CVS Caremark taps Lofberg to head PBM business

WOONSOCKET, R.I. As anticipated, CVS Caremark has named a new president for its PBM business. The company’s selection of Per G.H. Lofberg further illustrates CVS Caremark’s growing commitment to the field of personalized medicine and its importance to the industry.

Lofberg will succeed Howard McLure, who retired as president on Nov. 27, 2009, as president of the PBM business. Lofberg served as president and CEO of Generation Health, a genetic benefit management company that now has increased financial and strategic ties to CVS Caremark.

Tom Ryan, chairman, president and CEO of CVS Caremark, had announced plans to hire a replacement by the end of 2009, and told attendees during a recent Credit Suisse Healthcare Conference in Arizona that he was “focusing on someone from the outside” and someone “who understands the PBM business and understands the nuances of the PBM business.”

There are several reasons why the appointment of Lofberg makes sense for CVS Caremark. First, he has more than 30 years of experience in health care and the PBM industry, including the role of chairman for Merck-Medco Managed Care LLC, which later became Medco Health Solutions. Second, CVS Caremark has increased its investment in Generation Health and voiced its commitment to expand pharmacogenomic (PGx) clinical and testing services for its PBM clients.

In taking a deeper look at the selection of Lofberg, it also is somewhat reminiscent of the path that Chip Phillips took within CVS Caremark. As CVS Caremark looked to sell the retail-based clinic model to payers and advance the integration of the various components that make up the total CVS Caremark offering (i.e. PBM, mail order, specialty pharmacy and retail clinics), Phillips moved from the PBM side of the business in 2008 to lead MinuteClinic. In July 2009, it was announced that Phillips had accepted a new role as president of TheraCom, a CVS Caremark company that helps biotech and pharmaceutical companies commercialize their specialty products.

Now this cross-pollination of sorts is surfacing within the field of personalized medicine with the appointment of Lofberg, as CVS Caremark clearly is voicing its commitment to making genomic benefit management an integral part of its PBM offering.

Furthermore, Lofberg discussed some of the parallels with the PBM business during a podcast interview in early 2009 with David E. Williams, a co-founder of MedPharma Partners LLC, a strategy consultant in technology-enabled healthcare services, pharma, biotech and medical devices.

“I think a piece of this resembles the way the PBM business evolved. It has to do with assembling the critical mass of subject matter expertise, and then to build systems that are specifically focused on this business,” Lofberg told Williams. “So, if you go back to the PBM base again, there was really nothing patented or highly proprietary about what the PBMs did. But what ended up happening was that the systems that were built became significantly different from the traditional insurance company medical claims payment systems,” he continued.

“So, we’re hoping that this is a time when payers will want to be early adopters and take a lead in building programs that are going to be incredibly important for them for the next couple of decades,” Lofberg added.

According to Generation Health, genomic testing represents a $3 billion market that is growing 45% annually. There are at least 100 new tests added each year, and they usually are priced at several hundred dollars each.