Express Scripts

On August 4, 2016, Bottini & Bottini filed a shareholder derivative action in St. Louis state court on behalf of Express Scripts, Inc. The claims asserted in the complaint are alleged against the Company’s Board of Directors as well as certain of the Company’s officers, including Chief Executive Officer (“CEO”) George Paz, President, Timothy Wentworth, Chief Financial Officer (“CFO”), Eric Slusser, Senior Vice President - Sales & Account Management, David Queller, and Executive Vice President and Interim CFO, James M. Havel.

3. Express Scripts’ largest client is Anthem, Inc. (“Anthem”), one of the largest health benefits companies in the United States, which represented 16.3% of Express Scripts’ 2015 revenues and 14% of Express Scripts’ 2014 annual revenues. Accordingly, the Company’s relationship with Anthem and its ability to provide Anthem with high quality service is critical to investors.
4. Under the terms of the Company’s contract with Anthem, Anthem may periodically perform a market analysis to determine whether Anthem is receiving “competitive benchmark pricing” on drugs purchased through plans administered by Express Scripts. If Anthem concludes that the pricing terms under the agreement with the Company are no longer market competitive, then Anthem may propose new pricing terms to ensure that Anthem is receiving competitive benchmark pricing, and Express Scripts is obligated to negotiate in good faith over the proposed new pricing terms.

The Complaint alleges that throughout the Relevant Period, the Individual Defendants caused Express Scripts to repeatedly assure investors that the Company’s relationship with Anthem, its largest customer, was strong and that it was providing Anthem, and all its customers, with high quality service. Express Scripts also told investors that it was performing at a high level financially and operationally. In addition, the Company addressed the ongoing drug pricing negotiations with Anthem, stating that Express Scripts was committed to reaching a mutually beneficial agreement, and continuing its successful working relationship with its most important client. As a result of these misrepresentations, Express Scripts stock traded at artificially inflated prices during the Relevant Period.

The truth began to be revealed on January 12, 2016, when Anthem publicly threatened to terminate its relationship with Express Scripts unless the Company would renegotiate its agreement with Anthem to deliver more than $3 billion in annual savings to Anthem. Anthem’s statement made clear that Anthem and Express Scripts had engaged in contentious pricing negotiations for some time, and made clear that if Express Scripts remained unwilling to engage in good-faith negotiations regarding drug pricing, Anthem would terminate its relationship with Express Scripts and seek out a competing PBM. These disclosures caused the price of Express Scripts shares to fall $5.89 per share, or 7%, wiping out $3.9 billion in shareholder value. However, the Company’s stock price remained inflated because Defendants offered false and misleading explanations for, and continued to conceal, the true extent of the Company’s deteriorating relationship with Anthem.

Then, on March 21, 2016, Anthem sued Express Scripts for $13 billion, alleging that the Company breached its contract with Anthem by failing to negotiate drug pricing terms in good faith. The lawsuit revealed a deep (and never before disclosed) conflict between Express Scripts and Anthem dating back to at least February 2015, including allegations that Express Scripts was experiencing severe operational problems that interfered with its ability to adequately serve Anthem and exposed Anthem to increased regulatory scrutiny by the Centers for Medicare & Medicaid Services (“CMS”). More importantly, investors learned that Anthem would almost certainly either renegotiate its contract to pay billions of dollars less to Express Scripts, or worse, seek to engage a competing PBM resulting in the complete loss of Anthem’s business. These disclosures caused the price of Express Scripts shares to decline by $1.82 per share, or 2.6%.

As a result of Defendants’ wrongful acts and omissions, the Company has suffered significant losses and damages.