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Ed DeVaney, President, CVS Caremark, shares how we deliver savings to clients and members by challenging the status quo.
• After saving customers more than $1.8 billion by replacing Humira with lower-cost, FDA-approved biosimilars, CVS Caremark now prefers biosimilars for more than 10 drugs on its template formularies, Ed says.
• After saving customers more than $1.8 billion by replacing Humira with lower-cost, FDA-approved biosimilars, CVS Caremark now prefers biosimilars for more than 10 drugs on its template formularies, Ed says.
• CVS Caremark is adding Zepbound back to its commercial template formulary on Oct. 1 after using its scale to drive competition and reduce GLP-1 costs.
• “Our focus is on lowering costs, providing a best-in-class member experience, being hyper-transparent and consultative,” Ed says.
• “Our focus is on lowering costs, providing a best-in-class member experience, being hyper-transparent and consultative,” Ed says.
Creators and Guests
What is Big Questions Answered?
Big Questions Answered helps us understand important CVS Health initiatives by taking a closer look at new products, powerful innovations and the big changes the company is making to achieve its strategic imperatives and build a world of health around every consumer. The company's senior leaders answer big questions from host Matt McGuire.
Matt McGuire
Prescription drug prices remain a major concern for employers, health plans and patients. The high cost of specialty medications and GLP-1 treatments is putting pressure on benefit budgets, and affordability remains an issue at the pharmacy counter for many patients.
In this episode of Big Questions Answered, we explore how CVS Caremark is addressing these challenges through greater pricing transparency, making GLP-1s more affordable and expanding access to lower-cost biosimilars.
Welcome to Big Questions Answered, a podcast that helps us understand the important initiatives at CVS Health. I’m Matt McGuire from the Enterprise Communications team. I’ll be your host as we dive into the latest developments, breakthroughs and innovations that are helping us achieve our ambition to become America’s most trusted health care company. Thanks for joining me today as we get our big questions answered.
I'm here with Ed DeVaney, the President of CVS Caremark. In his role, Ed leads the sales, marketing, network and pharmacy benefit manager product teams, ensuring that we're listening to our customers, helping them navigate an ever-changing environment, and creating solutions that support their unique benefit strategies.
Ed, thank you very much for stopping by.
Ed DeVaney
Thank you, Matt. I appreciate the opportunity.
Matt McGuire
So, Ed, pharmacy benefits are at an inflection point. What’s driving that? And what is CVS Caremark doing in response?
Ed DeVaney
Matt, I think that’s a great question. And each and every interaction we have with customers, they are stating that the trends that they are experiencing both in the medical and pharmacy benefits is not sustainable.
If you look at the plan design in which our customers are enrolled in, about 50% of members today are enrolled in a high-deductible health plan, which means that these members have to pay first dollar pocket out of coverage. And when there's a sticker shock associated, whether with a medical benefit or even a pharmacy benefit, those consumers are acting, meaning that they're talking to legislators around the affordability crisis in which they are facing. So, with that, these consumers are talking to legislators, legislators are bringing through legislation. You're seeing that both at the federal and state level.
I think what affords us the opportunity to stand tall and proud in front of customers is we have navigated to a different type of market moving forward, meaning that we have already moved into one of the most transparent economic models in the marketplace. So, our customers, whether a health plan or employer, they’re actually seeing the ins and outs of the contract come out, whether it's through disclosure or full pass-through, whichever that customer opts to choose. And if you think about it from our perspective, we align with our customer base on what matters to them most.
I've been in this business over 20 years, and every single year what matters most to customers is being the best managers of their spend and driving a best-in-class member experience. We emphasize this with our strategy and we bring forward solutions that align with our customers' priorities.
Matt McGuire
Yeah, I mean, aligning with what matters most to customers is a business strategy that makes sense to me. So, Ed, earlier this month, CVS Caremark removed Stelara from its commercial formularies. And patients have access to Pyzchiva and Yesintek, the lower-cost, interchangeable biosimilar alternatives, which the company introduced to formularies last summer. Can you tell me about this change?
Ed DeVaney
We have a history within CVS Caremark of being a leader and preferring biosimilars on our template formularies. Let me tell you a quick story about Humira. We were the first in the market to exclude reference brand Humira from our template formulary. This saved our customers more than $1.8 billion. And from the consumer perspective, more than 80% of those members paid $0 out of pocket. So, if you think about it, today on our template formulary, it's just not about Humira or Stellara. We have more than 10 drugs where we prefer biosimilars. These are drugs such as Neupogen, Neulasta, as well as Epogen, Avastin, and Herceptin. While not commonly known as Humira or Stellara, they show our broad focus on bringing cost savings and value to not only customers, but also the end consumer.
The Stellara removal is really built on the existing strategy and playbook that we developed as we thought about excluding Humera from our template formulary. Again, more than 80% of these members are expected to pay $0 out of pocket. And for our customers, employers and health plans, which are the payors of health care in the United States for majority of the population, this is bringing massive savings opportunities that will ultimately hit these companies' bottom lines.
So, the key point from our perspective is biosimilars have existed in the market for a long time. CVS Caremark is the leader with our strategy to create a market so that both clients and members can realize the savings potential and reduce trends year over year.
Matt McGuire
That’s great to hear how we’re continuing to create new ways for clients and members to save. So, speaking of financial matters, how are medications for obesity, such as Zepbound and Wegovy, changing the conversations around health care costs?
Ed DeVaney
This comes up in every single client meeting. And it's probably the most polarizing topic I've experienced in all my years here within CVS Caremark. Every customer that covers it is looking for opportunities or at least exploring opportunities to not cover weight loss GLP-1s. And every customer that is not covering today are seeking solutions where they could cover it. But the reality is they are simply too expensive for most employers and health plans to cover it.
At the end of the day, clients are seeking a way to cover these medications. So it was up to us as being the best managers of our customer spend to come up with innovative solutions that can drive value within these therapeutic classes, namely weight loss GLP-1s.
Matt McGuire
So, I see that CVS Caremark is adding Zepbound back to its commercial template formularies on October 1. What motivated the company to remove it last summer and then add it back this fall?
Ed DeVaney
So, each and every day, as I talked about, this weight loss GLP-1s come up in every single client meeting. And our customers and consultants, they were the ones that came to us and stated, we want you to do what you do best, drive competition, and reduce the cost of these medications. We were the only ones that excluded one of the branded medications from the therapeutic class for weight loss GLP-1s in 2025.
Now, as we continue to evaluate alternatives and solutions to continue to lower the cost, we have added Zepbound back to formula. And again, this is a matter of us driving additional competition to lower the cost. We saw through that process that we were able to, again, even adding Zepbound in, that we could continue to drive the most affordability across the market for these drugs, both Zepbound and Wegovy. At the end of the day, we are ultimately looking to drive affordability and optionality within this class. Recognizing not all buyers are the same, we have created a mechanism now of A, having the best cost for our customers to rely on, but also offering customization and optionality where customers wish to pursue a different direction.
Matt McGuire
Fortunately for customers and patients, it doesn’t stop there. How else is CVS Caremark making prescription drugs more affordable for consumers?
Ed DeVaney
I think it really starts with us not being afraid to challenge the status quo. How do we leverage our scale, drive competition, what ultimately is going to lead to innovations? And a few examples.
We were the first in the market to deliver point of sale rebates to our customers. We were the first in the market to add biosimilars to our template formularies and actually prefer them over high-cost reference brand. And we were the first to bring forward a transparent economic or pricing model.
We are not nervous about bringing forward innovations, of leveraging our scale, driving competition, but we are nimble enough to challenge that status quo that can ultimately create change. And that change ultimately is going to deliver value for our payors and the end consumer.
Matt McGuire
I like the sound of that. So, to close things out, Ed, how do you see the pharmacy benefit marketplace evolving over the next three to five years? And how will the changes impact clients and members?
Ed DeVaney
I'm going to start on the recent legislation. So, we saw not only the CAA or Appropriations Act, as well as the FTC interim settlements. These, from a federal perspective, are really serving as a clearing event. Now everyone in the market is playing by the same set of rules, meaning that we have to pass through or disclose all revenue streams that are part of the business. The focus will remain directly on our customer tomorrow, as it always has. And our customers have always driven the innovations and strategy of our company. As a result, our focus is on lowering costs, providing a best-in-class member experience, being transparent, and being proactively consultative about potential changes or future changes that we expect within the pharmacy supply chain.
In addition to that, with the opportunity to leverage the newest technologies,
we are focusing on leveraging technology to reduce friction, to ultimately simplify the experience for the end consumer. We do have contracts today. I look at CalPERS [California Public Employees' Retirement System] and I was part of their board presentation where their board director actually stood up and said, “We think the way this contract is written
is a best-in-class contract for PBMs and payors.” We couldn't agree more. We have fully aligned interests. We are transparent, and we are disclosing and passing through, all value that's associated with the supply chain.
To me, moving forward over the next 3-5 five years, does two things. One, it reinforces that CVS Caremark strategically has been on the right path for three years, which is ahead of others in the marketplace. Also, it's an opportunity for us to bring forward our thought leadership and our willingness to be innovative and really challenge the status quo to deliver savings and value to the consumer, employers, government, Taft-Hartley accounts, and all members in which we are privileged to serve.
Matt McGuire
Innovating, delivering savings, focusing on the customer. Ed, this all sounds great. Thank you for stopping by. I had a great time talking with you.
Ed DeVaney
Thank you, Matt.
Matt McGuire
And a big thanks to you for tuning in to this episode. Until next time, I'm Matt McGuire. I look forward to joining you again to get more big questions answered.