United Health Group Clashes In Lawsuit With Amazon,Berkshire and Others

United Health Group Clashes In Lawsuit With Amazon, Berkshire, And Others

This week, in a federal courtroom in Boston, a bit of intrigue appeared as lawyers tried to unveil the secret plans for a new company created by three of the world’s most powerful companies. The underlying case concerns allegations made by United Health Group, which is asking a judge to prevent a former executive from working for the new health care organization created by Amazon, Berkshire Hathaway, and JP Morgan Chase. United Health has accused the leader, David William Smith, of having removed proprietary confidential information from which his new employer could benefit, and denied any inappropriate action.

In two days of hearings and filings, however, the lawsuit has shown how much of the major established players such as United Health and its Optum unit were nervous about the entry of these three large companies into the health care sector. Since the announcement a year ago, the new company has hired many employees, including Dr. Atul Gawande, a renowned physician who writes for The New Yorker as Managing Director, and a former Comcast executive who also worked for Optum. While the founding companies insist that the company would not be a ‘for-profit’ enterprise and was created to meet the needs of their 1.2 million employees, many speculations have been voiced about its possible expansion and replacing other established players. JP Morgan’s chief executive, Jamie Dimon, went so far as to reassure some of his investment bank clients that the company’s three giants were not turning to the health sector.

Optom in Legal Battle

In court recently, Optum asserted that its complaint was that the company ABJ or ABC, will very soon become their direct competitor. And Optum, which heads one of the country’s largest drug benefit managers and other companies, whose sales reached $ 100 billion last year, appears to be using the legal battle to uncover its potential. The judge briefly closed the courtroom to allow a company official to discuss confidential plans. That was neither the opportunity nor the means to obtain information about a person Optum had described as a competitor, said Judge Mark L. Wolf.

Little is known about the projects of the new entity. Employers have been quiet on the radio about what they are doing, said Brian Marcotte, executive director of the National Business Group for Health, which represents major employers. He added that the lawsuit filed by Optum represented fear of what this entity could become. The legal skirmish is a striking example of the aggressive tactics adopted by healthcare companies to protect their territory from technological powers such as Amazon and Apple. UnitedHealth, in particular, has not moved away from prosecution as a trading technique, recently suing many pharmaceutical companies against the price of generic drugs.

New Threats

Insurers and drug benefit managers, who mediate between employers and pharmaceutical companies, also monitor employers. There has been an influx of new threats. Two major health insurance companies, Aetna and Cigna, have recently merged with pharmacy benefit managers. Anthem announced recently it was moving quickly to set up an internal operation, ending its relationship with Express Scripts, a pharmacy benefits executive, earlier than expected after its acquisition by Cigna.

Until recently, large employers were generally not considered competitors of insurers and drug benefit managers who process their employees’ claims, although the announcement of the creation of ABJ expressed frustration with the US health care system. The new Big Three company has no name yet, let alone revenue. Amazon may be the real threat to Amazon, which has already made some forays into the pharmacy industry and is willing to sacrifice its profits to gain market share. Optum is vulnerable because its clients – particularly employers – have little information about its operations, ranging from health data services to pharmacy benefits. Amazon is anxiously waiting to pop up and do something disruptive around the industry.

About Varun Seepathi 40 Articles
With an experience of over 3 years, Varun Seepathi has aided more than 50 medium to small and large firms for foraying into new markets, by increasing footprint in the existing bracket and understanding the ins and outs of these beasts. These beasts are the companies which have been exclusively engaged in materials, chemicals or packaging activities, and have encountered restraints either in the maintenance of P&L or in beating their competitors. He has also authored more than 300 research papers relating to the industry which consist of crucial information such as addressable serviceable market, strategies of players, growth of the market, market size, forecast, market share estimations and winning strategies along with opinions on the same. The “three slope distributor/off-taker evaluation model” currently in use by a lot of multinational companies has also been pioneered by him. A mood driven writer, a professional consultant, and a born explorer, Varun Seepathi is currently working as a full-time consultant. Healthcare, wealth management and information technology are some of the verticals of the industry where he has demonstrated his skills.