The Express Scripts story: super-pharmacies and the US drug industry 

With the cost of global healthcare soaring – and both Medicare and the National Health Service (NHS) under pressure to optimise services – it is no surprise that drug spending is receiving increased attention from those footing the bill. Some ‘super-pharmacies’ are intent on shifting costs on to patients, but the majority are moving towards new management of formulary categories once thought ‘untouchable’.

Express Scripts is one of the largest pharmacy benefit managers (PBMs) in the US, providing coverage to 25 million Americans, with a portfolio of approximately 3,900 medications. These PBMs act as an intermediary between pharmaceutical companies and patients, and play a crucial role in delivery to the public. As of 2018, the company is the 25^th-largest in the US, and in 2016 declared revenues of $100.752bn.

“PBMs hold a lot of sway in the industry, particularly ones that provide coverage to a large number of Americans,” explains Rahael Maladwala, health analyst for GlobalData. “So it is important for pharmaceutical companies to give them a voice in strategy discussion, in regards to pricing and market access strategy.”

There are 48 drugs being removed from Express Scripts’ formulary coverage from 1 January 2019.

“Many of these include rare disease speciality drugs, however, a lot of the drugs being excluded have biosimilars and generics available,” he continues.

Among the specialty medications being dropped by Express Scripts are Atripla, CSL Behring’s Berinert to treat hereditary angioedema, and five factor VIII products to treat haemophilia.

Sanofi’s factor VIII drug, Eloctate, has relied on US sales for approximately 70% of its revenue generation, but has now been removed in favour of lower-priced alternatives including Shire's Adynovate and Advate. AbbVie’s leading hepatitis drug Mavyret was also excluded from the list, which is bad news for the pharma giant given industry analysts predicted sales to rise in excess of $1bn next year.

In addition to efficacy and safety, value of treatment is now a key factor that drug manufacturers must focus on to in order for a product to be considered for formulary coverage. This will undoubtedly have been a key driver in Express Scripts’ decision-making process.

“However, it must be noted that efficacy and safety are the first factors to be considered and cost-effectiveness only comes into play in areas where multiple drugs are available for a patient,” says Maladwala. "The removal of these drugs, mainly branded, signifies an opportunity for generics and biosimilars to fill the gap with cheaper alternatives, thus reducing costs. Express Scripts was also recently acquired for $67bn by Cigna, and this decision may signify a change in strategy for this ‘super’ PBM.”

With the ‘generic wave’ continuing to flood the market, we can expect to see new, high-profile generic products and biosimilars becoming successful alternatives to once ‘untouchable’ speciality drugs.

However, it looks as though the decision will ultimately be positive for US patients, as by reducing costs Express Scripts has the potential to improve coverage for its subscribers.

“In the long term, this move is likely to be seen as part of a bigger movement of lowering drug prices and moving to an outcome-based pricing system,” adds Maladwala.

The implementation of the ‘Biosimilar Action Plan’ by the US Food and Drugs Administration also looks to encourage the development and penetration of biosimilars in the US market.

“Again this is based on improving the value of treatment and lowering drug prices. I expect schemes and policies such as this will become more common over the next decade,” he concludes.