The Wall Street Transcript Interviews David B. Snow, Jr. CEO And Chairman Of The Board Of MedcoHealth Solutions (MHS)
January 30, 2010 - The Wall Street Transcript has just published Consumer Health Services Report offering a timely review of the Health Services sector. This Special Report contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. Please find an excerpt below.
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David B. Snow Jr., Medco's Chairman and Chief Executive Officer, architected the transformation of Medco Health Solutions into an enterprise that is recognized as one of the world's most admired and innovative companies. Joining Medco in 2003, Mr. Snow led the company's successful spinoff from Merck & Co., Inc., and has grown the enterprise, which is currently ranked 45th on the Fortune 500 list, with 2008 revenues exceeding $51 billion. An outspoken champion for health care reform, Mr. Snow is viewed as a thought-leader on the topic and is frequently asked to speak on the subject.
TWST: Would you give me a brief history of your company and what your focus is currently?
Mr. Snow: Our company was founded more than 25 years ago as Medco Containment Services, one of the first claims processors focused on managing the pharmacy benefit. Our business has obviously matured over the years with several transformative steps. With the acquisition by Merck in 1993, we were renamed Merck-Medco, and in the summer of 2003, we successfully spun off from Merck, creating Medco Health Solutions (MHS). The Medco of today is the world's most advanced pharmacy, serving more than 62 million members in America, with a growing number of subsidiaries abroad. We are focused on reforming health care through clinically driven pharmacy that improves the quality of care for patients and lowers total health care costs for payors.
We have developed the largest pharmacy practice that specializes in driving clinical excellence for patients with chronic and complex conditions because these patients represent 96% of all drug spending and 75% of all medical costs. And pharmacy is a daily enabler to keeping their conditions stable and improving their overall health.
TWST: You serve 60 million people, correct?
Mr. Snow: Yes, more than 20,000 Medco people serve about 62 million members across the United States, from a wide range of public- and private-sector clients, including about one-third of Fortune 500 employers. Our company's 20,000-plus employees are dedicated to improving patient health and reducing total health care costs for a wide range of public- and private-sector clients.
TWST: How has your business model changed since the 1980s to expand and cover the increased scope of products and services you offer?
Mr. Snow: It really couldn't be more different, it would be like comparing a biplane to the space shuttle. We started in the 1980s as a claims processor for pharmacy claims and management of pharmacy benefits. Later we created and then perfected mail-order pharmacy, using proprietary robotics in tandem with technologies guided by six sigma disciplines that set a new standard for dispensing accuracy - and in pharmacy that means greater patient safety. That technology and innovation liberated our pharmacists to focus on patients. Our clinical model revolves around pharmacists who are specialized by therapeutic condition to counsel patients and coordinate care, computer-assisted, evidence-based protocols to identify gaps in care that should be closed, and tools and incentives that encourage members to make better choices, and make it easier for them to follow their doctors' instructions. We are also taking a leadership role in the exciting field of personalized medicine. That's where doctors are guided by a patient's unique genetic profile to select the right medicine at the right dose, optimized for that individual.
TWST: And how are you doing that?
Mr. Snow: Well, our work is in an area of personalized medicine called pharmacogenomics. Medco is actually on the cutting edge of the core research, not inventing medicines but using genetic testing to improve the quality of care. In collaboration with prestigious partners, including Harvard University, the Mayo Clinic and the Food and Drug Administration, to name a few, we have already published research that is literally changing the way medicine is practiced today. There are basically four or five enzymes that are responsible for metabolizing approximately 70% of the most commonly used drugs. Your body's unique ability to metabolize those drugs will determine whether they will work for you and what is the most effective dose. Medco today is the only company in our industry with the ability to integrate this genetic information into its mainstream pharmacy practice to guide physicians and issue a warning when a genetic issue indicates a potential safety problem.
Let me cite one concrete example of how we are moving treatment from shotgun to precision medicine, improving both clinical and financial outcomes. About a year ago, our clinical team looked deeper into a theory that involved a potential issue related to Plavix, which is a medicine that prevents blood clots. That's important because Plavix is the world's third biggest-selling drug. The theory was that patients who were commonly prescribed a certain heartburn medicine, known as a proton pump inhibitor, in tandem with Plavix would negate the protective effects of the Plavix. Doctors commonly prescribed these drugs in combination because the PLAVIX can cause heartburn.
We launched a huge retrospective study using the actual data from 17,000 patients. Half the group just used PLAVIX, the other half used PLAVIX plus a proton pump inhibitor. We found that the group taking the PLAVIX along with the heartburn medicine experienced a 50% increase in cardiovascular events and a 70% increase in heart attacks. The study made news worldwide and subsequently the FDA has issued a warning to doctors and patients.In the Medco pharmacies, we've taken that knowledge and put it into our protocols, so that when a doctor prescribes PLAVIX and a PPI, we call the doctor and the patient to counsel on this potentially harmful interaction. And almost overnight, we've reduced that occurrence by more than 30%. In the medical community, that's acting with lightning speed. The evidence shows it typically takes 17 years from the time landmark evidence is produced in medicine to the time it becomes "standard of practice."
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