(Bloomberg) — Steve Miller is waging war against use of high-priced medicine in U.S. health plans.
He and his colleagues at Express Scripts Holding Co. say they are just getting started.
Miller is chief medical officer for the pharmacy benefits manager (PBM), which oversees prescription benefits for health plans and employers covering 85 million patients. Unless more is done about a wave of new and expensive drugs, some priced at as much as $50,000 a month, Miller says that health plans are going to be swamped as costs double to half a trillion dollars as soon as 2020, from $270 billion today.
Employers with health plans “are just terrified,” said Miller, after showing a visitor a giant prescription-filling room packed with robots stuffing pills in bottles. In a few years, “you could be in the business of running your company to pay your pharmacy bill.”
Express Scripts deploys powerful cost-control weapons: refusing outright to pay for dozens of drugs, and setting hurdles for patients to access the most expensive medications.
The St. Louis-based company is excluding 66 brand-name drugs in 2015 from its main formulary, or list of covered drugs, up from 48 in 2014, when it started making a list of exclusions. Both lists ban Simponi, a $3,000-a-month, injectable rheumatoid arthritis medicine from Johnson & Johnson.
Other PBMs are using similar tactics. A CVS Health Corp. unit that competes with Express Scripts will keep 95 drugs off of its main formulary in 2015, up from 70 this year. One of the drugs shut out is Rebif, an injectable multiple sclerosis drug that costs about $5,000 for a four-week supply. CVS believes “rigorous” formulary management will save more than $3.5 billion for clients over a three-year period, according to Christine Cramer, a company spokeswoman.
Government programs are also pushing back. The Illinois Medicaid program said in July that hepatitis C patients would have to meet 25 criteria to qualify for Gilead Sciences Inc.’s Sovaldi, which costs $84,000 for a 12-week regimen.
Twenty-seven state Medicaid plans pay for Sovaldi only for people with severe liver damage, and others also impose coverage limitations for patients with recent substance-abuse problems, according to data from Malinda Ellwood at Harvard University’s Center for Health Law and Policy Innovation.
If drug companies keep raising prices, the companies “face an increasingly ugly backlash from plan sponsors,” Express Scripts’ Miller said. The company only excludes drugs when there are clinical equivalents available, according to Miller, who said the removals have prompted few complaints.
Some drug makers are hit hard by such moves. In January, Express Scripts removed GlaxoSmithKline P.L.C.’s asthma drug Advair from its main formulary, or coverage list — the first time it barred a drug so widely used. Glaxo, based in the the U.K., was demanding a “significantly higher price” for Advair, which is no better than competing drugs, said David Whitrap, an Express Scripts spokesman. The inhalant costs $373.18 per month for the highest dose.
The combined market share for Advair and a second Glaxo inhaler fell 8.5 percentage points between December 2013 and October 2014, while competing brands gained, according to data from Bloomberg Intelligence. Glaxo shares fell 8.8 percent this year through Nov. 24, as European drug stocks broadly rose.
Glaxo and other drug makers are facing more price pressure, competition and benefit plans limiting patient choice, Jenni Ligday, a company spokeswoman, said in an e-mail.
Formulary access to Advair is improving and ’’will strengthen considerably in 2015,’’ she said. Advair will go back on the formulary in 2015 because Glaxo offered a better price, Express Scripts said.
Three drug-compounding companies alleged in a lawsuit this month that Express Scripts is denying insurance claims for their customized medicines in decisions that lack scientific backing, threatening to put them out of business. Express Scripts declined to comment on the suit. Its website says that clients’ costs for compound drugs had grown sixfold to $171 million a quarter over two years, driven by “exorbitantly overpriced” ingredients.
Meanwhile, at least a quarter of hepatitis C patients with prescriptions for Harvoni, a combination pill from Gilead that includes Sovaldi, “are facing delays or a bottleneck in insurer authorization for pharmacies to fill their prescription,” according to a Nov. 13 report from Wells Fargo & Co. analyst Brian Abrahams.
Express Scripts’ goal is to use its clout to shift market share to drug companies willing to give it better discounts, said Miller, age 57, a kidney doctor who was chief medical officer for Barnes-Jewish Hospital in St. Louis before he joined the company in 2005.
Drug companies that “think they can charge whatever they want” in competitive categories “run the risk of being excluded,” said Glen Stettin, 50, Miller’s colleague responsible for clinical products, including formularies.
Miller and Stettin, the two top doctors at the company, were “intimately involved” with the decision to start the drug exclusions in 2014, Whitrap said. Express Scripts’ main formulary covers 25 million people and is mostly used by employers and union-sponsored health plans. Other clients, including insurer WellPoint Inc., make their own formularies.
Ninety percent of commercial health plans required prescriptions for some specialty drugs — usually high-cost medicine for complex or life-threatening conditions — to be pre-approved by insurers in 2013, up from 82 percent in 2011, according to the Pharmacy Benefit Management Institute, a research group in Plano, Texas. And 74 percent sometimes required patients to try cheaper drugs before more expensive ones, up from 60 percent in 2011, the report said.
Doctors say the process results in treatment delays when paperwork gets snagged, appeals need to be filed, or patients are daunted by the barriers and give up.