In 2017, CVS Caremark established a hyperinflation drug removals program to help rein in skyrocketing pharmaceutical costs for its clients. This program reviews drug price inflation on a quarterly basis and removes drugs with especially big price tags with lower-priced, clinically equivalent alternatives.
CVS Caremark’s hyperinflation drug removal program was able to save clients more than $15 per 30-day supply, spending $88.30 on average (per 30-day supply) compared to $102.58 for those on formularies without drug removals.
More than 3,400 drugs boosted their prices in the first six months of 2019; the average increase was 5X the rate of inflation. CVS Caremark was able to keep the impact of price growth to 3.1 percent despite drug price inflation of more than 25 percent the Bigger Picture.
Drug prices continue to rise each year. Whether it’s treatments that have doubled in price due to inflation or new, life-saving therapies that come to market at astronomical prices, costs have gotten out of hand and much of the burden is falling on payers and their members. In 2017, CVS Caremark established a hyperinflation drug removals program to help rein in skyrocketing pharmaceutical costs for its clients. This program reviews drug price inflation on a quarterly basis, and removes drugs with especially big price tags with lower-priced, clinically equivalent alternatives.
Hyperinflation Strategy Lowers Costs for Clients
According to a new research brief, CVS Carmark’s hyperinflation drug removal program was able to save clients more than $15 per 30-day supply, spending $88.30 on average (per 30-day supply) compared to $102.58 for those on formularies without drug removals. The research brief finds 44 percent of clients saw their net prescription drug prices decline. Two out of three members spent less than $100 out of pocket on prescriptions while adherence in key categories such as cholesterol, depression and diabetes increased.
The Bigger Picture
More than 3,400 drugs boosted their prices in the first six months of 2019; the average increase was 5X the rate of inflation. Sometimes these are different strengths of the same drug or the same drug at the same strength by a different manufacturer. In other instances, they are new to the market. The cost of these drugs is borne by payors and their plan members. And drug price inflation continues to happen throughout the year, not just at a specific point.
In 2018, CVS was able to keep the impact of price growth to 3.1 percent despite drug price inflation of more than 25 percent. Such strategies include hyperinflation drug removals — drugs that see very high price inflation or those with big price tags compared to clinically equivalent alternatives — as well as ongoing monitoring of data for suspected fraud, waste and abuse, and utilization and specialty guideline management.
5 Drugs Removed From Formulary
As part of CVS Caremark’s hyperinflation strategy, the company removed five drugs from their template formularies in April. Utilization of the removed drugs dropped by 99 percent in the months following the move. These removals are projected to save clients $0.38 per member per month or $4.60 per member per year.
For example, the muscle relaxant Chlorzoxazone, one of the removed drugs, costs an average of $2,903 for a 30-day prescription compared to an average cost of $1.76 for the alternative, cyclobenzaprine.3 We have since removed additional drugs that were significantly higher priced from our template formulary.
