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Anthem has been in a long, painful divorce with Express Scripts. This is the type of arcane insurance news that most agents don’t care about, but in the end, it will impact you and your clients and probably already has.

You have noticed that the nation’s 3rd largest MAPD carrier doesn’t have a competitive PDP, unlike UHC and Humana. That is because, as they alleged in their 2016 lawsuit, Express Scripts failed to pass along BILLIONS of dollars in savings from negotiated drug prices and reaped “an obscene profit windfall.”

Anthem’s contract with Express Scripts dates back to 2009 when they bought Anthem’s own Pharmacy Benefit Manager (PBM) and this contract expires in 2019.

We–all Americans–benefit if there is more transparency in the drug pricing system. Agents deliver the message. “X is no longer on formulary, but Y is just as good, ask your doctor about Y.” Agents have no idea why this is happening. Billions of dollars are saved via rebates but the savings are not pass along to the consumer. Complaints flow into the carrier about the agent misleading him about his drugs being covered. Even if the agent had irrefutable proof that he did everything compliantly, the complaint, once alleged, hurts the carrier via star ratings calculations. Lower starts mean less money, which translates into lower benefits, higher premium and this come back to hurt the client and the agent.

Anthem has partnered with CVS to form INGENIO RX which will come to life in 2020.

Let’s focus on one painful truth about our current system, the one thing could easily be fixed with CMS attention: changes to a formulary during lock in. Why would a PBM change their formulary midstream?

The short answer is always MONEY.

The rebates (negotiated savings with a drug company) were suddenly greater on Y, so the PBM stopped carrying X which impacts the MAPD and PDP company because they suddenly no longer carry X on their formulary. This frustrates and angers our Medicare beneficiaries because we, the agent, are the ones on the front lines.


Agent Is Assumed Guilty:

Agents sold the plan because X was covered.

X is no longer covered.

Agent must have mislead client.


Formulary Changes During Lock In Should Be Prohibited. Beneficiaries are lock in, so should PBMs (and networks while we are at it).

Formulary Changes During Lock in Winners? PBM, sometimes the carriers.

Loser? Beneficiaries, agents, uplines and sometimes carriers.

Insurance agents are not pharmacists, but we play them on TV. Or, more precisely, we attempt to make sense of these secretive practices to our clients. It is often the agent who is left to defend the carrier for the changes the PBM made. The carrier isn’t to blame but how can you blame a

For the firs time in 10 years, Anthem will have complete control over it’s formulary.

Back to Anthem: By creating their own PBM (again, they sold their last one to Express Scripts) they can regain their competitive edge. And more importantly, Anthem is boasting that they will offer transparency in the drug supply chain and stop the abuse in the market, which –should–translate in to savings for the consumer, and the net effect to agents–should be–happier clients and less complaints.

Send me your questions or comment on this topic Sgordon@gordonmarketing.com