Our Take Newsletter

Our Take: PBM Express Scripts to ditch rebates, Centene and CVS Health take huge write-downs

November 3, 2025

PBM Express Scripts to ditch rebates, Centene and CVS Health take huge write-downs

Cigna’s Evernorth Health Services division will roll out a rebate-free drug pricing model for Express Scripts, its pharmacy benefit manager, starting in 2027.

The model is structured so that discounts Evernorth negotiates with drug manufacturers will be passed on directly to patients at the point of sale.

The traditional post-sale rebate payment model has been widely criticized for its lack of transparency. Under that model, PBMs have been able to retain a portion of rebates they negotiate with manufacturers, passing along the remainder of the rebates to the health plan or employer sponsoring the health plan.

Cigna said in the announcement that it estimates the new model will lower monthly prescription drug prices by an average of 30% for health plan members who pay the full cost of their medications. This includes millions of people with high-deductible health plans, Cigna noted.

The new model will incorporate technology that automatically compares all available price options for a drug — which might include Evernorth’s negotiated price, a cash discount price, the manufacturer’s direct-to-consumer price, and the patient’s copay — to ensure patients pay the lowest price.

If a prescribed brand-name drug is not covered by a patient’s health plan, the patient will have the option to pay Evernorth’s negotiated cost for the drug instead of the list price.

Employers and health plans will benefit from the new model, too, according to Cigna, with “more real-time visibility into their drug costs” that will improve their ability to forecast their budgets.

Cigna Healthcare, the company’s insurance arm, will adopt the new model in 2027 for its fully insured members. Starting in 2028, the rebate-free model will be Express Scripts’ standard offering.

Axios noted that the new model could have the unintended consequence of increasing health insurance premiums, since employers who receive rebates under the traditional model often use them to lower premiums.

Evernorth is also adopting a new reimbursement model for independent in-network pharmacies starting in 2026. Pharmacies will be compensated based on their cost for medications plus a dispensing fee, along with additional reimbursement for clinical services they provide.

During Cigna’s third-quarter earnings call on Thursday, CEO David Cordani said the company expects “a sustained and durable growth trajectory over the long term” for its PBM business, but it anticipates margin pressure within the business segment over the next two years due, in part, to investments the company will make to improve technology, enhance analytical capabilities, reengineer processes, and support recontracting efforts.

Cigna beat analysts’ expectations, posting a net profit of $1.9 billion for the quarter (vs. a profit of $739 million reported for the same quarter a year ago) and revenue of $69.7 billion (vs. $63.7 million in Q3 of 2024). Evernorth Health Services generated revenue of $60.4 billion on an adjusted basis, up 14.7% relative to last year’s third quarter.

Nonetheless, Cigna’s stock price dropped sharply in response to the earnings report and the accompanying announcement of the new PBM model, falling from $301.99 Wednesday night to $247.50 by midmorning Thursday.

Centene also reported its third-quarter financial results last week, which included a net loss of $6.6 billion resulting from a $6.7 billion goodwill impairment charge.

The company said it performed a quantitative impairment analysis during the third quarter as a result of market conditions in July — including the company’s declining stock price and the signing of the GOP’s One Big Beautiful Bill Act, which includes significant Medicaid cuts (Medicaid accounts for 45% of Centene’s medical members and more than half of the company’s premium and service revenue, Healthcare Dive reported).

Aside from the colossal write-down, Centene surpassed analysts’ forecasts for the quarter, reporting revenue of $49.7 billion (vs. $42 billion in the third quarter of 2024) and earnings per share of 50 cents.

UnitedHealth Group reported its quarterly results as well, posting a $2.3 billion profit (vs. $6.1 billion in the third quarter of 2024. Revenue increased compared with the same quarter a year ago ($113.2 billion vs. $100.8 billion).

Of note, UnitedHealth Group’s CEO, Tim Noel, said during the earnings call on Tuesday the company expects enrollment in its Medicare Advantage plans to decrease by 1 million members for 2026.

CVS Health reported a $4 billion loss for its third quarter stemming from a $5.7 billion goodwill impairment charge. The write-down was associated with external challenges that have prevented the company’s Health Care Delivery unit — which includes MinuteClinic, Oak Street Health, and Signify Health — from growing at the previously projected rate.

The company said it plans to close 16 Oak Street Health centers by the end of February, leaving it with 230 clinics in 27 states. It did not specify which locations would be closing.

CVS Health’s revenue was up 7.8% compared with last year’s third quarter ($103 billion vs. $95.4 billion). The company raised its full-year guidance for the third quarter in a row.

In other insurer-related news, Elevance Health may start implementing “corrective measures” in January to curb the use of care providers who are not in-network with Anthem Blue Cross Blue Shield commercial plans.

Under the new policy, hospitals and other contracted facilities that use nonparticipating care providers may be subject to a penalty equal to 10% of the allowed amount of the facility’s claims that involve the use of nonparticipating care providers. They could also face termination from Anthem’s networks.

Exceptions will be made for emergency services and in situations where Anthem has granted prior approval.

OUR TAKE: Although they’ve been in the hot seat for years, PBMs have evaded attempts by Congress to reform their practices — but only because Congress has been so remarkably dysfunctional.

Various states have had more success in passing legislation designed to hold PBMs accountable, though the most stringent laws are being appealed.

Large drug manufacturers are implementing direct-to-consumer platforms that circumvent PBMs (and insurers).

New “alternative” PBMs with more transparent business practices have cropped up in the last couple of years, threatening to take away market share from the “Big 3” PBMs: Optum Rx, CVS Caremark, and Express Scripts.

Feeling the squeeze, the Big 3 have undertaken changes on their own. Now that Express Scripts is phasing out rebates, there’s a good chance that CVS Caremark and Optum Rx will follow suit.

How much difference will it make? All three PBMs had already started to “self-police” by implementing new policies and pricing models with greater transparency. Eliminating rebates may have only an incremental effect at best.

Meanwhile, organizations representing retail and independent pharmacies have expressed skepticism with regard to Express Scripts’ announcement, and headlines in recent weeks suggest that Congress isn’t going to back off.

Health Care Rounds #192:‍Dr. David Carmouche

Across the country, health systems are chasing the promise of value-based care, but few have figured out how to make it work. David Carmouche, MD, Executive Vice President and Chief Clinical Transformation Officer at Lumeris, joins host John Marchica to discuss what it really takes to make value-based care work at scale. Listen wherever you get your podcasts or watch the episode here. If you like what you hear, please don’t forget to rate, review, and subscribe.

What else you need to know

Novo Nordisk set off a bidding contest with Pfizer by making an unsolicited bid to acquire Metsera, a New York-based biopharma with a pipeline of next-generation candidates for obesity and cardiovascular diseases. Novo Nordisk’s offer consists of an upfront payment of $56.50 per share in cash, or approximately $6.5 billion, plus contingent value rights that could boost the value of the deal to $9 billion.

In September, Pfizer agreed to pay at least $4.9 billion for Metsera, as well as another $2.4 billion in potential milestone payments. Through the acquisition, Pfizer could gain re-entry into the GLP-1 obesity market; Pfizer discontinued development of an oral GLP-1 drug called danuglipron in April due to potential liver toxicity. Together, Novo Nordisk’s semaglutide and Eli Lilly’s tirzepatide account for the vast majority of the global GLP-1 market. Metsera is also developing an ultra-long-acting amylin analog. Novo Nordisk and Lilly are developing long-acting amylin analogs of their own.

Calling Novo Nordisk’s bid “reckless and unprecedented,” Pfizer said Thursday in a press release the offer is “an attempt by a company with a dominant market position to suppress competition in violation of law by taking over an emerging American challenger. It is also structured in a way to circumvent antitrust laws and carries substantial regulatory and executional risk.” On Friday, Pfizer announced that it had filed a lawsuit against Metsera, Metsera’s board of directors, and Novo Nordisk, asserting claims for breach of contract, breach of fiduciary duty, and tortious interference. Pfizer also requested a temporary restraining order to prevent Metsera from terminating their merger agreement. According to Pfizer, the Federal Trade Commission has granted early termination of the legally required waiting period, all necessary regulatory approvals have been obtained, and Pfizer is prepared to complete the acquisition soon after the Metsera shareholder meeting on November 13. Pfizer said Metsera turned down an identically structured previous offer from Novo Nordisk because it posed “unacceptable regulatory risks,” and those risks “have not changed.”

The FDA is seeking to accelerate the development of biosimilars by eliminating certain approval requirements, including in some instances the need to conduct clinical trials to show the biosimilars have efficacy comparable to their reference biologics. These trials “often add little scientific value compared with advanced analytical testing,” the agency stated in a fact sheet. In some scenarios, the FDA suggested, companies seeking approval of a biosimilar could use comparative analytical studies based on preclinical and biochemical data instead of conducting comparative efficacy studies to demonstrate the biosimilar is interchangeable with a product already on the market.

According to the FDA, biologics represent just 5% of prescriptions written in the U.S., yet they account for 51% of drug spending. To date, the FDA has approved 76 biosimilars — 42 of which were approved in 2024 — whereas the European Medicines Agency approved 110 biosimilars last year, the FDA said. In the U.S., biosimilars generated $20.2 billion in savings in 2024, according to a report by the Association for Accessible Medicines. An analysis by the IQVIA Institute found that, as of June 2024, biosimilars were in development for just 12 of the 118 branded biologics expected to lost patent protection in the next decade. Comments on the FDA’s draft guidance are being accepted for 60 days.

Novartis agreed to acquire Avidity Biosciences for $12 billion. San Diego-based Avidity is developing a new class of therapeutics, called antibody oligonucleotide conjugates, that enable targeted delivery of RNA therapeutics to muscle tissue. Novartis is only interested in Avidity’s three late-stage candidates that address rare genetic neuromuscular diseases, including one in development for Duchenne muscular dystrophy. The plan is to spin out the biopharma’s five preclinical cardiology programs to a new, publicly traded Avidity subsidiary before the acquisition closes, according to a press release. The new company will inherit other assets as well — specifically, Avidity’s cardiology-based collaborations with Bristol Myers Squibb and Eli Lilly, according to MedCity News. The boards of both Novartis and Avidity have unanimously approved the acquisition, which is expected to close by mid-2026. In addition to completing the spinoff, other closing conditions must be met, including approvals by regulators and Avidity shareholders. If the acquisition is completed, Avidity shareholders will receive $72 per share in cash, along with one share of common stock in the new company for every 10 shares of Avidity stock.

Eli Lilly is partnering with Walmart to expand access to direct-to-consumer pricing for Lilly’s Zepbound (tirzepatide). For patients who pay out of pocket, Lilly’s telehealth platform, LillyDirect, offers pricing on single-dose vials of the weight-loss drug ranging from $349 per month for the 2.5 mg dose to $499 per month for other dose strengths. Patients who buy Zepbound through LillyDirect will be able to pick up their purchase at Walmart pharmacies starting in mid-November, Lilly said in the announcement. The partnership is the first retail collaboration for LillyDirect.

Amazon One Medical and Cleveland Clinic opened their first primary care office in northeast Ohio. Located in Avon, the new office is the first Amazon One Medical in the region, Cleveland Clinic noted in a news release. With in-person and remote care options, the office will offer same- and next-day appointments for preventive screenings, services to assist with chronic disease management, and care for illnesses such as colds and the flu. On-site lab services will also be available.