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 said it expected the new PBM to "achieve greater than $4 billion in gross savings annually."
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 email@example.com
(END) Dow Jones Newswires
October 18, 2017 07:46 ET (11:46 GMT)