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Behavioral Prescription Q&A With Michael Holmes of Express Scripts

November 11, 2009
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Related Topics: HR Services and Administration, Benefit Design and Communication, Featured Article
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In his current role at pharmacy benefits manager Express Scripts, Michael Holmes has been able to apply health care savings programs using behavioral economics to its own workforce before rolling them out to clients. With health care reform on most everyone’s minds, Holmes spoke to writer Jessica Marquez about how companies can apply behavioral economics, which looks at the psychological factors of economic decisions, to reduce health care costs and what he hopes to see come out of Congress.

Workforce Management: How has Express Scripts applied behavioral economics to its own workforce of 11,000 employees?

Michael Holmes: Before we rolled out Select Home Delivery, a program by which companies automatically enroll patients into our mail-order pharmacy service, we did it with our employees. The difference is our employees don’t have an opt-out feature because they like getting their prescriptions this way.

WM: How else have you tried to lower your own health care costs?

Holmes: One thing we found is that specialty drugs—or those drugs that have to be infused or injected—are much more expensive than oral solids. So we launched our Care Continuum program, which assures that the doctors are using the right dosage and that it’s safe. So for example, if the vial size for a drug is 50 milligrams, the doctor shouldn’t be billing the insurer for 100 milligrams. Specialty drug costs are expected to grow 25 percent by 2012, so this is one way we hope to reduce our costs. We rolled the program out nine months ago and we expect to save $2 million this year.

WM: What are some of the major challenges you are dealing with today?

Holmes: With the stock market declines, there is the issue of rewarding and retaining talent when the value of their equity has diminished. Twenty-six percent of employees have stock options and all of them can participate in a discounted stock purchase plan. Our stock has taken a dip from being in the 70s down to the 40s and now back into the 70s. So we did take a look at our stock option plan, but for now we have decided to not make any changes.

WM: Many insurers have been rallying their employees to voice their concerns about health care reform proposals. Are you doing this?

Holmes: We have been talking to employees about the importance of controlling costs. We see two things as very important. One is that we believe that e-prescribing makes a lot of sense. The other is this idea of biologics. If you think most drugs have generics available at a significantly lower price, we think the same should be true for specialty drugs. They have generic specialty drugs in Europe but not here. Our chief medical officer, Dr. Steven Miller, spent a lot of time during the presidential campaign educating as many people as we could about this. Today we have encouraged employees to write to their senators and to express their views. Our people take a lot of pride in the fact that we drive down the costs of health care, so they are reaching out about the fact that we want health care reform, but we want it done right.

WM: Are you advising employees to come out against the idea of a public plan?

Holmes: We are not saying anything about a public plan. Individuals have to make their own decisions if they want a public plan or not.

WM: Walgreen just announced that starting next year it would supply Caterpillar Inc. employees and retirees with prescription drugs. Are you worried that this model could replace pharmacy benefit managers like Express Scripts?

Holmes: Not really. Our mail-order pharmacy has high-volume fillers that are safer and more cost-effective than what we have found. It’s safer because we have quality controls around the process of making sure the right drugs are put in the bottles. We take a lot of the human effort out so that high-volume fillers can be more accurate than retail pharmacies.

WM: Outside of health care reform, what other issues are you focusing on?

Holmes: We are looking at the say-on-pay proposals and at the Employee Free Choice Act. We think that after health care reform, these will be the big issues. We don’t have a much of a concern about say on pay. I think the question is, how administratively burdensome will it be? We don’t have a lot of perks, so giving shareholders feedback wouldn’t be an issue. But the question is, how much time does it take to educate shareholders on what you have? On the Employee Free Choice Act, we have great relationships with our unions. The only concern, again, is whether the legislation becomes overly burdensome. Does it give employees true free choice? I think the right of private balloting is important and is key.

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