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Anthem accelerates start for pharmacy benefit manager IngenioRX

Cigna's acquisition of current pharmacy benefit manager Express Scripts helped spur the early launch.

Susan Morse, Senior Editor

Anthem will launch its pharmacy benefit management company IngenioRx during the second quarter, instead of waiting until the contract with its current PBM Express Scripts expires at the end of the year, the insurer reported during its fourth quarter earnings call yesterday.

The reason is due to the recent acquisition of Express Scripts by Cigna, Anthem said.

As a result, the PBM Agreement will now terminate on March 1, and the IngenioRx business will begin on March 2.

Anthem has provided notice to Express Scripts that it will exercise its contractual rights to terminate the PBM agreement earlier than the original expiration date of December 31, 2019.

WHY THIS MATTERS

Anthem said it expects gross annual savings greater than $4 billion through IngenioRx.

"Beyond unlocking tremendous value for our customers and their members, this acceleration will also allow us to accelerate our whole person health strategy, a strategy proven to reduce total cost of care, as pharmacy benefits are an integral part of that strategy," Anthem said by statement.

TREND

Anthem and Express Scripts had been at odds for some time.

In April 2017, Anthem said it would terminate its contract with Express Scripts when it expired on Dec. 31, 2019. It began engaging in a request for proposals for a new PBM service provider.

Express Scripts said it had proposed as much as $1 billion in annual price concessions in a new contract. But a year earlier, Express Scripts sued Anthem for deterioration of their drug pricing agreement, after Anthem had sued, claiming its PBM was making windfall profits because it wasn't passing on enough of the savings.

Anthem announced in October 2017 that it was starting its own pharmacy benefits company to replace its contract with Express Scripts.

Anthem and CVS Health signed a five-year agreement to launch IngenioRx for PBM services starting Jan. 1, 2020, to coincide with the end of Anthem's current contract with Express Scripts.

CVS Health also culminated a major deal late last year in its acquisition of Aetna.

The benefits of a merged PBM and insurance business include an integrated care delivery model that combines medical and claims analytics with pharmacy data.

WHAT ELSE YOU NEED TO KNOW

On Wednesday, Anthem reported net income of $424 million for the three months ending December 31, compared to $1.2 billion for the same time period in 2017. Net income last year benefited from changes in federal tax law.

Operating revenue grew by 30 percent year-over-year, to $5.4 billion in 2018.

Medical enrollment totaled about 39.9 million members at the end of 2018, an increase of 37,000 members during the fourth quarter. Much of this was due to an increase of 30,000 members in the commercial and specialty business, partially offset by a decline in individual enrollment. Government business enrollment increased by 7,000 members, driven by growth in Medicare and offset by a decrease in Medicaid membership.

ON THE RECORD

"In 2018, we achieved our objectives of improving execution and strengthening our value proposition with innovative and affordable solutions designed to more effectively meet the unique needs of our customers," said President and CEO Gail K. Boudreaux. "Our fourth quarter and full year performance provides a strong foundation for 2019."

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com

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