January 31, 2019

Anthem will cut ties with Express Scripts 10 months ahead of schedule

Daily Briefing

    Anthem on Wednesday announced that it will end its contract with Express Scripts and launch its own pharmacy benefit manager (PBM), IngenioRx, in March, 10 months earlier than originally planned.

    What executives need to know about pharmacy

    Background

    Anthem announced its plans to create IngenioRx in October 2017.

    The announcement came amid a legal battle between Anthem and its current PBM Express Scripts. Anthem alleged that Express Scripts charged the insurer at least $13 billion more for prescription drugs than competitive benchmark prices.

    At the time Anthem announced IngenioRx, it was slated to launch on Jan. 1, 2020, in partnership with CVS Health. Under the contract, CVS will provide Anthem with services such as claims processing, point-of-sale engagement, and prescription fulfillment. Anthem has said operating its own PBM will allow it to have full developmental and strategic control over what drugs are in its preferred list of prescriptions.

    IngenioRx launched earlier than expected

    On Wednesday, Anthem announced it had notified Express Scripts that it would be ending its relationship on March 1 rather than Dec. 31 "due to the recent acquisition of Express Scripts by Cigna."

    Anthem said a 12-month transition period away from Express Scripts will begin March 2.

    Anthem's CEO Gail Boudreaux in a statement Wednesday said that the insurer feels it's ready for an earlier transition into IngenioRx.

    "Since announcing our intent to create IngenioRx, we have been carefully planning the transition, including the possibility of an early launch, and are confident in our ability to execute the transition under the accelerated schedule," she said. "This will allow us to go to market with better economics earlier, and also accelerate our whole person health strategy, which is proven to reduce total cost of care."

    Anthem said it expects IngenioRx to produce gross annual pharmaceutical savings of over $4 billion, at least 80% of which will go to its customers via lower health care costs, with the remaining 20% going to Anthem's shareholders.

    Express Scripts calls the move 'disappointing'

    Express Scripts in a statement said Anthem's decision to terminate its contract early would create a "complex migration of each Anthem client and 14 million people onto a new [PBM] platform."

    Express Scripts added, "It is disappointing that Anthem has decided to terminate its contract early. We know that Anthem cannot offer its clients and members the combination of value, predictability, and clinical expertise that Express Scripts represents."

    Implications

    Anthem's move represents a growing trend in the health care industry to consolidate health insurance and pharmacy benefits under one roof, Axios' "Vitals" reports.

    Along with the Cigna-Express Scripts deal, CVS Health recently has acquired Aetna to pair with its PBM, Caremark; Humana has developed its own PBM; and Blue Cross Blue Shield owns a PBM called Prime Therapeutics.

    Meanwhile, UnitedHealth Group is the biggest single entity with insurance and PBM operations. Its PBM, OptumRx grew significantly after acquiring Catamaran in 2015. The Daily Briefing is published by Advisory Board, a division of Optum, which is a wholly owned subsidiary of UnitedHealth Group.

    According to Axios' "Vitals," there is some research that suggests a consolidation of insurers and PBMs under one benefit could help consumers save money, provided the insurer helps patients manage their diseases (Japsen, Forbes, 1/30; Livingston, Modern Healthcare, 1/30; Mathews/Prang, Wall Street Journal, 1/30; Baker, "Vitals," Axios, 1/31).

    What executives need to know about pharmacy

    While historically pharmacy may have been viewed as a cost center, today pharmacy services generate a significant portion of system revenues and are essential to the achievement of strategic system-level priorities.

    To better understand increasingly complex pharmacy issues and the critical role pharmacy plays in overall health system success, download our executive briefings on hot pharmacy topics.

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