Creating the Right Environment for Value

Value-Based Pharmacy Management

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August 15, 2017
Executive Vice President and Chief Medical Officer, CVS Health

Value-based management strategies can help ensure a sustainable future for the pharmaceutical and health care market and enable payors to control costs, while providing an affordable benefit to their plan members. However, certain controls and parameters — guardrails — are essential to ensuring that payors benefit from such strategies and can derive maximum value for their prescription drug spend. To be successful, value-based approaches must be tightly managed with key cost control measures in plan design, pharmacy network, and formulary, to ensure utilization of the right drug at the right time for the right patient.

When considering whether, and what, value-based management approach will help meet the cost control goals and the needs of their member population, payors need to consider a few key elements.

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Managed Networks
Managed pharmacy networks are similar to networks of hospitals or providers within a medical plan — members and payors spend less when in-network providers are used. Taking the concept a step further, physician networks and accountable care organizations comprised of select groups of doctors focus on improving outcomes. The parallel to this in pharmacy benefit management (PBM) is performance-based pharmacy networks, which are built around pharmacies that agree to meet certain clinical standards. A performance-based network implemented as part of a value-based management approach can help payors address key clinical and wellness goals.

Such networks can be designed around different outcomes such as improved adherence to medication therapy or compliance with test recommendations. Pharmacy reimbursement can be linked to achieving such outcomes, driving incremental value and helping payors realize their overall cost control goals.

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Mandatory Use of Specialty Pharmacy
Chronic and complex conditions are among the most difficult and expensive to manage. Every specialty patient faces unique challenges along their own, individual disease journey. And more often than not, retail pharmacies may be unable to offer the support and counseling that such patients need. Many retail pharmacies don’t even carry all specialty medications, and only 38 percent are confident that they can fill specialty medication prescriptions in a timely fashion. As a result, patients who begin specialty medication therapy at a retail pharmacy often fall off therapy after the first fill. Patients who were transferred from a retail pharmacy to a specialty pharmacy with delivery options were 17.5 percent more likely to refill their first prescription. Every time a patient needs a refill, there is the possibility that they will become non-adherent.

To help mitigate the risk of non-adherence, value-based approaches often use a specified level of adherence as a pre-qualifier for the measurement of other treatment outcomes such as better A1C control for diabetes, or prevention of adverse events. To realize these outcomes goals, payors must align with a specialty pharmacy network, such as CVS Specialty, which has trained clinicians who proactively offer patients support for complex conditions, manage comorbidities, counsel about side effects, and can intervene when appropriate to help patients stay on therapy or complete their treatment. Patients with access to CVS Specialty and care management saw an average of 5 percentage point increase in medication possession ratio compared to those using a retail pharmacy only.

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Standard Utilization Management Criteria
High-cost brand drugs are driving a significant percentage of year-over-year pharmacy spend. These products are often backed by large amounts of direct-to-consumer (DTC) advertising to encourage utilization and brand loyalty. Utilization management (UM) programs incorporated into plan design can help ensure that the right patient gets the right drug at the right time despite DTC messaging. By implementing tools such as prior authorization, step therapy, and clinical diagnosis review according to standard, recommended UM criteria, payors can help ensure that they are paying for the most cost-effective treatment and achieving the cost control goals of their value-based approach.

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Managed Formularies
A key goal of value-based management is controlling prescription drug spend, and such approaches can include price protection and trend guarantees. Managed formularies are the foundation of trend control, and are critical to meeting such guarantees. Formularies such as the CVS Caremark Standard Formulary encourage utilization of the most cost-effective, clinically appropriate treatments and enable better rebate and pricing negotiations with the manufacturers. CVS Health passes on the vast majority of rebates directly to its PBM payor clients. This can help payors manage, and lower, their prescription drug spend. Custom formularies, or those providing options to opt out of UM criteria within therapy classes, reduce the ability to negotiate better drug pricing and rebates, and generally cannot deliver the same cost controls.

Additional formulary measures such as a preventive drug list and point-of-sale rebates can help plans that choose a high deductible design support their value-based management goals by mitigating the out-of-pocket cost impact on members so that more of them stay on therapy.

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Better Outcomes at Lowest Net Cost
Formulary and plan design that favored lower-cost alternatives and included tighter pharmacy networks were the first steps toward a true value-based health care and prescription drug landscape. While the transition may take a long time and a conversion to an entirely value-based pricing and management model may never happen, the newer, value-based approaches build on the innovative thinking of those early steps. But they require change — a change in the way drugs are priced, dispensed, and how we pay for them. They also require us to rethink our approach to the traditional “open” model of health care. Implementing these “guardrails” can help move us closer to the ultimate goal of a true pay-for-performance system that delivers better outcomes while helping lower health care costs for payors.

Want to learn more about value-based management approaches? Ask Us
August 15, 2017
Executive Vice President and Chief Medical Officer, CVS Health

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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.