Less than a week after Cigna’s acquisition of Express Scripts, Centene has announced an initial strategic investment in RxAdvance, a Massachusetts-based pharmacy benefit manager (PBM).
Centene did not disclose the amount of the initial investment, but pointed to the PBM’s cloud-based platform aimed at reducing administrative costs and “avoidable drug-impacted medical costs.” As part of the transaction, Centene can expand its investment in the future.
“Centene has established a transformative partnership with RxAdvance to create its next generation pharmacy management solution,” Michael F. Neidorff, chairman and CEO of Centene, said in a statement. "RxAdvance's transparency, disruptive technology, and unique approach to partnership will help us further improve quality health outcomes for our members and other customers, while managing healthcare costs.”
RxAdvance CEO Ravi Ika will remain in his leadership, along with Chief Marketing Officer John Sculley, who previously served for 10 years as CEO of Apple.
Centene’s investment comes as payers are zeroing in on the PBM industry. Cigna’s $67 billion deal with Express Scripts last week follows a merger between CVS and Aetna, a $69 billion deal that is still being finalized. CVS and Aetna stockholders are scheduled to vote on the deal during a meeting Tuesday, but the acquisition still needs final approval from the Department of Justice.
Gurpreet Singh, partner and U.S. health services leader for consulting firm PwC, described the recent PBM-payer mergers as “a bit of a double-edged sword.” Although improved data sharing could benefit drug price transparency, the lack of competition rarely works out for patients, he told FierceHealthcare last week.
Concerns about competition have already bubbled to the surface in Ohio where CVS has been accused of overcharging the Medicaid program and muscling out independent pharmacists, according to The Columbus Dispatch. CVS is the PBM for four of the state’s Medicaid managed care companies as well as the second-largest retail pharmacy in the state.
Ohio Medicaid Director Barbara Sears told the newspaper it’s an issue impacting "all 50 states.”
“It’s a CVS Caremark issue, and it's not just impacting independent pharmacies,” she said, referring the company’s PBM arm.
A CVS spokesperson told the newspaper there are strict firewalls between the retail and PBM businesses.