(Bloomberg) — Express Scripts Holding Co. (Nasdaq:ESRX) is carefully scrutinizing prescriptions for products made by Valeant Pharmaceuticals International Inc. (NYSE:VRX), making sure the pharmacy manager’s rules are being followed.
“We are looking at every single claim for their products,” Steve Miller, chief medical officer for Express Scripts, said in an interview Friday at Bloomberg’s headquarters in New York. “They are getting extra scrutiny.”
Valeant last year was accused of working with a network of pharmacies to boost sales of its drugs and get them reimbursed by health insurers and pharmacy benefit managers (PBMs) like Express Scripts, even when there were cheaper generics available.
The drugmaker has also been under fire for raising the prices of many old drugs. At a hearing last week in Washington, members of Congress criticized the company for its dramatic price increases on two heart medications. A survey for Bloomberg News found 13 Valeant drugs that have doubled or more in price in the U.S. since December 2014, more than any other large company.
Valeant spokeswoman Laurie Little said in an e-mail that “we greatly value our relationships with channel partners and complying with the terms of our managed care contracts has been and will continue to be our priority.”
Express Scripts has already taken action against one Valeant drug, the diabetes medicine Glumetza, whose price rose 800 percent in 2015. The company started blocking reimbursement for Glumetza when a generic version became available this month.
Overall, Valeant makes “a lot of products that are highly priced that have really great generic alternatives available,” Miller said.
Express Scripts reviews prescription claims to ensure that the manufacturer and pharmacies are operating in a manner consistent with its contracts and in the best interests of its clients and patients, spokesman David Whitrap said in a statement. The reviews ensure that patients and payers aren’t spending more on the products than necessary, he said.
At the Congressional hearing last week, Valeant interim chief executive officer Howard Schiller said the company was revisiting its approach to pricing.
“Where we’ve made mistakes, we’re listening and we’re changing,” he told the committee at the hearing. In prepared remarks for the hearing, he said he expected price increases to be much more modest going forward. And in a Feb. 2 statement, the company said it offers hospitals discounts on the two heart drugs of as much as 30 percent.
Merck’s New Drug
Miller lauded Merck & Co.’s approach to its new hepatitis C drug, Zepatier, after the drugmaker put a $54,600 list price on the 12-week regimen. That’s 42 percent lower than the list price of rival Gilead Sciences Inc.’s drug Harvoni, which retails at $94,500. Drugmakers typically offer discounts and rebates to payers that lower the actual cost from their list price.
“I can’t say enough good things” about how Merck chief executive Ken Frazier approached pricing the company’s new drug, Miller said. “That sent a very loud message to the marketplace.”
Still, Miller doesn’t foresee Merck taking much market share this year, since there are contracts in place for drugs already on the market from Gilead (Nasdaq:GILD) and AbbVie Inc. (Nasdaq:ABBV). Gilead and AbbVie have divided up the market by locking up deals with insurers and pharmacy benefit managers, offering discounts to ensure their medications are the first choice.
“What you’ll see is the Merck team doing a lot of negotiating this year, and you’ll see the drug gain traction next year,” Miller said.
Merck said on Feb. 3 during a call with investors that it plans to compete in all segments of the hepatitis C market.
Express Scripts has been a frequent critic of drugmakers. In late 2014, the company helped set off a price war for hepatitis C drugs when it refused to cover Harvoni, in favor of AbbVie’s drug.
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