The case for transparent pricing: Making pharmacy benefits work for health plans
Key points for health plans
- Historical drug pricing models are broken. They’re hard to understand, outdated and incompatible with today’s regulatory and market demands.
- Transparent pricing models create more clarity, control and trust in your pharmacy spend.
- We’ll help you explain new pricing models to clients – guiding you every step of the way and building materials to support conversations.
- We’ll ease you into new pricing models that provide visibility into drug pricing, rebates and plan management – clearly showing what drugs cost.
For decades, health plans have been transforming health care to make it more personal, accessible and affordable. Transparency is at the core of this evolution, with health plans driving value-based care models and visibility into provider pricing and coverage. Transparent pharmacy pricing is the next step to help health plans, their clients and members gain more insight and control – and avoid unwanted regulatory scrutiny.
Historical pricing models are broken
Historical pricing models distort the true cost of brand drugs, making them appear more affordable than they are. These models have become unsustainable and incompatible with today’s regulatory and market demands.
Historical pricing models worked when members filled all prescriptions through their pharmacy benefits. Now, with 60 percent of members in high-deductible health plans – often not reaching their out-of-pocket maximums – many fill outside their plan. When fewer prescriptions go through the plan, it reduces the plan’s value and limits the ability to monitor medication use, which can impact safety and clinical outcomes. Ultimately, this behavior challenges the health plan’s ability to deliver on value-based care – where better outcomes and smarter spending depend on informed, connected care.
Transparent pricing: A strategic advantage
CVS Caremark TrueCost® is the industry’s first pricing model that gives insight into drug-level costs. While only pharmaceutical companies control drug list prices, adopting transparent pricing models creates more clarity, control and trust in pharmacy spend. Transparent pricing isn’t a trend – it’s the new standard for pharmacy pricing.
TrueCost brings health plans and their client relationships:
- Trust and accountability: Fosters trust by allowing clients to see actual prices and compare them to what’s available on the open market.
- Cost predictability: Helps forecast drug spend more accurately with protection from market fluctuations.
- Member impact: Improves transparency, access and affordability – keeping more claims within the funded benefit plan, when comparing walkaway rates to a conventional pricing model.
- Provider impact: Pays providers based on actual drug costs and a clearly defined service fee. This approach rewards providers who help members find lower-cost, clinically appropriate medications – encouraging better alignment between cost, care, quality and outcomes.
- Market advantage: Creates a competitive advantage in RFPs and contract renewals. Clients want more clarity and control. They want to see the real cost of drugs, understand the “why” behind pricing decisions and be able to predict future costs – and TrueCost delivers.
When we first launched TrueCost, we heard from health plans and consultants who were hesitant about adopting a newer pricing model. Here’s what they said:
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Feedback: New pricing models feel unfamiliar and risky. While historical pricing models aren't perfect, we know how they work and how to explain them to decision makers.
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Response: Health plans are already taking on risk with traditional pricing - it's just hidden. Members are filling scripts outside the benefit, which impacts visibility and the ability to deliver safety and value. TrueCost puts health plans back in control, helping manage costs more predictably, reduce budget swings and stay aligned with value-based care - all while keeping members satisfied. We'll help health plans understand, adopt and communicate new pricing models to decision makers and clients - and can share how to get them to buy-in on the advantages of TrueCost.
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Feedback: Existing rebate models worked for a long time and provided lots of cost savings. Can't we keep existing pricing models?
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Response: Because of market disruptors and member behavior changes, historical pricing models no longer work and are unsustainable. Rebate credits and models revolving around average guarantees aren't transparent. We're moving to drug-level pricing to help clients and their members understand the "true cost" of prescriptions and the drug-level rebate value for branded drugs.
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Feedback: We rely on the current pricing model and pharmacy benefit managers (PBMs) owning contracts, modeling and setting rates. It feels like it's shifting the risk to us.
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Response: With TrueCost, we take on the risk of rising prices per drug - so health plans don't have to. We lock in the unit cost for the length of the guarantee. That means we're motivated to buy smarter and manage costs more effectively, because we're accountable for the price.
TrueCost is not a one-size-fits-all solution
Changing drug pricing is a big step, so we offer flexible options tailored to health plans and their clients’ objectives. This lets everyone transition at their own pace.
Three levels of TrueCost
- Rebalanced model: Rebalances pricing across brands and generics, letting ingredient costs and dispensing fees stand on their own.
- Drug-level rebate guarantees: Provides greater visibility into net drug costs and flexibility to adjust to market changes.
- Full model (rebalanced + drug-level rebate guarantees): Makes drug pricing clearer and more controlled, with transparent, acquisition-based pricing.
50M+ members are benefiting from TrueCost’s transparent pricing model
We’ll help explain new pricing models to clients – guiding health plans every step of the way. We know what it takes to make the switch – and we’ve done it successfully. Our experience guiding commercial employer clients through pricing model transitions has delivered real results – like 50 percent fewer pricing changes to maintain guarantees. We’ve learned what works. We’re ready to help health plans do the same.
We’re leading the industry by designing transparent and predictable pricing models.
See how we’re peeling back the layers on what it means to be transparent, why health plans and their members need clarity more than ever and how we're moving the pharmacy industry forwarsd with new solutions.
