The rift between Anthem and Express Scripts, which already spurred dueling lawsuits between the two companies, now appears to have caused the pharmacy benefits manager to lose its largest client.
Express Scripts said in its quarterly earnings announcement on Monday that it does not expect Anthem to renew its PBM contract once it expires at the end of 2019.
The two companies had been engaged in negotiations in recent months, during which Express Scripts offered the insurer as much as $1 billion per year in price concessions from 2017 to 2019, the PBM notes. However, Express Scripts said it was recently told by Anthem’s management that it “intends to move its business” when its current contract expires and is not interested in continuing negotiations.
Anthem is also currently engaged in a request-for-proposal process for a PBM service provider following the end of its contract with Express Scripts, according to the announcement.
When reached via email, an Anthem spokeswoman said the company is not commenting on the matter at this time.
“We just can't explain why Anthem would choose to walk away from an opportunity to realize $1 billion in annual savings, which we have no obligation to provide under our current contract, in exchange for a contract extension at prevailing market rates with a longstanding business partner who has proven its ability to deliver value for their members,” Express Scripts President and CEO Tim Wentworth said in the announcement.
The development, however, hardly comes out of left field. Signs of conflict between the two companies began last January, when Anthem CEO Joseph Swedish said during a presentation at the J.P. Morgan Healthcare Conference that Express Scripts owed it $3 billion more per year in prescription drug savings in accordance with a repricing provision in its contract—funds the insurer hadn’t received.
Express Scripts’ then-CEO George Paz, though, said that February that he has “no clue where the $3 billion came from” that Swedish referenced. Anthem then upped the ante, filing a lawsuit against Express Scripts in March seeking to recover damages from the PBM and the right to terminate its contract.
Wentworth said shortly after the lawsuit was filed that Express Scripts does not intend to lose Anthem as a client, and he was hopeful the companies could resolve the drug-pricing dispute. Still, the PBM filed a countersuit against Anthem last April, seeking unspecified damages from Anthem and denying the insurer’s allegations that it was withholding prescription drug savings.
Both companies, meanwhile, were the subject of a class-action lawsuit filed last June by employers, which accused them of making a deal that left beneficiaries paying inflated copays for prescription drugs while enriching shareholders.
In a research note to investors, Leerink Partners analyst Ana Gupte wrote that the news of Anthem's plans was "not entirely surprising." Her firm sees CVS and Prime Therapeutics as having the greatest probability of becoming Anthem's next PBM provider, though Optum remains "a dark horse in the race," she wrote.