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June 27 — Express Scripts Inc. and Anthem Inc. are accused in a proposed class action of breaching their ERISA fiduciary duties by entering into a 10-year, multibillion-dollar prescription-drug agreement that caused plan participants to overpay for benefits ( Burnett v. Express Scripts, Inc. , S.D.N.Y., No. 1:16-cv-04948, complaint filed 6/24/16 ).
The lawsuit is the latest development in the $15 billion battle between Anthem and Express Scripts. In March, Anthem sued Express Scripts for allegedly overcharging for prescription drugs in violation of the parties' agreement.
Two months later, two health plan participants sued both companies under the Employee Retirement Income Security Act challenging Express Scripts' alleged overbilling.
The latest lawsuit, filed June 24 in the U.S. District Court for the Southern District of New York, is brought by participants in three medical plans sponsored by Verizon Communications Inc., AmTrust Financial Services Inc., and LG&E and KU Energy LLC. The plans have more than 26,000 participants combined.
In December 2009, Express Scripts paid approximately $4.67 billion to Anthem for the exclusive right to provide pharmacy benefit management services, the complaint says. Under this agreement, Express Scripts supports Anthem's business in over 24 states and services more than 15 million of its members.
According to the complaint, Anthem breached its ERISA duties by entering into an agreement with Express Scripts that was imprudent and not in the best interests of its members. In addition, Anthem allegedly failed to properly monitor and prevent Express Scripts from overcharging.
The complaint alleges that Anthem used Express Script's nearly $5 billion payment to fund stock buybacks in 2009 and 2010, which ultimately enriched Anthem's stockholders and management, rather than passing this money through to participants.
According to court documents, Express Scripts engaged in self-dealing prohibited transactions by overcharging for prescriptions to recoup the nearly $5 billion it fronted to Anthem to get the exclusive right to provide prescription drug benefits to members.
A market analysis performed by a third party revealed that Express Scripts' pricing exceeded competitive benchmark pricing by more than $3 billion annually, the complaint says. The analysis concluded that under the terms of the parties' agreement, the overcharges to participants could reach $15 billion.
Express Scripts and Anthem's action caused losses to participants and allowed both companies to unjustly enrich themselves, the complaint alleges.
Express Scripts's senior director of corporate communications, David Whitrap told Bloomberg BNA June 27 that the company denies the allegations and plans to defend itself vigorously.
Anthem didn't immediately respond to Bloomberg BNA's request for comments.
Keller Rohrback LLP represents the participants.
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Text of the complaint is at http://www.bloomberglaw.com/public/document/Burnett_et_al_v_Express_Scripts_Inc_et_al_Docket_No_116cv04948_SD.
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