2015 Drug Trend: Tackling Rising Drug Costs

Millions of people depend on CVS Health for the prescriptions they need to stay healthy at a price they can afford. Yet the prescription market today is highly volatile, marked by an unprecedented level of drug price increases and a stream of new expensive specialty drugs. The high cost of prescription medicines hurts everyone – from payers to patients – so CVS Health is committed to creating value and improving health by ensuring patients get the right drug for the lowest cost.

2015 Drug Trend

CVS Caremark, our pharmacy benefits manager (PBM), applies a variety of payer solutions to help manage drug costs, and new data from CVS Health shows that these PBM tools are working. In fact, despite rapidly rising drug costs, prescription drug trend* dramatically dropped to 5 percent in 2015 following a record high of 11.8 percent the previous year. Our proactive approach to cost management resulted in a reduction in trend of more than 50 percent. In addition, the analysis showed that non-specialty brand inflation was the largest driver of drug trend in 2015, although price inflation also affected specialty and generic categories.

Key Solutions

CVS Caremark applies a variety of solutions to help manage pharmacy costs and improve health outcomes. For example, we offer utilization management programs and flexible formulary options, based on clinical evidence, that help deliver lower costs for PBM clients while ensuring their members have access to the medications they need. On average, CVS Caremark clients who used our value formulary design in 2015 saved $20 million or more depending on the number of plan members they support. In addition, recently published research from the CVS Health Research Institute showed that along with cost savings, more selective formulary design encourages the utilization of generic drug options and improves medication adherence and health outcomes. We also employ industry leading purchasing strategies that leverage our scale to negotiate discounts with drug manufacturers.

Moving forward, CVS Health will continue to build on its success in 2015 by offering additional, integrated solutions and real-time data analytics on drug trend drivers to help clients manage health care costs and ensure patients have access to appropriate, affordable medications.

Click for more detail on our 2015 drug trend results.

* Prescription drug trend is the measure of growth in prescription spending per member per month (PMPM). Trend calculations take into account the effects of drug price, drug utilization and the mix of branded versus generic drugs as well as the positive effect of negotiated rebates on overall trend.