Former GSK chief and pricing critic Witty steps in as Optum CEO

Andrew Witty
Andrew Witty will take up Optum's CEO post on July 1. (GlaxoSmithKline)

When Andrew Witty headed up GlaxoSmithKline, he repeatedly told investors he was prepping the company for a future rife with payer pressure and cost-saving maneuvers that would hit pharma where it hurt. And now, he’s going to be part of that future.

Tuesday, UnitedHealth Group said Witty would take over the top post at Optum—which includes the pharmacy benefits manager OptumRx—on July 1, succeeding Larry Renfro, who will move into a new position at Optum Ventures. Witty, who has served on Optum’s board since last August, will vacate his director’s seat before stepping into his new role.

It’s not a typical move for an ex-pharma CEO. Former industry skippers tend to wind up leading biotechs or landing partner positions at VC firms. Witty, though, has long seemed passionate about the drug-pricing landscape, and now he’s heading into a position that’ll give him significant power to help shape it.

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Tasked with steering the aging respiratory giant Advair through some pretty unfriendly waters over the last few years of his GSK stint, Witty has plenty of experience with payer dynamics. With a major formulary exclusion plaguing the drug, Witty and Co. managed to discount their way back into PBMs’ favor—and at the expense of Advair’s rivals, too.

And just before handing the baton over to current Glaxo chief Emma Walmsley, Witty served up hefty discounts on the drug intended to thwart its generic competitors, had any of them been able to win FDA approval.

Those small victories couldn’t save Advair’s plummeting sales, though, and they did little to give Witty faith that preserving high prices on branded products would be sustainable down the line. In 2015, he closed a deal that sent away GSK’s cancer assets to gain top positions in vaccines and consumer health—low-margin businesses less subject to today’s hostile pricing environment, he figured. The company has since built back up in cancer, however.

RELATED: Pharma mold-breaker Witty turns over the reins after 9 years at the GSK helm

"We think we're really aligned with where the river is flowing. The river is flowing for more volume," Witty told CNBC at the time. "We're going to focus on that, get that volume out there at a fair price, get a good return on our R&D investment, but not be fixated on defending ever and ever higher prices in the developed world."

If a new drug spending outlook report is any indication, Witty's instincts were good. Tuesday, the IQVIA Institute for Human Data Science concluded that branded drug spending in developed countries would fall this year and remain flat over the next five. 

With new GSK CEO Emma Walmsley largely sticking to Witty’s strategy, it’s only a matter of time before investors find out just how well it equipped GSK for success in the modern age. In the meantime, though, UnitedHealth’s leadership is confident it’s snagged the right person to lead Optum into “its next phase of growth."

In a statement, UnitedHealth CEO David Wichmann praised Witty’s “record of fostering innovation and partnerships,” his “seasoned leadership of complex organizations,” and his “deep experience with how data and analytics and new technologies can be used to improve patient outcomes, better serve consumers, lower costs and drive value across the system.”