Captive Pharmacies: What We’ve Learned

Nov 23, 2015
Express Scripts routinely monitors our formulary and our network, and we take action when we see manufacturers and pharmacies trying to circumvent the cost-saving solutions that our clients implement.

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Over the past several weeks, media reports have detailed the connections between certain pharmacies and pharmaceutical manufacturers, and, importantly, the steps the two entities have taken to try to circumvent the cost-saving solutions our clients need. And recently, the U.S. Senate initiated its own investigation into these sorts of prescription drug price hikes.

Our focus has consistently been on making sure our clients and patients have access to a broad network of affordable pharmacies that provide great care. We have agreements in place that spell out our relationships. In the vast majority of cases, pharmacies act in the best interest of all parties. However, in some cases, we are finding that “captive” pharmacies, those pharmacies that are either owned by a manufacturer or dispense a high percentage of drugs from a specific manufacturer, are working around cost-savings solutions our clients put in place.

Express Scripts always takes the necessary action to protect our clients and patients from wasteful drug spending. When manufacturers like Horizon Pharma PLC purchased the rights to old generic medications and immediately hiked the prices by more than 500%, we removed those products from our formulary. When certain compounding pharmacies began exploiting a loophole to increase the average prescription cost of a compound from $90 to $1,100, we took the industry’s most aggressive stance to block these clinically unnecessary ingredients. And when Gilead Sciences announced that it would sell its hepatitis C product for $1,000 per tablet, we ultimately leveraged industry competition to save the country an estimated $4 billion this year.

Once again, now with captive pharmacies, we are taking decisive action.

The Difference Between Captive Pharmacies and Specialty Pharmacies

Media reports have been referring to some captive pharmacies as “specialty pharmacies.” However, it’s important to clarify the difference between 1) captive pharmacies that may be operated by manufacturers to push a particular product, or derive the vast majority of prescription volume from one manufacturer and/or product, and 2) legitimate high-touch specialty pharmacies like Accredo that deliver a superior level of specialized care for patients living with complex, specialty conditions. These two business models are very different.

We are reviewing these captive pharmacies on a case-by-case basis to ensure that each is acting in the best interests of our clients and adhering to the terms of our network agreements. Not all captive pharmacies are the same, and not all will need to be removed from our network.

True specialty pharmacies like Accredo are distinct from traditional pharmacies because they coordinate many aspects of patient care to more effectively manage treatment, side effects and interactions with other therapies. Medications dispensed by specialty pharmacies often require special storage, handling and packaging prior to dispensing. These products are usually significantly more expensive than conventional medications and require additional controls to assure that patients take them appropriately. At Accredo, patients with complex conditions receive the truly specialized, high-touch care they need to achieve better health outcomes. Just ask patients like John or Emily.

The products dispensed by some captive pharmacies don’t require special handling, ongoing patient counseling, or FDA safety programs. They are not specialty medications. And the captive pharmacies dispensing these products are not specialty pharmacies.

The Difference Between Patient Assistance Programs and Circumventing Formulary Rules

Patient Assistance Programs (PAPs), like those managed by our subsidiary United BioSource Corporation, help uninsured and underinsured patients receive free medication that would otherwise be cost-prohibitive. These programs serve as a critical safety net that can mean the difference between life and death for many of these patients.

Importantly, PAPs typically are funded entirely by the manufacturer, cost nothing to payers, and do not affect the drug price charged to patients who do not qualify for the PAP.

In contrast, when a captive pharmacy works to circumvent formulary rules to help a patient gain access to a specific drug, the actions of that pharmacy are ultimately increasing the amount that plan sponsors – and the country as a whole – pay for that particular medication.

Protecting U.S. Patients and Payers From Prescription Price Gouging

As these hedge-fund pricing schemes have played out this year on a national stage, it’s clear that some manufacturers have gone too far. These tactics aren’t good for patients. They aren’t good for payers. And they aren’t good for the many drug manufacturers who are bringing innovative drugs to market at sustainable prices.

We don’t need debate on these issues. We need action. And that’s what Express Scripts delivers on behalf of our clients and patients.

Express Scripts routinely monitors our formulary and our network, and we take action when we see manufacturers and pharmacies trying to circumvent the cost-saving solutions that our clients implement. When we see certain medications being priced far above clinically equivalent alternatives, we steer our patients to the more affordable options. When we find pharmacies that are not adhering to our provider agreements, we remove them from our networks.

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