Cigna Group is providing customers with a clearer view of how much they pay for drugs through its prescription plans, as the industry responds to growing Washington scrutiny and competition from smaller rivals for greater transparency.
The insurance giant’s pharmacy-benefit management unit will market a “fully transparent” option charging a flat monthly fee for each member with greater visibility into manufacturers’ prices and discounts. The unit, Express Scripts, will also offer a plan that caps patients’ out-of-pocket costs of $5 to $45 per prescription, depending on the drug.
PBMs are under increasing pressure to disclose more amid long-standing questions about making money. Both the Federal Trade Commission and the House Committee on Oversight and Accountability are investigating the industry, and the Ohio attorney general sued Cigna and Express Scripts last month, alleging that the anti-competitive conduct increases costs to consumers. Is. The companies dispute the allegations.
Express Scripts recently began offering more transparent plans to select large customers covering approximately 500,000 people. Preliminary results show reductions in drug and medical expenses and improved patient adherence to their medications through coaching and other programs.
Adam Kutzner, president of Express Scripts, said in an interview prior to the announcement, “to improve the level of transparency and have another option to contract with us, which is completely different from what we wanted to offer.”
New offerings will be available this year. Next year, Express Scripts also plans to begin giving members explanations of benefits when they fill prescriptions that show drug prices, plan payments and out-of-pocket costs.
PBMs manage drug plans on behalf of employers, health insurers and government programs. They contract with networks of pharmacies, negotiate discounts and rebates with drug suppliers, and process prescription claims.
The largest PBMs are now part of health care giants that together own insurance plans, pharmacies and care providers. They are facing more questions about whether they contribute to wastefulness, make money from opaque fees or have interests that diverge from those of their clients. Express Scripts is the second largest of the three major PBMs, behind CVS Health Corp’s Caremark unit and ahead of UnitedHealth Group Inc’s Optum Rx.
policy risk
Cigna’s new offering is designed to get ahead of policy changes being considered by Congress and could increase pressure on rivals to follow. They could help Cigna compete with smaller PBMs that market more transparent fee structures: Navitus, Capital Rx and EmsanaRx.
Some lawmakers have questioned PBMs’ use of spread pricing, where they charge employers or health plans more than they pay pharmacies to fill a prescription.
Duane Wright, senior government analyst at Bloomberg Intelligence, wrote last month that ending the practice could shave off about $1 billion in industry revenue, and that requiring them to pass all rebates on to customers could erode margins.
Kautzner said the new Express Scripts options are meant to give customers more choice without posing a risk to Cigna’s business.
“We are indifferent as an organization to how a client chooses to contract with us,” he said. “We have worked rigorously to create all these different options for customers and still operate within our own business model.”
In the flat-fee plan, ClearCareRx, customers will pay only what Express Scripts pays to pharmacies for prescription drugs, eliminating spread pricing. Express Scripts will pass along all the manufacturers’ rebates to customers, plus some of the fees PBMs charge drugmakers. Kautzner did not directly answer a question about whether other Revenue Express scripts from drug makers or related entities would be passed on to customers.
capping cost
Express Scripts will also offer a separate plan to allow customers to limit how much their members pay when prescriptions are filled. Members will have no additional costs beyond the co-pay – $5 for generic drugs, $25 for branded drugs that the PBM lists as preferred for customers and $45 for preferred specialty drugs.
Kautzner said the program builds on Express Scripts’ earlier efforts to limit out-of-pocket costs for insulin. Patients who face higher costs are less likely to adhere to medication.
“We know there is an increasing challenge for patients today with out-of-pocket costs,” said Kautzner.
Kautzner said the company hopes to offset some of the program’s costs with drug makers, as limiting patients’ cost-sharing could increase spending for health plans.
Express Scripts will also increase disclosures about fees, including on forms used by the Department of Labor to ensure that employers comply with the laws governing their employee benefit plans. Cigna also plans to disclose more information about its XpressScript business to investors through a new website and in filings with the Securities and Exchange Commission.