An analysis by CVS Caremark Corp. shows that the company reined in its pharmacy benefit management clients' costs for medications, in part, through an industry-leading dispensing rate for generic drugs.


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CVS Caremark helps PBM clients save by driving generics use

April 11th, 2013

WOONSOCKET, R.I. – An analysis by CVS Caremark Corp. shows that the company reined in its pharmacy benefit management clients' costs for medications, in part, through an industry-leading dispensing rate for generic drugs.

The company said Thursday that its annual Insights report, which reviews drug trend and key issues in pharmacy care, revealed that for 2012 the increased availability of generics and its generic dispensing rate of 77.4% helped reduce spending on traditional drugs by 3.6% for the its commercial clients, such as health plans and employers.

CVS attributed its generic dispensing rate to two key factors. The company noted that 2012 was a high point for generic drug launches, with the estimated market value of brands that lost their patents in 2012 topping $35 billion. In addtion, CVS worked closely with PBM clients to optimize the cost-saving opportunities presented by generics through strategies such as formulary management and step therapy plan designs to spur the use of less expensive generics. According to the company, 70% of its plan sponsors use generic step therapy or are considering implementing it.

Meanwhile, spending on specialty medications grew by 18.1% for commercial clients, becoming the main driver of overall drug trend of 0.3%, CVS noted. Overall, specialty drugs now represent nearly 20% of the total drug spend among clients, rising by three percentage points and marking 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," Jon Roberts, president of CVS Caremark's PBM business, said in a statement.

"We know that specialty pharmacy trend is driven by the same forces — utilization, price and drug mix — as trend for more traditional drugs," he explained. "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."

CVS added that it also examined 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," Roberts stated.

The adherence savings were calculated using CVS' Pharmacy Care Economic Model (PCEM), which the company said enables it to reckon the financial value of improved pharmacy care by reviewing adherence, gaps in care and use of generic alternatives. CVS pointed out that its pharmacy care programs such as Pharmacy Advisor are helping many PBM members achieve optimal levels of medication adherence. The savings calculated using the PCEM stem from medical cost avoidance, closing gaps in care, drug cost savings and productivity loss avoidance.

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