Fortune 100 Giant Tyson Foods Breaks Ties With CVS Caremark, Marks Shift Towards Transparent Pharmacy Benefit Managers

Tyson Foods Inc TSN has reportedly announced its departure from traditional pharmacy benefits managers (PBMs) in favor of startup Rightway. 

With 140,000 employees affected, Tyson aims to curb high-cost drug expenses, making it one of the first Fortune 100 companies to do so. 

The decision to shift away from CVS Health Corp’s CVS Caremark underscores Tyson’s commitment to controlling escalating pharmacy costs. 

In August 2023, Blue Shield of California discontinued its utilization of Caremark, the pharmacy-benefit manager responsible for negotiating drug prices and overseeing services like mail-order pharmacy. 

It joined hands with Amazon.com AMZN to manage at-home drug deliveries, Mark Cuban’s Cost Plus Drug Company to facilitate access to affordable medications, and Abarca to handle drug claims processing.

This departure aligns with a growing industry upheaval where smaller, more transparent PBMs are gaining ground against industry giants like CVS’ Caremark, Cigna Inc’s CI Evernorth, and UnitedHealth Group’s UNH OptumRx. 

These major players, controlling nearly 80% of the U.S. pharmacy benefits market, face increased scrutiny for their opaque negotiation practices.

Rightway, Tyson’s chosen alternative, guarantees a 15% reduction in pharmacy costs through transparent models. 

“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,” CNBC noted, citing Renu Chhabra, Tyson’s vice president and head of global benefits.

“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.”

A CVS representative informed CNBC that although the company will no longer manage Tyson’s comprehensive pharmacy benefits contract, it will still offer specialty drug pharmacy services in collaboration with Rightway.

“Our specialty pharmacy services support members managing high cost, complex conditions and typically represent over 50 percent of pharmacy benefit spend in the marketplace,” CNBC highlighted, citing the CVS Caremark spokesman Phil Blando.

Price Action: TSN shares are up 1.49% at $53.97 on the last check Thursday. CVS shares are down 4.02% at $71.21.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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