5 giant companies will soon control healthcare for 125 million people in the US, and all eyes will be on what happens to medical spending

Starting this spring, five corporate giants — Anthem, Cigna, CVS Health, Humana and UnitedHealth Group — will control health insurance and pharmacy benefits for more than 125 million Americans.

Why it matters:Most of this happened through rapid consolidation, and now the pressure is on these companies to prove they can better control both medical and drug spending with everything under the same roof.

Driving the news:Anthem has been working for over a year to create its own pharmacy benefit manager, called IngenioRx, so it could sever ties with Express Scripts.

  • Anthem’s new prescription drug negotiator is now ready to go live by March, 10 months ahead of schedule, the company said Wednesday.

This is the new landscape. These 5 companies will handle both drug and medical bills for millions of people across Medicare, Medicaid and employer-based insurance.

  • UnitedHealth Group is the largest entity combining health insurance and pharmacy benefits, with UnitedHealthcare and OptumRx (a PBM that got significantly bigger after it absorbed Catamaran in 2015).
  • CVS acquired Aetna to pair with its existing PBM, Caremark.
  • Cigna now owns Express Scripts.
  • Anthem will be moving millions of people onto IngenioRx this year.
  • Humana also has its own PBM, and it’s the fourth-largest by prescription volume.

It’s worth noting that Blue Cross Blue Shield plans also own a PBM, Prime Therapeutics.

What they’re saying:PBMs “don’t need to be independent entities with their own profit margins … that adds costs,” former Aetna CEO Mark Bertolini said in 2017.

  • Some research says combining health care services and prescriptions under one benefit (not necessarily one common owner) could save money, if the insurer helps people manage their diseases.
  • But insurers and PBMs have lived under the same roof before, and these companies have been doing the same work while U.S. health care spending has continued to rise.

Reality check:These companies would not have pursued merging medical and drug plan offerings if they didn’t think there was a lot of money to retain.

  • Anthem’s ahead-of-schedule PBM raised the company’s projected 2019 adjusted earnings per share to $19 — significantly above every Wall Street estimate. Of the $4 billion in savings Anthem expects from the PBM, 20% will immediately be booked as profit.

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