With employers and patients’ prescription medication costs rising and pricing transparency is limited, several solutions have emerged to help reduce spending. One approach is a cost plus model where the price of the drug is based on its production cost plus a fixed mark.
Alternative pharmacy welfare manager Navitus Health Solutions is the latest way to ride a cost-effective multi-train. The company announced last week that it will launch a cost-effective pricing model with Costco Pharmacy. Starting in January, it will provide customers with prescriptions to fill out at retail and mail-order locations.
Through this model with Costco, drug costs will also be based on Costco's payment for purchasing drugs, in addition to the fixed markup and fees for pharmacy services provided by the company. According to Navitus, this applies to a wide range of universal and branded drugs. With Navitus's Pass PBM model, all discounts and discounts will be transferred back to customers.
“Costco has long supported the Navitus PBM model to remove unnecessary expenses from the pharmaceutical supply chain,” Diana Gibson Pace, chief growth officer at Navitus Health Solutions, said in an email. “We also acknowledge that the pharmacy landscape is growing as drug costs continue to rise, with plans sponsors, consumers and regulators demanding greater transparency. Starting the cost plus model with Costco Pharmacy is a natural step. This cost-plus pricing model reflects a shared commitment between Navitus and Costco to address temporary purchases between refueled drugs through industry-leading purchase-type purchases, as well as temporary and simple share of temporary purchases.
Navitus members who live in Costco pharmacy within one hour can also receive the same-day prescription delivery through Instacart for free.
Additionally, Costco has been designated as the NavitusClear partner, whose name is “reflecting the level of drug pricing that we believe should be industry-standard.” Other companies under this name include Lumicera Health Solutions and Civicascript.
Richard Stephens, senior vice president of Costco Pharmacy, said in a statement that the company is “honestly to be” [Navitus’s] The first online pharmacy partner provides customers with highly competitive, fully audited drug costs for prescription drugs. We believe that this transparency is an active step in providing payers with tools to effectively manage their drug spending. ”
Several other companies offer cost plus models. Most famously is the Mark Cuban Cost Plus Drug Company, which requires the cost of manufacturing drugs, and then adds 15% markup, pharmacy labor costs and shipping costs.
GoodRX, a prescription savings company, has also recently launched a cost plus pricing model for independent pharmacies. In this model, the price of the drug is based on the national average drug acquisition cost (NADAC), as well as a fixed allocation fee and a fixed GoodRx management fee.
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