Don’t fall for the carve-out hype

Carving out specialty pharmacy perpetuates a fragmented system, compromises member care, adds administrative complexity that can negate any perceived savings and may even cost payors more in the long-term. The lofty promises of niche specialty vendors just don’t stack up against the proven performance of CVS Health’s integrated approach.

Joshua Fredell, PharmD, Vice President of Product Development, explains.

Video Transcript

JOSH FREDELL: Hi. My name is Josh Fredell, Vice President of Product Development with CVS Health. I'd like to take just a minute or two to talk a little bit about our findings around specialty carve-outs.

This is an important aspect today for all of our clients -- the appropriate management, both from a cost perspective and a care perspective, of specialty medications.

And because of that, we know clients are looking at many different approaches and vendors to do that. And as we look at the specialty carve-out vendor landscape, it's important to denote what is the activity that a given vendor is attempting to do?

And clearly, many are out there with a utilization management approach. And that's, of course, very important.

Controlling for appropriate utilization, both at the start of therapy and then throughout therapy, is an integral part of any good cost-management strategy, overall and especially in the specialty space.

Some carve-out vendors are specialized just around copay optimization, or really, alternate ways to obtain lower cost opportunities for clients and their members.

That could be through copay assistance, that could be seen through foundational support.

Which, of course, raises questions around is that even an appropriate program to use for a given member, since those programs are designed for those who do not have insurance, or very low coverage from insurance? So "is there an appropriate use of those programs?" is a key question to be asked around any vendor that's using foundation support.

And then international sourcing also offers potential savings opportunity, but raises questions around, can it be done successfully, and efficiently, and appropriately for members? There's still a lot of questions around that opportunity, but we see carve out vendors suggesting -- or at least advocating -- for that type of strategy for helping to manage costs.

But also, some vendors are very condition specific, either solely or as a part of what they do. That might be a very particular focus on the very rare, ultra-high-cost conditions, and the drugs that are used to treat those conditions. But we also see that in terms of being focused on the more common conditions in specialty space, whether it be rheumatoid arthritis or psoriasis, or even oncology.

All of these things are, of course, important. And all of these things are important to CVS Health in terms of how we approach our holistic cost management strategy.

Finally, there are carve-out vendors that look to do all of that. It's a full carve-out vendor, where they look to take all of those types of opportunities, including dispensing and adjudication of claims, outside of the current setup for the client.

This is today's landscape, and it really draws the question, does a client want a fragmented and separated approach, or one that's more integrated together, where they may be able to get the best from the cost management strategies? But also how those connect to connectivity and care opportunities for members and connectivity for physicians that are important.

As we've dug in and taken a closer look at the carve-out vendors, and the activities they do, and some of the results that they at least claim to create, some of our findings are, first, there's high program parity. Meaning we've not found a carve-out vendor that's offering a unique strategy that's not already deployed or able to be deployed for clients of CVS Health.

This includes utilization management, having stringent criteria that is designed both to make sure that the start of therapy is appropriate but also that is reassessing therapy over time, determining if it's not providing a clinical benefit, it should be stopped.

Also includes quality limits. Things designed to make sure that we don't see dose escalation or waste that happens throughout therapy after it's been started.

But again, we see program parity around utilization management, we see program parity around co-pay optimization. We see clients today within CVS Health saving considerable money through programs that take advantage of formulary, utilization management, copay optimization, and other elements already today.

And finally, we don't see parity, actually, in terms of connectivity. And I'll cover that a little bit more in just a few minutes.

We've also seen, in carve-out situations, an increase in member disruption. Members losing the ability to easily and efficiently obtain their prescription when it is necessary.

And that disruption, of course, creates issues in care management in the continuity of care for patients who do need these medications for important chronic and long-term conditions, both in the specialty space and outside of that.

So member disruption, certainly not anything we think any client wants to necessarily go towards. But we want cost management strategies that keep the member at the core as well, to take care of members while creating cost savings. And unfortunately, we have not seen that consistently for certain programs as clients carve out.

And then, the net cost remains unclear. We've seen claims of savings that are total savings, but not incremental savings for the client over what they're already achieving today. Or we see savings claims that assumes clients are going to take more aggressive approaches to formulary, or utilization management, or may start a new savings component, like through copay optimization, where they could be doing that already today.

And then finally, it's unclear if the savings is net of potentially additional fees that have to be paid for that program management, or additional costs to the client that may come from lower rebates being earned through that carve-out opportunity.

So these are all important aspects that need to be understood, assessed to make an appropriate decision for any client that's considering how do they get more out of their special cost management strategy. And is it really delivering unique strategies, is it taking care of the member and not creating undue disruption? And is it leading to true net cost savings, or is it just a repackaging of the same savings, and maybe even less savings, than what they're already realizing?

So I hope this has been helpful in terms of our view and what we've seen recently in our own findings around carve-out situations. Enjoy your day.