Anthem ($ANTM) and Express Scripts ($ESRX) have been going back and forth for a while over drug pricing, but now, the dispute has reached a boiling point. Anthem sued the PBM for negotiating pricing deals with drugmakers and not passing on the spoils.
The insurer claims that Express Scripts did not give it fair pricing on prescription drugs that were subject to new discount deals. Though the two companies have a 10-year contract, the agreement stipulates new pricing negotiations when necessary, Anthem claims.
Because Express Scripts has refused to renegotiate, Anthem says its current contract with Express Scripts exceeds what is considered reasonable pricing by $13 billion, plus about $1.8 billion in post-termination fees, the company said in a suit filed in the U.S. District Court for the Southern District of New York.
Now, Anthem is thinking about calling it quits on Express Scripts. The company "has not made any decision whether to end its contract with Express Scripts at this time," Anthem said in a statement. But the insurer is seeking damages to compensate for its overpaying for drugs under the current pricing agreement.
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| Anthem CEO Joseph Swedish |
The company tried for months to negotiate a better deal with Express Scripts, with top brass from both sides meeting to negotiate, Anthem said in its suit. In January, Anthem CEO Joseph Swedish said that the company could save almost $3 billion in drug costs by retooling its contract with the PBM.
"Under the agreement, Express Scripts is obligated to negotiate in good faith to ensure Anthem is receiving competitive benchmark pricing. Anthem has worked hard for more than a year to try to get Express Scripts to engage in such good faith negotiations, but Express Scripts has refused to do so," Anthem said in a statement.
Express Scripts is not assuming any of the blame, though. The PBM "values its relationship with Anthem and will continue to honor its commitments under the contract, as we would do with any client," it told FiercePharma in an email. "Express Scripts has consistently acted in good faith and in accordance with the terms of its agreement with Anthem. We believe that Anthem's lawsuit is without merit."
The suit comes as Express Scripts drives harder bargains with drugmakers to bring down prescription drug costs. In 2014, the PBM struck an exclusive deal with AbbVie ($ABBV) to cover its hep C drug Viekira Pak, setting off a pricing war between the company and its rival Gilead ($GILD), who also makes pricey therapies for the disease. Express Scripts CMO Steve Miller touted the pricing war, saying it would save the healthcare system billions.
Express Scripts followed up those moves with a series of cost-saving measures last year. In August, the PBM axed almost 20 more meds from its 2016 preferred formulary in a bid to save $1 billion. A few months later, Express Scripts launched value-based pricing for cancer meds, a new reimbursement model that prices drugs according to how well they work in specific types of cancer.
- read the suit (PDF)
- here's Anthem's statement
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