Introduction to Cost-Plus Pricing Initiative
Starting in January 2025, Navitus Health Solutions members will experience a revolutionary change in prescription drug pricing through a groundbreaking partnership with Costco Pharmacy. This innovative collaboration introduces cost-plus pricing for select prescriptions, marking a significant step toward greater transparency in the pharmaceutical industry.
The partnership represents a major shift from traditional pharmacy benefit manager (PBM) models, offering members unprecedented visibility into drug costs. This transparent pricing model will be available across both retail and mail-order locations, ensuring comprehensive access for all Navitus members.
How the Transparent Pricing Model Works
The cost-plus pricing model provides complete transparency by revealing three key components:
- Drug acquisition costs – the exact amount Costco pays to acquire medications
- Fixed markup – a predetermined percentage added to the acquisition cost
- Pharmacy service fees – charges for professional pharmacy services
This transparent PBM approach eliminates hidden fees and provides clear visibility into every aspect of prescription pricing. Unlike traditional models that often obscure true costs, this system ensures that health plan sponsors and members understand exactly what they’re paying for.
Advanced Transparency Features
The pricing model extends beyond basic cost disclosure. Navitus’s specialty pharmacy brand, Lumicera, enhances transparency by helping clients understand the total costs associated with specialty medications. This comprehensive approach ensures that even high-cost specialty drugs maintain the same level of pricing clarity.
Benefits for Health Plan Members
The Navitus cost-plus model delivers several advantages for healthcare consumers:
Financial Benefits:
- Elimination of hidden markups and fees
- Competitive pricing on prescription medications
- Fully auditable drug costs for better budgeting
Access Improvements:
- Support for all types of medications, including specialty drugs
- Consistent pricing across retail and mail-order channels
- Enhanced medication affordability through transparent pricing
Convenience Features:
- Same-day prescription delivery for qualifying members
- Integration with existing Costco Pharmacy services
- Streamlined prescription management processes
Navitus’s Commitment to Transparency
Diana Gibson Pace, chief growth officer at Navitus, emphasized the company’s dedication to transparency, stating that “From day one, Navitus has delivered a clear view to drug costs, rebates and fees as a transparent PBM.” This commitment reflects the company’s core philosophy of providing honest, straightforward pharmaceutical services.
The company employs a 100% pass-through model, ensuring that all savings and rebates are passed directly to clients without retention by the PBM. This approach contrasts sharply with traditional PBM models that often retain portions of negotiated savings.
Partnership Details and Implementation
Richard Stephens, senior vice president of Costco Pharmacy, praised the collaboration, noting that “Costco has long supported the Navitus PBM model and its commitment to transparency.” He emphasized that this partnership represents the first network pharmacy relationship to deliver “highly competitive, fully auditable drug costs.”
Ownership and Background
Navitus operates under the ownership of nonprofit health system SSM Health and Costco Wholesale, creating a unique structure that prioritizes member benefits over profit maximization. This ownership model has enabled Navitus to manage healthcare benefits for Costco’s employees and dependents since 2019.
Recent Business Developments
The company has undergone several strategic changes:
- 2024: Consolidated the EpiphanyRx brand under the Navitus umbrella
- 2023: Established a partnership with GoodRx for enhanced prescription savings
- 2022: Became a founding member of CivicaScript to support generic drug manufacturing
- 2021: Acquired EpiphanyRx to expand service capabilities
Additional Services and Convenience Features
Members living within one hour of a Costco Pharmacy location gain access to same-day prescription delivery through Instacart. This service enhancement demonstrates the partnership’s commitment to both transparency and convenience.
The delivery service complements the cost-plus pricing model by ensuring that transparent pricing doesn’t come at the expense of accessibility or convenience. Members can enjoy competitive pricing while receiving their medications quickly and efficiently.
Industry Impact and Future Outlook
This Navitus-Costco partnership sets a new standard for pharmacy benefit management, potentially influencing industry-wide adoption of transparent pricing models. The collaboration demonstrates that healthcare transparency and competitive pricing can coexist successfully.
The initiative addresses growing consumer demands for clarity in healthcare costs while maintaining the convenience and accessibility that modern patients expect. As the partnership expands, it may serve as a blueprint for other PBM relationships seeking to prioritize member benefits and transparency.
The success of this transparent drug pricing model could accelerate broader industry reforms, encouraging other pharmacy benefit managers to adopt similar approaches that prioritize member education and cost transparency over traditional profit-retention models.
Discover the latest payers’ news updates with a single click. Follow DistilINFO HealthPlan and stay ahead with updates. Join our community today!
