CVS's PBM shined ahead of Aetna deal talk

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CVS Health’s reported move to acquire Aetna would allow it to expand the reach of its pharmacy benefit management business to millions of new customers.

Already one of the nation’s largest PBMs following its $21 billion purchase of Caremark in 2007, CVS inked a 12-year contract with Aetna in 2010 to service about 9.7 million of the insurer’s PBM members. Then, in 2015, the drug retailer acquired nursing home pharmacy operator Omnicare for $12.9 billion, as well as Target’s pharmacies and clinics for $1.9 billion.

By buying Aetna, CVS would gain instant access to Aetna’s 23.1 million medical members and 15.2 million PBM customers. If that happens, what can brokers, advisers and their employer customers expect to see happen with drug prices?

A closer examination of CVS Caremark’s overall drug pricing and usage trend could be telling.

In 2016, the PBM shaved its drug trend — which CVS defines as the increase in prescription spending per member per month — to its lowest point in four years. CVS Caremark reported a trend increase of just 3.2%, down from 5.0% in 2015. Price protections, the return of more than 90% of overall rebates, and the use of generics and targeted approaches all contributed to the decline, according to CVS. By comparison, Express Scripts, one of CVS’s chief PBM competitors, reported spending on prescriptions increased 3.8% per person in 2016.

However, the cost of specialty drugs continues to rise. While CVS did not say how much prices are rising, it did say the category grew to nearly 36% of overall gross spending on prescription drugs and is expected to reach 55% by 2020. Apart from anti-inflammatory medications for rheumatoid arthritis and psoriasis, other major cost-drivers included antineoplastics and adjunctive therapies used to treat cancer as well as psychotherapeutic and neurological agents, including multiple sclerosis therapies.

Still, CVS’s specialty drug unit has spent years trying to improve adherence to prescription drug regimens and clinical outcomes on the highest cost scripts.

CVS Specialty, the unit of the company that concentrates on drugs for rare and chronic diseases, has improved patient engagement and medication adherence through a high-touch, personalized management model that focuses on more holistic care and greater convenience or access to medications and clinical professionals. The integrated approach not only manages specialty therapies with the help of a more expansive care team, but also a patient’s condition and comorbidities.

A patient-centric approach to working with specialty patients, according to Surya Singh, M.D., vice president and chief medical officer of specialty pharmacy at CVS, involves the use of extensive clinical counseling, care coordinators to handle social issues, registered nurses who do refill calls and sub-specialized nurses assigned to complex or rare conditions who work closely with specialized pharmacists.

“We’ve gone to great pains to make sure that our staff is specialized enough to have the deep expertise that only comes from talking to patients with those diseases regularly,” he said in an interview just prior to last week’s report that CVS was looking to buy Aetna.

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CVS Specialty also issues detailed and drug-specific lab reminders, side effect warnings through targeted digital communications to patients and offers access to medications through multiple channels that include retail pharmacies at CVS or Target locations and mail-order facilities. He says all of these steps raised adherence with drug regimens to greater than 85% of the time.

However, some brokers worry that a CVS-Aetna pairing could corner the market on certain high-cost drugs. “This is the ultimate play to control the supply chain and drive membership to their infusion and specialty drugs, which are the high profit margin pieces,” says Michael “Mick” Rodgers, managing partner with the Axial Benefits Group in Boston and EBA’s 2017 Adviser of the Year.

But at least one broker has a more positive outlook. Kevin A. Roberts, an independent health insurance broker with KR Benefits Insurance Services, believes that the combination of CVS and Aetna would have even greater leverage to negotiate with drug manufacturers to reduce costs and to pass on those savings to drug buyers.

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Pharmacy benefit management Pharmacy benefits Healthcare costs Insurance Aetna CVS Caremark