Pharmacy benefit forecasting: Medco CEO David B. Snow Jr. prepares for future of pharmacy benefit management

May 1, 2007

IN THE PAST TWO DECADES, the progress of pharmacy benefit management has brought about sophisticated strategies including formularies, utilization management and generic substitution. David B. Snow Jr., CEO of Medco Health Solutions, is bargaining that the next decade of pharmacy benefit management will bring enhanced patient therapy, personalized medicine and dramatic opportunities in the generic market-points all pharmacy benefit teams will have to ponder.

IN THE PAST TWO DECADES, the progress of pharmacy benefit management has brought about sophisticated strategies including formularies, utilization management and generic substitution. David B. Snow Jr., CEO of Medco Health Solutions, is bargaining that the next decade of pharmacy benefit management will bring enhanced patient therapy, personalized medicine and dramatic opportunities in the generic market-points all pharmacy benefit teams will have to ponder.

Being one of the largest PBM organizations in the country with the largest drug spend under management, Medco, based in Franklin Lakes, N.J., can't afford to get behind the curve on opportunities within healthcare's constantly changing dynamic. Snow says the company invested $151 million in capital on innovation last year to prepare for the future of pharmacy benefits, with a similar budget for this year.

"I'm not a big subscriber to the theory that you have to have all the capabilities under one roof that you own in order to manage care and integrate data; that's ridiculous," he says. "Frankly, you can't be world-class at everything. I'm a big believer in best of breed purchasing, and we're preparing for those customers who also believe in best of breed purchasing."

Individualized formularies-benefit rules applied to a population but on an individualized member level-are another up-and-coming trend to watch, he says. An individualized formulary might include step therapy for the newly diagnosed, for example. As the old ways of pharmacy benefit management settle, new ways of addressing PBM operations are emerging.

WHAT'S OLD: Disease management coaching.

WHAT'S NEW: Integrated therapy coaching.

MCOs know that disease management, health coaching and other member-engagement strategies will continue to dominate as ways to influence outcomes. In the future, total health-a more collaborative approach to member behavior that includes cross-platform programs and personalized medicine-will present opportunities to keep members healthy.

Snow says Medco is preparing for the opportunities by creating Therapeutic Resource Centers (TRCs), organized geographically by specialty, which feature specialized pharmacists who have comprehensive training in one of seven areas: gastrointestinal; neurology/psychiatry; pulmonary; cardiovascular; diabetes; hematology/oncology; and rare and specialty diseases.

"Today, pharmacists treat the patient at the script level, not the disease level," he says. "They are generalists. They can see any of 11,000 or 12,000 different drugs in any given day, tied to hundreds of different diseases, and there's no way they can be experts for every single one of them. When you add the cellular and the molecular [personalized medicine], the information is overwhelming even for the most knowledgeable doctors and pharmacists."

This year, scripts coming into Medco through mail order will be directed electronically to the appropriate TRC for processing. For example, pulmonary drug scripts will be directed to the Spokane, Wash., site for review and fulfillment, and patients can contact dedicated pharmacists trained to handle their concerns about their pulmonary drugs 24 hours a day.