Cigna (NYSE:CI) said that its health services division, Evernorth, which includes the pharmacy benefit manager Express Scripts, will eliminate the controversial practice of drug rebates for all of its fully insured plan customers beginning in 2027.
Instead, the discounted price negotiated between Express Scripts and a drug’s manufacturer will be directly available to consumers. With drug rebates, drugmakers pay the PBM after a prescription is filled, with the concept that the rebate is then passed along to the client, such as an employer. There is debate over how well this works or how much of the rebate plan enrollees actually receive.
Pharmas typically offer the rebates to PBMs as a way to gain more favorable placement on health plan drug formularies.
In a news release, Evernorth and Express Scripts President Adam Kautzner said that PBMs have been helping to save customers money by pushing greater adoption of generic and biosimilar medications.
“Our innovative model is a win-win for Americans and their employers—lower costs for Americans, real-time transparency for employers, and renewed trust in pharmacy benefits for all,” he said.
All Evernorth clients will benefit from the rebate-free practice starting in 2028. Medicare and Medicaid drug plans are exempted.
In addition, customers will pay the lowest price for a brand or generic drug, whether that is through an Evernorth negotiated price, a copay, or a cash discount price.
The changes come as President Donald Trump has been a stalwart opponent of PBMs. In a speech at Mar-a-Lago in December 2024, he said, “we are going to knock out the middleman,” a reference to PBMs.
In May, when Trump first announced his new policy to bring down the cost of prescription drugs, PBMs were referenced. A fact sheet mentioned that the HHS secretary would set up a program so “American patients can buy their drugs directly from manufacturers who sell to Americans at a ‘Most-Favored-Nation’ price, bypassing middlemen.”
Already, several large pharma companies, including Pfizer (PFE) and AstraZeneca (AZN), have made deals with the White House to sell some of their drugs through the forthcoming TrumpRx website.
In September, PBM trade group Pharmaceutical Care Management Association had reportedly drafted potential reforms to placate the president and avoid further regulatory scrutiny.
Express Scripts is one of the “Big 3” PBMs, along with OptumRx, part of UnitedHealth (NYSE:UNH), and CVS Caremark, a subsidiary of CVS Health (NYSE:CVS)