Ideas for Tomorrow – Larry Merlo, CEO and President of CVS Health (Full Program)

♪ Ladies and gentlemen, please welcome Cleveland Clinic CEO and president Dr. Tom Mihaljevic. [Applause] Good evening. Larry Merlo is president and chief executive officer of CVS Health, widely considered to be one of the top health care companies in the world. Since 1963, CVS has grown from a retail health and beauty store to an integrated provider of pharmacy, benefit services, minute clinics, and health insurance. Today our guest, Larry Merlo, leads a team of 265 thousand colleagues. So if you think that Cleveland Clinic is big with 66,000, I ask you to reconsider. With 10,000 retail locations and customers in 49 states, Puerto Rico and Brazil. Larry Merlo grew up not far from here in a small town in western Pennsylvania and his father worked in a Corning Glass Factory. In 1990, Larry joined CVS and advanced to the role of CEO and President in 2011. Under his leadership, the company has undergone a dramatic evolution and many of us have watched with amazement. In 2014, he announced that his stores would no longer sell tobacco products. He also announced that company will have a new name, CVS Health. And in 2019, CVS Health completed the purchase of Aetna Insurance, a deal that the New York Times called the big deal that has the potential to reshape the nation’s healthcare industry. Larry’s visionary leadership has brought CVS Health into millions of lives, and we’ll find out today exactly how many millions. He’s challenging the status quo to make health care more simple, local, and affordable and to help more people to achieve their best health. Here is a video about CVS Health, the company that Larry leads. ♪ Life is a beautiful journey. Everyone has their own path, and their own pace. Our job is to help them get there. And today, the way forward has never looked brighter. Because today, CVS Health has assembled all the elements to not only help those we serve get well, but help them stay well in body, mind, and spirit. Together, we’re bringing expert care to local communities, to front doors, into homes, and hands, creating welcoming moments millions of times each day, more affordable, accessible, simple, and seamless. We are health care innovators delivering health with heart, firm in our belief that when we put people first, we move health forward. It’s a new day in health care. And tomorrow, we’ll go farther still. Because life is a beautiful journey. ♪ And no matter where you want to go, we’ll be with you, all the way. ♪ Please join me in welcoming Larry Merlo. [APPLAUSE] Please have a seat. So, for our audience, this is going to be a great conversation because I think we’re going to address every single issue in health care, with solutions, as well. I hope everybody packed the sleeping bag. So, thank you very much for coming. It’s great to be here. Thanks for having me. Thank you, Larry. This is a forum when we invite people, not only from our industry but from different parts of our society, to share their insights about important topics. And this topic about health care is a really, really important one, obviously. We here at the Cleveland Clinic live and breathe it just like you do in your organization. But before we speak about healthcare in the United States and globally, I would just like to ask you something about your background, because our audience is oftentimes interested about how do people get to the position that you have, the position when you are responsible for now more than a hundred thousand colleagues, when you are running such a large organization with the national relevance and influence. Tell us a little bit about how it all started. Tom, you mentioned I grew up not that far from here, so it’s kind of like being back home. I remember it was 1997 that CVS had actually acquired the Revco drugstores and I actually got sent to, I actually had an apartment in Stow for about 2 years as we assimilated the 2 companies. And I was telling somebody earlier, I still am a Steeler fan but that was right at the time that the Browns moved to Baltimore, which I know was a very dark time. But I was very impressed that the Cleveland fans actually adopted the Steelers for just that period of time, and then as soon as football came back to Pittsburgh, or back to Cleveland, the Pittsburgh Cleveland rivalry went right back to where it had started, so. But, I grew up in, western Pennsylvania and actually I had gotten to my junior year in high school and was really thinking about majoring in music. And then one day realized, What am I going to do with a degree in music? And I actually had a chemistry teacher, because I loved chemistry and he said, Well, if you like chemistry this much, why don’t you look at pharmacy? And so, that’s what got me on the pharmacy path and went to the University of Pittsburgh, had a great experience there and loved working in a community pharmacy. I really appreciated the role that the pharmacist played more than 40 years ago in terms of getting to know your customers and what the customers look to the pharmacist to do, and to help them with. And I tell our pharmacists this all the time. I haven’t seen this change in 40 years that you think about the pharmacist as one of the most accessible and trusted professionals and I remember customers telling me things about their health and I’d say, Well, have you talked to your physician about this? And they would oftentimes say, No, should I? And I would say, Absolutely. And every now and then, someone would say, Would you call them for me? And so I learned that, I think Tom you mentioned this earlier, that we talk a lot about making health care local, and I think that was my first experience, in terms of what that really meant for patients every day around a variety of ailments, concerns or just things that they were worried about about their family. So how did you then move from carrying this joy of your work and interacting with customers, with patients, to being a person who is responsible of leading others in that same effort? How did it come about? Yeah. Yeah. I had the benefit of working for some very talented people that taught me an awful lot about the business and really began to get very interested in the business side of pharmacy. And that’s where that all started. And in terms of taking on responsibilities outside of the store environment as in field or what’s commonly referred to as store operations. And then, I was fortunate that every time there seemed to be a special project or something that needed to be done, somebody was tapping me on the shoulder that how about doing this. And one of the things that I learned from that, and again, I tell our CVS colleagues this all the time, that I think in today’s day and age, everybody wants to get promoted. As I sit here today, if I didn’t take on those assignments that were, they weren’t promotions, they were lateral in nature, but they took me outside of my comfort zone and things that were not core to my education or my experience and if I didn’t have the opportunity to do those things, I don’t believe I’d be in the position that I’m in today. So I’m curious about when you take a role from leading a smaller group, now you’re leading a group that spans across an entire country, also obviously, in Brazil and other parts of the world. How has your management style evolved? How do you motivate such a large organization in so many different locations, different constituencies, if you will. How do motivate and to work together to work as one? Yeah, Tom, another great question. When I moved into this role, it was 2011 and one of the things that I realized is all the sudden, the team that I was a peer to, all of a sudden, I was now their boss. So those relationships changed and in a pretty material way. And all of a sudden, things that we would talk about, Well, I don’t know if I can tell him that now. He’s my boss. Ok. But, one of the things that I remember taking a step back and thinking about, What are the things that you really believe in. And I came up with my list of 10 things that for me, kind of became my guidepost. One of the things, Tom, on there that I think speaks directly to that question is, I think when we get in the roles that we’re in, folks think that we have all the answers and we don’t. There are times when we’re teachers, but there are just as many times as we’re the student. The role of communication becomes even more important than ever because, How do we make sure that we’re good listeners? We create an environment where people are being honest about when you ask the question, this dynamic of, Well, don’t tell me what I want to hear. Tell me what’s really going on, because if you don’t do that, I can’t help you, and that’s my job as a student. And I think creating that alignment across the organization I think is what becomes critically important. Can you give us the items from your 10 item list? Because everybody is waiting for that. I’ll tick the important ones. Don’t forget where you came from. And I could remember the first time I ever met one of the senior executives, I was scared to death. And at the time, that person didn’t make me feel comfortable, as well. So, we get to see colleagues and they’re gonna make an impression or they’re gonna form an impression based on, we may only have a chance to interact with them one time. And so, how do we make that experience as productive and thoughtful as we can? One of the other things that we talk a lot about is we’ve got a great organization. We’ve got great colleagues that always work hard to do the right things. But we talk a lot about when we’re working on things, take a deep breath. There’s a tendency to rush in to start, if we’re trying to fix something or build something, people are charging full steam ahead. We talk a lot about making sure that we’re solving for the right problem. So how do we make sure we’re getting to the root cause, to the right root cause? Because we could be working on the wrong thing pretty quickly. We talk a lot about that. One of the things that we talk about as a leadership team is the value of, I mentioned communication earlier, but how do we work as a team? We have such a diverse business now. We’ve got retail pharmacies and a pharmacy benefit management company and now an insurance company and some equally important, but smaller businesses. As we’re sitting around the table as a leadership team, there is no single one of us that can answer every element across the spectrum of the care that we provide. So, we talk a lot about communication and the benefits of a highly engaged conversive team, acknowledging that it’s not a democracy here. And Tom, you talked about tobacco. We can get into that later if you want. But I’ll never forget the dialogue that we had as a leadership team. I think in the role that we’re in, once we have had the benefit of getting the input that we need, then it’s decision time. As the CEO, we can’t procrastinate. So those are, I can keep going but maybe I’ll stop there. I got through about half of it. Let’s speak about tobacco. A decision that you made is now 5 years ago. Five years. We celebrated our fifth anniversary yesterday. How did you come up to that decision? What prompted you to do so? Tom, in 2007, CVS Pharmacy and Caremark, a pharmacy benefit management company, came together as one. That was really the beginning of a journey of being more than just a retail pharmacy. So that was 2007. Fast forward to 2010. We actually had, at the time, a mission and a vision. I smile about this because we had the consultants do it, that was mistake number one. Okay? By the way, we had the mission and the vision in all of our offices and I’m being honest when I say this, I had mine strategically positioned that if you were in my office and we were having a conversation, I was able to look out the corner of my eye, trying so that you wouldn’t catch me, because if someone asked me, first of all, they were long paragraphs. They were words on a piece of paper and no one knew what they meant. So, we were trying to become more of a health care company but no one understood what that was. So, we bring our top 300 leaders together a couple of times a year and in one of those meetings, we put up on the wall, here’s the mission and the vision. Tell us which one’s which. You got a 50 percent chance of getting it right. And you know where this is going. That’s exactly what we got. 50 percent got which one was the mission, which one was the vision. So, we put a cross-functional team from individuals across the organization. It was less than 20 people. We said here’s the charge. And by the way these 20 really understood what our strategy was as a company. We said we’re going to blow up the mission vision, no consultants. You guys got to come together as a team and tell us what that should be. And I got to tell you, it took them 2 weeks. I’ll never forget this because I actually had tears in my eye when they came back because a person came back and said, Larry, we came up with a purpose, in the purpose is 8 simple words… Helping People On Their Path To Better Health. That was it. We went out, we road tested it with some of our colleagues and it resonated like that. People could turn around and say, Well here’s what I do. Here’s what I do. And then we went and took it out to our stores, did the same thing. Now you could expect what a pharmacist or pharmacy technician or a nurse practitioner would say, but I’ll never forget. One of the cashiers said to me, Well, Larry, if I have a senior citizen or an elderly person who’s got a couple bags, I’m going to ask if I can help them take the bags out of the car. So those words meant something very meaningful to everybody in the organization. It began a journey of, and I tell that story because it is critical to the tobacco decision. So this was now 2011. We’re trying to do more things. We were expanding Minute Clinics. We were talking to Cleveland Clinic about how we can work together as an integrated delivery system. I could remember sitting in some of those meetings where it would be about two thirds the way through the meeting, somebody would bring up that you guys sell tobacco products, don’t you? And our chief medical officer at the time, he was in many more of those meetings. And Troy Brennan was coming back and saying, Larry, we can’t sell tobacco products. And back then, we were selling about 2 billion dollars worth of tobacco products across 7600 stores. So, this was now, we were around say 2013, where, as we were plotting out our growth plan for the next 5 years, we had to come to grips with the reality that.. Is tobacco going to be an enabler or a barrier to growth? And that was a hard decision, because you see the environment in which public companies operate today. There is a tremendous amount of short termism that exists. And what are you going to do next quarter? What are you going to do this year? And we weren’t going to make up 2 billion dollars of revenues in one quarter, or one year for that matter. So we had a lot of discussion. Back to my example, I got everybody’s opinion. And it was decision time and I said, This is going to be a barrier to long term growth. We took it to our board. And Tom, we were talking earlier, what’s the role of the board of directors? And this was a very interesting board meeting. And I give our board a tremendous amount of credit, because the discussion lasted about a half hour, because they understood our strategy, because we had talked about all of that. And our board turned around and said, Larry, you can’t sell tobacco. It’s the right decision. And I’ll never forget one of our board members said, Don’t be shy about telling this story. So, it was in February of 2014 that we announced that we were going to eliminate tobacco from 7600 stores. We would do that by October 1st. And we actually were tobacco free on September 3rd, 2014 and as you mentioned earlier, we decided to rebrand the company, our corporate name was CVS Caremark. We changed our name to CBS Health, reflecting our ongoing strategy to be more of a health care company. So this is a really important shift in your strategy in the development of your organization. If you were to go back to the beginning of your career and the industry that you’re leading today, how would you describe the changes that have happened? Oh Boy. Tom, I mean… Growing up in the retail pharmacy and some of you will remember these days. When I first started, I was managing the People’s Drugstore. I had worked for People’s Drug in Washington D.C. for 12 years and CVS acquired the People’s chain in 1990. So I was managing our store in the Georgetown section of Washington D.C., and that store had a soda fountain. So, if I was opening the store, I had to get there at 6:00 in the morning because you had to get the crew in to fire up the grill. And at 7:00 a.m. we were serving breakfast and many can remember those days where the corner drugstore was the local gathering place, had a soda fountain. And then, that transition began probably in the 70s and it continued into the 80s with fast food operators kind of taking business away from the soda fountains. And all of a sudden, the drug stores became more convenience stores and offering a little bit of everything. And Tom, I can remember in strategy sessions back in the 90s having this discussion. As CVS Pharmacy, were we a convenience store that happened to have a pharmacy in the back of the store or were we have pharmacy that had a convenience offering. Now that sounds like a very subtle difference but the answer to those 2 questions are a world apart. And we really didn’t come to grips with that question for probably another 10 years. Back in 2007 is when we really answered that question by saying we’re a pharmacy that has a convenience offering as we look to expand our role in health care. As I think about our strategy today, we’re looking at the corner drugstore as being more of a health destination that continues to have, i’ll call it a front store offering of health, beauty, personal care, and some elements of convenience, but it’s not going to be the convenience store that people have come to know for the last 20 years. And that is another really probably interesting point and a perspective for our audience might be in debunking of some of the myths about the business of Pharmacy and PBMs There is perception and there are realities. Can you name the two or three most common misperceptions about Pharmacies and PBMs and then what the reality looks like. That’s a great question. One of the things that I think is really an untapped resource and I will say the role of pharmacy that there’s nothing that’s more aggravating to a pharmacist than somebody says, All you have to do is put the pills in a bottle. When I was in pharmacy school, it was a 5 year program. Now it’s a 6 year program. You’re a doctor of pharmacy and one of the opportunities that we have broadly across healthcare is the ability for pharmacists to practice to the top of their license. The laws that govern the practice of pharmacy are largely regulated at the state level. And the laws at the state level haven’t kept up with the opportunities that exist for pharmacists to play a broader role. And we talked about tobacco as one example. The role that pharmacists can play in promoting cessation and the fact that tobacco illnesses, well over 200 billion dollars of unnecessary health care costs today. You talk about something like medication adherence. The statistics here are very alarming. Someone who is newly diagnosed, some chronic disease… by the time they get through their first year, more than 70 percent are not taking their medications as prescribed. A lot of it is, you think about high cholesterol and it’s largely asymptomatic. And as we look at adherence rates across, hypertension, high cholesterol, diabetes, you see it every day. So there’s so much more that pharmacists can do in that regard. And on the PBM side, I would say as an industry, we’ve probably created some of that with the black box mindset that is out there. I think as a company and as an industry, we are bringing more transparency to that process. But look, we have a bit of a tug of war, if you will, between the PBM industry and the Pharma industry these days, and it all centers around the cost of medications. There are huge opportunities there. You look today at, about almost 90 percent of all the prescriptions that are dispensed across the country are now generics. That’s not where we hear about the cost of medications. Today, Specialty Pharmacy is less than 10 percent of prescriptions, well under 10 percent, but yet, it’s approaching 50 percent of pharmacy costs. And that’s where we need to do more. When it comes to determining the cost of medication and obviously for us, on our side, we’re looking at a cost that continues to grow 4 to 5, 6 percent per year. What can larger organizations like yours do in order to tackle that particular problem? I know that there is also a lot of perception or misperception about a topic. Who actually determines the ultimate cost of drugs? I’m sure you must be asked about this particular issue many, many, many times. So could you just clarify this for us? How does it actually work? Well, Tom, PBMs have done a lot of good things around the use of formularies to drive down costs. And it’s easy when the branded drug loses its patent protection and you now have a generic that can be interchanged in a very simplified way. It becomes much more complex when the generic is not available. And I think as an industry over the last several years, we have seen new product launches from pharma across therapeutic classes where as you look at incremental effectiveness over the existing therapies, there really isn’t anything more that that product is doing than the existing therapies and the products are being introduced to the market at inflated price points. So as an employer, you sit here and say, Well, why should we be paying more for a product that is not going to improve the outcome for my employees. And that’s where formularies have come into use where there is a preferred branded product. What PBMs have been able to do is negotiate a discount for placement in the formulary and that has dramatically reduced the net cost of pharmaceuticals. And those rebate dollars by and large go back to the plan sponsor. I think one of the challenges, Tom, that we do have as new products are coming to market largely in the biologic space, I think we’re all becoming increasingly concerned with the launch price of those products. And we are working on new and different, I’ll say, outcome reimbursement models where you’ve now got products, you look at the auto immune therapeutic class where you’ve got products that are approved for 3, 4, or 5 different indications. They may be 90 percent effective for Indication A, 50 percent effective for Indication B. We shouldn’t be paying the same price for those 2 products, recognizing the effectiveness is going to determine the health of the patient that we’re serving. So those are things that we’re working on and I do think that we’re going to end up challenging the, I’ll say the current regulatory environment because I can see one of the dynamics that are going to get in the way is, you’ve got your best pricing as it relates to government sponsored care. I think one of the things that we’ve got to figure out is, I know pharma is going to push back on an outcomes based reimbursement that is going to force them to lower the price across the board when you look at Medicare or Medicaid recipients. We’ve got to figure out that if the drug doesn’t produce the desired effect for that particular patient, how pharma isn’t penalized across the broader book of business for that. So, it gets pretty complicated, pretty quickly, but those are things that we have begun to work on. So, I want you speak about something that has been obviously in the public eye for quite some time. Serious Aetna. How did it come about? How does it really add up to your aspiration to improve the health of a large number of people here in the United States? Well, Tom, some of it goes back to some of the things I mentioned, whether it’s the the role of the corner drugstore, the role of the pharmacist, the role that the PBM plays. CVS Health and Aetna have had a relationship that goes back to 2011. At that time, Aetna had made a decision to outsource the management of their pharmacy component to Caremark. And I could remember, for a handful of years now, talking to Aetna CEO Mark Bertolini and Mark, there’s tremendous things that we can do that will help create a better outcome for an Aetna member. And the challenge for CVS was every time we would execute one of those events, if you will, we would incur the cost of that or the cost of building out that infrastructure and the benefit would accrue to Aetna as the insurer. If we could avoid a visit to an unintended medical event and we could never figure out an economic model that made sense. By the way, Tom, that’s really what started to drive, as we at CVS thought about our strategy for the next decade, the role that the insurer now plays in this broader company. Any challenges with integration or has it been all easy? Well, you know the answer to that. I don’t think integrating 2 companies is ever easy. There’s a tremendous amount of work and activities. But I will say we’re 8, 9 months into it and very pleased with how it’s going. Interesting for the reason that I mentioned that the 2 companies actually knew each other quite well. So we understood where our cultures were similar, where they might have been different, and we’ve gotten a tremendous amount done in a short period of time. We have our, I’ll call them our laboratory stores, where we’re calling them Health Hubs, where you will see a different CVS pharmacy than what you would see here in Cleveland. We’ve taken about 20 percent of the store and we’ve repurposed it to health related services. So we have an expanded Minute Clinic, if you will. We have a nutritionist, a respiratory therapist. We have a Wellness Room where I happen to be. These stores are in the Houston market and I happened to be there one day and in the Wellness Room, they were doing chair yoga with a group of senior citizens. So, the response that we’ve seen from the customers and it’s been a short period of time, but it’s validating the belief that we’ve had about the need to make health care local and meet people where they are in their community. So let’s just speak about a really tangible improvements in, you call it a customer. We would call it a patient experience and as a result of the acquisition. Well, Tom, one of the things that we’re seeing, I know one of the questions that we often get, that as we talk about some of these, sometimes someone will say, Larry, it sounds to me like you’re trying to replace the role of the physician. And it’s interesting. I was sharing this with Tom earlier that I was in Los Angeles giving a talk to the economic club and there was a Q and A. Someone on his side of the room said, Larry, I’m listening to what you said and I worry about what you’re doing that compromises the physician patient relationship. No sooner did I, I couldn’t even answer the question, somebody jumped up and said, Well, before you answer that, I want to talk about consumerism and health care. And I’m thinking, Oh, this is, I don’t want to start a war here. But if you think about it, when we’re in the physician’s office or heaven forbid in the hospital, we are a patient in the hands of a very skilled and trusted professional. But think about all of the activities and events that lead up to that. Think about what follows that. Today, we have become consumers of health care, and there’s so much that is, it’s up to that patient slash consumer to take the patient with diabetes. They are probably visiting their physician on a quarterly basis. They leave the office with a care plan. That care plan is going to have diet, nutrition, exercise, medication. But this is where we see an opportunity to be a complement to the role of the physician, because the physician doesn’t know what’s happening in between those visits until there is an unintended medical event that requires intervention. So, we can play that complimentary role to ensure that that care plan is being followed. And we can follow that patient longitudinally and if, by the way, things are getting off track, we can get them back to the physician, or we can refer them on. One of the things that’s interesting about Minute Clinic, we’ve now had more than 45 million patient visits. And the numbers that I’m going to share with you have not changed for the last 5 years. 50 percent of the patients that we see do not have a primary care physician. 50 percent of the visits that we see are nights and weekends. And Tom, maybe just one more anecdotal story. So, let’s go back to Houston. The last visit that I made, the nurse practitioner said, Larry, I wish you were here an hour ago. We actually had a patient come in and she was complaining of abdominal discomfort. She was a diagnosed patient with diabetes who had not been back to her physician for more than 18 months. So, did an A1C test. The A1C level was over 12. So more than 2X. Called a physician and long story short, she was within weeks of some medical event that could have resulted in a stroke. You guys know the consequences there. So you think about, OK, we avoided that emergency room visit that probably, in her particular case, would have resulted in hospitalization for some period of time. I actually had a cousin who, telling the story reminds me of that, that she was a diabetic. She was very irregular in terms of taking her insulin, following her diet, and she ended up with one day her blood glucose levels shot over 600. She ended up with a stroke and ultimately blindness. And you think about quality of life, her life changed at that time. And at the same time, the annual medical expenses that she incurred, you can’t reverse it at that point. So we sit here today and we say how many times does that happen that we can be an important part of that solution. So let you speak about similar yet even much more dramatic opportunity to intervene and that is the opiate crisis, in the United States that is claiming more and more lives year after year with a tremendous impact on our country and society as a whole. What should we do differently? Well, Tom, maybe I’d just chat for a minute about some of the things that we’ve done, some of things, that we’ve learned, because you’re right. It is a crisis and it doesn’t discriminate. I think when all this started, people thought it was in the inner cities across the country and it’s in the suburbs. It’s in rural America. You often talk about the social determinants of health. This certainly falls into that. One of the things that we started doing, I’m gonna say 4 years ago, is empty out your medicine cabinet. We started doing drug take back programs all across the country. We worked with local police municipalities in terms of putting drug take back boxes there, and then ultimately putting them in many of our stores. So, between police department stores, we have between 2500 and 3000 places where you can safely dispose unused medications and we will properly dispose of it, so that it’s environmentally friendly. To date, we’ve taken back over a million pounds of unused medication, million pounds. That’s just us. And I know, as an industry, many others have joined with similar programs. To be clear, this is not all opioids. OK, we can empty every medicine cabinet in America and back to the things that I believe in, How do we get to the root cause? And one of the things we quickly realized is, why do we have people leaving the dentist’s office after a tooth extraction with a prescription for 30 Hydrocodone or Oxy or someone, joint replacement or an ankle sprain, that they’re leaving the physician’s office or the emergency room with quantities well in excess of what’s required for treatment, and acknowledging that these unused quantities are getting into the wrong hands. So, this would have been 2 years ago actually this September. We embarked on a program that if you’re a first time opioid user, we’re going to work with your physician to ensure that we’re not dispensing more than a 7 day quantity. Over the past year, the number of prescriptions that we have dispensed for more than 7 days supplies have decreased by 78 percent. I would say that that’s a good start. We actually have about 30,000 pharmacists that are on our payroll in 10,000 communities across the country. So today, you have 75 percent of the U.S. population actually lives within 3 miles of a CVS. So, our pharmacists have gone out into the communities, into schools, educating students on the dangers of prescription drug abuse and we’re up to about 600,000 students, where we’ve been able to engage in those conversations. Tom, if you turn around say, What more do we need to do? Because obviously the work is far from done. I think we’ve got to continue the education. We’ve got to bend the curve in terms of just the indiscriminate prescribing and use of opioids. I know the pharma industry is continuing the journey of, Can we find a non addictive pain treatment? I don’t think we should wait for that. There are things that we also need to do. I could remember as a practicing pharmacist the term, corresponding responsibility. If a physician had his or her prescription blank stolen, then the office manager was calling the pharmacy saying, Look, be on the lookout. Bah bah bah. And as a pharmacist, you had a sense of where someone took the 3 on the prescription and tried to make it a 9. And you knew what to do. And today, it’s gotten a lot more complicated than that. You got pharmacists that are on the front line that are trying to determine, Is this prescription which now is a legal prescription written by a licensed prescriber, is it written for a legitimate medical purpose? And we’ve invested in technology and analytics to help our pharmacists separate fact from fiction there. And look we have stopped filling prescriptions for about 500 physicians across the country. [Q& A PERIOD] The question was what we’re doing internationally. I’m gonna say this might have been 7 years ago. Our closest international would have been Puerto Rico, which there’s a different language there, but it’s not International as we would think about international. And we acquired a small chain in Brazil. It was about 40 stores, a retail pharmacy. And we knew what we didn’t know, and then we knew that there was going to be another list of things that we did know we didn’t know. We had made a decision after we got into that that as a strategy for our company, trying to open drug stores globally was not where we wanted to go. As we looked at the globe, there were some additional opportunities in Brazil. But beyond that, we didn’t see opportunities in Europe or even in Asia for that matter. So, as we sit here today, Aetna has an international business. It is in about 15 countries. It’s headquartered out of the U.K. it largely provides care for expats. And that’s something that we’re spending time better understanding the opportunities that we have there for growth. So we have a question from the audience. Hi Larry. Bob Sopko. We met in 1997 when you bought Revco. You guys were very, very kind and considerate. It was I’m sure an interesting transition on your side of the equation. And congratulations. Judge Leon approved it today. So now that you’ve integrated part of Aetna, now you can legally do it. So. What do you think of the Amazon threat that keeps looming in very, very different verticals out there especially your vertical. Yeah Bob thanks for the question. One of the things that… Give Amazon credit for what they’ve done. They’ve changed the face of retailing, if you will. And they’ve done terrific things on the technology side, as well. My answer is going to go back to one of those things that we believe in again, that we spend a lot of time talking to our customers. And one of the things that I know I’ve learned and I’ll say learned the hard way, that you really have to be a good listener, because our customers aren’t going to be able to tell us what to do, but they’ll tell us what they’re frustrated with. And that’s the listening part where it then becomes our job to meet the unmet need that they’re frustrated with or that they’re looking for. So, as we sit here today, what can we control? It’s another thing that we talk a lot about. We need to control the things that are within our 4 walls and not get preoccupied or overwhelmed by things that we can’t control. So, if Amazon wants to get into health care, wants to get into pharmacy, they’re going to do that. What we want to do is make sure we don’t leave any white space for them to disrupt. So, it kind of gets back to, if we’re listening to our customers, then it’ll be another competitor in the market and they’ll be a good competitor and and we’ll be a good competitor for them, as well. Some of the things that you’ve seen us do the last couple of years, we now do home delivery. And you sit here and think about the convenience of pharmacy that from a bricks and mortar point of view were pretty convenient for reasons I mentioned earlier. We have mail order pharmacy. Many more of our stores have drive through pharmacies that you don’t have to get out of the car if you don’t want to. And now we’re delivering to your office and to your home. The other thing that we’re doing, it’s called Care Pass, and we tested it last year in 3 markets. So this is our answer to Amazon Prime. It’s a subscription service, and in the 3 markets that we tested it in, customers love it. And we announced last month that we were going to be rolling it out across the country between now and January. So that’s that’s how we’re thinking about it. Thank you. We have another question from microphone. Good evening and welcome back to Cleveland. I do want to say that we’re marketing consultants, but we totally agree with your characterization of the advice you received about your mission and vision. But we were just talking about organizations, decisions to play their part in smoking cessation and talking about CVS’s decision about no longer carrying tobacco and even earlier talking about the Cleveland Clinic decision about tobacco use among employees. That was probably easier to do. It’s more politically digestible but pardon the pun, the elephant in the room is the obesity epidemic, I believe. So where will organizations like yours, retail pharmacies and like your CVS and others, How will you address this big problem now? All right. What are the some of the things in the works if you can share and what’s your position on addressing the obesity epidemic now? Another great question and one of the things as we were making that decision, we had reached out to a variety of health care providers. Because you’re right. We sell soda and candy and snacks and, in some states, alcohol. The health care professionals said, Look, there’s no amount of tobacco use that can be considered safe. The other items that we’re talking about, taken in moderation. After we made the decision, again we went back out, now talking to our customers and they said something very similar, with one addition. They said, Help educate me on healthier alternatives. So, you’ve seen us do a number of things in terms of introducing snack lines that have no trans fat or reduced sodium content. And working with consumer packaged good companies like Pepsi. I would say that there is more of, certainly for the reason that you mentioned, more of an industry focus in bringing healthier alternatives to the decision making process. And at the same time, educating individuals about those healthier choices. I do think in this new company of CVS and Aetna, there’s even more that we can do. One of the things that Dr. Cosgrove was a part of, we were… I’m gonna say this was about 18 months ago, that he and I were part of a small group of individuals that were brought together to address the question of, How do we tackle the growing incidence of chronic disease in the country? And this was going to be a full day session. We were one hour into the session, quickly realizing that, for us to address chronic disease, we got to address the social determinants of health, of which access to healthy food becomes an important part of that. And so, I think now in this new company that there are things that we’re beginning to do to address social determinants and acknowledging that, in many cases, we can have this debate. But I do think it’s more true than not, that your zip code is just as important as your genetic code, when you look at health. Healthy eating is gonna be an important component of that. Thank you very much. We have time for one more question. We’ll take it from the other microphone please. Good evening. I’m Marjorie Moyer, psychologist and I’m very concerned with women’s health issues. I am part of a group that is promoting the development of a breast cancer vaccine. So we’re talking to women of all ages about the importance in the meantime of mammograms, because we have such greater success with early discovery. And so my question is, Has CVS thought about providing mammograms, either on site or mobile ones, that have come up in some parts of the country, but I don’t believe around Cleveland. We have started to talk about that and we have some partnerships where we’ve done the mobile health vans in working with others. One of the things that we’re thinking about and it goes beyond just ensuring that you’re having a mammogram at the appropriate times in one’s life. We can expand that dialogue to what are the other health preventive interventions that need to occur on those regular basis. And again, in this new company the opportunities that we have to ensure that we’re not missing those opportunities because much like you, we see the statistics that we got less than 40 percent of Americans that are are getting those diagnostic tests at the appropriate interval. So that’s something that you will see us working on. Well, Larry, thank you very, very much for the visit. [APPLAUSE] Thank you for your leadership and good luck. Thank you. Really Enjoyed it. [APPLAUSE CONTINUES] So, while we thank Larry Merlo for his visit, I would just like to announce our next speaker is David Rubenstein. He’s the Co-founder and Co-executive Chairman of the Carlyle Group and he will be with us on November 25th. Thank you very much for coming. ♪

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