Which PBM Best Manages Drug Trend? Express Scripts vs. Caremark vs. Catamaran vs. Prime

Four of the biggest pharmacy benefit managers (PBMs)—Catamaran, CVS Caremark, Express Scripts, and Prime Therapeutics—have now released their 2013 drug trend reports. The reports provide valuable marketplace insights. Just cite them with caution.

As the chart below shows, this year’s results are as mystifying as ever. Express Scripts had the highest overall drug trend, but the lowest specialty trend. Prime Therapeutics had a negative traditional trend, but the highest specialty trend. And so on.

Alas, the top-line figures don’t tell the full story, because of methodology and data presentation differences. As I noted last year, a PBM’s drug trend report is the bikini of pharmaceutical economics. What it reveals is interesting, but what it conceals is essential. Read on for the figure-hugging details.

LET THE BATTLE BEGIN

Drug trend measures the change in a plan sponsor’s total prescription drug expenditures—excluding rebates and (sometimes) administrative fees. Here are links to the respective drug trend reports and their nifty titles:

• Catamaran: 2014 Informed Trends 

• CVS Caremark: Insights 2014 

• Express Scripts: The 2013 Drug Trend Report (I discuss this report in Untangling Express Scripts’ 2013 Drug Trend Report.)

• Prime Therapeutics: 2014 Report on Prescription Drug Costs 

FULL COVERAGE

Here is a summary of 2013 drug trend for commercial plan sponsors, as reported by each company.

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STRING BIKINI

These reports, while chock full o’ interesting data, are primarily marketing documents, not peer-reviewed research studies. To see what’s really going on, check out this table summarizing the methodology behind the numbers.

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Observations and Methodological Mysteries:

• Specialty Drugs—We don’t know if each company is using the same list of specialty vs. non-specialty drugs. Three PBMs refer to an undisclosed and undefined “specialty drug list.” Express Scripts reported the lowest drug trend (14.1%), but the highest percentage of specialty spending (27.7%). By contrast, Prime reported the highest specialty trend (19.5%), but the lowest percentage of specialty spending (20.5%). Did Express Scripts include lower-priced, quasi-specialty (traditional) drugs in its list? Or did Express Scripts simply manage more specialty business than Prime, whose specialty pharmacy opened only a few years ago?

• Rebates—The drug trend figures exclude manufacturer rebates, so an individual plan sponsor could experience trend results that differ significantly from these published averages. Kudos to Prime for being the only PBM to report a “net ingredient cost” that accounts for manufacturer rebates and administrative fees. Check out Prime’s Fact Sheet on Ingredient Cost. 

• Sample composition—Express Scripts pools member-level data across plan sponsors for the available months of eligibility. CVS Caremark and Catamaran include only plan sponsors who were clients in 2012 to 2013. Notably, CVS Caremark excluded an unspecified number of outlier clients with “excessive changes to their gross cost PMPM.” Only two PBMs—CVS Caremark and Prime Therapeutics—even bothered to disclose sample sizes.

• Plan Type—If I read the disclosures correctly, then the top-line trend figures reported above include commercial plan sponsors and exclude such programs as Medicare Part D and Managed Medicaid. But aggregation was probably done differently. CVS Caremark computes figures separately for Employer, Health Plan, Third-Party Administration (TPA), Medicaid, and Medicare Part D. For CVS Caremark, the chart above shows the simple average of the “Employer” and “Health Plan data.” These categories are most comparable to other PBMs’ commercial plan results.

• Undefined Terms—CVS Caremark reports “Gross Trend” and “Net Trend,” but doesn’t bother to define either term in the report. In a private email, CVS Caremark told me: “Gross trend takes into account total prescription cost inclusive of the share paid by the member. Net trend looks only at our clients’ cost minus the member cost share. Neither accounts for rebates.” Hence, the “net” figures are higher than the “gross” ones.

• Taxes and Administrative Fees—As the table above shows, each PBM treats administrative fees and taxes differently.

Despite these limitations, I encourage you to read the reports for yourself. You may even learn something about U.S. drug costs.