Express Scripts sues Horizon as fight over prescriptions grows

Horizon PharmaHZNP -18.77 % PLC on Wednesday fired back a response at Express ScriptsESRX -0.86 % Holding Co.’s business practices after the largest US pharmacy-benefit manager said it was cutting off a pharmacy that sold medications made by the biopharmaceutical company. (“Horizon”), which has refused to honor certain contractual obligations it owes under a pharmaceutical manufacturer rebate agreement with Express Scripts.

We are also evaluating several other pharmacies that appear to be predominantly dispensing Horizon prescription drugs.

Express Scripts had been reviewing what it calls “captive” specialty pharmacies ever since allegations of misconduct emerged last month against Philidor, a specialty pharmacy whose sole customer was Valeant Pharmaceuticals worldwide (NYSE:VRX) and which Valeant had an option to buy. Nevertheless, if Horizon Pharma fails to swap out script volume to other specialty pharmacies that remain on Express Scripts’ network, losing access to Express Scripts’ patients could be a big blow. This competitive role, in our view, creates a clear conflict of interest, as Express Scripts stands as both a pharmacy’s overseer and competitor.

“Our philosophy of ensuring that patients get the medicine their doctors prescribe is threatening Express Scripts’ profiteering and exposing what we believe is a lack of care for patients and respect for physicians”, Horizon CEO Tim Walbert said in the release.

Express Scripts said it’s important to clarify the difference between niche pharmacies that are designated by manufacturers to push a particular product, and specialty pharmacies like Accredo that deliver a superior level of specialized care for patients living with complex specialty conditions. “The notion that Linden Care is a so-called “captive pharmacy” of Horizon Pharma is entirely false”, the drugmaker added. It said all pharmacies that distribute its drugs are “fully independent”, and Horizon doesn’t own or have a stake in any pharmacy or an option to purchase any pharmacy. If those other payers also decide to shut off Horizon Pharma’s specialty pharmacies, then Horizon Pharma could be forced to rely on traditional pharmacies for fulfillment and that could lead to more prescriptions for its drugs being shifted to non-Horizon Pharma alternatives. Express Scripts said it’s seeking “to recover money rightfully due its clients”. The area that we feel has been the company’s primary weakness has been its disappointing return on equity.