5 things about the end of the $15B Anthem-Cigna PBM lawsuit

A six-year legal spat between Anthem and Cigna is over after a federal judge ruled that Cigna’s Express Scripts does not owe Anthem $14.8 billion in alleged prescription drug overpayments.
Anthem filed a lawsuit in March 2016 arguing that its contract with Express Scripts guaranteed the insurer competitive prices for prescription drugs. Express Scripts, which Cigna acquired in 2018, pointed back at Anthem, contending the insurer was supposed to produce a market analysis of drug prices that would be the basis for negotiations.
In the end, that’s how a federal court left it in a ruling issued Thursday.
Judge Edgardo Ramos of the U.S. District Court for the Southern District of New York partially dismissed Anthem’s claims, declaring that the Express Scripts’s only obligation is to negotiate based on data the insurer provides.

“If the contract read ‘Express Scripts shall ensure competitive benchmark pricing,’ Anthem’s arguments might have substantial force,” Ramos wrote. “But a plain four-corners reading does not support its interpretation.”

Ramos also dismissed Anthem’s separate, $150 million claim that Express Scripts improperly submitted Anthem’s Medicare Part D prescription drug data to federal regulators and that it failed to resolve customer service issues in a timely manner.

The judge did decide that Anthem is contractually entitled to claims reimbursement of incorrectly approved prior authorizations, although the insurer has not specified a dollar figure, Ramos said. Anthem acknowledged in its lawsuit that Express Scripts processed 98% of it claims correctly.

Anthem and Cigna didn’t respond to interview requests.

The ruling ends a lengthy feud between the two rival insurers, which once planned a $54 billion merger that a federal court ultimately blocked.

Here are five things to know about the Anthem-Cigna lawsuit:

1. After suing Express Scripts over allegations the PBM withheld billions in savings and overcharged Anthem for $3 billion annually for seven years, Express Scripts countersued. In 2017, Anthem announced it would not renew its contract with Express Scripts. The move was a blow to the pharmacy benefit manager, as Anthem represented one-fifth of the PBM’s revenue at the time. Cigna’s Evernorth division. which houses Express Scripts, has since grown its pharmacy revenue to $121.4 billion. Pharmacy services represented the lion’s share of Cigna’s $174 billion in revenue last year.
2. The legal dispute was a driving force behind Anthem launching an in-house pharmacy benefit manager called IngenioRx in 2019. Anthem collaborated with CVS Health to establish the PBM. In 2021, IngenioRx’s revenue grew 16.1% to $25.4 billion and net income rose 23.7% to $1.6 billion.
3. Anthem ended its contract with Express Scripts 10 months earlier than expected after Cigna announced it was acquiring the PBM.
4. Anthem has continued to focus its PBM business by partnering with Humana to invest nearly $140 million to form a new pharmacy benefit manager platform last year. The insurers will hold a minority stake in the new joint venture, named DomaniRx. Financial technology company SS&C Technologies owns approximately 80% of the operation.
5. IngenioRx represents one-fifth of Anthem’s revenue and the insurer is banking on it helping drive growth among self-insured employer customers and on selling its services to other Blue Cross and Blue Shield companies. Anthem, which runs Blues plans in 14 states, does not expect the $2.67 billion Blues antitrust case to slow demand for its pharmacy services, CEO Gail Boudreaux said during the company’s earnings call in January.