Walgreens Boots Alliance, Centene and the pharmacy benefit manager RxAdvance Thursday said they are partnering to increase transparency and reduce costs through a cloud-based pharmacy benefit platform.
Centene last year bought a stake in RxAdvance, a cloud-based pharmacy benefit manager that is trying to tap into the rapidly consolidating and changing PBM industry. Now Walgreens, which doesn’t own a PBM, said the drugstore chain will also invest a stake in RxAdvance and build on its partnership with Centene, a health insurance company that is working its way through an acquisition of WellCare Health Plans to administer health coverage across the U.S.
“Using RxAdvance’s collaborative PBM cloud transactional platform and clinical intelligence, the companies will work together to improve overall patient care across the continuum of health care and to offer such a model to other large payers,” the companies said in a joint statement Thursday.
The partnership includes an investment by Walgreens into RxAdvance that Walgreens executives described as “small.” Additional financial terms of the partnership weren’t disclosed.
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The investments come as health insurance companies are buying or forming closer ties with PBMs via acquisitions designed in part to increase transparency as well as meld drug coverage and medical benefits together in the same package for their customers.
Cigna last year bought the PBM Express Scripts while Aetna, the nation’s third largest health insurer, merged with Walgreens’ chief rival drugstore chain, CVS Health, which owns the Caremark PBM. Meanwhile, UnitedHealth Group owns the OptumRx pharmacy benefit manager and Anthem is rolling out its own PBM, IngenioRx.
“Collaboration between retail pharmacies and payers like Centene can further transform the way we provide care,” said Walgreens CEO Stefano Pessina. “Using RxAdvance’s collaborative PBM cloud, our partnership can empower our pharmacists to make critical decisions at the point of sale to help improve adherence and also to reduce avoidable medical costs.”
Centene is perhaps best known for providing subsidized private individual coverage under the Affordable Care Act. Centene also administers Medicaid benefits for several states and is beginning to expand into Medicare Advantage, health coverage seniors buy from private insurers that have contracts with the federal government.
In RxAdvance, Walgreens is taking a bet on the future as Centene has already done with an investment stake the insurer made in the PBM last year. Centene Thursday said it has “increased its stake in RxAdvance, following its initial investment announced in March 2018.”
The investments are a potential boon for RxAdvance. RxAdvance, run by executives that include former Apple chief executive John Sculley, bills itself as a full-service PBM. Sculley is RxAdvance’s chairman.
“By pushing the limits of innovative technology and existing transaction standards, there is a clear path forward to reduce administrative costs, avoidable medical costs, and to improve overall quality of care,” said RxAdvance founder and CEO, Ravi Ika.
Centene executives have said they see RxAdvance as a next-generation solution to rising drug costs and the health insurer has gradually been moving its health plan enrollees to the new platform. The shift to RxAdvance by Centene, which already owns its own PBM known as Envolve Pharmacy Solutions, came as Congress called for more transparency while investigating the PBM’s role as a middleman between drug makers and consumers and its share of rebates — the portion of the drug returned by the seller to the buyer.
“Centene is committed to supporting a transparent pharmacy benefit management model that is sustainable with higher quality care for members at a lower cost to our customers,” Centene chairman and CEO Michael Neidorff said. “This new approach to pharmacy management will improve the transparency and quality of care, while reducing unnecessary medical costs for millions of people.”