Exclusive: Beyond Valeant, U.S. payers scrutinize other drugmaker ties to pharmacies

[October 31, 2015]  By Deena Beasley
 
 LOS ANGELES (Reuters) - Express Scripts Holding Co, the largest U.S. pharmacy benefit manager, is reviewing pharmacy programs run by AbbVie Inc and Teva Pharmaceuticals Industries Ltd after finding questionable practices at Valeant Pharmaceuticals International Inc's partner pharmacy, Philidor Rx Services.

Express Scripts and other big managers of prescription medicine benefits for health plans said on Thursday they would no longer work with Philidor as concerns mount that Philidor was improperly directing drugs made by Valeant to patients.

Valeant, which has headquarters in Quebec, has since said it was cutting ties with Pennsylvania-based Philidor, and that the pharmacy was suspending operations.

A handful of other drugmakers operate their own pharmacies and ship drugs directly to patients. Many of the rest employ independent specialty pharmacies that can haggle with insurers and link patients to programs under which drugmakers cover their out-of-pocket costs.

Such tactics can allow drugmakers to work around reimbursement restrictions from Express Scripts and other insurers, which are directing patients to cheaper generic versions of widely-used medicines to save costs.

Health insurers, faced with sharply rising drug costs, are increasing their oversight of prescription drug pricing, which has also become a key issue in the 2016 presidential election.

"We are reviewing and evaluating all similar captive pharmacy arrangements that we know of and will work to identify others," said Brian Henry, a spokesman for Express Scripts. He defined a captive pharmacy as one that derives the vast majority of prescription volume from one manufacturer or one product.

AbbVie said its wholly owned Pharmacy Solutions business aims to help patients and doctors verify insurance coverage in certain instances for drugs such as its widely-used rheumatoid arthritis treatment Humira. The company said the program accounts for less than 0.2 percent of its U.S. sales.

"We believe that Pharmacy Solutions does provide a level of service. We don't see any change at this time," said AbbVie spokesman Greg Miley.

Teva's Shared Solutions program helps multiple sclerosis patients access its Copaxone treatment, which has recently begun to face competition from generics. The company said in a statement that approximately 0.5 percent of its sales flow through the company's pharmacy.

Both AbbVie and Teva did not respond to requests for further comment.

CVS Health, the second-largest pharmacy benefit manager, also said it is continuing to investigate other pharmacies to uncover inappropriate billing and dispensing activities.

Erik Gordon, a professor at the University of Michigan's Ross School of Business, noted that independent specialty pharmacies provide an important service by dispensing expensive and complex products that require special handling, such as cancer treatments.

That is different from examples like Philidor, he said.

"Captive specialty pharmacies often are a vehicle for drug company parents to push their own products, especially products that are off patent and face cheaper competitors," Gordon said.

Shares of Valeant have lost more than half their value since mid-September as the company came under fire on several fronts, such as evidence of extreme price hikes for several of its drugs and allegations that it used Philidor to inflate revenue and circumvent insurer controls on high-cost prescriptions. Valeant has denied the accusations.

Valeant said sales of its drugs through Philidor, including acne medicines and a treatment for toenail fungus, accounted for about 7 percent of its total third quarter revenue.

(Reporting by Deena Beasley; Editing by Michele Gershberg, Chizu Nomiyama and Mary Milliken)

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