Express Scripts’ New Partnership Is An Olive Branch To Independent Pharmacies

Dive Brief:

• Express Scripts — one of the largest pharmacy benefit managers in the country — has notched a major partnership with independent pharmacies, amid contentious relations between the two industries.
• The Cigna-owned PBM unveiled a collaboration on Thursday with pharmacy network CPESN USA to coordinate care delivery for seniors on Medicare with hypertension and diabetes, two common chronic conditions. CPESN’s independent pharmacies will also help identify at-risk patients and improve medication management, according to a release.
• Express Scripts and CPESN plan to expand the partnership based on client feedback, said a spokesperson for Evernorth, Cigna’s health services business and the division that includes Express Scripts. Financial terms of the partnership were not disclosed.

Dive Insight:

PBMs are drug middlemen that manage pharmacy benefits for health insurers. Among other duties, the companies contract with pharmacies to dispense drugs to insurers’ members and reimburse pharmacies an agreed-upon rate. Pharmacies also pay PBMs transaction fees for claims processing services.

However, independent pharmacies are increasingly blasting PBMs for forcing them into accepting lower reimbursement and higher fees.

According to independent pharmacies, major PBMs pay them lower rates than the PBM’s in-house pharmacies, direct business to their owned subsidiaries and pressure independent pharmacies to accept coercive and damaging fees.

Independent pharmacies have also raised alarms about the practice of spread pricing, when PBMs charge insurers a higher price for a drug than what they reimburse to the pharmacy, and keep the difference.

Due to increased financial pressures — including from PBMs — independent pharmacies have been closing across the U.S., but especially in rural areas. Almost half of U.S. counties are considered pharmacy deserts as a result of the closures.

Federal lawmakers and regulators have stepped into the fray, holding hearings about the situation and warning PBMs to halt business practices that threaten pharmacies’ financial health. It’s one facet of a growing body of criticism against PBMs for business practices many stakeholders say are confusing at best and illegal at worst.

Despite an initiative launched last summer to improve relationship with independent pharmacies — including creating an advisory committee of pharmacists and increasing reimbursement for independent pharmacies in rural areas — Express Scripts hasn’t been able to avoid the fray.

The company — the second largest PBM in the U.S., managing prescriptions for almost 100 million Americans — was sued by a group of independent pharmacies in Wisconsin late last year for allegedly colluding with a competitor to fix lower reimbursement rates. Express Scripts has denied the allegations.

Still, Express Scripts says its new partnership with CPESN aims to expand on its bid to work more harmoniously with independent pharmacies.

“This collaboration with CPESN USA represents a meaningful step forward as we advance on our commitment to deepen relationships with independent pharmacists and remove barriers to quality care at the community level,” Adam Kautzner, the president of Express Scripts, said in a statement.

CPESN is potentially a major partner for Express Scripts. The group says it is the fourth-largest pharmacy contracting organization in the U.S., with more than 3,500 community pharmacy members — almost one-fifth of all independent pharmacies in the country.

Along with the care coordination aspects of the partnership, Express Scripts will also add those CPESN pharmacies to its retail pharmacy network, according to the release.

CPESN notched a similar partnership with CarelonRx, the PBM owned by insurer Elevance, in 2021.

Along with integrating more directly with pharmacists, major PBMs have also rolled out a number of “cost plus” pricing models meant to provide a more predictable revenue stream for pharmacies. In the models, pharmacies are reimbursed for the cost of a drug plus a predetermined markup.

Express Scripts and its competitors Caremark and Optum Rx, which are owned by CVS and UnitedHealth respectively, all rolled out cost plus pricing models last year.