Gaining Lives With OurGaining Lives With Our Unique PBM Capabilities
Jon RobertsExecutive Vice President & President, CVS/caremark
Agenda
Performance HighlightsPerformance HighlightsPerformance Highlights
Pharmacy Trends and Cost Management
Performance Highlights
Programs
Well Positioned to Grow in Evolving Health Care Environment
2©2014 CVS Health
Delivering on Our Promises with Strong PBM PerformancePBM Performance
Net Revenue($, billions)
Operating Profit($, billions)
76.2
98.213.6%CAGR13.6%CAGR
3.1
3.814.6%CAGR14.6%CAGR
58.9 2.2
3.1
2011 2013 2015E 2011 2013 2015E
3©2014 CVS Health
Notes:1. 2013 excludes Provigil.2. 2015 reflects midpoint of guidance ranges.
2015 Gross New Business of $6.6 Billion
$1.3billion
$6.6billion$2.1
$3.2billion
State of Florida
billion
Government & Union EmployerHealth Plan
4©2014 CVS Health
Notes:1. As of 12/4/14.2. Gross Wins excludes Medicare Part D SilverScript individual products.
Net New Client Business of $3.2 Billionwith 96% Retentionwith 96% Retention
Revenues($, billions) 75% of client non-
renewals due to 6.6 1.8
0.8
acquisition and retirees
3.20.8
Business Not Renewed
Gross New Business
Acquired Moved to Exchange (Primarily Retirees)
Other Net New Business
4 million members implemented in 2014 … clients highly satisfied
Business (Primarily Retirees)
Notes:1. As of 12/4/14.2 Net New Client Business excludes Medicare Part D SilverScript individual products
5©2014 CVS Health
2. Net New Client Business excludes Medicare Part D SilverScript individual products.3. Client retention rate is defined as: 1 less (projected 2015 lost revenues from known terminations occurring after January 1, 2014,
divided by estimated 2015 PBM revenues) expressed as a percentage. Both terminations and PBM revenues exclude the individual PDP business.
How We Win: Compete on Price, Differentiate with Service and CapabilitiesService and Capabilities
Advanced Formulary Adherence
Programs
Network StrategiesPreferred Network,
MaintenanceExclusive Specialty y
Strategies ProgramsMaintenance Choice®
Specialty
6©2014 CVS Health
Aetna: Continuing to Expand Our Partnership
Aetna Medicare Business
Coventry Commercial and Medicaidus ess a d ed ca d
Q1 2015 Q1 2016 2017
Coventry M diMedicare
Maintenance Choice® and Pharmacy Advisor® continue to expand
7©2014 CVS Health
Note:1. Aetna Medicare Business lives are moving to the CVS/caremark platform in Q1 of 2015.
Maintenance Choice®: Client and Member Value Drive Continued AdoptionDrive Continued Adoption
~34
Maintenance Choice Adoption(members, millions)
20 to 21
10.8
20 to 21
2009 2012 2015E Runway
2.9
2009 2012 2015E RunwayMaintenance Choice 1.0 Maintenance Choice 2.0
8©2014 CVS Health
Note:1. Maintenance Choice 1.0 includes Mandatory, Mandatory Opt-Out and Incentive based.
Specialty ConnectTM: Like Maintenance Choice®, Only CVS Health Can OfferOnly CVS Health Can Offer
Choose Where to Send / Bring Prescription
Choose Preferred Delivery Location
Counseling From Therapy-specific
CareTeamsg p Delivery Location CareTeams
CVS/specialty Home / Location of Choice
CVS/pharmacy CVS/pharmacyFull Integration With
CVS/specialty
~75,000 patients served … half choose the retail pick-up option
9©2014 CVS Health
Pharmacy Advisor® Serves All Our Lines of Business
• Successfully d l d
Cumulative Counseling Interventions(millions)
9 9 deployed across Commercial, Medicare and Medicaid
7.2
9.9
Medicaid
• Delivering value in Medicare on
3.8
in Medicare on Clinical Star Measures
Q4'11 Q4'12 Q4'13 Q3'14
1.3
Q4 11 Q4 12 Q4 13 Q3 14
Retail Call Center
10©2014 CVS Health
Note:1. PBM: Commercial, Medicare, Medicaid and Exchanges.
CVS/minuteclinic Savings Strategy Continues to GrowGrow
• ~14 fold increase in member Client Adoption
(members, thousands)
lives enrolled in three years
• Launched capability to 1,200
14,500
adjudicate CVS/minuteclinicservices through PBM benefit~14X
• Significant opportunity to grow lives with CVS/minuteclinicremains
23910888
1.2 million total implemented and committed lives to date
2015201420132012 Runway
11©2014 CVS Health
Note:1. CVS Caremark Product Team master client pipeline tracking. Based on implemented plans thru 2014.
Enterprise Share: ~40% of PBM Prescriptions Through CVS Health ChannelsThrough CVS Health Channels
CVS Health Share of CVS/caremark Prescriptions
40%
58%
40%
28%
Book of Business Employer Health Plan
Opportunity to drive additional enterprise share with health plans
12©2014 CVS Health
Note:1. Enterprise share (includes mail) for the nine months ended September 2014.2. Book of Business includes Medicare Part D SilverScript individual products .
Agenda
Performance HighlightsPerformance Highlights
Pharmacy Trends and Cost Management Pharmacy Trends and Cost Management Programs
Well Positioned to Grow in Evolving Health Care
Programs
Environment
13©2014 CVS Health
Fewer New Generics to Mitigate Trend: Spend Management Programs Increase in ImportanceManagement Programs Increase in Importance
Total Brand Market Sales of Expected Generic Launches($, billions)
35.0
24.4
14.7 16.5
24.4
12.3
5.8
2012 2013 2014E 2015E 2016E 2017E
Note:1 2013 d i i l d ll t l l h
14©2014 CVS Health
1. 2013 and prior includes all actual launches.2. 2014E forward includes all actual and expected generic launches in total brand numbers.3. Forward-looking information assumes no “at risk” launches.Source: Total brand market sales estimates represent 12 months of sales as reported in the IMS Health NSP file.
Specialty is Growing in Absolute Dollarsand Percent of Total Spendand Percent of Total Spend
Total Industry Specialty Spend($, billions)
235
127
179
235
17%CAGR
92CAGR
2012 2014E 2016E 2018E SpecialtyPercent
30% 38% 45% 50%
Pharmacy spend Infused oncologyMedical spend
Percentof TotalDrug
Spend
15©2014 CVS Health
Source: NHE, Artemetrix, CVS/caremark internal analysis, 2013.
Pharmacy spend Infused oncologyMedical spend
Return of Double-digit Trend Requires Tighter Cost Controls
Payor Trend
Cost Controls
10 3%10.3%
3.8%
0.1%
2012 2013 2014E
16©2014 CVS Health
Source: 2014 - Enterprise Analytics as of Q314; excludes compounds due to client-specific strategies.
Our Unique Set of Tools to Manage Trend
Managed Ad d S i ltF l
Traditional / Non-specialty Drugs
Specialty DrugsIn Pharmacy
Specialty Drugs In Medical
Managed, Advanced, Value Advanced Specialty
30- and 90-day Retail, Mail, Maintenance Choice Preferred, Exclusive and Infusion Networks
Formulary
Networks ,
Prior Authorization, Retrospective review
Cross-Benefit Clinical Guideline Management and PA
Utilization Management
Site of Care Transition Management with Coram Nurses
Prior Authorization Pharmacy Benefit Medical Benefits Claims
Site Of Care
Claims Prior Authorization, Retrospective Review
Pharmacy BenefitClaims Edits Edits with Novologix
Technology
Pharmacy Advisor® CareTeam including Pharmacist, Accordant and Coram Nurses
Claims Editing
Care Coordination
17©2014 CVS Health
Coordination
A Closer Look: Our Formulary Options Save Clients Money and Drive Increased Use of GenericsMoney and Drive Increased Use of Generics
Managed Formulary
CVS/caremark led industry with introduction of strategy to exclude certain branded drugs from formulary
• Approach delivers savings to clients and their members
• Improved rebates on formulary brandsImproved rebates on formulary brands
• Increased penetration of generics
Have excluded more drugs to date than other traditional PBMs
Incremental savings of over $3 5 billion expected ’12 through ‘15
18©2014 CVS Health
Source: CVS/caremark internal data, 2014.
Incremental savings of over $3.5 billion expected 12 through 15
A Closer Look: Our Formulary Options Save Clients Money and Drive Increased Use of GenericsMoney and Drive Increased Use of Generics
Less Savings More
Managed Formulary
Advanced Formulary
Value Formulary
1% to 2% 10% to 12%3% to 5%ClientS i 1% to 2%
0 5%
10% to 12%
8% t 10%
3% to 5%
1 0%
Savings
GDR 0.5% 8% to 10%1.0%Increase
Incremental savings of over $3 5 billion expected ’12 through ‘15
19©2014 CVS Health
Source: CVS/caremark internal data, 2014.
Incremental savings of over $3.5 billion expected 12 through 15
A Closer Look: Our Network Options Offer Savings and Choiceand Choice
Less Savings More
Retail 90 Maintenance Choice®
2.0Maintenance Choice®
1.0
90-dayNetwork
30 day
National Advanced ChoiceTM Exclusive Choice
68,000h i
50,000h i
19,000h i30-day
Networkpharmacies pharmacies pharmacies
20©2014 CVS Health
Agenda
Performance HighlightsPerformance Highlights
Pharmacy Trends and Cost Management Programs
Well Positioned to Grow in Evolving Health Care Well Positioned to Grow in Evolving Health Care Environment Environment
21©2014 CVS Health
Evolving Health Care Environment: Consumer is at the CenterConsumer is at the Center
3X150% 3Xexpected covered lives by 2018
%growth in CDH enrollment
10K 40+%CONSUMERS
10K people per day turning 65
40+% projected increase in lives from 65 2013
22©2014 CVS Health
Source: CDH - Employer Health Benefits Survey 2014; Exchanges - CBO 2014 beginning with 2013 enrollment; Medicaid – Avalere 2014; Medicare: Pew Research Center.
Five Factors Positioning Us for Solid Growth
Positioned To GrowWith O I t t d A t
1 2 3 4 5
With Our Integrated Assets and Deep Expertise
Supporting Providers in
New Reimbursement
Winning With Health Plans
Growth in Government Programs:
Medicare and
Only CVS –Differentiated
Member Experience
Exceptional Service
ModelsMedicaid
Investing for the Future
23©2014 CVS Health
Only CVS – Differentiated Member Experience: Helps Members Better Manage Health and Costs
1
Helps Members Better Manage Health and Costs CVS Retail Pharmacist
CVS/minuteclinicNurse
CVS/specialty CareCall Center CVS/specialty Care Team
Call Center Pharmacist
Infusion NurseBenefit Opportunity
Specialist
Digital Tools
24©2014 CVS Health
Growth in Government Programs: Medicare Growth Through SilverScript and Our Health Plan Partners
2
Through SilverScript and Our Health Plan PartnersMedicare Members By PBM
(millions)SilverScript Choice
and SilverScript Plus
CVS Health
Express Scripts
OptumRx
7.2
6 9
8.4• Competitively priced
• Zero deductible and
Catamaran
Humana
CVS Health 6.9
6.3
3.9
Zero deductible and low premium
• Personalized
Prime
Cigna 1.6
1.5
marketing
Envision
MedImpact
Captive PDP Captive MAPD NonCaptive
0.7
0.4
25©2014 CVS Health
p p p
Source: CMS (Membership figures as of October 3, 2014)
Growth in Government Programs: Medicare Membership Projected to be ~7.5 Million
2
Membership Projected to be 7.5 MillionJanuary 2015 CVS/caremark Projected Medicare Members
(millions)
0.47.50.2
6.9
2015E Medicare Members
Health Plan & EGWPs
Individual PDP
2014 Medicare Members
26©2014 CVS Health
Note: Preliminary projections on 12/8/14 after the close of the Medicare Annual Enrollment Period.
Growth in Government Programs: Increased Medicaid Enrollment with Lives Growth
2
Medicaid Enrollment with Lives Growth2015 Managed Medicaid PBM
(estimated % of lives)Managed Medicaid Enrollment
(lives, millions)
40+%
Express Scripts21%
34%Other
312.8
44.4
40+%
9.9
31.78
Prime
MedImpact8% 19%2016 MCO
EnrollmentNew
EnrolleesIncreased
Utili ti f2013 MCO Enrollment Prime
2% Catamaran6%
OptumRX10%
EnrollmentEnrollees from ACA Eligibility
Expansion
Utilization of MCOs and
Organic Growth
Enrollment
27©2014 CVS Health
Source: CVS/caremark analysis, Avalere September 2014. MCO = Managed Care Organization
Winning with Health Plans: $3.2 Billion Gross New Business and 30 Total Exchange Clients in 2015
3
Business and 30 Total Exchange Clients in 2015
Comprehensive services that meet needs for cost Unique PBM pcontrol, quality, enhanced capabilities
Holistic approach to manage specialty pharmacy
qModel
Comprehensive Holistic approach to manage specialty pharmacy across both pharmacy and medical benefits
pSpecialty Solutions
Enterprise services that create competitive advantage in the B2C environment
Member Access and Engagement
Line of business expertise to drive growth, compliance and innovation
Expertise in Government Programs
28©2014 CVS Health
Supporting Providers in New ReimbusementModels: Patient-centered Medical Home Example
4
Models: Patient centered Medical Home Example
CVS/caremarkCVS/pharmacy
Pharmacists provide counseling on adherence
and comprehensive medication review for
Adherence counseling and Electronic Health Record notification of patient non-adherence medication review for
vulnerable patientspatient non-adherence
and gaps in therapy
CVS/specialty
CareTeam pharmacist
CVS/minuteclinic
Support their patient management with Patient-centered
M di l Hp
and Accordant nurse serve as extension of
clinical team
programs such as diabetes counseling and
smoking cessation
Medical Home
29©2014 CVS Health
Supporting Providers in New ReimbusementModels: Patient-centered Medical Home Example
4
Models: Patient centered Medical Home Example
CVS/caremarkCVS/pharmacy
Pharmacists provide counseling on adherence
and comprehensive medication review for
Adherence counseling and Electronic Health Record notification of patient non-adherence medication review for
vulnerable patientspatient non-adherence
and gaps in therapy
CVS/specialty
CareTeam pharmacist
CVS/minuteclinic
Support their patient management with Patient-centered
M di l Hp
and Accordant nurse serve as extension of
clinical team
programs such as diabetes counseling and
smoking cessation
Medical Home
30©2014 CVS Health
Exceptional Service: We’re Raising the Bar toEnsure Continued Success
5
Ensure Continued Success
Continue to Evolve Service Culture
Invest inInfrastructure
Monitor Performance Service Culture Infrastructure
• Define success
• Make the metrics
Metrics
• Integrated delivery channels
• Holistic view of operational
• Make the metrics visible
• Reward achievement
• Automated benefit builder
• Artificial intelligence
performance
• Early detection of trends; avoidance of
in call centers
• Digital capabilities
escalated issues
• Speedy resolution
31©2014 CVS Health
Positioned for Today, Preparing for Tomorrow
Investments and Innovations address payor needsMade the Right Moves
Effectively engaging members and providersMade the Right Moves
Winning in the marketplace with integrated model
S l d ti titi i iStill Onl CVS Scale and expertise ensure competitive pricing
Differentiated offerings drive client retention and winsStill … Only CVS
Continue to expand unique breadth of capabilitiesLooking Ahead Continue to expand unique breadth of capabilities
Partnering with health plans to meet their needsLooking Ahead …
Continued Innovation
Unmatched capabilities to win in fast-growing sectors
Positioned for sustainable growth as market evolvesSustainable Growth
32©2014 CVS Health Gaining Lives With Our Unique PBM Capabilities