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There’s big money in those PBMs

On April 22, a Becker’s Hospital Review story posted new numbers that show just huge growth for Anthem’s pharmacy benefit manager.

The stats on the expansion of IngenioRx, Anthem’s pharmacy benefit manager (PBM), are hot off the presses—and the numbers are big.

To help put them in context, here’s a quick primer on PBMs: These are the behind-the-scenes third parties that insurers use to handle prescription drug benefits for their health plans. More and more, insurers are looking to manage these drug benefits themselves by launching or acquiring their own PBMs, like Cigna buying Express Scripts, and UnitedHealth Group’s creation of OptumRx.

So—back to Becker’s. The story shows sky-high ROI from IngenioRx, in line with its explosive growth. The PBM:

• Grew more than 12.8 percent year over year, with an operating revenue of $5.9 billion in Q1 of 2021.
• Saw an operating gain of $407 million in the three months leading up to March 31, up 16.6 percent from that time a year earlier.
• Made up 18.3 percent of the company’s Q1 operating revenue.

From these figures, we can easily see why insurers are building up their PBM businesses. But we also see that it’s about more than just raw revenue. It’s about control. When insurers bring pharmacy operations under their larger corporate umbrella, it keeps more revenue streams in-house and enables them to control who gets what medication and when—instead of keeping those decisions with the physicians who are actually doing the prescribing.

Insurers like to present PBMs as consumer-friendly cost-savers, but we’re not so sure. After all, Cigna’s purchase of Express Scripts has driven massive profits for the insurer, but there’s scant evidence of decreased costs or added value for the people that Cigna insures.

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