Medicaid managed-care insurer Centene Corp. said Tuesday it bought a stake in cloud-based pharmacy benefit manager RxAdvance to help the insurer lower drug costs and improve health outcomes.
St. Louis-based Centene didn't reveal the size of the equity investment, but said it would be able to expand its stake in the future.
The deal is the latest example of an insurer buying up or investing in PBMs to gain more control over pharmaceutical costs. In another deal, Cigna Corp. last week announced it would buy PBM Express Scripts for $67 billion. In December, Aetna agreed to become a stand-alone division within pharmacy chain and PBM CVS Health.
PBMs are the behind-the-scenes middlemen between drugmakers and health plans that negotiate drug discounts, manage formularies and design pharmacy networks. PBMs have been put under the microscope lately for their role in the rising cost of drugs in the U.S., although PBMs argue they help secure the lowest prices for their clients.
The partnership with RxAdvance will help Centene "improve health outcomes and reduce avoidable drug-impacted medical and administrative costs," the insurer said in the announcement.
As part of the deal, Jesse Hunter, Centene's executive vice president of mergers and acquisitions and chief strategy officer, will join RxAdvance's board of directors. RxAdvance, based in Southborough, Mass., was launched in 2016 and is run by CEO Ravi Ika and board chairman John Sculley, former CEO of Apple.
"RxAdvance's transparency, disruptive technology, and unique approach to partnership will help us further improve quality health outcomes for our members and other customers, while managing healthcare costs," Centene CEO Michael Neidorff said in a statement.