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      Helping enable a more transparent, simple health care system

      March 19, 2024 |3 minute read time

      Man and woman looking at prescription pill bottle in kitchen

      At CVS Health®, we are building a world of health around consumers. As part of our commitment, we are reshaping the future of drug pricing, bringing greater transparency to the system while assuring important access to pharmacy services for Americans.

      We’re introducing two important innovative solutions — our community pharmacy is launching CVS CostVantage, and our pharmacy benefits management (PBM) business recently introduced TrueCost.

      CVS CostVantage

      Community pharmacies today do more than fill prescriptions. Patients rely on them now more than ever, and pharmacists can help fill the gap between provider visits.

      Pharmacists are local, accessible and one of the most trusted health care providers. In fact, in a recent survey, 90% of consumers said they trust their local pharmacist and pharmacy team, and nearly 1 in 3 Americans visit their pharmacy at least once per week—approximately twice as often as they visit their physician(s)*. The need for local, convenient care will only increase, especially as the U.S. population ages.

      Maintaining community pharmacy is critical. Specifically, the way community pharmacy is currently reimbursed for services doesn’t align to the underlying costs of doing business or the value delivered.

      It's time for a change. CVS Pharmacy® is helping to create a new sustainable community pharmacy model and bringing much needed transparency and simplicity to the system with CVS CostVantage. Launching for commercials payors in 2025, it will help shift how our pharmacy is compensated by payors by aligning pharmacy reimbursement to the quality services we provide and the prescriptions we dispense. Learn more about how it works and why it matters from Prem Shah, executive vice president and chief pharmacy officer, CVS Health® and president, Pharmacy and Consumer Wellness, in a piece published in Fierce Healthcare.

      Importantly, this will also help provide greater transparency for PBMs and payors and serve as a crucial building block for PBMs to create a more transparent model — like TrueCost.

      Learn more about CVS CostVantage


      Pharmacists are some of the most trusted health care providers, and Americans increasingly rely on the convenient and timely care they provide.


      That’s why it’s more critical than ever to keep our industry thriving.


      In the past, our pharmacy reimbursement model made sense.


      But health care is complex, and prices are rising.


      Pressures we face today outpace business growth, operational efficiencies, and improvements we’ve made in the costs of goods.


      It’s resulted in unprecedent declines in reimbursement for the prescriptions we fill.


      And today, as a health care provider, community pharmacy does more than fill prescriptions, and patients are increasingly turning to them to help fill gaps in care.


      Reimbursement is disconnected from the actual cost of goods and services.


      Simply put, the current model is unsustainable.


      The way pharmacies have historically been reimbursed for medications no longer supports the cost of doing business.


      It’s time for change.


      That’s why we introduced a simple, new reimbursement model leading the way to help improve long term viability of the pharmacy industry.


      CVS CostVantage™ will bring much needed transparency and sustainability to our pharmacy business and to the marketplace overall.


      Beginning in January 2025, CVS Pharmacy will use a transparent formula to define drug costs and related reimbursement with every PBM and payors we work with.


      We’ll base this formula on the underlying cost of the drug, plus a defined markup and a dispensing fee tied to the care and value we provide, helping to combat the need for higher rates on some medicines to help subsidize losses on others.


      The new model aims to support continued consumer access to affordable health care at our locations, help us continue to invest in our stores and colleagues, and accelerate the work being done by PBMs and their payors to create greater simplicity and transparency in their work with pharmacies.


      Because Americans in every community need a local pharmacy they can rely on.


      With more than 9,000 CVS Pharmacy locations, no one is better positioned to tackle one of the biggest challenges our nation faces while creating a more vibrant future for our business and industry.


      Together, we’re building a world of health around every consumer.

      TrueCost

      TrueCost is our PBM’s response to a rapidly changing landscape in the marketplace. We’ve heard the call — from our clients, from lawmakers, and from pharmacies — for greater pricing transparency, predictability and sustainability. And we are answering it.

      TrueCost will be a breakthrough step forward for our PBM clients and members and will further support community pharmacies. Specifically:

      • Clients will see greater pricing transparency through drug level, net cost pricing guarantees
      • Members get reassurance that the price they are paying is more reflective of the pharmacies acquisition cost of the drug, when plan design allows
      • Helps keep members on benefit by realizing the value of their pharmacy benefits from pricing that better reflects the cost of the drug

      We’re excited about what TrueCost will mean for our customers, and most importantly the nearly 90 million Americans who get their pharmacy benefits through CVS Caremark®.

      Specifically, client pricing will better reflect the net cost of prescription drugs, with a new level to drug specific rebate values, something they have been asking for. And TrueCost will enable a pharmacy reimbursement structure in which CVS Caremark will be better positioned to reimburse pharmacies for drugs based on their acquisition costs, with dispensing fees that reflect the services they provide to their patients.

      Together, both CVS CostVantage and TrueCost are an important step forward to bring greater transparency and clarity to a complex health care system and help pharmacy on the pathway to a more sustainable, transformative future that supports important access to pharmacy care.

      • * FOR TWICE AS OFTEN AS THEY VISIT THEIR PHYSICIAN SOURCE: Berenbrok LA, Gabriel N, Coley KC, et. al. Evaluation of Frequency of Encounters With Primary Care Physicians vs Visits to Community Pharmacies Among Medicare Beneficiaries. JAMA Netw Open. 2020 Jul 1; 3(7):e209132.

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