CVS Health Promises a New Drug Plan to Pass All Rebates Along to Consumers

December 5, 2018, 2:50 PM UTC

Amid deepening criticism of the pharmaceutical industry and drug prices, CVS Health announced a new prescription plan “guaranteed net price” model through a press release.

CVS Health claims the approach will be “a simpler economic model … to provide predictable drug costs” to consumers, said Derica Rice, president of the company’s CVS Caremark division, in the statement.

What that means is that CVS Caremark would pass through rebates, discounts, and other fees paid by drug companies to pharmacy benefit management companies, or PBMs. There has been growing criticism that the PBMs and insurance company make money from the pharmaceutical manufacturers’ discounts by pocketing them and leaving prices to consumers as normal, Reuters reported.

President Donald Trump singled out drug “middlemen” earlier this year as one cause of unnecessarily higher drug prices for consumers.

In an interview with Reuters, Rice said that the approach would offer average spending per prescription, whether at retail or specialty pharmacy, or through mail order.

Although PBMs initially lowered consumer prices through large-scale negotiations, increased consolidation—CVS Caremark, Express Scripts, and OptumRX together control 85% of the market, according to the White House Council of Economic Advisors—has resulted in higher prices, according to a study in the Journal of the American Medical Association.

PBMs have used multiple methods to drive up prices and profits. They include “gag clauses” to prevent pharmacists from telling patients about cheaper options, required payments for manufacturers to have their products on approved drug lists, and billing health plans higher amounts than they pay pharmacies.

The move comes as a bipartisan bill to crack down on the tactics drug makers use was introduced in the Senate, according to The Hill.