Friday, December 13, 2013

Express Scripts Plans a Specialty Drug Price War

According to a new must-read Bloomberg story, Express Scripts plans to start a price war over new hepatitis C treatments. The news follows the release of Gilead’s Sovaldi (sofosbuvir), which reportedly costs $1,000 per pill.

Express Scripts projects that Hepatitis C drug trend will grow by 168% by 2015, so payers are closely watching this test case. When there are multiple treatments in a therapeutic class, can the biggest PBM really control specialty drug costs?

While Express Scripts is talking boldly, the empty threat of blocking valuable medications has come back to life more times than a narcoleptic Jason Voorhees.

Read on for details on the unlucky hepatitis C medications that may be cut (or not) by Express Scripts’ machete.


Gilead’s Sovaldi is not the first novel oral hepatitis treatment to be released this year. Janssen’s Olysio (simperevir) is another new hepatitis C treatment, but is only indicated for patients with the common genotype 1 disease form. By contrast, Sovaldi was approved to treat a major larger patient population—people with gentoypes 1, 2, 3, or 4.

Although Olysio and Sovaldi are the two newest players, AbbVie has a hepatitis C regimen in its pipeline with a 96% sustained virologic rate (SVR) for genotype 1. SVR is essentially a cure rate, so AbbVie’s high success rate may make the drug regimen well-positioned to jump into the fight at any minute, pending FDA approval. These treatments do not appear to be interchangeable.

While existing therapies are only 4% of specialty spend, costs averaged $3,300 per prescription in 2012 (per Express Scripts data).


Express Scripts projects overall specialty drug trend—the change in specialty drug expenditures of a third-party payer—to be 17% to 20% over the next few years. By 2015, hepatitis C drug trend is projected to be more than nine times higher than overall drug trend. (Data are from the latest Express Scripts drug trend report.)

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Despite positive medical outcomes and better adherence, payers will be screaming in terror.


As we note in Express Scripts and the Inevitability of Formulary Exclusion, Express Scripts is getting more aggressive, slicing 48 drugs from its 2014 national formulary.

Here’s the scariest quote about hepatitis C from the Bloomberg story:
“We will identify which drugs can be pitted against each other and make some really tough formulary decisions,” Steven Miller, chief medical officer of St. Louis-based Express Scripts, said in a telephone interview. “If the difference in convenience cannot be demonstrated to have a difference in outcomes, we often recommend coverage of the equally effective, less-convenient product.”

Put another way, Express Scripts does not view more convenient dosing or administration as justification for higher pricing. It's a deeply ironic viewpoint, given the following Express Scripts claim: "$329.0 billion was spent on avoidable medical and pharmacy expenses as a result of patients not being adherent to medication treatments." (source)

Yes, that's $329 BILLION—more than total 2012 U.S. spending on all pharmaceuticals. Hmmmm, how will adherence improve by removing more convenient therapies?

Express Scripts may spook manufacturers into slashing hepatitis C drug prices, but the battle will continue over many sequels.

P.S. Congratulations! If you made it this far, then paraskavedekatriaphobia did not prevent you from enjoying today’s Drug Channels.


  1. Adam,

    In addition to gaining valuable industry insight I also learned the meaning of fear of Friday the 13th. A good start. As always, thank you for your articles. When they come through I always make sure to take time to read them. Have a great weekend!

    Best regards,

  2. Hi Adam,

    How do you think payers will react to Express Scripts's tactics here?

    Obviously, they get upfront savings if Gilead's drugs are cut from the formulary... but at the potential of higher long term expenses to the healthcare system.

    I think similar arguments can be made about a lot of these "pricing for adherence" drugs.

    Do you think payors push back against Express Scripts?