At CVS Caremark Corp., the average drug trend for pharmacy benefit management (PBM) clients last year was 2.4%, the lowest in six years, according to company research.

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CVS Caremark reports low drug trend for PBM clients

April 14th, 2011

WOONSOCKET, R.I. – At CVS Caremark Corp., the average drug trend for pharmacy benefit management (PBM) clients last year was 2.4%, the lowest in six years, according to company research.

CVS Caremark on Thursday released its annual Insights Report, which reviews drug trend and highlights key areas to watch in pharmacy care. The company noted that its low average drug trend for PBM customer segments — employers, health plans and third-party administrators — shows that it helped its clients and their members manage pharmacy costs amid a difficult economy.

"Last year was one of uncertainty and change for our clients as they worked to understand the impact of health care reform while also dealing with a sluggish economic recovery," Per Lofberg, president of CVS Caremark's PBM business, said in a statement. "One of our priorities is to help our clients navigate health care reform and determine how best to implement necessary changes. Even with this added layer of complexity, we helped our clients manage costs and maintain quality care for their members."

CVS Caremark said its 2010 drug trend was held in check by the increasing use of generic drugs as more of these less-expensive medications became available, more physicians prescribed them and more members were willing to use generics. The company's generic dispensing rate (GDR) was 71.5%.

Other trend drivers included continued growth in the utilization of complex specialty pharmaceuticals, as well as a rise in use of prescription drugs overall. CVS Caremark said it expects these trends to continue this year and, with the growing impact of chronic disease, sees a need to integrate and coordinate pharmacy care in a central location — a pharmacy home — to help members coordinate and simplify their medication management.

In addition to the 2.4% overall trend, other notable findings in the 2011 Insights Report included the following:

• Nonspecialty trend: The cost increase for prescriptions, excluding expensive biologic pharmaceuticals, was 0.8%, driven by the increased use of generics.

• Specialty pharmaceuticals continued to be the fastest-growing area of spending in medications, rising 13.7% from the year before.

• About one-quarter of the CVS Caremark clients experienced a reduction in medication costs year over year  or a negative trend, and one-third of the clients experienced a trend of less than 2.5%.

"The continuing increase in the use of expensive specialty drugs, as well as the growing prevalence of chronic disease, calls for innovative health care solutions such as an integrated pharmacy home to help patients deal with complex therapy regimens and stay adherent," stated Troy Brennan, executive vice president and chief medical officer at CVS Caremark. "Developing a pharmacy home was one of the recommendations raised by our recent research conducted with Harvard Medical School and Brigham & Women's Hospital. That work and this report make it clear we must devise better ways to serve the chronically ill. This trend report shows we are making headway in that fight."

Also on Thursday, CVS Caremark announced a new medical benefit drug management service for PBM and specialty pharmacy customers. The company said the offering is the first of its kind to provide a comprehensive management solution for the buy-and-bill drug model currently used by physicians, in which doctors purchase specialty medications, administer them to patients and directly bill the payer.

Due to be broadly available starting Jan. 1 2012, the payer-centric offering will employ both prospective and retrospective drug utilization management strategies to drugs billed under the medical benefit, while ensuring minimal disruption to physician workflows and facilitating the delivery of evidence-based care, according to CVS Caremark.

The company said it will work with New Century Health, a specialty care management firm, to offer its clients integrated evidence-based medicine, treatment care pathways, quality improvement programs, and peer-to-peer review through a web-based decision support platform.

CVS Caremark reported that more than 50% of specialty drugs are billed under the medical benefit, many of which are administered in a doctor's office. Through analysis of CVS Caremark data, it was found that among the company's PBM clients, cancer and associated supportive care specialty drugs — such as hematopoietics for anemia and neutropenia — account for approximately 53% of the total specialty drug spend billed to the medical benefit.

As a result, CVS Caremark's new offering will initially focus on improving the quality, safety, and management of oncology drugs billed under the medical benefit. Estimated savings of up to 15% of a payer's oncology spend are expected, the company noted.

"This offering will enable CVS Caremark to identify the unrecognized specialty pharmacy spend currently billed through the medical benefit for oncology patients," Lofberg commented. "By systematically tracking and analyzing this activity, we can provide our clients with an opportunity to better manage these expensive drugs while also improving the quality of care for their members."