CVS revamps its drug-pricing process as healthcare disruptors push for transparency

Buy now, rebate later… CVS, America’s largest drugstore chain, is revamping how it pays pharmacies to fill prescriptions in an effort to simplify drug pricing. Usually pharmacy benefit managers (PBMs) act as intermediaries between drugmakers, insurance providers, and pharmacies to set medication prices. One problem: those drug-pricing formulas often come with inconsistent fees and markups. Now…

• Long line: CVS’ new “CostVantage” model will kick off in 2025 using its own Caremark PBM service (the largest in the US) to ensure pharmacies get paid the original drug price plus a small fixed markup and service fee.

• Small print: While the policy won’t affect consumers right away, CVS says it should eventually help lower more prescription prices for Americans, employers, and health insurers.

Full bottle, clear price… can’t lose. Pricey medications are among the biggest healthcare headaches. Over 60% of US adults take at least one prescription med and pay $1.2K/year, on average, to get them filled — more than in any other country. The industry’s notorious for its lack of pricing transparency, which has created opportunities for discount-drug disruptors like Mark Cuban's Cost Plus Drugs and Amazon’s $5/month unlimited meds subscription. The newcomers are off to a strong start:

• New script: Blue Shield of California expects to see $500M in yearly drug-cost savings after replacing CVS’s pharmacy benefit services with Amazon Pharmacy, Cost Plus Drugs, and others.