I’d ask you to start by giving us an update on where we are now. The numbers are familiar now to people, 220,000 Americans have been killed by this pandemic, 8.2 Americans have been infected by it. And we have reports of a new surge that seems to be taking place around the country. You’re on top of this, looking at the data from all of your different sources, including Aetna, which is now part of CVS Health. Tell us, Mr. Merlo, what the situation looks like to you, and do you think we are at the start of a new surge?
MR. MERLO: Well, David, first of all, thanks for having me. It’s great to be with you today. And, 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 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, you know, we certainly hear a lot and talk a lot about where we are with vaccine development. I’m sure we’ll get into that. And, you know, we sit here today and we think about the role that it’s something we talk often about as 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, and 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 nontraditional 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. You know, we know that the virus has disproportionately affected the minority populations, and we’ve worked with community leaders to make testing more available there.
So, you know, 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.
MR. IGNATIUS: Let me ask you, and I’ll call you Larry, I just want to ask, as we head into what could be a difficult winter, whether your company, your tremendous logistical chain is ready for what could be a surge. Do you have the PPE necessary for your customers, for their demands? Your drive-through testing centers are extraordinary but it sometimes takes a good long while to get those results. Are you able to do that faster now, and do you have plans both to speed up the delivery of results and expand further the testing capability?
MR. MERLO: Yeah, David, it’s a great question, and we feel very comfortable that we have adequate supplies of PPE for our front-line 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, I’ll say, 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, we describe much of the testing that we’re doing today, we describe it as “swab and send.” It’s the molecular diagnostic test. We’re also utilizing more point-of-care testing, especially onsite 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 20, 15 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 very much mimic the symptoms for the traditional, the seasonal flu. So, in getting vaccinated and providing some additional protection against that seasonal flu I think will be critically important as we move into the winter months.
MR. IGNATIUS: So, the ability to get your flu shot at a CVS or the CVS COVID testing centers are an example of how you’ve become a direct point of care, if you will, for a growing number of Americans. I want to ask you about the future of your business, and that’s health care, broadly defined. If you were to talk about what the new normal will be in health care going forward, hopefully after this pandemic has passed, what do you think that will look like. What’s going to be different as a result of what you’ve learned in this experience and just the recent growth of your company?
MR. MERLO: Yeah, David, I alluded earlier to CVS Health and Aetna coming together, and the opportunity there is to really create a new kind of health care company. I think all of us, as individuals, have experienced the frustrations that exist across our health care 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 health care costs.
So, we do see an opportunity to make health care 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 health care costs.
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 you know, David, we think about the fact that one of the keys to the future health care system is being able to meet people where they are, whether it’s in their community, whether it’s in their home, or now, you know, in the palm of your hand. And we talked about testing. We talked about vaccines. You think about that experience for the consumer of health care. 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 in, your insurance information. And then you think about today, in this, what many describe as an omnichannel world, what’s unique about health care is oftentimes in health care 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.
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 health care more accessible, more affordable.
MR. IGNATIUS: So, Larry, looking back at these difficult months since March, as we’ve been struggling as a country to deal with this pandemic, you have a unique vantage point, outside politics, the point of health care delivery. What do you think we’ve done well and what do you think we haven’t done so well? What are your lessons learned, eight, nine months in?
MR. MERLO: 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. 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 it 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. David when you–please.
MR. IGNATIUS: I just wanted to ask, Larry, your employees, in a sense, are front-line workers, dealing with the public. Folks come in with health care problems. Have you been paying your employees, your front-line employees bonuses during this difficult period? Tell us how you’re trying to keep up that front-line spirit among your workforce.
MR. MERLO: Yeah, David, we’ve done a number of things. We’ve given bonuses to our front-line workers. We’ve also provided resources. You know, 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. 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, 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 evidence, ensuring a safe and healthy environment, from PPE to Plexiglas barriers that have been installed in a number of areas of our stores, to ensure the right environment.
MR. IGNATIUS: Let’s talk about a question that is on, I think, all of our viewers’ minds and that’s development of a vaccine, what progress is being made, how it’s going to be delivered. You’re in a position to have pretty good information that I hope you’ll share with us. Let’s start with a question of where vaccine development is. I think there was a meeting this past week of a key committee that reviews vaccines in development. What have you heard from that group and what do you hear generally about how far off a vaccine that can be delivered is?
MR. MERLO: Well, David, we have been working with HHS, more as it relates to the distribution and the administration of a vaccine once its 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 and in the news, that there is progress being made. We’ve seen companies like Pfizer and Moderna move into their Phase 3 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 countries once it’s available. We have about 2.1 seniors that are in nursing homes and 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 its 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 health care 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 go 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.
MR. IGNATIUS: Let me ask you about a particular issue that’s come up, certainly in the political discussions, and that is whether people are going to fully trust a vaccine when it’s introduced. What can CVS Health to encourage trust among your customers that the vaccines that will be offered are safe?
MR. MERLO: Well, David, it is a concern and it should be a concern for all of us as we think about, again, fighting this vaccine, or 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 first-hand. I knew my customers, knew their families, and the discussions that we would have, oftentimes people, you know, they are more comfortable asking you the questions. There’s a lot of follow-up from perhaps a physician visit. And you play that trusted resources 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, you know, I think back to when 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 compounded problem where people that were being maintained in their chronic conditions were well in check because of a lack of medication, that would be coming out of whack, and it would have further stressed the health care system. And it never happened.
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 along with the safety and efficacy that comes with that.
MR. IGNATIUS: Well, that’s useful to know. So, our viewers should understand, if I’m hearing you right, Larry, that you go into your CVS, you’ve got questions about a vaccine, at the blessed moment when that vaccine is available, and your pharmacist will be able to help you think about making good choices.
Let me just ask you one additional question about vaccines. President Trump last night, during the debate, talked about the role of the military in getting the vaccine available, if I understood him, distributing it, I assume to folks like you who will then put it in the hands of consumers. Could you give us a little better sense of what this rollout is going to be like, based on your conversations with HHS and other officials in the government? I didn’t understand the military part of that.
MR. MERLO: 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 manufacturer 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.
MR. IGNATIUS: Let me ask about the simplest aspect of health care COVID prevention and that’s wearing a mask. You, in a speech this week, I think, likened the acceptance of wearing masks to acceptance of wearing seat belts, that once upon a time wearing seat belts were seen as a terrible infringement on your freedom, and we don’t even think about it anymore. I’m curious, Larry, what CVS tells its employees they should do if somebody walks into a crowded CVS not wearing a mask. How do you tell your employees to deal with that problem?
MR. MERLO: 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 analog 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 on 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. 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.
MR. IGNATIUS: So, we have just over a minute left and I want to make sure before we close, I ask about the other issue that we’ve been thinking deeply about as a country this year, in addition to the pandemic, and that’s racial justice. CVS is a massive national presence. You’re all over the country. Just tell us briefly what you’re trying to do to improve the way in which CVS serves minority populations in America, what you’re doing that’s new in responding to this unusual moment for America.
MR. MERLO: 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, 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 is 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 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.
MR. IGNATIUS: So, Larry Merlo, I want to thank you for joining us, giving us this unusual tour of the landscape in health care. We’re all grateful to your company and the employees who are out there every day, dealing with us, helping get us the medicines that will keep us well. So, thanks for joining us.
We’ll be back at Washington Post Live next week with a whole slate of new guests. We hope you’ll join us. But today we want to especially thank Larry Merlo, the chief executive of CVS Health.