Tyson Foods drops CVS, picks Rightway pharmacy benefit manager

Tyson Foods will become one of the first Fortune 100 companies to stop using the nation’s traditional large pharmacy benefits managers, as it looks to cut spending on high-cost drugs.   

After putting its benefits contract up for bid, Tyson dropped CVS Health‘s Caremark and chose PBM startup Rightway to manage drug benefits for its 140,000 employees starting this year, the companies said Wednesday. Rightway guarantees it can save employers 15% on pharmacy costs by using a transparent model where it passes drug discounts to employers and plan members, while also providing concierge care to help employees find lower-cost alternatives like generics and biosimilars.

Tyson’s decision adds to an upheaval in the industry, as startups promising lower costs and transparency challenge the largest benefit managers, and pushed them to change their own business models. Tyson made the decision as it saw pharmacy costs soar.

“We were going anywhere between 12% to 14% increases for pharmacy — and on a $200 million spend that’s quite a bit. We found that the specialty (drug) component of our trends … were picking up a lot of the increase year over year,” said Renu Chhabra, Tyson vice president and head of global benefits.

When she tried to get answers on what was driving those trends from the company’s old pharmacy benefit manger, or PBM, Chhabra says she couldn’t get the kind of data she wanted.

“I wanted to look at Humira, and I wanted to see what the acquisition cost was. And then I wanted to understand what Tyson was paying for that; it was very difficult to get to those numbers,” she said. “Part of this was to really get a partner who can help us organize the information, make sure we understand how to manage specialty, and really looking at how to get the best net cost.”

Most large employers work with the three biggest PBM players: