According to the law firm press release, Express Scripts is the largest independent pharmacy benefit manager ("PBM") in the country. As a PBM, Express Scripts administers the prescription drug benefit component of its customers' health insurance plans. Express Scripts also negotiates drug prices with pharmacies and establishes a network of pharmacies through which patients can fill their prescriptions.
Express Scripts' most important client is Anthem, Inc. ("Anthem"), one of the largest health benefits companies in the United States, which represents approximately 14% of Express Scripts' annual revenues. Pursuant to the Company's contract with Anthem, Anthem may periodically conduct a market analysis to ensure that Anthem is receiving "competitive benchmark pricing" on drugs purchased through plans administered by Express Scripts. If Anthem determines 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.
Throughout the Class Period, Express Scripts repeatedly assured investors that its relationship with Anthem remained strong and that it was providing Anthem, and all of its customers, with high quality service. Express Scripts also touted 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 Class 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. Then, on March 21, 2016, Anthem sued Express Scripts alleging that the Company breached its contract with Anthem by failing to negotiate drug pricing terms in good faith. The lawsuit revealed a 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. 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 a material decline in the price of Express Scripts stock.
On July 27, 2016, the Court issued an Order consolidating related actions, appointing Lead Plaintiff, and approving Lead Counsel. Lead Plaintiff filed an amended Complaint on October 14. Defendants filed a motion to dismiss the amended Complaint on December 7.
On August 1, 2017, the Court issued an Order granting Defendants' motion to dismiss. Plaintiffs were given leave to amend their Complaint. On August 30, Plaintiffs filed a second amended Complaint. Defendants filed a motion to dismiss the second amended Complaint on November 20. On May 22, 2018, the Court issued an Order granting Defendants' motion to dismiss, closing this case.
On June 20, 2018, Lead Plaintiff filed a Notice appealing the Court's Order granting Defendants' motion to dismiss. On May 28, 2019, the Court of Appeals affirmed the judgment of the District Court.