A person walks in front of a CVS Pharmacy store in Manhattan, New York, United States, on November 15, 2021.
Andrew Kelly Reuter
CVS Health announced on Tuesday: renew Consider how prescription drugs are priced and eliminate the complex models that typically set how much pharmacies are reimbursed and how much patients pay for those drugs.
With this new initiative, CVS upends the traditional prescription drug pricing system that has long been under political scrutiny for what critics call a lack of transparency and rising health care costs for U.S. consumers. It becomes the latest company to do so.
CVS will launch a new model for pharmacy reimbursement on January 1, 2025, executives said at the company's 2023 investor day.
CVS' new model could change the cost of prescription drugs for some patients, but it won't necessarily make all drugs cheaper, company executives said. They noted that while the prices of some drugs may fall, the prices of others may rise. But executives say prescription costs should go down, not up, for consumers, employers and health insurance companies.
“This is a really fundamental step toward a transparent model for consumers, allowing payers to get more predictable pricing at the pharmacy counter,” said Prem Shah, president of CVS Pharmacy and Consumer Wellness. Prem Shah, president of CVS Pharmacy and Consumer Wellness, said: Day.
The plan, dubbed CVS CostVantage, will use a “sustainable and transparent” formula to determine drug prices and determine the reimbursement pharmacies receive from pharmacy benefit managers accordingly, according to CVS. He says he will. These intermediaries negotiate drug discounts with manufacturers on behalf of health insurance companies, large employers, and other contractors.
Under the new model, CVS' more than 9,000 retail pharmacies will be able to use PBMs and other pharmacies based on drug prices, “well-defined” markups and fees for handling and dispensing prescriptions, Shah said. It will be reimbursed by the payer.
Currently, pharmacies typically receive payment using a complex system rather than based directly on the amount spent on the drug. This model involves a multi-layered network of insurance companies, drug companies, PBMs, and pharmacies, creating ambiguity regarding fees and markups added to the original cost of the drug.
Billionaire Mark Cuban launched an online pharmacy last year that takes a similar approach to CVS' new reimbursement model. The company, called Cost Plus Drugs, aims to broadly reduce the price of drugs by selling them at a 15% markup on top of the drug cost plus pharmacy fees.
Cuban's venture has already sent shockwaves through the broader health care industry. CVS took a hit over the summer when Blue Shield of California, a major California health insurance company, announced it would no longer use the company as a PBM and would instead partner with several companies. , including Cuban's Company and Amazon Pharmacy.
CVS Health's Caremark is one of the leading PBMs in the United States, but other PBMs have faced increased scrutiny over their role in drug price gouging, and the Federal Trade Commission has also investigating their habits.
Cuban drug companies are pressuring other companies that manage drug benefits to make their own changes. For example, Cigna announced PBM last month. We offer similar pricing models Go to Cost Plus Drugs.
The Biden administration is taking its own steps to rein in drug prices.
As part of the President's Inflation Control Act, the administration announced in August: first 10 prescription drugs It is subject to drug price negotiations with the federal Medicare program, which aims to make expensive drugs more affordable for older Americans.
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