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Skip Anthem, Express Scripts Drug Price Fight, US Tells Justices

May 25, 2022, 2:58 PM

A case asking whether insurers and pharmacy benefit managers face ERISA liability when negotiating drug prices doesn’t merit US Supreme Court review, according to a federal government brief advising the justices to skip a case involving Anthem Inc. and Express Scripts Inc.

The US Court of Appeals for the Second Circuit’s 2020 decision declining to hold either company liable as a fiduciary under the Employee Retirement Income Security Act is a nonprecedential ruling that doesn’t conflict with any Supreme Court or appeals court decisions, US Solicitor General Elizabeth B. Prelogar told the justices in a brief filed Tuesday.

However Prelogar’s brief suggests Anthem could face fiduciary liability under ERISA without making an explicit argument to that effect. She says the Second Circuit’s reasoning “is not entirely clear, and under one reading it may be erroneous at least with respect to Anthem.”

In particular, she rejected the idea that Anthem could avoid liability by mixing fiduciary acts with other business activities.

“The fact that Anthem might combine any such fiduciary functions with other non-fiduciary aspects of its business—such as negotiating the sale of its in-house PBMs, or simultaneously negotiating the price that Anthem would itself pay for prescription drugs for Anthem’s insured healthcare plans—would not excuse Anthem from any fiduciary responsibility to petitioners’ plans when negotiating prices that those plans would pay,” she wrote. “Otherwise, a fiduciary could entirely escape its obligations to ERISA plans simply by combining them with other business functions.”

But the Second Circuit’s decision won’t bind it in the future, and the case is a poor vehicle for high court review because it would require consideration of contracts outside the record and resolution of threshold jurisdictional questions, Prelogar said.

Prelogar’s brief, which was also signed by Solicitor of Labor Seema Nanda, was filed at the court’s invitation.

The case challenges a 2009 deal in which Express Scripts, a PBM that coordinates prescription drug coverage for health insurers, agreed to provide drug services for Anthem health plans. Anthem in turn sold Express Scripts three PBM companies for more than $4 billion. The plaintiff health plans say Express Scripts paid a multibillion-dollar premium for the companies in exchange for wide latitude to significantly overcharge Anthem patients for prescription drugs.

The Second Circuit ruled for the companies, reasoning that the decision to sell a corporate asset isn’t a fiduciary action, even if it affects how much plan participants pay for drug prices.

White & Case LLP represents Anthem. Steptoe & Johnson LLP and Quinn Emanuel Urquhart & Sullivan LLP represent Express Scripts. Keller Rohrback LLP, Stris & Maher LLP, Whatley Kallas LLP, and Consumer Watchdog represent the health plans.

The case is Doe v. Express Scripts, Inc., U.S., No. 21-471, amicus brief 5/24/22.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Brian Flood at bflood@bloomberglaw.com