UPDATED: Feb. 12 at 3 p.m. ET
CVS Health CEO David Joyner went on the defense of the pharmacy benefit management industry on the company's fourth-quarter earnings call Wednesday morning.
PBMs have been under intense scrutiny from regulators and lawmakers who are concerned about the role that they play in the pharmaceutical supply chain as drug costs rise. However, the industry has shot back that is a critical bulwark against drugmakers and their pricing.
"One of the most powerful forces helping to offset rising healthcare costs is PBMs like Caremark," Joyner said. "These entities remain the only part of the drug supply chain and entirely focused on lowering costs, but have erroneously been subject to deceptive rhetoric and misinformation."
Joyner noted that branded pharmaceutical manufacturers "added $21 billion of annual gross drug spend through their price actions" in January. Drugs where PBMs lack tools to negotiate prices have seen prices rise more than twice as fast as other products, he said.
In addition, Joyner said that "multiple well-known economists" have projected that PBMs create $100 billion in net value each year for the healthcare system.
The Federal Trade Commission has released a series of reports on the industry following a lengthy investigation into its business practices. On the call, Joyner said those reports don't paint the full picture of what PBMs can do.
These organizations serve as "a critical counterbalance to the monopolistic tendencies of drug manufacturers," he said.
"So when you look at all the data, not cherry-picked data points like those specifically referenced in the FTC interim reports, the conclusion is clear, PBMs deliver savings to their clients," Joyner said. "Caremark has been and continues to be a critical solution to help ensure Americans pay less for drugs."
CVS Health reported $1.6 billion in profit for the fourth quarter, down from a $2 billion haul a year ago, according to its earnings report released Wednesday.
Full-year 2024 profits were $4.6 billion, down significantly from the $8.3 billion that the company earned in 2023.
Revenue was up year-over-year, however. CVS reported $97.7 billion in revenue from Q4, increasing from $93.8 billion in the prior-year quarter. Full-year revenue for 2024 was $372.8 billion, up from $357.8 billion in 2023.
The company beat the Street on both earnings and revenue for the fourth quarter, according to Zacks Investment Research.
"Our integrated model allows us to uniquely deliver a simpler, connected experience that saves time, saves money, and improves health," CEO David Joyner said. "We have continued to see growth in key areas of our business, including the Pharmacy and Consumer Wellness segment, while we address the industry-wide challenges that have impacted our Health Care Benefits segment."
CVS continued to face elevated medical costs in the fourth quarter, a trend that has battered its insurance division over the past year. It reported a medical loss ratio of 94.8% in the fourth quarter, growing from 88.5% in the fourth quarter of 2023.
MLR for the full year was 92.1%, up from 86.2% in 2023.
In addition to the continued trends around utilization, Aetna was also impacted by unfavorable results in Medicare Advantage's Star Ratings and higher acuity patient mix in Medicaid following the completion of redeterminations.
It boasted 27.1 million members as of Dec. 31, according to the report.
At its health services segment, which includes the massive pharmacy benefit manager Caremark, CVS did see revenues dip as it offloaded a significant client and pharmacy price improvements continued to roll out. However, revenues were up at the pharmacy division due in part to an increased prescription volume.
CVS said it expects to earn between $5.75 and $6 in earnings per share for 2025.