A Look at Value-Based Drug Contracting Strategies

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Dr. Surya Singh, Vice President and CMO for Specialty at CVS Health, recently participated in a panel at the annual meeting of the National Business Group on Health about value-based drug contracting strategies and their potential to help control health care costs. Here, he discusses how we’re thinking about this topic at CVS Health.

Why pay for something that doesn’t work? Or pay the same amount across all patients for something that works well only in some specific subpopulations? In our current health care system, this happens a lot when it comes to paying for prescription medications.

As the cost of drugs continues to rise, health care stakeholders are looking at new, value-based drug purchasing models, or contracting strategies that align a drug’s price to the evidence behind it, in terms of efficacy and/or patient outcomes. Setting prices based on the value of a good or service is not a new economic concept and one that is widely used across consumer goods industries. In health care, payors and manufacturers are now starting to use these strategies with the goal of creating additional value for the overall health care system.

At CVS Health, we are exploring new ways to share risk with pharmaceutical manufacturers to ensure that our clients are getting the most possible value from their drug spend by more closely linking the net cost of drugs to the outcomes that those drugs deliver.

We are actively working on three value-based models, including:

  • Indication-based Formulary: By negotiating formulary positions based on the specific indications rather than at the level of broad therapeutic categories, we aim to help create greater competition, lower costs and improve value for payors. For example, many autoimmune drugs have several different indications and the clinical utility may vary by indication, so our goal is to create a differentiated rebate structure per drug based on indication or patient diagnosis.

  • Indication-based Pricing: In this model, payors and manufacturers agree on different prices for a drug’s different indications based on efficacy and outcomes. For example, clients pay more for the use of a given drug in diseases where the drug is shown to be more effective and less in diseases where the established benefit is not as clear.

  • Outcomes-based Contracting: In this strategy, reimbursement is linked to a set of value-based attributes that can be measured and tracked to evaluate performance of a drug over time, and manufacturers then pay retrospective rebates based on the measurement of clinical outcomes.

As payors continue to explore new ways to address the rising cost of prescription drugs, value-based purchasing models show promise in ensuring that a drug’s price is based on its value and not simply what the market will bear.

For more information on how CVS Health is working to ensure consumers have access to affordable medicines, check out our Rising Drug Prices information center. And to stay informed about the most talked-about topics in health care, register for content alerts and our bi-weekly health care newsletter.

Perspectives on value-based drug contracting.
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Increasing Generic and Biosimilar Competition to Contain Rising Drug Costs

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Prescription drug prices are a near constant in the news, drawing attention and raising concerns about medication access and affordability.

The good news is that hope is not lost when it comes to containing costs. By employing smart strategies, it is possible to slow the rate of drug trend (the rate of drug spending growth).

In fact, even as drug prices continued to rise, trend for CVS Health’s commercial pharmacy benefit management clients actually declined in 2016 compared with 2015.

How is this possible? CVS Health uses a number of approaches to help drive down costs, including advocating for increased competition in the market. This includes competition from unbranded and generic alternatives to brand name drugs, which provide consumers more affordable options.

Generics Help Push Down Costs for Consumers

There are two types of unbranded drugs – generic drugs and biosimilars:

Generic drugs are chemically identical to brand name drugs – they are the same in terms of dosage form, administration, quality, performance characteristics, strength, safety, and intended use. The difference is that they are typically sold at a significant discount relative to the branded drug.

We believe that increasing the number of generic alternatives to branded drugs promotes competition in the market and tightens the reins on branded drug price increases. In fact, the U.S. Food & Drug Administration (FDA) analysis has found that the price of a drug falls most dramatically with the entry of the first couple of generic competitors, and continues to fall incrementally as additional generic competitors enter the market.https://www.fda.gov/AboutFDA/CentersOffices/OfficeofMedicalProductsandTobacco/CDER/ucm129385.htm

Biosimilars are biological products that are highly similar to FDA-approved, brand-name specialty biologics (therapies isolated from a variety of natural sources using cutting-edge technologyhttps://www.fda.gov/aboutfda/centersoffices/officeofmedicalproductsandtobacco/cber/ucm133077.htm), with no clinically meaningful difference in safety and efficacy.https://www.fda.gov/Drugs/DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/ ApprovalApplications/TherapeuticBiologicApplications/Biosimilars/ucm241718.htm

Specialty drugs, many of which are biologics, accounted for 73 percent of overall medicine spending growth over the past five years,http://healthaffairs.org/blog/2016/05/17/is-high-prescription-drug-spending-becoming-our-new-normal/ so having an unbranded competitor could help drive down costs. RAND Corporation estimated that the entry of biosimilar products into specialty markets could reduce spending on biologics by an estimated $44.2 billion over the next decade.https://www.rand.org/content/dam/rand/pubs/perspectives/PE100/PE127/RAND_PE127.pdf

Generic and Biosimilar Competition Can Drive Down Trend

Prescription benefit managers such as CVS Caremark maximize the value of generics and biosimilars by designing managed formularies with clinically equivalent alternatives to branded drugs to increase dispensing rates of these lower-cost options.

Our track record shows that encouraging their use is containing spending growth: in the 2016 Drug Trend Report, generic drugs had the largest deflationary impact on trend due to higher dispensing rates combined with low overall inflation and falling prices for most generics.

Additionally, there is potential for biosimilars to positively impact trend in the future, much as generics have in traditional drug markets; however, there are currently only four FDA-approved biosimilars.https://www.uspharmacist.com/article/biosimilars-current-approvals-and-pipeline-agents

Specialty pharmaceuticals account for roughly 36 percent of spend for our PBM clients, increasing competition with biosimilars could help bring down prices for these expensive products.

Unlocking More Competition to Reduce Costs

Competition in the drug market is influenced by the speed of new generics and biosimilars entering the market. At the start of 2017, more than 4,000 generic drugs were pending approval at the FDA. In comparison to the European Union, the U.S. has much catching up to do: Europe approves drugs more quickly and has 20 biosimilars on the market compared to our four.

As the health care landscape continues to evolve, increasing the flow of generics and biosimilars is an important step to unlock the cost savings potential for patients, taxpayers and the health system as a whole.

For more information on how CVS Health is working to ensure consumers have access to affordable medicines, check out our Rising Drug Prices information center. And to stay informed about the most talked-about topics in health care, register for content alerts and our bi-weekly health care newsletter.

Increasing competition can help lower medication costs for consumers.
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How Competition Can Increase Access and Reduce Costs

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Recent high-profile drug price increases are driving a national conversation about medication cost and access. Branded drugs prices in particular are rising faster than the rate of inflation overall. But while they make up just 15 percent of all dispensed prescriptions, these drugs account for 75 percent of pharmaceutical spend.Percentage of all prescriptions in the US market for 2015 taken from IMS; Average cost range from “The 2016 Economic Report on Retail, Mail, and Specialty Pharmacies,” Drug Channels Institute, Jan 2016 (page 4). So it’s imperative that we do everything we can to ensure that medications are accessible and affordable. One important part of our strategy is fostering competition to keep drug prices in check.

Competition is Key

In the pharmaceutical market, like in other parts of the economy, consumers benefit when producers have to compete to attract their business. Pharmacy benefit managers (PBMs), such as CVS Caremark, encourage this competition by leveraging their clients’  combined purchasing to negotiate lower prices with drug manufacturers. PBMs also compete among one another for health plan and employer clients, contributing to the incentive to negotiate the lowest-possible drug prices.

When Competition Works, Patients Benefit

There are many ways that patients benefit from pharmaceutical market competition. Here are three examples:

The Generic Marketplace

When patents for brand name drugs expire and generic medicines are allowed to enter the market, robust competition causes prices to plummet. According to the Generic Pharmaceutical Association, the use of generics over brand name drugs saved the U.S. health care system $254 billion in 2014. Eighty-five percent of the drugs dispensed by CVS Health are highly effective, less-expensive generic medications.

Access to Breakthrough Cures

When a breakthrough hepatitis C drug was introduced to the market in 2014, its price of $1,000 a pill (about $84,000 for a full course of treatment) caused concern that the medication would be out of reach for millions of patients. A competing therapy was soon launched, and PBMs were able to leverage their negotiating power and tools such as formularies to achieve significant savings for customers. According to the Pharmaceutical Care Management Association, PBMs were able to negotiate lower prices for these breakthrough cures than other industrialized countries with government price controls.

Medicare Part D

More than 40 million Medicare beneficiaries receive their drug benefits through a Medicare Part D plan. Beneficiaries may choose among numerous plans that use PBM negotiations to make prescription drugs affordable and accessible. The Part D program is overwhelmingly popular among seniors and other Medicare beneficiaries with costs to the health care system that are significantly less than originally projected.

Proactive Pharmacy Management Strategies

As one of the largest drug purchasers in the U.S. health care system, CVS Health employs industry-leading purchasing strategies to encourage more competitive pricing and make breakthrough drugs more affordable for patients who need them. Our utilization management programs and flexible formulary options help deliver lower costs for PBM clients, while ensuring their members have access to the medications they need. 

More Can be Done

Federal regulations can slow down the process of introducing competition into the drug market. For example, it takes about three to four years on average to introduce a new generic medication. Supporting efforts to accelerate market competition, combined with continued public pressure on the companies that have adopted abusive pricing practices, can help patients avoid unnecessarily expensive medications.

Visit our Rising Drug Prices information center to learn more about our efforts to contain drug costs.

A look at how competition can keep prescription drug prices in check.
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Helping Patients Maximize Prescription Benefits and Save Money

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The percentage of Americans enrolled in high deductible health plans has grown significantly in recent years – from four percent in 2006 to 28 percent in 2016. At the same time, drug prices have continued to rise, resulting in many Americans shouldering higher costs for their prescription drugs.  

While CVS Health has made significant progress in mitigating the impact of high list prices set by pharmaceutical manufacturers, for too many Americans, annual out-of-pocket (OOP) drug costs are still significant. To fight back on rising drug costs, CVS Health launched the most comprehensive program in the industry designed to save patients money on their medications. By helping patients realize savings at the pharmacy, the initiative helps consumers access and stay on the medications they need to maintain their health.

Reducing Costs at the Pharmacy Counter

CVS Pharmacy Rx Savings Finder is a new savings and discount capability available at all CVS Pharmacy locations. The integrated tool helps the company’s 30,000 retail pharmacists quickly and seamlessly evaluate individual prescription savings opportunities right at the pharmacy counter. In fact, pharmacy teams can review a patient’s prescription regimen, medication history and insurance plan at the pharmacy counter to determine the best way to save money on OOP costs.

The new capability will help pharmacists navigate in a step-by-step process to ensure that patients receive the lowest cost option:

  1. First, if the prescribed medication is on the patient’s formulary and is the lowest cost option available.
  2. Second, if there are lower-cost options covered under the patient’s pharmacy benefit – such as a generic medication or therapeutic alternative with equivalent efficacy of treatment.
  3. Third, if the patient may be able to save money by filling a 90-day prescription rather than a 30-day prescription.
  4. Finally, if neither a generic nor a lower-cost alternative is available, other potential savings options for eligible or uninsured patients where allowed by applicable laws and regulation.Prescriptions submitted for reimbursement to Medicare, Medicaid or other federal or state programs are not eligible.

 

Increasing Cost Transparency and Using Pharmacy Benefit Management Solutions

Other components of the company’s comprehensive savings approach help keep prescription medications affordable for patients. These include:

  • The recently launched real-time benefits program helps bring greater drug price transparency to physicians and CVS Caremark pharmacy benefit management (PBM) members at the point-of-prescribing. Early results show that the majority of prescribers accessing patients’ real-time benefits information have switched their patients’ drug when it is not covered and they frequently switch from a drug that is covered under the member’s plan to a less expensive option.
  • The Point of Sale (POS) rebate offering allows the value of negotiated rebates on branded drugs to be passed on directly to patients when they fill their prescriptions – and the savings from this program can be significant. In 2013, CVS Health led the industry with the introduction of POS rebates to clients, and today nearly 10 million members are covered by and able to benefit from the program.
  • CVS Caremark also offers clients the ability to adopt preventive drug lists, which make medications for many common, chronic conditions available at a $0 copay to the member. Use of this option, coupled with higher utilization of generic drugs, dropped members’ overall prescription cost share by nearly one percent in 2017.

Mitigating Impact of High Drug Costs

Our core PBM strategies – leveraging market competition, maximizing the use of low-cost generics and other formulary management, and effectively negotiating discounts and rebates – continue to be an important part of reducing drug trend, the measure of growth in prescription spending per member per month, for our payor clients and keeping drugs more affordable for PBM members.

Our latest Drug Trend Report shows that great progress is being made. For example:

  • In 2017, our strategies helped protect clients from drug manufacturer price increases of almost 10 percent, keeping cost growth per unit nearly flat and trend to the lowest level in five years.
  • For chronic conditions such as diabetes, high blood pressure and high cholesterol, our plan designs connected patients to lower-cost options that ultimately helped improve adherence to medications by as much as 1.8 percentage points.
  • Forty-two percent of CVS Caremark clients had negative trend, meaning they spent less in 2017 on prescription drugs than in 2016.
  • Nearly 90 percent of our PBM plan members spent less than $300 out-of-pocket for their prescription medicines last year.   

CVS Health is taking a leadership role in developing programs and initiatives to help consumers save money on their overall prescription drug costs and stay adherent to the medicines they need. And while this initiative signals progress, the company remains committed to doing even more across the enterprise to help patients on their path to better health.

Read the white paper to learn more about our efforts to address rising prescription drug prices.

For more information on how CVS Health is working to expand access to more affordable and effective health care, check out our Cost of Care information center and the CVS Health Impact Dashboard. To stay informed about the latest updates and innovations from CVS Health, register for content alerts and our bi-weekly health care newsletter.

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Health Care Decoded: Increasing Access and Affordability

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Vice President of Policy and Regulatory Affairs Donald Dempsey recently represented CVS Health at Roll Call’s Health Care Decoded on a panel titled, “Access, Affordability and Government Spending.” The session was part of a larger summit on key health care issues, such as health care costs and drug pricing.

During the discussion, Mr. Dempsey highlighted several ways CVS Health is helping people access affordable care: increasing access to lower cost drugs; providing tools to help patients take their medications; and utilizing pharmacy benefit management (PBM) strategies to drive down costs. He also offered insights into the role that public policy could play to further support these efforts across the health care system.

Increasing Visibility into Patients’ Drug Costs

Mr. Dempsey touched on how increasing transparency into patients’ drug benefits at the point of prescribing and at the pharmacy counter helps prescribers and patients better understand options before a script is written. CVS Caremark’s real-time benefits, for example, allows prescribers to view a patient’s drug coverage and identify member-specific medication costs for a specific drug, as well as potential therapeutic alternatives. This can help prescribers and patients make more informed decisions and find the lowest cost, clinically effective treatment for their care.

Helping Patients Stay Adherent to the Medications

Mr. Dempsey also noted that patients who stay adherent to medication have lower health care costs and better health outcomes. That is why CVS Health has developed a number of programs and tools to make medication management easier, including:

Part of ensuring patients remain adherent is ensuring they get the greatest value for the cost of their medications; CVS Health has been exploring how value-based drug formulary models can help patients do so. And while progress has been made, removing regulatory barriers, like anti-kickback statutes and civil money penalties, could promote more collaboration and innovation around value-based solutions for patients.

Leveraging Competition to Drive Down Costs

Mr. Dempsey underscored how CVS Health deploys several PBM strategies that use competition to drive drug price reductions for beneficiaries. Leveraging competition to negotiate discounts, identifying and including clinically appropriate drug options at reduced prices in our formulary, and working to align drug prices with their value to our beneficiaries help reduce the cost of care for our patients. Beyond our PBM strategies, we also support policy solutions that promote competition, such as the CREATES Act, which seeks to remove barriers to competition to further drive down drug costs.

Mr. Dempsey’s co-panelists included Donald May of AdvaMed and Rodney Whitlock of Campaign for Sustainable Rx Pricing, who echoed the need for increased competition and broader collaboration to drive down the cost of care and drug prices. 

For more information on how CVS Health is working to expand access to more affordable and effective health care, check out our Cost of Care information center and the CVS Health Impact Dashboard. To stay informed about the latest updates and innovations from CVS Health, register for content alerts and our bi-weekly health care newsletter.

Panelists Donald Dempsey (CVS Health), Donald May (AdvaMed), Rodney Whitlock (ML Strategies & Campaign for Sustainable RX Pricing) and moderator Andrew Siddons (CQ Roll Call)
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Health Care Consumerism: Increasing Transparency to Aid Decision-Making

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“Health Care Consumerism” is a three-part series that looks at how patients are increasingly managing their own health care decisions. With the expansion of high-deductible health plans (HDHPs), patients seek greater transparency, affordability and convenience as they consider what options work best for their budgets and health care needs. This series examines some of the key trends in health care consumerism and how CVS Health is working to empower patients and improve their health care experiences.

Evaluating Health Care Options

The U.S. health care system was not built to provide consumers with the same kind of ease to access information they might expect when purchasing other types of goods and services, such as televisions or oil changes. Details about the cost and quality of health services and treatments can be much more opaque. Oftentimes, patients may not know how much they have to pay until after receiving care.

Fortunately, new tools that provide transparency into the types of health services available and the overall cost of care are helping patients make more informed choices. More than 80 percent of people who have compared health care cost and treatment information online report that they will do it again.https://www.publicagenda.org/pages/how-much-will-it-cost At CVS Health, we believe patients should have more transparency into their health care costs and are helping them access the care and medicines they need at an affordable price.

Arming Consumers with the Right Information

As enrollment in HDHPs continues to grow, consumers who have not yet met their deductible may find themselves surprised by out-of-pocket costs after visiting a provider or when filling a prescription. In fact, more than 15 percent of consumers enrolled in these types of plans report difficulties paying for medical bills after receiving care.

To empower consumers to make more informed health care decisions, CVS Health is providing solutions and tools that offer a direct line of sight into what is covered under their benefit plans and expanding visibility into lower-cost care alternatives. Our transparency efforts include:

  • Ensuring that consumers can locate the cost of the 125 services available at our 1,100 MinuteClinic locations nationwide through a comprehensive online price list
  • A new tool, the Rx Savings Finder, which enables our 30,000 retail pharmacists to quickly and seamlessly review a patient’s prescription regimen, medication history and benefit plans to identify the lowest-cost medication option available. The tool allows consumers and their pharmacists to openly evaluate and discuss medicine costs at the pharmacy counter.
  • Bringing greater drug price transparency to the point of prescribing through “real-time benefits,” which allow prescribers to immediately review the member-specific cost for a selected drug, and identify the lowest-cost, clinically appropriate therapeutic alternatives available on a member’s formulary. CVS Caremark members can also access this information through their member portal and mobile app.

For more information on how CVS Health is working to expand access to more affordable and effective health care, check out our Cost of Care information center and the CVS Health Impact Dashboard. To stay informed about the latest updates and innovations from CVS Health, register for content alerts and our bi-weekly health care newsletter.

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Greater Rx Price Transparency at the Point of Care

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Casey Leonetti, Senior Vice President of PBM Innovation recently participated in a panel at HIMSS 2018, one of the largest annual health information and technology conferences. The panel, Bringing Prescription Price Transparency to the Point of Care brought together industry experts to discuss price transparency challenges and solutions.

Moderated by Dr. Pat Salber of The Doctor Weighs In, the panel opened with some startling facts.

Did you know…

  • Medication cost can be a significant factor when a patient is deciding whether or not to fill a prescription.https://www.ncbi.nlm.nih.gov/pubmed/24687067
  • In addition, approximately 80 percent of physicians said manual prior authorization requests require extra work, rework and follow up, which can also delay the start of an important therapy or result in poor compliance.https://www.beckershospitalreview.com/healthcare-information-technology/providers-frustrated-with-prior-authorization-workflows-5-stats-to-know.html

Ms. Leonetti discussed this as the impetus for launching CVS Health’s real-time benefit capability, which provides visibility to member-specific medication costs and available lower-cost therapeutic alternatives at the point-of-prescribing and at the pharmacy. Specifically,

  • Prescribers are able to see specific benefit information for CVS Caremark PBM members integrated directly into their e-prescribing workflow, and even before they prescribe a drug, prescribers can also see the cost of the drug based on the patient’s coverage, factoring in the their remaining deductible.
  • In addition, the prescriber is able to review up to five clinically appropriate branded alternatives or therapeutically equivalent generic medications specific to the patient’s formulary coverage.
  • Prescribers also have visibility to requirements, such as prior authorization or step therapy, enabling them to immediately submit an electronic prior authorization request and in most cases, receive a near real-time decision.
  • Pharmacists at all retail pharmacies within the CVS Caremark network have visibility to the same list of clinically appropriate formulary alternatives provided to the prescriber.
  • And, CVS Caremark members are also able to find lower-cost alternatives within the Check Drug Cost tool on Caremark.com, including visibility to their remaining deductible.

Altogether, this type of transparency helps eliminate disruptive situations where the patient arrives at the pharmacy counter and is unable to fill a prescription because, for example, it is not covered on the formulary or requires additional approvals. It also helps ensure that the patient doesn’t abandon the prescription because of cost. In addition, real-time benefits help ensure that the member is accessing the most clinically effective and affordable medication, which can help keep costs low for the entire health care system.

The other panelists, including representatives from Surescripts and Aprima, also provided their perspectives on greater prescription price transparency at the point-of-care.

For more information about how CVS Health is working to ensure patients have access to affordable health care, visit our Cost of Care information center and the CVS Health Impact Dashboard. And to stay informed about the most talked-about topics in health care, register for content alerts and our bi-weekly health care newsletter.

Panelists at the HIMSS 2018 conference
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Why Are Physicians Still Prescribing High Cost Brand Name Drugs? Ask Pharma.

Why Are Physicians Still Prescribing High Cost Brand Name Drugs? Ask Pharma.
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Chief Medical Officer Dr. Troyen Brennan authored the following op-ed, which was published by RealClearHealth.com. In it, he lauds recently published research in JAMA that showed the influence of pharmaceutical detailing on physician prescribing practices.  

Generic drugs are a boon in health care. Typically lower in cost and as effective as their branded counterparts, they help control pharmacy spending and increase access to important therapies for patients who could be deterred by the high cost of some branded drugs. In fact, research shows that the use of generic drugs produces annual savings in excess of $200 billion.

Why, then, are some physicians still prescribing the higher cost, branded versions of these drugs?

The devil may be in the “detailing.” Pharmaceutical detailing – a common marketing practice whereby physicians receive sales visits from pharmaceutical reps – is pervasive and can keep certain drugs top-of-mind for physicians, influencing their prescribing behavior.

This point was underscored by new research recently published in the Journal of the American Medical Association (JAMA) for which CVS Health provided de-identified pharmacy claims data. The study examined the impact of policies limiting pharmaceutical detailing at academic medical centers. When these policies were implemented there was an increase in prescribing of “non-detailed” drugs, more than 95 percent of which were generics.

Plainly stated, when prescribers were visited by pharmaceutical sales reps less often, they prescribed generic medications more often. In fact, the overuse of high cost brand name medications resulted in about $73 billion in costs to the U.S. health care system between 2010-2012, about a third of which was paid for by patients.

Pharmaceutical marketing is ubiquitous as manufacturers seek to recoup the costs associated with research and development (R&D) and turn a profit. But manufacturers’ sales and marketing activities are now outpacing R&D costs, and spending on certain kinds of marketing practices such as direct-to-consumer advertising has nearly doubled since 2013.

Pharmaceutical detailing activities are the most common direct-to-physician marketing practice and are often the primary interaction that doctors have with drug manufacturers, who rely on detailing to increase prescribing of their drugs. While detailing serves a purpose to educate physicians about drugs and their benefits, this research clearly shows that detailing can also lead to increased prescribing of these drugs, which are often higher cost, brand name drugs, with lower cost, just-as-effective, generic alternatives available.

This new research clearly underscores the need for continued monitoring and increased scrutiny of pharmaceutical marketing practices. But beyond what manufacturers are doing to increase sales of certain drugs, physicians should also consider the cost of drugs when making prescribing decisions. This is especially important as the high cost of prescription drugs and pharmacy care continue to dominate the national health care debate.

One way to do that is to give physicians better visibility into the cost of prescription drugs at the moment they are being prescribed. This can be done through enhanced e-prescribing and connectivity with electronic health records. These tools help physicians view their patients’ insurance information in real time, find lower cost drug options, including lower cost generics, and also help initiate and expedite prior authorization requests, when needed. As a result, physicians can understand their patients’ out-of-pocket drug costs and can take that into account when making any prescribing decisions. Pharmacy benefit managers, working with electronic medical record vendors, are now testing such programs.

In addition, in plans with high deductibles, the pharmacy benefit manager can make it possible for patients to have access to preventive medications, sometimes with zero co-pay, before they meet their deductible. As these high deductible plans become more prevalent, such preventive drug lists will be critical to ensuring that patients can have access to their medications.

Finally, the government also has an important role in helping to increase drug competition, which can drive down drug costs. For example, addressing the backlog of generic medicines awaiting FDA approval and promoting policies that do not delay market entry of generic drugs will help increase the number of lower cost generic drugs available in the marketplace. 

The new research underlines the fact that pharmaceutical manufacturers have a strong financial incentive to get people to take high priced medications.  But today, neither the health care system nor the patient can afford unnecessary costs when equally effective, less expensive generic medications are available.

For more information on how CVS Health is working to ensure consumers have access to affordable medicines, visit our Rising Drug Prices information center. And to stay informed about the most talked-about topics in health care, register for content alerts and our bi-weekly health care newsletter.

CVS Health’s Troy Brennan examines research on pharmacy detailing practices.
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Top Trends: Learn What is Impacting How Americans Consume and Pay for Health Care

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In our rapidly changing and dynamic health care marketplace a major question persists: how can we increase access to care and improve quality while lowering overall costs? At the 2016 CVS Health Forum, where the company’s pharmacy benefit management (PBM) clients learn about advanced solutions for managing their pharmacy benefit, CVS Caremark President Jon Roberts discussed how the company is addressing this cost-quality-access dilemma.

Roberts discussed the following top trends as major market drivers that are impacting payers’ budgets and changing the way that Americans consume health care. In addition, he outlined how our enterprise-wide innovations bend the cost curve in a meaningful and sustainable way for our PBM clients while improving quality and access for their members.

Slowing of the generic drug pipeline

While generics have been a key lever in helping to control prescription drug costs, there are now fewer new generics being introduced and, as a result, we are seeing generic drug price inflation. We are working to address this through our Red Oak Sourcing collaboration with Cardinal Health. This collaboration has helped improve the cost margin of generics, drive our generic dispensing rate to more than 80 percent across our book of business, and help reduce payer spend by four percent.

Higher drug prices

Rising costs of prescription drugs grabbed headlines this year as manufacturers set increasingly higher prices on new and existing products. Our CVS Health 2015 drug trend results also showed that inflation on traditional non-specialty branded products is the single largest contributor to pharmacy spend. Despite these cost pressures, we helped cut our PBM clients’ drug trend, a measure of growth in prescription spending, to five percent in 2015 from a high of 11.8 percent in 2014.

Cost, however, continues to be a top concern for payers, and we are implementing an aggressive approach to help anticipate and mitigate its impact on already strained health care budgets. And although cost containment is a major focus, we must also balance quality and access for the PBM members we serve. Several studies from the CVS Health Research Institute show that many of the cost management strategies that PBMs employ – including narrow pharmacy networks and formulary management – also increase member access to care and improve health outcomes.

Growth of specialty

The specialty market continues to experience tremendous growth, with many new and expensive therapies in the pipeline. With new drugs, rising prices and growing utilization, it’s predicted that specialty will account for 50 percent of total drug spend by 2018. We are focused on ensuring that members access the right drug at the right time and for the right price. In addition, we provide holistic clinical care and support to help those on specialty medications start and stay on their treatment regimens. Together, this improves quality of care, leads to better health outcomes and helps control overall costs.

Growth of value-based model

As payers move away from fee-for-service models, providers have more responsibility for population health. We see this as a tremendous opportunity and are already working to share valuable data and analytics from our PBM, pharmacies and retail clinics about patients’ conditions, risk profiles and behaviors with providers to help better support them, improve patient outcomes and close gaps in care.

More consumer accountability

Consumers are becoming much more involved in making decisions about their health care and this “retailization” of health care is poised to accelerate in the coming years. Through our recent acquisitions of Target and Omnicare, our consumer touchpoints are growing, offering increased opportunities to help members on their path to better health throughout their lifespan.

Digital tools will also play a transformational role in educating, empowering and engaging consumers. In addition to our retail pharmacy tools, we recently launched several tools for our PBM members to help them order and manage prescriptions online; check prescription costs and plan coverage; and track their individual or family’s drug-related expenses for the year.

“CVS Health is committed to ongoing innovation aimed at improving cost, quality and access for all those we serve,” Roberts concluded. “Our one-of-a-kind, connected health care model enables us to leverage our scale and enterprise assets to lower costs and improve health outcomes.”

Article: Top Trends: Learn What is Impacting How Americans Consume and Pay for Health Care
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The Truth Behind Drug Rebates and How to Help Make Drugs More Affordable

The Truth Behind Drug Rebates and How to Help Make Drugs More Affordable
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Rising drug prices are having an impact on patients every day, especially those in high deductible health plans who are paying an increasing share of the cost of their prescription drugs. While the current debate about drug pricing and the role of pharmacy benefit managers (PBMs) centers on rebates and their impact on drug costs, it omits key facts and obscures the truth behind rising drug costs. At CVS Health, we are debunking the pervasive myth that rebates drive up drug prices by showing that rebate retention is not correlated with higher drug prices.

In addition, often lost in the debate is a discussion of what is working. For example, PBM cost containment strategies have a proven track record of helping improve medication adherence and promoting better patient health while keeping drug cost inflation under control in spite of continued manufacturer driven drug price increases.

At CVS Health, we are committed to using every tool possible and continuing to drive innovation to bring down the cost of drugs. We remain focused on providing the right drug to the right patient at the right time at the lowest possible cost.

Learn more.

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