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6/1/2020 Express Scripts battle with Anthem raises questions about drug prices | Local Business | stltoday.com https://www.stltoday.com/business/local/express-scripts-battle-with-anthem-raises-questions-about-drugprices/article_f5c45402-021f-512e-a3be-a9d7356fc9a5.html Express Scripts battle with Anthem raises questions about drug prices By Samantha Liss St. Louis Post-Dispatch May 7, 2017 Subscribe for $1 a month This July 21, 2011, file photo shows a building on the Express Scripts campus in Berkeley, Mo. (AP Photo/Jeff Roberson) E xpress Scripts is tangled in a public feud with Anthem Inc., its biggest client and the nation's second largest health insurer. https://www.stltoday.com/business/local/express-scripts-battle-with-anthem-raises-questions-about- drug-prices/article_f5c45402-021f-512e-a3be-a9d... 1/8 6/1/2020 Express Scripts battle with Anthem raises questions about drug prices | Local Business | stltoday.com The two corporate giants are arguing over billions of dollars. Anthem believes it is being overcharged for Express Scripts' services and filed suit against the company last year in an attempt to recoup nearly $15 billion. Even though Express Scripts denies the allegations, the north St. Louis County-based pharmacy benefit manager, or PBM, has offered to shave $3 billion from the remainder of Anthem's contract that runs through the end of 2019 in an attempt to retain its largest client. Industry experts say the battle between the two companies raises questions about whether consumers are paying more for prescription drugs than they should be. \"This case suggests that consumers have reason to wonder how much of the billions in savings from these big, powerful firms ever reach the end user,\" said Erin Fuse Brown, a professor of health law at Georgia State University. As the nation's largest PBM, Express Scripts provides more than 80 million Americans with prescription drugs. Employers and health insurance companies hire Express Scripts to purchase drugs on their behalf and manage pharmacy claims. https://www.stltoday.com/business/local/express-scripts-battle-with-anthem-raises-questions-about- drug-prices/article_f5c45402-021f-512e-a3be-a9d... 2/8 6/1/2020 Express Scripts battle with Anthem raises questions about drug prices | Local Business | stltoday.com Express Scripts uses its leverage to put pressure on drug manufacturers to reduce the cost of prescriptions. But some wonder how much of the savings Express Scripts squeezes from manufacturers is ultimately passed on to consumers. Some have accused Express Scripts of playing the middleman, and actually contributing to the rising cost of prescription drugs through the tools it uses to lower prices, mainly through rebates. Express Scripts gets rebates passed back to it from drugmakers after it agrees to favor one drug over other competitors. Landing on Express Scripts' approved list of drugs, known as a formulary, means drugmakers then have access to millions of Americans through Express Scripts. On the flip side, a drug that is excluded from the formulary means fewer sales and less revenue for the drugmaker. So in order to ensure access to Express Scripts' formulary, drugmakers are willing to part with millions of dollars in the form of rebates. While Express Scripts shares that money with its clients employers and insurance companies it's unclear whether patients benefit with lower copays or out-of-pocket spending. https://www.stltoday.com/business/local/express-scripts-battle-with-anthem-raises-questions-about- drug-prices/article_f5c45402-021f-512e-a3be-a9d... 3/8 6/1/2020 Express Scripts battle with Anthem raises questions about drug prices | Local Business | stltoday.com \"A lot of people don't question the negotiated price they get for their drugs,\" said Katherine Hempstead, an executive with the Robert Wood Johnson Foundation. \"Baked in is money for PBMs and various other people in the supply chain. In terms of what these prices are, all this negotiated stuff is totally proprietary, and it's not publicly available.\" In other words, consumers don't know the acquisition price for the drug or the rebates that are returned to the PBM, and they don't know how much of that rebate is shared with their employer. https://www.stltoday.com/business/local/express-scripts-battle-with-anthem-raises-questions-about- drug-prices/article_f5c45402-021f-512e-a3be-a9d... 4/8 6/1/2020 Express Scripts battle with Anthem raises questions about drug prices | Local Business | stltoday.com Last August, CEO Heather Bresch of Mylan, the maker of the EpiPen, pointed the finger at PBMs and other companies in the supply chain as a contributing factor to the rising price of drugs. She did so while under intense scrutiny for hiking the cost of the EpiPen, the life-saving antidote to some allergic reactions. \"There are four or five hands that the product touches and companies that it goes through before it ever gets to that patient at the counter,\" Bresch said in an interview with CNBC. Express Scripts began to face greater scrutiny after Bresch's on-air comments. And now, its public feud with Anthem is causing consumers to ask more questions of PBMs. The view of PBMs is becoming more nuanced as consumers begin to understand that \"their interests are pretty complicated,\" Hempstead from Robert Wood Johnson said. \"PBMs drive clear and significant value in this market,\" said Rena Conti, an expert in health care and pharmaceutical financing at University of Chicago Medicine. \"At the same time, and here's the trade-off, they don't do it for free. They are companies that have shareholders and that also have to meet profitability targets. And some of the significant value that they provide the system is captured by them and not by payers and patients.\" https://www.stltoday.com/business/local/express-scripts-battle-with-anthem-raises-questions-about- drug-prices/article_f5c45402-021f-512e-a3be-a9d... 5/8 6/1/2020 Express Scripts battle with Anthem raises questions about drug prices | Local Business | stltoday.com But Express Scripts has maintained that its incentives are aligned with its clients, and that it provides a valuable service. It has said that its dispute with Anthem over the 10year contract is unique and isn't indicative of any larger industry trends. Yet, the arrangement does puzzle some analysts. \"It's atypical in any industry to see larger customers pay more than smaller ones as was the case here,\" said Britton Costa, senior director with Fitch Ratings. But Express Scripts says that when it purchased Anthem's \"struggling\" in-house PBM in 2009, Anthem was given a choice. They could choose to take more cash up front instead of lower pricing over the duration of the contract. Anthem chose to take more cash up front, about $4.7 billion, Express Scripts said. https://www.stltoday.com/business/local/express-scripts-battle-with-anthem-raises-questions-about- drug-prices/article_f5c45402-021f-512e-a3be-a9d... 6/8 6/1/2020 Express Scripts battle with Anthem raises questions about drug prices | Local Business | stltoday.com \"Although Anthem could have passed this up-front money through to its members in the form of reduced drug pricing instead, Anthem used the up-front payment to repurchase its stock,\" Express Scripts said in its counterclaim against Anthem. Samantha Liss 314-340-8017 @samanthann on Twitter sliss@post-dispatch.com 0 comments Daily updates on the latest news in the St. Louis business community. Email Address Sign up! * I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy. Related to this story Nicklaus: Anthem drama shouldn't be existential crisis for Express Scripts May 7, 2017 The path your prescriptions travel May 7, 2017 https://www.stltoday.com/business/local/express-scripts-battle-with-anthem-raises-questions-about- drug-prices/article_f5c45402-021f-512e-a3be-a9d... 7/8 6/1/2020 Express Scripts battle with Anthem raises questions about drug prices | Local Business | stltoday.com https://www.stltoday.com/business/local/express-scripts-battle-with-anthem-raises-questions-about- drug-prices/article_f5c45402-021f-512e-a3be-a9d... 8/8