’m shocked that the PBMs, pharmacies, manufacturers, associations, wholesalers, and others aren’t out talking about this. I would want to let the public know that this isn’t a systemic problem, but is one contained to one instance and that quality will be maintained…but maybe no one cares?
May 6, 2013 5 Comments
I think we all know that medication adherence is a big deal. The most common number quoted is the $290B waste number from NEHI. There are numerous studies that confirm the value of non-adherence even one that just came out.
The amount of money spent on trying to improve adherence is huge! Pharma has worked on. Retail pharmacies have worked on it. Providers have worked on it. Insurance companies have worked on it. Employers have worked on it… And all of these have happened across the world.
At the same time, you see people get so excited about things don’t make any sense to me.
Let me take an easy example. A few months ago, a company called MediSafe put out a press release around moving medication adherence on statins up to 84.25%. Nothing against the company, but I read the press release and reached out to them to say “this is great, but it’s only 2 months of data…most people drop therapy after the first few months so who care…call me back when you get some good 12 month data.”
But, a lot of people got all excited and there was numerous press about this – see list of articles about them.
Now, tonight, I see another technology getting similar excitement. Fast Company talks about the AdhereTech technology which integrates a cellular phone with a pill bottle. And, it costs $60 a month. In my experience, companies wouldn’t even spend $2 a month to promote adherence so $60 is just impractical. The argument is that this is good for high cost specialty drugs that are oral solids not injectables. But, this isn’t a new idea. Glowcaps already built this model with a very slick interface and workflow.
And, I don’t know about you, but I think this would be obnoxious. And, I love data and am part of the QuantifiedSelf movement. I’m not sure I understand the consumer research here. I would have to believe all of the following to buy into this model.
Yes. Will this work for some people…sure. But, if it helps 10% of people, then my cost is really $600 per success.
Should we be working on better solutions to address adherence…of course.
But, let’s stop trying to figure out some gimmick to fix adherence. Let’s look at root cause.
For example:
We have a lot of problems.
March 17, 2013 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.
@reginaherzlinger asks why you need to have connections to get clear information about cost and quality if care.
— Liz Boehm (@LizBoehm) March 16, 2013
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.
@expressscripts #rx #fail. Refill rejected due to @cvs refill I never picked up 3 mo ago. Why is it my issue 2 resolve?Call pharmacy #cx
— George Van Antwerp (@gvanantwerp) March 9, 2013
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…
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.
February 11, 2013 1 Comment
12 Of 23 Companies
As I mentioned a few weeks ago (2/2/13), I wanted to test and see if healthcare companies would respond to consumers via Twitter. To test this, I posted a fairly general question or message on Twitter to see the response (see below). Of the 23 companies that I sent a message to, only 12 of them ever responded even after 6 of them received a 2nd message. Those results are shared below. What I also wanted to look at was the average time to respond along with which group was more likely to respond.
I will admit to being surprised. I’m sure all of these companies monitor social media so I’m not sure what leads to the lack of response. [I guess I could give them the out that I clearly indicated it was a test and provided a link to my blog so they could have chosen not to respond.]
Regardless, I learned several things:
From a time perspective, I have to give kudos to the Prime Therapeutics team that responded in a record 2 minutes. Otherwise, here’s a breakout of the times by company with clusters in the first day and approximately 2 days later.
| Company |
Response Time (Hrs:Min) |
| Prime Therapeutics |
0:02 |
| Aetna |
1:12 |
| LoseIt |
1:19 |
| Healthways |
2:07 |
| Walmart |
3:01 |
| Express Scripts |
8:35 |
| Kaiser |
29:22 |
| BCBSIL |
47:32 |
| OptumRx |
47:39 |
| BCBSLA |
48:18 |
| Sanofi |
53:30 |
I guess one could ask the question of whether to engage consumers via Twitter or simply use the channel more as a push messaging strategy. The reality is that consumers want to engage where they are, and there are a lot of people using Twitter. While it might not be the best way to have a personal discussion around PHI (Protected Health Information) given HIPAA, it certainly seems like a channel that you want to monitor and respond to. It gives you a way to route people to a particular phone number, e-mail, or support process.
As Dave Chase said in his Forbes article “Patient engagement is the blockbuster drug of the century”, this is critical for healthcare companies to figure out.
The CVS Caremark team told me that they actively monitor these channels and engage with people directly. I also talked with one of the people on the Express Scripts social monitoring team who told me that they primarily use social media to disseminate thought leadership and research, but that they actively try to engage with any member who has an actionable complaint. They want to be where the audience is and to quickly take the discussion offline.
If you want to see the questions I asked along with the responses, I’ve posted them below…
January 30, 2013 0 Comments
While prescription adherence continues to be a $290B+ problem, we still address the problem in a drug by drug approach due to silos within our healthcare value chain.
For example:
Additionally, there is additional effort made to keep you adherent if:
For those of us that have studied adherence, you know that this is a multi-factorial issue meaning that there are numerous things that impact your adherence. Some people will respond to nudging. Some people need to better understand their disease. Some people need co-pay relief or patient assistance programs. Some people need a different medication.
But, the two things we don’t need are:
So, what’s the answer. There isn’t a silver bullet (which is what we’d all like). I believe the best alternative is to drive adherence through the disease management and case management companies. These nurses are treating the patient. They are discussing their multiple co-morbidities with them. They are talking about and understanding their barriers. They should be able to help “prescribe” information and tools to help them with their adherence.
Of course, the issue here is engagement. If we’re only getting 10% of the patients with chronic illnesses to participate in our programs (which is about the national average – I believe), what about the other 90%. This is where a care coordination program that incorporated the provider and the pharmacy into a technology solution which pushed gaps-in-care and messaging through the EMR and pharmacy system to drive coordinated solutions is the answer.
I don’t know when this will happen, but I don’t believe we’re going to put a dent in adherence until we think differently about this problem.
December 26, 2012 2 Comments
The short answer is that a PBM is the company hired by your employer (either directly or through your health insurance company) to manage your pharmacy benefits. When you use your pharmacy card at the retail pharmacy to get a prescription, the pharmacy interacts with your PBM electronically to find out if the drug is covered and the copay to you the consumer.
*****************
Back when I first started blogging, I used a lot of my experiences at Express Scripts to shape some of my perspectives about the PBM or Pharmacy Benefit Manager industry. It took me a few months before I realized that some people reading the blog didn’t know what a PBM was. That led me to my all time most popular blog post – “What Is A PBM?”
Since that was over 5 years ago, I figured it was time for an update.
The market has shifted in the past 5 years especially with Express Scripts purchase of Medco to become the largest player in this space. Walgreens has also divested their PBM to CatalystRx which was then bought by SXC and the new entity renamed CatamaranRx. At the same time, you’ve seen United Healthcare insource their PBM business from Medco to combine it with their old Pacificare PBM to create OptumRx. You’ve also seen Humana’s PBM business and mail order business – RightSourceRx – grow significantly.
There are other big PBMs which I didn’t mention such as CVS Caremark which after years of rumors about them splitting back up seems to have proven their case as an integrated, retail-owned PBM. There is MedImpact which has 32M lives according to the latest PBMI market share report, and Prime Therapeutics which is a PBM owned by several of the BCBS plans. Additionally, Aetna, Cigna, and several other managed care companies also have their own PBMs.
While I would have argued that the PBM wasn’t typically known to consumers 5 years ago, I think that the very public dispute between Walgreens and Express Scripts has changed some of this.
But, what a PBM does is relatively simple:
The PBM’s clients are employers who are self-insured, government entities (i.e., state employees, Department of Defense), unions, TPAs (third party administrators), and managed care companies (i.e., BCBS of).
PBMs are sometimes referred to as middlemen, but I will point to a few other posts on this:
In general, if you’re looking for more information on PBMs, I would point you to several sources:
The only other blogger who really offers any coverage of this space is Adam Fein which his blog – Drug Channels.
November 10, 2011 0 Comments
I’ve talked before about some of the mobile PBM efforts, but what about the retail pharmacies. You should expect that the chains will have different mobile strategies than the grocery stores or the big box retailers. And, it will be interesting to see how the independents might collaborate on a shared platform.
Here’s a few things already out there:
– Walmart new shopping application and Walmart’s page on mobile
– CVS retail application
– Walgreens has a mobile pharmacy app
– Target also has a mobile pharmacy application
So what should or could pharmacies offer consumers in terms of mobile applications:
– A refill application is a minimum
– Education or drug information is another basic
– There are certainly some geographic options such as a store locator or clinic locator
– There are options for location based check-in using Foursquare
– Scheduling MTM consultations or vaccinations are a reasonable option
– What about promoting saving thru 90-day retail or generics?
– As retail pharmacies are in the specialty business, there could be opportunities to promote this channel and offer support.
– Telemonitoring is another option (e.g., FaceTime)
– Use of QR code is another part as is augmenting the shopping experience with augmented reality
– Of course, couponing will be part of the solution, but what I’d like is someone who would download my shopping receipts (from multiple companies) and provide me with relevant savings.
– Should it include Rx coupons? Unlike the PBMs, retailers want traffic and if coupons increase adherence then why not.
– There are other options like photos and integration with social networks and tools.
I think one of the key “killer apps” is secure rules based messaging. Imagine using data to identify when you need a vaccination or identifying a potential drug-food issue or having age based triggers. These could be sent directly to the consumer in a secure environment. Of course, we’re only at about 10% adoption and the key question is whether these are the key consumer that everyone wants to attract. Are they the high utilizers? Do they buy other goods?
More to come here. This is a rapidly evolving space.
November 9, 2011 0 Comments
I was watching a YouTube video on Starbucks’ augmented reality cup which got me thinking. Why not do the same with the prescription bottle?
What a great way to engage the tech savvy consumer.
Perhaps you could provide a plain language summary of information about the medication. You could give a list of side effects. Or show how to take the medication.
Perhaps it could have an embedded survey that you complete weekly.
And, it seems like an easy opportunity for someone to offer an augmented reality applications for all medications. Hold up the phone to a pill and get information on it. (maybe a little harder)
I think there is a lot more here as companies like Lamar continue to evolve.
April 21, 2009 3 Comments
As we have been working with a lot of PBMs over the past year, the question has come up many times – “where do you see the industry going?” After bouncing some ideas off a few of you, we have pulled together a whitepaper with the Silverlink Communications perspective. Certainly, each area of the whitepaper could have been its own chapter, but rather than turn this into a thesis, we are publishing it.
As I have said in a few recent articles including the one in HCPro, I think the Express Scripts acquisition of NextRx will likely accelerate a few of our predictions here.
The executive summary of the whitepaper is below. The final whitepaper is available here.
I would welcome any comments you have…
Executive Summary
In the next several years, we believe that three changes will drive the pharmacy marketplace and ultimately change the business model for PBMs. These changes will be accelerated by the current financial crisis which may drive further consolidation in the short-term. Consolidation which we believe will accelerate the “race to the bottom” where the traditional model of scale has been maxed out with parity achieved among the large PBMs.
1. The need to better engage the consumer in understanding their benefits and ultimately responsibility for their care;
2. The effort to automate and integrate data across a fragmented system and across siloed organizations; and
3. The shift from trend management to being responsible for outcomes.
Consumer Engagement
The industry-wide movement to consumerism will continue to affect plan design, but it will also thrust PBMs and pharmacies into the critical path of member engagement. With pharmacy being the most used benefit as well as the volume and accessibility of retail pharmacies, they will play a critical role in driving adherence and helping consumers understand healthcare. This will renew the focus on cognitive skills, medication therapy management and ultimately drive the desire for a more traditional “corner store” approach that can be scaled using technology.
Combining this with the macro-economic forces that are driving ubiquity of technology through mobile media and the evolution of the Internet from a pull media to a push media will also challenge the PBMs and pharmacies to innovate. They will be required to look outside of healthcare models to identify the right communications to drive behavior. PBM’s and pharmacies will have to leverage behavioral economics and personalization technology to get the right message to the right consumer at the right time through the right medium.
Automation and Integration
The consumer engagement challenges will only exasperate some ongoing challenges within the PBM and pharmacy community. This will include the lack of staff to provide more cognitive services and the general fragmentation of data across organizations and functional silos. Figuring out an overall “single view of the patient” which shows all the touch points and offers a coordinated multi-channel strategy for inbound and outbound communications will become a major focus.
In addition, in order to make these solutions efficient, the development of predictive models, much like the clinical and underwriting solutions being used today, will become the norm across the industry. As these models are fine tuned and the promise of e-prescribing becomes more of a reality, the channel for engaging physicians in the member’s care will finally exist. PBMs and pharmacies will be able to use data to allow physicians to understand when patients aren’t being compliant and when there is an opportunity to drive change.
From Trend Management to Outcomes
The traditional business model for the PBMs has been based on large scale negotiations to drive rebates and efficiencies within mail service – cost to fill and acquisition costs. At the same time as those efficiencies reach a maximum discount, the traditional tools for managing trend will have run their course. Although plan design won’t “die”, comparative effectiveness may reduce (or eliminate) the need for formularies, and in general, the ability to shift cost to the consumer above the 25-30% level will be difficult.
Both of these challenges will push the PBMs and pharmacies into a role where they are focused on driving health outcomes and being part of the bigger solution across the industry. They have a strong footprint to drive this change and as theranostics (or personalized medicine) evolves there will be an opportunity to find cost effective solutions to change the prescription landscape.
March 14, 2008 1 Comment
Have you ever read the annual Takeda Prescription Drug Benefit Cost and Plan Design Report? It is a great summary of data from 340 employers representing over 6M members and this version is based on data from May and June 2007.
Here are my notes:
WSJ Health Blog Drug Channels KevinMD Blog Health Populi e-Patients
Contact me at gvanantwerp @ mac.com.
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