As health care and prescription drug benefits evolve, the highest drug costs are increasingly concentrated in a relatively small number of brand‑name medications – and those costs are being felt more directly by patients through high deductibles and coinsurance. This means that long‑standing rebate models, while designed to lower overall plan costs, don’t always translate into immediate relief for patients at the pharmacy counter.
Adam Kautzner, president of Express Scripts and Evernorth Care Management, shared that perspective during a recent appearance on the TD Cowen Insights podcast, where he discussed moving toward a rebate‑free approach to pharmacy benefits, one that drives a fundamental shift in how prescription drugs are paid for and experienced by patients.
“We service a hundred million Americans on their pharmacy benefits. We process over two billion prescriptions a year,” Kautzner said. “We’re focused on access, affordability, and ultimately the health of the consumers that we have within our book of business.”
A system that works – but not for everyone
Rebates have historically helped lower net drug costs for plan sponsors, particularly for brand‑name drugs in competitive classes. But Kautzner said shifts across the market have exposed limitations in how that value reaches patients.
“About nine out of every 10 prescriptions are generic in America, but 10% of the drugs are branded products,” he said. “And those 10% of drugs account for about 88% of the total spend on pharmaceuticals.”
As more employers adopt high‑deductible and co‑insurance plans, patients are increasingly exposed to list prices rather than net costs. “They’re paying their deductible or their co‑insurance based off the list price of the drug, not the actual net cost of that product,” Kautzner said. “And so they’re seeing what the list prices of those drugs are.” That disconnect, he said, has fueled frustration and confusion at the pharmacy counter.
Moving discounts upfront
The rebate‑free model is designed to change that experience by replacing after‑the‑fact rebates with upfront discounts that are visible to patients before they fill a prescription. “Being rebate‑free means we are going to be contracting with drug manufacturers in a whole new way,” Kautzner said. “This new manner is an upfront discount with full benefit to the consumer.”
For medications that previously included rebates, Kautzner noted that those discounts average about 30% upfront for patients in a deductible or co‑insurance plan. “The consumer will see that discount before they go to the pharmacy counter, through their digital app or online,” Kautzner said.
Simplicity and predictability
Under the new approach, Express Scripts is also changing how it is paid – ensuring compensation is not tied to drug prices or negotiated discounts.
“We’re not going to be reimbursed based off of the cost of the drug or the discounts we negotiate,” Kautzner said. “Instead, our reimbursement is going to be on a per-member-per-month fee or a per-prescription fee.”
That structure, he said, offers employers greater predictability at a time when rebate guarantees have become less reliable. “What was a very predictable piece now has become very unpredictable,” Kautzner said. “And so in this new model, the predictability is going to be there.”
A better experience at the pharmacy counter
The model also reshapes how pharmacies are reimbursed, placing greater emphasis on patient‑facing services – such as medication counseling, chronic disease management, vaccinations, screenings, and point-of-care testing – rather than drug margins.
“A pharmacy can be much more than just putting pills in the bottle,” said Kautzner, a pharmacist by training. “They want to do those things and we want to reimburse them for those services.”
For patients, the goal is fewer surprises – and fewer abandoned prescriptions. “About 10% of prescriptions today at the pharmacy counter aren’t picked up,” Kautzner said. “Many of those are because of cost and affordability. We’re going to reduce those things.”
Ultimately, he said, the shift is about redesigning pharmacy benefits around the people who use them. “When we designed this new model, we started with the consumer first,” Kautzner said. “And then built it back from there.”
Quotes have been edited for clarity and brevity.
The first to deliver prescription medication straight to patients’ homes, Express Scripts® Pharmacy has been leading the way in making the pharmacy experience simpler and better. With easy-to-use digital tools, automatic refills, flexible payment options, and 24/7 pharmacist support, we’re delivering more than medication.
