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CVS Health’s Troyen A. Brennan, MD, MPH, brings attention to a unique specialty pharmacy model and value-based contracting.
The average annual retail price for popular specialty medications reached $52,486 in 2015, a 9.6% hike compared with 2014, according to a study from AARP and the Prime Institute at the University of Minnesota released in September 2017.
With drug prices soaring, can value-based pharmacy management models be the answer? Troyen A. Brennan, MD, MPH, executive vice president and chief medical officer of CVS Health, offers Managed Healthcare Executive (MHE) insight into this question, as well as thoughts on the opioid epidemic, the role of the PBM in helping to curb drug costs, and the market dynamics impacting healthcare.
Brennan: Recently, we announced an enterprise-wide effort and commitment to fight the national opioid abuse epidemic. Specifically, CVS Caremark is enhancing our opioid utilization management approach, which will:
CVS Pharmacy is expanding our drug disposal collection program by adding additional drug takeback kiosks in some of our pharmacy locations. In addition, we will strengthen pharmacist counseling for patients filling an opioid prescription at our pharmacies via a robust safe opioid use education program.
We are also providing funds to support non-profit, community-based opioid treatment and recovery programs.
Brennan: Biologics and other very expensive drugs are impacting our PBM clients. In fact, brand drug inflation was the primary contributor to our clients’ drug trend in 2016.
At CVS Health, our PBM employs a number of clinical tools, such as utilization management, formulary strategy, and network solutions that all help to lower drug costs and lead to better health outcomes. In addition, drug competition is key to lowering costs for our clients. When available, we encourage the use of generics over brand name drugs, which can result in enormous savings for not only our clients, but the entire healthcare system. Biosimilars also present a cost-saving opportunity as we will be able to benefit from the increased competition within each category where biosimilars are launched.
Biosimilar and follow-on biologics are included as a key component of our current 2017 standard formulary strategy, replacing higher-cost drugs within the categories. For 2017, we included the biosimilar Zarxio, replacing Neupogen, to decrease the risk of infection in patients receiving treatment for certain forms of cancer, and the follow-on product Basaglar, replacing the insulin Lantus, for the treatment of diabetes.
Brennan: There are a range of market dynamics that are driving up pharmacy costs and impacting health plans. For example, as the population ages, we are seeing growth in drug utilization, especially for more expensive specialty drugs. In addition, health plans are also experiencing increasing pressure to better manage (often expensive) drugs paid for under the medical benefit.
At CVS Health, we have a number of scalable solutions to address each cost driver for health plans, including formulary management, network strategies and medical claims management, which together produce substantial cost savings for health plans. For example, many health plans are taking steps to manage spend and utilization under the medical benefit, but the approach cannot be fully successful if it isn’t automated and coordinated with the pharmacy benefit. We have a technology that allows for automated, coordinated work flow across benefits, resulting in appropriate utilization as well as edits on dose and price on medical claims before they are paid. For a typical health plan client, this can produce real results, including savings of up to 19% for their specialty drug medical spend.
Brennan: Recently, we’ve seen a trend toward value-based pharmacy management models that tie drug reimbursement to the value it delivers instead of the drug’s sales volume or a pre-set price. Today, these models are more relevant than ever as drug prices and the cost impact to payers continue to rise-especially when it comes to specialty brand medications.
CVS Health is currently employing value-based management strategies in multiple drug categories, including therapies for autoimmune diseases. For example, our indication-based management strategies in autoimmune categories provide preferential formulary placement for the most cost-effective, clinically appropriate drug therapies in these classes-at the indication (instead of drug) level. This helps us maximize health outcomes for patients and minimize costs for payers by preferring the highest value drug option for that specific indication.
Brennan: Even though more consumers have access to healthcare, they are now paying for more of their healthcare out of their own pocket with the rise in high-deductible health plans. Compounding this is the fact that middle class wages are stagnating and cannot keep pace with consumers’ “out of pocket” healthcare costs. In addition, those with deductibles are more likely to forego important medical care, abandon their first prescription and are less likely to stay on their prescriptions.
Pharmacies are frequented by almost every American. They are also often where consumers first run into their deductible, or are exposed to out-of-pocket healthcare costs. Many times, medications are also the first line of defense in treating chronic or complex conditions-and taking those medications appropriately impacts patient outcomes and overall healthcare costs. These medications need to be affordable and as drug prices keep rising, pharmacy innovation can keep the patient at the center of their care, provide information about lower cost drug options, help people understand and navigate their benefit and give the consumer choice of where, when and how they want to get their medicines.
Tracey Walker is content manager for Managed Healthcare Executive.