CVS Caremark Reports Traditional Drug Trend Increased by Just 0.8 Percent in 2013 While Overall Prescription Drug Trend is Up 3.8 Percent

PRESS RELEASE

WOONSOCKET, R.I., April 10, 2013 /PRNewswire/ -- CVS Caremark (NYSE: CVS) today released its annual Insights report, which reviews drug trend and highlights key issues in pharmacy care. In 2013, prescription drug trend grew 3.8 percent compared to nearly flat growth (0.1 percent) in 2012. This growth was driven by significant price inflation for traditional brand drugs, specialty drugs and generics as well as a significant increase in utilization as members filled more prescriptions in the slowly improving economy. The CVS Caremark Insights report analyzes these trends and outlines a number of strategies health care payers can adopt to help manage prescription drug spending. Prescription drug trend is the measure of growth in prescription spending per member per month. Trend calculations take into account the effects of drug price, drug utilization and the mix of branded vs. generic drugs.

While spending for traditional medications was up just 0.8 percent in 2013, this compares to a trend that actually declined 3.8 percent in 2012. The driver of overall trend in 2013 was specialty medications which grew by 15.6 percent. Specialty drugs treat more complex diseases such as multiple sclerosis, rheumatoid arthritis, hepatitis C and cancer. Overall, specialty drugs now represent nearly 22.5 percent of total drug spend among CVS Caremark clients, a relative increase of more than ten percent in a single year.

"As our clients are faced with the pressure of rising prescription drug trend, CVS Caremark is well-positioned to help them manage this impact through a variety of unique programs that encourage the use of lower-cost generics; improve the management of specialty medications across the medical and pharmacy benefit and site of care; and control price inflation through aggressive formulary management and use of narrow networks," said Jon Roberts, president of CVS Caremark's pharmacy benefit management business.

The company also reported a record generic dispensing rate (GDR) of 81.4 percent in 2013. While the generic pipeline is dwindling over the next few years, CVS Caremark analysis indicates that not every client has truly maximized their existing generic opportunities, leaving continued room for improvement and savings.

"This year's Insights report outlines seven sure things that our clients should keep in mind," Roberts added. "These include: prescription trend is up, generics have peaked, specialty drives trend, price is king, money matters to members, adherence is the answer and past performance is no guarantee of future results. This is not just a catchy list of factors that impact drug trend, these are key concepts for our clients to consider when determining how to maximize their prescription drug benefit in the complex and changing health care landscape."

The Insights report highlights five specific strategies to help clients save money and improve the health of their patients in the years ahead:

• Double Down on Generics: Analysis of generic utilization, managed formulary options and new specialty generics can help slow overall trend.
• Look Across Benefits at Specialty: Recent research commissioned by CVS Caremark found transitioning targeted specialty medication spend from the medical to the pharmacy benefit can save an average of 19 percent.
• Tackle Price: Narrow pharmacy networks can help lower costs for payers, particularly when combined with convenient options like mail service delivery.
• Be Strategic About Cost Share: Member cost-share can affect where prescriptions get filled, which drugs members ask for and even if members fill their prescriptions. Clients should align their cost-share strategies with their overall plan goals and provide support to help their members understand their prescription therapy.
• Keep the Big Picture in Mind: Helping members stay healthy can help reduce prescription trend and overall cost growth. In addition, managing the whole patient can help reduce hospitalizations, readmissions and emergency department visits, helping manage overall costs.

The CVS Caremark Insights report addresses prescription drug use for members with prescription benefits provided by CVS Caremark during the 2013 calendar year. The 2013 cohort studied includes 22.9 million members across the commercial segments (health plan and employer) as well as Medicare Part D and Medicaid plans.

Access the full CVS Caremark Insights report at: info.cvscaremark.com/insights-trend2014.