Health insurer Anthem Inc. plans to set up its own pharmacy benefits management unit, signaling a final break with Express Scripts Holding Co. after accusing it of overcharging by billions of dollars.
The move means Express Scripts will not only lose its biggest client but also face a new rival. Anthem’s new unit, called IngenioRx, will grow its own business with a “full suite” of services, the insurer said in a statement on Wednesday.
Anthem said it had also secured a five-year agreement with CVS Health Corp. — the operator of a pharmacy benefits manager that is Express Scripts’ biggest competitor — that goes into effect after its current contract with Express Scripts expires at the end of 2019.
The pharmacy benefit management business has been under pressure from all sides. Lawmakers in Washington have been asking how PBMs — which act as middlemen administering complex drug contracts and negotiating prices — make their profits. Drugmakers have blamed PBMs for consumer outrage over the high cost of medicine in the U.S. And analysts have speculated that Amazon.com Inc. is eyeing the industry as ripe for disruption.
Express Scripts said it has already been taking steps to mitigate the fallout from Anthem’s exit. The news is “not unexpected, but is disappointing,” said Brian Henry, an Express Scripts spokesman.
The move draws to a close a turbulent saga that’s helped push Express Scripts shares down by roughly a third since January 2016, when the dispute between the companies became public. At an investor conference that month, Anthem Chief Executive Officer Joe Swedish said that the PBM had overcharged it by as much as $3 billion. The companies subsequently sued each other.