(Bloomberg) — Express Scripts Holding Co. (Nasdaq:ESRX) said it’s still working to resolve its contract dispute with health insurer Anthem Inc. (NYSE:ANTM), which has claimed the pharmacy benefit manager (PBM) should be giving it $3 billion a year more in savings on prescription drugs.
“We remain fully committed to good faith negotiations,” Express Scripts Chief Executive Officer George Paz said on a conference call with investors on Wednesday, adding that Anthem wasn’t entitled to $3 billion. “I have no clue where the $3 billion came from. I have no concept, the number doesn’t make any sense.”
In January, Anthem said that Express Scripts wasn’t passing along enough in savings on drugs and threatened to take its business elsewhere. The companies’ relationship goes back to 2009, when Express Scripts paid $4.7 billion to acquire Anthem’s drug-benefit plan, NextRx, along with a 10-year contract to manage drug benefits for Anthem members that expires in 2019. The contract allows Anthem to review periodically what it pays for drugs and to negotiate new terms.
Paz declined to go into details on the talks. “People are a little dismayed that this is actually taking place in the public markets,” he said. Other accounts are renewing at a normal pace, Paz said.
A spokeswoman for Anthem didn’t immediately respond to a request for comment.
On Tuesday, the company reported fourth-quarter earnings of $1.56 a share, excluding one-time items, matching an average of estimates compiled by Bloomberg. It managed 341.5 million claims, on an adjusted basis, an increase of 1.3 percent. Those claims were more profitable than a year ago, the company said in a statement, with earnings before taxes, interest, depreciation and amortization (EBIDA) per claim rising 2.7 percent to $5.66.
Express Scripts shares fell 2.4 percent to $67 in New York trading before the market opened.
Fourth-quarter net income rose to $773.5 million, or $1.13 a share, from $581.8 million, or 79 cents, a year earlier. Revenue fell less than 1 percent $26.2 billion, less than analysts had predicted.
The stock fell less than 1 percent to $68 in trading after the market closed in New York.
Insurers and employers pay Express Scripts to rein in the cost of drugs by pitting brand-name manufacturers against one another for access to the company’s lists of covered drugs, and by pushing patients to take generic versions instead of more expensive brand-name counterparts.
The company raised the lower bound of its 2016 adjusted earnings forecast to $6.10 to $6.28 a share, from its previously announced $6.08 to $6.28 a share.
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