PBM postioned to ‘effectively compete’

At press time, the industry was weighing the potential merger of pharmacy benefit manager rivals Express Scripts and Medco Health Solutions, but executives at CVS Caremark remain more confident than ever that its PBM business is ideally positioned to “effectively compete,” regardless of what federal trade regulators decide for ESI-Medco. And there’s good reason why.

“With the evolution of U.S. health care to more consumer-directed care, our multiple consumer touchpoints make us best-positioned to promote cost-effective and healthy behaviors. And the success that we’re having in both the 2011 and 2012 selling seasons clearly demonstrates that our model is resonating with payers,” Larry Merlo, president and CEO of CVS Caremark, told analysts in August.

Not only did the PBM business experience double-digit revenue gains during the second quarter ended June 30 — due in large part to the addition of the Aetna contract and the acquisition of the Medicare prescription drug business of Universal American — but the company continues to make progress on its five-point PBM growth plan, which includes:

  • Achieving continued momentum in new business wins and strong client retention;

  • Continuing to develop and up-sell its unique clinical offerings;

  • Driving growth in 90-day mail choice and generic dispensing rate;

  • Focusing on high-growth areas, especially Medicare Part D, specialty pharmacy and Aetna; and

  • Executing successfully on the PBM streamlining initiative, with a goal to deliver more than $1 billion in related cost savings from 2011 through 2015.

“In addition to the anticipated benefits from this five-point plan for PBM growth, 2012 also begins the generic wave, which will carry through the next several years with about $100 billion of branded products coming off patent between now and 2016,” Merlo told analysts. “So I remain very confident that 2012 will be the year that our PBM breaks trend and demonstrates healthy operating profit growth.”

Broadly available for implementation beginning Jan. 1, 2012, will be a new medical benefit drug management service for the company’s PBM and specialty pharmacy clients. “This offering will enable CVS Caremark to identify the unrecognized specialty pharmacy spend currently billed through the medical benefit for oncology patients,” explained Per Lofberg, president of CVS Caremark’s PBM business. “We can provide our clients with an opportunity to better manage these expensive drugs while also improving the quality of care for their members.”

One year ago, Jonathan Roberts, EVP Rx purchasing, pricing and network relations, also was named COO of the PBM business, assuming leadership of PBM operations, mail-service pharmacy and specialty pharmacy.

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