Cigna Announces ‘Rebate-Free’ Pharmacy Benefit Model Starting in 2027

Cigna announced today it is revamping its pharmacy benefit management (PBM) so funds from rebates negotiated with drug manufacturers will be used to lower the price patients pay for drugs, a sharp departure from the PBM practice of using rebates as a source of profit and as money passed on to employers and other payers to buffer the expense of providing healthcare and drug coverage.

Cigna said it was also changing the way it pays community pharmacists so it is based on the cost of the medications, a dispensing fee and reimbursement for clinical service.

The company news release said the “rebate-free” PBM will go into effect in 2027 for its fully insured health plan and will become standard for all its PBM clients in 2028. Cigna said its new rebate-price discount model would translate into drug costs that are, on average, 30% lower for people enrolled in health plans who pay the full cost of medications, a group that would include those in high-deductible health plans.

The company’s announcement was greeted with skepticism from critics of the “big 3” PBMs, which include Cigna’s Express Scripts, CVS Health’s CVS Caremark and UnitedHealth Group’s Optum Rx.

Joe Shields, CEO of Transparency-Rx, an advocacy group for smaller PBMs challenging the big 3 and their business practices, said that large PBMs have shifted their dependence on rebates to fees paid upstream to the group purchasing organizations that the PBMs control. Unless their clients have access to more information about those fees, it won’t be clear how much of the money that they received from drugmakers is getting passed on in the form of supposedly lower prices, he said. “Who owns the data?” asked Shields, who also said that the major PBMs have not lived up to past announcements trumpeting transparency.

Alan Pannier, Pharm.D., MBA, senior vice president of product strategy for SmithRx, a member of Transparency-Rx, said in an email that the Cigna plan will not change “misaligned business practices” and that it will continue to keep money from drugmakers. “They are just delinking that revenue from claims and calling them ‘fees’ instead of ‘rebates,’” said Pannier, echoing Shields. Pannier said the “truly aligned” model that would benefit PBM clients and patients includes flat administrative fees as the only source of revenue.

The National Community Pharmacists Association issued a statement questioning whether “this is a genuine transformation or whether it’s a head fake to get the heat off.” The statement called on Congress to pass stalled PBM reform legislation. Cigna “could revert back to its old ways the moment President Trump leaves office,” the statement said.

The Cigna news release quotes Adam Kautzner, Pharm.D., the president of Express Scripts, as saying the company’s new model is a “win-win for Americans and their employers—lower costs for Americans, real-time transparency for employers and reviewed trust in pharmacy benefits for all."

The news release quotes Kautzner and Cigna CEO and Chairman David M. Cordani as praising President Donald Trump for taking steps to lower high drug prices that, according to Cordani’s quote, “have long been controlled by drug companies.” The large PBMs and the large drugmakers have been fighting over who is to blame for high drug prices.