Radar on Drug Benefits

Promising “extraordinary prescription savings for extraordinary times,” Express Scripts on May 7 unveiled a new program that offers medication discounts for Americans who lose their health coverage amid the economic damage wrought by the COVID-19 pandemic. The discounted prices — $25 for a 30-day supply of generics and $75 for a 30-day supply of select brand-name medications — are available to former Express Scripts members and eligible non-members alike, either through mail order or at more than 50,000 participating pharmacies.

The concept of offering discount drugs to the general public isn’t exactly new, observes Ashraf Shehata, KPMG’s national sector leader for health care and life sciences. After all, “the old $5 generics and other programs like that were quite popular” at retail chains, he tells AIS Health. Companies such as CVS Health Corp. and Walgreen Co. also found success with retail pharmacy discount card programs, he points out.

Industry experts expect the COVID-19 pandemic and related economic crisis, in addition to the trend of vertical integration in the PBM sector, will increase those companies’ direct interaction with consumers. The crisis has so far spared the margins of insurance companies, but it has forced patients to change their behavior toward medicine as jobs are lost and quarantine becomes a way of life.

The recent wave of payer acquisitions of PBMs has kept the latter on strong footing despite the crisis. CVS Health Corp.’s Caremark, UnitedHealth Group’s OptumRx and Cigna Corp.’s Express Scripts control approximately 74% of the market, according to a January 2020 estimate by Drug Channels Institute CEO Adam Fein, Ph.D. Each parent company posted strong first-quarter 2020 results and maintained its earnings guidance through the rest of the year.

Serving just 6.2 million members, Navitus Health Solutions — a PBM owned by St. Louis, Mo.-based integrated health system SSM Health — is hardly one of the industry’s major players. But given that it features a “pass-through” business model in an era when opaque PBM structures are facing scrutiny, and Costco Wholesale Corp. recently purchased a minority stake in the firm (RDB 3/12/20, p. 3), Navitus may be poised for a bigger spotlight.

Just ask David Fields, who in late April was named the PBM’s new CEO after serving on an interim basis after Navitus’ former chief executive stepped down due to health issues. Fields — who joined SSM Health in 2018 as president of its Dean Health Plan and has held leadership roles at Blue Shield of California and Aetna Inc. — tells AIS Health that what he likes best about Navitus is how it differs from some of its peers.

Major PBMs reported strong results for the first quarter of 2020 as members rushed to fill prescriptions in March ahead of the COVID-19 pandemic. However, financial analysts warn the pandemic could have unpredictable effects on PBMs for the rest of 2020 and moving into 2021.

The 2021 PBM selling season could be disrupted in still-unknown ways, analysts said, and members are cutting back on routine physician visits and elective procedures, resulting in lower script volume overall.