Tuesday, July 27, 2021

Tip of the Week: Non-Fiduciary PBMs Hedge Against Their Legacy Business Models

Anthem and Humana have invested nearly $140 million to form a new pharmacy benefit manager, as criticism over traditional PBMs’ operations kickstarts business at startups that promise transparency. The new venture comes as more payers begin to question the work of the “Big Three” PBMs.

  • In 2019, Anthem launched in-house PBM IngenioRx, after suing Cigna’s Express Scripts for $15 billion over allegations the company withheld savings and overcharged the insurer.
  • In April, Costco announced it was expanding its partnership with Madison, Wisc.-based Navitus Health Solutions, a PBM owned by SSM Health
  • Ohio announced it was partnering with Tysons, Va.-based Gainwell Technologies to operate its own PBM, which it expects to save the state $240 million in drug costs each year, compared with its former private operators.

Tyrone's Commentary:

Every profession and industry has its bad actors, and ours is no different. Just because the business model of non-fiduciary PBMs has become layer upon layer of self-dealing, it is important to remember that many of our peers are doing good work within the walls of those enterprises as well. In our ongoing effort to push the industry toward radical transparency, we will continue with education as our focal point because we know there are fantastic people within the industry who can help us in our goal to raise the standard of care for purchasers of PBM services. Afterall, education is the key to getting to lowest net cost.

The insurers, Anthem and Cigna, will hold a minority stake in the new joint venture, named DomaniRx, which is being championed by SS&C Technologies. The Windsor, Conn.-based fintech company owns approximately 80% of the new business, according to a filing submitted to the U.S. Securities and Exchange Commission on July 15. 

Humana will serve as DomaniRx’s first customer. The Louisville, Ky.-based insurer currently operates its own PBM. Humana and Anthem hold a non-exclusive license to RxNova SS&C’s existing claims processing platform.

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