To give you a sense of just how profitable and important pharmacy benefit managers (PBMs) are to Big Insurance, you need to know that Cigna is suing CVS, which owns Aetna, to keep CVS from hiring the woman who until recently ran Cigna’s Express Scripts PBM.
CVS Health announced last Monday that Amy Bricker, who was president of Express Scripts, is now CVS’s Chief Product Officer-Consumer, reporting to CEO Karen Lynch.
In a statement that must have raised the ire of Cigna CEO David Cordani, Bicker was quoted in a CVS news release as saying:
"CVS Health has unmatched opportunities to enhance and launch consumer products that make care simpler and more affordable. I'm incredibly excited to join the company at a pivotal time in health care."
Cigna, it seems, is incredibly determined to keep Bicker from taking that job. On Friday, Fierce Healthcare and a few other trade publications reported that Cigna has filed a lawsuit to block Bricker’s hire, citing the non-compete agreement she presumably (and likely) signed.
This is from Cigna’s lawsuit:
"Despite holding a high-level executive role, and despite being fully aware that she had signed the non-competition agreement, and despite accepting a huge increase in compensation and extensive equity participation in exchange for signing the agreement, Bricker recently resigned from her senior leadership position with Cigna to become a member of the Executive Leadership team at Cigna’s chief competitor, Defendant CVS Health Corporation.”
Fierce Healthcare went on to quote Cigna’s lawsuit maintaining that “in her new role, Bricker would ‘inevitably’ be asked to reveal Cigna's ‘confidential and trade secret business information for the benefit of her new employer.’"
To say that Cigna’s and CVS’s PBMs are important to the companies and their shareholders would be a wild understatement. Express Scripts, which Cigna bought in 2018, generates far more revenue and profits for the company than its health plan business. CVS's PBM, Caremark, which it bought in 2006, contributes more to the parent company’s revenues than either Aetna’s health plans or the nearly 10,000 CVS retail stores, which sell not only drugs but tubes of toothpaste, candy and, at this time of the year, Valentine’s Day cards.
PBMs are the middlemen in the pharmacy supply chain between patients and pharmaceutical companies. Express Scripts, Caremark, and UnitedHealth Group’s OptumRx are the three biggest. Collectively, they control 80% of the market. We know from those companies’ earnings reports that their PBMs are contributing growing percentages to the companies’ revenues and profits. But there is a whole lot we don’t know about them because they are anything but transparent.
For employers and governments at all levels, PBMs are largely opaque boxes of secrets, and each company has its own proprietary set of trade secrets. Consequently, PBMs and their Big Insurance owners are attracting attention in Washington as well as lawsuits from some big customers who suspect PBMs are in cahoots with drug makers and not passing along savings as they should to their clients.
Earlier this month, the state of California filed a lawsuit against several drugmakers and all three of the big PBMs, alleging that they “acted unlawfully to drive up the cost of insulin.”
As Fierce Healthcare reported:
The lawsuit claims that Eli Lilly, Novo Nordisk and Sanofi, major manufacturers of insulin, and CVS Caremark, Express Scripts and Optum…used their market share to overcharge patients. A recent analysis shows that insulin costs roughly 10 times more for American patients as it does elsewhere, according to an announcement from (California) Attorney General Rob Bonta's office. The lawsuit argues both sets of companies are complicit in the high cost of insulin as manufacturers are responsible for setting list prices and then PBMs negotiate rebated costs on behalf of health insurers. Because rebates are based on list price, drugmakers will increase list prices to secure higher rebates.
And in Washington, Republican and Democratic lawmakers on both sides of Capitol Hill are planning to go after PBMs this year.
As Roll Call’s Jessie Hellmann reports:
The business practices of…PBMs have attracted the ire of community pharmacies, health care providers, drug companies and both Republicans and Democrats, who argue the middlemen lead to increased costs for patients.
“We want to address the whole kit and caboodle,” said Rep. Earl L. “Buddy” Carter, R-Georgia, referring to the full suite of PBM business practices. That is going to be the first issue that we address: PBMs.”
On the other side of the Hill and political divide, Senate Finance Chair Ron Wyden, D-Oregon, said in November that “pharmacy benefit managers continue to be a major issue I’m going to focus on.”
And just last Thursday, Sens. Maria Cantwell, D-Washington, and Chuck Grassley, R-Iowa, reintroduced the Pharmacy Benefit Manager Transparency Act and the Prescription Pricing for the People Act, bills that would make several PBM practices illegal. Among other things, their bills would outlaw a practice in which PBMs charge health plans and government programs like Medicaid more for a drug than what they reimburse to a pharmacy, and “clawing back” payments PBMs have already made to pharmacies.
Independent community pharmacies maintain that the latter practice in particular is forcing many of them out of business. Keep in mind that CVS has thousands of its own pharmacies across the country.
Back to the legal spat between Cigna and CVS. I suspect Cigna’s Cordani gave his company’s top lawyer, Nicole Jones, the green light to go after Bicker and CVS. Cigna has been a stepping stone for a number of current and former CVS/Aetna execs. Karen Lynch herself used to be part of the Cigna C-Suite. As was her predecessor, Mark Bertolini, who, as the Wall Street Journal reported in 2017, was set to reap about $500 million–yes, half a billion dollars–when CVS completed its acquisition of Aetna, which he led for several years. CVS closed the deal to buy Aetna in November 2018, for $69 billion.
I worked with all of those folks–Cordani, Jones, Bertolini and Lynch–when I was at Cigna.
As for Bicker, I imagine CVS offered her even more than what she was making at Cigna for her to risk getting sued.
What you can know for sure is that a heap of your premium dollars will be going into the pockets of lawyers on both sides of this case as these giants duke it out.
I’ll keep you posted.
If it weren't our money going into this fight, I'd be delighted. I wish they'd quit denying my little claims. SMH