CVS Health Statement Regarding Ohio Department of Medicaid's Report on PBM Performance for Managed Care Plans

WOONSOCKET, R.I., June 21, 2018

The report's analysis of our claims data clearly shows that CVS Caremark reimburses independent pharmacies at a higher rate than CVS pharmacies are reimbursed, and that CVS Caremark pays a higher dispensing fee to independent pharmacies than it pays to CVS pharmacies.     

We believe CVS Caremark's "spread" of 8.70% - which is significantly lower than was previously reported by news media that used only selective samples - is very reasonable, given that this pricing model is in lieu of our managed care clients paying an administrative fee for the PBM services we provide, and it provides our clients with stability and certainty around their drug costs by guaranteeing their rate. A significant portion of the "spread" we receive pays for vitally important clinical services and other benefit management services we provide to clients. 

It is important to note that in 2017, CVS Caremark's overall net profit margin was only 3.5%, and in the first quarter of 2018 it was just 2.4%.

The report raises interesting questions about the benefit of managed Medicaid plans moving to a "pass-through" pricing model. We agree with the report's recommendation that more analysis is needed. The report's data analysis concludes that under the Managed Care model, Ohio's Medicaid program saved $145 million annually in prescription drug costs as compared to its former fee-for-service pricing model. 

Ultimately, clients choose the pricing option that best meet their individual needs. We look forward to discussing this report in more detail with our managed Medicaid clients, ODM and Ohio's elected officials.