CVS Health will begin to provide clients a locked-in, average cost per covered drug and pay for any additional inflation in treatment expenses, a move that comes as middlemen pharmacy benefit managers face increasing pressure from the government.
The drug store chain, which last week finalized its $69 billion merger with Aetna despite potential new challenges from a federal judge, said it would pass on to plan sponsors the entirety of the rebates that drug companies provide to lower the list cost of treatments.
Policymakers, the pharmaceutical industry, and others have criticized pharmacy benefit managers for taking an outsize portion of those rebates, effectively leading to higher drug costs for consumers. The Trump administration has signaled opposition to the business model and is expected to try to revamp the rebate program, a move that could have significant consequences for CVS Health and other middlemen negotiators.
CVS Health’s new pricing model will enable clients, which often are corporations and other large business entities, “to clearly see the net cost of their pharmacy benefit and select their PBM provider based on that criteria,” President Derica Rice said in a statement. “We see a real opportunity to offer clients a simpler economic model.”
The company will account for inflation in drug costs, as well as the possible shift to cheaper generics and the amount of expected rebates, in providing its clients a guaranteed average cost per prescription.
CVS and Aetna previously argued a combined entity would lead to lower treatment prices for consumers, a claim blasted by a top doctors’ group that said the merger would result in higher premium and out-of-pocket costs for patients purchasing drugs.
U.S. District Judge Richard Leon seized on that argument this week and issued a new challenge to the deal after the Department of Justice approved it in October. Leon said he would not “rubber-stamp” the agreement, which required Aetna to divest its Medicare Part D business, and warned that CVS might need to keep its assets separate from the insurer as the deal is reviewed, even though the two firms have already begun integrating.
