CVS Caremark Corp.’s generics dispensing rate (GDR) reached 77.4% last year, reducing commercial clients’ traditional drug spending by 3.6%, the company’s annual “Insights” report found.

CVS Caremark, generics dispensing rate, drug spending, Jon Roberts, medication adherence, pharmacy benefit manager clients, specialty medications, specialty drugs, PBM, specialty pharmacy trend, Pharmacy Care Economic Model, PCEM, pharmacy care, Pharmacy Advisor, Affordable Care Act, generic drug launches

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CVS Caremark’s generics dispensing push pays off

April 22nd, 2013

WOONSOCKET, R.I. – CVS Caremark Corp.’s generics dispensing rate (GDR) reached 77.4% last year, reducing commercial clients’ traditional drug spending by 3.6%, the company’s annual “Insights” report found.

The company’s focus on medication adherence saved pharmacy benefit manager clients over $643 million in 2012, the study says.

CVS Caremark’s industry-leading GDR is the result of two key elements. First, 2012 marked a high point in the flood of generic drug launches, with the estimated market value of brands that lost their patents exceeding $35 billion. Second, the company worked closely with PBM clients to maximize cost-saving opportunities from generics as broadly as possible, using strategies such as formulary management and step therapy plan designs. Seventy percent of CVS Caremark plan sponsors use generic step therapy or are considering implementing it in the near future.

While spending for traditional medications decreased, spending on specialty medications grew by 18.1% for commercial clients (i.e., health plans and employers). Specialty drugs treat more complex diseases such as multiple sclerosis, rheumatoid arthritis, hepatitis C and cancer. Overall, specialty drugs now represent nearly 20% of total drug spending among CVS Caremark clients — up three percentage points for the largest increase in the past six years.

“As the generic wave begins to subside in the coming years, the impact of specialty pharmacy on client spend will only increase,” said Jon Roberts, president of CVS Caremark’s PBM business.

“We know that specialty pharmacy trend is driven by the same forces — utilization, price and drug mix — as trend for more traditional drugs. Although biogenerics are not yet a factor in helping to manage costs, CVS Caremark is still able to provide a variety of solutions to help our clients effectively manage their specialty pharmacy spend while continuing to ensure access to these medications for the patients who need them.”

Besides tracking drug trends, CVS Caremark analyzed the impact of improved medication adherence for its PBM clients.

“In 2012, CVS Caremark’s commercial clients benefited from cost savings of more than $643 million on their overall health care spend as the result of improved medication adherence for chronic conditions,” said Roberts.

The adherence cost savings were 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 to reviewing adherence, gaps in care and use of generic ­alternatives.

CVS Caremark pharmacy care programs such as Pharmacy Advisor are 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, closing gaps in care, drug cost savings and productivity loss avoidance.

The report notes that the newly insured under the Patient Protection and Affordable Care Act will sharply increase prescription usage next year. But analysts expect continued slow growth in overall utilization of health care services, largely because of economic concerns.
Such concerns, however, have less impact on specialty utilization, the study says.

Moreover, the rush of new specialty drug launches is expected to continue next year with 43 potential launches. “These new launches will drive price and utilization trend.”