CVS Health is implementing modifications to their prescription drug pricing structure, which may result in cost reductions for consumers beginning in the upcoming year.
On Tuesday, the large healthcare corporation announced plans to implement a new payment system aimed at increasing cost predictability when purchasing medication. This model will be available next year for select third-party discount card providers.
Cash discount cards like those offered by GoodRx can give customers a price break on out-of-pocket costs for some prescriptions, depending on the person’s coverage and the drug.
CVS Health pharmacies will adopt the CostVantage model in a wider scope by 2025. This model aims to increase transparency in drug pricing. It utilizes a formula that considers the drug’s cost, a fixed markup, and a prescription filling fee.
CVS Health operates a major chain of drugstores as well as a significant pharmacy benefit management division, which administers prescription drug coverage for notable clients such as insurance companies and employers.
The company also offers health insurance through its Aetna division, and has been expanding its healthcare services through its pharmacies and clinics.
On Tuesday, the company revealed a 10% increase in its quarterly dividend and provided its projections for the upcoming year. CVS Health predicts adjusted earnings of at least $8.50 per share and total revenue of at least $366 billion.
According to FactSet, analysts predict that the earnings will be $8.51 per share with a revenue of $344.5 billion.
John Boylan, an analyst at Edward Jones, stated in an email that he viewed the revenue guidance and dividend increase as a display of confidence from the management, which exceeded expectations.
CVS Health Corp. stock, headquartered in Woonsocket, Rhode Island, rose 3.7%, or $2.54, to end Tuesday at $71.02, while other major indexes declined.