CVS Caremark 2012 Insights Report Reviews PBM Trends

Each year CVS Caremark analyzes drug trend performance for our pharmacy benefit management (PBM) clients (e.g., employers, health plans, third-party administrators and government-funded plans) and makes this information available in our annual Insights report. Insights 2012 provides an overview of drug trend performance for each business segment and also highlights key factors influencing pharmacy care including the implementation of health care reform; marketplace shifts that are impacting drug utilization, mix and price; and recent research that is helping us better understand the health care landscape.

Economic uncertainty and persistent unemployment dampened health care utilization in 2011 – members chose to ration their health care costs in response to a sluggish economy resulting in fewer doctor visits and fewer prescriptions.  The changing drug mix also pushed trend down with many blockbuster branded drugs facing generic competition for the first time.  The availability of these new generics helped push GDR higher in 2011, but economic pressures also contributed to the increase with price-sensitive consumers and cost-conscious payors turning to generic drugs for cost-savings.

In 2011, this low utilization of drugs combined with a high generic dispensing rate (GDR) worked to drive drug trend down.  The drug trend for CVS Caremark’s commercial clients was 2.1 percent for employers and 2.2 percent for health plans.  At the same time, GDR for the company’s book of business grew to 74.1 percent due to the combination of a stream of patent expirations for blockbuster branded drugs and the company’s successful implementation of formulary and plan design strategies to encourage the use of cost-effective generic drugs.

Overall, price was the largest driver of trend in 2011 for CVS Caremark commercial clients with Average Wholesale Price (AWP) per day trend showing price increases across both specialty and non-specialty branded drugs.  In fact, since 2007, brand drug price inflation has increased 27 percent.  Another trend driver in 2011 was continued growth in the utilization of complex and expensive specialty drugs.  CVS Caremark specialty drug trend ranged from 16.5 percent for employer clients to 19.1 percent for our health plan clients. Our book of business analysis shows that while specialty drugs may make up as little as 2.5 percent of a payor’s total prescriptions, they can add up to 31 percent of overall pharmacy spend. Over the next few years the impact of specialty drugs on pharmacy spend will continue to grow as more specialty drugs enter the market and higher cost per unit prices continue. 

For more information please access the full 2012 Insights Report at the following link: http://www.cvscaremarkfyi.com/2012Insights