WASHINGTON — In the nation’s capital, CVS Health president and CEO Larry Merlo highlighted the growing role that pharmacy and his company are playing in reducing chronic illness and improving patient health at a National Press Club luncheon.
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Larry Merlo addresses the National Press Club in Washington, D.C. |
Speaking at the event on Friday, Merlo also shed light on CVS Health’s widely hailed decision to stop selling cigarettes and tobacco products in its CVS/pharmacy drug stores.
In his remarks to the media audience, Merlo noted that pharmacy is helping solve the "cost-quality-access conundrum" that’s now facing the American health care system.
"Pharmacy is extending the front lines of health care to deliver better outcomes more affordably to the people that we serve," he said.
The United States can and must do more to slow the rise of health care costs, Merlo stressed. To that end, he said, CVS has positioned itself as a partner to physicians and other health care providers as they sharpen their focus on health outcomes and cost-effectiveness of care, rather than on volume.
Meanwhile, the "retailization" of health care signifies that consumers are more informed about their health and are being more proactive in health care decisions, Merlo said.
Digital technology, too, will be a linchpin in consumer health care. Though the transition to a digital society has been slower in health care than other areas, "siginficant and lasting change is under way," Merlo said. And this innovation won’t be optional, he noted, saying many experts think the health care sector will change more in the next 10 years than it has in the past 50 years.
"I’m convinced that one very important avenue to improve quality, cost and access is rooted in pharmacy care," Merlo said.
CVS is playing its part in advancing care and patient health outcomes and mitigating costs, he said, through such programs as Pharmacy Advisor (to people manage chronic diseases) and Specialty Connect (which offers patients choice and flexibility in how they access specialty medications), as well as through its MinuteClinic walk-in medical clinics and ongoing efforts in digital innovation.
"The system today is pretty stressed," Merlo said, citing a government projection that the share of gross domestic product devoted to health spending will grow to more than 19% by 2023 from 17.2% in 2012.
Although that rate has slowed, it’s still faster than average economic growth, he pointed out. "The real world translation to those numbers is the fact that it becomes more challenging for people to quickly access quality care through the traditional care channels," he explained.
At the same time, there is tremendous growth in Medicare, Merlo said, noting that the "silver tsunami" is making 10,000 baby boomers eligible for the program daily.
"This means over 16 million new people will become Medicare-eligible by 2019. It also means we’re facing a long-term incerase in the demand for services and the use of medications," he said.
Another challenge comes from the escalating prevalence of chronic disease, as half of Americans now suffer from chronic illness, accounting for nearly $3 of every $4 spent on health care, according to Merlo. What’s more, the "epidemic" of medication nonadherence
is costing the nation’s health system about $300 billion a year in avoidable costs.
Earlier this year, CVS made a landmark decision to reflect its growing commitment to improve Americans’ health. In February, the company said it would end the sale of cigarettes and tobacco products at all CVS/pharmacy stores, making it the first and only national pharmacy chain to drop tobacco products. And a couple of weeks ago, CVS Health announced the end of tobacco sales at all of its stores, nearly a month ahead of its initial target date of Oct. 1.
The move wasn’t an easy decision, Merlo told the gathering at the National Press Club event. When CVS announced the plan, it estimated that it will lose about $2 billion annually in sales from tobacco shoppers, with an impact on 2014 earnings of 6 cents to 9 cents per share.
"We had to ask hard questions," Merlo said. "Somebody had to be first, and we’re proud to say that it was CVS."
Merlo also cited research indicating that curtailing access to tobacco products at retail is having an impact in reducing tobacco use.
The results of a study from CVS Health, included in a Health Affairs blog, show that the enactment of policies to eliminate the sale of tobacco products at retailers with pharmacies in San Francisco and Boston was associated with up to a 13.3% reduction in purchasers of tobacco products. The evidence indicates that removing tobacco products from pharmacy retailers will lead to substantially lower rates of smoking, with implications for reducing tobacco-related deaths, according to CVS.
What’s more, the study examined the possibility of the tobacco ban in those cities influencing the sale of other products, such as coffee, soda and pain reliever. The research found "no statistically significant change" in the level of use of coffee, soda or pain relievers versus the reduction in tobacco purchasers.
"Collectively, we have been humbled by the outpouring of support," Merlo said of his company’s phaseout of tobacco. "It’s resonating."
