New CVS Caremark Report Projects Annual Specialty Drug Spending will Quadruple to $402 Billion by 2020

PRESS RELEASE

WOONSOCKET, R.I. (November 20, 2013) — A new CVS Caremark (NYSE: CVS) report released today projects that specialty drug spend is expected to more than quadruple by 2020, reaching approximately $402 billion a year. The Insights report on specialty pharmacy prescribing trends and strategies for managing costs also reports that while only a very small percentage of patients (less than four percent) use specialty medications, they account for 25 percent of health care costs. Specialty drugs treat complex diseases such as multiple sclerosis, rheumatoid arthritis, hepatitis C and cancer and represent a rapidly growing area of spending in health care.

“Specialty pharmacy trend is driven by price, mix and utilization, just like traditional drug trend, but managing specialty drug trend is more complex,” said Jon Roberts, president of CVS Caremark’s pharmacy benefit management business. “While many payors already have basic strategies in place to manage costs and ensure safe and effective use of specialty drugs, we have found that every plan has the opportunity to improve upon their management of this category.”

The report reviews foundational strategies for managing specialty drug trend and provides additional insights into key areas where CVS Caremark offers expanded services to improve cost savings for clients. These areas include: understanding the cost impact resulting from the location of drug administration for infused drugs (e.g., at the hospital, doctor’s office or at home), gaining visibility to the portion of specialty pharmacy spend billed under the medical benefit, and providing a full range of services designed to provide comprehensive care for the patient that can improve outcomes and reduce overall medical costs.

“Clinical appropriateness is the primary consideration when managing specialty pharmacy patients, but there are a variety of other factors that can also affect the optimal therapy choice for an individual,” said Alan Lotvin, MD., executive vice president of Specialty Pharmacy at CVS Caremark. “For example, the site of care where an infused drug is administered to the patient is one area that can significantly impact costs for the patient and payor without necessarily influencing the patient’s outcomes.”

Understanding the Cost Impact of Site of Care

Many specialty drugs for the treatment of conditions such as cancer, rheumatoid arthritis and multiple sclerosis are administered via infusion that can take place in a hospital, physician’s office, infusion center or even the patient’s home. Costs for both the drug and its administration can vary by thousands of dollars depending on where the patient receives the infusion. CVS Caremark offers programs that can help payors increase the utilization of more cost-effective sites of care for infused therapies.

Spanning the Pharmacy and Medical Benefit

Nearly half of specialty drug spend actually occurs under the medical benefit rather than the pharmacy benefit, where it can be harder to track and manage using clinical and cost management strategies. CVS Caremark offers clients management techniques to help capture and control spend billed under the medical benefit.

Providing Comprehensive Whole-Patient Care

Compared to the average patient, specialty patients are more likely to have multiple diagnoses, see more specialists, fill more prescriptions and have more lab tests, ER visits and hospitalizations. As a result, specialty patients have much higher overall medical costs, as much as 8.5 times higher than non-specialty patients. CVS Caremark provides a range of unique services designed to address these needs and help streamline care management for both the patients and their physicians in order to help improve health outcomes and avoid unnecessary costs for patients and payors. Services include:

• New program to be rolled out in 2014 that will enable specialty pharmacy patients to access our full suite of specialty pharmacy services through their local CVS/pharmacy store. The patient’s local CVS pharmacist can accept their prescription and connect them with the support services available through the CVS Caremark specialty pharmacy
• Expert care provided by CVS Caremark therapy-specific Specialty CareTeams who work with the patient to monitor outcomes and side effects, encourage medication adherence, and assist with refills, prior authorizations and benefit verification.
• Complete patient management available through a care management program for rare diseases. Care management nurses help patients manage non-pharmacy issues related to their condition in coordination with the patient’s health care provider and the CVS Caremark CareTeam.

Access the full 2013 Specialty Trend Management Insights Report in the publication section at the following link: www.cvscaremarkfyi.com/insights-2013