(Bloomberg) — Express Scripts Holding Co. shares fell in early trading after the company said it will lose its biggest customer, health insurer Anthem Inc., which will drop the pharmacy benefit manager after accusing it of overcharging by billions of dollars a year.
Anthem last year sued Express Scripts for about $15 billion, saying it was being overcharged by about $3 billion a year and that the pharmacy benefit manager wasn't passing along discounts it gets from drugmakers.
"We do not have $3 billion in savings to give Anthem from pricing concessions," Chief Executive Officer Tim Wentworth said on a call with investors Tuesday after the company said Anthem wouldn't renew. "This is the point we've made since the figure was first stated by Anthem in January of 2016, at a time when we earned less than $2 billion on Anthem's business the prior year."
(Related: Prescription Drug Pricing 101)
Express Scripts shares were down 13% to $58.81 at 8:54 a.m. in New York, before the markets opened. Express Scripts said Monday in a statement that it "was recently told by Anthem management that Anthem intends to move its business when the company's current contract with Anthem expires" in 2019.
The Anthem contract represented 16% of the prescriptions Express Scripts processed last year, yet was responsible for 31% of the company's $7.26 billion in Ebitda, according to a company presentation Tuesday. Ebitda stands for earnings before interest, taxes, depreciation and amortization.
With or Without You
Without Anthem, Express Scripts will cover about 65 million people and process about 1 billion prescriptions a year, the company said. It spent much of Tuesday's conference call defending the company's business and its future.
"Our solutions are in demand and our work has never been more important," Wentworth said on the call. "With or without Anthem, we remain well-positioned for future growth and to lead the way to more affordable access to medicine."
Asked about whether other clients might leave amid the Anthem turmoil, Wentworth said that the feedback Wentworth has gotten from other clients has been "extraordinarily supportive."
(Photo: M. Spencer Green/AP)
