It may be one of the most tortured corporate relationships in the health-care industry right now.
A 15-month fight between Anthem Inc. and Express Scripts Holding Co. spilled into public view again this week as the companies traded volleys over whether or not the insurer will renew its pharmacy benefit management contract with Express Scripts at the end of 2019.
On Monday afternoon, Express Scripts shares plunged after the company said that it had been told by Anthem, its biggest customer, not to bother making an offer for the contract. Then, Wednesday morning, Anthem's CEO said not so fast — the insurer had made no decisions yet. Observers were left scratching their heads about what is going on.
Recommended For You
Anthem "is playing the field," said Ana Gupte, a senior analyst with Leerink Partners who covers Anthem. The insurer is using its "market power to get to a better settlement and contract terms," she said in an email. "If they don't, they have many viable alternatives."
The disagreement dates back to January 2016, when Anthem's CEO Joe Swedish took to the stage at an investor conference in San Francisco and said the pharmacy benefit manager was overcharging for drugs by $3 billion a year. The two companies have since sued each other.
'Moving on'
Express Scripts said this week that there's no way it could come up with the $3 billion, because that's more than it made off of the entire Anthem business last year. It said it was ready to lose the business.
"We're moving on," Express Scripts CEO Tim Wentworth said.
On Wednesday, Swedish sent Express Scripts' shares moving again, this time upward, when he held out hope that maybe it would take the company back. The stock gained 2.1 percent to $61.28 at the close in New York, after declining almost 11 percent on Tuesday for its biggest one-day loss in more than four years.
"We've not made a final decision with respect to any vendor," Swedish said. "We've not ruled anyone in or out. I think that covers the entire spectrum of vendor possibilities and I'll leave it at that."
For Anthem, staying coy could force Express Scripts to come up with ever cheaper proposals in a last-ditch attempt to save a business that accounted for 16 percent of the prescriptions it oversaw last year, and 31 percent of its earnings before interest, taxes, depreciation and amortization, or Ebitda.
Negotiating tactic?
Leaving the light on for Express Scripts could also flush out better offers by competitors, such as CVS Health Corp., UnitedHealth Group Inc.'s OptumRx unit, and Prime Therapeutics LLC. Prime and CVS declined to comment, while OptumRx didn't respond to requests for comment.
"We are the best long-term partner for Anthem," said Brian Henry, a spokesman for Express Scripts, said in an email Wednesday. "They have not offered us the RFP as yet and they have been clear, from their conversations to us, they have not been interested in receiving the savings we have offered nor a contract extension."
For now, the companies remain at an impasse. Swedish said on the call that the $3 billion number wasn't negotiable. "We really have not changed our position," he said. "We are hopeful that we can resolve our dispute."
In the meantime, Express Scripts will be waiting.
"My door is always going to be open and my phone will always be in my pocket, hoping that I get that call," said Express Scripts CEO Wentworth.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
