Western Pennsylvania's trusted news source
Giant Eagle wades into pharmacy benefit management, promising transparency | TribLIVE.com
Health

Giant Eagle wades into pharmacy benefit management, promising transparency

Jack Troy
8914776_web1_PTR-GeaglePharm-051023
Louis B. Ruediger | TribLive
Giant Eagle is expanding its retail pharmacy operation as well as the reach of its pharmacy benefit management arm, GallientRX, which it spun off earlier this year as a separate business.

As Giant Eagle expands its pharmacy business by absorbing customers from the failed Rite-Aid chain, it quietly has been making a bigger push into a more obscure sector of the industry: pharmacy benefit management.

After dabbling for at least a decade in pharmacy benefit management, serving as the go-between among local businesses and health insurance companies, the Cranberry-based grocer this year spun off a separate company, GallientRX, to offer those services.

Giant Eagle leadership touts the new business as a more transparent alternative to traditional pharmacy benefit managers, or PBMs.

PBMs have been criticized by many — including Pennsylvania Gov. Josh Shapiro — for making large profits while forcing up the cost of prescription drugs and helping to put small, independent pharmacies out of business.

“We’ve been in this space for years,” Michael Chappell, vice president of pharmacy operations at Giant Eagle, told TribLive. “This is really, how do we expand it?”

Most benefit managers make money by taking a cut of what insurers pay pharmacies to dispense medication.

GallientRX instead passes along the full payment and charges the organizations that hire it a monthly fee.

Giant Eagle has dozens of pharmacies in grocery stores, plus a few standalones, meaning it’s familiar with the ins and outs of benefit management.

“When you’re in the retail pharmacy business, you’re in the PBM world on a daily basis,” Chappell said. “So this is something that’s not foreign to Giant Eagle. We have a lot of tenure and knowledge on what PBMs do.”

GallientRX — which Chappell emphasized is a separate company, not a division of Giant Eagle — won’t limit clients to Giant Eagle pharmacies.

Vertical integration

Pharmacy benefit management can be a tough market to enter.

A recent analysis by the American Medical Association found a widespread decline in competition within local markets. As of 2021, Express Scripts and OptumRx controlled 76% of the Pennsylvania market.

CVS Caremark is considered the third member of the “Big Three” benefit managers.

Greg Lopes, a spokesman for the Pharmaceutical Care Management Association, said the industry group supports “more competition in the PBM market because employers and health plans deserve choice and flexibility to work with PBMs that best meet their health care needs.”

All three of the heavy hitters have some degree of integration with insurers or pharmacies.

CVS Caremark, for instance, is part of the umbrella organization that includes more than 9,000 pharmacies and a massive insurance arm.

Its pharmacies are receiving a price for filling prescriptions set by another part of the overall organization, appearing to some as a conflict of interest.

Giant Eagle now is connected to a benefit manager in a similar way, albeit on a much smaller scale.

“Vertical integration is not an intrinsic evil,” said Antonio Ciaccia, president of health care consulting firm 3 Axis Advisors. “But it does represent a blurring of lines of what we might typically consider a company to be.”

Consumer impact

In GallientRX, Ciaccia sees a sign the benefit management industry is headed toward more transparency, or at the least giving the appearance of transparency.

“It’s becoming increasingly an expectation of policymakers and plan sponsors, so as a result it creates opportunities for those who truly deliver on those models,” he said.

Whether this transparency translates to cost savings for consumers depends.

If new models like GallientRX are truly more efficient, Ciaccia noted, patients could see savings, especially those whose insurance plans include high out-of-pocket costs.

The introduction of GallientRX is yet another example of Giant Eagle showing increased interest in pharmacies.

In May, Giant Eagle announced it had purchased prescription files from 78 closing Rite Aid stores. And in August, it partnered with Mark Cuban’s Cost Plus Drugs to offer lower prices on some drugs.

At a news conference announcing the collaboration, Cuban said he’d like to “get rid of” benefit managers.

In an email to TribLive, Cuban said he would need more information from Giant Eagle before commenting on GallientRX.

Jack Troy is a TribLive reporter covering business and health care. A Pittsburgh native, he joined the Trib in January 2024 after graduating from the University of Pittsburgh. He can be reached at jtroy@triblive.com.

Remove the ads from your TribLIVE reading experience but still support the journalists who create the content with TribLIVE Ad-Free.

Get Ad-Free >

Categories: Business | Health | Local | Top Stories
Content you may have missed