CVS 2012 Annual Report Download - page 5

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We’ve grown our PBM book of business by approxi-
mately 50 percent since 2010, delivering $24 billion of
net new business over this period. In the 2013 selling
season, we retained 96 percent of our book of business.
We also won well over $4 billion in gross new business
and approximately $400 million in net new business.
It’s worth noting that these gains came across customer
segments, including employers, commercial health
plans, Medicare Part D, and Medicaid.
Medicare has quickly emerged as a major payor for
prescription drugs in the United States, and our PBM
is currently a strong number three player in the Part D
market with roughly 6.5 million lives. This includes the
lives we serve through our SilverScript prescription
drug plans, as well as other lives where we serve as the
PBM for health plan clients. With baby boomers turning
65 at the rate of 10,000 people per day, along with their
growing utilization of prescription medications, we see
the Medicare market as an attractive growth area.
Managed Medicaid represents another critical growth
segment for us, as health care reform could add up
to 15 million new lives to Medicaid rolls in the coming
years. We are currently the clear leader in the Managed
Medicaid PBM market with an estimated 31 percent
share. We have continued to win new clients and have
also seen existing clients expand membership as states
move from a fee-for-service model. Our success is due
in part to our ability to tailor our programs and opera-
tions to support the unique needs of this segment.
Our specialty pharmacy business continues to grow
rapidly, with enterprise-wide specialty revenues of
more than $18 billion in 2012. The specialty market is
expected to grow to approximately $120 billion in 2016,
roughly double the size of the market in 2010. That
means that by late 2016, it could account for roughly
one-third of total pharmacy spend in the United States.
This rapid increase in specialty drug costs presents
challenges for our clients, so we have expanded our
capabilities to manage specialty trend across the entire
continuum of pharmacy and medical benefits. When
implementing our programs, which include Specialty
Guideline Management, exclusive pharmacy networks,
and site of care management, clients can save up to
12 to 16 percent on their specialty spend.
There is plenty of other good news coming out of our
PBM, from our collaboration with Aetna to our streamlin-
ing initiative. The latter, which involves rationalizing our
mail order pharmacies, streamlining operations, and
consolidating our claims adjudication systems, is on
track to deliver $1 billion in cumulative cost savings over
the five-year period ending in 2015.
CVS/pharmacy® gained share and outperformed
competitors on key metrics
Our retail business continued to fire on all cylinders in
2012, and we gained market share in both the pharmacy
and the front of the store. In fact, our retail share of the
prescription drug market has grown two percentage
points in the past two years to reach more than 21 percent.
We also far outpaced our peer group with 9.1 percent
growth in prescriptions dispensed. Even factoring out
the prescriptions gained during the Express Scripts-
Walgreens impasse, our underlying pharmacy growth
led the industry.
Our focus on excellence in patient care is a key driver
of our strong performance in the pharmacy. As part
of our patient care initiatives, our pharmacy teams
performed 72 million customer interventions in 2012.
Interventions like these keep our adherence rates well
above all other pharmacy retailers, helping our patients
stay healthy and driving savings for payors.
Another way in which we can control health care costs
is by moving patients to lower-cost, generic drug alterna-
tives when available and clinically appropriate. Given
that generics produce greater profits for us than branded
drugs, we can improve profitability even as we lower
costs for patients and payors. The opportunity for us
in this area remains significant for the next few years.
“ We’ve grown our PBM book of business by approximately
50 percent since 2010, delivering $24 billion of net new
business over this period.”
CVS CAREMARK 2012 ANNUAL REPORT
3