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Mail Order Pharmacy - Value, Tactics, Challenges


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A copy of a presentation I delivered on February 8, 2011 for Barclays Capital on mail order pharmacy.

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Mail Order Pharmacy - Value, Tactics, Challenges

  1. 1. GEORGE VAN ANTWERP PBM Expert CallGM, Pharmacy SolutionsSilverlink Communications Pass Through Pricing At Retail: More Focus On Mail? February 8, 2011
  2. 2. Quick Biography 1996 - 2000 2000 - 2001 2001 - 2006 Current Business Web configuration Member intelligence and Electronic communication tools for health plans prescribing, generic technology strategy t h l t t and other industries strategy, design, and t t d i d for health plans and sampling, plan implementation for other industries design, utilization over 15 PBMs and management, pharmacies therapeutic interchange, retail- i t h t il Focus on adherence to-mail, mandatory and retail-to-mail mail Disclaimer: Silverlink does work and intends to work with many of the PBMs and has confidentiality agreements with them. Additionally, George Van Antwerp may own individual stocks. 2©2011 Silverlink Communications, Inc. All rights reserved.
  3. 3. Agenda Why mail order is important How to increase mail order utilization Challenges 3©2011 Silverlink Communications, Inc. All rights reserved.
  4. 4. Why Mail Is Important: Profits percentage of PBM profits from generics at mail order Source: Adam Fein 2010-11 Economic Report on Retail and Specialty Pharmacy ( 4©2011 Silverlink Communications, Inc. All rights reserved.
  5. 5. Why Mail Is Important: Control Source: Medco’s 2008 Drug Trend Report 5©2011 Silverlink Communications, Inc. All rights reserved.
  6. 6. Why Mail Is Important: Adherence 84.7% of patients who received their medications by mail at least two-thirds of the time stuck to their physician-prescribed regimen, versus 76.9% who picked up their medications at “brick and mortar” Source: Kaiser Permanente pharmacies ( "We also know that an approximately 15 percent increase in adherence to medications occurs for consumers receiving a 90-day prescription versus those receiving a 30-day supply. So our Go 90 program can improve health outcomes and reduce overall costs to the health care system through better adherence " - Kermit Crawford, President, Walgreens in press release on 1/12/11 p 6Silverlink Communications, Inc. Proprietary and Confidential ©2010
  7. 7. Why Mail Is Important: Price Compression Retail business (for a PBM) can be a claims processing business  Too easy to be commoditized Retail pass-through p p g pricing will always be a “simple” g y p model to pursue  Takes away incentive for PBM to aggressively manage retailers Pass-through pricing (like focusing just on discount percentage) is short-sighted in that it doesn’t look at net cost (i.e., total cost of ownership)  Medicare shift to bonus payments based on quality (Star measures)) PBM has to focus on innovation and outcomes  Cigna / Merck agreement Opportunity for engagement of the consumer is better  How do you impact medication possession ratio? 7
  8. 8. Increasing Mail Utilization: Alignment Does the Consumer save?? These questions are drug specific based on plan design and pricing. Does the Does the payer PBM make save?? money? ? 8©2011 Silverlink Communications, Inc. All rights reserved.
  9. 9. An Example: How Mail Doesn’t Save The Payer Money Assume $80 cost for a If the payer saves 10% If the patient’s copay is 30-day brand Rx going to mail order, you $25 and you give the create $8 in savings patient a 90-day supply (per 30-day supply) or ( 30 d l ) for t f two 30-day copays, 30 d $24 in savings they save $25 (per 90-day claim) Moving to mail generates $24 in savings, but the payer gives all that plus $1 to the consumer. They either need more savings (pricing) or to reduce the copay incentive (plan design) design). Note: Numbers are only examples. They do not represent any national averages. 9©2011 Silverlink Communications, Inc. All rights reserved.
  10. 10. Increasing Mail Utilization: Awareness and Trust What is mail order (or home delivery)? Who is PBM? How do you know my How can the medications? same medication be less expensive? Is it safe to ship it to me using USPS? 10©2011 Silverlink Communications, Inc. All rights reserved.
  11. 11. Increasing Mail Utilization: Plan Design Source: CVS C S Caremark T d R R k TrendsRx Report 2009 t Source: S htt // l / i l ti / l th d li / 11©2011 Silverlink Communications, Inc. All rights reserved.
  12. 12. Increasing Mail Utilization: Interventions Target and score individuals based on number of Rxs and likelihood to convert Develop p p personalized messaging based on g g g gender, g g p y, and , geography, other attributes Coordinated outreach using direct mail and automated calling Provide members with opportunity to talk with live agent to learn more Manage ongoing test grid to evaluate champion / challenger for optimization Use final disposition of member to evaluate for recycling frequency and new outreach plan 12©2011 Silverlink Communications, Inc. All rights reserved.
  13. 13. Increasing Mail Utilization: Consumer Knowledge New Caring Sporadic Forgetful Steady Nancy Carin Sam Frank Suzy  Newly diagnosed  Caregiver for either  Someone who gets  Chronic medication  Chronic medication  Not very familiar with dependents or parents some acute user user her condition, the  Picking up medications  Likely to have or  One or more medication, the di ti th prescriptions f them i ti for th occasionally ( i ll (e.g., develop multiple d l lti l conditions diti pharmacy process, or and responsible for antibiotic) conditions  Understands the value the PBM translating (sharing)  Understands the  Not great with of medication  Needs lots of hand- information with them healthcare system adherence to therapy  Feels better when holding and education  Important to educate, somewhat but not  Understands their taking her medications  Need to address gaps but not the patient overly interested or condition, but not  Actively managing her in the physician-  Likely to be the “e- engaged in the worried about it (even health patient encounter patient patient” but also semantics if they should be)  Generally adherent  Need to help her build stressed out (aka  Engaged with MD and a routine sandwich generation) pharmacist 13©2011 Silverlink Communications, Inc. All rights reserved.
  14. 14. Challenges: “Wal-Mart Models” Medicare Pharmacy Access Standards M di Ph A St d d Urban: On average, at least 90% of Medicare beneficiaries who live in an urban area have access to a network pharmacy within 2 miles of their residence. Suburban: On average at least 90% of Medicare beneficiaries who live in a suburban average, area have access to a network pharmacy within 5 miles of their residence. Rural: At least 70% of Medicare beneficiaries have access to a network pharmacy within 15 miles of their residence. Source: Access Standards from Wal-Mart whitepaper - 14©2011 Silverlink Communications, Inc. All rights reserved.
  15. 15. Challenge: Retention 5-25% 5 25% Percentage of people that leave mail order after the first fill In one study, people continued to churn from mail order BUT the majority of them (that stayed continuously eligible) returned in approximately 45 days indicating the issue was refilling before it was too late NOT service and satisfaction. Source: Data points provided here are anecdotal and not from published studies. 15©2011 Silverlink Communications, Inc. All rights reserved.
  16. 16. Challenges: Generic Utilization BRAND GENERIC $25 copay for 30-day $8 copay for 30-day $50 copay for 90-day $16 copay for 90-day $100 savings per year $32 savings per year 16©2011 Silverlink Communications, Inc. All rights reserved.
  17. 17. Challenges: 90-day Retail The findings showed that of the members who previously got their prescriptions through mail, 76.3 percent chose to stay with mail service, service while 23 7 percent moved their prescriptions to retail For 23.7 retail. the group that was just initiating therapy for a recently diagnosed long-term chronic illness, 44.3 percent selected retail as their pharmacy of choice, while 55 7 percent selected mail service For choice 55.7 service. members who had no previous experience using a mail pharmacy, nearly 68 percent selected retail pharmacy for their maintenance medication prescriptions. (CVS Caremark press release on 1/19/11) p p ( p ) 17©2011 Silverlink Communications, Inc. All rights reserved.
  18. 18. My Predictions Generics at mail will continue to be the profit driver for PBMs Specialty (by mail) will be the bigger focus 90-day programs will take off More retail and PBM collaboration to leverage the POS relationship (for adherence); evaluate central fill (mail at retail); and implement limited networks The messaging around mail order will shift from savings to adherence and health outcomes (which may address some of the skeptics at the plans) Increased automation will continue to lower costs Eventually retail will manage the first fill and mail order and/or kiosks will be the strategy for long-term patients that are stabilized on their medications 18©2011 Silverlink Communications, Inc. All rights reserved.