An FTC settlement and newly passed legislation in Congress scraps rebate tactics and formulary bias, chipping away at PBM pricing power.

Eli Lilly will no longer offer CVS Health’s prescription drug benefit plan for its employees, per Bloomberg. Lilly may have been considering another pharmacy benefits manager outside of this news. But it’s more likely that CVS’ choice to promote a rival drug (Wegovy) over Zepbound was Lilly’s breaking point—showing that even employee benefit plans can be used as leverage in the battle for weight loss drug dominance.

Mark Cuban’s online pharmacy, Cost Plus Drug Company, signed a deal to sell a biosimilar version of Johnson & Johnson’s drug Stelara at a price far below the brand-name list price and lower than competing biosimilars. Starjemza isn’t Cost Plus’ first move into biosimilars, but the drug’s steep discount compared to other Stelara competitors could pose a real challenge to typical pharmacy benefit manager pricing negotiations.

Capital Rx, a company looking to disrupt the pharmacy benefit manager (PBM) space, raised $400 million, including a $252 million Series F funding round. More employers are jumping from one of the Big 3 PBMs to a smaller disruptor that promises pricing transparency and a greater share of rebates. The recent growth of PBM startups like Capital Rx and Rightway will give other players the confidence to enter a previously impenetrable market, particularly as scrutiny of the Big 3 intensifies.

The news: Walgreens Boots Alliance will be spun out into five standalone companies following its official sale to private equity firm Sycamore Partners. The final word: Walgreens tried to become a vertically integrated healthcare conglomerate, but it picked the wrong markets to invest in. Its rival CVS bought a pharmacy benefit manager (PBM) and a health insurer, both of which have contributed tremendous value to the parent company. However, Walgreens could find newfound success in retail pharmacy by positioning itself as a neighborhood drugstore destination that isn’t affiliated with unpopular PBMs and insurers while leaning into its pharmacists as highly trusted and accessible healthcare professionals.

The news: CVS’s Q2 earnings topped estimates, buoyed by solid performance in its retail pharmacy segment and signs that its health insurance division is finally turning things around. Our take: CVS may not be thriving compared with earlier in the decade, but it’s in a good position relative to most of its rivals. That’s largely because of its diversified footprint across healthcare (pharmacy, insurance, PBM) that prevents the company from being overexposed in one struggling sector. CVS’ ongoing company turnaround could be a good sign for the similarly structured UnitedHealth, DOJ investigations notwithstanding.

CVS puts Novo Nordisk’s Wegovy (not Lilly’s Zepbound) on commercial drug formularies: Market reaction to the decision affirms how much influence PBMs like CVS Caremark have over prescription drug access. Eli Lilly may need to explore creative pricing strategies to improve access to Zepbound.

Trump plans to “knock out” pharma’s middlemen: His comments sent shares of the three largest pharmacy benefit managers down in a sign of what’s to come under the incoming administration.

CVS’ biggest healthcare moves in 2024: Eyeing a return to profitability for Aetna, the company prioritized cost-cutting measures and new leadership. We examine which of its health-focused moves could ultimately have the biggest impact on its bottom line.

Lawmakers introduce bill requiring vertically integrated insurers to offload their pharmacies: Democrats and Republicans aligning on co-sponsored legislation shows that the public is at its wits’ end with rising prescription drug prices.

CVS Health replaces CEO Karen Lynch: With its insurance arm, Aetna, failing to meet investors’ expectations, CVS’ decision to appoint a longtime pharmacy benefit manager exec as CEO could be just what the doctor ordered to start turning its financial fortunes around.

Blue Shield of California negotiates for cheaper version of biosimilar: This is the first time a health insurer has used this approach to bring a Humira biosimilar to market, circumventing pharmacy benefit managers entirely.

CVS Health explores possible company breakup: A series of concurrent headwinds are impacting multiple sectors of CVS Health’s business, leading concerned investors to step in and try to force its hand.