CVS says its focus on medication adherence saved its pharmacy benefit management, health plan clients US$2.4B in 2011

Cindy Allen

WOONSOCKET, Rhode Island , May 16, 2012 (press release) – CVS Caremark (CVS) today released its annual Insights Report, which reviews drug trend and highlights key issues in pharmacy care. In 2011, the drug trend for the company's pharmacy benefit management (PBM) employer clients (2.1 percent) and health plan clients (2.2 percent) represented the company's lowest recorded trend for the past seven years. In addition, CVS Caremark estimates that its PBM clients saved nearly $2.4 billion in 2011 due to improved medication adherence for chronic conditions.

"Over the past several years, CVS Caremark has conducted research on the causes and impact of medication nonadherence and we know that taking medications for chronic diseases as directed keeps patients healthier and helps avoid extra costs associated with nonadherence," says Troyen A. Brennan, MD, MPH, Executive Vice President and Chief Medical Officer of CVS Caremark. "Based on our research, we have implemented programs to help our customers and members improve their adherence and in 2011 the results of these programs increased optimal adherence rates for our clients, resulting in nearly $2.4 billion in overall health care savings across our book of business."

"Last year, even consumers with insurance continued to feel the impact of a sluggish economic recovery and responded by rationing their health care spending, resulting in relatively flat utilization of pharmacy services," said Per Lofberg, president of CVS Caremark's pharmacy benefit management business. "As a company focused on helping people on their path to better health we worked closely with our clients to find opportunities to control costs through formulary management and increased utilization of generic drugs while also continuing to promote programs to improve medication adherence and keep members healthy."

During 2011, the generic dispensing rate (GDR) for the company's book of business grew to 74.1 percent due to the combination of a stream of patent expirations for blockbuster branded drugs and the company's successful implementation of formulary and plan design strategies to encourage the use of cost-effective generic drugs.

Another trend driver in 2011 was continued growth in the utilization of complex specialty pharmaceuticals. CVS Caremark book of business analysis shows that while specialty drugs may make up as little as 2.5 percent of a payor's total prescriptions, they can add up to 31 percent of overall pharmacy spend. Over the next few years the impact of specialty medications on pharmacy spend will continue to grow as more specialty drugs enter the market and higher cost per unit prices continue. In 2011, specialty drug trend ranged from 16.5 percent for employer clients to 19.1 percent for our health plan clients.

Drug price was also one of the largest drivers of trend in 2011 for CVS Caremark commercial clients with Average Wholesale Price (AWP) per day trend showing price increases across both specialty and non-specialty branded drugs. In fact, since 2007, brand drug price inflation has increased 27 percent. CVS Caremark takes these types of market developments into account when developing our formulary and plan design strategies, which promote the use of generic drugs whenever possible and provide for the appropriate use of single-source brand drugs when necessary. We work with our clients to address the impact of price and drug mix by implementing narrower formularies, Dispense as Written (DAW) penalties and step therapy plan designs to help promote the use of clinically appropriate and cost-effective medications.

The cost savings due to improved adherence was calculated using the company's proprietary Pharmacy Care Economic Model (PCEM), which enables CVS Caremark to calculate the financial value of improved pharmacy care by taking a holistic approach reviewing adherence, gaps in care and use of generic alternatives. The company's innovative pharmacy care programs such as Pharmacy Advisor® for diabetes, are succeeding in moving a significant portion of PBM members to optimal levels of medication adherence. The savings calculated using the PCEM are due to medical cost avoidance, drug cost savings and productivity loss avoidance.

Access the full 2011 Insights Report in the publication section at the following link: http://www.cvscaremarkfyi.com/2012Insights

About CVS Caremark
CVS Caremark is dedicated to helping people on their path to better health as the largest integrated pharmacy company in the United States. Through the company's more than 7,300 CVS/pharmacy stores; its leading pharmacy benefit manager serving more than 60 million plan members; and its retail health clinic system, the largest in the nation with more than 600 MinuteClinic locations, it is a market leader in mail order, retail and specialty pharmacy, retail clinics, and Medicare Part D Prescription Drug Plans. As a pharmacy innovation company with an unmatched breadth of capabilities, CVS Caremark continually strives to improve health and lower costs by developing new approaches such as its unique Pharmacy Advisor program that helps people with chronic diseases such as diabetes obtain and stay on their medications. Find more information about how CVS Caremark is reinventing pharmacy for better health at info.cvscaremark.com.

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