Anthem's PBM will trail nation's largest as it looks to compete sooner
Anthem accelerating launch of its own pharmacy benefit manager means it could emerge as a formidable competitor sooner than expected, taking on some of the nation's largest PBMs.
But they'll be playing catch-up.
Even though Anthem is the nation's second-largest insurer, its PBM IngenioRx will have a considerably smaller footprint out of the gate. In terms of market share, IngenioRx will likely trail the nation's fourth largest PBM, Humana's Pharmacy Solutions, Dean Ungar of Moody's told Healthcare Dive.
"They're not going to be in the leading position," Ungar said.
He said it’s important to note that Humana does not compete with traditional PBMs for third-party business. They provide PBM services to their existing medical clients. And although Humana's PBM will be closer in size to Anthem’s than the giant market leaders, IngenioRx’s is positioned differently as it will be going after third-party business.
Before Anthem can go out and win new business, the first major hurdle is executing a smooth transition to its new PBM. IngenioRx will start with 14 million members once it peels them away from Express Scripts, starting March 2.
That compares with UnitedHealth's Optum, with about 92 million members and CVS' Caremark's 93 million.
Once that one-year transition is completed, Anthem's IngenioRx will likely compete with Express and Caremark for new business in 2021, Ana Gupte, an analyst with Leerink, told Healthcare Dive.
There's opportunity within Anthem for new business. It can start trying to sell to its clients who are enrolled in medical coverage, which covers about 40 million, Ungar noted.
"If they don't have the scale it's going to be hard to compete," Ungar said. "This is not like a no-brainer but I do think that their expectation is that they'll have a more competitive product in the marketplace and be able to grow market share and take business."
The move comes at the expense of drug wholesaler AmerisourceBergen, which partners with Express Scripts. On the flip side, it benefits McKesson, CVS' drug distributor, Brian Tanquilut, an analyst with Jefferies, told Healthcare Dive. Anthem previously inked a five-year deal with CVS to have the pharmacy retail giant provide prescription fulfillment and claims processing.
Anthem's move to bring its PBM in-house is part of a larger trend of insurers merging with PBMs, pivoting away from a time when independent PBMs dominated the industry.
"I do think that these companies, in general, are making a long-term strategy to offer comprehensive services," John Boylan, an analyst for Edward Jones, told Healthcare Dive. "The more you know about their healthcare needs, the better you serve them and we think that’s why you're seeing these comprehensive strategies."
The move comes at a difficult time for PBMs, however, as they seem to be bearing the brunt of the Trump administration's ire toward high drug prices. HHS last week dealt a blow to payers when it proposed ending safe harbor protections for drug rebates through PBMs, Medicare Part D plans and Medicaid managed care organizations. Stocks tumbled and analysts speculated PBMs could see their role in the pharmaceutical supply chain diminished as commercial rebates are now at risk as well.
Clarification: This article has been edited to add more information about Humana's PBM.