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Pharmacy Benefit Managers (PBMs) CVS/Aetna and Express Scripts/Cigna have recently introduced new cost-plus pharmacy reimbursement models known as CVS CostVantage and Express Scripts ClearNetwork. These models aim to simplify the reimbursement process for pharmacies by providing a guaranteed profit and shifting the patient's cost share to reflect the net price of their prescription, rather than the higher list price.
PBMs traditionally don't know a pharmacy's acquisition costs and reimburse them using using complex models where the same medication filled by the same pharmacy on the same day can have vastly different reimbursement rates.
Pharmacies sometimes earn a high margin, sometimes they earn a low margin, sometimes they lose money.
Considerations
While I applaud the simplification of these new reimbursement models with guaranteed profit margins for pharmacies and patients' cost share to reflect lower net prices of prescriptions, there are also important considerations to unpack:
Transparency Concerns
It remains unclear how the acquisition cost for pharmacies will be determined. There are multiple potential benchmarks PBMs can use today, none of which truly reflect a pharmacy’s net acquisition cost.
Incentivizing Higher Cost Drugs
The cost-plus reimbursement model may incentivize pharmacies to choose higher cost drugs to maximize their reimbursement, potentially leading to increased drug costs overall.
Vertical Integration Risks
Vertical integration allows CVS/Aetna and Cigna/Express Scripts to control the acquisition cost and reimbursement rate, potentially inflating costs at each stop in the supply chain.
Limited Transparency
While these models increase transparency for plan sponsors regarding the net cost of prescriptions, they do not provide insight into supply chain markups, limiting their usefulness in controlling healthcare spending and increasing their usefulness in justifying premium increases.
Conclusion
While the introduction of CVS CostVantage and Express Scripts ClearNetwork brings welcome changes to pharmacy reimbursement, there are lingering concerns regarding transparency, incentives, and vertical integration. Further details beyond public announcements are needed to fully evaluate the impact of these models on the healthcare landscape.
About
Hunter Gurney leads Gurney Benefits, an employee benefits advising and brokerage firm. Gurney Benefits helps clients take a modern, human-centered approach to benefits design. Gurney Benefits offers a full suite of benefit and HR solutions for compliance, technology, and engagement along with easy access to hundreds of medications and services like surgery, labs, and imaging for $0.
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