Express Scripts, the pharmacy benefits management arm of The Cigna Group’s (NYSE:CI) Evernorth segment, has revealed its latest pricing option, Express Scripts ClearNetwork. This innovative model adopts a cost-based pricing strategy for prescription drugs and pharmacy services, scheduled to be available for all covered generic, branded, and specialty medications from early 2024. The pricing option is being rolled out across a vast network of over 65,000 retail pharmacies within the Express Scripts network.
The pricing model incorporates the lowest value from various established third-party industry benchmarks, including Predictive Acquisition Cost, National Average Drug Acquisition Cost, and Wholesale Acquisition Cost, to evaluate the acquisition cost for each individual drug. As a result, Express Scripts’ client base, comprising employers, government organizations, and health plans, will be required to make a straightforward payment based on the expected acquisition cost.
In addition to the expected acquisition cost, clients will bear a nominal amount for pharmacy and administration expenses. This includes a fee directed towards the pharmacy for dispensing medications, and a second fee, not exceeding 15% of the drug cost, which is distributed among participating pharmacies to ensure a reasonable profit. This fee is also shared with Express Scripts to cover claim management and network services costs.
The launch of Express Scripts ClearNetwork is expected to benefit both clients and their employees or members. Clients will enjoy a simplified breakdown of prescription drug payments and the ability to provide customized pharmacy benefits, while employees and members will benefit from easy access to required medications through Evernorth’s extensive pharmacy network.
Express Scripts’ in-depth understanding of the pharmaceutical supply chain, business scale, and existing relationships may have facilitated the launch of this new pricing model. Tools like these are likely to retain existing customers and attract new ones to Cigna’s pharmacy network, ultimately boosting pharmacy revenues, which accounted for 69.8% of CI’s revenues in the first nine months of 2023.
Express Scripts, as a pharmacy benefit manager, has a suite of transparent drug pricing options, including ClearCareRx launched in April. The company consistently takes measures to address individual client needs and enhance cost savings on prescription drug purchases. In July, Express Scripts added three biosimilars to its National Preferred Formulary to generate cost savings for clients.
Pharmacy benefit managers, including Optum Rx from UnitedHealth Group’s (UNH) Optum segment, are actively working to improve access to vital medicines, offer more choices, and generate cost savings for their client base. UnitedHealth Group recently transferred eight insulin products to preferred status on its standard formulary to provide consumers with the lowest cash price for these life-saving medications.
Over the past six months, Cigna’s shares have gained 13.6%, outperforming the industry’s growth of 12%.
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