A Gilead Sciences exec took on pharmacy benefits managers earlier this week, claiming that PBMs are the driving force behind high drug prices. That didn't sit well with Express Scripts, the world's largest in that field—and a top exec quickly struck back.
Express Scripts caught wind of recent statements made by Jim Meyers, Gilead’s EVP of worldwide commercial operations, and the PBM not only disputed Meyers' blame for Gilead's pricing but also demanded a dramatic repayment on the company's pricey hep C treatments.
The argument comes as PBMs face unprecedented scrutiny for their role in the drug supply chain. Critics accuse the companies—which negotiate reimbursement deals on drugs on behalf of their employer clients—of incentivizing price increases. Swelling drug rebates enrich PBM revenue and the savings is typically shared with the companies' clients, they say, while consumers pay their share based on list prices and increasing drug costs drive up insurance premiums.
This particular skirmish started when Meyers told Bloomberg that PBMs count on high drug prices to trigger rebates that fill their own coffers. Meyers said he’s never “met, in this entire experience, a PBM or a payer outside of the Medicaid segment that preferred a price of $50,000 over $75,000 and a rebate back to them.”
Responding in a letter to Gilead CEO John Milligan, Express Scripts’ SVP of supply chain and specialty Everett Neville wrote that the drug company sets its own prices. Back in 2014 and 2015, Gilead came under intense criticism for its $84,000 and $94,500 list prices for hep C cures Sovaldi and Harvoni, respectively.
According to Neville, Gilead “only reduced the price ... for employers and health plans once Express Scripts preferred another curative therapy.”
“In none of those scenarios does Express Scripts keep the price high,” he wrote. “You do.”
Now, Express Scripts wants to see Gilead repay all costs above $50,000 per treatment with Sovaldi since its launch. The PBM giant also wants Gilead to set its wholesale acquisition cost—essentially its list price—for hep C meds Harvoni, Sovaldi and Epclusa at $50,000, and waive penalties for including Merck’s competing Zepatier on its formulary.
“If you’re saying that the drug really is worth about $50,000, then it’s only right to make sure payers are made whole for overpaying,” Neville continued.
A Gilead spokesperson declined to comment on the letter.
It’s the latest, and perhaps the most direct, dispute between two companies operating in separate segments of the industry. Amid the controversy over drug price increases last year, attention began shifting to PBMs when Mylan CEO Heather Bresch—under fire for EpiPen price hikes—said drug middlemen were at least somewhat responsible for high prices.
Since then, the National Community Pharmacists Association has called for an investigation into PBMs and Rep. Buddy Carter called the groups the “man behind the curtain” in drug pricing.
But PBMs won’t take the scrutiny without pushing back themselves. Their industry group, the Pharmaceutical Care Management Association, has its own set of proposals, and has been “meeting with key stakeholders all over Washington,” CEO Mark Merritt recently told FiercePharma.
The group’s ideas would cut $100 billion in drug spending over 10 years, according to its calculations. Among its proposals are a shortened biologic exclusivity period, an end to the direct-to-consumer advertising tax deduction, and more biosim and generic use overall.
Back during the launch of new, expensive hep C meds from Gilead and others, Express Scripts’ chief medical officer Steve Miller said tough negotiations—started by Express Scripts—saved U.S. payers $4 billion on the drug class in one year.
Since then, as industry-watchers know, Gilead’s hep C sales have taken a hit to the point where Milligan recently said the company can’t grow without M&A.
Last year, Gilead turned in $30.39 billion in total revenues, a 7% fall from 2015’s $32.6 billion. What’s more, the company is predicting total revenues for 2017 between $22.5 billion and $24.5 billion. If it hits the midpoint, that’d be a 22% fall from 2016.
Harvoni sales slipped 34% last year compared to 2015, while Sovaldi dropped by 24%. Together, the meds lost $6 billion in sales versus the prior year. Now, for 2017, Gilead expects total hep C sales of $7.5 to $9 billion, representing a steep falloff after the products reeled in $14.8 billion last year.
A Gilead spokesperson told FiercePharma last month that “due to increased competition in the marketplace, the actual price paid across all payers has decreased by more than 50%” for Harvoni.
“Today, the volume weighted average price for Harvoni is less than $15,000 per bottle,” he said. “For Medicaid, the average price per bottle is now less than $10,000 for states that provide open access to all patients regardless of fibrosis score. Many patients can be cured in eight weeks, meaning only two bottles are required for a full treatment course.”