Prime Therapeutics/Walgreens wins specialty pharmacy business from CVS Health

To a certain degree, the PBM business is a zero-sum game: as most commercially insured patients are under one pharmacy benefit program or another, the addition of one patient population to a PBM is the loss from some other PBM. Such is the case with the Blue Cross/Blue Shield (BCBS) Federal Employee Program (FEP), which covers more than 5.4 million members (employees, retirees and their families). Prime Therapeutics, a PBM owned by a collective of a dozen or so BCBS programs, has won the specialty pharmacy FEP business for 2018 and the following two years from CVS Health.

CVS immediately sent out a statement that the shift will not affect 2017 revenue—keep those investors calm!—and stressed that under a separate agreement that will run through the end of 2018, it retains FEP’s non-specialty business. Interesting, CVS Health sized the FEP business at $2.7 billion in 2017, while Prime counted it as $5 billion in annual spending, for an estimated 400,000 prescriptions annually. In either case, specialty drug spending is rising at a double-digit rate, and is expected to constitute half or more of drug spending for commercial plans in the next few years.

It’s worth wondering why the specialty business of BCBS plans was not at Prime in the first place, since Prime is owned by a collective of some BCBS plans. The answer might be in the fact that Prime entered into a partnership with Walgreens last August to create a combined specialty central pharmacy and home delivery company, which indicates that it had a need to beef up its specialty services. On the flip side, CVS Health has made efforts to enable specialty products to be dispensed from, and serviced by, local CVS pharmacies—a tricky proposition since specialty products usually need substantial follow-on support not conventionally available from neighborhood pharmacies.

“Specialty drugs can be life saving, but when they average $300,000 annually, these drugs can be out of reach for many who need them. It’s critical to have a PBM that has a view of total drug cost management – both medical drug costs and pharmacy costs,” said Jim DuCharme, Prime president and CEO. “I look forward to working with FEP to provide superior coordinated care that helps federal employees, retirees and their families manage these expensive medicines and improve their overall health.” [Note: that $300,000 figure is not an average for all specialty drugs; it’s a much lower figure.]

For the pharma industry, a move like this indicates a need to spend more time with market access programs for specialty products at Prime. Evaluating the patient support services available through Prime/Walgreens, as compared to those at CVS Health, will also be key.