The US healthcare industry is starting to see more competition

Tyson Foods, one of the 50 largest US employers and the maker of dino nuggets, is switching up pharmacy benefit managers in an effort to lower healthcare costs for its ~140,000 workers.

The food giant this week announced plans to drop CVS Health’s Caremark, the largest US pharmacy benefit manager (PBM), in exchange for a startup named Rightway, becoming the largest company to publicly pull its business from one of America’s three main PBMs – Caremark, Cigna’s Evernorth, and UnitedHealth Group’s OptumRx – which collectively own ~80% of the market.

What are PBMs?... Pharmacy benefit managers are companies that use their wholesale power to negotiate rebates with drug makers, then pass those savings on to employers and health insurers after keeping a portion for themselves. But they’re often a black box, and some experts and advocacy groups argue PBMs actually end up inflating prices since they’re incentivized to favor more expensive drugs with higher profit margins.

👀 Looking ahead… Instead of using Caremark, Tyson is turning to PBM startup Rightway, which guarantees it can save employers 15% on pharmacy costs.

• Tyson says its decision to drop Caremark🥊 was driven by a 12%-14% hike in prices for this year (which, given the company’s $200 million annual spend, represents a significant chunk of change).
• When Caremark was asked to explain the increase, they were reportedly unable to provide the data Tyson was looking for. (Luckily they were talking to Tyson the food company – not Mike Tyson, the fighter.)