Reducing Wasteful Spend on High-Cost, Low-Value Drugs

Hyperinflation strategies netted significant savings in 2021

BRIEFING
May 19, 2022
Vice President & Head of PBM & Specialty Product Innovation

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. Research shows that drug prices are not increasing at the rate seen in previous years, but many are hyperinflated: New products enter the market at a high price, and many have lower-cost alternatives.

Money spent on these “hyperinflated” drugs is wasted spend for clients and their members: They offer no clinical advantage over lower-cost medications and lead to higher costs for everyone.

We regularly surveil the marketplace and have observed unjustified price hikes, different formulations or varied dosing recommendations for existing drugs. We update our template formularies quarterly to remove these hyperinflated drugs.

Last year, we identified and removed 35 hyperinflated drugs from our managed formularies. One of the drugs removed — a certain brand of meloxicam — cost on average $1,152.86 for a 30-day supply, compared to just $2.17 for the preferred alternative. A second example is topiramat: The brand removed carried a cost of $876.96, versus the preferred alternative at $11.84.

These removals resulted in a significant percent drop in utilization. CVS Caremark's hyperinflation strategy could reduce client spend on meloxicam alone by more than 99 percent.

CVS Health helped clients save $768.1 M in 2021 – a savings of $22.97 per member per year – with our hyperinflation strategyCVS Health Analytics, 2022. Saving projections based on pre-rebate spend for commercial clients for all hyperinflation exclusions occurring in 2019, 2020 and 2021. Actual results may vary depending on benefit plan design, member demographics, programs implemented by the plan and other factors.

Our hyperinflation strategy works in tandem with other strategies to reduce wasteful spend:

BRIEFING
May 19, 2022
Vice President & Head of PBM & Specialty Product Innovation