Direct-to-consumer (DTC) pricing for medications is making a splash. With DTC, drug manufacturers sell medications directly to patients instead of through a retail pharmacy or pharmacy benefit manager (PBM). This is a shift from the traditional pharmacy model.
Some drugs, including those for weight management, now have a DTC model. Eli Lilly & Co. and Novo Nordisk, for example, both have a DTC option for their weight loss drugs: Eli Lilly launched LillyDirect® and Novo Nordisk launched NovoCare®. Costco, Walmart, and others are also selling some weight loss drugs as manufacturer-authorized partners. Pfizer has a DTC model for migraine medicine, and Amgen has a DTC option for a cholesterol-lowering drug. AstraZeneca began selling a diabetes medicine and two asthma medications via DTC in October 2025. And in January 2026, Bristol Myers Squibb began offering a DTC option for a drug for moderate to severe plaque psoriasis. The company also offers a DTC option for a blood thinner, which began in September 2025.
Traditional pricing model versus DTC
In the traditional pricing model, the manufacturer sets a list price for a medicine, and the PBM negotiates rebates from the manufacturer in exchange for coverage (aka formulary access). The list price, also known as the wholesale acquisition cost (WAC), is the price of the drug before discounts, rebates, or coupons. The health plan then pays the pharmacy, and rebates are paid back to the PBM or the plan. In this set-up, members in their deductible phase or those who have a coinsurance percent (as opposed to a flat copay) pay cost sharing that is based on the non-discounted list price. In DTC, the price patients pay is often closer to the manufacturer’s net price, which is the price paid after manufacturer rebates, discounts, and coupons.
With DTC, rebates often decrease or disappear altogether. Because the PBM is not being used, there isn’t a need to pay rebates. Manufacturers can replace those rebates with lower prices to begin with. In this scenario, plans lose the rebate revenue, but they may get lower gross drug costs in return.
Effect of DTC on cost
DTC could have an impact on plan costs. These lower list prices can reduce the amount of total drug spend upfront and lessen administrative complexity. But without the rebates, plan costs could appear higher. Where this would be felt most is with high-rebate medicines.
For patients, there are pros and cons to DTC. If the pricing for drugs is based on net cost, they could have lower out-of-pocket (OOP) costs and get more predictable pricing. The whole process might also be simpler—they could bypass prior authorization, for example.
There could be some negatives, though. For example, the drug might not count toward a deductible or OOP maximum if it is purchased outside the plan by the member. However, Express Scripts has agreed to apply payments made through TrumpRx towards the OOP maximum and deductible in a recent settlement agreement with the Federal Trade Commission.
DTC pricing shrinks or eliminates rebates because it removes the PBMs from the process. This can potentially lower costs and will make those prices more transparent for patients, but it also changes how insurers, plans sponsors, and payers work.
DTC pricing has the potential to reshape the market by increasing transparency, spurring competition, and putting decisions in the hands of consumers. There are positives and negatives to DTC, and its impact will depend on uptake, consumer trust, and response from drug manufacturers.
Interested in learning more about DTC and rebates? Please contact [email protected].
