Controlling Costs for Clients and Plan Members

For most clients, cost control is a top priority. With the rise of high-deductible health plans and ever-higher drug prices, helping keep drugs affordable for members, thereby supporting better quality of care, is also critical. And clients have to balance both these priorities in a rapidly evolving landscape where the price of drugs has been center stage in a wider conversation about how to stem the rising cost of care in our country.

In 2018, pharmaceutical manufacturers toned down the aggressive price increases that have been a pattern for years. However, drug price inflation – at about 8 percent – continued to significantly outpace the U.S. consumer price index, which was about 2 percent. Pharmacy benefit management (PBM) strategies blunted the impact of these price increases for our clients. For non-specialty drugs, contribution of price growth to trend was 4.2 percent. For specialty drugs, price growth contributed 1.7 percent to trend. Overall, 44 percent of clients actually saw their net drug prices decline. 

Lower net prices helped reduce costs for members as well as clients. Our analysis shows that member out-of-pocket prescription costs have declined for six straight years. In that period, medical costs increased by 14 percent while members’ costs for a 30-day prescription declined by more than 8 percent. In 2018, two out of three members who used their pharmacy benefit spent less than $100 out-of-pocket on their prescriptions. 

Managing specialty costs continues to be a challenge. In 2018, specialty drugs accounted for only 1 percent of prescription claims, yet accounted for 45 percent of costs. With little competition in the sector to help deter price increases and a robust pipeline that continues to fuel rising utilization, specialty pharmacy requires a tight management approach that utilizes multiple strategies. In 2018, plans that adopted two or more management strategies were able to reduce spending growth by half or more. 

CVS Health has an ongoing focus on reducing costs and improving quality of care. From 2016 to 2018, our management resulted in client and member savings of more than $141 billion, equivalent to 30 percent cost avoidance on pharmacy spend. By keeping drugs affordable for members and providing targeted interventions as well as prescription management tools, we also helped improve medication adherence among members. We calculate that the adherence improvements added an incremental $18.3 billion in savings in overall medical costs. 
 

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