The Express Scripts' Polar Express

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  • 12/30/2014

Baby, it’s cold outside – if you’re suffering from Hep C.

A recent article in the Washington Post, “One company’s battle to stop the wave of high priced drugs,” could more accurately have been titled, “One company’s battle to stop innovation.”

The Post reports:

This week, the country's biggest drug plan manager Express Scripts said it will drop Gilead's drugs Sovaldi and Harvoni from a list of preferred drugs covering 25 million patients and instead will only put Viekira Pak on its list. Express Scripts said it has negotiated a significant discount with AbbVie — perhaps between $20,000 and $30,000 per course of treatment — in return for expanding access to patients and allowing primary care doctors to prescribe the drug … Until recently, Express Scripts didn't exclude any drugs from its list of preferred medications. But the exclusion list grew from 44 drugs two years ago to 66 in this past year.

Until recently, Express Scripts didn't exclude any drugs from its list of preferred medications. But the exclusion list grew from 44 drugs two years ago to 66 in this past year. The company's chief medical officer, Steven Miller, said he's been telegraphing a move like the AbbVie deal all year.

"We need innovation, and affordability has to be part of that innovation," Miller said in an interview. The companies aren't disclosing the discount, but he said the deal helps close the gap between prices in the U.S. and western Europe. Sovaldi is priced at $57,000 in the United Kingdom and $66,000 in Germany.

That’s the party line – for payers. But you have to read on to get the rest of the story -- about the chilling impact the Express Scripts strategy will have on patient care and pharmaceutical innovation.

"The only way you do exclusions," Miller said, "is you have to do drugs that clinically have identical outcomes."

But Dana Goldman, director of the Schaeffer Center for Health Policy and Economics at the University of Southern California, warns this could come at the expense of the patient since not all will respond to the same treatment. Express Scripts says it won't limit access for hepatitis C patients who need Gilead's drugs, but drug exclusions could still be problematic for patients, Goldman said.

"The reality is if you put up barriers for physicians and patients, we know that people won't have as good access," said Goldman, whose own research found that limits on what drug availability lead to worse outcomes for psychosis patients.

What’s really happening is insurers want someone else to pay for their failure to adequately price demand for highly effective, potentially lifesaving drugs. If the critics had their way and new regulations required price slashing, inevitably patients would lose access to lifesaving therapies, both directly and as a result of reduced research and development expenditures on what could be the next Sovaldi, or Ebola-fighting ZMapp.

Insurers also are hardly powerless, which is evident in their ability to shift drug costs to patients. While critics lambaste the American health system as free enterprise run amok, in reality the U.S. health insurance sector is more like a regulated monopoly – with a mandated customer base that will keep growing as Obamacare expands its reach and as America continues to age.

Prescription drugs currently make up just over 11 percent of the nation’s nearly $3 trillion health care tab; simple math indicates pharmaceuticals are not the major driver of runaway U.S. health expenditures.

And Express Scripts is not what anyone would call a disinterested party.

Consider the 2010 comment of George Paz, chairman and chief executive of Express Scripts, “The cheapest drugs is (sic) where we make our profits.” And just who is “cheaper” better for? "Our whole model is switching people to lower-cost drugs. The more money my shareholders make, the more money I make."

Paz ranked sixth on the 2012 Forbes CEO compensation list, with $51.5 million in total compensation the preceding year, and $100.2 million over a five-year period.

More money for George and Co., but less choice and no savings for patients. This has been the case with brand vs. generic medicines for years. But at least these often resulted in lower out-of-pocket co-pay expenses for patients. Today, the same fatten-George’s Wallet schemes are being used for drugs for evermore serious and life-threatening conditions – such as Hep C. Express Scripts enjoys enormous leverage in the marketplace. What Express Script’s Dr. Miller didn't’ say about drug exclusions, is that his employer told investors earlier in the year that company planned to save $1 billion in 2015 by excluding 66 medicines from its list of covered drugs.

And they did.

Brr. That’s the sound of chilling innovation.


Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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