New CVS Health policy will exclude drugs above cost-effectiveness threshold

CVS Health will allow self-funded insurers to exclude some drugs from coverage if the cost is too high. The policy has been met with criticism from the pharmaceutical industry, which argues CVS is demarking treatment at arbitrary values.

Specifically, the policy will enable plans to eliminate certain drugs if the cost tops $100,000 per quality-adjusted life year—the measure of disease burden that is often used in economic evaluations of medical interventions. The move comes as a renewed push to lower drug prices has swept across Washington.

CVS argues the policy could help impact drug pricing, which is left completely up to manufacturers with respect to new products.

“When it comes to the pricing of new drugs, launch prices have been steadily increasing for years and are completely left to the discretion of the manufacturer,” Troyen Brennan, MD, MPH, executive vice president and chief medical officer of CVS Health, and Surya Singh, MD, corporate vice president and head of specialty client solutions at CVS Health, wrote in a defense of the policy in Health Affairs. "… Until now, PBMs (pharmacy benefit managers) such as CVS Health have had no ability to impact the initial launch price of a drug, which is set solely by the manufacturer, seemingly without regard to the inherent value of the medication or what the payer or patient can afford.”

For self-funded insurers, or larger employers, the new option will help control the total cost of benefits. 

However, patients could see their treatment options fall and limited access to certain drugs.

While value-based pricing and care continue to gain support across the space, the new policy from CVS is “too much too soon and could hamper patients’ access to needed medicines,” wrote Robert Dubois, MD, PhD, chief science officer and executive vice president of the National Pharmaceutical Council, in a Health Affairs post critiquing the policy.

The policy, "particularly in the PBM space" is not common, Dubois told HealthExec. However, another significant cost-effectiveness threshold policy was recently approved by The New York State Drug Utilization Review Board that mandates a "steep discount" to cystic fibrosis treatment in the Medicaid program.

"It's an outlier," Dubois said of CVS's policy. "If you look at the New York State Drug Utilization Review Board decision regarding whether to cover a cystic fibrosis medicine, then you can see these types of management decisions starting to occur. We need to raise thoughtful questions about the impact of these strict decisions, especially for patients, before we go too far along this path."

It is unclear how many medicines could be impacted by the option and insurers have the ability to make the choice to keep or remove coverage for affected drugs. Breakthrough drugs are also excluded. For now, the policy only applies cost-effectiveness estimates reviewed by the Institute for Clinical and Economic Review (ICER) and will likely only impact a small number of patients.

"It may be a small number today, but the question is how will it evolve?" Dubois said. "Does it evolve to incorporate not just ICER’s reviews, but other cost effectiveness reviews as well? Do other PBMs follow suit? Will employers choose this route? Just because CVS is doing this doesn’t mean everyone will be on board."

The $100,000 cut-off also lacks any nuance, according to DuBois. For example, should patients not have access to medicines with a price of $101,000, he asked? The price may not necessarily reflect value. It also doesn’t take into account how different patients react to treatments, he stated.

“Prices should reflect value, and concerns about health care spending should move us toward incentivizing high-value interventions and dis-incentivizing low-value care,” Dubois wrote. “However, the announcement from CVS, perhaps well intentioned, is too much too soon."