The announcement is the latest in series of changes that are roiling the prescription drug pricing model. These extra or hidden costs make prescriptions more expensive.”Ĭuban’s Cost Plus Drug Company provides price transparency throughout the prescription drug supply chain, Fabrizio said, noting that it is “forcing pharmacies to change their model to remain competitive.” “Americans would be surprised at the hidden costs that are passed on to them by a variety of third parties. “At a minimum, the goal for CVS and others should be to shine a light on the way drugs are priced, any discounts that are negotiated and overhead that comes from a variety of sources,” said Nick Fabrizio, senior lecturer in health policy at Cornell University. The health care industry as a whole provides less price transparency for consumers than other businesses. “It provides our and payor clients a foundational step towards more pricing clarity for consumers.” “We are leading with an approach that will shift how our retail pharmacy is compensated by implementing a more transparent and sustainable model that fairly aligns pharmacy reimbursement to the quality services we provide,” said Prem Shah, president of CVS Pharmacy and chief pharmacy officer at CVS Health, in a statement. More prescription costs should fall than rise for consumers, employers and health insurers, they said. Some drugs may cost less, while others might rise in price, CVS executives said. This shift in payment models could change the cost of prescription drugs for some patients, although it will not necessarily make all medicine cost less. The Wall Street Journal was first to report the news. It is expected to launch for commercial payors in 2025. The new approach, named CVS CostVantage, will use a simpler formula that includes the cost of the drug, a set markup and a fee to determine the drug’s price and reimbursement with pharmacy benefit managers. These complex reimbursement formulas aren’t directly based on what pharmacies spent to purchase specific drugs. It’s a similar model to the one entrepreneur Mark Cuban is pushing with his Cost Plus Drugs company.Ĭurrently, the prices customers pay for drugs and the payments pharmacies receive are largely determined by middlemen known as pharmacy benefit managers, which negotiate rebates from drug manufacturers to insurers. ![]() ![]() The company said in an announcement Tuesday that its new pharmacy reimbursement model will bring more transparency to its drug pricing system. CVS is revamping the way it reimburses its pharmacies for prescription medications, a move that could make prescription drug pricing simpler and change how much consumers pay for their medicines.
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