Anthem Signs Five-Year Deal With CVS for Services to New Pharmacy-Benefit Manager IngenioRx
October 18 2017 - 7:59AM
Dow Jones News
By Anna Wilde Mathews
Anthem Inc. said it would launch its own pharmacy-benefit
manager, serviced by CVS Health Corp., in 2020 after the conclusion
of its current contract with Express Scripts Holding Co.
Anthem's move to create IngenioRx is a blow to Express Scripts,
which is losing its biggest customer, but Express Scripts had
warned in April that Anthem was unlikely to renew their 10-year
pact once it expires at the end of 2019. Anthem has sued Express
Scripts for allegedly overcharging on prescription drugs over
several years.
Anthem's decision is a win for CVS, which gains even more heft
with the addition of the script volume associated with the
second-biggest U.S. insurer. UnitedHealth Group Inc.'s OptumRx, had
been seen facing a challenge in winning Anthem's business because
UnitedHealth's insurance arm is Anthem's direct competitor. Anthem
said it had signed a five-year contract with CVS.
Anthem said IngenioRx will seek to sign up other clients, as
well. Among others, Anthem may be targeting the business of its
fellow Blue Cross Blue Shield insurers. For several years, insurers
have generally been seeking to diversify their businesses, aiming
to follow the model of UnitedHealth's success with its Optum
health-services unit, of which OptumRx is a part.
Anthem's CEO, Joseph R. Swedish, said the insurer had
"determined that our scale and experience best position us to
deliver an innovative solution, and the launch of IngenioRx will
allow us to break through what is now a complex and fragmented
landscape." He said the move "also positions Anthem to take
advantage of a unique opportunity to grow and diversify our
business within our existing footprint as well as nationally."
Anthem's decision takes it back toward a setup it had before its
contract with Express Scripts, which took over Anthem's pharmacy
services in 2009 when it bought Anthem's in-house PBM for about
$4.68 billion. Anthem didn't immediately disclose any financial
details of its agreement with CVS.
Express Scripts just announced that it would buy private
medical-benefits manager eviCore healthcare for $3.6 billion from
investors TA Associates, Ridgemont Equity Partners and General
Atlantic. Anthem's business had been worth around $17.1 billion in
annual revenue to Express Scripts.
Anthem sued Express Scripts in 2016, seeking around $15 billion
in damages and arguing that the PBM has overcharged it for drugs
under their deal. Express has denied the allegations and made its
own counterclaims.
Write to Anna Wilde Mathews at anna.mathews@wsj.com
(END) Dow Jones Newswires
October 18, 2017 07:44 ET (11:44 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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