While the ongoing public spat between giants Anthem Inc. and Express Scripts Holding Co. has drawn attention, various managed care companies have stressed the importance of evolving pharmacy management practices — and pricing transparency — during first-quarter 2017 earnings calls.
Moreover, recent comments by some company executives on both the pharmacy and health plan side raised the possibility of new arrangements and deals. Aetna Inc. is in the midst of a long-term PBM services contract with CVS Health Corp., for example, and both companies, which separately reported earnings May 2, implied broad openness to new, unspecified transactions.
During Aetna’s first-quarter earnings call, Chairman and CEO Mark Bertolini was asked to discuss how he would like to see his company’s relationship with CVS evolve and the potential impact of any shuffling of PBM alignments among Aetna’s competitors.
Bertolini replied that as Aetna approaches Jan. 1, 2020, its first opportunity to consider renewing the CVS agreement, the Hartford, Conn.-based insurer continues to explore what it can do within the contract and has “some developments and conversations underway” concerning its Medicare and commercial products.
Going forward, “the PBM relationship as a stand-alone model is a troubled relationship,” Bertolini told investors, adding that, “As we look at all the noise around drug pricing and [discounts], it is still our view that drug pricing transparency’s incredibly important for all consumers.”
Aetna ‘Rethinks’ CVS Relationship
As Aetna continues talking to CVS about the direction of their relationship, “we’re trying to fundamentally rethink how we could work closer together” on the pharmacy side and “also on the local care delivery that could go on in the community, given that CVS has 9,000 stores within 3 miles of 80% of the American public,” Bertolini said.
“It has been our view that we need to get closer to home and closer to community to help people with social determinants and other costs that are based near their home, versus waiting for them to show up maybe once a year at the doctor to get information about how they’re doing,” he said.
A Wall Street analyst asked what’s on the table now — and whether Bertolini sees building out more retail provider capabilities in terms of CVS acquiring those capabilities or having Aetna work with CVS through some type of joint venture or partnership. “Still too early to tell. We’re in the midst of those conversations with multiple players,” Bertolini replied.
Moments later in Aetna’s first-quarter earnings call, Shawn Guertin, the insurer’s executive vice president and chief financial officer, said, “the pharmacy story really continues to be one that’s all about specialty pharma.” Specialty pharmacy is the primary cost-trend driver, now comprising roughly 40% of costs despite comprising “a very low percentage” of scripts, he said.
Plans Eye OOP Costs, Rebates, Pricing
Broadly speaking, analyst Ross Muken, senior managing director and partner at Evercore ISI, tells AIS Health that he sees several themes emerging from recent corporate earnings calls.
Aside from insurers’ significant focus on managing specialty pharmacy costs, Muken says, the number of clients mulling early renewals is increasing and PBMs including Express Scripts and CVS are becoming more aggressive with early contract renewals, sometimes offering new financial terms effective this year versus 2018.
Rebates also have notably increased for the 2018 selling season, he says.
Adds Muken: “I think [there is] certainly a lot of focus on out-of-pocket [OOP] costs, a lot of focus on net rebate trends and net pricing overall.”
As for industry realignments, Muken speculates that CVS may be the most viable player to capture Anthem’s pharmacy management business, with Express Scripts possibly looking at mergers and acquisitions to regain members post-Anthem.
View Aetna’s earnings at http://tinyurl.com/k5o5b2s.