CVS Caremark Corp. estimated that its pharmacy benefit management (PBM) clients saved nearly $2.4 billion last year because of improved medication adherence for chronic conditions.

CVS Caremark, Insights Report, drug trend, medication adherence, pharmacy benefit management, PBM, pharmacy care, Pharmacy Care Economic Model, PCEM, medication compliance, generic drug, branded drug, drug cost savings, Troy Brennan, Per Lofberg, pharmacy services, PBM employer clients, generic dispensing rate, specialty drug, specialty medication, specialty pharmaceuticals, drug price inflation

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CVS Caremark: Better adherence saved PBM clients $2.4 bil.

May 16th, 2012

WOONSOCKET, R.I. – CVS Caremark Corp. estimated that its pharmacy benefit management (PBM) clients saved nearly $2.4 billion last year because of improved medication adherence for chronic conditions.

The company announced the finding Wednesday with the release of its annual Insights Report, which reviews drug trend and spotlights key issues in pharmacy care.

CVS Caremark said the cost savings from better medication compliance was calculated using its Pharmacy Care Economic Model (PCEM), which enables the company to reckon the financial value of improved pharmacy care by taking a holistic approach in reviewing adherence, gaps in care and the use of generic drug alternatives. Savings calculated using the PCEM stem from medical cost avoidance, drug cost savings and productivity loss avoidance.

In addition, programs such as Pharmacy Advisor for diabetes are helping many PBM members achieve optimal levels of medication adherence, CVS Caremark noted.

"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," Troy Brennan, executive vice president and chief medical officer at CVS Caremark, said in a statement. "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."

In 2011, the drug trend for CVS Caremark's PBM employer clients (2.1%) and health plan clients (2.2%) marked the company's lowest recorded trend for the past seven years, according to the Insights Report.

"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," stated Per Lofberg, president of CVS Caremark's PBM business. "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."

The generic dispensing rate for CVS Caremark's book of business in 2011 grew to 74.1%, which the company attributed to patent expirations for blockbuster branded drugs and its implementation of formulary and plan design strategies to spur the use of lower-cost generic drugs.

Another trend driver last year, CVS Caremark said, was continued growth in the use of complex specialty pharmaceuticals. The company's book of business analysis showed that although specialty drugs may make up as little as 2.5% of a payor's total prescriptions, they can represent 31% of overall pharmacy spend.

And over the next several years, the report pointed out, the impact of specialty medications on pharmacy spend will continue to grow as more specialty pharmaceuticals enter the market and higher cost-per-unit prices continue. In 2011, the specialty drug trend ranged from 16.5% for employer clients to 19.1% for our health plan clients.

CVS Caremark added that drug price was also one of the largest drivers of trend in 2011 for its commercial clients, with the average wholesale price (AWP) per-day trend showing price hikes across specialty and nonspecialty branded drugs. The company said that since 2007, branded drug price inflation has climbed 27%.