CVS Jumping on Cost-plus Bandwagon

CVS Health is joining pharmacy benefit managers by offering simpler, cost-plus pricing, although it won't be available until 2025.

“CVS CostVantage will define the drug cost and related reimbursement with contracted pharmacy benefit managers (PBMs) and payers, using a transparent formula built on the cost of the drug, a set markup, and a fee that reflects the care and value of pharmacy services,” the company said in a news release this morning in advance of its investor’s day event.

CVS Pharmacy plans to launch CVS CostVantage with PBMs for their commercial payers in 2025, according to the news release.

The news release also announced the launch of a program called TrueCost, which the company will offer “client pricing reflecting the true net cost of prescription drugs, with visibility into administrative fees.” It will also be available in 2025.

Cigna Group’s Express Scripts announced plans to offer a “cost-plus” drug pricing model in November.

Pharmacy benefit managers (PBMs) especially the ‘big three” — CVS Caremark, Express Scripts and Optum Rx — have been under pressure to make their complicated, often obscure pricing tactics more transparent. Mark Cuban, the owner of the NBA’s Dallas Mavericks and a “Shark Tank” judge, co-founded Mark Cuban Cost Plus Drugs in early 2022 with a simple mark-up pricing strategy that Express Scripts and CVS Caremark appear to be emulating.

Several PBM reform bills have been introduced in Congress that would also require more reporting and transparency.