Quick Glance
– Capital Rx launches new innovative Clearinghouse Model, a new pricing framework that will itemize the actual unit cost for all drugs for the first time
– The Clearinghouse Model will eliminate price variability for customers, ensuring that drug costs are the same for all customers.
– Pharmacies in its retail network, which includes chains, like Walmart, Walgreens, to grocers and independent pharmacies, will be able to deliver the lowest prescription prices to customers.
– While rising drug prices have made headlines, the price variability and PBM profit margins contributing to this have remained overlooked and unaddressed.
Capital Rx, an NYC-based next-generation pharmacy benefits manager (PBM), today announced the launch of its Clearinghouse Model, the first major innovation in the way prescriptions are priced for over three decades. Through this new pricing framework, Capital Rx brings full visibility to drug unit prices and eliminates arbitrary price variability for patients and employers.
National Average Drug Acquisition Cost
Capital Rx’s Clearinghouse Model deploys the National Average Drug Acquisition Cost (NADAC), which is maintained by the Centers for Medicare and Medicaid (CMS) based on surveys of actual acquisition costs among retail pharmacies. With a NADAC benchmark, Capital Rx utilizes on an unbiased source that also ensures price consistency because NADAC prices only update when changes of +/-2% occur. In addition, Capital Rx ‘s contracts with employers offer an industry-first- actual unit costs for all drugs, that is the same for all customers. In comparison, typical PBM agreements are over 50 pages but do not include a single prescription price.
The Bigger Picture
Currently, different employer groups are paying wildly different drug prices because of existing “spread” opportunities for traditional PBMs. While rising drug prices have made headlines, the price variability and PBM profit margins contributing to this have remained overlooked and unaddressed.
“Everyone knows drug prices are rising at alarming rates, but the most interesting metrics we’ve been following over the years are price variability and PBM profit margins,” said AJ Loiacono, CEO of Capital Rx. “Gaps between AWP and acquisition cost create large “spread” opportunities for traditional PBMs. In this model, different employer groups pay wildly different drug prices, and two patients in the same plan can be charged different prices, even when standing in the same pharmacy. This absurd process ends with the introduction of the Clearinghouse Model.”
The Clearinghouse Model will eliminate price variability for customers, ensuring that drug costs are the same for all customers. Pharmacies in its retail network, which includes chains, like Walmart, Walgreens, to grocers and independent pharmacies, will be able to deliver the lowest prescription prices to customers.
“When Capital Rx approached us with the Clearinghouse Model, we immediately recognized a common goal and shared vision,” said Luke Kleyn, Vice President, Walmart Health and Wellness. “Walmart is working with Capital Rx to deliver the lowest prescription prices and enable our customers to live better. “Under the Clearinghouse Model, employers and plan sponsors will have direct visibility to the value provided by Walmart.”
Why It Matters
“Capital Rx was founded with the mission to fix the issues plaguing the existing pharmacy benefits model and to address shortcomings in the prescription supply chain.” Loiacono concluded, “Rather than expend resources supporting a system that conflates opacity with earnings, we focus our efforts on improving service and patient outcomes through data-driven programs. The Clearinghouse Model we’re launching is a key first step, establishing a simple framework that allows us to move the conversation past validating artificial pricing guarantees.”
