Cigna’s Express Scripts to Phase Out Rebate-Based Drug Model, Shift to Cost-Plus Pricing

The company will also introduce a reimbursement model that pays pharmacies based on the cost of the drug, plus a dispensing fee and reimbursement for clinical services.

Cigna’s health services arm, Evernorth, announced plans to overhaul how its pharmacy benefit manager, Express Scripts, handles drug pricing — moving away from the traditional rebate model to a point-of-sale and cost-plus system. 

The change, which will impact millions of commercial members, aims to increase price transparency and reduce direct costs for consumers.

Under the new structure, Express Scripts will pass negotiated drug savings directly to members at the pharmacy counter, eliminating retained rebates for commercial clients. The company will also introduce a reimbursement model that pays pharmacies based on the cost of the drug, plus a dispensing fee and reimbursement for clinical services.

Evernorth said the shift will begin in 2027 for Cigna’s fully insured members — about 2 million consumers — and will become the default option for clients in 2028. However, a rebate-based arrangement will remain available.

“We remain confident in the long-term durability of our margin profile,” an Evernorth spokesperson told Healthcare Dive. The spokesperson added that the new model “should be appealing due to lower direct costs for consumers and more visibility for employers into their budgets.”

According to the company, the transition will ensure that consumers automatically pay the lowest price available at the counter — whether that’s the negotiated rate, a cash discount, or the co-pay. Evernorth expects consumers to save an average of 30% on brand-name drugs once the model takes effect, with “millions more” set to benefit beginning January.

The company aims for 50% of employers to adopt the new structure within the next three years. Analysts say the move could reduce Cigna’s exposure to upcoming policy changes targeting PBM rebate practices while maintaining earnings stability.

Cigna already passes through more than 95% of rebate dollars to clients, with retained rebates accounting for less than 10% of Evernorth’s pre-tax earnings, according to TD Cowen analyst Charles Rhyee.

Evernorth’s decision follows similar changes by major PBMs, including CVS Caremark’s TrueCost and UnitedHealth’s Optum Rx cost-plus models, as large employers demand greater transparency in drug pricing.

Cigna is scheduled to report its third-quarter earnings on Thursday.

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