Anthem sues Express Scripts over Rx drug prices

Seeks at least $13 billion in damages

Health insurer Anthem on Monday filed a lawsuit against pharmacy benefit manager (PBM) Express Scripts for allegedly overcharging for prescription drugs.

Lawsuit details

Anthem argues in the suit that Express Scripts charged the insurer more for prescription drugs than competitive benchmark prices. Specifically, the lawsuit claims that pricing under the current contract exceeds competitive benchmarks by at least $13 billion. Further, Anthem CEO Joseph Swedish earlier this year said the insurer was overpaying $3 billion annually for prescription drugs under its contract with Express Scripts.

Anthem in a statement says Express Scripts is contractually obligated to work in good faith to ensure the insurer receives competitive prices on prescription drugs but has refused to do so.

Report: US Rx drug spending growth slowed to 5.2 percent in 2015

The lawsuit, filed in a New York district court, seeks $15 billion in damages for uncompetitive pricing practices from Dec. 1, 2015, through 2020, which includes one year of transition costs and effects on Anthem's business. The insurer also is seeking $150 million for "operational breaches" of contract.

In addition, Anthem is seeking the right to end its contract with Express Scripts. The companies entered into a 10-year contract in 2009.

According to the Washington Post's "Wonkblog," it is unclear how the issue will be resolved, and the existing contract between the companies remains in place. Anthem notes that the lawsuit does not affect how its members receive their prescription drugs.

Express Scripts' response

Express Scripts spokesperson Jennifer Luddy in a statement says, "We believe that Anthem's lawsuit is without merit," adding that the PBM "has consistently acted in good faith and in accordance with the terms of its agreement with" the insurer.

Express Scripts spokesperson Brian Henry says that the company does "not believe [Anthem is] entitled to $3 billion."

Comments

Ana Gupte, a senior analyst at Leerink Partners, notes, "With this kind of tension, it's gotten to a point ... that I do not think [Anthem] can continue in the long term with the contract with Express."

Further, some analysts say Anthem is overstating the amount it has been overcharged. Brian Tanquilut, an analyst at Jefferies and Co., said, "My struggle is that I don't know how Express can earn $3 billion off a $15 billion contract."

Meanwhile, the lawsuit could lead other insurers to reconsider their contracts with PBMs, Bob Herman reports for Modern Healthcare. And Anthem's lawsuit "could be the precursor to [Anthem] building its own large PBM," Bruce Japsen reports for Forbes (AP/Sacramento Bee, 3/21; Johnson, "Wonkblog," Washington Post, 3/21; Kodjak, "Shots," NPR, 3/22; Herman, Modern Healthcare, 3/21; Japsen, Forbes, 3/22).

How Houston Methodist reduced the effect of drug costs on revenue

Houston Methodist Health System faced high drug costs that drained overall hospital revenue. Executives challenged the pharmacy and business office teams to mitigate the impact. Using Revenue Cycle Compass dashboard, Houston Methodist was able to go beyond traditional analytics to show what pharmacy costs could be reimbursed or covered by copay assistance, significantly offsetting initial drug cost.

Executive hospital leadership also created three new FTE reimbursement coordinator positions to identify the best payment solutions with patients pre-treatment, discuss out-of-coverage treatments with physicians, and work with the insurance predetermination process to navigate one-off cases. In just three years, Houston Methodist saved over $522K.

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