2015 CAREFIRST
FORMULARY
OPTIONS
200+ ASO ACCOUNTS
August 5, 2014
1
PROPRIETARY AND CONFIDENTIAL
Agenda
•
•
•
•
•
Purpose
Pharmacy Landscape
Guiding Principles
2015 Options
Implementation
2
PROPRIETARY AND CONFIDENTIAL
Purpose of Today’s Training
• Why we are here
• Understanding CareFirst’s strategic
decision
• How CareFirst and downstream
accounts benefit
3
PROPRIETARY AND CONFIDENTIAL
Double Digit Increase in Pharmacy Trend
Projected
Influencers
• Inflation
• Source of drug
• Lack of product competition
• Site of service
PRICE
Overall cost of drug,
including what
Account and member
pay
DRUG MIX
Influencers
Proportion of brand-name • Generics
• Formulary
and generic drugs being
• Pharmaceutical marketing
dispensed
• New agents
UTILIZATION
Intensity of drug use;
approval of new drugs
or indications
Influencers
• Changes in treatment guidelines
• Demographic/economic changes
*By 2016. CVS Caremark drug trend forecast. Trend calculations based on a trend cohort group. Trend cohort group includes funded Accounts
with retail claims for the calendar year and includes Accounts in the commercial segments (health plan and employer), Medicare and Medicaid.
30454
4
PROPRIETARY AND CONFIDENTIAL
Multiple Market Factors Increase Pressure
on Accounts to Control Pharmacy Spend
GENERIC LAUNCHES HAVE
PEAKED; WILL NO LONGER
OFFSET DRUG TREND
• Generic dispensing
rate topped 80% in
2013; 2012 was peak
of patent cliff at $35B*
• 2014 generic
launches make up
half the market
value of 2012
launches*
MANUFACTURER RESPONSE:
PRICE INCREASES; SHARE
RETENTION STRATEGIES
• 14.4% increase in
non-specialty brand
AWP in 2013*
• Manufacturers invested
$4 billion annually1
between 2010 and 2011
to preserve market
share and margin by
going outside the
standard supply chain
SPECIALTY CONTINUES TO
DRIVE UP COSTS
• Specialty drugs
accounted for 22.5%
of our Accounts’
pharmacy spend*
– Relative increase of
more than 10% in a
single year*
Past plan performance is no guarantee of future results – accounts must employ a
defined strategy to offset ongoing marketplace tactics
*CVS/caremark Internal Analysis, 2013. 1. As reported by PCMA: Cleveland Research, “How Co-pay Discount Cards Are Affecting Drug Spend,”
Presented at Pharmacy Benefits Academy, August 2011
31392e
5
PROPRIETARY AND CONFIDENTIAL
Our Proactive Approach Positions Accounts at
the Forefront of Market Changes
•
•
•
Industry-leading formulary strategy:
Built from our experience in anticipating
marketplace changes
THE 2014 CVS/CAREMARK
FORMULARY STRATEGY
RESULTED IN:
$41.13
Encourage continued savings:
Help Accounts stay ahead of market shifts
with innovative formulary and pipeline
management
Average plan savings per
transitioned prescription*
Building on our success:
Continue to help maximize savings for
Accounts while minimizing plan member
disruption
2.5%
$28.69
Average member savings per
transitioned prescription*
Overall effective increase
in GDR in targeted drug
classes*
A strategic approach to formulary management proactively positions
Accounts to help mitigate the effects of future trend increases
*Indicates an average savings based on cohort results. Actual savings may vary per plan.
Contact your CVS/caremark Account team for a personalized savings analysis.
31392e
6
PROPRIETARY AND CONFIDENTIAL
Guiding Principles of Formulary
Management
Rx
Maintain clinical integrity
Target classes with sufficient generic availability,
clinically interchangeable brands; evaluate appropriate
specialty classes*
Secure competitive pricing for our Accounts
Continually assess marketplace to identify lower-cost
options and opportunities to maximize manufacturer
rebate values
Educate and engage members and physicians
Help ensure access to the drugs members need to stay
healthy; provide resources for physicians to support
member transition
20 years experience providing unique formulary strategies to meet Account goals
*Specialty classes with similarity between chemical entities
31392e
7
PROPRIETARY AND CONFIDENTIAL
CareFirst Formulary Options in 2015
CAREFIRST
FORMULARY 3
CAREFIRST
FORMULARY 2
CAREFIRST
FORMULARY 1
•Open Formulary
•Currently in place for
CareFirst (all business)
•Tiering changes on
some drugs to drive
• Covers generics and
most brands
• ~70 excluded products
• Exclusions updated
yearly
• Up to 3-4% savings of
drug spend compared
to CareFirst
Formulary 1*
• Covers most generics
and brands and
specialty
• ~200 excluded products
• Exclusions updated
quarterly
• Up to 3-4% savings of
drug spend compared
to CareFirst
Formulary 2*
member behavior
•Quarterly tier changes
SAVINGS
1. Source: CVS Caremark Enterprise Analytics, 2012. Projections based on CVS Caremark data. Individual results will vary based on plan design, formulary status,
demographic characteristics and other factors. Based on Account specific modeling of CareFirst BCBS
*Based on ingredient cost Drug Spend. Drug Spend pharmacy savings include rebate impact. Account savings may vary by plan design, pricing arrangement, drug mix
and at-risk market launches. Member savings will vary based on several factors, some of which include plan design, plan performance, etc.
30454
8
PROPRIETARY AND CONFIDENTIAL
CareFirst Formulary 1: Open Formulary
•
Enhanced the current CareFirst open formulary to increase the overall
rebate value
•
Broad access to over 5,000 drugs with no brand drug exclusions
•
Formulary tiering to drive member behavior
– 10.5% of the members were positively impacted by drugs moved to a
lower cost sharing tier (July 15, 2014)
– Less than 2% of the members will have drugs moved to a higher cost
sharing tier (January 1, 2015)
•
Quarterly tier changes
– Targeted member communications will be sent to affected members
30 - 45 days prior to the effective date
Default option for CareFirst accounts Note: CareFirst Formulary 1 is a Custom Opt-out Formulary
9
PROPRIETARY AND CONFIDENTIAL
CareFirst Formulary 2: Generic and Rebate
Improvement Formulary Effective 1/1/15
•
For 200+ ASO accounts looking to be more aggressive in their pursuit of
rebates
•
~70 drugs excluded – alternative medications available
– 2-3% of members affected by drug exclusions and negative tier
changes
•
Exclusions updated annually
•
Increased rebate guarantees over CareFirst Formulary 1
•
Reduces overall spend by nearly 3-4% compared to CareFirst Formulary 1
•
Quarterly tier changes
– Targeted member and physician communications 30-90 days prior to
the effective date
Note: CareFirst Formulary 2 is Standard Formulary
10
PROPRIETARY AND CONFIDENTIAL
CareFirst Formulary 3: Higher Control
Formulary (Lowest Net Spend) Effective 1/1/15
•
For 200+ ASO accounts seeking the lowest possible costs while retaining
coverage within each therapeutic class
•
Focuses on driving to generic drugs & driving higher rebate value
•
~ 200 drugs excluded – preferred alternative medications available
• 4-5% of members affected by drug exclusions and negative tier changes
•
Exclusions and tier changes updated quarterly
•
Creates savings by driving members to the lowest cost drugs
• Up to 3-4% savings of drug spend compared to CareFirst
Formulary 2*
Note: CareFirst Formulary 3 is Advanced Control Formulary
11
PROPRIETARY AND CONFIDENTIAL
CareFirst Formulary 3: Integrates
Preferred Product Strategy and Generics
•
Extend savings by leveraging preferred product strategy along with shift
to generics
– Quarterly updates
– Advanced specialty controls included
•
Helps ensure trend management against costly new products that do not
deliver clinical advantages
– Day one control of new product launches and line extensions, until
reviewed
Note: CareFirst Formulary 2 is Standard Formulary
30454
12
PROPRIETARY AND CONFIDENTIAL
CareFirst Formulary 3 Specialty Drives
Additional Plan Savings
•
Help manage specialty drug spend:
– Included in the new formulary option
– Addresses both appropriate utilization and preferred drug selection
•
Currently focused on seven** therapy classes: MS, Biologic DiseaseModifying Agents (Rheumatoid Arthritis), fertility, hepatitis C interferons,
growth hormone, PAH, osteoarthritis
– Quarterly updates
•
Day one control of new product launches and line extensions, until
reviewed; unless given pivotal drug status
Specialty growth expected to quadruple by 20181 –
new specialty control strategies needed to address rapid growth
**Number of classes may change. Accounts must accept all classes
1. The Growing Cost of Specialty Pharmacy—Is it Sustainable? February 18, 2013) Note: CareFirst Formulary 3 is Advanced Control Formulary
30454
13
PROPRIETARY AND CONFIDENTIAL
Comparing CareFirst Formularies
INTERNAL/FOR TRAINING
PURPOSES ONLY
CAREFIRST
FORMULARY 1
CAREFIRST
FORMULARY 2
CAREFIRST
FORMULARY 3
Drug Coverage
All drugs covered
per plan design
Focus on generics and select
brands. Exclusion updated annually
Select brand exclusions.
May be updated quarterly
Design
Tier placement and
member copay only
Tier placement and
member copays; promotes generic
dispensing when available
Tier placement and member
copays; mandatory medical
necessity review; drives lowest
net cost
Excluded
Medications
Zero
~70
~200
Member Impact
None
~2-3% of members affected moving
from CareFirst Formulary 1 to
CareFirst Formulary 2
~4-5% members affected
moving from CareFirst
Formulary 2 to CareFirst
Formulary 3.
Rebate Impact
Increased over
CareFirst 2014
Formulary
Increased rebate value over
CareFirst Formulary 1
Highest rebate value
Drug Spend
Savings
Increased drug spend
savings over
CareFirst 2014
Formulary
Up to 3-4% savings of drug spend
savings* compared to CareFirst
Formulary 1
Up to 3-4% of drug spend
savings* compared to CareFirst
Formulary 2
Implementation
Lead Time
n/a
90 days
90 days
**check with UW for
account specific info
*Savings based on drug ingredient cost. Savings include rebate impact. Account savings may vary by plan design, pricing arrangement, drug mix
and at-risk market launches. Member savings will vary based on several factors, some of which include plan design, plan performance, etc. Note:
CareFirst Formulary 1 is a Custom Opt-out Formulary, CareFirst Formulary 2 is Standard Formulary, CareFirst Formulary 3 is Advanced Control
Formulary
30454
14
PROPRIETARY AND CONFIDENTIAL
Account Formulary Strategy – Key
Considerations
INTERNAL/FOR TRAINING
PURPOSES ONLY
Account Philosophy
Need for greatest savings/value
Union or other factors that may limit design choices
Past experience with similar approach
Marketplace considerations
15
PROPRIETARY AND CONFIDENTIAL
Support a Smooth Transition with Effective
Member and Physician Engagement
•Member communication focuses on new
savings options; encourages outreach
to prescriber
•Current drug and recommended drug are
MID-OCTOBER
MID-NOVEMBER
clearly listed
•Provides support in contacting physician, if
requested by member
We leverage best practices for the most comprehensive engagement strategies.
31392e
16
PROPRIETARY AND CONFIDENTIAL
Communication Strategy
CareFirst Formulary 1:
• Member Communications Only
– Targeted Negative Tier Change Notifications
» Mailed 30-45 days prior to Implementation date (Mid-November) and quarterly
thereafter
» Final drug list targeted for 10/1/2014 – updated impact report expected by 10/5/14
CareFirst Formularies 2 & 3:
• Member Communications
– Targeted Negative Tier Change Notifications
» Mailed 30-45 days prior to Implementation date (Mid-November) and quarterly
thereafter
– Targeted Excluded Drug Notifications
» Phase 1 Mailed Beginning October (and quarterly thereafter for CareFirst
Formulary 3)
» Phase 2 Mailed Mid-November (and quarterly thereafter for CareFirst Formulary
3)
(CareFirst Formulary 2 doesn’t have quarterly exclusions – yearly only)
• Physician Communications
– Targeted Member Specific Excluded Drug Notifications
» Mailed Approximately 3 weeks after Member Letters (End – Early November) and
quarterly thereafter
Medical Necessity Exception Process: In place for physicians to submit on behalf of their members for
medical necessity review
17
PROPRIETARY AND CONFIDENTIAL
Questions?
18
PROPRIETARY AND CONFIDENTIAL
• ID Cards
• CareFirst Marketing Materials
• Installation
CareFirst BlueCross BlueShield is the shared business name of CareFirst of Maryland, Inc. and Group Hospitalization and Medical Services, Inc. which are independent licensees of the
Blue Cross and Blue Shield Association. ® Registered trademark of the Blue Cross and Blue Shield Association. ®′ Registered trademark of CareFirst of Maryland, Inc.
PROPRIETARY AND CONFIDENTIAL
ID Cards Mock-Up – 200+ ASO (Facets)
ID cards will now include an indicator of which formulary:
RX = CareFirst Formulary 1
RX2 = CareFirst Formulary 2
RX3 = CareFirst Formulary 3
20
PROPRIETARY AND CONFIDENTIAL
ID Cards Mock-Up – Large Group (NASCO)
Before
Legend on card strip
After
21
PROPRIETARY AND CONFIDENTIAL
CareFirst Formulary 2 & 3 Quote and
Installation Process
Account Manager
• Request a quote business as usual from Underwriting
• Notify your Underwriter if sold
Service Rep
• Facets
– No additional paperwork
– Service Rep indicates “Formulary 2 or Formulary 3” in SOCS form
comments
• NASCO
– Pharmacy NAEGS & FirstForm updates
– Service Rep indicates “Formulary 2 or Formulary 3” in SOCS form
comments
22
PROPRIETARY AND CONFIDENTIAL
CareFirst Formulary Communication Resources
Marketing Piece
Purpose
Audience
Source
Resource
Number
Formulary Comparison
Sheet
Sheet for sales to use in discussing formulary
options with employer groups
Employer
SOS
SUM2656-1P
Member
Communications on
Formularies 1, 2 and 3
Negative tier change letters sent to impacted
members
Member
CVS
Member
Communications on
Formularies 2 and 3
Drug exclusions letters sent to impacted
members
Member
CVS
Provider
Communications on
Formularies 2 and 3
Drug exclusion letters sent to providers of
impacted members
Provider
CVS
Formulary Drug
Removal Listing –
Formulary 2
For Formulary 2, list indicating alternatives to
drugs being excluded
Members
SOS
SUM2657-1P
Formulary Drug
Removal Listing –
Formulary 3
For Formulary 3, list indicating alternatives to
drugs being excluded
Members
SOS
SUM2658-1P
Pre-Log In Drug Search
Tool
• 24 hour drug tool to identify if drug covered
on formulary.
• Also provides formulary PDF and Preferred
Drug List
(updated quarterly: 1/1; 4/1; 7/1; 10/1)
Prospects and
Members
www.carefirst.com/rx
Member On-Line Tools
(My Account)
24 hour drug tools for ordering and refilling
drugs and more
Member
My Account
www.CareFirst.com
23
PROPRIETARY AND CONFIDENTIAL
CareFirst Formulary 1 Member Communications
Value Add: Negative Notice of Tier Change (Drug moving to higher costsharing tier)
• Previously posted in Vitality
• NEW: 30-45 days prior to effective date, mailing sent to members taking a
drug being moved to a higher cost-sharing tier (negative tier change notice)*
• Notice gives members lower-cost alternative(s)
• Call to action to provide information to provider
* NOTE: These negative change notices do NOT include notification of
drugs changing tiers due to generic drug introduction. Per CVS, this is not
a notifiable situation as this is an open formulary and the member had the
choice to select the generic and not pay the higher cost share of the nonpreferred brand.
• When a generic becomes available, the preferred brand drug moves
to a non-preferred brand drug status (as noted in the contract)
• When member goes to the pharmacy, the member is notified by the
pharmacist about the availability of the generic drug.
• 98% of members will buy the generic alternative
24
PROPRIETARY AND CONFIDENTIAL
Formulary 2 Drug Removal List (MOCK-UP): Updated
Annually
25
PROPRIETARY AND CONFIDENTIAL
Drug Search Tool – Pre-Log In
Search
Function may
change for
2015
26
PROPRIETARY AND CONFIDENTIAL
Secure Log In--My Account
My Account “Drug
and Pharmacy
Resources” include:
1. My Drug Home
2. Drug coverage
and cost (Drug
Pricing)
3. View Drug claims
4. Find a Pharmacy
5. Order and refill
prescriptions (Mail
Order)
1
2
4
3
5
NOTE: The Drug Pricing Tool provides pricing information for the plan the member currently
has. A member cannot access pricing information for a plan that is effective in the future.
Example, Marta changes benefits effective January 2015. She will not be able to get
drug pricing information on her new plan until January 2015.
27
PROPRIETARY AND CONFIDENTIAL