Cigna’s pharmacy benefits business, Express Scripts under its Evernorth division, announced that it will transition away from the traditional rebate-based model in the U.S. drug-supply chain. Instead, the company will move toward a “cost-plus” pricing model and upfront discounts, aiming to lower out-of-pocket costs and increase pricing transparency.
Glimpse:
Beginning in 2027 for fully-insured plans and broadly by 2028 for its PBM clients, Express Scripts will no longer retain post-purchase rebates from drug manufacturers. Instead, negotiated discounts will be applied at the pharmacy counter for patients. At the same time, the company will reimburse pharmacies on a “cost + dispensing fee + service” model moving toward greater transparency in drug pricing.
The Cigna Group’s Evernorth health services division, which includes its large PBM unit Express Scripts, announced a major shift in how prescription medications will be priced and how pharmacies and health plans will be reimbursed.
Under the existing model, drug manufacturers pay rebates to PBMs after prescriptions are filled; these rebates help influence formularies, drive brand-drug placements and generate margin for PBMs. Cigna has argued that this model has contributed to lack of pricing transparency and higher out-of-pocket costs for patients especially those on high-deductible plans.For fully-insured Cigna clients, the rebate-free pricing structure kicks in 2027.
For all Express Scripts clients, the model becomes standard 2028, though clients may still opt for the traditional rebate model if they choose.
Instead of rebates, discounts negotiated with drug manufacturers will be passed directly at the point of sale resulting in an average 30% reduction for brand-name drug out-of-pocket costs for people paying full price.
The reimbursement model for pharmacies will shift toward “cost plus” reimbursement based on the drug acquisition cost plus a dispensing fee and any additional service fees.
For employer and plan-sponsor clients, the model is intended to offer greater transparency, simpler pricing and improved trust in the pharmacy benefit supply chain.
Cigna officials emphasise that although the structure is changing, they do not expect their overall earnings margin to erode materially. Analysts estimate that rebate retention currently represents a small portion of Evernorth’s earnings, making the transition manageable. The move is also seen as pre-emptive in light of regulatory pressure in the U.S. to curb opaque PBM practices, given criticism that rebate structures favour high-priced drugs and obscure the true cost of care.
“In this new era of pharmacy benefits, we’re creating more choice for Americans by lowering the costs of expensive brand-name drugs while driving accelerated adoption of generics and biosimilars.”
By
HB Team
