As employers and patients struggle with rising prescription drug costs and limited pricing transparency, several solutions have emerged to help lower expenses. One approach is the cost-plus model, where a drug’s price is based on its production cost plus a fixed markup.
And Navitus Health Solutions, an alternative pharmacy benefit manager, is the latest to jump on the cost-plus train. The company announced last week that it is launching a cost-plus pricing model through Costco Pharmacy. It will become available for clients starting in January for prescriptions filled at retail and mail order locations.
Through this model with Costco, drug costs will be based on what Costco pays to acquire a drug, in addition to a fixed markup and fee for pharmacy services the company offers. This applies to a broad range of generic and brand medications, according to Navitus. And with Navitus’s pass-through PBM model, all discounts and rebates will be passed back to clients.
“Costco has long supported the Navitus PBM model to remove unnecessary costs from the drug supply chain,” said Diana Gibson Pace, chief growth officer for Navitus Health Solutions, in an email. “We also acknowledge the pharmacy landscape is under growing pressure as drug costs continue to rise and as plan sponsors, consumers and regulators demand more transparency. Launching a cost-plus model with Costco Pharmacy was a natural step. This cost-plus pricing model reflects a shared commitment between Navitus and Costco to address rising drug costs through industry-leading purchasing power, transparency and simplicity.”
Navitus members that live within an hour of a Costco Pharmacy can also receive same-day prescription delivery through Instacart at no cost.
In addition, Costco has been designated as a NavitusClear partner, which is a designation given to partners that “exemplify the level of transparency in drug pricing we believe should be the industry norm,” according to Navitus. Other companies with this designation include Lumicera Health Solutions and CivicaScript.
Richard Stephens, senior vice president of Costco Pharmacy, said in a statement that the company is “proud to be [Navitus’s] first network pharmacy partner to deliver to their clients highly competitive, fully auditable drug costs of prescription medications. We feel this level of transparency is a positive step to give payers a tool to effectively manage drug spend.”
Several other companies offer a cost-plus model. One of the most well known is Mark Cuban Cost Plus Drug Company, which takes the cost to manufacture a drug and then adds a 15% markup, a fee for pharmacy labor and a fee for shipping.
GoodRx, a prescription savings company, also recently launched a cost-plus pricing model for independent pharmacies. In this model, the price of a drug is based on the National Average Drug Acquisition Cost (NADAC), plus a fixed dispensing fee plus a fixed GoodRx admin fee.
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