Cigna’s Rebate-Free Pharmacy Model: Three Realities Behind Its Latest Push to Pop the Gross-to-Net Bubble

On Monday, Cigna announced that it would be abandoning traditional manufacturer rebates and moving to a new, “rebate-free” approach—essentially a point-of-sale (POS) rebate model paired with a cost-plus pharmacy reimbursement framework. Here’s the press release.

Moving manufacturers’ rebates and discounts to the point of dispensing is a big win for patients, who can share in the savings that pharmacy benefit managers (PBMs) negotiate with drugmakers. It's a practical, patient-friendly step toward shrinking the gross-to-net bubble that has inflated out-of-pocket costs for years.

Yet as always, the fine print matters. Below are three crucial considerations that reveal why this move might be less revolutionary than it first appears—and why it may not be widely adopted by plan sponsors. Perhaps these will spark some questions for Cigna's management about the company's increasingly opaque profit model during tomorrow’s third-quarter earning call.

This isn’t the first time that Express Scripts has tried to alter how its plan sponsors manage their pharmacy benefits. After reading the analysis below, you can decide whether this latest attempt is true reform—or the triumph of hope over experience.

BACK TO BIKINI BOTTOM

Cigna announced that it would begin offering “transparent, rebate-free pharmacy benefit services.” Its Express Scripts PBM is part of Cigna’s Evernorth Health Services business.

The model includes:

• Integrating manufacturer rebates and discounts directly into the prescription price. Patients, who currently don’t directly benefit from the rebates negotiated between drugmakers and PBMs due to the gross-to-net bubble , could finally see lower out-of-pocket costs.

• Using a “lowest of” pricing rule among: the pharmacy’s cash price, the manufacturer’s direct-to-consumer price, the coinsurance amount based on the net price, or the copay.

• Implementing a cost-plus model for pharmacy reimbursement that will be somehow different from ClearNetwork, announced with great fanfare in 2023.)

Cigna plans to roll out this model for its fully insured lives beginning in 2027 and offer it to commercial clients in 2028.

Note that Cigna has only about two million fully insured beneficiaries—fewer than most peers. Nonetheless, passing rebate value directly to patients with deductibles and coinsurance should reduce out-of-pocket costs, improve medication adherence, and ultimately benefit Cigna’s own fully insured business.

BEST DAY EVER?

There are certainly some encouraging aspects of this new model. Longtime Drug Channels readers may recognize echoes of our infamous 2018 thought experiment: A System Without Rebates: The Drug Channels Negotiated Discounts Model.

But there are three key issues that Evernorth’s glossy PR framing conveniently sidesteps.

1. Is this just another point-of-sale rebate program?

Evernorth’s “rebate-free pharmacy benefit” sounds remarkably like existing point of sale (POS) rebate programs, in which formulary rebates are applied as prescription discounts directly to patients at the pharmacy counter.

POS rebates have existed for years, but adoption has been chronically low. As I noted in 2018, UnitedHealthcare launched a point-of-sale rebate program for nine million people enrolled in its fully insured commercial group benefit plans.

Some states—including Arkansas, Indiana, and West Virginia—have even mandated POS rebates for certain insurance plans.

For a deep dive, see Section 9.3.2. of our 2025 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.

2. How many plan sponsors will actually adopt the rebate-free model?

Evernorth’s press release calls the rebate-free model its “standard” offering beginning in 2028.

Translation: It’s optional, not mandatory.

Here’s the uncomfortable truth: Most commercial plan sponsors use rebates to offset general healthcare costs and reduce premiums, not to directly lower patients’ pharmacy costs for the patients whose prescriptions generated those rebates.

The delay to 2028 presumably gives Cigna time to renegotiate contracts and persuade its clients to adopt the new model. Still, Wall-Street analysts expect that only about half of its commercial book of business will transition by 2031.

Some studies have found that POS rebates can lower out-of-pocket savings for some members while slightly raising overall premiums. (See endnote 853 in our 2025 report for citations.)

This fundamental trade-off has limited overall adoption rates of POS rebates. A 2024 Mercer survey found that only 14% of employers shared rebates with plan members at point of sale or planned to do so in 2025.

The proposed “lower of” structure also raises questions about the viability of copay maximizers, which depend on capturing the value of manufacturers’ copay support funds relative to list prices. Will Express Scripts and its commercial clients really be willing to walk away from those funds? Or will the new model not apply to some or all specialty drugs?

Another clue that adoption may be low and slow: Cigna gave no indication that anything will change for Ascent Health Services, which manages rebate negotiations for Express Scripts’ PBM business, Prime Therapeutics, and several smaller PBMs. For those unfamiliar, Ascent is domiciled as an LLC in Delaware but based in Switzerland, which is well known for mechanical watches and…financial transparency?

3. Does this address Express Scripts’ transparency problem?

Rebates are no longer the primary source of PBM profits. Today, PBMs earn more from specialty drug dispensing, manufacturer fees, and opaque GPO-related revenue streams—categories that are often invisible to plan sponsors. Watch How Large PBMs Make Money Today: A 2025 Drug Channels Update.

These newer revenue streams are often opaque to the PBMs' plan sponsor customers, which has fueled growing frustration among employers and policymakers. That opacity has also opened the door for a new generation of PBMs built around clearer, more aligned business models.

Results from Pharmaceutical Strategies Group’s (PSG) valuable new 2025 Pharmacy Benefit Manager Customer Satisfaction Report underscore the challenge. (Free download with registration.) Table 13 (page 22) highlights plan sponsors’ perceptions of their PBM’s transparency. At my request, PSG was kind enough to run a crosstab of these transparency perceptions against PBM size. The chart below summarizes the results of this custom analysis.

Among a large sample of plan sponsors:

• Only 15% of clients of the Big Three PBMs—CVS Caremark, Express Scripts, and Optum Rx—felt they had transparency into PBM revenue sources. Only 26% said they had clarity into rebate flows.

• Among smaller PBMs, fewer than half (44%) believed they had full revenue transparency, and only 51% said they understood rebate handling. These PBMs have an edge—but it’s narrower than you might think.

[Click to Enlarge]

Evernorth’s new model appears designed to counteract this perception problem. In theory, it will position Express Scripts to compete more effectively with smaller PBMs built around “clear and aligned” business models—as long as plan sponsors believe the new narrative.

KRABBY PATTY OR KELP SHAKE?

This isn’t the first time Express Scripts has promised transformation—only to be mugged by market realities. Hop in the Wayback Machine to revisit those heady days of 2018 when the company launched two initiatives to prepare for the “world without rebates:”

• PBM Pricing Overhaul: Express Scripts Prepares for a World Without Rebates—But Employers May Not Change (October 2018)

• Express Scripts Launches a New Formulary for a World Without Rebates. Will Plan Sponsors and Drug Makers Play Along? (November 2018)

Seven years later, the same structural challenges remain—and I’m still writing about them!

Today, however, external pressures are threatening to pop—or at least deflate—the gross-to-net bubble. As I outlined most recently in July, five key forces are accelerating reform:

• Uncapping of Medicaid rebate limits due to the American Rescue Plan Act of 2021

• Manufacturers’ market access strategies centered on lower list prices

• The Inflation Reduction Act of 2022 (IRA)

• The rise of cash-pay pharmacies and discount cards

• Expansion of direct-to-patient manufacturer programs

President Trump’s Most Favored Nation concept is accelerating these forces of change.

Evernorth’s new model may signal a genuine step forward—or could simply be the latest in a long line of rebate experiments that promise transparency but deliver only complexity. Either way, the channel’s long-overdue reckoning with the gross-to-net bubble is now unmistakably underway.

Mr. SquarePants stands ready.