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CVS Caremark Keeps Heat On Drug-Maker Discount Cards

By Jon Kamp Of DOW JONES NEWSWIRES CVS Caremark Corp.'s (CVS) pharmacy-benefit business is prepared to escalate a campaign against drug-industry coupons that the company says encourage unnecessary use of expensive brand-name drugs. The Woonsocket, R.I., firm's push against so-called "copay cards" has highlighted rising tension between benefit managers that make more off money generic drugs, and drug makers trying to keep patients on the brand-name versions. The increasingly popular cards give patients a break on higher copays for branded drugs at the pharmacy counter. But because health plans typically foot most of the bill, they can get pinched by higher costs behind the scenes. CVS Caremark, which has the second-largest pharmacy-benefit business after Express Scripts Holding Co. (ESRX), has been particularly active in trying to short-circuit the cards' effectiveness. The company on Jan. 1 began blocking coverage for 34 treatments--mostly drugs with modest sales--with an eye on this issue. About half the drugs were supported by copay cards when CVS Caremark took action, while the other half were drugs for which manufacturers wouldn't agree to rebates the company sought. Either way, the company is making a push against pricey drugs when there are other, less expensive options, said Jon Roberts, chief operating officer for CVS Caremark's pharmacy-benefit manager division. The list of blocked drugs is likely to grow next year, and will be detailed to clients by July 1, he said in an interview. "I think we are being aggressive", Roberts said. He's set to become president of the PBM business in September. Companies like CVS Caremark and their PBMs manage pharmacy benefits for health plans and corporate customers by securing rebates from drug makers that help determine which treatments have lower copays for patients. But discount cards peddled directly to patients can wipe away the incentives these copay structures otherwise create. "Copay coupons, which reduce or eliminate member copays for branded drugs, have flooded the market and are undermining benefit designs meant to promote the use of the lowest-cost, clinically appropriate products," CVS Caremark said in its recently published drug-trend report. The PBM sector has taken note. An industry trade group issued a study last year claiming copay cards could raise drug costs to employers and health insurers by $32 billion over the next decade. Meantime, some labor-group health plans filed lawsuits earlier this year against major drug makers in federal court arguing copay coupons amount to illegal bribes. The drug industry has a very different view. The Pharmaceutical Research and Manufacturers of America, or PhRMA, a trade group for drug makers, highlighted another study showing most copay-coupon spending is on drugs that don't have available substitutes. The industry argues coupons can help improve adherence to prescribed drugs--poor adherence is a costly issue--by improving access. "We strongly support the use of copay coupons, where permissible, as research shows that they address a serious problem of high cost-sharing for medicines," said Matthew Bennett, senior vice president at PhRMA, in a statement. But CVS Caremark only went after drugs with viable alternatives, Roberts noted. These included allergy and asthma treatments, blood-pressure and pain drugs, an erectile-dysfunction treatment and cholesterol-lowering pills. The biggest drugs knocked off the list were two insulin products from Eli Lilly & Co. (LLY), which said it opted against agreeing to big discounts with CVS Caremark. The list was considered voluntary for the PBM's clients, although they risked getting a smaller share of rebates if they didn't get on board. Industry consultants said some clients were rattled by CVS Caremark's aggressive push. According to Roberts, the company could have issued the changes earlier to give health plans more time to adapt. Nevertheless, the adoption rate was "very high," he said, paving the way for an expanded effort. "When you can shut down almost 100% of their usage in our network, that's a pretty powerful leverage point," he said. -By Jon Kamp, Dow Jones Newswires; 617-654-6728; jon.kamp@dowjones.com

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