END OF THE WORLD AS WE KNOW IT?
The Impact of the Proposed 2016 US Payer Mergers
UP UNTIL NOW
consolidation has been a slow and steady process.
Large-scale PBM mergers have resulted in
significant market concentration
A timeline of
select mergers
2004
Making Giants
• Anthem – Wellpoint
• Caremark –
Advanced PCS
Compressed Commercial Volume by PBMs (NIADs*, % TRxs*)
Top 5 PBMs
Other PBMs
62%
85%
2005
2015
15%
United Grows
2005
to
2008
• UnitedHealthcare +
Oxford, John Deere,
Pacifcare, Sierra Health
• HIP – Vytra
Mega PBM Mergers
2012
38%
• ESI – Medco
• Caremark – Universal
• American Wellpoint –
Amerigroup
On the plan side, past mergers have
similarly caused consolidation
Compressed Commercial Volume by Plans (NIADs*, % TRxs*)
Top 5 PBMs
Other Plans
34%
Segment & Regional
Expansion
2013
to
2014
• Aetna – Coventry
• Ascension – CHE Trinity
• HCSC – BSBC of MT
53%
2015
2004
Local Dominance
2015
66%
• BS of NE PA – Highmark
• BS of CA – Care 1st
47%
THE LAW OF THREES
Three large mergers that could lead to the market
being dominated by three plans and three PBMs
33.5M
Lives
covered
Aetna+Humana:
"Run the Medicare World"
26%
of Medicare
Advantage market
53.2M
Lives
covered
Anthem+Cigna:
"In it to Win it"
25%
of Commercial
market
65M
Lives
covered
$
56% of revenue
from Medicare
Advantage
$
$117B Projected
2015 Revenue
United+Catamaran:
"I Am a Contender"
20%
1B prescriptions
per year
PBM Market
Share
If the three mergers happen...
The United and Catamaran merger could result in 3 PBMs controlling over 75% of commercial Rx
Around 50% of all Medicare Advantage lives will be covered by 3 health plans
Around 60% of all commercial lives will be covered by 3 health plans
IMPLICATIONS
• Back to the negotiation table – Unlike previous mergers, plans have highlighted managing pharmacy
costs as a key opportunity. The goal will be securing the deeper rebate.
• If it isn’t broke, expand it – Payers are looking to fill in any strategic gaps and optimize across merged
entities. In areas where one merging payer is stronger, be ready for changes in the partner.
• Account engagement changes – Based on previous mergers, payers will combine resources and
streamline inefficiencies; account teams should expect changes in relationship managers.
• The mergers are national, the impact is local – Consolidated entities will have market share >10-20% of
TRx in major cities but this will vary significantly. It is critical to map the impact of changes at the local
level.
• Impact is broader than merged entities – Expect PBM switching next year based on competitive reactions
to potential UHG-Catamaran merger.
• The bar for access will be higher, the only way to clear it will be to start training now. If you want to discuss
planning for an evolving market access environment contact us at: [email protected]
* NIADS - Non Insulin Anti-Diabetics
* TRx - Total prescriptions
Sources: FiercePharma, IMS Health Rx Benefit Design, Kaiser Family Foundation, Aetna Investor Reports, Anthem Investor Reports, UnitedHealthGroup,
Market Realist , July 2015, IMS Formulary Impact Analyzer (2014), IMS Health - Amundsen Group Analysis, Payer Research Insights, IMSCG expertise