Express Scripts disputes Anthem's claim that it's owed $3B
While Anthem's pharmacy benefit manager, Express Scripts, says it is "fully committed to good faith negotiations" with the insurer amid a contract dispute between the two companies, its CEO questioned Anthem's claim of significant owed savings.
The rift began when Anthem CEO Joseph Swedish said during a January presentation at the JP 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. But though this provision was effective as of Dec. 1, 2015, "we have not yet received an offer from [Express Scripts] that we believe reflects market-competitive benchmark pricing," Swedish said at the time.
Express Scripts CEO George Paz said on the company's annual earnings call this week that "I have no clue where the $3 billion came from. I have no concept, the number doesn't make any sense to me."
He declined to provide many details about the dispute, saying he doesn't believe Anthem wants it "air all their dirty laundry out and try to force a negotiation through a conference call." However, he expressed surprise at how the negotiations with Anthem have progressed.
Other executives he's spoke to "are dismayed that this is taking place in the public markets," he said. "Obviously, a lot of CEOs are interested in watching this because that's quite a new experience for all of us."
Swedish, however, has said that Anthem reached its $3 billion estimation by working with "multiple, independent reference points," including competitive vendors and third-party consultants, to determine appropriate benchmark pricing. "To be clear, our shareholders are entitled to that value today, and our team has been and continues to be focused on exercising our contractual rights to capture that value," he added.
Back in July, Swedish also hinted that the insurer's pending acquisition of Cigna could change its approach to pharmacy benefit management, saying "there's significant value and opportunity for the combined company and our customers from a better pharmacy contract." Therefore, when Anthem's 10-year contract with Express Scripts expires in 2019, the company may re-evaluate, he said.
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