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Anthem ends Express Scripts contract, turns down drug price concessions

Insurer is engaging in a request for proposals for a new pharmacy benefit manager following the end of its contract.

Susan Morse, Senior Editor

Anthem will terminate its long-term relationship with pharmacy benefit manager Express Scripts Holding Co. when the current contract expires at the end of 2019.

"Although conversations have been ongoing, the company was recently told by Anthem management that Anthem intends to move its business when the company's current contract with Anthem expires on December 31, 2019, and that Anthem is not interested in continuing discussions regarding pricing concessions for 2017-2019 or in receiving the company's proposed pricing for the period beyond 2019," Express Scripts said in a statement.

Anthem has submitted no formal letter to end the agreement, Express Scripts said.

[Also: Anthem, Express Scripts face legal challenge over prescription drug prices]

The insurer is engaging in a request for proposals for a new PBM service provider following the end of its contract, Express Scripts said. Express Scripts is not formally participating in Anthem's RFP process.

A PBM negotiates prices with drugmakers on behalf of payers and employers.

In recent months, Express Scripts has been in discussions with the insurer and has proposed providing as much as $1 billion in annual price concessions, or $3 billion over the life of an extended contract.

[Also: CVS Health, Express Scripts among healthcare organizations to unite behind bill that closes generic drug approval loophole]

"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," said Tim Wentworth, president and CEO of Express Scripts. "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."

Express Scripts makes well below $3 billion annually on the Anthem contract despite Anthem's numerous public pronouncements to the contrary, Wentworth said.

Express Scripts is well positioned for future growth with or without Anthem, the company said.

[Also: Anthem files motion to block Cigna from terminating $54 billion merger]

"Anthem's conflicting demands for annual PBM savings, ranging from $700 million in September 2015 to $3 billion in January 2016, its subsequent litigation against us, and now its decision to discontinue discussions altogether do not make any sense to us," Wentworth said.

In April 2016, Express Scripts Holding Co. sued Anthem for the deterioration of their drug pricing agreement.

A month earlier, Anthem had sued Express Scripts for more than $15 billion, alleging its pharmacy benefits manager was making windfall profits because it was not passing along enough of the drug price savings.

Twitter: @SusanJMorse