Innovative Approaches to Saving Patients Money on Prescription Drug Costs

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1 Innovative Approaches to Saving Patients Money on Prescription Drug Costs April Innovative Approaches to Saving Patients Money on Prescription Drug Costs

2 Executive Summary As prescription drug prices continue to rise and enrollment in high-deductible plans grows, many patients are shouldering higher costs for their prescription medicines. When these higher costs lead to patients not taking their medications as recommended, the health and financial consequences of non-adherence can negatively impact individuals and public and private payors alike. Recognizing this challenge, CVS Health has launched a comprehensive program to help patients save money on their prescription drugs. The enterprise initiative combines industry-leading capabilities to identify savings opportunities in realtime for patients at the pharmacy counter with best-in-class pharmacy benefits management solutions to increase cost transparency for patients, providers and pharmacists. Nearly 90% of PBM plan members spent less than $300 out-of-pocket for their prescription medicines in An Era of Rising Drug Prices In 2016, the U.S. spent $328.6 billion on prescription drugs, and by 2026 the country is projected to spend $462.5 billion according to National Health Expenditure data. Rising prescription drug spending is largely driven by significant increases in list prices by pharmaceutical manufacturers. As a retail pharmacy and a pharmacy benefit manager, CVS Health is in a unique position to address the challenges patients face in an environment of rising drug prices. CVS Caremark employs a number of pharmacy benefit management strategies to keep costs affordable for patients by maximizing the use of lowcost generics and biosimilars through formulary management and effectively negotiating discounts and rebates with drug manufacturers. As a result of these strategies, nearly 90 percent of PBM plan members spent less than $300 out-ofpocket for their prescription medicines in In 2017, 28% of workers were in a high deductible health plan. Today the vast majority nearly 90 percent of prescriptions filled each year in the U.S. are generic medicines, which are a key tool in driving down prescription drug costs. At CVS Pharmacy, more than 50 percent of the prescriptions filled cost $4 or less, and 75 percent cost $10 or less. Still, we recognize that for far too many Americans, prescription drug costs can be a major expense, which is why in April 2018 CVS Health announced an expanded comprehensive approach to help patients save money at the pharmacy counter. As the rise in high deductible health plans shifts more costs to patients, developing solutions that help individuals access and afford the medicines they need is an important public health and economic challenge. The Rise in High Deductible Health Plans The growing prevalence of high deductible health plans is playing a significant role in the costs patients are responsible for at the pharmacy counter. The percentage of workers in a high deductible plan has grown from four percent in 2006 to 28 percent in Innovative Approaches to Saving Patients Money on Prescription Drug Costs

3 As patients assume more responsibility for their cost of care, rising prescription drug prices can lead to non-adherence and negative health outcomes. In fact, a survey of more than 2,400 CVS pharmacists revealed that 62 percent believe the high cost of drugs is the biggest reason why patients don t adhere to their medications. Medication non-adherence can lead to poor health outcomes and is estimated to cost the U.S. health care system nearly $300 billion each year. Comprehensive Solutions to Help Patients Access the Medicines They Need CVS Health is taking a leading role in developing programs to help patients save money on their overall prescription drug costs and stay on the medications they need. At a time when prescription drug prices are rising, our size, scale and ability to effectively negotiate with manufacturers help us mitigate the impact for both payors and patients. Industry-leading Innovation Focused on Saving Patients Money At the Pharmacy Counter With over 30,000 pharmacists in nearly 10,000 retail locations nationwide, our pharmacists have the expertise and access to patients to play a critical role in helping patients navigate the growing costs and increasing confusion surrounding prescriptions drugs. Medication non-adherence costs the health care system nearly $300 billion each year. 30,000 pharmacists serve 10,000 communities across the country. The CVS Pharmacy Rx Savings Finder will enable the retail pharmacists for the first time to evaluate quickly and seamlessly individual prescription savings opportunities right at the pharmacy counter. The Rx Savings Finder will help pharmacists navigate in a step-by-step fashion through each of the following options: 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. 1 With these tools and programs, our pharmacy teams are able to offer patients advice not only on how and when to take their medications, but also on how to better afford them. 1 Prescriptions submitted for reimbursement to Medicare, Medicaid or other federal or state programs are not eligible. 3 Innovative Approaches to Saving Patients Money on Prescription Drug Costs

4 At the Doctor s Office CVS Health recently launched a real-time benefits program, which helps bring greater drug price transparency to physicians and CVS Caremark plan members. Before a medication is prescribed, physicians have visibility to a member s specific benefit information, including the member-specific cost for a selected drug, based on a member s coverage, deductible and how much of the deductible they have met, along with up to five lowest-cost, clinically appropriate therapeutic alternatives based on the patient s formulary. PBM members have access to the same information on the CVS Caremark app and member portal. Early results show that the vast majority of prescribers accessing the real-time benefits information through their electronic health record switched their patient s 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 available option. When the prescriber switched to a lower cost drug, the difference was approximately $75 per prescription. Using Pharmacy Benefit Management Solutions CVS Health s 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. CVS Health has offered Point of Sale (POS) rebates to clients since 2013 and today nearly 10 million members are covered by and able to benefit from the program and the savings from this program can be significant. Clients may also adopt preventive drug lists, which make medications for many common, chronic conditions available at a $0 copay to the member. In 2017, members overall prescription cost share dropped by nearly one percent per member per month, as a result of increased adoption of preventive drug lists coupled with higher utilization of generic drugs. In 2017, CVS Health PBM strategies reduced drug trend for CVS Caremark commercial clients to the lowest level in five years, keeping drug price growth at a minimal 0.2 percent despite manufacturer price increases of near 10 percent. In fact, 42 percent of CVS Caremark payor clients spent less on their pharmacy benefit plan in 2017 than they had in CVS Caremark helped members reduce monthly out-of-pocket costs and improve adherence in key categories like diabetes, hypertension and hyperlipidemia. These lower costs, in turn, helped improve adherence in key categories such as diabetes, high blood pressure and high cholesterol. For example, plan designs that promoted lower-cost options and targeted adherence interventions helped increase the percentage of members who stayed on their therapy and were optimally adherent to their medications by as much as 1.8 percentage points. When prescriber using real-time benefits information switched to a lower cost drug, the difference was approximately $75 per prescription Leveraging Biosimilars for Savings As the first major PBM to place a biosimilar on formulary, CVS Health placed Zarxio on our national formulary in 2017 to replace higher cost Neupogen. Prior to this action, only 3 percent of patients covered by our commercial clients were receiving Zarxio through the pharmacy benefit. By July of the first year, 91 percent of patients were receiving the lower cost Zarxio instead. Later, we followed up by placing the biosimilar Basaglar on our formulary to replace more costly insulin treatments and continue to evaluate adding other biosimilars to our formularies. 4 Innovative Approaches to Saving Patients Money on Prescription Drug Costs

5 Effective Public Policy Would Allow More to Be Done to Lower Prescription Drug Costs Mitigating rising prescription drug prices works best when there is competition in the pharmaceutical market and when barriers to develop innovative solutions are addressed. If implemented, a number of public policies would help reduce the rise of drug prices: Reduce the backlog: FDA must continue to address the generic drug application backlog in order to create additional competition in the market place and lower the cost of prescription drugs. Expedited review: FDA must continue its efforts to provide expedited review for drugs with no current competition. Biosimilars: Increase the availability of biosimilars to make lower cost options available. Reduce biologic exclusivity: Shorten the exclusivity period for biologics from twelve to seven years. Interchangeability: FDA should finalize industry guidance for biosimilars in order to create a clear and consistent approval pathway for these important products. Curb anti-competitive behaviors: Stop practices that delay entry of competitive products, including pay-for-delay. Pass the CREATES Act: Stop the misuse of Risk Evaluation and Mitigation Strategies (REMS). Allow generic and biosimilar manufacturers to obtain samples of brand drugs to generate generic competition. Strengthen health savings accounts (HSAs): Modify HSA rules to give high deductible plans the option to cover all prescription drugs including generic and brand drugs outside the deductible. Address the Anti-Kickback Statute: Allow plans and manufacturers to enter into value-based purchasing programs incentivizing medication adherence. For more information on how CVS Health is helping patients access and afford prescription drugs, visit: cvshealth.com/savingpatientsmoney. 5 Innovative Approaches to Saving Patients Money on Prescription Drug Costs