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CVS Caremark releases annual insights report on drug spend

WOONSOCKET, R.I. — The increased availability of generics combined with CVS Caremark's generic dispensing rate of 77.4% helped reduce spending on traditional medications by 3.6% for the company's commercial clients, according to its newly released annual insights report, which reviews drug trend and highlights key issues in pharmacy care.

CVS Caremark's GDR is the result of two elements.  First, 2012 marked a high point in the flood of generic launches, with the estimated market value of brands that lost their patents in 2012 exceeding $35 billion. 

Second, CVS Caremark worked closely with PBM clients to maximize the cost-saving opportunities posed by generics as broadly as possible, using strategies such as formulary management and step therapy plan designs to encourage the use of cost-effective generic drugs. In fact, the retailer stated that 70% of its 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, becoming the main driver of overall drug trend of 0.3%. 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 spend among CVS Caremark clients, growing by three percentage points and representing 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," stated 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 – a 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."

In addition to 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 healthcare spend as the result of improved medication adherence for chronic conditions," added Roberts.

The adherence cost savings were calculated using the company's Pharmacy Care Economic Model, 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, the company stated. CVS Caremark's pharmacy care programs such as Pharmacy Advisor are succeeding in moving a significant portion of PBM members to optimal levels of medication adherence, the company noted.  The savings calculated using the PCEM are due to medical cost avoidance, closing gaps in care, drug cost savings and productivity loss avoidance.


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