The Flaws in Cigna’s PBM New Cost-Plus Model

As SVP of Product Strategy at SmithRx, I’ve closely followed Cigna’s evolving pharmacy benefit strategy from its initial cost-plus network announcement to its more recent shift toward a rebate-free, point-of-sale pricing model through Express Scripts. At first glance, these changes signal a push toward greater transparency and simpler drug pricing. But as the details have emerged, and as regulators and industry experts weigh in, important questions remain about what these reforms truly mean for employers, plan sponsors, and the long-term structure of PBM incentives.

What “Rebate-Free” and Cost-Plus Really Mean in Practice

Cigna’s transition from a cost-plus pharmacy network to a rebate-free PBM model has been positioned as a step toward clearer drug pricing. Through Express Scripts, the company aims to eliminate traditional rebate arrangements and instead apply more straightforward pricing at the point of sale.

However, employers evaluating this model should look closely at how funds move through the system. If pharmacies are reimbursed at one cost-plus rate while plan sponsors are charged a higher effective markup or administrative structure, it raises an important question: where does the spread or margin ultimately reside? True PBM transparency requires clear line-of-sight into acquisition cost, dispensing fees, administrative fees, and any retained revenue, not just a shift in how rebates are labeled.

Why Uniform Pricing Doesn’t Always Translate to Lower Total Spend

Cigna has positioned its rebate-free PBM model as a more transparent alternative, while noting that participation and savings outcomes will depend on each employer’s plan design. That caveat is important. Drug savings are not evenly distributed across all categories, and the impact of eliminating rebates or applying standardized markups will differ depending on utilization patterns.

For generics, cost-plus or simplified reimbursement structures may create clarity and predictable margins. But for branded and specialty medications — which now drive the majority of employer pharmacy spend — percentage-based pricing or flat administrative assumptions can magnify cost exposure. Employers should evaluate how the model performs under real utilization scenarios rather than relying solely on headline messaging about transparency. The key question isn’t whether pricing is simpler — it’s whether total net spend improves.

The Broader Industry Debate: Predictability vs. Transparency

Cigna’s rebate-free pivot comes at a time when regulators and lawmakers are actively challenging long-standing PBM practices. Recent scrutiny of spread pricing and rebate retention has accelerated the push toward models that align pharmacy reimbursement and employer cost more directly.

However, a persistent narrative remains: that traditional or rebate-influenced models provide predictable offsets that help employers manage volatility. In contrast, pass-through pricing where clients pay the true acquisition cost of a drug plus a fixed administrative fee, removes hidden margins but reflects actual market dynamics.

The reality is that historical drug inflation has been driven less by transparency and more by rebate-maximizing incentives that favor higher list prices. Eliminating those distortions does not inherently increase volatility; instead, it exposes real market costs and enables clearer benchmarking. Employers evaluating new rebate-free or cost-plus models should assess whether the underlying incentive structure has meaningfully changed, or simply shifted form.

At SmithRx, our experience tells a different, more positive story about pass-through. We've built our business on this model, and the results speak for themselves. We work with over 3,000 clients who not only benefit from the transparency of our pass-through pricing but also see real, tangible savings of up to 50% on their prescription drug costs. 

What we've found is that predictability doesn’t have to come at the cost of higher fees or back-alley deals. Our clients can budget and plan their healthcare expenses effectively because they know exactly what they're paying for. 

The Real Need for Transparency

While Cigna’s rebate-free model may simplify pricing, high-cost medications still require scrutiny. True transparency means clear, predictable costs across all drug categories. At SmithRx, our pass-through model delivers exactly that: auditable pricing, aligned incentives, and meaningful savings for thousands of clients.