Which PBM Best Managed Drug Trend in 2014: CVS Health, Catamaran, or Express Scripts? (rerun)

This week, I’m rerunning some popular 2015 posts, so I can work on the forthcoming 2015-16 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors.

Click here to see the original post and comments from May 2015.

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Three of the biggest pharmacy benefit managers (PBMs)—Catamaran, CVS Health, and Express Scripts—have now released their 2014 drug trend reports. (Links below.) That means it’s time for my annual review of what the reports say about drug spending—and which questions remain unanswered.

Drug trend measures the change in a plan sponsor’s total prescription drug expenditures—excluding rebates and (sometimes) administrative fees.

Express Scripts and CVS Health reported comparable drug trend figures, while Catamaran’s were much lower. Oddly, Prime Therapeutics issued a spending report that omitted drug trend figures. When it publishes a more complete analysis, I’ll publish an update.

As I noted last year, the top-line figures don’t tell the full story, due to differences in methodology and data presentation differences. When you read a PBM’s drug trend report, don’t forget Mark Twain’s observation: Confidence is the feeling you have before you fully understand the situation.

THE REPORTS

Here are links to the respective drug trend reports:

• Catamaran: 2014 Informed Trends

• CVS Health: Insights 2014 

• Express Scripts: The 2014 Drug Trend Report (I discuss this report in Express Scripts New Trend O’ Drugs Report: Price Without Value.)

• Prime Therapeutics: 2014 Public Exchange Report (Prime issued this report with substantial spending data, but doesn’t plan to release 2014 trend figures until sometime later this year. Slow computers, maybe?)

Note that UnitedHealth Group’s OptumRx PBM doesn’t publish a drug trend report. Perhaps that will change after it acquires Catamaran.

THE RESULTS

Here is a summary of 2014 drug trend reported by each company. As I discuss below, each company includes different plan sponsors in the computation.

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This year, CVS Health took a giant step backward in presentation and disclosure. It published an unimpressive report that omitted significant amounts of information. Prime’s initial report omitted year-over-year trend information. By contrast, Express Scripts and Catamaran produced reports that yielded useful insights into the pharmaceutical market. As the table below shows, all four PBMS displayed an unfortunate increase in “not disclosed” data items.

OBSERVATIONS AND METHODOLOGICAL MYSTERIES

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

[Click to Enlarge]

• Specialty Drugs—We don’t know whether 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 identified various characteristics that a specialty “may” have. Prime’s report reminds us that “there is no single definition of ‘specialty.’” Prime then neglects to provide any clarification on how it defines specialty. Whatever.

• Payer Segment Reporting—Each PBM reports on different market segments. Express Scripts reports on three segments (Commercially Insured; Medicare; Medicaid), but does not report overall book-of-business trend figures. Catamaran reports trend for its overall book of business and for eight market segments: Employer; Health Plans; Labor and Trust; Medicare Part D; State and Local Government; Workers’ Compensation; Health Insurance Marketplace; and Fee-For-Service Medicaid. CVS Health reports drug trend only for its entire book of business, but provides no sub-segments breakdowns. In the chart above, I include the book-of-business figures from CVS Health and Catamaran, but the commercial figures for Express Scripts. Prime reported some data for public exchange and commercial members, but no drug trend data.

• Rebates—The drug trend figures exclude manufacturer rebates, so an individual plan sponsor could experience trend results that differ significantly from these published averages. It also means that actual drug trend is much lower for categories with large rebates. Last year, Prime was the only PBM to report a “net ingredient cost” that accounts for manufacturer rebates and administrative fees. Unfortunately, Prime’s latest report omits these data.

• Data Details—Some PBMs provide extensive data details, which help to explain and amplify the top-line results. Express Scripts provides the most therapeutic category details, including market share of top drugs in each category. Catamaran provides the most detailed breakout of trend by payer segment. It also provides therapeutic category details. CVS Health, however, set a new low for non-disclosure. It has eliminated all data tables from its trend report. The CVS Health report instead includes brief vignettes illustrating trend when plan sponsor clients follow such benefit management strategies as formulary exclusions, narrow retail network, and tighter specialty management. CVS Health didn’t even provide drug trend forecasts.

• Sample Composition—Express Scripts pools member-level data across plan sponsors for the available months of eligibility. Catamaran includes “clients who had continuous enrollment from 2013 to 2014 and had 24 months of claim experience.” CVS Health includes clients with “at least 24 months of continuous claim and eligibility data.” Notably, CVS Caremark excluded an unspecified number of outlier clients with “excessive changes to their gross cost PMPM.” (PMPM = per member per month) Only Prime Therapeutics bothered to disclose sample sizes, which is ironic given how little information was conveyed by its report.

• 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 learn something about U.S. drug costs—but less than in previous years.