Leading the Evolution of the Specialty Model€¦ · Education Transportation Support Comorbidity Management Emotional and Social Support CVS Specialty Support 250+ Specially-Trained

Leading the Evolution

of the Specialty Model

Alan Lotvin, MD

Executive Vice President, CVS Specialty

2

Agenda

Performance Highlights

Integrated PBM + Specialty: Needed Now More Than Ever

Continuous Innovation to Provide Maximum Value to Stakeholders


CVS Health Continues to Grow in Specialty

3

CVS Caremark Managed

2013 2014 2015 2016E 2017E

40

3022

5159

Growth

Opportunity

CVS Specialty Dispensed

Refer to endnotes for additional information.

CVS Specialty Revenue($, billions)

CVS Health Continues to Grow in Specialty

4

2013 2014 2015 2016E 2017E

19%Industry

CAGR

29%CVS Specialty

CAGR

2720

14

3237

CVS Specialty Dispensed

CVS Specialty Dispensed Revenue($, billions)


25%

28%

35%

2%10%

Revenue from Specialty Drugs

30%

18%32%

3%

10%7%

CVS Specialty Growing Faster Than Nearly All Large Competitors

$98B

5

Specialty Pharmacy Share(dispensed revenue)

1200basis point lead for CVS Specialty

2015

Competitor A Competitor B Competitor C Competitor D All Others

2013

$63B

300basis point lead for Competitor


Multiple Contributors to Gross Profit Growth

18% 8%

31%

22%21%

25% (25%)

6

Gross Profit Growth (2012 to 2016E)

2012

Gross

Profit

CVS Caremark

Client Wins

Non-CVS

Caremark

New

Drugs

Generics Strategic

Acquisitions

Inflation Price

Erosion

2016E

Gross

Profit


Access to New Drugs Is Important Contributor to Performance

25 2526

2930

COMPETITOR A COMPETITOR B COMPETITOR C COMPETITOR D CVS SPECIALTY

7

Specialty Pharmacy Access to Limited Distribution DrugsLimited Distribution Launches Jan 2015 – Oct 2016

Competitor A Competitor B Competitor C Competitor D


8

The Enhanced CVS Specialty Operating Model Will Improve Physician Experience and Patient Outcomes

PhysicianService Center

Organized by

physician specialty

Centers of Excellence Organized by

patient condition

National Dispensing Network

Organized by

geography

Faster turn around times

and improved referral

conversion rates

Specialized patient

support

Reliability and cost

savings of ground

shipping

9

Agenda





Payor / Market IssuesPatient Issues

The Complexity of Patients and Market Requires Broad Set of Interventions

10

Spend across pharmacy and medical benefits

Multi-drug regimens

Clinical complexity

Pipeline of new drugs and indications

Emerging specialty

provider models

Biosimilars

Patients• Easy access to specialty medications

• Clinical support; drugs and conditions

• Financial assistance counseling

Value Our Stakeholders Are Seeking: Simplification

Physicians• Administrative simplicity

• High-touch service

• Visibility into adherence

Payors• Specialty spend management

• Clinical care for patients

• Greater value for spend

Manufacturers• Support adherence

• Data on real world use of products

• Formulary access

11

Patient Payor

Adherence

to All Drugs

Full Patient

Management

Easy, Local

Access

Price and

UtilizationManagement

Medical Benefit

Management

Site of Care Management

Our Integrated Model Enables Us to Meet the Needs of This Increasingly Complex Market

12

PBM + Specialty

Health Plan + PBM + Specialty

“Pure Play” Specialty Pharmacy

Retail Pharmacy

Patient Payor

Adherence

to All Drugs

Full Patient

Management

Easy, Local

Access

Price and

UtilizationManagement

Medical Benefit

Management

Site of Care Management

Our Integrated Model Enables Us to Meet the Needs of This Increasingly Complex Market

13

PBM + Specialty

Health Plan + PBM + Specialty

We’ve captured ~40% of market

growth since 2013


14

Agenda




Patients: Improving Care and Outcomes

Payors: Optimizing Total Spend


Complex Specialty Patients Drive a Large Portion of Health Care Costs

Members Using Specialty Drugs

Specialty Share of Total Health Care Costs

15

34%5%3%

14%

9%

8%

All other medical costs

All other drugs

Specialty condition: other medical costs

Specialty drugs

50% Not Related toSpecialty Condition

Our model leverages frequency of interactions to deliver broadest range of health improvement messages


Our Care Management Model Addresses More Than Adherence; Helps Reduce Overall Health Care Costs

16

Basic Specialty Model

Pharmacy Technician

Pharmacist

Support

Medication Management

Our Enhanced Model

Our Care Management Model Addresses More Than Adherence; Helps Reduce Overall Health Care Costs

17

Medication Management

Symptom Management

Self CareEducation

Transportation Support

Comorbidity Management

Emotional and Social Support

CVS Specialty Support

250+ Specially-Trained Rare Disease Nurses

Pharmacy Technician

Pharmacist

13xGreater engagement

Measurable Results of Our Care Management Model

18

Rapid client adoption: nearly 550 clients (~20% of clients) after two years in market

23%Fewer hospitalizations

7%Fewer ER visits

11%Reduction in total health care costs for managed conditions

CVS Specialty Proven ResultsOur Enhanced Model

Pharmacy Technician

Pharmacist

250+ Specially-Trained Rare Disease Nurses

~30%new autoimmune

patients start at retail

Our Specialty Connect Model Helps Improve Patient Convenience, Satisfaction and Adherence

Clinical Benefit

Delivery Choice

Highly Utilized Retail Channel

19Refer to endnotes for additional information.

Delivery Choice

Clinical Benefit


Clinical Benefit

Delivery Choice

Highly UtilizedRetail Channel

60Net Promoter

Score

20

54%Specialty Connect

users prefer pick-up

at CVS Pharmacy

or



Clinical Benefit

Delivery Choice

Highly UtilizedRetail Channel

11.4percentage point

improvement in adherence


Key Innovations Can Help Deliver Significant Value

Innovating

Specific bio-marker tests

inform best treatment

course

Monitors activity to identify

early signs of disease

progression

Promote adherence

at key points in care

Delivering

Nearly 60% of specialty patients have opted in to email and text notifications

22

9% increase in refills on time

Testing

Advanced Testing Wearable Technology Two-Way Text Messaging


23

Agenda





Payors: Optimizing Total SpendPayors: Optimizing Total Spend

The Value of the Integrated PBM + Specialty Model

24

250 basis points

CVS Caremark+ Exclusive

CVS Specialty

CVS Caremark+ Multiple Specialty

Pharmacies

$10Msavings per 1 million lives

60 basis point improvement in adherence

CVS Specialty Proven ResultsCost Per Utilizer Per Month


Comprehensive Management: Significant Savings Opportunities to Even the Most Sophisticated Clients

25

$7M

Medical Claims Management

$7M$1M

Specialty Formulary

$48M $1M

Site-Of-Care Management

$64 million savings per 1 million lives ~11% reduction in specialty drug spend

Prior Authorization

Across Benefits

Exclusive Network


Prior Authorization Provides the Richest, Most Timely Dataset for Specialty Management

Medical

Claim Patient

DemographicsDiagnosis

Billed

ProcedureDrug Code

Pharmacy

Claim Patient

Demographics

Diagnosis

(Inferred)Drug Code

Source Data Included

26

(days to weeks)

(near real-time)

Prior Authorization Provides the Richest, Most Timely Dataset for Specialty Management

Medical

Claim Patient


Billed

ProcedureDrug Code

Pharmacy

Claim Patient

Demographics

Diagnosis

(Inferred)Drug Code

Response

to Therapy

Prior

Authorization Patient


Clinical

Exam Data

Laboratory

Data

Source Data Included

Prescribed

Drug

27

(real-time)

(days to weeks)

(near real-time)

Utilization Is a Key Driver of Specialty Growth, Demanding Continued Innovation

28

Prior authorization across benefits

Enhanced rule sets

Today’s Solutions

Near-Term Innovations

Quantity edits

Step therapy and generics first

EHR integration ePA adoption

New clinical data

NON-

SPECIALTYSPECIALTY

2.2%

7.2%

Utilization Trend


Inflation and Higher Launch Prices Create Need for Innovative Management Solutions

29

Exclusion formulary

Plan design for generics and biosimilars

Formulary

Plan Design

Value-based plan design

Value-based contracting

8.7%brand price inflation

2015

~$170Kaverage annual price

last three approved

oral oncology drugs


Cost Drivers

30

Rich Biosimilar Pipeline Creates Savings Opportunities

BioXpressBiocon

(PRX-106) Protalix

ABP 710 (Amgen)

NI-071 (Nichiiko)

BOW15 (Epirus)

GS071 (Aprogen) Harvest Moon

PF-06438179 (Pfizer Sandoz)

Avasthagen

BioXpressTunex (Mycenax)

LBEC0101(LG Life)

CHS-0214 (Coherus) SB4 (Samsung Bioepis)

GP2015 (Sandoz)

FKB327 (Kyowa Kirin)

Harvest Moon GP2017 (Sandoz)

M923 (Momenta) Oncobiologics

SB5 (Samsung)

ABP501 (Amgen)

Biocon

BI

CHS-1420 (Coherus)

BioXpress(BOW050) Epirus

BioXpressLBAL (LG Life)

PF-06410293 (Pfizer)

Harvest Moon

MK-8808 (Merck)

ABP 798 (Amgen)

SB2 (Samsung Bioepis)

MabionCD20 (Mabion)

CT-P10 (Celltrion) BI 695500 (BI)

GP2013 (Sandoz)

PF-05280586 (Pfizer)

AP052 (Aprogen) Early phase

Preclinical

Filed Approval

12 months

Late phase Filed

18-24 months

Approval Launch

unknown

ETANERCEPT(Enbrel® $5B)

ADALIMUMAB(Humira® $8B)

INFLIXIMAB

(Remicade® $4B)

RITUXIMAB

(Rituxan® $4B)

Timeline


Integrated PBM + Specialty Model Produces Better Results

31

12%

26%

43%

63%65%76%

49%49%59%

Generic Dispensing Rate

CVS Specialty

Glatopa (Copaxone®) Imatinib (Gleevec®) Dofetilide (Tikosyn®)

Competitor Specialty Competitor Non-Specialty


Industry Specialty Spend

Management of Drugs Paid Under the Medical Benefit Remains a Significant Opportunity

Prior authorization across benefits

Today’s Solutions

Near-Term Innovations

Edit and reprice claims

Automated site-of-care

Medical rebates2015 2020E

36% of total

drug spend

55% of total

drug spend

Medical

Medical

Pharmacy

Pharmacy


0

100

200

300

400

500

600

0 50 100 150 200 250

# o

f C

laim

s

Remicade Claims As EditedRemicade Claims for Crohn’s Disease as Submitted Claims Over Max Dose

Billed Units (Dose)

Maximum Dose99%beforeediting

CVS Specialty Medical Claims Management Offers Significant Savings

33

0

100

200

300

400

500

600

0 50 100 150 200 250

# o

f C

laim

s

Remicade Claims as Edited Claims Over Max Dose

Billed Units (Dose)

Maximum Dose

Savings

510 claims at max dose

validated, appropriate dosage

99%beforeediting

CVS Specialty Medical Claims Management Offers Significant Savings

34

33%on edited claims

22%afterediting

Proven, in-market

operational programs

Access to all needed

data in near real-timeBroadest set of

capabilities

to manage

specialty spend

across benefits

Payor Value Proposition

35

Today’s Key Takeaways

Driving More Affordable, Accessible and Effective Care

In-market solutions with proven results that are lowering costs and

improving outcomes

Driving Outcomes

and Savings

Integrated retail/PBM offerings, such as Specialty Connect, provide

clinical support, unique flexibility and convenience to patients

Providing the Front

Door and the Last Mile

We’re the specialty partner of choice, even when we’re not the PBMBest Partner for PBMs

and Health Plans

Innovation, a balanced growth portfolio, and our enterprise assets will

enable CVS Specialty to remain the provider of choice

Positioned for L-T

Enterprise Growth

36

Integrated PBM and specialty provides better results for patients,

payors and physicians; addresses increasingly complex market needs

Integrated

Pharmacy Care

Leading the Evolution of the Specialty Model

37

EndnotesSlide 3

1. 2016E & 2017E values represent the mid-point of CVS Health internal projections.

2. Industry CAGR calculated 2013-2016 via Milliman report http://www.phrma.org/sites/default/files/pdf/milliman-specialty-

drug-forecasts.pdf.

Slide 4

1. Source 2013: Fein, Adam J., The 2013-14 Economic report on Retail, Mail, and Specialty Pharmacies, Drug Channels

Institute, January 2014, http://www.drugchannels.net/2014/03/2013-pharmacy-market-share-for.html.

2. Source 2015: Fein, Adam J., The 2016 Economic Report on Retail, Mail, and Specialty Pharmacies, Drug Channels

Institute, January 2016, https://3.bp.blogspot.com/-bUyVZq-

soCo/Vt4NxR7VCPI/AAAAAAAAJrE/HPqPo05Vixw/s1600/Top_10_Specialty_Pharmacies_2015.png.

Slide 5

1. Source: CVS Health internal data analysis.

Slide 6

1. Source: CVS Health internal data analysis of market information which includes all FDA approved limited distribution

specialty drugs between January 2015 to October 2016.

Slide 12

1. Source for percent of market: CVS Health internal data analysis using data from National Health Expenditure, Drug

Channels, and internal data.

Slide 14

1. Source: CVS Health internal data analysis of 2015 Blue Health Intelligence Commercial Specialty Drug Database.

38

EndnotesSlide 17

1. Source Greater Engagement: Judith Mueller Discusses (podcast), www.hpminstitute.org/content/wellness-and-disease-

management-podcast-industry-specialist-judy-Mueller.

2. Source of other metrics: CVS Health internal data analysis.

3. Savings will vary based upon a variety of factors including things such as plan design, demographics and programs

implemented by the plan.

Slide 18


Slide 19

1. Source Specialty Connect User Preference: Journal of the American Pharmacists Association 56 (2016) 47-53. January

2016, “The Adherence Impact of a Program Offering Specialty Pharmacy Services to Patients Using Retail Pharmacies.”

2. Source Net Promoter Score: CVS Health internal data analysis.

Slide 20

1. Source Adherence Improvement: Journal of the American Pharmacists Association 56 (2016) 47-53. January 2016, “The

Adherence Impact of a Program Offering Specialty Pharmacy Services to Patients Using Retail Pharmacies.”

Slide 21

1. Source Increase in Refills: CVS Health internal report, Refill Reminders Value Study, using Specialty digital and PBM data,

October, 2014 – July, 2015.

2. Source of Adoption Rate: CVS Health internal data analysis, analysis of SMS and email alert signups. CVS Health uses

and shares data as allowed by applicable law, our agreement and our information firewall

39

EndnotesSlide 23




Slide 24




Slide 26

1. Source: CVS Health internal data analysis .



Slide 27

1. Source Inflation: CVS Health internal data analysis.

2. Source Annual price: Medispan data.

Slide 28

1. Source Biosimilar Study: QuintilesIMS Institute, March 2016 report, page 14, “Delivering on the Potential of Biosimilar

Medicines.”

2. Source Brand Sales: Evaluate Ltd. Annual USA Product Sales Summary, 2015; report date: 12/01/16.

3. This slide contains references to brand-name prescription drugs that are trademarks or registered trademarks of

pharmaceutical manufacturers not affiliated with CVS Health.

40

EndnotesSlide 29

1. Source: CVS Specialty internal data analysis.

2. This slide contains references to brand-name prescription drugs that are trademarks or registered trademarks of

pharmaceutical manufacturers not affiliated with CVS Health.

Slide 30

1. Source Specialty Spend: CVS Health internal data analysis of National Health Expenditure and Artemetrx reports.

2. Source Total Drug Spend: “Medicines Use and Spending in the U.S.” IMS, April 2016.

Slide 31


Documents

Leading the Evolution of the Specialty Model€¦ · Education Transportation Support Comorbidity Management Emotional and Social Support CVS Specialty Support 250+ Specially-Trained