Please ensure Javascript is enabled for purposes of website accessibility

CVS Announces Plan to Eliminate Co-Pays for Diabetes Drugs

By Todd Campbell - Jan 29, 2020 at 1:38PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The pharmacy giant is offering health insurers and employers a tool to eliminate out-of-pocket costs for diabetics that won't raise their costs either.

According to a study by CVS Health's (CVS 2.33%) pharmacy benefit manager, CVS Caremark, the average diabetic spends $467.24 out-of-pocket per year on their medication, including insulin, and 12% of them lay out upwards of $1,000. As a result of those costs, some diabetes patients must sometimes forgo their medication, which can result in disease progression, and in some, lead to the development of heart disease.

In hopes of helping ensure patients can take their medication as prescribed, CVS Caremark is offering employers and health insurers a solution that will eliminate out-of-pocket expenses for members, without costing either the employer or insurer more money. 

A piece of paper shows zero dollars owed.

IMAGE SOURCE: GETTY IMAGES.

CVS Caremark boasts over 102 million plan members; in the third quarter, it accounted for $36 billion of CVS Health's total revenues of $64.8 billion. 

The RxZERO program relies on drug-formulary and plan-design approaches to provide zero-dollar co-pays for plan participants across all categories of diabetes medications, including insulin and oral type 2 medications, which are often prescribed to help patients reach their recommended blood sugar levels. CVS Health says RxZERO fully adheres to treatment standards outlined by the American Diabetes Association, which recommends a fasting blood sugar target of 80 to 130 mg/dl for most adults with diabetes.

Health payers spend an average of $1,256 per member per year for diabetes medications after rebates from drug manufacturers. Switching to RxZERO's value-based formulary, which focuses on generic drugs and preferred brand-name drugs, lowers plan sponsors' cost per member to $1,225 per year. The savings comes from patients' increased adherence to medical advice, and from the use of lower-cost medicines, which offsets the increase in patient prescription volumes driven by the elimination of out-of-pocket costs for patients.

Plans that can reduce diabetes spending are especially important because the number of people with the disease is growing. More than 30 million Americans have diabetes, and according to the International Diabetes Federation, the number worldwide will increase from 463 million today to over 700 million by 2050.

 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

CVS Health Corporation Stock Quote
CVS Health Corporation
CVS
$94.52 (2.33%) $2.15

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
321%
 
S&P 500 Returns
111%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.