Express Scripts Says It Will Lose Anthem, Its Biggest Customer, in 2020
April 24 2017 - 6:26PM
Dow Jones News
By Bowdeya Tweh
Express Scripts Holding Co. said Monday it doesn't expect Anthem
Inc., its biggest customer, to extend a pharmacy-benefits
management agreement slated to expire at the end of 2019.
The nation's largest pharmacy-benefits manager said it pledged
$1 billion a year in price concessions through 2019 if Anthem would
extend the current deal beyond the current expiration date. But
Express Scripts officials said recent conversations with Anthem
indicate the health insurer wants to move in a different direction.
Anthem has issued a request for proposals seeking a new
pharmacy-benefits manager once the current agreement expires,
Express Scripts said.
Express Scripts shares dropped 12% after hours following the
company's announcement. Shares closed up 1.2% to $67.25 during
Monday trading.
Tim Wentworth, president and chief executive of Express Scripts,
said it is "difficult for us to understand" why Anthem hasn't
engaged in discussions.
"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," he said.
An Anthem spokeswoman declined to comment on Express Scripts'
announcement.
The Anthem business contributed 31% of adjusted earnings before
interest, taxes, depreciation and amortization in 2016 and 26% of
adjusted earnings before interest, taxes and amortization in 2015,
Express Scripts said.
Anthem sued Express Scripts last year, alleging the St. Louis
benefits manager violated its contract by charging excessive prices
for drugs. Express Scripts has rejected that claim, adding that
Anthem failed to negotiate in good faith on new pricing terms and
shouldn't be able to change the existing contract.
Express Scripts has handled Anthem's pharmacy services under a
10-year contract struck in 2009, when it bought Anthem's in-house
PBM for about $4.68 billion, The Wall Street Journal reported.
"Looking forward, we will continue to invest in our business to
maintain optimal service levels, bring innovative solutions to the
marketplace to help our patients and payers and generate new
business," Mr. Wentworth said.
On Monday, Express Scripts also reported first-quarter adjusted
earnings per share that just topped analysts' expectations, coming
in at $1.33 a share on revenue of $24.65 billion. Adjusted claims,
which account for monthly prescriptions filled in retail pharmacies
and 90-day fills through the company's mail-order business, dipped
1% to 351.7 million.
The company's overall profit rose 4% from a year before to
$546.3 million, and it increased its full-year earnings guidance
for this year.
Write to Bowdeya Tweh at Bowdeya.Tweh@wsj.com
(END) Dow Jones Newswires
April 24, 2017 18:11 ET (22:11 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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