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Lowe's Leads First Wave of Companies Partnering With Express Scripts to Apply Behavioral Economics to Healthcare
Date:3/17/2009

Innovative Model Drives Millions of Dollars in Savings for Employers and Patients

ST. LOUIS, March 18 /PRNewswire-FirstCall/ -- Lowe's, the second-largest home improvement retailer in the world, is among more than two dozen companies on track to save millions in 2009 through a pilot program with pharmacy benefit manager Express Scripts (Nasdaq: ESRX). One of the first marketplace innovations to apply behavioral economics principles to enhance health care, the Select Home Delivery program provides direct savings to both companies and their employees by optimizing the use of home delivery for prescription medications.

(Logo: http://www.newscom.com/cgi-bin/prnh/20080827/EXPRESSSCRIPTSLOGO)

Lowe's was one of the first companies to partner with Express Scripts on offering its associates Select Home Delivery, which does not require mandatory participation or alter copayments. Since Lowe's introduced the program, their employees' use of home delivery has more than doubled.

"Lowe's and our associates could share in millions of dollars of savings each year if we all switched our maintenance medications to home delivery," said Bob Ihrie, Lowe's senior vice president of employee rewards and services. "From behavioral economics, we now know that the small effort required to change behavior looms large psychologically, which causes people to procrastinate and put off decisions. By partnering with Express Scripts, we have been extremely effective in turning employee procrastination into an ally for desired behavior."

In the midst of growing economic challenges for consumers and businesses, the program has garnered strong interest and is being used by the first wave of companies, with many more preparing to introduce it this year. Early estimates are that some participating companies and their employees adopting Select Home Delivery in 2009 could reach up to $3 million in savings.

Behavioral Economics Principles at the Heart of Product Innovation

The Select Home Delivery concept originated a year ago during discussion of 401(k) enrollment research findings, during the first advisory board meeting of the Express Scripts Center for Cost-Effective Consumerism. Reflecting its strong potential as a breakthrough offering, the product went through accelerated development and client enrollment to roll out in the marketplace in less than a year.

"Opt-out and active decision programs for 401(k) enrollment dramatically improved low employee participation rates. We wanted to explore whether these tools could also solve healthcare challenges," said David Laibson, PhD, Robert I. Goldman Professor of Economics at Harvard University and member of the Center's advisory board. "This is one of the first marketplace adaptations that successfully applies behavioral economics to improve health care."

Express Scripts works with the Center's advisory board to advance Consumerology, an innovative approach to helping consumers make better and more cost-effective healthcare decisions. It was founded on key principles of behavioral economics to understand the way people make decisions and provide insights about how to motivate positive changes.

Ihrie and Bob Nease, PhD, chief scientist at Express Scripts, announced preliminary results from Lowe's pilot program at a recent National Business Group on Health conference on lowering costs while improving the quality of healthcare.

"Until now, increasing the use of home delivery meant either wooing members with financial incentives or pushing them with mandatory programs. Select Home Delivery breaks ground by using a key principle of behavioral economics to voluntarily 'nudge' members to use the Express Scripts Pharmacy," said Nease. "Ultimately, anyone wishing to opt out may do so. This approach is surprisingly powerful, as evidenced by the positive response from members and plan sponsors."

The program outperforms other approaches that either impose financial penalties for using retail pharmacies or rely on education alone to increase use of home delivery.

Translating Proven Insights into Healthcare Solutions

Express Scripts is working with many clients to apply its signature approach to drive better health outcomes at lower cost.

"Express Scripts' behavior-centric approach continues to enable better health and value for plan sponsors and members," said Larry Zarin, at Express Scripts. "Now more than ever, it is critical to deliver solutions that reduce wasteful spending for businesses working to preserve benefits and jobs, as well as policymakers seeking to reform health care for all Americans."

Importing proven insights from non-healthcare settings has been key. For example, Select Home Delivery is in large part based on research originally funded by the National Institute on Aging. Researchers James Choi (Assistant Professor at Yale University), David Laibson (Robert I. Goldman Professor of Economics at Harvard University), and Brigitte Madrian (Professor of Public Policy and Corporate Management in the Aetna Chair at Harvard University) collaborated on the project, which showed that opt-out programs were highly effective in increasing enrollment in 401(k) programs.

Express Scripts established the Center for Cost-Effective Consumerism, which involves leading scientists from top universities working closely with its research and product development experts, to accelerate development of an advanced understanding of human behavior and of what strategies work best to motivate consumers to make optimal healthcare decisions. For more information on the Center, visit http://www.consumerology.org.

About Lowe's

With fiscal year 2008 sales of $48.2 billion, Lowe's Companies, Inc. is a FORTUNE(R) 50 company that serves approximately 14 million customers a week at more than 1,650 home improvement stores in the United States and Canada. Founded in 1946 and based in Mooresville, N.C., Lowe's is the second-largest home improvement retailer in the world. For more information, visit http://www.lowes.com.

About Express Scripts

Express Scripts, Inc. is one of the largest pharmacy benefit management (PBM) companies in North America, providing PBM services to millions of consumers. Express Scripts serves thousands of client groups, including managed-care organizations, insurance carriers, third-party administrators, employers and union-sponsored benefit plans. Express Scripts is headquartered in St. Louis, Missouri. More information can be found at http://www.express-scripts.com.

    Media Contact: Maria Palumbo
                   314.684.6438
                   MPalumbo@express-scripts.com


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SOURCE Express Scripts, Inc.
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