CVS Health Kept Drug Price Growth Nearly Flat and Improved Medication Adherence for PBM Clients in 2017

PBM clients had lowest prescription drug trend in five years

Average member out-of-pocket costs declined and adherence improved in key categories such as diabetes, high blood pressure and high cholesterol

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CVS Health

Apr 05, 2018, 12:00 ET

WOONSOCKET, R.I., April 5, 2018 /PRNewswire/ -- CVS Health (NYSE: CVS) today announced that, in 2017, the company kept drug price growth nearly flat for its pharmacy benefit management (PBM) clients, at a minimal 0.2 percent, despite manufacturer price inflation near 10 percent. Overall, the combination of this nearly flat drug price growth, with low drug utilization growth of 1.7 percent, reduced drug trend for commercial clients to 1.9 percent, the lowest level in five years. Out-of-pocket costs for members also declined, with three out of four members spending less than $100 out-of-pocket for their prescription medications, and nearly 90 percent of members spending less than $300, even as adherence improved to its highest level in seven years. In addition, 42 percent of CVS Health commercial PBM clients spent less on their pharmacy benefit plan in 2017 than they had in 2016.

"The health care landscape continues to evolve, but the cost of drugs remains a top concern for our clients and their members, who turn to us to ensure they are getting the most out of their pharmacy benefit plan," said Jon Roberts, executive vice president and chief operating officer, CVS Health. "At CVS Health, we always encourage the use of clinically appropriate therapeutic alternatives including generics, which can lower cost for payors and members, leverage competition within drug classes where applicable, and develop innovative strategies to keep prescriptions affordable. By lowering member costs, we are also helping to remove a key barrier to adherence. Members who are more adherent have better health outcomes and ultimately lower overall health care costs."

In 2017, growth in generic utilization played a major role in helping keep overall and member-specific costs low. In fact, the generic dispensing rate (GDR) for CVS Health PBM clients was above 86 percent. PBM strategies such as preventive drug lists with $0 copays for generics, as well as formulary strategies that promote the use of generics first, helped reduce costs for high utilization categories such as antihypertensives and cholesterol-reducing drugs. In addition, plan designs that promoted lower-cost options and targeted adherence interventions also helped increase the percentage of members who stayed on their therapy and were optimally adherent to their medications by as much as 1.8 percentage points in key categories such as diabetes, high blood pressure and high cholesterol.

Although manufacturer-driven price inflation for specialty drugs measured 8.3 percent in 2017, CVS Health was able to keep specialty drug cost growth at just 3.7 percent for clients. This was achieved through effective formulary strategies, indication- and outcomes-based contracting and cost-cap based rebates.

CVS Health also offers PBM clients a variety of formulary strategies, which are some of the most effective means of leveraging market competition. For clients aligned with the company's managed formularies, drug price actually declined – by 0.1 percent, in 2017, as compared to the minimal 0.2 percent drug price growth seen across the commercial cohort. Also, despite greater utilization, clients aligned to the company's formulary approach also had lower per member per month costs. The company's formulary management approach includes careful, ongoing assessment of the marketplace, effective negotiations to be able to offer competitive pricing to clients, and the development of more targeted approaches, such as indication-based formularies, in which prices and rebates for a drug are negotiated based on its effectiveness to treat a specific diagnosis rather than at a therapy class level.

To further enhance affordability and price transparency, in late 2017, CVS Health introduced real-time benefits enabling prescribers to see the member-specific out-of-pocket costs of a prescribed medication as well as the costs of clinically appropriate alternatives in real-time allowing prescriber to make more informed decisions and offer members medication options that may be more affordable.

Prescription drug trend is the measure of growth in prescription spending per member per month. Trend calculations take into account the effects of drug price, drug utilization and the mix of branded versus generic drugs as well as the positive effect of negotiated rebates on overall trend. The 2017 trend performance is based on a cohort of CVS Health commercial PBM clients – employers and health plans.

To learn more about the CVS Caremark 2017 drug trend, click here.

About CVS Health
CVS Health is a pharmacy innovation company helping people on their path to better health. Through its more than 9,800 retail locations, more than 1,100 walk-in medical clinics, a leading pharmacy benefits manager with more than 94 million plan members, a dedicated senior pharmacy care business serving more than one million patients per year, expanding specialty pharmacy services, and a leading stand-alone Medicare Part D prescription drug plan, the company enables people, businesses and communities to manage health in more affordable and effective ways. This unique integrated model increases access to quality care, delivers better health outcomes and lowers overall health care costs. Find more information about how CVS Health is shaping the future of health at https://www.cvshealth.com.