CVS Caremark Wants To Make Drug Rebates a Thing of the Past

The PBM’s new system guarantees net pricing for average prescription claims. Some experts are skeptical this will really affect drug prices.

PBMs have come under scrutiny and fire the last few years, often taking the blame for skyrocketing pharmaceutical prices. Critics claim that PBMs pocket much of the drug rebate money pharma manufacturers offer instead of passing it on to the consumer. Drug companies pay the rebates in their maneuvering to get better placement on health insurers’ formularies.

CVS Caremark next month intends to abandon the rebate system, which it sees as flawed, for one that will “offer so-called guaranteed net pricing for average prescription claims, whether medicines are purchased by mail or from retail or specialty pharmacies,” Stat reports.

Rebates and administrative fees will be passed through to its health plan clients, under the CVS proposal, while CVS will take on price shifts and hikes by the manufacturers for brand and generic drugs.

Consultant Linda Cahn advises health plans and employers on PBM contracts. She says that it will be difficult for insurers to compare the CVS model with models that might be used by other health plans. A better approach would be if all PBMs used an app that “would disclose the actual list price of every drug, by therapeutic category,” Cahn tells Stat. “This app would enable doctors and patients to compare drug costs and select lower-cost drugs whenever feasible. This, in turn, would create price competition, since manufacturers with excessively priced drugs would need to lower their prices or lose market share.”

Roger Longman, chairman of the analytics company Real Endpoints also has doubts, telling Stat that “there is nothing here that really addresses the problem of patient cost, other than by implication. It’s an interesting new program but I don’t see it fundamentally changing anything on the reimbursement front.”