(Bloomberg) -- Cigna Group is offering clients a clearer view of how much they pay for drugs through its prescription plans, as the industry responds to rising Washington scrutiny and competition from smaller rivals touting greater transparency.

The insurance giant’s pharmacy-benefit management unit will market a “fully transparent” option charging a flat monthly fee for each member, with more visibility into manufacturers’ prices and discounts. The unit, Express Scripts, will also offer a plan that caps patients’ out-of-pocket costs from $5 to $45 per prescription, depending on the drug.

Pressure on PBMs for more disclosure is rising amid long-standing questions about how they make money. Both the Federal Trade Commission and the House Committee on Oversight and Accountability are investigating the industry, and the Ohio attorney general sued Cigna and Express Scripts last month, alleging that anticompetitive conduct drives up costs for consumers. The companies dispute the allegations.

Express Scripts recently began offering the more transparent plans to select large clients covering about 500,000 people. Early results show drug and medical spending decreasing and patients better adhering to their medications through coaching and other programs.

“Improving the level of transparency and having another option of how they contract with us is absolutely another piece of what we wanted to offer,” Express Scripts President Adam Kautzner said in an interview before the announcement.

The new offerings will be available this year. Next year, Express Scripts also plans to begin giving members explanations of benefits when they fill prescriptions that show drug prices, what the plan paid and out-of-pocket costs.

PBMs manage drug plans on behalf of employers, health insurers and government programs. They contract with networks of pharmacies, negotiate discounts and rebates with drug suppliers and process prescription claims.

The largest PBMs are now part of health-care behemoths that simultaneously own insurance plans, pharmacies and care providers. They’re facing more questions about whether they contribute to wasteful spending, make money from opaque fees or have interests that diverge from their clients’. Express Scripts is the second-largest of the three dominant PBMs, behind CVS Health Corp.’s Caremark unit and ahead of UnitedHealth Group Inc.’s Optum Rx.

Policy Risks

Cigna’s new offerings appear designed to get ahead of policy changes being considered by Congress and could raise pressure on rivals to follow. They also may help Cigna head off competition from smaller PBMs that market more transparent fee structures: Navitus, Capital Rx and EmsanaRx.

Some lawmakers have questioned PBMs use of spread pricing, where they charge employers or health plans more than what they pay pharmacies to fill a prescription. Ending that practice could dent industry revenue by about $1 billion, Bloomberg Intelligence Senior Government Analyst Duane Wright wrote last month, and requiring them to pass all rebates on to clients could shrink margins.

The new Express Scripts options are meant to give more choice to clients without posing a risk to Cigna’s business, Kautzner said.

“We are as an organization indifferent to how a client wants to contract with us,” he said. “We have worked vigorously to create all of these different options for clients and still work within our own business model.”

In the flat-fee plan, ClearCareRx, clients will pay only what Express Scripts pays pharmacies for drugs, eliminating spread pricing. Express Scripts will pass through all manufacturers’ rebates to clients as well, along with certain fees the PBM charges drugmakers. Kautzner didn’t directly address questions about whether other revenue Express Scripts or related entities get from drugmakers will be passed on to clients. 

Capping Costs

Express Scripts will also offer a separate plan to let clients limit how much their members pay when they get prescriptions filled. Members won’t have any additional charges beyond the copays — capped at $5 for generic drugs, $25 for branded drugs that the PBM lists as preferred for customers and $45 for preferred specialty drugs. 

The program builds on Express Scripts’ earlier efforts to limit out-of-pocket costs for insulin, Kautzner said. Patients who face higher expenses are less likely to adhere to medication.  

“We know that there’s a growing challenge with patients today around out-of-pocket costs,” Kautzner said

Kautzner said the company hopes to work with drugmakers to offset some of the costs of the program, since limiting patients’ share of costs can increase expenses for health plans. 

Express Scripts will also increase disclosures about fees, including on forms used by the Department of Labor to ensure employers comply with the laws governing their employee benefit plans. Cigna also plans to disclose more information about its Express Scripts business to investors through a new website and in filings with the Securities and Exchange Commission.

©2023 Bloomberg L.P.