CVS Health is promising to simplify how its pharmacies get paid for drugs. But that doesn’t mean the drugs will get cheaper.
The country’s biggest pharmacy chain said it’s switching to a system where pharmacy benefit managers, employers, and other insurers pay for drugs based on the cost of the drug plus a set markup and dispensing fee. At first blush, it sounds like the model popularized by Mark Cuban of Shark Tank fame, whose own drug program claims to save employers up to 60% compared with conventional arrangements. Drug pricing experts, however, say CVS’ CostVantage program appears designed to pad CVS’ own bottom line rather than make drugs cheaper for patients and employers.
“When you notice that this was announced on investor day, I think we know who their audience is with this,” said Elizabeth Mitchell, CEO of the Purchaser Business Group on Health, a consortium of employers and public plans. “This would suggest it may not be lowering costs for consumers.”