CVS Health Corp. (NYSE:CVS) said drug costs for its plans grew a modest 5 percent in 2015, far less than the 11.8 spending growth rate from a year before.
The company, which manages drug benefit plans for more than 75 million Americans, was able to keep costs down in 2015 by negotiating discounts from big manufacturers and carefully managing its list of covered drugs, CVS’s Chief Medical Officer Troyen Brennan said in an interview Monday. The company also put restrictions on some high-priced drugs, a step that helped keep costs from growing by double digits last year, he said.
See also: Specialty drugs: A primer
Last year’s biggest driver of spending increases was across-the-board list price hikes for a variety of brand-name drugs, Brennan said. “Most pharmaceutical manufacturers have built inflation into what they do,” he said. “We see it for little-known drugs” as well as major brand-name medications, he said.
CVS’s spending for hepatitis C drugs was roughly flat over the course of the year, which helped keep costs in check, Brennan said. While more patients used the drugs, there were also bigger discounts, he said. In early 2015, CVS made a deal with Gilead Sciences Inc. (Nasdaq:GILD) to cover its hepatitis drugs Harvoni and Sovaldi, rather than a competitor, in order to get the lowest possible net price.
The company put another check on 2015 costs when it stopped covering many expensive, unproven compounded pain drugs, Brennan said. Spending on those drugs has plummeted, he said.
CVS is continuing to talk to other hepatitis C drug manufacturers, including Merck & Co. (NYSE:MRK), whose new hepatitis C drug, Zepatier, has a $54,600 list price for a 12-week regimen. That’s 42 percent lower than the list price of rival Gilead’s Harvoni, at $94,500. Drugmakers typically offer discounts and rebates to payers that lower the actual cost from the list price.
“We are busy talking with all the manufacturers trying to decide what the best possible course of action is for our clients,” Brennan said, when asked whether his company would favorably cover Merck’s new hepatitis drug. “Competition is always good.” He wouldn’t provide more detail.
CVS plans to restrict the use of a toenail fungus drug from Valeant Pharmaceuticals International Inc. (Nasdaq:VLNT), as part of an initiative aimed at cutting spending on dermatology treatments, Brennan said.