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A dispute is raging between Anthem, one of the nation’s largest health plans, and Express Scripts, the largest pharmacy benefits manager, as the companies battle over billions in prescription drug costs. Specifically, Anthem contends Express Scripts, which manages prescription drug benefits for health plans, failed to pass along rebates negotiated with drug makers.

The battle, which is described in a lawsuit filed in federal court in New York Monday by the big insurer, first became widely known two months ago, when Anthem executives mentioned some of the details at the JP Morgan health care conference in San Francisco. But ever since, the clash has been drawing attention, because it comes as high drug prices are causing a growing outcry.

Pharmacy benefits managers, in particular, have become part of the controversy.


By virtue of their role as a middleman, these companies stand at the crossroads where lists of preferred medicines are compiled for health plans and prices for these drugs are negotiated. Express Scripts claimed its tactics kept drug prices from rising more than 5.2 percent last year. In general, though, a key issue is the extent to which pharmacy benefits managers are transparent about rebates that are received and passed to clients.

In its lawsuit, Anthem claims emphatically that Express Scripts has not been transparent because a third-party consultant conducted an audit and found the insurer was overpaying Express Scripts by about $3 billion annually. As a result, Anthem is seeking $15 billion in damages and wants out of its contract with Express Scripts that expires in 2019.


The outcome “could have far-reaching effects” on pharmacy benefits management, according to a Fitch Ratings analyst report. “The lawsuit challenges a fundamental aspect of PBM-insurer relationships: the value of a PBM’s negotiating power” with drug makers. The dispute could “embolden other (Express Scripts) clients to do the same” thing and claim they are not receiving rebates to which they are entitled.

Given what Leerink analyst Ana Gupte describes as an “acrimonious public conflict,” she predicted the relationship will end before 2019, and she bet that yet another big pharmacy benefits manager will get Anthem’s business. A leading contender might be OptumRx, which is owned by UnitedHealthcare, yet another huge insurer.

Anthem may have an additional motive for its lawsuit beyond recovering money. The company plans to merge with Cigna, yet another large insurer, which happens to have its own pharmacy benefits manager. Arguably, some corporate and government clients may find a combined medical and pharmacy benefits offering — a sort of one-stop shopping — more appealing.

Such a move could undermine the pharmacy benefits management model, according to Fitch analysts. “While taking its PBM operations in-house could simply reflect a shift in Anthem’s own strategy, switching to another PBM could call into question Express Scripts’ claims that its independent business model is best positioned to pass through cost savings to clients,” they wrote to investors.

Whether this approach would address concerns about transparency is unclear.

But any shift that lessens reliance on pharmacy benefits managers at a time when there are questions about their role in drug pricing can be a plus for Anthem. How so? The insurer could argue to the Federal Trade Commission that its pending merger with Cigna could increase competition for pharmacy benefits, rather than be viewed only with concern about decreasing competition among health plans.

“Anthem likely wants to bring its PBM function back in-house as part of a combined Anthem-Cigna company,” said Adam Fein of Pembroke Consulting, who tracks drug distribution. “Perhaps Anthem’s dispute with Express Scripts is in part a way to convince the FTC to approve the Anthem-Cigna merger because it would increase competition in the PBM market.”

We asked Anthem for comment and will update you accordingly.

  • antehm suing the express scripts, i have had dealings with express scripts and can tell why there is a lawsuit, if i had the money i would sue them to, there employees are crooks and are committing fraud against retired vets, and when an appeal was put in by me, they never acknowledged it, deny or approve, just claim i owe them, and no apologies were made for the rude treatment by the employees and management i dealt with, not 1 word. Do they know what patient abandonment is? when you say you are denying any meds to go out due to a non payment, that is so wrong, and to do this is patient abandeonment, further i was told by tehre management , that they can charge up to 150 USD without my knowledge and I have to pay it, this is fraud dammitt, then the snippy woman demanding payment and says “make a payment plan” how dare she,and then said ” if you do not pay the amount in question we will withhold all and any meds to you.” what the hell is going on with these crooks and who is really in charge? I cannot hang on a phone for hours on end and when i aksed for some one higher up in management to help me i was told they cannot give that information out. then they have made threats of turning me to a collection agency, I am a combat disabled VET , DIED N COME BACK TO LIFE DAMMITT AND DO NOT PAY FOR ANY MEDS AS 99% OF THEM ARE SUPPLIED BY THE VA AT NO COST AS THEY ARE FOR SERVICE CONNECTED TREATMENT. I am appalled at teh treatment and no service from these people, I would cancel there contract with the govt in a heartbeat and put an investigation as to how much these crooks are really screwing folks out of and making big profits on the backs of honest people. also the nasty woman who treated me so rude i would tell her ” YOUR FIRED”. I wish i knew who at that blasted company i could speak with to take care of an issue with out the hassles and rudeness.

  • Get rid of EXPRESS IDIOTS, I’ve never had issues with any company in the past that I can recall that has left me with such distaste in dealings!
    They deny,change meds for you,lose scripts faxed w/confirmation, lost script in mail(not there fault, but come on, its medication mail ups).
    Thats from 1 scripts dealings in one month time, hence the name IN my phone book EXPRESS IDIOTS

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