Centene, the nation’s largest Medicaid managed-care company, is planning to stop its work as a pharmacy middleman, or pharmacy benefit manager. Executives last week said the company is issuing a $30 billion request for proposals from an outside contractor to take over the work.
The news comes after Ohio Attorney General Dave Yost sued the company in March, accusing it of working through its Ohio managed-care organization to layer pharmacy middlemen atop one another and then overbilling taxpayers by tens of millions of dollars. Centene didn’t admit wrongdoing, but it agreed to pay Ohio $88 million and it set aside $1 billion to settle with states that seemed likely to follow Yost’s lead and sue the company.
Centene didn’t respond to a request for comment, but in a call with investors last week, the company’s top executives said that managing its pharmacy benefits wasn’t among its core functions.
“We are launching an RFP in 2022 that will be awarded in 2023,” said Sarah London, Centene’s president of health care enterprises. “The goal there is to make sure that we are staying sharp in terms of our external partners, getting the greatest economic benefit where we are leveraging an external partner.”
The news organization Axios last week reported that the move into pharmacy benefits by Centene, a Fortune 24 company, was a bust. But any strategic failures or Ohio’s lawsuit accusing the company of fraud weren’t mentioned by the Centene executives or investment analysts on last week’s call.
Pharmacy benefit managers, or PBMs, perform multiple functions in the supply chain. They never touch a pill, but they negotiate discounts from manufacturers in exchange for giving their products preferred treatment and they create networks of pharmacies. And PBMs determine how much to pay pharmacies for the drugs they dispense.