CVS Health CEO Larry Merlo on the coronavirus pandemic (Full Stream 10/23)

Well, David, first of all, thanks for having me. It's great to be with you today. And yeah, David, you know, we've been, what, seven, eight months into the pandemic, and I would say in the early months we were working to that phrase 'flatten the curve,' and then we quickly migrated to fighting the virus. And I would say that's the phase that we continue to be in. And we see peaks and valleys that I would describe as being geographically concentrated across the country. And that's where we are today: we're fighting this virus. And we certainly hear a lot and talk a lot about where we're at with vaccine development. I'm sure we'll get into that. And we sit here today and we think about the role that—it's something we talk often about—is our best defense right now is good social hygiene, and as a way that we can demonstrate a responsibility to fighting that virus. And David, what's interesting for us, you mentioned Aetna. It was in late 2018 when CVS Health and Aetna became one company, so we're really in the early stages of what I would describe as a strategic transformation to more of a diversified health services company. At the same time, the pandemic became a real opportunity for us to reprioritize elements of our strategy to deliver essential health services and create new solutions and make them accessible in non-traditional settings. And probably the best example of that is—and it goes back to that question of where we're at today—testing continues to play a critical role in fighting the virus, if you will. And we now have more than 4,000 drive-through testing locations in communities all across the country. We've now tested more than 5 million individuals, not just in our retail sites, but we've also gone into underserved communities. We know that the virus has disproportionately affected minority populations, and we've worked with community leaders to make testing more available there. So we're very proud of what our colleagues have been able to do, again, in communities across the country, and it's something that we'll continue to do for the foreseeable future.

Yeah, David, it's a great question, and we feel very comfortable that we have adequate supplies of PPE for our frontline colleagues and ensuring that they can perform their roles in a very safe and healthy fashion. David, we did go through that surge that you alluded to earlier in that July time frame where the test results were delayed. We worked with our laboratory partners, and as we sit here today, we're seeing about 97 percent of the tests that we're performing coming back to our customers in an average of 2.1 days. So the turnaround time has gotten substantially better, and I think the labs have done a very nice job of expanding their capacity to ensure that we don't see those extended delay periods that we saw again in that July time frame. At the same time, much of the testing that we're doing today, we describe it as 'swab and send,' and it's the molecular diagnostic test. We're also utilizing more point-of-care testing, especially on-site with employers as they have begun to return some of their employees back to the work site. That provides for a more instant result, usually in less than 15, 20 minutes, and we expect to continue to see an expansion of point-of-care capabilities as we move into the winter months. The other element, David, that I would say is really important—and maybe this will come across as a bit of an advertisement—but we're in that period where it's important that Americans get their seasonal flu shot. What's interesting for us is we have already administered more than 11 million seasonal flu vaccines, and we started that program in late August. And here we are, what, six, seven weeks later, and as we look at the year-over-year comparisons, the seasonal flu shot vaccinations are up about 100 percent. So it's good news in that people are taking that public health awareness in terms of, 'I do need to get that seasonal flu vaccine.' You think about the fact that the symptoms associated with COVID are very much mimic the symptoms for the traditional seasonal flu. So getting vaccinated and providing some additional protection against that seasonal flu, I think, will be critically important as we move into the winter months.

Yeah, David, I alluded earlier to CVS Health and Aetna coming together, and the opportunity there is to really create a new kind of healthcare company. I think all of us as individuals have experienced the frustrations that exist across our healthcare delivery system. It's complicated to use and navigate, it's extremely expensive for many, and yet you think about the fact that today about two-thirds of all Americans have one or more chronic diseases. We know their names: hypertension, diabetes, cardiovascular, to name a few. And it's those chronic diseases that account anywhere from 75 to 80 percent of healthcare costs. So we do see an opportunity to make healthcare more affordable, make it simpler and easier to use, and in doing so, help people achieve their best health. And in satisfying those objectives, we believe that as a result, we can reduce overall healthcare costs. And as I had alluded to earlier, the pandemic has accelerated elements of our transformation, and we're seeing our enterprise strategy come to life in very meaningful ways to meet the demands of communities, customers, and the clients that we serve. And David, we think about the fact that one of the keys to the future healthcare system is being able to meet people where they are, whether it's in their community, whether it's in their home, or now in the palm of your hand. And we talked about testing, we talked about vaccines. You think about that experience for the consumer of healthcare: it starts with that mobile device where you can go online and you can schedule a testing appointment, you can get all of your medical information and your insurance information. And then you think about today in this what many describe as an omni-channel world. What's unique about healthcare is oftentimes in healthcare you eventually have to see that patient, that consumer, face to face, because oftentimes the individual needs to be touched, as is the case with the testing process. And so it's a great example of the intersection that exists with digital and then the role that our bricks-and-mortar asset plays in the community, very accessible, and it creates what we believe to be a more seamless experience in making healthcare more accessible, more affordable.

Well, David, maybe I'll speak to it on two fronts. I'll speak to our response as a society and maybe start there. Look, I think we have great examples of the role of public-private partnerships. I think what we have done around testing is a great example of that, and it speaks to that public-private partnership role at a federal level as well as at a state and local level. And I believe that as we move forward, we can't lose sight of the private sector's role in innovation and the nimbleness that exists in the private sector and across corporate America. And I think we have done that well. And by the way, there are many examples beyond the ones that I'm mentioning that CVS has been directly involved in across other industries that have played a role in fighting the pandemic. David, the second one that I'll mention is as an organization, again, I couldn't be prouder of the work of our 300,000 CVS Health colleagues. And as we all have been challenged in terms of how COVID has impacted our personal lives, our colleagues have stepped up to the challenge and the responsibilities that they have in their professional lives. And again, I think they've done a fantastic job in terms of responding to those challenges while continuing to have the responsibility in managing their personal lives, their families. The one thing, David, that I would say I have seen in our company that I think is an important learning for us is we've got a great culture. Our teams work extremely hard to always do the right things. And I think at times that perhaps takes us a little longer as we strive for perfection. What I've seen is a response where people have figured out, 'Hey, here's a solution, and I know I can make it better, but we need to get this in the market today, and it is going to satisfy the need that people are counting on us for, and we'll make it better along the way.' So the speed for innovation is something that I've been very pleased with.

Yeah, David, we've done a number of things. We've given bonuses to our frontline workers. We've also provided resources. We have many working families, if you will, and we provided resources around dependent care, child care, to certainly help them in that period of time where shelter-in-place orders were in effect largely across the country. We've done some things, especially with our part-time workers, with additional benefits so that, obviously, like many, we were talking about the fact that if you have any symptoms, please stay home. And we didn't want to put our employees in a position where they had to choose between doing what was right from a health point of view for themselves and their community and having that challenge between, well, it's also about a paycheck. So we worked hard to take that off the table. So yeah, we've done a number of things to support our colleagues in that regard, in addition to all the things that we've done within the store environment, whether ensuring a safe and healthy environment from PPE to plexiglass barriers that have been installed in a number of areas of our stores to ensure the right environment.

Well, David, we have been working with HHS more as it relates to the distribution and the administration of a vaccine once it's available. So in terms of where the development process of the vaccine is at this point, I hear the same things that you report in the media, in the news, that there is progress being made. We've seen companies like Pfizer and Moderna move into their phase three clinical trials, and there continues to be an awful lot of optimism that we may begin to see a vaccine in market early next year, and some believe later this year. You probably saw the announcement last Friday. We were pleased to be, again, back to the public-private partnership, work at a federal level in terms of being able to provide the vaccine to long-term care facilities across the country once it's available. We have about 2.1 million seniors that are in nursing homes, in assisted living facilities, and obviously many of those individuals represent among our most vulnerable populations. So getting the vaccine into their arms is going to be a real priority once it's available. And again, we've been working with HHS in terms of the plans that we can provide in terms of supporting that need. And quite frankly, David, it goes back to what we were talking about earlier. We have more than 30,000 healthcare professionals when you think about pharmacists, nurse practitioners, physician assistants, that are in communities all across the country. And the pharmacists and nurse practitioners can play a critical role that goes well beyond what you would think of when you think about the role of the pharmacist associated with your medication and dispensing your prescriptions. And we're very proud to see pharmacists be able to practice to what we describe as the top of their license.

Well, David, it is a concern, and it should be a concern for all of us as we think about, again, fighting this virus and the role that the vaccine plays in doing that. And we've seen the surveys, we've participated in some of the surveys that today only about 60 percent of Americans said that they will get the vaccine. And David, look, there's no question that pharmacists are among the most trusted professionals across all industries. And you think about the accessibility of the pharmacist, and what comes with that is the trust that individuals have with their pharmacist. I'm a pharmacist by education. I started my post-college career working in a community pharmacy, actually in the Washington, D.C. area, and I can speak to that firsthand. I knew my customers, knew their families, and the discussions that we would have. Oftentimes, people are more comfortable asking you the questions. There's a lot of follow-up from perhaps a physician visit, and you play that trusted resource in terms of, what do I do about this, how do I access this? And I do believe that pharmacists will play an important role in educating individuals about the importance of that vaccine. And David, I think back to—you think of all the challenges that we've had to deal with as a society, the one challenge that we haven't had is accessibility to prescription medications. And that is something that we put a real focus on at the onset, that we must ensure the continuity of the pharmaceutical supply chain. Again, that's not something that anyone has talked about because it hasn't been a problem. And just think about what would have happened if we had a shortage of maintenance medications for diabetes, for hypertension, for cardiovascular disease. We would have really compounded the societal and the health problems created by COVID with now a compounded problem where people that were being maintained and their chronic conditions were well in check because of a lack of medication, that becoming out of whack, and it would further stress the healthcare system. And it never happened. And so again, credit to everyone associated with that pharmaceutical supply chain. And look, I expect that we will play a critical role in educating all individuals about the importance of the vaccine and to say, along with the safety and efficacy that comes with that.

Yeah, well, David, you think about the role of the military, among their many areas of expertise, you think about the logistics challenges that the military has in terms of making sure that the variety of, I'll use the word, products that they deal with are in the right places at the right time. And so that becomes critically important when you think about the distribution role of the vaccine from manufacture to the points of access where that vaccine will be administered. And David, what we're learning from the vaccines in development is that there are special handling requirements for that vaccine from a storage point of view. And different vaccines have different refrigeration requirements, and that's something that we have available today in all of our pharmacies, recognizing that there are products that are safely stored at room temperature, some require refrigeration, some require freezing temperatures. So that's where the military has been playing an important role around the distribution that will be associated with the vaccine.

Yeah, David, it's been—that has been, as you know, a subject of great discussion. And look, I mentioned this earlier, that good social hygiene is our best defense as we keep our fingers crossed on that vaccine becoming available soon. And my mask protects you, your mask protects me. And I really do believe in that analogy that it took years, if not decades, for everyone to get into the habit of seat belts do save lives, and the responsibility that we have as individuals to not just protect ourselves but to protect each other. And we were looking to demonstrate good social hygiene, starting with the mask, and trying to establish that behavior and that discipline in a matter of days or weeks. And we don't have years with which to build that or change that behavior. And David, I will say, back in the March, April time frame, it was more of a challenge in our stores, and we were doing a lot around communication. I think that became one of our guiding principles in terms of how do we keep our employees up to speed on everything going on, what we know, what we don't know, and provide frequent and transparent information. And we talked a lot about that. And we wanted to avoid confrontation at the store level, but we wanted to ensure the safety of our employees as well as the other customers in the store. I will say that we have come a long way as a society in that, and CVS as well as many other retail locations have, whether it's through posting signs, communicating broadly in terms of asking customers to wear facial masks and the importance of that. And as we sit here today, I would say that as a society we have come a long way in terms of establishing more of a discipline than, I'll say, where we were back in the spring time frame.

Yeah, David, great question. And we, like many others, the killing of George Floyd stopped us in our tracks. And we took probably, I'm going to say, 30 days to go back and evaluate all of the various programs and activities that we had across our company, for our colleagues, for our communities, as well as the suppliers that we do business with. And the objective of that period of time was, let's go back, let's evaluate what's working, and let's evaluate what may not be working as well as we think it should. And a third important question: what may be missing from our plan? And David, that resulted in—the good news is there were things that were working extremely well, and an opportunity to do even more. There were things that weren't working quite as well as we had hoped, and things that we saw that were missing from our plan. So we, I'll say, we rewrote our plan, if you will. And we have a commitment, a five-year commitment, associated with about $600 million of investments in our employees to ensure that we have more representation across all levels of our company. One of the things that we found was working extremely well is several years ago we began a supplier diversity program. I remember when we started, we had purchased about $200 million from diverse-owned suppliers. Today that number's over $2.2 billion. So we established new goals to continue to keep that going. And then we also stopped and looked at things that we were doing in communities. We talk a lot about the social determinants of health, as an example, and the fact that your zip code in some communities can directly tie to your health status more so than your genetic code. And what more could we do there, whether it was around workforce programs as well as ensuring access to health and things that directly impact health, like housing. So look, I think we have a great plan as we go forward. It's something that we'll be able to measure and evaluate ourselves, ensuring that we achieve the goals that we've established for ourselves and our company.