Formulary Management

A comprehensive formulary strategy is foundational to mitigating the impact of escalating drug prices, and the introduction of new high-cost therapies.

Innovative Formulary Design

Regardless of what managed formulary payors are currently aligned with, there may be opportunity to build upon it to help maximize savings. A well designed formulary strategy helps ensure members have access to clinically appropriate products while providing clients financial value and savings through preferred placement for generics, rebates and price protection.

In 2012, we were the first pharmacy benefit manager (PBM) to remove certain high-cost drugs from our Standard Formulary and give preference to lower-cost, clinically appropriate alternatives leading to cost savings for clients. New-to-market drug evaluations introduced in 2015 provide day-one control and further helped reduce costs by adding clinical review of the drug to determine whether it delivers value over existing alternatives. Our Hyperinflation Management Program, introduced in 2017, targets specific drugs with excessive year-over-year price increases when there are clinically appropriate, cost-effective alternatives available. We were first in market to move to prioritize biosimilars on our formulary for categories where these lower-cost alternatives are available. To help control rising specialty drug costs, we have also introduced indication-based formularies that tie a drug’s pricing and rebates to the value it delivers.

Our managed formularies are designed to minimize member disruption; less than 1.5 percent of affected members dropped off therapy after implementation of a managed formulary.1 By contrast, there was a 2 percent improvement in adherence.

Managed Formulary Options

Standard

Our Standard Formulary offers the broadest coverage of generic, brand and specialty medications of our three formularies. Updates are made at the beginning of the year with potential quarterly exclusions for hyperinflation and specialty products. It offers savings of 1 to 2 percent on pharmacy spending.

Advanced Control

Advanced Control Formulary covers select generics and brands and includes controls for specialty medications. Product and trend management strategies are updated quarterly. This formulary offers savings of up to 5 percent on pharmacy spending and an increase in generic dispensing of up to 1 percent.

Value

Value Formulary covers most generics, and select brands, including specialty medications, with tier exceptions or higher copays for non-formulary brands. Drug list and management strategies are updated quarterly. Value Formulary can deliver pharmacy spend savings of up to 8 percent and an increase in generic dispensing of up to 5 percent or more.

The Right Formulary Option Can Improve Generic Dispensing Rate, Lower Costs

Formulary management can raise GDR and lower PMPM costs

Data Source: CVS Health Enterprise Analytics, 2017.

Formulary management can raise GDR and lower PMPM costs

Data Source: CVS Health Enterprise Analytics, 2017.

Considerations for your business
  • Are your current formulary strategies helping you control cost?

  • Are you effectively managing the impact of new high-cost drug launches and maximizing savings from lower cost generics?

  • Could you save more by refining your formulary strategy?

Have a question about our Formulary Management programs?

Other Cost Management programs

Network Strategies

Our innovative network strategies help drive results. Results show that a strong managed network reduces redundancy, not member access. Our managed networks meet the unique access needs of each plan’s member population while helping to generate savings for payors.

Dynamic Trend Management

In this rapidly evolving market, our real-time surveillance and monitoring tools identify emerging trend drivers on an ongoing basis, allowing the development and implementation of solutions to control costs.

All our formulary offerings are based on careful clinical evaluation of therapeutic options and are designed to help deliver lowest net cost while helping ensure that members have access to the medications they need.

Unless otherwise noted, all data is sourced from CVS Health Enterprise Analytics. Savings results will vary based on a variety of factors including demographics, plan design and other programs implemented by the client. Client-specific modeling available upon request.

1. CVS Health Trade Finance, 2012 – 2017E