I dread that question. Insurance
is unsexy, much less drug insurance which is obscure and sounds even more boring. Then throw on top of that my actual role
(product strategy and marketing), which is unique for our own company and tough
to understand. So even after I give the
condensed version (“I help people get their drugs at the right place and at a low
cost”), I still get quizzical looks before the conversation comes to a grinding
halt.
Since the shortened version doesn't work, this week’s post is dedicated
to the longer version, which also connects back to how the healthcare system needs
to change and what small part my company is doing to help.
At a very high level, my group does three core things:
1) Create Network Products: Employers and health plans (“clients” in
our terms) come to us because they don’t want to manage drug spend for the
people they employ or cover. Our company
provides this service by acting as a middleman between the clients, their
members, pharmacies and pharmaceuticals.
We negotiate drug discounts with pharmacies and drug companies that are
then passed back to the client and members through other discounts and lower
copays.
My group specifically analyzes and markets the best combination of
pharmacies and discounts to save clients the most money, while still giving members
access to get their drugs. For example, a
client can choose to let members fill prescriptions at more pharmacies, making
it easy for their members to get their drugs.
However, the client saves money by cutting out duplicative pharmacies and
only allow members to fill at selected retailers (i.e., clients can save more
money by cutting out the CVS or Wagreens that are within 5 miles of one another).
2) Create Incentives: In addition to choosing what type of pharmacy
network they want, clients also need to create incentives for their members to
use these networks and continue taking their medication. These incentives are usually either financial
or hard stops. For example, to encourage
folks to use the smaller pharmacy network, we can increase the copay for their
drugs by $10 if they fill at a non-preferred retailer – some people will pay
that penalty, but many will switch over to our network. If a client is really serious about saving
money through these restrictions, they will put fill limits in place, which means
a member’s prescription is not covered if they try to fill that Rx outside of their
plan.
3) Encourage Usage: While the incentives are the dollars and cents, we
also develop consumer marketing materials to take a softer approach. These come in the form of letters or calls or
emails that tell you how you can save money and the importance of staying on
your medications. They are also used in
conjunction with the incentives to make sure we avoid as many rejects and
unhappy members as possible.
These efforts result in saving the client and member money by passing
along the discounts from these restrictions. At the same time, our company makes
a very small profit by charging dispensing fees for each drug processed or a
small spread between what the pharmacies pay and what the client pays. Some argue that we’re increasing the cost of
drugs, but without taking advantage of our size (we’re the second largest
purchaser of generic drugs in the country), we couldn't get these discounts
that far outweigh the fees.
So what does my group teach us about the healthcare system as a
whole? First, there’s real value in intelligently
limiting healthcare choices. By changing
the pharmacies a person can fill at, we can recognize up to 10% savings across
all drug spend – combine that with other programs (e.g., drug formularies,
clinical programs) and we’re talking serious money. On top of that, our customer satisfaction is
at an all-time high, meaning people are not up in arms about having fewer
choices.
Second, this is a delicate system that requires incredible coordination. If any one of these systems breaks – fewer clients
come to us for drug benefits, pharmacies start playing hardball, members stop
taking their drugs – we will not be able to provide the same services and
everyone will be worse off. Prime
examples of this are the spat between Walgreens / Express Scripts and the argument
for the individual mandate (i.e., if everyone doesn't participate, then we can’t
pay for the people who use the most care).
Finally, it’s going to take a lot of smart people to get out of this
mess. I work with some very intelligent
people, yet we’re only impacting a very small part of the healthcare problem,
and imperfectly at that. If we’re going
to keep our country healthy, we need a lot more brainpower and energy behind big
ideas that are going to make real change.
