In discussing company’s drug spend report, CVS Caremark President Alan Lotvin, M.D., bats away criticism of the pharmacy benefits management (PBM) industry, blames drugmakers for high drug prices, and says independent pharmacies are doing well because of participation in “humongous buying groups.”
CVS Health said today that its pharmacy benefits management (PBM) division kept the growth of its customers overall drug costs to 2.4% during the first three quarters of last year by using a variety of measures, including a program that the company says combats the effects of copay assistance cards on formularies and plan design.
The company’s report says this is the fifth year in a row that the “drug trend” — growth in prescription drug spending on a per member per month basis — for its PBM customers has been in the single digits.
“The mandate from my customers is to lower the cost of drugs. That is what we do,” said Alan Lotvin, M.D., president of CVS’ PBM, CVS Caremark, in an interview with Managed Healthcare Executive.® “There are all arguments in the world about PBMs doing this and PBMs doing that, and blah, blah, blah. The proof of the pudding is in the proverbial eating. Drug trend has been in single digits for years.”
Lotvin said the CVS drug spend report shows the value of the industry. “Fundamentally, in aggregate, drug pricing is lower than medical inflation, is lower than traditional inflation. Andit’s driven by all the things we do as industry, whether it’s negotiating unit prices, utilization management, driving (prescription of) generics.”
Lotvin’s spirted defense of the industry comes amid a drumbeat of criticism of PBMs that cast them as the secretive middlemen of the drug industry that make large profits by charging fees, collecting rebates and using a variety of other pricing tactics to their advantage. CVS Caremark, along with Cigna’s Express Scripts and United Health Group’s OptumRx, control roughly 80% of the PBM sector. Action by Congress and federal regulators has stalled. Last week, a tievote by Federal Trade Commission prevented a proposed study of PBM practices from going forward. But many states have passed legislation with the goal of reining in PBMs.
In the interview with MHE, Lotvin laid the problem of high drug costs at the feet of drugmakers. “When Enbrel came to market in 1997, it was $700 a month. It is now $7,000. So, I’m struggling a little bit there,” Lotvin said. “If manufacturers weren’t setting their prices at the point where human beings can’t afford them, then we wouldn’t have problem (of high drug prices).”
Lotvin also took aim at the ongoing criticism from smaller, independently owned pharmacies that PBMs are using their clout and pricing practices to effectively force them out of business. Lotvin said the smaller pharmacy businesses are trying to maintain an inefficient supply chain but also participate in buying groups. “These independent pharmacies are all part of humongous buying groups. So, they’re doing well. Are they doing as well as they were? No.”
The CVS drug trend report covers doesn’t include last quarter of 2021, but the report says the company doesn’t expect “meaningful change” when data from the fourth quarter is added. The report is based on data from 1,014 clients of CVS Caremark.
Expenditures on specialty drugs — medications for relatively rare diseases — make up more than half of the total spending on drugs. The CVS drug trend report says the company limited the specialty drug trend to 5.8% in 2021. Lotvin said in the interview with MHE it was the first time that the specialty drug trend has been in the mid-single digits. “Manufacturer-driven” drug price inflation has moderated, he noted, but Lotvin also credited CVS Caremark’s contracting and formulary policies and the entry of generics in specialty drug markets with slowing down the rise of specialty drug expenditures.
The company’s PrudentRx plan was also a “key contributor,” he said, and the company’s drug spend report shows that clients that signed up for the plan had, on average, a negativespecialty drug trend of 12.5% while clients that didn’t had positive specialty drug spend of 7.4%. PrudentRx has several features, among them a controversial “accumulator” that has the effect of keeping the portion of a drug’s cost that is covered by a copay assistance card from counting toward a member’s deductible or annual out-of-pocket limits. Drugmakers and some patient groups criticize accumulators as burdening patients with high drug costs that will limit access and hinder adherence. Lotvin and executives at other PBMs see the copay assistance as an end run around formularies and their efforts to steer patients and prescribers to cost-effective medications.
Here are some other notable points made in the CVS drug spend report: