CVS Health said it has worked out a way for employers and insurers to cover the out-of-pocket costs of their members' diabetes medications while also saving money.
Despite shouldering the added cost of their members' drugs, CVS' pharmacy benefit manager, CVS Caremark, said its clients will ultimately save money through its new plan, called RxZERO. CVS claimed the savings will come from a combination of adopting its formulary that steers patients toward generic drugs as well as simply having less expensive members.
"Eliminating out-of-pocket costs for diabetes medications ensures long-term affordability, improves adherence, and most importantly, puts patients on the path to better health," Dr. Troyen Brennen, CVS' chief medical officer, said in a statement.
CVS broke out how it ran the numbers in a white paper. CVS said the average health plan spends $1,256 per year—after PBM rebates—for every member taking a diabetes medication. The company estimates those plans would spend an extra $244 annually for covering each member's out-of-pocket costs for diabetes medications, and $51 more annually for each members' additional diabetes medications.
But the healthcare company said its PBM clients would save $170 per member per year by switching to its value formulary, which covers drugs in line with American Diabetes Association guidelines. It claimed they would save another $156 annually per member through increased medication adherence. Research has shown that higher out-of-pocket costs result in lower adherence to medications and worse health outcomes.
Ultimately, that works out to $1,225 in annual spending for every member who takes a diabetes medication, $31 less than before RxZERO.
"While this is not a huge amount of savings, it means clients can help their members better afford their medication and improve health outcomes without raising premiums or deductibles," CVS wrote in the white paper.
The formulary includes insulin and medications for patients with type 2 diabetes, such as metformin.
CVS said it's too early to tell whether more employers and insurers will adopt the value formulary, as it's "early in the selling season," company spokesman Trey Hollern wrote in an email. The company is just beginning to discuss options with clients for 2021.
CVS Caremark has offered the value formulary since 2012. It covers most generics and select brands, including specialty medications, with tier exceptions or higher copays for non-formulary brands. CVS claims the formulary, which it has adopted for its own employees, can deliver pharmacy savings of up to 8% and increased generic dispensing.
CVS recently joined other pharmacy chains to sue three drugmakers for allegedly preventing generic competition from hitting the market, allegedly resulting in billions of excessive spending.
Dr. Robert Levin, president of the Alliance for Transparent and Affordable Prescriptions, said anything that lowers patients' out-of-pocket costs and promotes generics is a good thing. However, the Clearwater, Florida-based rheumatologist blamed pharmacy benefit managers for driving up drug costs in the first place through a system of kickbacks from drugmakers in exchange for placing their drugs on formularies.
"The thing is that by the way they do business, the PBMs put upward pressure on the whole price of drugs in our system," Levin said. "The PBMs are a lot to blame for what's going on, as are the manufacturers."