CVS Caremark (CVSC) recently announced a new formulary strategy where they prefer a lower list price approach over a higher list for higher rebates approach. This change in approach will take effect on their standard formularies starting January 1, 2024. National CooperativeRx has had several discussions with our CVSC team to understand this change and more discussions will be had. Although there is more to learn and analyze about this new approach, we want to provide our members and partners with advanced notice of what is coming.
While continuing to focus on lowest net cost for plan sponsors, CVSC’s standard formulary offering will focus on low cost and low or no rebate as the preferred contracting method with Pharma. The reason for this change is a combination of new federal public policy, actions by pharmaceutical manufacturers, and public sentiment. This approach is currently focused on insulin but may include other drug classes immediately or soon after the January 1, 2024, launch.
CVSC has given us the assurance that the loss of rebate will be offset by the savings provided to plans through the lower list price. Analysis of this dynamic is expected by mid-July.
While this new approach is in response to market dynamics, our members still have a choice in choosing the formulary approach that aligns with their cost management and member experience priorities. No additional action is needed for members who are supportive of this formulary change, as this new approach will be the standard CVSC formulary offering starting in 2024. Members wishing to stay with the higher rebate model will need to sign paperwork to move to a different formulary. The current deadline for this paperwork is 8/15/23.
A webinar was held for National CooperativeRx members and partners on July 20. CVSC representatives provided greater detail on the new formulary approach and answered questions from attendees. Please contact your National CooperativeRx account representative for information from this webinar.
Patient cost share dynamics have not been fully mapped out; however, coinsurance and high deductible plans are likely to see a cost share shift. Patients may pay less based on a lower list price. Plans will also benefit from the lower list price; however, some plans will see their cost increase with patients paying less. The significance of this shift is yet to be determined and will vary by plan. Plans may want to alter cost share dynamics if the shift is significant.
While analysis of the impact of this change is yet to be seen, National CooperativeRx views this announcement as positive. It is well documented that rebates have gotten out of control for some medications. In these instances, pharmaceutical manufacturers increased prices at an exponential rate. Pharmacy benefit managers with the greatest purchasing power were able to significantly offset the price increases with gains in rebates.
Although National CooperativeRx members receive 100% pass-through of the rebates received from CVSC, there is a time value of money cost that results from waiting for the rebate payments. A lower list price will eliminate this cost for those medications.
As stated above, patients will also benefit from the lower list price. Currently, some patients are financially disadvantaged when cost share is based on the artificially high list price and the plan is not reinvesting the rebate value at the point-of-sale. A more accurate list price will eliminate, or at least lessen, this dynamic. Patients without insurance will also benefit when pharmaceutical manufacturers provide a lower list price.
As always, the National CooperativeRx team is here to help plan sponsors navigate this new approach. We will continue to gather information from CVSC and provide updates as they warrant. As a member-owned and member-governed cooperative, our focus is on doing what is in the best interest of our members. Stay tuned for further announcements on this important topic. If you have initial questions, please reach out to your National CooperativeRx account representative.
