Strategic challenge #1
How will the EVP Foulkes choose which ailment to target initially in the Pharmacy Advisor Program? (John, Quelch, & Huckman, 2015, p.6)
Non-adherence has caused the U.S. healthcare system an estimated $290 billion in annual cost on unnecessary medical treatment. It involves chronic disease such as high cholesterol, diabetes, and depression (John, Quelch, & Huckman, 2015, p.4).
A CVS Health study showed a reduction in the total annual healthcare spending due to medication adherence (Exhibit 4, John, Quelch, & Huckman, 2015, p.10; cf. p.4).
Consumers are attentive to the $290 billion expense reduction associated with patient medication adherence (John, Quelch, & Huckman, 2015, p.5).
Barrier #1: CMO Brennan observed that it is difficult for the consumers, both customers and employees, to see the savings from avoided expenses, particularly through indirect cost savings associated with medication adherence. They understand better direct cost savings, which are immediate and quantifiable (John, Quelch, & Huckman, 2015, p.5).
Barrier #2: It is hard to determine the cause of non-adherence. Is it only because the healthcare cost is too high? Or, is it because the patients simply became healthier due to lifestyle changes not associated with medication? (John, Quelch, & Huckman, 2015, p.4)
Barrier #3: It is hard to choose between the three chronic diseases associated mostly with high non-adherence. The life risks, the complication potentials, and treatment impacts of these three diseases are too highly diverse to effectively choose from as a priority disease in the initial implementation of the program (John, Quelch, & Huckman, 2015, p.4).
Recommendation #1: Diabetes has the highest payer’s medical fee savings of $4,415 (Exhibit 4, John, Quelch, & Huckman, 2015, p.10). Moreover, less costly generic medications can be used effectively to treat this condition (John, Quelch, & Huckman, 2015, p.4), thus, contributing further to greater direct cost savings. Since medical fee is a direct cost savings, most consumers care about it the most (John, Quelch, & Huckman, 2015, p.5). Moreover, it has the second lowest additional drug expenditures to payers and the highest employer productivity savings potential of the three conditions (Exhibit 4, John, Quelch, & Huckman, 2015, p.10). It also has higher potential adherence increase (John, Quelch, & Huckman, 2015, p.6).
Recommendation #2: Like diabetes, prioritizing high cholesterol is also appealing to consumers due to its lower medication costs using generic drugs (John, Quelch, & Huckman, 2015, p.4). It has the second highest payer medical fee savings of the three chronic conditions and the lowest additional drug expenditures to the payer (Exhibit 4, John, Quelch, & Huckman, 2015, p.10). Its employer productivity savings is almost as high as that in diabetes.
Recommendation #3: Targeting depression treatment for the program should be the last priority due to its lower savings potential, inaccessibility to generic drug treatment, long treatment effects, and high additional drug expenditures (John, Quelch, & Huckman, 2015, p.4, 10). Its payment medical fee savings and employer productivity savings are the lowest of the three conditions with accompanying high additional payer drug expenditures (Exhibit 4, John, Quelch, & Huckman, 2015, p.10).
Strategic challenge #2
How will EVP Foulkes present the potential benefits of the Pharmacy Advisor Program to health insurers, employers, and CVS/caremark? (John, Quelch, & Huckman, 2015, p.6)
The Pharmacy Advisor Program pilot study showed an increase in patient adherence by 1.4 percent in diabetes patients. Future inclusion of high cholesterol and depression in the program will increase optimal adherence by another one percent for each condition and the total adherence increase to 3.4 percent (John, Quelch, & Huckman, 2015, p.5-6).
With the Affordable Care Act passed in 2010, an expected 32 million of previously uninsured Americans will be covered by 2019. Pharmacy Benefit Management (PBM) plan members receive most of their prescriptions directly by mail (75 percent) and by pickup at any CVS/pharmacy outlet (25 percent) (John, Quelch, & Huckman, 2015, p.6, 2-3). PBM also gain discounts on large prescriptions while its generic gross margins sets at 30 percent.
The CVS/pharmacy fills an average of 1,900 prescriptions a week, half (950 prescriptions) of which were new and about half were e-prescriptions (John, Quelch, & Huckman, 2015, p.2). This volume represented only 40 percent of the retail outlets’ total customer volume. The remaining 60 percent were largely front-store customers.
Barrier #1: The 1.4 percent increase in the diabetic patient adherence is still very small compared to the current adherence rate of 65 percent for diabetes. Moreover, the increased 66.4 percent adherence is still far off from the ideal 95 to 100 percent adherence goal. This increment alone is not motivating enough as a positive impact of the Program.
Barrier #2: There is still limited data from the CMO Brennan report. It is yet unclear if CVS Health has complete data on the number of insured patients it is serving, both through the PBM service and the CVS/pharmacy retail walk-in customers. EVP Foulkes still has to obtain this data in order to get clear figures on the company’s potential market resulting from the 2010Affordable Care Act both as gross market through 2019 and as the expected market for the program.
Barrier #3: There is no available information on the generic/non-generic prescription profile of PBM patients from its clients. EVP Foulkes must obtain this data as it will be helpful in devising Program strategies that may encourage the use of large-margined generic medications over non-generic medications.
Recommendation #1: The increased patient adherence 3.4 percent in all three conditions has a significant impact on payer medical fee savings, which can reach as much as $7,873 (Exhibit 4, John, Quelch, & Huckman, 2015, p.10). With additional drug costs of $ 2,256, the payers will get a net savings of $5,617 simply by staying as PBM clients.
Recommendation #2: The increased patient adherence in the three conditions will also bring productivity savings of $3,721 annually to employers (Exhibit 4, John, Quelch, & Huckman, 2015, p.10).
Recommendation #3: Focusing on generic prescriptions (e.g. encouraging client physicians to prescribe generic names) will cut costs from covered patients gained through the PBM services, which is a significant reduction in the client’s medication reimbursement expenditures. It increases PBM profitability while encouraging more clients to enroll in PBM plans.
Strategic challenge #3
How will EVP Foulkes propose the form that an increased customized communication should take? (John, Quelch, & Huckman, 2015, p.6)
One of the focuses of the Pharmacy Advisor Program is pickup reminder. Prescriptions that are not picked up by patients will prompt the pharmacist through the Pharmacy Care Economic Model (PCEM) to call these patients and encourage them to pick up the medications. Pick-up reminder calls occur during slower times in the CVS/pharmacy outlets. In prescriptions that were neither ordered nor picked up, the system had increased the pickup rate in this group by around 30 percent (John, Quelch, & Huckman, 2015, p.5).
Another focus of the Program is patient counseling. This type of communication involves a discussion on the potential side effects of the prescriptions, highlighting the benefits of adherence, and providing answers to patient questions (John, Quelch, & Huckman, 2015, p.5). The PCEM system automatically provides all the relevant information about the prescriptions that will be useful in the counseling interaction.
The third focus is non-communication in nature but data gathering and analysis. Its extensive reporting capability covers data on store-level adherence, pharmacists’ effectiveness in influencing patient behavior, prompt adherence, and generation of customized action guides, among others (John, Quelch, & Huckman, 2015, p.5-6).
3.
a. Barrier #1: The parameters of influencing patient behavior are not clearly reported. Is it based mainly on the recorded purchase of prescriptions after the counseling interaction? Are the pharmacists trained to effectively influence patient behavior? Are salient patient information available automatically that will be useful and effective in influencing patient behavior when used during the counseling interaction?
b. Barrier #2: The information provided by the PCEM system are restricted to drug information and adherence issues. It is informative but apparently cannot effectively connect with the motivating factors unique to each patient that will enhance adherence rate. Thus, it is expected that the pilot program gained only less than two percentage points in adherence improvement.
c. Barrier #3: Evidently there is no adequate research performed to investigate the adherence factors for patients with diverse demographic and clinical information. This inadequacy basically influenced the poor adherence outcome in the Program pilot study.
4.
a. Recommendation #1: A patient adherence study should be conducted to identify the factors that motivate and demotivate patients from keeping high adherence rates. This study may include literature analysis and better if the study can sample its customers to ensure context-based outcomes. Meanwhile, EVP Foulkes may suggest these outcomes for future funding.
b. Recommendation #2: In the meantime, while waiting for the patient adherence study to be conducted, an internal effort must conducted to gather data from published sources on adherence motivation and demotivation. A short data gathering period of seven days may be adequate for this purpose. All data gathered must be consolidated into an adherence persuasion manual for pharmacists, which may be given through a day-long training.
c. Recommendation #3: A data-based non-adherence impact information must be made available to the pharmacists handling patient-filler counseling. It should indicate disease impact of non-adherence in terms of predicted rate in worsening of disease and the like.
References
John, L., Quelch, J., & Huckman, R. (2015, March 11). CVS Health: Promoting drug adherence. HBS Case Study 9-515-010: 1-12.
