Illustration: Aïda Amer/Axios
Winning over employers is the biggest hurdle facing two new drug benefits companies — one created by billionaire Mark Cuban's startup drug firm and another created by a coalition of large employers.
Why it matters: The projects won't go far if major employers don't shift their business away from the dominant incumbents to these new firms.
The big picture: Three pharmacy benefit managers — Express Scripts, CVS Caremark and OptumRx — control roughly 80% of the market.
- All three have high client retention rates, usually 95% or higher. But many employers don't leave those PBMs because it's a pain to do so.
Yes, but: Large companies like Boeing, Disney, Intel and Walmart make up the Purchaser Business Group on Health, which is starting a PBM called EmsanaRx. "The industry has really been unresponsive to their concerns," said Elizabeth Mitchell, PBGH's CEO.
- PBGH can't force its member companies to end or switch their PBM contracts, but the group is "very encouraged" about winning employers during open bids, Mitchell said.
The bottom line: These new companies are looking to strip away the games within drug pricing contracts, like rebates and spread pricing. There's a big appetite for change, but success ultimately will depend on employers ditching the current oligopoly.
Go deeper: The drug pricing contract Express Scripts doesn't want you to see