Indianapolis Business Journal (IN) June 11,
2018
Just seven months ago, when Anthem Inc. announced plans to
set up a pharmacy unit to help it save billions of dollars a year on
prescription drugs, the health insurer confidently predicted a smooth rollout.
The new unit, IngenioRx, would launch in 2020, Anthem
said, led Griffin by executives with deep experience in pharmacy-benefits
management, a fiercely competitive, complex field.
"The IngenioRx pharmacy leadership team combined has
more than 100 years of experience in the PBM industry, which will be invaluable
in helping to ensure a seamless transition for members," Anthem said in a
press release in October.
But things haven't gone as smoothly as predicted. On May
8, IngenioRx's top executive, Brian Griffin, quit with no warning to become CEO
of _ Michigan-based Diplomat Pharmacy.
His resignation came less than two weeks after Anthem CEO
Gail Boudreaux showered praise on him during an earnings conference call with
Wall Street analysts, hailing Griffin as an ideal executive to lead "one
of our most important growth opportunities."
"With more than 30 years of experience and a deep
understanding of pharmacybenefits management, Brian brings the leadership
skills necessary to launch IngenioRx as a transformative PBM offering,"
Boudreaux said.
Just moments later on the conference call, Griffin told
analysts he was "very excited" about the IngenioRx launch. He made no
mention of the fact he was considering other job offers.
"What is very important about this is, we are
launching our own PBM," Griffin told analysts. "And with that,
importantly ... we're going to be in the position to have complete control over
the design of our pharmacy networks."
Now Anthem is scrambling to adjust. The company said May
10 that IngenioRx would be temporarily led by Deepti Jain, the unit's chief
operating officer, who has been with Anthem since 2014. Meanwhile, Anthem is
launching a search to fill the top job at IngenioRx.
Anthem declined to make Jain available for an interview,
or to answer questions about what exactly IngenioRx plans to offer in products
or services, or what it will look like in terms of physical assets.
In a brief statement, Anthem said IngenioRx will
"help lead the industry forward by offering a holistic, integrated
approach that leverages both medical and pharmacy data to reduce drug costs,
identify gaps in care, and improve medication adherence and outcomes."
Some analysts say Griffin's resignation is almost sure to
slow momentum, at least temporarily.
"You have to wonder if this is just a hiccup, or
something more serious," said Les Funtleyder, a health care analyst for E
Squared, a hedge fund based in New York City. "It doesn't look good."
PBM complexities
The setback comes as Anthem is looking for ways to build
new business and boost revenue. The Indianapolis-based company said last month
that first-quarter operating revenue was relatively flat, at $22.3 billion.
Meanwhile, its biggest competitor, United HealthGroup, saw first-quarter
revenue climb 13 percent, to $55.2 billion.
In recent months, competitors have announced huge mergers
likely to reshape the industry.
In December, CVS Health, the nation's largest U.S.
drugstore chain, said it would buy health insurer Aetna Inc. for $67.5 billion.
That would give the combined companies a huge, unprecedented role across the
nation's health care sector, from insurance offices to the corner drugstore.
In March, Connecticut-based health insurer Cigna Corp.
said it would buy Express Scripts, a pharmacy benefits manager, for $52
billion.
So far, Anthem has shown little interest in buying a
pharmacy or getting bought by one.
Instead, it has opted to set up its own pharmacy-benefits
management unit. So far, it has provided only vague descriptions of what
IngenioRx will look like, other than to say it will offer a "full suite of
services" for members of its own health plans. IngenioRx will also compete
for business against other PBMs.
Pharmacy-benefits managers are powerful middlemen that
help select which drugs are covered for patients, negotiate discounts with
drugmakers, and help set customer prices.
But the PBM sector has come under a harsh glare in recent
months. Employers and workers covered under health plans protest the rising
cost of drugs and demand to know whether PBMs are passing along the savings
they negotiate or are pocketing them.
Stan Jackson, vice president at Apex Benefits in
Indianapolis, said PBMs are notoriously protective of their contracts, making
it difficult for clients to see if they're getting a good deal.
"Many times, you don't know what the rebate is,"
he said. "Only the PBM knows."
Bryan Brenner, CEO of FirstPerson, an Indianapolis-based
benefits brokerage, said he hears complaints about drug prices and PBMs
constantly.
"All of our clients are agitated by the lack of
transparency with PBMs," Brenner said. "There's many ways that the
money gets hidden. We fight that all day. It's very frustrating." 5геяяег
This month, Presi- - dent Trump took aim at PBMs, claiming
they inflate drug prices, and promised to crack down.
"We are very much eliminating the middlemen,"
Trump said in remarks on May 11, as he rolled out his plan to reduce drug
prices. "The middlemen became very, very rich . they won't be so rich
anymore."
One worked, one didn't
Drug spending in the United States has slowed slightly
over the past two years, but still makes up about 10 percent of the nation's
health care expenditures.
Some analysts say Anthem-and other insurers-are scrambling
to catch up to industry leader United HealthGroup, which set up its own PBM,
Optum Rx, more than two decades ago.
Last year, OptumRx managed $85 billion in pharmaceutical
spending, providing services to more than 65 million people in the United
States through its network of more than 67,000 retail pharmacies.
David Windley, an insurance analyst at Jefferies in
Nashville, Tennessee, said Minnesota-based United HealthGroup has "turned
the tables" on the PBM industry, becoming a dominant player. The company,
he wrote in an April 12 research note, "has effectively executed an
integration strategy that competitors are now anxious to catch up to."
Anthem set up a PBM called NextRx more than a decade ago.
The unit dispensed and managed 265 million prescriptions each year for 25
million people. But in 2009, needing money to pay down debt, buy back stock and
pay taxes, Anthem (then called WellPoint Inc.) sold NextRx for $4.7 billion to
Express Scripts of St. Louis, making that company the secondlargest PBM in the
country.
The centerpiece of the deal was a 10-year commitment to
work together. Express Scripts would become the exclusive provider of
pharmacy-benefits services to Anthem, including network management and claims
processing. Anthem retained control of medical policy, formularies detailing
which drugs are covered, and disease-management aspects of pharmacy benefits.
But in 2016, the relationship began to strain. Joseph
Swedish, then CEO of Anthem, said Express Scripts should be passing along $3
billion more of the savings it negotiated from drugmakers. Anthem sued Express
Scripts in federal court seeking to recoup some of the money. Express Scripts
countersued, denying it was overcharging and claiming Anthem had failed to
negotiate in good faith. The suits are pending in U.S. District Court in New
York.
Awkward partnership
Meanwhile, Anthem is dealing with another odd twist. In
October, when it announced the launch, Anthem said it had signed a five-year
agreement with Rhode Island-based CVS Health for services beginning Jan. 1,
2020. CVS' role would be to fill prescriptions, process claims and deal with
members at "point of sale engagement."
But just six weeks later, CVS announced its own deal to
buy Connecticut-based Aetna, a competitor to Anthem. That put Anthem in the
uncomfortable position of having a major partner who was also likely to compete
against it.
In response to questions, Anthem told IBJ it is "very
pleased with our relationship with CVS, and [we] are fully engaged with them in
the transition process to launch our new PBM operations."
But some analysts say the Anthem-CVS relationship is
awkward at best, and question whether the partners will be able to work well
together.
"I think what we're seeing is a few things that make
you question the vision" of the IngenioRx structure, said Funtleyder, the
E Squared health care analyst.
But Steve Halper, an insurance analyst at Cantor
Fitzgerald in New York City, took a more optimistic view of Anthem's fledgling
PBM.
He said the startup appears to be on track and could make
a strong contribution to Anthem's revenue.
"We maintain our view," Halper said in an April
25 research note, "that investors still have not given the company much
credit for its PBM buildout. This, in theory, should support stronger long-term
growth."
No comments:
Post a Comment