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Express Scripts, Walgreens Team Up To Offer 90-Day Retail Solution

via http://aishealth.com/archive/ndbn081613-04

Reprinted from DRUG BENEFIT NEWS, biweekly news, proven cost management strategies and unique data for health plans, PBMs, pharma companies and employers.

In an unexpected display of camaraderie, Express Scripts Holding Co. and Walgreen Co. have come up with a new offering presumably aimed at competing with CVS Caremark Corp.’s highly successful Maintenance Choice program. Industry observers say the launch of Smart90 Walgreens is a plus for both parties and reflects increased interest in custom retail networks.

In a joint press release issued on Aug. 1, the companies said Smart90 Walgreens is designed for Express Scripts clients that are “interested in 90-day prescription drug programs that drive lower costs and improve health outcomes for people with chronic diseases who require long-term treatment.” Not only will clients achieve savings from more aggressively discounted pricing on 90-day prescriptions, but the program has the potential to increase medication adherence by cutting down on the number of opportunities a member has to forget to fill a prescription, maintain the companies.

“There is increased interest in narrow (smaller) retail networks that provide deeper ingredient cost discounts with unique features that provide member-satisfying flexibility while reducing costs,” observe consultants Jane Lyons, practice leader of employers, and Rob Noel, practice leader of managed care markets, at Pharmaceutical Strategies Group LLC. “Walgreens benefits from more store foot traffic and Express Scripts benefits from increased client satisfaction and possibly new sales.”

Through the new program, members in plans that include Walgreens in their pharmacy network may obtain 90-day supplies of all maintenance medications via mail order or participating Walgreens locations for the same copayment, although client plan rules may dictate a different days supply.

Pending adoption by benefit plan sponsors, members could begin accessing the benefit as early as January 2014. The product will be available at more than 8,000 Walgreens retail locations.

This is not the first product of its kind to be offered by the PBM. Prior to being acquired by Express Scripts, Medco Health Solutions, Inc. launched similar options several years ago, clarifies Express Scripts spokesperson Brian Henry. That program was enhanced and relaunched by Express Scripts as Smart90 last year, enabling members to obtain a 90-day fill through home delivery or through one of 23,000 pharmacies exclusively, explains Henry. That option still exists, and pricing will be similar for a client whether they adopt Smart90 or Smart90 Walgreens, he tells DBN.

“This announcement leverages Walgreens’ market presence to reduce member confusion over which pharmacies offer the 90-day-at-retail option,” add Lyons and Noel. At the same time, “the arrangement provides Express Scripts with a product offering that competes with CVS Caremark’s Maintenance Choice option.”

In an Aug. 1 research note, ISI Group LLC securities analysts Ross Muken, senior managing director and partner, and Michael Cherny, managing director in the health care technology and distribution sector, echoed the assertion that Express Scripts and its retail partner “needed an answer to CVS’s Maintenance Choice program, and Smart90 should prove a reasonable alternative.” Moreover, they observed that the program should enable the PBM “to be more competitive in the next selling season, particularly amongst employer clients who tend to gravitate towards plans with limited networks.”

Cherny and Muken suggested that Smart90 Walgreens could “halt some of CVS’s share gain momentum but the magnitude of the change will not be apparent for some time,” pointing out that it took Maintenance Choice “a few selling seasons to resonate with clients.”

Introduced in 2009, Maintenance Choice allows members to obtain 90-day supplies of maintenance medications via a CVS Caremark mail facility or retail location, and is available as a mandatory or voluntary plan design. During the company’s most recent quarterly earnings call, PBM President Jon Roberts said the program now has 16.5 million enrollees, up from nearly 11 million lives in 2012. With this year’s launch of Maintenance Choice 2.0, the voluntary version, the company is on track to have 30 million enrollees, he said.

Express Scripts, Walgreens Overcome Hurdles

William Blair & Co., LLC, equity research analyst John Kreger says the Express Scripts-Walgreens partnership is an “interesting turn of events” given the companies’ inability to reach a new network pharmacy contract for a year (DBN 7/27/12, p. 1). “Getting beyond just the personalities involved, the fact that they’re doing it I don’t think is that surprising,” he tells DBN. “It seems like [Maintenance Choice has] been the most successful part of the CVS Caremark combination. So I think it makes sense from the standpoint of Walgreens to have a strong competitive counter to what CVS has done effectively on their pharmacy side and Express to have a strong counter to the success that the Caremark part of CVS Caremark has had in selling it.”

When asked whether Express Scripts’ new offering is in direct competitive response to Maintenance Choice, Henry responds, “We’ve seen some drivers for this type of product and an option like Smart90 Walgreens: cost savings (in particular through home delivery), data that demonstrate improved adherence vs. 30-day prescription fills, greater client interest in pharmacy network strategy and solutions that provide broad access, control costs and improve patient outcomes.”

Meanwhile, Express Scripts does not appear to be backing away from the mail-order business, which has slowed in recent years. For the three months ending June 30, Express Scripts reported home delivery and specialty claims totaling 35.4 million, down from 38.7 million in the prior-year period.

Chairman, CEO and President George Paz said during a July 30 conference call that Express Scripts believes home delivery represents a long-term growth opportunity and while it currently accounts for less than 30% of total adjusted claims, it could reach 40% in the short term and eventually be as high as 60%. Part of his reasoning, he explained, is that 75% of Express Scripts’ home delivery prescriptions are for maintenance medications, and mail order has been shown to improve adherence, increase safety and lower costs.

“I definitely do not think Express Scripts is giving up on mail, but the numbers don’t lie,” remarks Kreger. “Mail has not had momentum for years, so they or others in the industry are going to have to do something to make that a more valuable proposition in the eyes of clients and members.”

Meanwhile, the success of Smart90 Walgreens hinges on the two companies’ ability to “work together to co-promote the program and divide profits from share gain (adjusted for any channel bias),” wrote Muken and Cherny.

“The headline-grabber obviously is that Express and Walgreens had the dispute and now they’re going to seem to work more closely together,” added Cherny during ISI’s weekly video “checkup” series. “The question is who’s supporting this? How much is Express Scripts going to market this to their member base? And how much signup can they get?”

 

© 2013 by Atlantic Information Services, Inc. All Rights Reserved.

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