- Accusations are running rampant in the third party payer sector, as pharmacy benefit managers and insurers fight over drug rebates. These lawsuits fall on the backsplash of increased scrutiny over drug pricing and calls for transparency about the deals and discounts that PBMs strike with pharmaceutical companies.
- Anthem is dropping Express Scripts as its pharmacy benefit manager and is suing the company for $15 billion because the PBM reportedly reaped "an obscene profit windfall" from drug manufacturers. Those savings were not getting passed on to Anthem. Express Scripts, in turn, countersued stating Anthem did not negotiate in good faith.
- The latest legal case has Express Scripts dragging UnitedHealth Group's Optum into the mess. According to legal documents, Anthem requested a pricing proposal from OptumRx ahead of leaving Express Scripts —Optum complied. Now, Express Scripts is accusing the two companies of creating this proposal to justify the $15 billion lawsuit.
Express Scripts losing business from Anthem could have a huge impact on the PBM, which reportedly gleans nearly one-fifth of its revenue and one-third of its adjusted earnings from Anthem.
Once it drops Express Scripts, Anthem plans to launch its own PBM called IngenioRx with CVS providing prescription fulfillment and claims processing services. Anthem said the program will save about $4 billion annually once it's fully integrated by 2021. CVS recently agreed to offer services to Anthem beginning in 2020.
All of this mud-slinging plays into the larger discussion of drug pricing. For the last two years, the public and government officials have been targeting the pharmaceuticals industry and looking for explanations regarding high drug costs. In an effort to deflect blame, pharma companies have often pointed to middlemen like PBMs, accusing them of negotiating drug discounts in order to pad their own pockets. The debate has called into question the role of the PBM and has highlighted the lack of transparency that has become ingrained in the drug pricing system.
Recent consolidation in the PBM and insurer space has given these companies even greater control over drug prices, and has added to their leverage over pharmaceutical companies.
In its most recent deal, Express Scripts is buying eviCore Healthcare for $3.6 billion. EviCore Healthcare works with health plans to lower unnecessary scans and tests. The deal goes beyond the pharmacy benefits business and stretches into working with insurers in the medical benefit management services sector. The company manages medical benefits for 100 million people as well as benefits in categories, such as radiology, cardiology, musculoskeletal disorders, post-acute care and medical oncology.
The deal is a way for Express Scripts to expand its offerings to health plans, so it would not only offer prescription benefit services but another way to control healthcare costs.
To complicate things even more in the PBM market, there were rumors that Amazon would jump into the PBM arena. However, Amazon’s recent filings with state pharmaceutical regulators show the company is not looking to sell drugs in its marketplace.
Adding to confusion and further consolidation in the space, CVS is also in talks to buy Aetna for $66 billion. A CVS/Aetna deal would lead to a company with annual revenue of about $240 billion, which would put it second only to Walmart in the U.S.