Cvs Health Corporation · NYSE:CVS
Cvs Health — Investor Day (June 2019)
28 slides from Cvs Health's investor day presentation, Jun 4, 2019
Slide 1: Establishing the Foundation for Transformation
Establishing the Foundation for Transformation Jon Roberts Executive Vice President & Chief Operating Officer
Slide 2: Cautionary statement regarding forward-looking statements
Cautionary statement regarding forward-looking statements The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of CVS Health Corporation. By their nature, all forward-looking statements involve risks and uncertainties. Actual
Slide 3: Transforming our operations to enable long-term growth
Transforming our operations to enable long-term growth CVS + Aetna To capitalize on this opportunity, we will establish a new operational foundation Enhance our Optimize our Modernize our technology pharmacy enterprise to NEW OPPORTUNITY infrastructure to supply chain drive long-term Unmatched exper
Slide 4: Agenda
Agenda Consumer-centric, data-driven infrastructure Optimizing the pharmacy supply chain Enterprise modernization 4
Slide 5: Building a consumer-centric technology infrastructure
Building a consumer-centric technology infrastructure Three Key Areas Integrated data An intelligent and advanced engagement analytics platform Seamless, connected digital & physical experiences 5
Slide 6: Creating an integrated data ecosystem
Creating an integrated data ecosystem Creating a high-quality, reliable, protected and …to unlock the power of our data; integrated data platform for the enterprise… delivering value in new ways Increasing consumer engagement Enhancing business benefits Medicare Coram Driving new business Medicaid C
Slide 7: Applying advanced analytics, including machine learning and artificial intelligence
Applying advanced analytics, including machine learning and artificial intelligence Supporting our businesses Engaging consumers Next best action Revenue & Network & membership growth provider tools analytics that develop targeted engagement Consumer opportunities to influence Behavior consumer beha
Slide 8: Developing an intelligent engagement platform
Developing an intelligent engagement platform Understanding the consumer’s Consistent and connected journey and creating a outreach across various channels customized engagement strategy Continually updated 360° Personalized content view of consumer to management; the right topic, personalize produc
Slide 9: Turning data into insights and insights into action
Turning data into insights and insights into action AT-RISK JOSEPH AGE: Maintaining my health is my INCOME: first priority since learning I’m JOB: Employed at risk for complications DEVICES USED: Mobile phone associated with my diabetes. PREFERENCES: Appreciates proactive outreach as he balances wor
Slide 10: Building on our existing foundation, we are taking an agile and scalable approach
Building on our existing foundation, we are taking an agile and scalable approach Build on our Take a use case driven Start small, show Build for existing technology approach to build value, and iterate the enterprise modernize and guided by the needs of with a design that ensuring we maximize ratio
Slide 11: Agenda
Agenda Consumer-centric, data-driven technology Optimizing the pharmacy supply chain Enterprise modernization 11
Slide 12: Levers to optimize our pharmacy supply chain
Levers to optimize our pharmacy supply chain 1. Size, scale, 2. Traditional 3. Specialty & 4. Pharmacy & 5. Innovative and expertise generics biosimilars medical benefit contracting 12
Slide 13: Size, scale, and expertise
1. SIZE, SCALE, AND EXPERTISE 100+ $18.5 Million 3 Billion 2 Lives under Savings from Our advantages management across PBM and generics and biosimilars make us a Health Care Benefits (2016-2018) marketplace leader 2.7 $67 Billion 1 Billion 2 Enterprise Rebate value prescriptions delivered to clients
Slide 14: Red Oak continues to position us to win in the traditional generics marketplace
2. TRADITIONAL GENERICS Red Oak continues to position us to win in the traditional generics marketplace New Capabilities • Increased data and analytics capabilities • Expanded ability to identify risks and opportunities across the global supply chain • Enhanced supplier assessment framework to deliv
Slide 15: Historic and potential future generic launches
2. TRADITIONAL GENERICS Historic and potential future generic launches Sales of branded products with recent and upcoming generic launches (excluding biosimilars)4 U.S. Sales ($ Billions) $30 $25 Abilify ($7.9B) Opportunity remains Future Opportunities: $20 Nexium ($6.0B) Crestor ($6.5B) beyond the
Slide 16: In Specialty, we will increase the use of biosimilars as approvals gain momentum
3 . S P E C I A LT Y A N D B I O S I M I L A R S In Specialty, we will increase the use of biosimilars as approvals gain momentum Sales of branded products with recent and upcoming biosimilar launches5 U.S. Sales ($ Billions) $13.6 Humira Cost management opportunity improves when there is increased
Slide 17: Enterprise approach to reducing specialty drug costs under medical and pharmacy benefit
4. PHARMACY AND MEDICAL BENEFITS We will take an enterprise approach to reducing specialty drug costs under both the medical and pharmacy benefit Our combined capabilities create $280 more opportunities to: • Align incentives across stakeholders to increase competition in medical U.S. specialty $150
Slide 18: High-cost therapies present opportunities for innovative approaches
5 . I N N O VAT I V E C O N T R A C T I N G High-cost therapies present opportunities for innovative approaches Gene therapy Examples: Expensive Single-use agents $850K $2M+ $2-3M “Curative” Luxturna Zolgensma Valoctocogene Replace lifetime therapy inherited for spinal muscular atrophy Roxaparvovec
Slide 19: High-cost therapies present opportunities for innovative approaches (illustrative example)
5 . I N N O VAT I V E C O N T R A C T I N G High-cost therapies present opportunities for innovative approaches Gene therapy12 Example (illustrative): Expensive Single-use agents $850K $2M+ $2-3M “Curative” Luxturna Zolgensma Valoctocogene Replace lifetime therapy inherited for spinal muscular atrop
Slide 20: Optimizing our pharmacy supply chain
Optimizing our pharmacy supply chain • Well positioned to drive value from traditional generics and biosimilars • CVS + Aetna combination provides additional levers to drive value in specialty pharmacy under the medical benefit • We will use our enterprise assets to continue to optimize our pharmacy
Slide 21: Agenda
Agenda Consumer-centric, data-driven technology Optimizing the pharmacy supply chain Enterprise modernization 21
Slide 22: Generating net savings with enterprise modernization
Generating net savings with enterprise modernization13 $1.5B to $2.0B Areas of net savings • Technology modernization − Rationalization − Centers of Excellence $900M-$1.1B • Productivity improvements − Optimize call centers − Vendor management $400M-$600M − Business initiatives Projected costs to ac
Slide 23: Major long-term value opportunities will help us reach our strategic and financial aspirations
Major long-term value opportunities will help us reach our strategic and financial aspirations Enterprise modernization Work smarter to deliver IT modernization substantial cost benefits Deliver unmatched Enterprise service consumer experience delivery center Build an innovative workplace and workfo
Slide 24: Example: Automating pharmacy benefit plan configuration
Example: Automating pharmacy benefit plan configuration14 Delivering faster, more accurate client Requirements Modeling Optical Character Analytics + benefits and better member experience Client Recognition + Machine Interface Natural Language Processing Learning 2,800+ clients Automated offering 1,
Slide 25: Example: Targeting significant reduction in call center cost
Example: Targeting significant reduction in call center cost while improving member experience 14 Goals Reduce call center >100M cost by >30% … Leverage Inbound calls received each year across PBM, technology Aetna, and Retail …while improving businesses member experience … Change >$1B behaviors Ann
Slide 26: Building a powerful operational foundation
K E Y TA K E AW AY S Building a powerful operational foundation At the center – a consumer-centric technology infrastructure with advanced analytics An optimized pharmacy supply chain – capitalizing on generics and biosimilars, and utilizing innovative contracting Multi-year Enterprise Modernization
Slide 27: Endnotes
Endnotes 1. https://www.cvshealth.com/about/facts-and-company-information, accessed May 19, 2019. 2. https://payorsolutions.cvshealth.com/sites/default/files/2018-trend-report.pdf (page 2), accessed May 19, 2019. 3. https://d18rn0p25nwr6d.cloudfront.net/CIK-0000064803/9cbbe02f-2553-4357-9633-fc0823f
Slide 28: Endnotes
Endnotes 10. https://www.consumerreports.org/drug-prices/kymriah-first-gene-therapy-costs-475000-dollars-childhood-cancer, accessed April 8, 2019. 11. https://www.pharmaceutical-technology.com/comment/asco-2018-will-jcar017-become-third-car-t-product-lymphoma/, accessed April 8, 2019. 12. Summary of