Scripting a New Story for Cigna’s PBM

By: David Ostrowsky

For the better part of the 2020s, Pharmacy Benefit Managers, more colloquially known as PBMs, have been heavily scrutinized and even maligned for their business practices. Some critics have alleged that PBMs are responsible for engaging in non-transparent practices such as spread pricing and rebate retention while concurrently directing healthcare consumers towards more expensive drugs. However, earlier this autumn, one industry-leading PBM, Express Scripts (Cigna), announced plans to initiate a new drug-pricing arrangement that may ease the financial burden for millions of patients—or at the very least alleviate their concerns that the pharmacy rebate system is not aligned with their best interests.

In late October, Cigna revealed that discounts it negotiates with manufacturers will be passed on directly to patients at the pharmacy counter (this is otherwise known as a “point-of-sale” model whereby consumers pay a net price inclusive of the rebates when they receiver their prescriptions) rather than being shared with employers. The global health services conglomerate will be launching the rebate-free model via its Evernorth division and PBM Express Scripts beginning in 2027. Cigna has gone on record to state that monthly prescription drug prices will be slashed by an average of 30% for those who pay the full price. Adam Kautzner, president of Express Scripts, was quoted as saying that his company’s new model will yield “lower costs for Americans, real-time transparency for employers and renewed trust in pharmacy benefits for all.”

By doing away with post-sale rebates for consumers, Express Scripts will be compensated on a fee structure that’s unassociated with drug prices. As for pharmacies, Evernorth intends to provide reimbursement based on the cost of prescriptions, along with a dispensing fee and further reimbursement for clinical services. Evernorth has already offered what’s known as a “cost-plus” model to clients, which is very common in the PBM industry; going forward, Evernorth will broaden the arrangement across all in-network pharmacies beginning in 2026.

Your everyday American consumer is not the only beneficiary of this development. The consensus among healthcare finance experts is that the transition will reduce Cigna’s exposure to a flurry of regulatory changes aimed at changing PBM rebating models. Additionally, Cigna’s long-term earnings are not expected to be adversely impacted. Healthcare Dive reported that Cigna already funnels over 95% of rebate dollars to its clients while retained rebates comprise less than 10% of Evernorth’s total adjusted pre-tax earnings. Thus, passing more rebates through should hardly affect the company’s bottom line.

From a consumer’s perspective, there are, however, a couple drawbacks to the new model: For one, the reference above to “2027” is not a typo—there won’t be any relief for at least another year. In fact, the novel system will be activated for Cigna’s fully insured patients in 2027 (approximately two million customers) and won’t emerge as the standard for all Evernorth pharmacy benefit clients until 2028. Even then, a rebate arrangement will still be available for clients who prefer that option. Secondly, there is potential for premiums to tick up as employers who currently receive the rebates won’t be able to use such funds to reduce premiums. Regarding the latter concern, an Evernorth spokesperson told the Axios news site that “we can do this without raising overall premiums by simplifying the complex system through which Americans get their medications.”

Nevertheless, Cigna’s pivot to the point-of-sale model augurs well for cash-strapped Americans. Under this arrangement, consumers whipping out their credit cards at their local pharmacies can rest assured that they will automatically be charged the lowest prices. (For good measure, a more transparent pricing system means that employers will enjoy sharper visibility into their budgets.)  Lest we forget, back in January, Cigna pledged to make healthcare more financially feasible for its customers across the nation. Nearly a full year later, it appears that the company is making an effort to stay true to its word.