The PBM side of CVS

By Clive Riddle, April 6, 2018 Assuming the CVS acquisition of Aetna clears all final hurdles, perhaps the most attention given to the merged company is in respect to the retail synergies. But the CVS Caremark PBM also deserves considerable attention. After all, Cigna’s big merger recently announced with Express Scripts was purely a PBM play. With that in mind, its interesting to poke through the just released 14-page CVS Health Drug Trend Report 2017. Similar to Express Scripts previously released 2017 report, the CVS Health report was certainly positive, and they touted that drug prices for clients  rose “at a minimal 0.2 percent, despite manufacturer price inflation near 10 percent.” But it must be noted that the touted 0.2 percent increase was just for prices. There was 1.7% cost growth due to utilization, yielding a total pmpy drug trend in 2017 of 1.9%, still quite a positive trend. Here is additional data CVS shared about their client experience in 2017: ·         While CVS drug price growth was 0.2%, the manufacturer AWP inflation rates were 9.2& for traditional brands, 8.3% for specialty brands, and 0.4% for generics. ·         The CVS generic dispensing rate was 86.1%. ·         CVS traditional and specialty brands accounted for 14% of prescriptions dispensed, but 69% of pharmaceutical spend. ·         The CVS specialty trend consisted of 3.7% price growth plus 9.2% utilization cost growth for a total 12.9% 2017 specialty trend. ·         CVS gross client costs pmpm were 108.42 pmpm in 2017 compared to $104.10 in 2016. ·         For CVS Clients with managed formularies, costs were $88.94 pmpm compared to $87.43 pmpm in 2016. ·         The managed formulary differential in overall drug trend for 2017 resulted in a 1.7% trend with managed formulary clients compared to 4.2% trend for other clients. ·         42 percent of CVS Health commercial PBM clients spent less on their pharmacy benefit plan in 2017 than they had in 2016. ·         For clients aligned with the company's managed formularies, drug price declined by 0.1 percent, in 2017, as compared to the overall 0.2 percent drug price growth. ·         Member out of pocket costs pmpm declined from $11.99 in 2016 to $11.89 in 2017. ·         In 2017 24% of members had zero out of pocket costs (no claims), 49.4% of members had out of pocket costs under $100, 14.6% had out of pocket costs between $100-$299, 5% had out of pocket costs between $300 - $499, 4.3% between $500-$599 and 2.7% above $1,000.