CVS 2009 Annual Report Download - page 23

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PER LOFBERG
EVP of CVS Caremark Corporation
President, Caremark Pharmacy Services
LARRY MERLO
EVP of CVS Caremark Corporation
President, CVS/pharmacy
QUESTION: Larry, you mentioned the private-label
business. Why is that so important?
LARRY MERLO: Our private-label and exclusive brands in
the front of the store are somewhat like generic drugs in
the pharmacy. They offer the same quality as the national
brands, but they are priced lower. That offers customers
value while providing us with significantly higher margins.
These products accounted for close to 17 percent of
front-store sales in 2009, but we believe that this figure
can climb to as high as 20 to 25 percent.
QUESTION: With everything CVS Caremark is doing now,
are you still focused on opening new stores?
LARRY MERLO: Consistent with the past several years,
we opened 278 new or relocated stores in 2009, yielding
approximately 2 percent retail square footage growth.
We expect to open a similar number of locations each
year for the foreseeable future. Our continued retail
expansion in existing and new markets also enhances
our ability to reach more PBM plan members with
some of our newer offerings. Today about 75 percent
of the population lives within three miles of a CVS
store, and that number will continue to grow. In 2010,
we’re entering some new markets, such as Puerto Rico,
Memphis, and St. Louis.
QUESTION: Specialty accounts for the fastest-growing
sector in pharmaceutical spending today. How effective
has CVS Caremark been at reining in those costs?
PER LOFBERG: Our specialty business has long been the
clinical leader, providing programs that improve patient
engagement and better manage costs and health. Through
proactive outreach, we identify potential clinical and
compliance issues before they become a problem – both
prior to treatment initiation and throughout treatment.
Our Specialty Guideline Management program has saved
clients an average of more than $200 million in annual
avoided drug costs, which is about 6 percent of their
total specialty spend. So, we have a significant impact
on controlling their costs.
QUESTION: What is the rationale for CVS Caremark’s
investment in Generation Health?
PER LOFBERG: Clients are becoming interested in genomic
testing. One area is pharmacogenomics, which focuses
on providing the right drug and dosage to the right
patient. As one of Generation Health’s founders, I’m
obviously a big believer in the investment. It positions
CVS Caremark to take a leadership role in utilization
management of genomic testing.
QUESTION: Larry, we talked about Maintenance Choice
and some of the other value-added services you have
introduced in the stores that make the plan member
experience unique for CVS Caremark clients. Can you
also talk about the Consumer Engagement Engine?
LARRY MERLO: Absolutely. Once this is implemented across
all our stores, our pharmacists will be able to counsel
plan members more effectively and identify opportunities
aimed at improving their health and saving them money.
The Consumer Engagement Engine’s unique ability to
provide clinical information right at the retail pharmacist’s
fingertips will allow us to have an impact on adherence
and compliance sooner than any of our competitors. We
expect it to be a powerful competitive advantage.
2009 Annual Report 19