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