Anthem Moves To Create Own Pharmacy Benefit Manager
Anthem Inc. (NYSE:ANTM) has announced a partnership with CVS Health Corp. to launch a new pharmacy benefit management company called IngenioRx. According to a statement regarding the new initiative, the partnership involves a five-year agreement to “combine its member and provider engagement initiatives and market leading pricing.” IngenioRx will handle “sales, marketing, account management, and retail network strategy.” CVS will process claims and handle related “prescription fulfillment.”
The partnership will begin in January of 2020, as Anthem’s current PBM contract with Express Scripts expires at the end of 2019. Anthem CEO Joe Swedish said, “Through the process of evaluating many PBM options in preparation for the expiration of our current contract, we determined that our scale and experience best position us to deliver an innovative solution, and the launch of IngenioRx will allow us to break through what is now a complex and fragmented landscape.”
Anthem says the partnership will give the health insurer “complete control” over its formulary, the preferred list of drugs covered for its customers. CVS Health currently has its own PBM known as Caremark, but Anthem said IngenioRx will be a separate partnership and have its own management team. IngenioRx will also have the ability to sell services beyond the 14 states where Anthem operates Blue Cross and Blue Shield plans.
Anthem is currently the nation’s second-largest health insurer, behind rival UnitedHealth Group Inc. The move gives Anthem another avenue to compete with UnitedHealth, which runs its own pharmacy-benefits management business called OptumRx. Swedish said, “We are excited to build a game-changer in the PBM arena.”
PBMs are a middleman between drug manufacturers and employers for purchasing drugs. In recent years, they have come under fire from multiple sides. Drugmakers have blamed PBMs for the high cost of medicine in the U.S. Lawmakers in Washington have been questioning how PBMs make their profits.
Anthem was wary about renewing with Express Scripts after a high-profile dispute between the two. Anthem accused Express Scripts of overcharging by billions of dollars. The companies subsequently sued each other. Express Scripts shares are down by roughly a third since January 2016, when the dispute between the companies became public.
The move means Express Scripts will not only lose its biggest client but also face a new rival. Express Scripts said in a statement, “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 it has already been taking steps to mitigate the fallout from Anthem’s exit. The company’s statement continued, “We are committed to working together with Anthem to facilitate a smooth transition to the new PBM provider.” Express Scripts has served Anthem members and clients since 2009.