WOONSOCKET, R.I., Dec. 5, 2018 /PRNewswire/ -- CVS Health
(NYSE: CVS) today announced that it is introducing a new approach
to the pricing of Pharmacy Benefit Management (PBM) services. The
new Guaranteed Net Cost pricing model simplifies the financial
arrangements underlying PBM contracts and focuses on helping plan
sponsors deliver savings through PBM cost management strategies
such as formulary, utilization management and performance pharmacy
networks. This new model more closely aligns PBM incentives with
plan sponsors' objectives than current pricing models by providing
greater cost predictability. The company has been actively briefing
benefit consultants as well as current and prospective clients on
the new model. As a result, clients, including both existing and
new clients who are transitioning to CVS Caremark as their PBM,
have already chosen to adopt the Guaranteed Net Cost model starting
in 2019.
"We see a real opportunity to offer clients a simpler economic
model that leverages proven PBM cost management strategies to
provide predictable drug costs," said Derica Rice, President, CVS Caremark. "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."
Current pricing models offer discounts and rebates, but do not
provide net cost predictability, and the variability between PBMs
can make it difficult to draw direct comparisons. CVS Health's new
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.
The model focuses on a simple concept – net cost per claim. Under
the new model, CVS Caremark will pass through 100 percent of
rebates to plan sponsors and take accountability for the impact of
drug price inflation and shifts in drug mix. With the Guaranteed
Net Cost model, clients continue to have the option to implement
point-of-sale rebates to provide plan members visibility into the
net costs of their medication.
Guaranteed Net Cost is calculated using plan utilization and
expected rebate value, and applying projected drug price inflation
and expected shift in drug mix (e.g., movement from brands to
generics). Any plan design decisions clients choose to implement to
help manage appropriate drug utilization or encourage the use of
lower-cost therapeutic alternatives would further positively impact
overall plan drug costs.
"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," added Rice. "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."
To date, through the application of PBM tools, CVS Caremark has
been successful in helping to improve adherence and keep drug cost
inflation under control for clients despite steady price increases
by manufacturers. In 2017, drug price growth for CVS Caremark PBM
clients was only 0.2 percent, despite manufacturer price increases
of nearly 10 percent. In addition, improvements in medication
adherence helped reduce overall health care costs for CVS Caremark
PBM clients by $600 million in
2017.
About CVS Health
CVS Health is the nation's premier health innovation company
helping people on their path to better health. Whether in one of
its pharmacies or through its health services and plans, CVS Health
is pioneering a bold new approach to total health by making quality
care more affordable, accessible, simple and seamless. CVS Health
is community-based and locally focused, engaging consumers with the
care they need when and where they need it. The Company has more
than 9,800 retail locations, approximately 1,100 walk-in medical
clinics, a leading pharmacy benefits manager with approximately 93
million plan members, a dedicated senior pharmacy care business
serving more than one million patients per year, expanding
specialty pharmacy services, and a leading stand-alone Medicare
Part D prescription drug plan. CVS Health also serves an estimated
39 million people through traditional, voluntary and
consumer-directed health insurance products and related services,
including a rapidly expanding Medicare Advantage offering. This
innovative health care model increases access to quality care,
delivers better health outcomes and lowers overall health care
costs. Find more information about how CVS Health is shaping the
future of health at https://www.cvshealth.com.
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SOURCE CVS Health