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Anthem, Cigna settle contract claims, clearing way for appeal in $14.8 bln suit

Credit: REUTERS/BRENDAN MCDERMID

By Brendan Pierson

Nov 13 (Reuters) - Anthem and Cigna Group's CI.N Express Scripts unit on Monday settled the last pending claim in a long-running contract dispute, clearing the way for Anthem to appeal the dismissal of its $14.8 billion lawsuit accusing Express Scripts of overcharging it for prescription drugs.

Anthem had sued Express Scripts, a pharmacy benefit manager, in Manhattan federal court in 2016, accusing it of failing to negotiate over drug prices in good faith under a 10-year contract that began in 2009. Anthem said it was entitled to $14.8 billion in damages as a result of the breach.

U.S. District Judge Edgardo Ramos last March dismissed the central claim in the case, finding that Anthem could not show that good faith negotiations would have yielded the billions it claimed. He allowed another claim, accusing Express Scripts of failing to reimburse Anthem for prescription drug claims that Express Scripts approved improperly, among other breaches of the contract, to go forward.

In a court filing on Monday, the two sides said they had settled the outstanding claim on undisclosed terms. That allows a final judgment to be entered in the case, so that Anthem can appeal to the 2nd U.S. Circuit Court of Appeals.

Lawyers for Anthem and Cigna did not immediately respond to requests for comment.

Pharmacy benefit managers (PBMs) like Express Scripts act as middlemen between health insurance plans and drug companies, negotiating prescription drug prices and maintaining plans' formularies, or lists of covered drugs.

Anthem previously owned a PBM, NextRx. In 2008, with NextRx's business struggling, Anthem started looking for a larger PBM to buy NextRx and contract to provide Anthem's PBM services.

Express Scripts submitted the winning bid for that process, but Anthem alleged in its lawsuit that after being awarded the contract, it refused to negotiate in good faith.

Express Scripts in turn accused Anthem of bad faith. It dropped that claim earlier this year, but reserved the right to revive it if Anthem's lawsuit is revived on appeal.

Express Scripts was bought by Cigna in 2018.

Anthem in 2015 had announced a plan to acquire Cigna for $54 billion in cash and stock. However, the deal was blocked by a U.S. court and never took place.

The case is Anthem Inc v. Express Scripts Inc, U.S. District Court for the Southern District of New York, No. 1:16-cv-02048.

For Anthem: Claudine Columbres of White & Case

For Express Scripts: Ellison Ward Merkel of Quinn Emanuel Urquhart & Sullivan

Read more:

Express Scripts says Anthem negotiated in bad faith - court filing

Judge dismisses two Express Scripts claims in Anthem drug pricing lawsuit

U.S. appeals court blocks Anthem bid to merge with rival Cigna

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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