Beyond the Big Three and How We Got Here
This isn’t the first time pharmacy benefit managers (PBMs) have been ensnared in controversy. PBMs were first created in the 1960s to help insurance companies manage and administer claims for prescription drugs. Over time, they took on the roles of claims adjudication, rebate negotiation and benefit design.
This isn’t the first time pharmacy benefit managers (PBMs) have been ensnared in controversy. PBMs were first created in the 1960s to help insurance companies manage and administer claims for prescription drugs. Over time, they took on the roles of claims adjudication, rebate negotiation and benefit design.
In the early 1990s, Merck became the first pharmaceutical company to acquire a PBM, Medco, which then was the largest PBM. This was quickly followed by SmithKline Beecham’s acquisition of Diversified Pharmaceutical Services (DPS) and Eli Lilly and Company’s acquisition of PCS Health Systems Inc. But these acquisitions faced significant scrutiny — and a Federal Trade Commission (FTC) investigation — about the conflicts of interest and the possibility of the pharmaceutical companies using the PBMs as distribution channels. As a result of the FTC investigation, Merck Medco was required to have an open formulary and an independent pharmacy and therapeutics committee. Merck spun out the PBM as a separate company and held on to Medco for another decade. Medco was eventually acquired by Express Scripts in 2012. SmithKline Beecham and Eli Lilly gave up on the PBM business before 2000. Express Scripts acquired DPS, and Rite Aid Corp. acquired PCS.
Related: Beyond the Big Three PBMs
The trend toward the current form of vertical integration and the dominance of the big three insurers began in late 2006 when CVS announced it was buying Caremark Rx. CVS kept on growing through acquisitions: Longs Drugs, MinuteClinic, the specialty infusion group Coram, and Omnicare, which provided pharmacy services to long-term care facilities. The spree culminated in 2018, with the acquisition of Aetna.
UnitedHealth created Optum in 2011 as a health and pharmacy services subsidiary out of existing business. Optum Rx, the PBM, has ballooned through acquisitions, including the 2015 purchase of Catamaran and 2019 purchase of Diplomat, a specialty pharmacy and infusion services business.
Cigna acquired Express Scripts in 2018, and Express Scripts and Prime Therapeutics entered a three-year collaboration in 2019. This year, Centene Corp. acquired Magellan Health Inc., which operates a PBM.
David Calabrese of OptumRx Talks New Role, Market Insulin Prices and Other Topics 'On His Mind'
April 13th 2023In this month’s episode of the "What's On Your Mind podcast," Peter Wehrwein, managing editor of MHE connects with the now Chief Clinical Officer of OptumRx Integrated Pharmacies, David Calabrese. In this conversation, David touches on his transition in January as OptumRx’s former chief pharmacy officer and market president of health plans and PBMs to his new role as Chief Clinical Officer where he now focuses more on things such as specialty pharmacy to home delivery — with an overall goal of creating whole-patient care. Throughout the conversation, Calabrese also touched on the market’s hot topic of insulin prices and behavioral health services within the OptumRx community, among other topics.
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