Transcript Director Development Series

Comparing
US and Canadian Drug Plan Design Trends:
The Express Scripts Story
Steve Goldberg, MD,MBA
Chief of Medical Affairs
Value of Generics Symposium
October 26, 2011
Montreal, Canada
Agenda
• Overview: US PBM, Express Scripts
• Generics are a key strategy to maximizing quality and
mitigate cost trend
• Our experience with “free” generics and tiered co-pays
• There is significant opportunity in Canada with active
management of the pharmacy benefit
2
US Pharmacy Benefit Managers (PBMs)
• Emerged in late 1970s to manage increasing prescription
costs
• Adjudicate 90% of all prescriptions processed today
(approximately four billion annually)
• Top three pharmacy benefit managers (PBMs) handle
around 50% of outpatient prescription volume
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33
Express Scripts Overview
• 60 million members
• Respected and recognized
– Our business model is in
alignment with our clients
– Business model does not
compete with our clients
– Scientific research to develop
meaningful prescription-drug
solutions
At Express Scripts, we work
to make the use of prescription
drugs safer and more affordable
Express Scripts Technology & Innovation Center
• Key corporate facts
– More than 13,000
employees
– 60,000+ participating
pharmacies in US
– 54.1 million Home Delivery
and specialty prescriptions
– 72.7% of all prescriptions
dispensed are generic drugs
4
The Research and New Solutions Lab
Data
Confidential and Proprietary Information
© 2011 Express Scripts, Inc. All Rights Reserved
Insights
Solutions
55
Key Companies Trust Express Scripts
Confidential & Proprietary
© 2011 Express Scripts, Inc. All Rights Reserved
6
Annual US Pharmacy-Related Waste
More than $403 billion
Three steps to drive out
pharmacy-related waste

$88.3

$258.3

Step  Optimize Channel
$56.7
Step  Optimize Drug Mix
Step  Maximize Adherence
Amounts are in billions of dollars
Source: Express Scripts, Inc.
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Pharmacy Benefit Managers
– Electronic claims processing
– Benefit design and administration
– Pharmacy networks
– Formulary development and management
– Generic substitution
– Pharma rebates and discounts
– Patient service
– Home Delivery
– Clinical management
– Trend management
– Reporting
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88
National P&T Committee
Committee composition
– 18 physicians and one pharmacist
– community- and academic-based practice settings
– No Express Scripts employees
– Term of three years
Specialties
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Allergy and Asthma
Cardiology
Dermatology
Endocrinology
Family Practice
Gastroenterology
Geriatrics (MD and
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PharmD)
Infectious Disease
Internal Medicine
Neurology
Obstetrics and
Gynecology
Oncology
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Ophthalmology
Pediatrics
Psychiatry
Pulmonology
Rheumatology
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Attacking the Waste
Spending More and not Getting More
Chemical
Equivalence
Therapeutic
Equivalence
Occurs “automatically”
Requires interventions
Prilosec
Omeprazole
Substitution occurs 97% of the
time with little intervention
Nexium
Omeprazole
Substitution occurs infrequently
without intervention
10
Attacking the Waste
Spending More and not Getting More
30 days of one
brand-name drug:
$119.51
30 days of the
generic equivalent:
$34.34
No difference in health benefit
11
Generic Fill Rate (GFR)
The “trend management metric”
Clinical Potential: 86%
The higher the
Generic Fill Rate,
the lower the overall
drug cost.
Every 1% increase in GFR
=
1.5% decrease in Rx spend
Express Scripts Average: 72%
12
Generic Fill Rate (GFR)
The “trend management metric”
Clinical Potential: 86%
Express Scripts Average: 72%
WASTE:
Spending
money without
improving
health
13
Generics Avoid Unknown Risks
25 Years, 25 “Unsafe” Drugs
1982:
Ticrynafen®
1998: Seldane®
1999:
Hismanal®
2001: Baycol®
2005:
Palladone®
1983: Zimeldine®
1998: Duract®
1999: Trovan®
2003: Orlaam®
2005: Cylert®
1984:
Methaqualone®
1998: Posicor®
2000: Rezulin®
2004: Vioxx®
2006: Tequin®
1996: Trancopal®
1999: Raxar®
2000:
Propulsid®
2005:
Tysabri®*
2007: Permax®
1997: Fen-Phen®
1999:
RotaShield®
2000:
Lotronex®*
2005: Bextra®
2007:
Zelnorm®*
* Reintroduced with new safety program
21 of the 25 were still brand-only
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Optimize Plan Design, Optimize GFR
15
Optimize Your Copay Levels
Two employers, two plans
Plan A (7,000 lives) and Plan B (6,300 lives)
• Started at same copay levels
• Made the same Tier 2 and 3 copay increases
• Plan B also lowered Tier 1 copay by $3
• No other benefit changes in 2005
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Optimize Your Copay Levels
Two employers, two plans
Plan A (7,000 lives) and Plan B (6,300 lives)
• Started at same copay levels
• Made the same Tier 2 and 3 copay increases
• Plan B also lowered Tier 1 copay by $3
• No other benefit changes in 2005
Results
• Plan A GFR: 1.4% higher than
expected; saved $0.91 pmpm
• Plan B GFR: 4% higher than
expected; saved $2.60 pmpm
Plan A missed a win/win:
$1.69 in additional savings by
lowering Tier 1 copay by $3
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Landscape in Canada
Drug Trend
GFR
2003
11.2%
32.1%
2004
9.6%
34.7%
2005
9.4%
37.5%
2006
8.4%
38.8%
2007
7.1%
41.4%
2008
5.0%
45.0%
2009
5.4%
47.0%
2010
2.8%
49.0%
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Generic Fill Rate
80.0%
70.0%
60.0%
50.0%
Canada
40.0%
U.S.
30.0%
20.0%
10.0%
0.0%
2002 2003 2004 2005 2006 2007 2008 2009 2010
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Landscape in Canada
• The vast majority (approx 80%) of plans in Canada are
using a single-tier plan that covers all items that require
a prescription (vs multiple tiers or step therapy)
• Decline in drug trend due primarily to patent cliff and
generic price reform
• Canada GFR rate of 49% vs US 72%
• The clinical potential GFR is much higher through active
benefit management (e.g., exchanges of therapeutic
equivalents)
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Step Therapy and FormularyRapidResponse
Back-up Drugs
Higher-cost Brands
Medical
Exception
Criteria
Back-up Drugs
Lower-cost Brands
Front-Line Drugs
Generics
Step Therapy RapidResponse :
Patient + Physician
21
Benefit Changes Have Limited Impact on Calls
Extra Calls Per Week
10,000 Enrollee Plan, Changed from 2 to 3 Tier Benefit
Express Scripts
Call Center
HR
Department
Source: Express Scripts Office of Research and Development based on a 2-tier to 3-tier benefit change
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How Clinical 360® Works
We have a comprehensive mix of programs that will deliver immediate,
short term, and long term clinical goals to:
Reduce
Enable
Prescription Waste
Better Overall
Health and Value
Enrich
Manage
The Care Continuum
Medication Therapy
and Safety
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Path to Greater Care and Zero Waste
Clinical
360®Health
Solutions
Clinical 360®
Trend
Turn2Generics®
Drug Utilization Review
Zero $ Generic Copay
Specialty Benefit
Services
Specialty Pharmacy
and Distribution
Specialty Pharmacy
Benefit Management
•Select Specialty*
Medication Adherence
Drug Quantity Mgmt
Medical Benefit
Management
Fraud, Waste, and Abuse
ExpressAlliance®
Prior Authorization
Select Step Therapy*
Step Therapy
Integrated Data Services
Benefit Design
MTM
2-Tier (open)
3-Tier
Copayment Differential
Prescription-Drug Plan
2-Tier (closed)
Medicare Part B
Retiree Drug Subsidy
Medicare
Solutions
Exclusive Network
Preferred Network
Select Network*
Standard Network (50k)
Retail Network
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© 2011 Express Scripts, Inc. All Rights Reserved
Exclusive HD
High
Performance
Formulary
Prime
National Preferred
Preferred HD
Select HD*
Home Delivery Education
Home Delivery
*
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Generics Reduce Prescription Waste
Program
Turn2
Generics®
Description
Member fills
brand at retail.
Program targets
expensive brands.
Letter alert.
Proposes therapeutic
shift.
Savings with
generics.
Zero Dollar
Generic Copay
How it Works
Plan sponsor
waives
copayments up
to six months
to motivate
members to
try generics.
Implementation Time
Letter mails 10
days from date
of data
analysis.
Practitioner engaged.
Members receive a
materials to share with
practitioner.
Educates them about
therapeutically
equivalent generics .
Standard=4
weeks,
Custom=6
weeks.
Clinical Edits
Reporting
ACE
ARB
CCB
Cox2
NSAID
HMG
Lyrica
PPI
Activities
and
Outcomes
Brand ACE
Inhibitors, ARB,
ARB/HCTZ
Combo, Beta
Blockers,
Bisphosphonates
Others
Activities
and
Outcomes
PMPM
Saving
s
$0.09
PMPM
Value
Reduces waste both
plan sponsors and
members.
ROI up to 8:1
Switch rate 7.4%
$0.03
PMPM
Reduces waste both
plan sponsors and
members.
ROI up to 23:1
Notes they will have
and $0 copayment if
their physician provides
a new prescription for a
generic alternative.
Express Scripts Proprietary & Confidential
25
Express Scripts National Formularies
National Preferred
Generic Drugs*
Brand Drugs*
Prime
High Performance
99.3%
99.3%
54.6%
45%
 Manages drug trend
 Manages drug trend
with a three-tier or open
with a three-tier or
formulary benefit design
closed formulary
 Features a broad brand
benefit design
selection and low-cost
 Limited number
generic products
of brands
99.3%
36%
 Aggressively manages
drug trend with a closed
formulary benefit design
 Comprised of generics and
the lowest cost brand drug
in each therapeutic class
 Mandatory Trend Package
Trend Focus
 Optional Trend programs  Recommended for
use with Enhanced
Trend Package
Ideal Plan
Sponsor Type
 Marginally managed
 $20 Copayment
differential and less
 Aggressive
 Closed benefit design
Features
 Well-managed
 Greater than $20
Copayment differential
26
Summary
• Drug plans in the US that are actively managed by PBM's
show significant savings compared to plans that are
passively managed
• Much of the savings from actively managed US plans
come from maximizing the use of generics
• Most plans in Canada are not actively managed (proven
US PBM tools are not used) so generics are underutilized
• Savings opportunity for private plans in Canada with
increased use of both interchangeable and
therapeutically equivalent generics
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Thank you
• Questions?
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