The Express Scripts, Inc. (ESI) 2010 Drug Trend Report claims that the annual cost of “wasteful spending,” or what it considers suboptimal pharmacy-related behavior, is a staggering $403 billion. Unfortunately, the company’s recommendations for dealing with this problem are exactly backward.
Namely, Express Scripts’ top suggestion throughout the report is to shift patients from their community pharmacy to mail order, whether they like it or not. Mail order almost never produces the savings that its backers claim. But, even if one accepts the mail order cost estimates in ESI’s report, its mail order recommendation amounts to telling health plans to focus on 1.9 percent of this $403 billion in waste. (Per the report’s fine print, “$7.6 billion in savings would be achieved due to better unit pricing and lower dispensing fees in optimal channels” i.e., mail order.)
For many years, the Big 3 PBMs (ESI, CVS Caremark and Medco Health Solutions) have sought to increase their profits by convincing employers and other health plan sponsors to entice patients to switch to PBM-owned mail order by having the health plans pick-up 33 percent of the patient cost-sharing responsibility, or co-pay. (Of course, those costs don’t “disappear”; they are simply rolled into the insurance/PBM premiums paid by all patients and the plan sponsor.)
Despite this, mail order’s market share has been relatively flat in recent years. Common sense suggests three reasons for this: First, patients are satisfied with their community pharmacies. Second, mail order simply isn’t for everyone. And, third, because the employer is now absorbing the co-payment that was previously paid by the patent, mail order seldom delivers the promised savings to health plans.
To get around all this, the Express Scripts report uses creative “methodology” to assert that patients really prefer mail order, even though they still vote with their feet and wallets in favor of community pharmacies. There is no independent study to validate Express Scripts’ conclusion. In fact, this particular PBM’s mail order program was the least utilized among the Big 3 mail order services in 2010.
Express Scripts’ report claims that allowing consumers to bypass mail order and have their prescriptions filled at the pharmacy of their choice accounts for $88.3 billion of the $403 billion waste total. By contrast, in its 2009 Trend Report, ESI estimated this amount to be $6 billion. The change is simply sleight-of-hand to make mail order more attractive to employers, unless one believes that mail order costs decreased $80 billion in 12 months.
The two real savings drivers that amount to $395 billion of the $403 billion estimate – receive second billing in the report.
The first is “Non-Adherence,” or patients improperly taking their medication, estimated to cost between $258.3 and $308 billion. Like most PBMs that have selling mail order as their primary mission, Express Scripts equates medication possession with adherence. Of course, non-adherence is multi-variant with as many as 20 different drivers and non-possession of medication is but one.
The second is Drug Mix (i.e., using more generic drugs vs. brand names), estimated to cost between $56.7 and $87.7 billion. The irony here is that in 2010 Express Scripts mail order dispensed generic drugs just 60.2 percent of the time. This was dead last among the Big 3 PBMS and far off the 72.7 percent rate achieved by community pharmacists. Because of these numbers, it is unclear how moving more prescriptions from local pharmacies to Express Scripts mail order would promote higher generic utilization.
All of this is to point out that when it comes to 98 percent of the savings opportunities associated with the pharmacy benefit, Express Scripts needs to refocus its priorities on the things that really matter to patients and health plans rather than the bottom line of its mail order pharmacy.