CVS 'confident' it will replace revenue lost from tobacco sales

Since 2008, Dr. Troyen Brennan has served as executive vice president and chief medical officer at CVS Health Corp. Previously known as CVS Caremark Corp., the pharmacy chain operates 7,800 stores and nearly 1,000 walk-in clinics in 31 states under the MinuteClinic brand. He oversees the company's clinical and medical affairs strategies. Before joining CVS, Brennan was CMO at insurance giant Aetna and previously was CEO of Brigham and Women's Physicians Organization in Boston. He earned his medical degree, law degree and a master's in public health from Yale as well as a master's degree from Oxford University, where he was a Rhodes scholar. Modern Healthcare reporter Bob Herman recently talked with Brennan about CVS' decision to drop the sale of tobacco products at its stores, the growing role of retail clinics and the chain's mission to help patients manage medications and their costs. This is an edited transcript.

Modern Healthcare: CVS stopped selling cigarettes, cigars and other tobacco products last October. What are the results so far, and what has the reaction been?

Dr. Troyen Brennan: It has gone well, and the reaction has been positive. We saw our future in the industry and realized the sale of tobacco products was antithetical to healthcare. We guessed that the cost would be about $2 billion in lost revenue, but we hoped to make that up in the long term by developing more products that emphasize people's health. We also changed our name to CVS Health, which seems to have resonated with the public. Overall revenue is up as a result. We haven't replaced the loss in our retail stores associated with tobacco, but we're confident we will.

MH: Do you see other major pharmacy companies following suit?

Brennan: Unfortunately, no, we don't see other retailers following suit, even though we've developed evidence that demonstrates that when you eliminate tobacco sales from retail pharmacies, overall rates of smoking decrease—at least that's what we have found in Boston and San Francisco.

MH: Can you talk a little bit more about the products you hope will make up for the lost revenue?

Brennan: We're very interested in trying to add more products that contribute to people's health. We have begun to make some changes overall in the types of food we offer, and we'll continue to do that, as well as looking to products that emphasize health as well as beauty.

MH: What do you think is actually the biggest public health crisis right now?

Brennan: We still have to count tobacco as the biggest public health problem in the country—one that is solvable by getting people to stop smoking. The next one is the problem we have with weight. Obesity rates are way too high and are associated with very high rates of other diseases like diabetes, hypertension and coronary artery disease. So, when we think about a wellness approach, we're focusing on those issues.

MH: You've written a lot about patient-safety topics and overall healthcare quality. What are your current views of the patient-safety movement and the legal avenues patients have to deal with medical errors?

Brennan: The patient-safety movement is vibrant and developing a lot of good programs in hospitals and healthcare institutions. As a result, there have been a lot of good outcomes for patients. Regarding liability, that's not as substantial an issue as it was 15 or 20 years ago. I think people are less concerned about issues associated with malpractice somehow interfering with patient safety.

MH: What are your thoughts on Congress' move to repeal the sustainable growth-rate formula? Is the movement toward paying physicians for value instead of volumen something that is actually going to take hold?

Brennan: Getting rid of the SGR, if we were just going to be putting in fixes in every 18 months to two years, makes good sense, focusing on real policy around how physicians are paid. I think it's just part of what the administration and the federal government are doing overall, emphasizing payment for better outcomes and improvement in population management.

MH: CVS recently created a few more partnerships and clinical affiliations with health systems. What are the basics of these partnerships?

Brennan: A lot of them are based on our pharmacy and retail clinic outreach. We are committed to getting to about 1,500 MinuteClinics by 2017 and are on pace to do that. The clinics are providing good care for people who have acute and short-term illnesses, but we also see them slowly moving into chronic care. But we see chronic care as complementary primary care, where we're working directly with primary-care providers.

MH: How do those partnerships incorporate prescriptions and electronic health records?

Brennan: We're not the medical home, but we work closely with the medical home. To do that, we have to be able to share electronic health records, and that's the point of a lot of our affiliations with integrated delivery systems. We're reaching out to them and saying, “We can work with you. We can help provide better pharmacy care through our pharmacies. We can collaborate for the kinds of complementary primary care that MinuteClinics can provide, and as a result provide better care for all of your patients.”

We have over 50 of those affiliations now, and we'll continue to add to that number over time.

MH: What are some other areas CVS plans to invest in?

Brennan: Our other big move is that we have developed a large pharmacy drug program under Medicare, the so-called PDPs, and we'll continue to grow that program so that people who are on traditional Medicare are able to access the drug benefit. We've also added home infusion. Coram is the largest home-infusion company in the country, and we own that now. We'll continue to work on ways we can provide care for patients who are quite sick at home and need that service.

We'll also be making a lot of changes in the ways we help patients improve medication adherence. About 50% of patients with chronic illness aren't taking their medications six to eight months after their doctor started to prescribe them. We are in a good spot there, because we can improve quality and reduce cost by just making sure patients take their medications.

MH: One of the prominent issues in pharmacy involves some of the high-cost specialty drugs. We've seen this with hepatitis C and Sovaldi. How is CVS working to help manage these costs?

Brennan: That's what a pharmacy benefit management company does, and that's really half of what we do here at CVS—to take advantage of competition between pharmaceutical companies and try to reduce costs to the greatest extent possible. We also try to make sure that people on medications are using them according to evidence-based guidelines. We put into place utilization-management approaches that ensure the patients who need the drugs are getting the drugs, especially the very expensive drugs, but that we're not having patients unnecessarily use very expensive medications.