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News that Anthem will launch its own new pharmacy benefit manager in 2020 in partnership with CVS Health should worry the pharmaceutical industry.
Insurers are closing ranks around a model that brings the PBM closer to the health plan in hopes of creating a savvier buyer of prescription medicines while seeking more transparency. UnitedHealth Group already owns OptumRx, a fast-growing PBM, and other insurers are looking at new relationships with PBMs.
At Anthem, the nation’s second-largest health insurer says operating its own PBM in IngenioRx will give the health plan full control over development and strategy when it comes to what drugs are in the insurer’s preferred list of prescriptions known as a formulary. That’s an admission that Anthem doesn’t have full control over such decisions in its Express Scripts relationship, which expires at the end of 2019.
“IngenioRx combines the best of Anthem's strength to create a solution that we expect will resolve widespread consumer frustration in an industry that is too complex and lacks transparency,” Anthem CEO Joe Swedish told analysts on a conference call Wednesday.
Anthem will retain control of “key pharmacy services, while leveraging CVS' best-in-class operational performance, scale and retail presence,” executives said. The contract with CVS, which will process claims, runs for five years beginning Jan. 1, 2020.
PBMs are middlemen between drug makers and consumers when it comes to purchasing drugs and providing prescription coverage. The PBM’s role is in part to leverage its negotiating clout to get the best drug prices on behalf of its diverse base of customers.
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Yet drug costs remain at the top of the list of employer and consumer client complaints to health insurance companies and Anthem is promising more transparency to address this. While it’s not yet known exactly what Anthem has in mind on the transparency front given it remains in a relationship with Express Scripts, closer scrutiny on what drugs will be paid for is likely.
“It was critical that IngenioRx be firmly in control of vital aspects of our pharmacy benefit program, such as clinical and formulary strategy and development, member and employer experiences, sales, marketing, account management and retail network strategy,” said Brian Griffin, the president of Anthem’s Commercial & Specialty Business Division.
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For its part, Express Scripts says Anthem will be hard-pressed to do better when it comes to offering clients a better deal. Some analysts see Express Scripts ratcheting up pressure on drug companies to extract bigger discounts to keep customers happy and grow its business.
“While it is disappointing that Anthem has decided to work with another PBM, we know that no other PBM will offer Anthem the combination of savings, member and client stability, and clinical expertise that Express Scripts represents,” Express Scripts said Wednesday in a statement after Anthem announced it was forming a new PBM.
But it’s becoming clear that health insurance companies are getting negative feedback from consumers, employers and government health programs they administer when it comes to drug costs. Health insurers see the need to change the way prescriptions are managed in this country.
Aetna CEO Mark Bertolini earlier this year called out problems with the way pharmacy benefits are managed and said the insurer is making changes as well to get better deals for its customers.
“I think going forward, the PBM relationship as a standalone model is a troubled relationship,” Aetna CEO Bertolini told analysts in May on the company’s first quarter earnings call. “As we look at the noise around drug pricing and where are the discounts and where are not the discounts, it is still our view that drug pricing transparency is incredibly important for all consumers.”
Express Scripts said it will continue to have a diverse client base even without Anthem, citing “65 million members and a volume of more than one billion prescriptions annually,” the PBM said in a statement Wednesday. “Our strategy, independent business model and unique solutions collectively position us for a strong future.”
