Monday, December 28, 2020

2020 in Review: PBMs Continue Integration, Face More Regulatory Challenges

by Peter Johnson

In 2020, the PBM industry continued to deepen its integration with other industry players, a trend that experts say is likely to continue in coming years. The PBM space has consolidated to the point that five firms — UnitedHealth Group's OptumRx, CVS Health Corp.'s Caremark, Cigna Corp.'s Express Scripts, Anthem Inc.'s IngenioRx, Humana Inc.'s Humana Pharmacy Solutions, and the Blue Cross and Blue Shield affiliate-owned Prime Therapeutics LLC — manage the lion's share of the pharmacy benefits offered to U.S. health plan members.

Beyond their deepening integration with the payers that own them, these firms are working to expand their data and direct-to-consumer operations.

Ashraf Shehata, national sector leader for health care and life sciences at KPMG, says that a "back to basics" approach for 2021 will be essential for PBMs, especially as their health plan owners navigate the uncertainty generated by the COVID-19 pandemic. However, he notes that the space is still managing the aftereffects of transactions and is looking for more deal-making opportunities.

In that realm, the long-term integration of Express Scripts into Cigna has generated the most noise. Under Cigna, Express Scripts has deepened a horizontal relationship with Prime Therapeutics.

Meanwhile, in November, Amazon.com Inc. made a big splash by unveiling new pharmacy services, including a prescription-discount service for uninsured individuals that taps into Express Scripts' price-negotiation powers with manufacturers.

Midwestern supermarket chain Hy-Vee, Inc. also launched a PBM in December, while in March, Costco Wholesale Corp. purchased a minority stake in Navitus Health Solutions, a subsidiary of integrated health system SSM Health.

Shehata says that PBMs' data expertise will be a key line of business going forward, especially as regulators and the new Democratic administration increase scrutiny on the industry.

He suggests that PBMs could expand beyond the traditional role into something more like a data and analytics clearinghouse for the entire health care industry and PBMs need to be aggressive in delivering value directly to consumers as regulatory scrutiny on the industry increases.

"Big data and [artificial intelligence is] going to sit in kind of the combination of the traditional PBM, …the more traditional health claim, and… detailed EHR data," Shehata explains. "You'll start to see a whole generation of organizations also bring in EHR data, because it's much more accessible now."

From RADAR on Drug Benefits


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