CVS 4Q16 Earnings Call Notes

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Larry Merlo

Extremely difficult to comment on ACA scenarios

“So with that, let me move on to the topic of the potential repeal and replacement of the ACA. We believe it’s important to provide affordable coverage for all Americans, which both Democrats and Republicans have acknowledged. However, at this point, it’s extremely difficult for us to comment on the possible scenarios that may play out in the coming months.”

We are the solution not the problem to rising drug prices

“I also want to address the ongoing rhetoric around drug pricing. And whether it’s new launches at elevated price points or increasing prices of older drugs, those contributing to a sense that government interventions are necessary and any suggestion that PBMs are causing drug prices to rise is simply erroneous. We are the solution and not the problem. And that’s why both public and private payers continue to count on PBMs as indispensable partners that help to manage their drug trend.”

Managing specialty pharma is top of mind for clients

“, top of mind for our clients continues to be managing their rapidly growing specialty trend. And we offer a comprehensive set of solutions and continue to see solid growth in specialty. And specialty revenues increased 12% in the fourth quarter, continuing to outpace the market.”

Pharma copmanies have lost $100 B of branded drugs

“you look back and you think about just the sheer number of branded products that have come off patent over the last four, five years. We’ve got nearly $100 billion of branded drugs that have lost patent protection. Obviously, that’s created somewhat of a headwind for the pharmaceutical industry. You’ve got new products that have entered the market that to some degree I describe as me-too products that are entering the market at inflated price points with no incremental effectiveness over the existing therapies. So why should sponsors of care pay for a higher price of those drugs, especially when many of those drugs are the ones that we’re seeing advertised on TV, okay, countless times; and there’s a cost to that. So I think when you start connecting the dots in terms of why the rhetoric now, what has changed in the marketplace that is driving this, it starts to bring some of that dialogue to the discussion.”