Keynote address by Thomas M. Moriarty, Executive Vice President, Chief Strategy Officer and General Counsel at the Bloomberg Intelligence Healthcare Summit, March 23, 2017.

1. Private Sector Solutions
to America’s Health Care
Challenges
Thomas M. Moriarty
Executive Vice President, Chief Strategy Officer
and General Counsel

2. Addressing Chronic Disease
2
1 in 2 Americans have a chronic disease
1 in 6Americans have three or more chronic conditions.
85% of all health spending on Americans with chronic conditions
46% of all Medicare dollars spent on patients with 6+ chronic conditions
Source: 2013 CVS Caremark Enterprise Analytics. Projections based on CVS Caremark data. Individual results will vary based on plan design, formulary
status, demographic characteristics, and other factors

3. Market Dynamics
3
1. High launch prices for branded products
2. Price increases for older drugs
Pricing Dynamics:
• Sales and marketing outpace R&D
• Slow drug approval timeline
• More ‘me-too’ drugs, less innovation
• High deductible health plans
Causes of High Cost Drugs:
$

4. Pharma has Shifted its Business Model to
Maintain Profits
4
$0
$1
$2
$3
$4
$5
$6
2013 2014 2015
DTC Advertising Spend
Spend(inBillions)
$3.8
$4.53
$5.40
Source: FDA, Nielsen and Kantar Media

5. US Drug Approval Process Lags Behind
EU
EUROPEAN MEDICINES AGENCY
• Average drug approval time 12
months
• In 2016, 81 new medicines
• 20 approved biosimilars
FOOD AND DRUG
ADMINISTRATION
• Average drug approval time 18
months
• In 2016, 22 new medicines
• 4 approved biosimilars
5
>

6. Touchpoints Across the Healthcare
Continuum
6

7. Improved Medical Adherence is Essential
7
• Prescription drugs are the ”first, logical
choice for medical intervention” for nearly
90% of people with chronic and complex
diseases.
• Improved medication adherence could
save nearly $300 billion in unnecessary
medical costs each year.
Source: Medco 2011; CVS Health Insights, “adherence,” Fall 2014

8. Reducing Preventable Hospital
Readmissions
8Source: 2013 CVS Caremark Enterprise Analytics. Projections based on CVS Caremark data. Individual results will vary based on plan design, formulary
status, demographic characteristics, and other factors
1 in 7 patients are readmitted within 30 days
2/3 of hospital readmissions are due to medication issues (non-
adherence and adverse drug reactions)
Up to ¾ readmissions are preventable
65% savings, totaling $3,324 per patient, from reduced readmissions
as a result of pharmacist interventions

9. Part D Has Been a Success
PREMIUMS HAVE BEEN STABLE1 Costs Remain Low, Satisfaction High, More
Savings Available
• Part D costs have been 45 percent below the
original CBO projections by $349 billion2
• Average premiums are stable over time. 2017
monthly premium is approximately $341
• Use of PBM tools will save Part D and its
beneficiaries nearly $257 billion from 2016 to
20253
Source: 1- Medicare Trustees Report 2- CBO Projections https://www.cbo.gov/topics/health-care/medicare 3-http://thatswhatpbmsdo.com/wp-content/uploads/2016/02/visante-pbm-savings-study-Feb-2016.pdf
26 9

10. An Integrated Approach
…enabling us to help deliver superior outcomes at the lowest net cost
Cost
Mgmt
Tools Infusion
Care
Clinical
Programs
Digital
Long-
Term
Care
Retail
Mail
Medical
Benefit
Mgmt
Retail
Clinics
Specialty
Patients
Payors Providers
10

11. Market-oriented Reforms Promote
Competition, Curb Rising Costs
11
1. Increase the flow of generics and
biosimilars to market. Promote policies
that do not delay generic and biosimilar
entry.
2. Empower pharmacists to support patient
care
3. Acknowledge the role of PBMs in
keeping drug costs down.

12. FDA’s Drug Approvals Backlog Hampers
Competition
1FDA’s Generic Drug Review Dashboard. Updated July 1, 2016.
Quicker entry of generic drugs and biosimilars would remove barriers to greater competition.
• Quicker entry of generic drugs and
biosimilars would remove barriers
to greater competition.
• Over 4,000 generic drug
applications are pending at FDA.1
12

13. Greater than 90% of rebates are passed directly back to our PBM clients
Despite Market Forces, We Continue to
Help Our Clients Cut Trend
Source: CVS Health internal data analysis, utilization trend based on commercial cohort (Health Plans and Employers).
Trend is reported net of rebates. 13
Trend Drivers Trend Reducer
8.6% 0.4%
2.0% 11.0%
-7.8%
Brand
Inflation
Generic
Inflation
Utilization Unmanaged
Trend
CVS Health
PBM Management
CVS Health
Trend
3.2%

14. 14
Containing EpiPen Costs
Impact of
PBM-Negotiated
Discounts,
Rebates and Price
Protection

15. 15
CVS Health Prioritizes Affordable
Medicines for Consumers
Adrenaclick
$109.99 Cash Price
EpiPen
$649.00 Brand
$339.99 Authorized Generic

16. Private Sector Solutions
to America’s Health Care
Challenges
Thomas M. Moriarty
Executive Vice President, Chief Strategy Officer
and General Counsel