Anthem takes pharmacy business in house, taps CVS to help

Health insurer Anthem will start managing its billions of dollars of patient prescriptions itself in 2020, which said on Wednesday, ending a deal with Express Scripts Holding which had deteriorated into lawsuits over terms.

Anthem, which has said Express Scripts overcharged which by $3 billion annually through unfavorable prices, said which would certainly use drug retailer CVS Health to handle prescription fulfillment in addition to claims processing for 5 years for the brand new company, called IngenioRX.

Pharmacy benefit managers negotiate prices with drugmakers in addition to determine which treatments are included on their list of covered drugs in addition to how much of a co-payment to charge for them versus their rivals. As drug prices have posted annual double-digit gains, companies, insurers in addition to the U.S. government have pushed benefit managers to better manage costs.

Leerink analyst Ana Gupte estimated which No.2 health insurer Anthem’s prescription business represents about 220 million scripts per year worth about $23 billion in revenue.

The move should add $1.50 per share to earnings starting in 2020 based on the company’s expectations to save which $3 billion annually, she said in a research note.

different insurers, including UnitedHealth Group in addition to Humana, already manage their pharmacy benefit themselves.

Anthem, whose 10-year contract with Express Scripts expires in 2019, had said which was considering staying with Express Scripts, choosing another company, or doing the work itself.

Express Scripts spokesman Brian Henry said the company was disappointed by the move in addition to would certainly continue to work with Anthem through the contract end date in addition to any transition period. Excluding Anthem, the company has 65 million members, he said.

CVS Health, which also includes a pharmacy benefit management business in addition to its pharmacies in addition to Minute Man clinics, said its 5-year agreement with Anthem would certainly begin in 2020 in addition to run through the end of 2024.

CVS Health said which expects to incur implementation charges related to the transition of members, nevertheless said the costs would certainly not have an impact on its 2017 earnings.

Shares of CVS Health were up in premarket trading on Wednesday, while Express Scripts’ shares were marginally down.

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