CVS 2008 Annual Report Download - page 11
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Please find page 11 of the 2008 CVS annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.in 2008. CVS Caremark has a solid
balance sheet and an investment
grade credit rating, and we maintain
a commercial paper program currently
backed by $4 billion in committed
bank facilities.
As noted, the U.S. economy is defi -
nitely in a recession and it will likely
last throughout 2009. We’ll feel its
effect to some degree, with growth in
script utilization slowing industry-wide.
Lower utilization, layoffs, and job loss
will affect our PBM business; however,
in a landscape where control of health
care spending is urgently needed,
our proven cost-reducing services and
the cost-effective care offered through
MinuteClinic should prove more valu-
able than ever.
Our share price certainly wasn’t
immune to the turmoil in the fi nancial
markets during the past year, but we
still outperformed the broad market
averages. Our shares fell 27.7 percent
in 2008, compared with the 38.5
percent decline of the S&P 500 Index
and the 33.8 percent drop in the Dow
Jones Industrial Average (DJIA). Over
the past fi ve years, on average CVS
Caremark shares returned 10.4 per-
cent annually. The S&P 500 and DJIA
had negative returns of 2.2 percent
and 1.1 percent, respectively, over
the same period.
Our Proactive Pharmacy Care
Offerings Are Gaining Traction
with PBM Clients
Looking at our PBM business, we’re
very pleased with the broad-based
enthusiasm among customers for the
groundbreaking new products and
services we have brought to market.
This was refl ected in the number of
sizable new contracts we won in the
latest selling season.
CVS Caremark is adding clients across
the PBM spectrum – from large- and
small-cap companies to government
entities and private insurers. We’re
achieving this by offering payors and
patients everything they have come to
expect from a top-rated PBM; however,
we’re also offering plan design options
and services that no standalone PBM
can match. Through the Proactive
Pharmacy Care offerings we began roll-
ing out in 2008, we’re giving consumers
easier access to their medications and
to the counseling they need, whether it
is through one of our mail pharmacies
or at one of our more than 6,900 stores.
By helping patients adhere to their drug
therapies, we’re lowering overall health
care costs and improving outcomes.
You can read about specifi c Proactive
Pharmacy Care offerings, such as
Maintenance Choice and integrated
specialty, elsewhere in this report.
Let me note, though, how pleased we
are that over 200 clients have already
committed to offering Maintenance
Choice to their more than 2 million
covered lives.
Specialty pharmacy and our Medicare
Part D Prescription Drug Plan (PDP)
business are also part of our PBM seg-
ment. The past year marked our 30th
anniversary in specialty pharmacy,
our industry’s fastest-growing sector.
In fact, specialty pharmacy accounts
for approximately 20 percent of the
money spent on prescription drugs in
the United States even though these
medications are used by only a small
fraction of the population. Payors need
help managing these costs and CVS
Caremark is the clear category leader.
Based on prescriptions we fi ll or man-
age, we have a 27 percent share of the
$38 billion specialty market address-
able by PBMs and drug retailers. Still,
we currently provide specialty services
to only 60 percent of our PBM cus-
tomers. The ability to cross sell to the
remaining 40 percent represents an
important opportunity for growth.
Medicare Part D continues to play a key
role in ensuring that seniors can afford
the prescriptions they need. We’re a
major factor in this arena through our
SilverScript® and RxAmerica proprietary
PDP plan offerings and as a provider
of PBM services to these plans and to
PDPs sponsored by others. Through our
PDPs and related PBM activities, we
expect to cover approximately 1.5 mil-
lion lives in 2009.
“ CVS Caremark is adding clients across the PBM spectrum – from large- and small-cap
companies to government entities and private insurers. We’re achieving this by offering payors
and patients everything they have come to expect from a top-rated PBM; however, we’re also
offering plan design options and services that no standalone PBM can match.”
2008 ANNUAL REPORT 7