Express Scripts will lose about $20 billion in revenue once its contract with Anthem expires at the end of 2019, according to Fitch Ratings.
Anthem said in April 2017 that it would drop Express Scripts. The decision came during an ongoing legal battle between the two parties.
In a lawsuit filed in March 2016, Anthem accused Express Scripts of overcharging the payer by roughly $3 billion annually and of not funneling drugmaker discounts to Anthem. While the insurer sued for $15 billion, Express Scripts has denied the allegations.
"If customer retention ultimately requires increased pricing concessions, it could further eat into [Express Scripts'] margins over the longer term as contracts roll," according to Fitch. "While Anthem's dispute with [Express Scripts] comes down to a pricing dispute with one customer, it is occurring at the same time that other PBM customers are expressing concerns about the industry's pricing model."
Fitch Ratings is maintaining Express Scripts on rating watch negative following the company's definitive agreement to be acquired by Cigna for about $67.2 billion. Fitch also said Express Scripts is expected to continue feeling pricing pressure from new contracts, consolidating competitors and potential nontraditional pharmacy players.
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