CVS Pharmacy achieves CVS CostVantage milestone
CVS Health announced that all of the commercial prescriptions dispensed through CVS Pharmacy are contracted through the company’s CVS CostVantage reimbursement model starting this year.
“Delivering on our commitment to transform the pharmacy model, we successfully led the way forward, contracting with pharmacy benefit managers and other payors to advance a more transparent approach to reimbursement for the prescriptions we dispense and the services we provide,” said Prem Shah, group president of CVS Health.
Shah added, “In our discussions and negotiations, we found common ground and a commitment to a simpler approach to reimbursement and a more sustainable path forward for retail pharmacy. As the leading pharmacy in America, we take our responsibility seriously to continually improve and advocate for community pharmacy. We will also continue to move forward in our work to eventually expand CVS CostVantage to Medicare and Medicaid managed prescriptions as well.”
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CVS cited a recent survey, which found that 81% of consumers said they trust their local pharmacist, and 88% believe their pharmacists are the most accessible and frequently visited healthcare providers. Nearly 1 in 3 Americans visit their pharmacy at least once per week—approximately twice as often as they visit their physician(s).
“Continuing to maintain community pharmacy is important. The way community pharmacies have historically been reimbursed for services has not fully reflected the value delivered or the underlying costs of doing business. By removing the market reliance on cross-subsidization caused by market basket approaches to reimbursement, CVS CostVantage provides more clarity, ensuring that CVS Pharmacy has a way of pricing and contracting that reflects the reality of today’s marketplace and anticipates the future,” the company said.
CVS said that the CVS CostVantage formula is based on the underlying cost of a drug plus a defined markup and a dispensing fee tied to the care and value that it provides.
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This approach helps reduce the need for higher rates on some medicines to help subsidize losses on others. Beyond resetting the approach for drug reimbursement at the pharmacy level, CVS CostVantage also helps provide greater transparency for PBMs and payors and serves as a crucial building block for PBMs to create simpler, more transparent models for plan sponsors and patients, the company said.