(Reuters) - Health insurer Anthem Inc said it had sued pharmacy benefit manager Express Scripts Holding Co to recover damages from drug pricing it believes was too high.
The lawsuit, filed on Monday in U.S. District Court for the Southern District of New York, is the latest development in a months-long dispute over Anthem’s contract with Express Scripts.
The lawsuit also seeks to recover damages from operational issues and for a declaration of Anthem’s right to terminate its contract with Express Scripts, the company said.
Anthem, which has been seeking $3 billion in annual cost savings through a repricing provision in its 10-year contract with Express Scripts, said it had not yet decided whether to end the contract.
Some industry analysts believe a split is now more likely than a settlement.
“The latest news has taken a very unhealthy turn and we see it unlikely that Anthem renews its contract with Express Scripts past 2019, and is likely to leave sooner to the extent it can manage the transition for consumers smoothly,” Leerink Partners analyst Ana Gupte said in a research note.
Anthem has said that through the repricing clause, which took effect on Jan. 1, it hoped to avoid overpaying for pharmaceuticals based on current market pricing, putting potential savings at $3 billion annually. The contract is set to run through 2019.
“Given the selloff over the past few months, we believe Express Scripts’ valuation already reflects the potential loss of the Anthem contract,” JP Morgan analyst Lisa Gill said in a research note.
Express Scripts, the largest U.S. pharmacy benefit manager, said in a statement that it believed the lawsuit to be without merit. The company has “consistently acted in good faith and in accordance with the terms of its agreement with Anthem,” it said.
PBMs negotiate pharmaceutical benefits for employers and health plans and also run large mail order pharmacies.
In January, Express Scripts said the contract called for a pricing review but that Anthem was not entitled to $3 billion.
Express Scripts shares were off 0.2 percent at $69.26, while Anthem was down 2.2 percent at $139.55.
Reporting by Bill Berkrot in New York and Ankur Banerjee in Bengaluru; Editing by Lisa Von Ahn and Nick Zieminski