Nick Fabrizio

Senior lecturer, Cornell Jeb E. Brooks School of Public Policy

Nick Fabrizio, senior lecturer in health policy at Cornell University, says Americans would be surprised at the hidden costs that are passed on to them by a variety of third parties.

Fabrizio says:

“CVS Health’s decision to shift to a more transparent model could impact the way pharmacies are paid and hopefully, lower prescription costs. Today, prices consumers pay, and the way pharmacies are paid are based on pharmacy-benefit managers and a complex formula that is not directly based on the actual costs to purchase those specific drugs. At a minimum, the goal for CVS and others should be to shine a light on the way drugs are priced, any discounts that are negotiated and overhead that comes from a variety of sources. Americans would be surprised at the hidden costs that are passed on to them by a variety of third parties. These extra or hidden costs make prescriptions more expensive.

“The model called ‘CVS CostVantage’ is designed to list the cost of the drug, a set mark-up and a fee to determine the price of the drug and reimbursement to the pharmacy benefit manager.  This is a model that Mark Cuban’s Cost Plus Drug Company has promoted from its inception and based on complete price transparency from manufacturing to prescription delivery. Cuban’s model is changing the game and is forcing pharmacies to change their model to remain competitive. Health care has lagged almost every other industry in providing price transparency to the consumer and this is a trend that will hopefully be pushed in all health care sectors.”