Navitus & Costco launch Cost-Plus Pharmacy Model: A Game Changer for Drug Pricing?
Rising prescription drug costs are a major pain point for both employers funding healthcare plans and patients filling those prescriptions. A lack of price transparency only exacerbates the problem. But a growing movement towards simpler,more obvious pricing is gaining momentum – and the latest progress could significantly impact the landscape.
Navitus Health Solutions, a leading alternative pharmacy benefit manager (PBM), has partnered with Costco Pharmacy to introduce a cost-plus pricing model for prescription drugs.Available to clients starting in January, this approach promises to deliver substantial savings and much-needed clarity.
How Does Cost-Plus Pricing Work?
Unlike traditional PBM models riddled with hidden fees and complex rebates,cost-plus pricing is remarkably straightforward. the price of a drug is persistent by Costco’s actual acquisition cost, plus a fixed markup to cover pharmacy services and a transparent fee. This applies to both generic and brand-name medications.Crucially, Navitus’s “pass-through” PBM model ensures that all discounts and rebates are directly passed on to clients – a departure from the standard practice of PBMs retaining these savings.
“Costco has long supported the Navitus PBM model to remove needless costs from the drug supply chain,” explains Diana Gibson Pace, Chief Growth Officer at navitus Health Solutions. “Launching a cost-plus model with Costco Pharmacy was a natural step, reflecting our shared commitment to transparency and simplicity in addressing rising drug costs.”
Convenience & Accessibility Boost
The partnership extends beyond just pricing. Navitus members residing within an hour of a Costco Pharmacy will benefit from free, same-day prescription delivery via Instacart. This added convenience addresses a key barrier to adherence and improves the overall patient experience.Costco has also been recognized as a “NavitusClear” partner – a designation reserved for organizations demonstrating a commitment to industry-leading drug pricing transparency. Other NavitusClear partners include lumicera Health Solutions and CivicaScript.
Richard Stephens, Senior Vice President of Costco Pharmacy, emphasizes the value of this collaboration: ”We are proud to be Navitus’s first network pharmacy partner to deliver highly competitive, fully auditable drug costs. This transparency empowers payers to effectively manage their drug spend.”
The Rise of Cost-Plus: Beyond Navitus & Costco
Navitus and Costco aren’t alone in embracing this model.Several companies are challenging the status quo:
Mark Cuban Cost Plus Drug Company: Perhaps the most well-known, this venture adds a 15% markup to manufacturing costs, plus fees for pharmacy labor and shipping.
GoodRx: Recently launched a cost-plus model for independent pharmacies, basing prices on the National Average Drug Acquisition Cost (NADAC) plus dispensing and administrative fees.
What Does This Mean for You?
The proliferation of cost-plus models signals a significant shift in the pharmaceutical landscape. Increased transparency and simplified pricing structures empower employers and patients to make informed decisions,perhaps leading to substantial cost savings.
While the long-term impact remains to be seen, the momentum behind cost-plus pricing suggests a future where accessing affordable medication is less complex and more predictable.
