Wednesday, May 23, 2012

The Message Out of Express Script's C-suite is Changing

In a classic bait and switch George Paz, CEO of Express Scripts, has subtly lowered the expectations for the ESI and Medco merger.  As I learn more about George I'm not quite sure what to think about him.  Here is what I've gathered thus far.  He's a shrewd businessman, but not very smart, yet he's smart enough and frugal.  George is also aggressive, but will change his position faster than Cory Booker if it will bring ESI an advantage.  Sometimes to the detriment of his stakeholders.

Here are a few excerpts from an interview he participated in with the Wall Street Journal.  It was published on May 23, 2012.

WSJ:  What were the biggest disagreements with Walgreen?
Mr. Paz:  I should only be paying for things that matter.  I shouldn't be paying for things that don't matter.  And, if Walgreen wants a premium, and they're not doing anything different, why should I pay them more?  One of the issues was the way Walgreen defined generic drugs.  That would have been a billion dollar effect on my book of business.  That would've been a huge windfall back to Walgreen that doesn't exist in any of my other [pharmacy] contracts.

[Regarding paying a premium, a Walgreen spokesman said virtually all other payers see that we are in line with the market and have us in their networks."  On generics, the spokesman said that "Express Scripts insisted on being able to unilaterally define contract terms, including what does and does not constitute a brand and generic drug."]

WSJ:  Talk about the role pharmacists should play in healthcare.
Mr. Paz:  I said one time that it shouldn't matter who counts to 30 for filling up retail prescriptions, and I caught a lot of grief for that, and probably rightfully so. But that wasn't the point.  The point is that putting pills in a bottle doesn't change health outcomes.  It doesn't matter whether you get your pills at Walgreen or CVS or Kroger.  The reality is:  What happens with that process?  Who is taking care if that patient?  It's not counting pills and sticking them in bottles.  That doesn't add any value.

WSJ:  How does Express Script use its pharmacists?
Mr. Paz:  I've taken those pharmacists and asked them to reach out to doctors.  Doctors still misprescribe very often.  They leave gaps with care.  People with asthma, they they don't take their inhalers, they wait until they're sick, and by then, it's too late.  Now we're already running up the bills and going to the emergency rooms.  We're using our pharmacist to do the things they were educated to do, not to count pills.  That's not where the value is.

WSJ:  How might the company's size help drive down healthcare costs for individuals?
Mr. Paz:  Medicare and Medicaid costs are skyrocketing.  The cost of compliance with some pretty tough rules has become very costly.  If I'm small, I have to spend the same amount of money to comply with Medicare, whether I'm 10 members or I'm 10 million.  By creating size and scale, I can spread those covers over more and more people, and therefore lower the costs per person.

There are so many contradictions in these statements I don't even know where to begin.  First, he talks about paying only for things that matter.  Well I've repriced more than enough of Express Scripts claims data to know that his clients are, in fact, paying far too much for things that don't matter.

And you're using pharmacists to call doctors at $55/hr?  Primary Care Physicians are extremely busy and it takes several call backs to reach them.  They don't want too hear anyone tell them about their gaps in care especially a PBM that restricts their prescribing options.  This is a waste of time and money.  Particularly, when you consider the increasing popularity of e-prescribing.  Sounds to me like Express Scripts is searching for a reason to charge more for their service even when it doesn't add value.  Control what you can control by implementing more compliance packaging, for example.      

Furthermore, if Walgreen's, one of the largest pharmacy chains in the world, statement is even partly true with regard too Express Script's desire to unilaterally determine contract language then where does that leave a small to midsize company?  No chance to not pay for things that don't matter is what's left for smaller companies dealing with Express Scripts.

There is so much incentive provided in this interview for payors to re-evaluate their pharmacy benefit. But, unfortunately most won't.  Who cares if your PBM account manager and/or consultant is telling you it's raining outside when really they're peeing down your back. George Paz said, "our size should help drive down costs for consumers."  Before the merger was approved it was, "will drive down costs for consumers."

I'm not saying that ESI doesn't provide a good service.  Instead, I'm saying that their customers aren't being educated and as a result are paying far too much for similar services they could get for 20 to 30% less. You could be saying too yourself who am I too judge the CEO of a fortune 50 company. He must be more intelligent, trustworthy and industrious compared to the owner of a boutique PBM, right?  I've got two words for you - George Bush.


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