Express Scripts says Anthem negotiated in bad faith: court filing

(Reuters) - Pharmacy benefit manager Express Scripts Holding Co has accused Anthem Inc of negotiating their contract in bad faith and is seeking a court order that the health insurer has no right to demand lower drug prices.

The office building of health insurer Anthem is seen in Los Angeles, California February 5, 2015. REUTERS/Gus Ruelas

The allegations, made in a filing in federal court in Manhattan on Tuesday, are in response to a lawsuit Anthem brought against Express Scripts last month seeking $13 billion in price cuts over the remaining four years of the companies’ contract.

Pharmacy benefit managers negotiate pharmaceutical benefits for employers and health plans and also run large mail-order pharmacies.

Express Scripts said in Tuesday’s filing that the contract did not require it to offer any specific price cuts, but only to negotiate in good faith.

Anthem spokeswoman Leslie Porras said that Anthem believes Express Scripts’ positions are baseless. “Anthem stands behind the merits of our lawsuit,” Porras said in a statement.

Express Scripts pointed to statements made to investors last September by Anthem’s chief executive, Joseph Swedish, that he expected only $2 billion to $2.8 billion in price cuts.

Express Scripts said it had proposed five price cuts “within the range” of Swedish’s projections last June, but that all were rejected, suggesting that Anthem was acting in bad faith when it brought its $13 billion lawsuit.

The company also said Anthem acted in bad faith by accepting a $4.675 billion up-front payment from Express Scripts at the beginning of the contract, which it said was supposed to let Express Scripts charge higher prices.

Express Scripts said that if Anthem does win price cuts in its lawsuit, it should be ordered to repay that money.

The case is Anthem Inc v. Express Scripts Inc, U.S. District Court, Southern District of New York, No. 1:16-cv-02048.

Reporting by Brendan Pierson in New York; additional reporting by Caroline Humer; Editing by Leslie Adler and Alan Crosby