Anthem’s In-House Drug Plan: What Should Employers Expect?

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Jasmine Ye Han and Kristen Ricaurte Knebel

Anthem Inc. is aiming to have its own pharmacy benefit manager in 2020, and that could lead to more integrated medical and pharmacy benefits for employers, health-care practitioners told Bloomberg Law.

Anthem, the nation’s second largest health insurer, announced Oct. 18 that it’s partnering with CVS Health to launch its pharmacy benefit manager IngenioRx in 2020. Once the new PBM launches, employers using Anthem’s affiliated health plans will have the same options for selecting a PBM, plus a new in-house option, Leslie Porras, Anthem’s senior public relations director, told Bloomberg Law in an email.

This change could mean “better integration of the clinical and pharma product,” Alden J. Bianchi, a member at Mintz, Levin, Cohn, Ferris, Glovsky & Popeo PC in Boston, told Bloomberg Law. “I don’t see a downside for employers,” he said. Bianchi is the practice group leader of the firm’s Employee Benefits & Executive Compensation Practice.

Lower Cost?

“Anthem is going to say they’re lowering the cost, but we don’t know yet,” an attorney who represents multiple players in the health-care industry told Bloomberg Law.But at least for those employers contracting with Anthem, it removes additional layers and allows a more direct relationship with one entity doing both, she said.

“It has the potential of giving employers more control of medical and pharmacy benefits,” the attorney, who asked not to be identified, said.

One thing employers can do when faced with this new option is ask for a guarantee that they will see a cost savings if they go with Anthem and its in-house PBM, David Dross, national practice leader of Mercer’s managed pharmacy practice in Houston, told Bloomberg Law.

“They’ve indicated that they’ll do a better job if they can manage everything,” he said. “We don’t want a theoretical idea, we want a specific financial guarantee connected with that.”

Better Together

Employers usually sign a contract with a health insurer who subcontracts with a PBM. It can be easier to deal with one company for two services that are related; although they can sign the contracts separately, the unnamed attorney said.

Anthem’s move shows a trend of larger insurers taking the PBM capabilities in house, instead of contracting with PBMs separately, something that can help when it comes to managing costs. If the insurer and the PBM have the same medical and pharmaceutical data, they can also streamline services for things like specialty pharmacy, a cost that continues to rise. About 80 percent of employers cite specialty pharmacy as one of the top three health-care cost drivers, according to a 2017 survey by the National Business Group on Health.

It could make it easier to have specialty care managed under one umbrella. If an employer contracts with a separate PBM, “you have your PBM managing specialty one way and your insurer doing it another way,” which can cause some issues for disease management, Dross said.

The nation’s largest health insurer, UnitedHealth, also runs its own pharmacy-benefits management business called OptumRx. That unit brought in $16 billion in revenue in the third quarter, UnitedHealth said in its earnings report.

Anthem: Transparency Needed on Pricing

IngenioRx would offer competitive pricing for employers, Anthem said in touting the plan.

There’s potential for more transparency over pricing, but only time will tell, the unnamed attorney said.

“In the PBM industry, the number one thing employers want, is transparency in terms of pricing,” she said.

CareMark, CVS’s in-house PBM, is also one of the largest PBMs in the industry. CVS will manage claims processing and handle and deliver drugs, but Anthem will take on much of the medical work. This includes deciding which drugs to cover and under what terms, as well as making sure patients take them appropriately, according to Bloomberg.

To contact the reporters on this story: Jasmine Ye Han in Washington at yhan@bna.com; Kristen Ricaurte Knebel in Washington at kknebel@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Try Pension & Benefits Daily