A Prescription for Better Diabetes Management

New RxZERO Plan Design Eliminates Member Out-of-Pocket Costs

WHITE PAPER
January 29, 2020
Executive Vice President and Chief Medical Officer, CVS Health
Senior Vice President, CVS Health and Chief Medical Officer, CVS Caremark
Vice President, Health Strategy and Innovation, CVS Health

Diabetes is one of the most prevalent chronic conditions in the U.S. and accounts for a substantial portion of the health care costs for the nation. Drug prices often make up a significant portion of the cost of treatment. Increasingly, as list prices and overall cost of care continue to rise, people with diabetes are shouldering a greater portion in the form of out-of-pocket costs.

For many, this poses an affordability — and therefore adherence — barrier. This can lead to poor outcomes and ultimately higher downstream costs.

Members who have high out-of-pocket costs, either because they are covered by a high deductible health plan (HDHP) or because they have substantial copayment or coinsurance costs, often struggle to afford the medications their doctors prescribe. As a result, their adherence to the care plan suffers, leading to the development of comorbidities and a worsening of their overall condition. Health services research has shown that in large populations of study subjects, higher out-of-pocket costs lead to lower adherence and poor health outcomes.Eaddy et al. How Patient Cost-Sharing Trends Affect Adherence and Outcomes: A Literature Review. PT. 2012 Jan;37(1):45-55.

Reducing or eliminating plan member out-of-pocket costs should be a central part of any plan to address the diabetes epidemic.

$467 average annual out-of-pocket per member for those taking brand antidiabetic medications*
~12% of members who use brand antidiabetic medications spend more than $1,000 out-of-pocket a year on all diabetes medications.*

$467
average annual out-of-pocket per member for those taking brand antidiabetic medications*

~12%
of members who use brand antidiabetic medications spend more than $1,000 out-of-pocket a year on all diabetes medications.*

A Comprehensive Solution

In the past, the focus of the discussion around affordability for diabetes medication has been on insulin. While insulin is an important component, that is too narrow. For people with type 1 diabetes, insulin is the cornerstone of treatment. But that accounts for only about 5 percent of all people with diabetes. Of the 95 percent of people living with type 2, less than a quarter require insulin treatment.

For people with type 2 diabetes, the first line of treatment is usually metformin — an inexpensive generic medication. If they do not achieve their target A1C levels with metformin, the next line of therapy, depending on the individual's clinical profile, is a sodium-glucose cotransporter 2 (SGLT2) inhibitor, a glucagon-like peptide 1 (GLP-1) receptor, or a dipeptidyl peptidase 4 (DPP-4) inhibitor. Our analysis indicates that the combined cost of SGLT-2, GLP-1, and DPP-4 medications to a plan sponsor is actually higher than that for insulin. That’s why any discussion of affordability should include the entire range of diabetes treatments.

How Our Zero Out-of-Pocket Solution Works

As we discussed, the average post-rebate cost of diabetes to a plan is $1,256 per year for every member taking an antidiabetic medication.** Average member out-of-pocket cost for all diabetes medications was $244.** (This is for members with any diabetes medication. Those taking a branded medication have higher costs – an average of $467 a year.) If we eliminate member out-of-pocket cost, the plan sponsor has to cover both the $1,256 in medication costs and the $244 in member cost they have forgone. Research shows that eliminating out-of-pocket costs for members improves adherence. Based on published findings, this increase in adherence costs the client an additional $51 per member per year.

However, this incremental cost can be offset in two steps:

Clients can save $170 per member per year by adopting our most cost-conscious, generics-focused, Value Formulary. It covers choices in each drug category and fully adheres to the American Diabetes Association standard. Value Formulary utilizes generics and preferred brand medications. It is the formulary CVS Health has adopted for its own employees, and many other large clients have as well.
Plan sponsors can also save money in overall medical costs because higher adherence – as a result of lower out-of-pocket costs – improves member health. Our Pharmacy Care Economic Model reveals that for every member with diabetes, who goes from non-adherent status to adherent, client health care costs drop by $2,202 per year. Applying these values to the entire member population, we estimate the value to the plan in improved adherence and lower medical costs is $156 per member per year.Roebuck MC et al. Medication adherence leads to lower health care use and costs despite increased drug spending. Health Aff (Millwood). 2011 Jan;30(1):91-9.

Put together, this lowers overall pharmacy costs for the client to $1,225. While this is not a huge amount of savings, it means clients can help their members better afford their medication, and improve health outcomes without raising premiums or deductibles.

RxZERO Can Also Lower Overall Costs for Payors

The lower overall cost for Payors is calculated by adding the 45.32 Post-Rebate Baseline Diabetes PMPY spend, plus $8.86 cost from Covering Member OOP Diabetes Expenses and $1.86 cost from Increased Medication Adherence; then removing -$6.18  Pharmacy Savings from Change to Value Formulary, and -$5.66 Medical Savings from Increased Adherence. This results in $44.20 Post-Zero OOP Diabetes PMPY Pharmacy Spend.
The lower overall cost for Payors is calculated by adding the 45.32 Post-Rebate Baseline Diabetes PMPY spend, plus $8.86 cost from Covering Member OOP Diabetes Expenses and $1.86 cost from Increased Medication Adherence; then removing -$6.18  Pharmacy Savings from Change to Value Formulary, and -$5.66 Medical Savings from Increased Adherence. This results in $44.20 Post-Zero OOP Diabetes PMPY Pharmacy Spend.

RxZERO takes away the need for members with diabetes to make difficult decisions about whether they can afford their medications. As our analysis demonstrates, it can also contain or even lower, costs for payors, without the perceived trade-off they had to make before of increasing deductibles and premiums.

Want to learn how RxZERO eliminates member out-of-pocket spend while also controlling plan costs? Ask Us
WHITE PAPER
January 29, 2020
Executive Vice President and Chief Medical Officer, CVS Health
Senior Vice President, CVS Health and Chief Medical Officer, CVS Caremark
Vice President, Health Strategy and Innovation, CVS Health

*CVS Health Analytics, 2020. P1003450120

**CVS Health Analytics, 2020. Based on 2018 claims for a representative group of 330 commercial clients who have not adopted a preventive drug list. P1003430120

The source for data in this document is CVS Health Enterprise Analytics, unless otherwise noted.

Adherence results may vary based upon a variety of factors such as plan design, demographics and programs adopted by the plan. Client-specific modeling available upon request.

Savings will vary based upon a variety of factors including things such as plan design, demographics and programs implemented by the plan.

CVS Health uses and shares data as allowed by applicable law, and by our agreements and our information firewall.

Image source: Licensed from Getty Images, 2020.

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