Eli Lilly switches from Big 3 PBM to alternative transparent rival

It’s splitsville for Eli Lilly and CVS Caremark.

Beginning in the new year, pharma giant Eli Lilly will switch its pharmacy benefit manager (PBM) from CVS Caremark, one of the Big 3 PBMs that control about 80% of the pharmacy market, to Rightway, a much smaller alternative PBM founded in 2017, spokespeople for the three companies confirmed to Healthcare Brew.

The switch is “substantial,” according to Antonio Ciaccia, CEO of drug pricing nonprofit 46brooklyn Research and president of consulting firm 3 Axis Advisors. Drug manufacturers “spend a good deal of time blaming PBMs for problems in the marketplace…but then simultaneously, their companies contract with those same PBMs when it comes to their own employees,” he said.

“It begs the question: If these PBMs are so bad, why are you using them?” Ciaccia continued.

It’s also a noteworthy switch because Lilly is a large employer with around 23,000 US-based employees, making it one of the bigger contracts for a PBM to land.

Lilly isn’t the first drugmaker to choose Rightway. The alternative PBM also contracts with San Francisco-based Genentech, which has nearly 12,000 employees and is known for its oncology medications. Outside of pharmas, Tyson Foods, which employs roughly 116,000 people in the US, also switched from Caremark to Rightway in early 2024.

“It feels like there’s a lot of general momentum in the marketplace for differentiated PBMs,” Ciaccia said.

CVS Caremark spokesperson Phil Blando told Healthcare Brew the PBM’s client retention is in the “very high 90% range” and includes “many major pharmaceutical companies.”

The bigger picture. The move comes six months after Caremark announced it would favor rival Novo Nordisk’s GLP-1 drug, Wegovy, over Eli Lilly’s competitor, Zepbound.

When asked if the change had prompted Lilly’s decision to switch PBMs, spokesperson Carrie Martin Munk told Healthcare Brew the drugmaker regularly reviews its benefit service providers to ensure the company “continue[s] delivering high-quality, cost-effective coverage.”

Drugmakers generally maintain that there’s no “crossing of the streams,” meaning the benefits sides of their businesses and their contracts with PBMs stay independent from each other, Ciaccia said.

However, “are we really going to pretend as though there may not be at least some understanding that the decisions of one aspect of a company may harm or help another side of the company?” he added.

Trendsetter. Eli Lilly is likely just the beginning of a broader trend of large employers moving away from the Big 3 PBMs, Ciaccia projected.

PBMs have been in the hot seat this year, with Arkansas banning PBMs from owning pharmacies in the state and other states passing legislation restricting the companies. Employers are also increasingly moving away from the Big 3 PBMs, Healthcare Brew previously reported.

“I think we’ll look back at this year and the next year and say, ‘These are the years where the ground really started to shift,’” Ciaccia said. “Does it mean that the Big 3 are going to be dinosaurs in three, five years? No, there’s still an incredible amount of stickiness in the industry.”

However, the Big 3 PBMs are “having to at least show that they are willing to meet new expectations in the market,” he said.