April 25, 2017
Express Scripts, the leading pharmacy benefit manager (PBM) in the country, recently announced that its largest client, Anthem Inc, will not renew its contract once the current agreement expires December 31, 2019.
The announcement follows a chain of events over the last year in which Anthem claimed that Express Scripts had failed to pass along billions of dollars of savings from drug prices that the companies negotiated. Anthem recently sued Express Scripts for roughly $15 billion—claiming it was being overcharged by $3 billion a year.
“Anthem is not interested in continuing discussions regarding pricing concessions for 2017-2019,” a statement from Express Scripts read.
The two companies have been working under a 10-year contract since 2009 when Express Scripts purchased Anthem’s struggling in-house PBM at the time for $4.7 billion. The Anthem contract totaled about 16% of the prescriptions Express Scripts negotiated last year.
It is expected that without Anthem, Express Scripts will cover approximately 65 million people and process roughly 1 billion prescriptions a year.
It is currently unclear what PBM Anthem will turn to following their contract termination. Currently in the drug benefit industry, only a handful of major PBMs remain, including CVS Health Corp, OptumRx, Maxor, and Prime Therapeutics LLC. Most available PBMs currently represent Anthem’s rivals like Aetna, UnitedHealth Group, and Blue Cross and Blue Shield.
Express scripts clarified that Anthem stated it “intends to move its business when the company's current contract with Anthem expires.”
Despite the lawsuit, Express Scripts seems surprised by Anthem’s maneuver, adding that a smaller PBM is unlikely to achieve comparable cost-savings for the insurer.
“It is difficult for us to understand why Anthem has not recognized the potential value which could be brought forth by engaging in meaningful discussions regarding a mutually beneficial pricing arrangement for the remaining term of our contract and beyond,” Tim Wentworth, Express Scripts CEO, said in the statement. “No other party can offer Anthem savings prior to 2020, and no other party can provide updated pricing terms beyond 2019 without the risk and disruption of a lengthy and complicated implementation.”
—Julie Gould (Mazurkiewicz)