NEWS

CVS Reveals New Pricing Model for PBM Clients

December 5, 2018

CVS Health has introduced the Guaranteed Net Cost model—a new approach to the pricing of its Pharmacy Benefit Management (PBM) services.  

According to CVS, the new model will simplify the financial arrangements within PBM contracts and focus on helping plan sponsors deliver savings through PBM cost management strategies such as formulary, utilization management and performance pharmacy networks. Further, CVS says that this model will align PBM incentives with plan sponsors’ objectives.

"We see a real opportunity to offer clients a simpler economic model that leverages proven PBM cost management strategies to provide predictable drug costs," Derica Rice, president of CVS Caremark, said in a statement. "As a result, CVS Health is introducing a straightforward, more holistic approach that enables plan sponsors to clearly see the net cost of their pharmacy benefit and select their PBM provider based on that criteria."

CVS explained that current pricing models offer discounts and rebates, but do not provide net cost predictability. According to CVS, the variability between PBMs can make it difficult to draw direct comparisons. However, the Guaranteed Net Cost pricing model “guarantees the client's average spend per prescription, after rebates and discounts, across each distribution channel retail, mail order and specialty pharmacy.” Further, the model focuses on a simple concept net cost per claim.  

Under the new model, 100% of rebates will be passed form CVS to plan sponsors, and CVS will take accountability for the impact of drug price inflation. Clients will continue to have the option to implement point-of-sale rebates to provide plan members visibility into the net costs of their medication under the new plan as well.

"As a PBM, our job has always been to help our clients manage costs in the face of escalating drug prices without compromising clinical care, so they can continue to provide an affordable benefit to their members," Mr Rice stated. "By simplifying the PBM economic model, we can focus on maximizing the impact of PBM strategies that help reduce costs for clients and consumers, and continue to develop additional innovative tools and approaches."

CVS will begin using the Guaranteed Net Cost pricing model on January 1, 2019.

Julie Gould

Reference

CVS Health. CVS Health Introduces New Approach to Pricing of Pharmacy Benefit Management Services. https://cvshealth.com/newsroom/press-releases/cvs-health-introduces-new-approach-pricing-pharmacy-benefit-management. Published December 5, 2018. Accessed December 5, 2018.


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