CVS Well being, the nation’s largest pharmacy chain with greater than 9,000 places, said on Tuesday that it deliberate to vary the way in which its pharmacies are paid for the medicines they dispense, in an obvious try to handle widespread criticism from well being plans and employers about excessive drug prices.
The brand new mannequin, which can start to enter impact subsequent 12 months, includes a posh nook of the opaque world of drug pricing. The concept is to pay pharmacies an quantity that extra intently displays how a lot they spend on a medication and to supply extra details about these funds to well being plans and employers, which act as payers.
Prem Shah, who leads CVS’s pharmacy enterprise, mentioned the corporate’s objective was “to supply a way more clear mannequin that gives predictability and worth for the payers in a method that’s extra aligned when it comes to the way in which that some other regular market would work.”
CVS mentioned the brand new mannequin wouldn’t translate into speedy financial savings for customers. It was unclear whether or not the brand new mannequin would end in decrease prices for the well being plans and employers that foot a lot of the invoice for pharmaceuticals.
Adam Fein, a drug-distribution advisor who writes a well-liked trade weblog, said CVS’s new mannequin “displays the newest try to repair the system’s wacky economics.”
Below the present system, pharmacies are paid based mostly on a murky method that results in substantial variations throughout particular person medicines. For some medicine, the pharmacy turns a good-looking revenue, however for others, it barely breaks even or loses cash. That mannequin can translate into big payments for well being plans and employers for medicines that may be purchased for a lot much less from a wholesaler.
CVS’s new mannequin would as a substitute compensate pharmacies based mostly on how a lot they paid for a drug. The mannequin would additionally construct in a set markup and a price for pharmacy providers.
CVS is finest recognized for its pharmacies, however crucial arm of its enterprise is CVS Caremark, a drug pricing intermediary often called a pharmacy profit supervisor that works on behalf of well being plans and employers. Caremark is the nation’s largest pharmacy profit supervisor. Considered one of its jobs is to reimburse pharmacies for getting and dishing out a drug, utilizing cash collected from well being care payers.
A key downside in drug spending “is that this intersection between P.B.M.s and pharmacies,” mentioned Antonio Ciaccia, a advisor who works with shoppers who’re scrutinizing their offers with their pharmacy profit managers.
Mr. Ciaccia mentioned he was skeptical that CVS’s new mannequin would result in decrease prices. “There’s nothing on this that explains how that is going to work,” he mentioned.
However others have been extra optimistic. Dr. Scott Gottlieb, a former commissioner of the Meals and Drug Administration, said on CNBC that below CVS’s new mannequin, “the buyer goes to have extra perception into what medicine truly value, and it’s going to additionally assist the pharmacies have extra stability of their income.”
CVS mentioned the brand new cost mannequin wouldn’t usually apply to so-called specialty medicine, that are costly medicines for advanced and severe circumstances. It additionally wouldn’t apply to pharmacies run by impartial pharmacists, a lot of whom say that they’re being paid by pharmacy profit managers at ranges too low to maintain their companies afloat.
One payer, the massive nonprofit insurer Blue Protect of California, just lately dropped CVS as its most important pharmacy profit supervisor and turned to opponents to deal with a few of its prescription claims. However on Tuesday, it applauded CVS’s announcement: “There’s a clear have to remake the pharmacy care system into one that’s extra clear, sustainably inexpensive, and gives high quality expertise for everybody,” mentioned Sandra Clarke, the chief working officer of Blue Protect of California.
