Lawsuit paper with a stethoscope on top

On parade in the lawsuit Anthem recently filed against Express Scripts are a list of grievances that shed light on what precipitated the now-public feud between the two healthcare giants.

Anthem filed its complaint March 21, 2016, in U.S. District Court, Southern District of New York, claiming Express Scripts breached the agreement binding it to serve as Anthem’s exclusive PBM provider for a 10-year period from 2009 through 2019. Specifically, Anthem alleges that Express Scripts has failed to pass on rebates it negotiated with drug makers, and that its pricing for Anthem exceeds the competitive benchmark by more than $3 billion annually.

Beyond the pricing breach, Anthem reveals an array of alleged operational issues. It claims Express Scripts has failed to comply with Centers for Medicare & Medicaid Services requirements, is using a faulty computer software program, and that system errors and inadequately-trained personnel have allowed high-cost drugs to be incorrectly approved at “alarming rates,” costing Anthem more than $100 million. That allegation is especially troubling for the nation’s biggest drug benefit manager, considering how vocal Express Scripts has been in its battle against rising drug prices.

Anthem also mentions an issue that stems from something that may not be readily apparent – that it competes with Express Scripts in the marketplace with both companies vying for employer group self-insurance business and Medicare Part D prescription benefit plans. At a meeting in February, Anthem accused Express Scripts of working to thwart its efforts to secure that business. After the meeting, Anthem wrote to Express Scripts about its concerns: “We have tried to avoid stating the obvious problem that (Express Scripts), as a competitor of Anthem’s, is inflating Anthem’s prices so that it can then undercut Anthem’s prices.”

In addition to the nearly $15 billion that Anthem seeks in monetary damages, the insurer has asked the court to let it out of its agreement with Express Scripts. Thus, should Anthem secure a favorable judgment and walk away with a clean exit from the remaining three years it has left on the contract, it would have a clear path to in-house PBM. It could also switch vendors if and when it closes on its acquisition of Cigna, which has a PBM deal with Catamaran Corp.

In its statement to the media, Express Scripts said it has acted in good faith and the suit is without merit.

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