Transcript Slide - Express Scripts

Preparing for What’s on the
Prescription Drug Benefit Horizon
Brenda Motheral, PhD
Senior Vice President
Research & Product Management
Topics
• Three Eras of Pharmacy Benefit
Management
• Learnings From The Market’s 2006
Natural Experiments
• What’s Ahead in 2008
2
The Market Response
• PBMs aggregate purchasing power
of plan sponsors
• Mail forces discipline into retail
Supply Chain
1990
1995
2005
3
Low Cost Carrier Market Share 2002
St. Louis
City B
0%
25%
*Nonstops in May 2002
4
Change in Ticket Price: 1998-2006
+25%
St. Louis
City B
2%
*Bureau of Transportation Statistics
5
Retail brand discount
grows for 15 years
10%
8%
6%
4%
2%
Baseline
0%
‘90
‘92
‘95
‘96
‘98
‘00
‘02
‘04
6
The Market Response
• Plan sponsors begin to adopt plan
designs that incent or require
cost-effective choices
Plan Sponsor Directed
Supply Chain
1990
1995
2005
7
Employers Using Proven Tools (%)
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1998
Generic Policy
2002
Step Therapy
2006
Three-tier copay
8
Lowest Drug Trend In a Decade
60%
40%
20%
Generic Fill Rate
Drug Trend
80%
0%
Note: Specialty tracked separately as of 2003
Express Scripts Internal Data, 2006
9
The Market Response
•Public and private plan
sponsors pass responsibility for
spend mgt to consumers
Consumer Directed
Partnership
Plan Sponsor Directed
Supply Chain
1990
1995
2005
10
Topics
• Three Eras of Pharmacy Benefit
Management
• Learnings From The Market’s 2006
Natural Experiments
• What’s Ahead in 2008
11
Wal-Mart Market Share:
Before and After $4 Generics
Hypothesis:
Finding:
Low prices on selected
generics will result in
more volume of other
generics and brands as
well as increased nonpharmacy store sales
Pricing strategy had
minimal market impact
on rx drug use.
Impact on uninsured &
non-pharmacy sales
is unknown.
12
Medicare Part D
Hypothesis:
Part D beneficiaries will
take advantage of
lower cost generics to
avoid hitting the donut
hole
13
Medicare Part D Experience
60%
50%
GFR
56%
49%
40%
40%
34%
30%
20%
45%
% Hit
Donut
19%
10%
0%
Plan A
Plan B
Plan C
* Potential GFR is calculated under the assumption that all target brands switched to the generic alternatives
In reality, some target brands could be switched to brand preferred alternatives.
14
Medicare Part D Experience
60%
GFR
50%
40%
40%
45%
35%
Savings Potential
Of $13.8 Million
$2.1 Lipids
$2.6 Ulcer
$9.1 Other
30%
20%
10%
0%
65%
Plan C
% Hit
Donut
Plan C
Opportunity
* Potential GFR is calculated under the assumption that all target brands switched to the generic alternatives
In reality, some target brands could be switched to brand preferred alternatives.
15
Medicare Part D
Hypothesis:
Finding:
Part D beneficiaries will
take advantage of
lower cost generics to
avoid hitting the donut
hole
Many beneficiaries are
hitting the donut hole
unnecessarily and could
take advantage of
lower cost generics
16
2006 Market Experiments
• Wal-Mart
• Medicare Part D
• Consumer-Driven Health Plans
17
Consumer-Directed Health Plans
Hypothesis:
Employees enrolled in a
high deductible plan will
use more generics and
OTCs and discontinue
unnecessary meds
18
Compared to Traditional Insurance:
CDHP Members Reduce Brand Use
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
CDHP
Traditional
CDHP
Implemented
Jan
‘05
Jul
‘05
Jan
‘06
Jul
‘06
Dec
‘06
CDS-matched dataset, N = 3,374 each group
19
But Generic Use is Lower Too …
0.9
0.8
0.7
0.6
0.5
0.4
0.3
CDHP
Implemented
0.2
CDHP
Traditional
0.1
0
Jan
‘05
Jul
‘05
Jan
‘06
Jul
‘06
Dec
‘06
CDS-matched dataset, N = 3,374 each group
20
Chronic Medication Persistency:
CDHP Members May Switch to OTC
But ….
90%
80%
70%
68%
60%
50%
40%
40%
30%
Traditional
CDHP
20%
10%
0%
Antiulcer**
* p < .05
** p < .01
21
CDHP Members: Lower Persistency
in Some Classes w/o OTC Options
83%
90%
80%
75%
68%
70%
75%
65%
60%
40%
50%
Traditional
CDHP
40%
30%
20%
10%
0%
Antiulcer**
* p < .05
Antilipid**
Antihypertensive*
** p < .01
22
Consumer-Directed Health Plans
Hypothesis:
Finding:
Employees enrolled in a
high deductible plan will
use more generics and
OTCs and discontinue
only unnecessary meds
Without additional
educational programs,
enrollees did not use
more generics.
Compliance decreased
in many therapy classes
23
Topics
• Three Eras of Pharmacy Benefit
Management
• Learnings From The Market’s 2006
Natural Experiments
• What’s Ahead in 2008
24
Other Market
Experiments
• Wellness Incentives
• Value-Based Insurance Design
• Care Coordination
25
Conclusions
• Three Eras of Pharmacy Benefit
Management
• Learnings From The Market’s 2006
Natural Experiments
• What’s Ahead in 2008
26
Conclusions
• Three
Erasand
of plan
Pharmacy
Benefit
Supply chain
sponsor-directed
models will
continue to drive value for pharmacy benefit mgt.
Management
New hybrid models
challenges
• Learnings
Frompose
Thefamiliar
Market’s
2006for rx.
High liability and web tools alone will not be sufficient.
Natural Experiments
•
While consumerism will evolve over many years,
What’s
Ahead in 2008
pharmacy represents a great near-term opportunity.
27