“CVS Health, the nation’s largest drugstore chain, will move away from the complex formulas used to set the prices of the prescription drugs it sells, shifting to a simpler model that could upend how American pharmacies are paid,” Anna Wilde Mathews writes over at The Wall Street Journal. “Under the plan, CVS’s roughly 9,500 retail pharmacies will get reimbursed by pharmacy-benefit managers and other payers based on the amount that CVS paid for the drugs, in addition to a limited markup and a flat fee to cover the services involved in handling and dispensing the prescriptions. Today, pharmacies are generally paid using complex measures that aren’t directly based on what they spent to purchase specific drugs. A similar payment model, sometimes known as ‘cost plus,’ has been promoted by entrepreneur Mark Cuban’s eponymous pharmacy company, among others, which have said it brings greater clarity and accountability to drug pricing. CVS’s move, earlier reported by The Wall Street Journal, is to be phased in starting in the first half of 2024. It will take the approach to a far greater scale, embedding it in a company that stands at the core of the American drug-supply chain. ‘It’s a fundamental change in how pharmacy services are priced,’ said Adam Fein, chief executive of the Drug Channels Institute, which provides research on the drug-supply chain. It is also, he said, ‘a legitimate step toward transparency.’ For consumers, employers and health insurers paying for prescriptions, the change will have mixed effects. Some drugs may cost less, while others might rise in price, CVS executives said. More should show declines than increases, they said.” Anna Wilde Mathews, “CVS plans to overhaul how much drugs cost,” The Wall Street Journal.
