Cvs Health Corporation · NYSE:CVS
Cvs Health — Investor Day (December 2016)
40 slides from Cvs Health's investor day presentation, Dec 15, 2016
Slide 1: Leading the Evolution of the Specialty Model
Leading the Evolution of the Specialty Model Alan Lotvin, MD Executive Vice President, CVS Specialty
Slide 2: Agenda
Agenda Performance Highlights Integrated PBM + Specialty: Needed Now More Than Ever Continuous Innovation to Provide Maximum Value to Stakeholders 2
Slide 3: CVS Health Continues to Grow in Specialty
CVS Health Continues to Grow in Specialty CVS Specialty Revenue ($, billions) 59 51 Growth 40 Opportunity 30 22 2013 2014 2015 2016E 2017E CVS Specialty Dispensed CVS Caremark Managed 3 Refer to endnotes for additional information.
Slide 4: CVS Health Continues to Grow in Specialty
CVS Health Continues to Grow in Specialty CVS Specialty Dispensed Revenue ($, billions) 29% 37 CVS Specialty 32 CAGR 27 20 14 19% Industry 2013 2014 2015 2016E 2017E CAGR CVS Specialty Dispensed 4 Refer to endnotes for additional information.
Slide 5: CVS Specialty Growing Faster Than Nearly All Large Competitors
CVS Specialty Growing Faster Than Nearly All Large Competitors Specialty Pharmacy Share (dispensed revenue) 2013 2015 10% 7% 2% 10% 25% 30% 300 3% 1200 35% basis point lead basis point for Competitor lead for 28% 32% 18% CVS Specialty $63B Revenue from Specialty Drugs $98B Competitor A Competitor B
Slide 6: Multiple Contributors to Gross Profit Growth
Multiple Contributors to Gross Profit Growth Gross Profit Growth (2012 to 2016E) 2016E 25% (25%) Gross 21% Profit 22% 31% 2012 Gross 18% 8% Profit CVS Caremark Non-CVS New Generics Strategic Inflation Price Client Wins Caremark Drugs Acquisitions Erosion 6 Refer to endnotes for additional informatio
Slide 7: Access to New Drugs Is Important Contributor to Performance
Access to New Drugs Is Important Contributor to Performance Specialty Pharmacy Access to Limited Distribution Drugs Limited Distribution Launches Jan 2015 – Oct 2016 30 29 26 25 25 COMPETITOR Competitor A A COMPETITOR Competitor B B COMPETITOR Competitor C C COMPETITOR Competitor D D CVS SPECIALTY 7
Slide 8: The Enhanced CVS Specialty Operating Model Will Improve Physician Experience and Patient Outcomes
The Enhanced CVS Specialty Operating Model Will Improve Physician Experience and Patient Outcomes Physician Centers of National Service Center Excellence Dispensing Network Organized by Organized by Organized by physician specialty patient condition geography Faster turn around times Reliability and
Slide 9: Agenda
Agenda Performance Highlights Integrated PBM + Specialty: Needed Now More Than Ever Continuous Innovation to Provide Maximum Value to Stakeholders 9
Slide 10: The Complexity of Patients and Market Requires Broad Set of Interventions
The Complexity of Patients and Market Requires Broad Set of Interventions Patient Issues Payor / Market Issues Clinical Spend across pharmacy Pipeline of new drugs complexity and medical benefits and indications Multi-drug Biosimilars Emerging specialty regimens provider models 10
Slide 11: Value Our Stakeholders Are Seeking: Simplification
Value Our Stakeholders Are Seeking: Simplification Patients Payors • Easy access to specialty medications • Specialty spend management • Clinical support; drugs and conditions • Clinical care for patients • Financial assistance counseling • Greater value for spend Physicians Manufacturers • Administ
Slide 12: Our Integrated Model Enables Us to Meet the Needs of This Increasingly Complex Market
Our Integrated Model Enables Us to Meet the Needs of This Increasingly Complex Market Patient Payor Price and Adherence Full Patient Easy, Local Medical Benefit Site of Care Utilization to All Drugs Management Access Management Management Management “Pure Play” Specialty Pharmacy Retail Pharmacy PBM
Slide 13: We've captured ~40% of market growth since 2013
Our Integrated Model Enables Us to Meet the Needs of This Increasingly Complex Market Patient Payor Price and Adherence Full Patient Easy, Local Medical Benefit Site of Care Utilization to All Drugs Management Access Management Management Management We’ve captured ~40% of market PBM + Specialty Heal
Slide 14: Agenda
Agenda Performance Highlights Integrated PBM + Specialty: Needed Now More Than Ever Continuous Innovation to Provide Maximum Value to Stakeholders Patients: Improving Care and Outcomes Payors: Optimizing Total Spend 14
Slide 15: Complex Specialty Patients Drive a Large Portion of Health Care Costs
Complex Specialty Patients Drive a Large Portion of Health Care Costs Members Using Specialty Share of 50% Not Related to Specialty Drugs Total Health Care Costs Specialty Condition 14% All other medical costs 3% All other drugs 5% 34% 8% Specialty condition: other medical costs 9% Specialty drugs O
Slide 16: Our Care Management Model Addresses More Than Adherence; Helps Reduce Overall Health Care Costs
Our Care Management Model Addresses More Than Adherence; Helps Reduce Overall Health Care Costs Basic Specialty Model Support Medication Management Pharmacy Pharmacist Technician 16
Slide 17: Our Care Management Model Addresses More Than Adherence; Helps Reduce Overall Health Care Costs
Our Care Management Model Addresses More Than Adherence; Helps Reduce Overall Health Care Costs Our Enhanced Model CVS Specialty Support Medication Symptom Management Management Pharmacy Pharmacist Technician Comorbidity Emotional and Management Social Support 250+ Specially-Trained Rare Disease Nur
Slide 18: Measurable Results of Our Care Management Model
Measurable Results of Our Care Management Model Our Enhanced Model CVS Specialty Proven Results 13x 7% 23% Greater Fewer Fewer Pharmacy Pharmacist engagement ER visits hospitalizations Technician 11% Reduction in total health care 250+ Specially-Trained costs for managed conditions Rare Disease Nurs
Slide 19: Our Specialty Connect Model Helps Improve Patient Convenience, Satisfaction and Adherence
Our Specialty Connect Model Helps Improve Patient Convenience, Satisfaction and Adherence Highly Utilized Retail Channel ~30% new autoimmune Delivery Choice patients start at retail Clinical Benefit 19 Refer to endnotes for additional information.
Slide 20: Our Specialty Connect Model Helps Improve Patient Convenience, Satisfaction and Adherence
Our Specialty Connect Model Helps Improve Patient Convenience, Satisfaction and Adherence Highly Utilized Retail Channel or Delivery Choice 54% 60 Specialty Connect Net Promoter users prefer pick-up Score Clinical Benefit at CVS Pharmacy 20 Refer to endnotes for additional information.
Slide 21: Our Specialty Connect Model Helps Improve Patient Convenience, Satisfaction and Adherence
Our Specialty Connect Model Helps Improve Patient Convenience, Satisfaction and Adherence Highly Utilized Retail Channel Delivery Choice 11.4 percentage point improvement in adherence Clinical Benefit 21 Refer to endnotes for additional information.
Slide 22: Key Innovations Can Help Deliver Significant Value
Key Innovations Can Help Deliver Significant Value Innovating Testing Delivering Advanced Testing Wearable Technology Two-Way Text Messaging Specific bio-marker tests Monitors activity to identify Promote adherence inform best treatment early signs of disease at key points in care course progression
Slide 23: Agenda
Agenda Performance Highlights Integrated PBM + Specialty: Needed Now More Than Ever Continuous Innovation to Provide Maximum Value to Stakeholders Patients: Improving Care and Outcomes Payors: Optimizing Total Spend 23
Slide 24: The Value of the Integrated PBM + Specialty Model
The Value of the Integrated PBM + Specialty Model Cost Per Utilizer Per Month CVS Specialty Proven Results 250 $10M basis points savings per 1 million lives 60 basis point CVS Caremark CVS Caremark improvement in adherence + Exclusive + Multiple Specialty CVS Specialty Pharmacies 24 Refer to endnote
Slide 25: Comprehensive Management: Significant Savings Opportunities to Even the Most Sophisticated Clients
Comprehensive Management: Significant Savings Opportunities to Even the Most Sophisticated Clients Specialty Prior Site-Of-Care Exclusive Medical Claims Formulary Authorization Management Network Management Across Benefits $1M $7M $48M $7M $1M $64 million savings per 1 million lives ~11% reduction i
Slide 26: Prior Authorization Provides the Richest, Most Timely Dataset for Specialty Management
Prior Authorization Provides the Richest, Most Timely Dataset for Specialty Management Source Data Included Medical Claim Patient Billed Diagnosis Drug Code Demographics Procedure (days to weeks) Pharmacy Claim Patient Diagnosis Drug Code Demographics (Inferred) (near real-time) 26
Slide 27: Prior Authorization Provides the Richest, Most Timely Dataset for Specialty Management
Prior Authorization Provides the Richest, Most Timely Dataset for Specialty Management Source Data Included Prior Authorization Patient Prescribed Clinical Laboratory Response Diagnosis Demographics Drug Exam Data Data to Therapy (real-time) Medical Claim Patient Billed Diagnosis Drug Code Demograph
Slide 28: Utilization Is a Key Driver of Specialty Growth, Demanding Continued Innovation
Utilization Is a Key Driver of Specialty Growth, Demanding Continued Innovation Utilization Trend Today’s Solutions 7.2% Prior authorization Step therapy and Quantity across benefits generics first edits 2.2% Near-Term Innovations NON- Enhanced EHR integration New clinical SPECIALTY SPECIALTY rule s
Slide 29: Inflation and Higher Launch Prices Create Need for Innovative Management Solutions
Inflation and Higher Launch Prices Create Need for Innovative Management Solutions Cost Drivers Formulary 8.7% brand price inflation Exclusion Value-based 2015 formulary contracting Plan Design ~$170K average annual price last three approved Plan design for Value-based oral oncology drugs generics a
Slide 30: Rich Biosimilar Pipeline Creates Savings Opportunities
Rich Biosimilar Pipeline Creates Savings Opportunities Biocon BioXpress ETANERCEPT (PRX-106) Protalix INFLIXIMAB Timeline (Enbrel® $5B) ABP 710 (Amgen) (Remicade® $4B) Avasthagen NI-071 (Nichiiko) Tunex (Mycenax) BOW15 (Epirus) Filed Approval BioXpress LBEC0101(LG Life) GS071 (Aprogen) 12 months S
Slide 31: Integrated PBM + Specialty Model Produces Better Results
Integrated PBM + Specialty Model Produces Better Results Generic Dispensing Rate 76% 65% 63% 59% 49% 49% 43% 26% 12% Glatopa (Copaxone®) Imatinib (Gleevec®) Dofetilide (Tikosyn®) CVS Specialty Competitor Specialty Competitor Non-Specialty 31 Refer to endnotes for additional information.
Slide 32: Management of Drugs Paid Under the Medical Benefit Remains a Significant Opportunity
Management of Drugs Paid Under the Medical Benefit Remains a Significant Opportunity Industry Specialty Spend Today’s Solutions 55% of total drug spend Prior authorization Edit and 36% Medical across benefits reprice claims of total drug spend Near-Term Innovations Medical Pharmacy Pharmacy Automate
Slide 33: CVS Specialty Medical Claims Management Offers Significant Savings
CVS Specialty Medical Claims Management Offers Significant Savings RemicadeClaims Remicade ClaimsAs Crohn’s Disease as Submitted forEdited Claims Over Max Dose Maximum Dose 600 99% 500 before # of Claims 400 editing 300 200 100 0 0 50 100 150 200 250 Billed Units (Dose) 33
Slide 34: CVS Specialty Medical Claims Management Offers Significant Savings
CVS Specialty Medical Claims Management Offers Significant Savings Remicade Claims as Edited Claims Over Max Dose Maximum Dose 600 99% 22% 510 claims at max dose 500 before after # of Claims 400 editing editing 300 200 Savings 100 validated, appropriate dosage 0 0 50 100 150 200 250 33% Billed Units
Slide 35: Payor Value Proposition
Payor Value Proposition Broadest set of Access to all needed data in near real-time capabilities to manage specialty spend Proven, in-market across benefits operational programs 35
Slide 36: Today's Key Takeaways
Today’s Key Takeaways Driving More Affordable, Accessible and Effective Care Driving Outcomes In-market solutions with proven results that are lowering costs and and Savings improving outcomes Providing the Front Integrated retail/PBM offerings, such as Specialty Connect, provide Door and the Last M
Slide 37: Endnotes
Endnotes Slide 3 1. 2016E & 2017E values represent the mid-point of CVS Health internal projections. 2. Industry CAGR calculated 2013-2016 via Milliman report http://www.phrma.org/sites/default/files/pdf/milliman-specialty- drug-forecasts.pdf. Slide 4 1. Source 2013: Fein, Adam J., The 2013-14 Econo
Slide 38: Endnotes
Endnotes Slide 17 1. Source Greater Engagement: Judith Mueller Discusses (podcast), www.hpminstitute.org/content/wellness-and-disease- management-podcast-industry-specialist-judy-Mueller. 2. Source of other metrics: CVS Health internal data analysis. 3. Savings will vary based upon a variety of fact
Slide 39: Endnotes
Endnotes Slide 23 1. Source: CVS Health internal data analysis. 2. Savings will vary based upon a variety of factors including things such as plan design, demographics and programs implemented by the plan. Slide 24 1. Source: CVS Health internal data analysis. 2. Savings will vary based upon a varie
Slide 40: Endnotes
Endnotes Slide 29 1. Source: CVS Specialty internal data analysis. 2. This slide contains references to brand-name prescription drugs that are trademarks or registered trademarks of pharmaceutical manufacturers not affiliated with CVS Health. Slide 30 1. Source Specialty Spend: CVS Health internal d