Anthem's decision last week to cut ties with its long-time pharmacy benefit manager, Express Scripts, is being called a game changer for a segment of the industry that's increasingly under fire for pricing and transparency.
"It's becoming transparent that PBMs are engaging in shell games to gain profits, and payers and customers are paying the price," said David Balto, an antitrust attorney formerly with the Federal Trade Commission and a critic of the PBM industry.
Express Scripts announced April 24 that Anthem, its biggest client, will not renew its contract with the PBM after the current agreement expires at the end of 2019. The two have been locked in a feud for more than a year after Anthem claimed Express Scripts withheld billions in savings and overcharged Anthem for its services by $3 billion annually. Anthem sued the PBM for $15 billion last year. Express Scripts denied those allegations and countersued Anthem. Anthem declined to comment on the announcement.
Express Scripts' shares plummeted more than 10% in the wake of the news that it lost its largest client. Anthem's contract accounts for about 18% of Express Scripts' revenue.
"What we're seeing with Anthem is some frustration in the market," said Michael Rea, CEO of RX Savings Solutions, a company that sells software to health insurers and self-insured employers to help them lower their drug costs. "The market is demanding accountability and relief" over rising prescription drug prices.