CVS is the latest pharmacy to change its drug pricing formula, a move it said would increase transparency and simplify costs.
The company now bases drug costs on the amount it pays for a drug and limits the markup and service fee for customers.
“What CVS does – at the pharmacy and at the PBM.” [pharmacy benefit managers] – changes or resets the way reimbursement is provided in an industry that has become very complex and largely follows a model based on what was the case a decade ago,” a CVS Pharmacy spokesperson told ABC News. “Only we can accept something like this.” Given our leadership in PBM and pharmaceuticals, we are taking a step forward. This is a necessary, fundamental step to make the entire system more consumer-friendly, provide payers with choice, and maintain a viable retail pharmacy industry.”
Dr. John Brownstein, chief innovation officer at Boston Children’s Hospital and an ABC News contributor, said CVS’s announcement is consistent with the industry’s decision to take a more straightforward approach to drug pricing.
“By basing drug costs on actual purchase prices, CVS is taking a critical, fundamental step toward making health care more consumer-friendly and ensuring the viability of retail pharmacies,” he said.
Many consumers may not be directly affected by this change. The earliest consumer impact would be expected in the first half of 2024 for those who use cash pharmacy discount cards at a CVS pharmacy.
In 2025, CVS Pharmacy announced it would launch this model with pharmacy benefit managers. Savings are most often achieved on the payer or plan sponsor side, but depend on how exactly the model is adopted, how the individual customer uses it, and how the plan is applied to an individual’s benefits.
Dr. Lucas Berenbrok, associate professor of pharmacy and therapeutics at the University of Pittsburgh, said pharmacies and consumers alike will benefit from these new pricing models. Pharmacies have a more predictable reimbursement rate and consumers are less likely to overpay for generic drugs, he noted.
“I think it could give patients even more confidence in the public that someone cares about them and that they can get medication at a fair price,” Berenbrok told ABC News.
The CVS pricing model is similar to Express Scripts’ cost-based prescription drug pricing announced last month.
“It is encouraging to see major players like CVS and Express Scripts taking steps to remove complexity in drug pricing, ultimately benefiting consumers and payers alike,” Brownstein said.
Dr. Jade A. Cobern, MD, MPH, is a board-certified pediatrician specializing in preventative medicine and a member of the ABC News Medical Unit.