Eliminating Wasteful Spend on Hyperinflated Drugs

Mitigating the cost impact of overpriced medications

BRIEFING
June 17, 2021
Vice President, Product Development, CVS Health

Managing pharmacy spend can be a challenge for payors offering sustainable health benefits to employees while keeping costs low, as new medicines appear on the market regularly. We have observed unjustified price hikes, different formulations, or dosing recommendations for existing drugs. Money spent on these “hyperinflated” drugs is wasted spend for clients and their members because they offer no clinical advantage over lower-cost medications and lead to higher costs for everyone.

Helping prevent waste and unnecessary spending

As part of our commitment to help prevent waste and unnecessary spending, and to ensure appropriate utilization of medication, we remove hyperinflated drugs from our formularies that have readily available, clinically appropriate and more cost-effective alternatives. A flexible approach and quarterly removals — rather than annual reviews — help ensure that clients can stay ahead of rapidly changing market trends.

To further complement these strategies, we have weekly new-to-market (NTM) reviews assessing new drugs that are priced significantly higher than other clinically equivalent alternatives. When evaluating NTM products for inclusion in our formulary, we do not add drugs that have far higher prices than clinically appropriate alternatives in their therapeutic class.

The CVS Outlier Pharmacy Program is designed to proactively monitor and identify pharmacies with increased volume in claims submissions of certain drugs identified as hyperinflated. Such pharmacies are considered “outliers” because they have unusually high rates of dispensing high-cost drugs when clinically equivalent, lower-cost options are readily available.

Pharmacies are notified that they have been identified as having unusual dispensing patterns and are informed that they must correct such practices. If they continue the outlier practices, they can be subject to disciplinary action, up to and including termination of participation in our network, in accordance with contractual terms and applicable law.

CVS Outlier Pharmacy Program complements our comprehensive strategy to reduce the impact of hyperinflated drugs. It expands upon our ongoing monitoring and proactive identification of high-cost drugs to include pharmacies that are dispensing large volumes of such drugs to help ensure appropriate utilization.

Effective Formulary Management of Hyperinflated Drugs

Pictogram of a pill bottle and eyedrop bottle Lowered client spend by $1.2 billion*

Each quarter we review our CVS Caremark template formularies to identify hyperinflated drugs.

In 2020, our strategy to counter hyperinflation helped clients save money:

Checkmark We identified and removed 72 hyperinflated drugs, resulting in an 89 percent drop in utilization
Checkmark One of the drugs removed — a certain brand of fenoprofen — cost on average $2,644 for a 30-day supply compared to just $6.34 for the preferred alternative. Clients opting in to the hyperinflation strategy could reduce their spend on that single product by more than 99 percent
In 2020, we saved clients $629.9M through our hyperinflation strategies.

Our agile, data-driven hyperinflation and outlier pharmacy strategies include:

  • Weekly NTM reviews to assess new drugs with significantly higher prices than clinically equivalent alternatives
  • Ongoing identification of hyperinflated drugs and determination of appropriate formulary placement each quarter through our Formulary Management strategy
  • Monthly monitoring of our pharmacy network through the CVS Outlier Pharmacy Program to identify unusual or suspicious dispensing practices

This article from September 17, 2020, has been updated for 2021.

Want more information on how our hyperinflation strategy can help you control costs? Ask Us
BRIEFING
June 17, 2021
Vice President, Product Development, CVS Health

*2020 vs. 2018

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

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.

This page contains trademarks or registered trademarks of CVS Pharmacy, Inc. and/or one of its affiliates.

Image source: Licensed from Getty Images, 2020.