Science and Tech


CVS prescription pricing change doesn't necessarily mean lower costs

CVS Pharmacy is revamping the way it reimburses its pharmacies for prescription medications. The company says it'll launch CVS CostVantage next year.
Posted at 8:31 AM, Dec 06, 2023

CVS will soon change the way it prices drugs and it could impact how much your prescriptions cost.

The company says it'll launch CVS CostVantage next year, its new drug pricing formula that will include the cost of prescription drugs with a set markup and a fee, instead of relying on its current complex system.

“This is an industry that has been under fire for extreme lack of transparency. Very few people understand how much they’re paying, why they’re paying it,” said Dennis P. Scanlon, a distinguished professor of health policy and administration at Pennsylvania State University.

Harry Nelson, a health care lawyer specializing in regulation and legislation, says like most pharmacies, CVS outsources the pricing of its drugs to pharmacy benefit managers, who negotiate with health care plans to come up with a final price for a drug.

"Different prices are being paid by different customers, different patients based on what kind of insurance they have. And frankly, it's a little bit of a black box," said Nelson. "It's a mystery exactly what the pricing will be because CVS is entirely relying on these PBMs, these pharmacy benefit managers, to let it know what price the drug costs and what the consumer's share of the price will be."

CVS says CostVantage will make drug pricing simpler and better allow consumers to see the actual drug price upfront.

Nelson called the move a "positive first step." While the plan could affect the price of drugs, Nelson added that doesn't necessarily mean they'll go down.

"We still have a situation where drug manufacturers and, in some cases, specialty pharmacies that control certain in-demand drugs, particularly, like for example, a lot of immuno-oncology drugs for various types of cancers, we're not actually negotiating prices of the drugs themselves," Nelson said.

Even so, Nelson says the new model can help consumers put pressure on pharmacies and lawmakers to bring drug prices down.

"The more that the large pharmacies, the national chain pharmacies see that people are sophisticated, that consumers are moving platforms where they can get better pricing, the more we're going to see appropriate changes and reforms."

CVS says it will start offering CostVantage in the first half of 2024 to patients using some third-party cash discount cards, such as GoodRX, which help with out-of-pocket costs. CVS drugstores will start using the new model in 2025.

Another company, Express Scripts, made a similar announcement in November, launching a cost-based drug pricing model that will launch in 2024.

“There's a lot of pressure. That pressure is both economic pressure, political pressure, and it’s legal pressure that’s really driving the train,” Scanlon said.


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