ESRX
#I'm going to give you an answer you probably expect.
We remain in conversations; the conversations are productive.
You should expect an announcement that we've renewed or haven't renewed when that actually occurs.
That has not occurred at this point.
As far as leveraging on the generics, we currently feel well leveraged, but that is something we evaluate constantly, at least every year.
Sure.
No, I would say actually ---+ and we've, as you can imagine, those often get tacked down far in advance.
Because to contemplate making a change requires more than the three or four months that you can move most other large employers, for example.
So I would say it's not at all outsized on any one of those.
I would also say that we've seen a little bit of ---+ given the uncertainty around ACA and other things, we've seen in our book, and I suspect we may see it in the market place generally, that the movement level will probably be lower [though] our plans wanting to extend.
And we're using the opportunity to help our plans extend their contract with us over a longer period of time.
So early renewing those plans and so forth has kept them spread out, and you may not have tracked some of that in your data.
So no, no bias towards a large health plan renewal.
We have important health plans that we're going to renew this year, let me be clear, or that we have already renewed.
And those are really important relationships to us, but there's not a disproportionate share of them this year up.
I would tell you that ---+ thanks for the question, I would tell you that's the strange thing.
I was asked by somebody recently, so how much are you having to talk your clients through some of the headline stuff.
The answer is, listen, the headline risk to your constituency investors in our Company is what we're very concerned about, because the facts just aren't getting out.
I will tell you the great, good news.
And again, it manifest itself in a good selling season last year, it manifests itself in extraordinarily high retention, manifests itself in a very high satisfaction on our clients' surveys, is that this is not, by and large, a client issue.
It's not to say clients don't force us to compete; they force us to compete.
But I can tell you that the client conversations move very quickly to their spend, their trend, the programs they're in, the recommendations and ideas that we have for them, and there is just not time spent on this debate.
Now, folks will want to know where do you think ACA is going, particularly our health plans.
Obviously, we work very closely with them and their strategic planning.
But the great good news is that our clients ---+ and again, our Drug Trend Report last week was proof of it.
We'll have our Drug Trend Report out in another month for our regulated business, our Med D business, and so forth, Medicaid.
Again, I think what you'll see is we're getting results for our clients, so the conversation stays very focused on what we can do for them.
So our rate limiters are two things: our creativity and having pharma willing to support their products and to come forward in creative ways or to respond to our creative ideas as it relates to that.
From that standpoint, I think over the next four, five years, first of all, again, PCSK9 is a great example.
Our cardiovascular program is going to be completely reinvented, and it may get reinvented again as the market changes and all of these programs will be adaptive over time.
So they're not static and then you don't work them.
We know that in 2018 we have two additional areas; we haven't talked about which ones yet.
We're still working with manufacturers and retailers to again, each one has a unique set of attributes that you then leverage.
We have to leverage the specific dynamics and opportunities in class.
We look forward so we can think about how we manage that class over the longer term, based on what we know is either happening or going to happen.
And so again, we see this as a great chassis and a great long-term runway for us in terms of how we've contracted with manufacturers, how we contract with retailers, and ultimately, how we help our clients get cost certainty.
But again, to answer your question directly, two of them in 2018 incrementally, and beyond that, we've got several other ideas.
Sure.
So our thinking there is Anthem is going through what I would have expected Anthem to go through absent the lawsuit or anything else, which is they're looking at the marketplace to determine what is the state of play in terms of services that a PBM provides to make sure that when ---+ the extent that we have the opportunity to sit down with them, they've got some context.
Their RFP is out, as we expected it would be.
It's very heavily weighted toward understanding capabilities and guarantees and those sorts of things, as well as pricing.
And the way I think about that is that we welcome the opportunity to sit down once they've done that.
And the good news is they know our capabilities.
They know the 1/1 we just delivered for them.
They know the results that we've been able to achieve in helping them install in their group.
They know what we've been able to do as they've narrowed certain programs and used our tools.
And so, from our standpoint, I think that we stand very, very well positioned when they're ready to come and have a conversation about moving forward, to the extent that happens.
What I'd tell you is rebates are really precisely defined, and they are obviously negotiated hard.
So if I understand your question, what I would say is it is all rebates, all things that are governed around either market-share movement or inclusion in a formulary and so forth.
Now, we certainly have things that we do that are governed by fair-market pricing where we're paid to do a particular report or service and so forth for certain things.
Those are relatively small, but those are not attributable to rebates.
And so, the 89% number is an all-in number.
Yes, it's important to us.
Dr.
Stettin's area that continues to build out our clinical programs, which we take to clients and do get paid fees for administering, usually guarantee ---+ almost always guarantee the outcomes of those, are an important component of how we overall not only provide care, but also how we then profitably administer our clients' accounts, and align with our clients through those programs.
And you're right, prior auths and utilization management, Med D has chosen to use prior auths rather than tighter formularies in a lot of cases.
And so, we are paid to administer those program.
As I've said, we're paid to, for example, in PCSK9s, to administer the tests that at least the last year, physicians were still learning which patients were appropriate for those products.
And so we had a large percentage of the patients that shouldn't have been on those not get those drugs, get more appropriate therapy, and much less expensive therapy as well.
But it was more appropriate and happened to be less expensive, and we were paid to make those things happen.
And so, from my perspective, again, it's part of the overall way that we work with a client.
If we know a client is going to take a large basket of our managed approach, then we obviously discount more deeply those things than if they only take one of them, for example.
So we benefit our clients when they work with us more deeply to put those programs in place, and they're meaningful to the overall value we create.
No, because again, in some respects, we have clients that don't pays us for those programs because, for example, they let us keep some rebates.
So they would rather share ---+ make up a number here, but it's pretty consistent.
We will have a client who will say, you can keep 10% of all the rebates that we together create, but I don't want to pay you for the rational med program and the utilization management bundle that saves a lot of money now.
With those clients, we will show them the results of those programs.
They will know what we were paid by virtue of the rebates that we were to keep.
Because again, all of that is very transparent with these clients and auditable.
So it really does depend on how the individual client wants to work with us and pay us, and it's not as simple as just breaking that out as a single line of business.
We've got time for two more questions, operator.
Thanks for your question, <UNK>.
It's obviously not an easy question.
What I'd say is there's an amazing amount of ---+ and, first of all, you said it, so let me repeat it.
We are in one of the most competitive businesses I know, and so, our clients have great choices besides just us.
We are in a competitive business.
They have terrific choices.
They have consultants a lot of the times that add to the mix of evaluating us and ensuring that we make and keep meaningful promises to them.
And so the market does work here, and I think that satisfaction with PBMs is high.
If you look at the patients in Med D, satisfaction with PBMs is high and it saved a fortune, so I think there's a lot of stuff that could you point to.
I point to our operating margin versus ---+ or our net income versus a pharma company's net income stands on its own; no one writes about that.
But again, I don't think our business over-earns as it relates to that.
I look at our drug trend, and we're pretty darn transparent as relates to how we report drug trend, which again, for our client is the result of the work we do.
They know what they pay us, they know what they get in drug trend, and they can decide whether or not they're getting good value for not.
But to your point, we continue to challenge ourselves to say is there something else we can put out there.
You heard me say 89% today for rebates, and the reason that I thought that was important is because I think there was a misperception as relates to that keep.
But quite frankly, the real number that matters is 100% of the time, our clients make the determination.
I think the questions that need to be asked, frankly, need to be asked of the drug companies in terms of why they're raising their prices, why they're choosing to use rebates.
From that standpoint, I think that we're not the only ones that should be answering these questions.
But I like the fact we create a very competitive marketplace, and our ability to manage the supply chain end to end is very, very strong and our clients get that.
That is a great question, and I completely believe that there is a lot we have done there, but there's more that we are doing they.
By the way, it starts with working with our plans.
Because we've had rebates at the point of sale, for example, for 10 years and we've had less than 20 plans enrolled.
But as I pointed out in an earlier question, I think our plans are re-looking at all of the dimensions of the plan designs, particularly as these integrated deductibles have created some unintended consequences.
So but helping a member understand that versus helping them navigate it are two different things.
And to your point, now we show our members what the plan pays and they pay today, for example.
They get to see that real-time.
Our digital and online tools are very strong in terms of showing different choices, both in terms of where they get their drug and what drug that they're on versus one that would be a lower cost alternative.
But I do believe, to your point, it is the place that we've got work to continue to do.
Because by the way, the better job we do helping patients see that and participate in it, frankly, it will lower our client's cost because what those patients will navigate intentionally versus unintentionally to better choices.
Thank you.
Final question.
Thanks for the question, and as I said in my prepared remarks, there are ---+ I didn't put them all there, the things that we're advocating for, but we are strongly, both as a Company and through PCMA, and I appreciate you mentioning them, because I should have earlier.
We're very engaged leveraging our industry association, as well as our own large footprint to advocate strongly.
And I think the most important thing we can do with the ---+ or among the most important things we can do with the new administration, as well as folks at the state level, is demonstrate what has been done already as it relates to generics, as it relates to creating competition.
Because I tell you, folks often say, well, the bioequivalents aren't going to be exactly the same as generics, and [I don't] take that point.
But even if they behave like a somewhat lower price competitive brand, they open the doors for us to start the spiral of price competition that ultimately moves to a very different place over a fairly short period of time.
And what we're going to focus on doing as we engage with folks isn't just telling them that; it's showing them the case studies.
It's bringing the voice of the payer into the room, because our payers completely get it and understand the opportunity that if we can unleash these biosimilar will be created over time.
Just in less than a half a dozen or a half a dozen categories if you look at current expired patents, there's a ton of head room that we could be creating so that we can continue to have innovation that we can afford across our patient population.
So it is an important role that we're taking to advocate for them.
We aren't betting on them.
In our 2017 guidance, I wish I could tell you that there's a strong bioequivalent contributor there, and there's not.
We're waiting.
We've got a couple that we know are very close to the edge.
But over the next five years, we're going to play a very strong role, because it's going to help our clients stay in the game and be competitive.
With that, I want to thank everybody for dialing in.
We're proud of where we ended 2016.
And again, I've mentioned our employees before, but from that standpoint, we could not have hoped for a stronger contribution from our 26,000 employees.
And we all stayed focused on our patients this year.
we produced the result for our shareholder.
And as we come into 2017, the unspoken thing about 2017 is you've seen our guidance.
We have over a percent of EBITDA that is again going away as a result of Coventry and the Catamaran, the final roll-off of those two things.
So we're again in 2017 very focused on backfilling to those headwinds and performing very, very strong for you, our investors, because we know this model over the long term is a model that produces tremendous value for the marketplace and it should produce tremendous value for you as well, and we are very focused on that.
So with that.
Just one last comment before we close.
I just want to clarify one thing.
Our blackout period opens at the end of this week in response to one of the questions on capital deployment from Bob <UNK>.
I may have indicated end of the month.
But the blackout period is the end of this week, and we'll be back in the market purchasing shares at that time.
Absolutely.
So thank you all for dialing in.
Appreciate it.
We'll talk to you next quarter.
