UPDATE 3-Tyson Foods drops CVS for startup to manage staff pharmacy benefits
(Adds CVS' response in paragraphs 4 and 5)
By Christy Santhosh
Jan 24 (Reuters) - Tyson Foods has dropped CVS Health as its pharmacy benefit manager and replaced it with Rightway, the startup said on Wednesday, to manage drug benefits for the meatpacker's 175,000 employees.
Three pharmacy benefit managers (PBMs) — CVS's Caremark, Cigna's Express Scripts and UnitedHealth Group's Optum Rx — currently control around 80% of the U.S. prescription drug market.
Tyson has become one of the largest U.S. employers to move away from using a traditional PBM, at a time when these companies are under fire from lawmakers over their role in driving up healthcare costs.
CVS told Reuters that its most recent bid for PBM services would have exceeded the 15% savings rate claimed by a competitor.
The company said it would continue to serve Tyson through Rightway to manage specialty drugs, which are costly medications used to treat complex conditions such as cancer and rheumatoid arthritis, effective Jan. 1, 2024.
Last year, non-profit health insurer Blue Shield of California said it plans to stop using most of CVS's PBM services and tap into five different partners, including Amazon.com and Mark Cuban's Cost Plus Drugs.
Rightway works on a fee basis and claims it can reduce employer spending by 18% on average. The startup also said it allows clients to trace every transaction to boost transparency.
PBMs act as middlemen, negotiating rebates and fees with drug manufacturers, creating lists of medications that are covered by insurance and reimbursing pharmacies for patients' prescriptions.
In December, CVS had said it would simplify the structure through which its pharmacies get reimbursed for drugs, in a push for more transparency.
Under the new model, called CostVantage, the company's over 9,000 pharmacies will have fixed markup and fees to define drug cost and related reimbursements with contracted insurers and PBMs. (Reporting by Christy Santhosh and Granth Vanaik; Editing by Anil D'Silva, Shweta Agarwal and Pooja Desai)
