Report: Drugmakers facing steep pressure from payers to curb costs

The nation’s largest manager of employer prescription drug plan has been aggressively negotiating prices with pharmaceutical companies, in what Wall Street notes as a continued trend of pricing pressures facing drugmakers. Reuters reports that Express Scripts on Monday came to a more favorable agreement with AbbVie Inc’s recently approved hep c treatment and largely will […]

The nation’s largest manager of employer prescription drug plan has been aggressively negotiating prices with pharmaceutical companies, in what Wall Street notes as a continued trend of pricing pressures facing drugmakers.

Reuters reports that Express Scripts on Monday came to a more favorable agreement with AbbVie Inc’s recently approved hep c treatment and largely will not cover Gilead Sciences Inc’s rival treatment after two years of stalled negotiations.

“The move threatens to undermine profits at Gilead, and was viewed by Wall Street as a sign that other major biotechnology players, including Amgen Inc and Biogen Inc, will face steeper U.S. pricing pressure from insurers,” Reuters reported. “Other drugmakers without potentially transformative new products, such as Shire Plc, Novo Nordisk and Theravance Inc, may also be particularly vulnerable, analysts said.”

Shire, Novo Nordisk and Theravance did not respond to the news agency’s requests for comment.

Throughout 2014, St. Louis-based Express Scripts excluded 44 medications from its reimbursement list. It has increased that number to 66 for 2015.

From Reuters:

Express Scripts will further expand the number of medicines it won’t cover for 2016, including treatments for common illnesses such as diabetes, pulmonary hypertension and arthritis, said Chief Medical Officer Dr Steve Miller, in an interview earlier this month. In some cases, Express Scripts could drop coverage for newer specialty medicines in the biotechnology field, he said. The timing on specific drugs will depend on when new competing drugs with similar clinical benefits are approved for the U.S. market.

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The prospect of having their drugs dropped from Express Scripts’ biggest “formulary” list of covered medicines has prompted some leading pharmaceutical makers to discount their prices, Miller said.

Express said it’s acting in the interest of its employer clients who are looking to curb their own healthcare spending. Savings so far have curbed spending by $1 billion a year, according to Miller.

CVS Health, the second largest pharmacy benefits manager, is similarly excluding 95 drugs from its reimbursement list next year, up from 72 in 2014, in a move that could save plan sponsors more than $3.5 billion over three years dating back to 2012.

The effect is already being felt by such Big Pharma players as AstraZeneca Plc and Sanofi. Both companies warned recently that the need to offer U.S. price discounts on some of their biggest brand-name medicines will hurt 2015 sales.

Insurers are pushing back against prices in other categories, including blood thinners and even HIV drugs and multiple sclerosis treatments, where there are multiple options for doctors and patients, observers said.