In a bid to dampen rising drug costs, CVS Caremark plans to allow its clients — such as health plans and employers — to exclude from their formularies any new medicine that has a higher price than a particular benchmark for determining value. The pharmacy benefit manager will set a threshold of $100,000 per QALY, or quality-of-life years, a barometer that measures both the quantity and quality of life generated by providing a treatment or some other health care intervention. The move, which begins Jan. 1, comes as PBMs are under pressure to demonstrate their own value at a time of rising drug prices. We spoke with Dr. Troyen Brennan, an executive vice president and chief medical officer at CVS Health (CVS), the parent company, about the implications. This is an edited version of our conversation.
Pharmalot: Why take this approach and why now?
Brennan: The one part of pharmaceutical pricing that we don’t have much control over is the initial launch price. Some company gets a patent and then decides that the product goes to market at whatever price. By taking this approach, we hope to take advantage of the competitive marketplace and get a reasonable number of our clients interested in launch prices that are tied to this cost-effective measurement. And we hope to get reasonable parameters for particular medications, too.
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