How CVS Caremark’s 2025 Rebate Policy Shift Could Reshape Employer Drug Tiers for Emerging Cardiometabolic Therapies

How CVS Caremark’s 2025 Rebate Policy Shift Could Reshape Employer Drug Tiers for Emerging Cardiometabolic Therapies

Data First: What Changes on January 1, 2025

Starting January 1, 2025, CVS Caremark will overhaul its rebate policy to reduce reliance on manufacturer rebates when building formularies. Announced in April 2024, the company’s new philosophy emphasizes net cost and clinical performance over rebate totals. That change will flow straight through to employer-sponsored plans using CVS Caremark’s standard formularies, about 100 million covered people nationwide.

A 2023 Kaiser Family Foundation (KFF) analysis found that roughly 90% of employer plans depend on PBMs for formulary design and rebate negotiation. Rebates represent an estimated 35% of total drug spending in the commercial market, a setup that has favored high-rebate brands even when lower-priced equivalents exist. CVS Caremark’s redesign goes directly after that distortion.

Why Cardiometabolic Drugs Sit at the Center of This Change

Cardiometabolic therapies are among the fastest-growing categories in the pharmacy space. IQVIA data show U.S. spending on diabetes and cardiovascular drugs hit $130 billion in 2023, up a third from five years prior. Within that spend, GLP-1 receptor agonists have captured most of the growth, thanks to strong outcomes data and their expanding use in obesity and heart risk reduction.

Products like semaglutide (Ozempic®, Wegovy®) and tirzepatide (Mounjaro®, Zepbound®) usually land on Tier 3 or non-preferred brand tiers under commercial plans. Those placements often track to rebate deals that exceed half the list price, according to company earnings reports. Under the new CVS Caremark model, these placements could realign, particularly as oral GLP-1 agents approach FDA review. Whether that shift benefits employers or not will depend on how manufacturer contracts translate into net pricing.

How Employer Plans Structure Drug Tiers Today

Most employer plans use three to five tiers to control member out-of-pocket costs and total spend. Higher-cost drugs often rise in tier placement when rebates increase, even if net costs don’t justify the move. Below is a typical 4-tier setup employers use to benchmark costs:

Impact on Cardiometabolic Tier Placement Under the 2025 Model

CVS Caremark says the new formulary design will rank therapies based on actual net cost to both plan and patient, plus any performance-based outcomes contracts. That framework tends to favor drugs with lower list prices and stable reimbursement over rebate-heavy products. Cardiometabolic agents are first in line because they carry such large costs for employers.

Consider SGLT2 inhibitors like empagliflozin (Jardiance®). They improve both heart and kidney outcomes and cost around $570 a month at wholesale. GLP-1 injectables, meanwhile, run about twice that. Rebate streams narrow that gap on paper, but under this new lens, agents like Jardiance® could inch into preferred tiers if comparisons show similar benefit and predictable pricing. It’s a different logic, less rebate math, more total value math.

Pharmacists managing benefit transitions should expect updates to prior authorization paths and step-therapy ladders. SGLT2 or fixed-dose combo drugs might become required first-line options before GLP-1 use. And that could ripple quickly through claims during early 2025 renewals as employers revise plan setups. We’ll see some confusion at the counter for a bit. Happens every time models flip.

Projected Financial Outcomes for Employers

Employer plan budgets are already feeling the squeeze. CMS and KFF data show average drug spend per covered worker jumped from $1,153 in 2018 to $1,547 in 2023. Specialty drugs make up more than half that total, even though fewer than 2% of employees use them. Cardiometabolic meds are edging into that same territory.

CVS Caremark projects a 3%-6% reduction in total drug spend by the end of 2025 for plans adopting its net-cost model. The savings range depends on how manufacturers respond to the new pricing reality. Employers that keep traditional rebate contracts will still get rebate checks, sure, but their total spend may climb because list prices remain high under rebate-heavy categories. No real free lunch there.

Pharmacy Practice and Patient Access Considerations

Pharmacists handling benefits or specialty coordination need to look at how manufacturer copay assistance aligns with the new structure. Those cards usually tie to the list price, not net cost. If PBMs pivot formulary preference toward lower-list-price drugs that have less rebate support, patients could lose copay help faster, raising out-of-pocket costs even as premiums flatten.

Members under employer plans with CVS Caremark administration will get updated formulary letters around open enrollment. Because tier placement shapes adherence patterns, clear communication matters. CDC research shows adherence in chronic cardiometabolic disease sits at only about 50%, with money barriers making up roughly half of that. Real-time benefit tools at the pharmacy counter might curb frustration during the transition period if employers actually deploy them, which they should.

Emerging Therapies Under Review

Several new drugs in this space are close to market. Danuglipron (Pfizer) finished phase 3 as an oral GLP-1 receptor agonist, and retatrutide (Eli Lilly) is advancing as a triple hormone receptor agent showing strong metabolic data. Pricing for both remains unknown. If either launches amid the policy change, their initial formulary slots will likely depend on net contract terms, not rebate packages. That alone could reroute how new entrants gain traction.

Similarly, biosimilars and combo therapies could benefit from faster uptake. For example, biosimilar evolocumab may land at a 15%-30% discount to Repatha®, depending on launch timing and distribution strategy. Under the old rebate logic, those savings would take months, or years, to hit formularies. The net-cost model could push them into Tier 2 right away. That’s meaningful speed for employers hunting value.

Strategic Actions for Employers and Benefit Managers

Employers prepping 2025 renewals should ask CVS Caremark for an early formulary preview this fall and test budget scenarios under rebate and net-cost assumptions. Modeling the two side by side will make it clear where rebate-driven structures mask higher overall spend. Don’t rely on vendor summaries alone. Check your claims experience against the new logic.

Benefit managers need to update EHR system flags in wellness programs to match new step-therapy requirements for diabetes and heart drugs. Physician communication in early 2025 will matter, missed formulary details easily turn into rejected claims and frustrated members. Coordination with ADA and ACC clinical sequencing recommendations could help employers explain these adjustments through a familiar clinical lens.

Looking Ahead: Employer Formulary Evolution

What CVS Caremark is doing fits into a wider industry shift aimed at untangling rebate noise from true drug value. Express Scripts and Optum Rx are already piloting similar models, each with its own definition of “net cost.” The jury’s still out on how this affects innovation or long-term pricing behavior. So far, the research is mixed.

As these cardiometabolic and obesity drugs dominate public and boardroom conversations, employers face an uncomfortable choice: keep chasing rebate checks or pivot to transparency and stability. The 2025 policy change offers a clear experiment in what happens when we strip rebates out of the foreground. Let’s see if plans, and patients, actually get what they’ve been paying for all along.

Medical and Insurance Disclaimer: This content is for informational purposes only and does not constitute medical, legal, or insurance advice. Readers should consult licensed healthcare professionals or qualified benefits advisors regarding decisions based on this material.