Hyperinflation

Helping Mitigate the Impact of Price Outliers.

The pharmaceutical market continues to evolve at a rapid rate and trends continue to emerge — from new therapies that come to market at astronomical prices, to ongoing expansion in supplemental indications. Another trend to emerge in recent years are hyperinflated medications — those either experiencing double-digit, year-over-year inflation or that are exponentially more expensive than a readily available lower-cost alternative with a price not supported by evidence of greater clinical efficacy. Ensuring that plan members start on the most appropriate, clinically equivalent, lower-cost option right from the beginning of treatment, can help save plans money.

In some instances, hyperinflated drugs are different strengths of the same drug, or the same drug at the same strength by a different manufacturer. As an example, one brand of extended-release metformin cost more than $620 for a 30-day supply compared to just $3.43 for the preferred alternative. Clients with the hyperinflation strategy could reduce their spend on that single product by more than 99 percent.

In other cases, the drugs are new to the market. The cost of these drugs is borne by payors and their members. And drug price inflation continues to happen throughout the year, not just at a specific point.

Hyperinflation Strategy Lowers Costs for Clients

Launched in 2017 to target drugs seeing very high inflation from one year to the next, we expanded our hyperinflation strategy in 2019 to target price outliers within a therapeutic category for even better cost control.

In 2019, the CVS Caremark client strategy resulted in an overall savings of $390.8M.

We continually review and identify drugs that are seeing high price increases and those that are outliers based on price, including new market entrants, and remove such therapies from our managed formularies. From January to July 2020, we identified and removed 57 hyperinflated drugs from our template formularies.

The flexible approach and ongoing removals – rather than annual – help ensure that clients can stay ahead of rapidly changing market trends, rather than simply reacting to market changes. 

Want to learn about how our strategies to mitigate hyperinflationary drugs can help manage costs? Ask Us