Reducing costs for clients and members by eliminating wasted spend on hyperinflated drugs | CVS Health

Reducing costs for clients and members by eliminating wasted spend on hyperinflated drugs

A man and woman review their medication information online using their tablet

Manufacturers set drug prices. Sometimes they take unjustified hikes by increasing the cost of an existing drug or by introducing different formulations or dosages at a significantly higher price. This leads to “hyperinflated” drugs — medications with artificially inflated price tags compared to available clinically equivalent, cost-effective alternatives.

Money spent on such hyperinflated drugs is wasted spend for clients and members because they do not offer any clinical benefit over lower-cost medications and lead to higher costs for everyone.
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As the steward of our clients’ pharmacy benefit spend, CVS Caremark considers it our responsibility to help mitigate the impact of such hyperinflated drugs on their plan. Our hyperinflation strategy, introduced in 2017, uses data analytics to proactively monitor for price outliers. Once identified, we remove these medications from our managed formularies on an ongoing basis. For instance, we used advanced data analytics to identify one anti-fungal medication — posaconazole — which was priced at a staggering $4,500 for a 30-day supply compared to less than $14 for the alternative, fluconazole.

In 2020 alone, we identified and removed 72 hyperinflated drugs from our formulary.

We have also seen that some “outlier” pharmacies — often independents — dispense a high volume of such hyperinflated drugs instead of readily available, clinically-equivalent lower cost alternatives in order to raise their own profits. Our analysis shows that even though our strategy has reduced overall volume, since 2016, 63 percent of all hyperinflated drugs were dispensed by such outlier pharmacies. As part of our strategy, we also proactively monitor for and identify pharmacies with excessive dispensing of high-cost drugs. We encourage such outlier pharmacies that such practices are unacceptable and provide them the opportunity to correct their behavior. If they do not implement corrective action, they face disciplinary action, up to and including removal from our network.

Our hyperinflation strategy, which we provide to clients as part of our management efforts, helps eliminate wasteful spend driven by the marketplace practices of others and lower costs for clients. We proactively manage this for our clients as part of our formulary management process. We continually monitor the pharmaceutical landscape and evolve our formulary strategy to help clients stay ahead of marketplace trends, while offering members access to clinically appropriate, cost-effective medications.