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Express Scripts targets new migraine drugs to change U.S. pricing dynamic

[April 24, 2018] By Deena Beasley

LOS ANGELES (Reuters) - The largest U.S. manager of prescription benefits is telling drugmakers that the current pricing model is broken, and taking aim at Amgen Inc and other makers of new migraine medicines to try and fix it.

Express Scripts told Reuters it is pressing them to forego the usual strategy of setting a high U.S. list price, then lowering the cost for health plans through hefty rebates. It is also seeking a refund if the drugs don't work within a defined timeframe. The shift could help Express Scripts and other pharmacy benefits managers (PBMs) bring prices down, and deflect growing criticism of their role as "middlemen" in the drug supply chain.

The Trump administration and members of Congress have demanded that PBMs pass on more of the rebates they receive to consumers outraged over rising costs at the pharmacy counter. Many Americans now have health plans with higher deductibles or co-payments, making them responsible for more of their medical costs.

Express Scripts is advising drugmakers to take that shift into account as they launch a new class of migraine drugs.

"If your expectation is that you are not going to actually get that high list price, then don't do that to patients who have high co-pays," Chief Medical Officer Steve Miller said in an interview, describing his message to Amgen and its rivals. "Let's be more balanced. Let's get back to where gross-to-net is not so different." Amgen's Aimovig is expected to be approved next month, followed by similar drugs from Teva Pharmaceutical Industries Ltd and Eli Lilly & Co that the companies say could benefit up to 4 million people in the United States.

The injected therapies interfere with the function of a molecule involved in the processes that kick off a migraine, such as dilation of blood vessels in the brain.

Wall Street analysts expect Amgen to announce a list price of up to $10,000 per year for Aimovig once it is approved, setting the tone for competitors.

But Express Scripts and other PBMs restrict access to new drugs they deem too expensive, asking doctors to provide detailed evidence of why a specific patient may benefit, requiring the use of other drugs for a period of time or favoring cheaper rivals when available.

Drugmakers could face similar issues with the new migraine treatments, Miller said: "Should they price these things too high they will probably not be able to achieve much market share."

Express Scripts is also pushing Amgen and its peers to refund two-thirds of the cost of a migraine drug if a patient stops treatment within 90 days because it didn't work or caused major side effects.

Such guarantees are becoming more prevalent for older drugs with competing products on the market, including diabetes and hepatitis C therapies. It would be unusual to introduce them for the first drug in an entirely new class of therapy. Amgen, which will market Aimovig in partnership with Novartis, declined to comment on talks with Express Scripts. Research chief Sean Harper said in a recent interview that payers share blame for the current pricing model.

Their demands for ever-larger rebates has forced manufacturers to use higher list prices as a benchmark, he said.

"It is a ridiculous situation that we are in," Harper said. "No one is paying the list price, but patients are exposed for a period of time" until they pay off their insurance deductible.

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An Amgen sign is seen at the company's office in South San Francisco, California, U.S., October 21, 2013. REUTERS/Robert Galbraith/File Photo

TAKING OUT COSTS

Rising U.S. healthcare costs, the most expensive worldwide, are straining budgets for families, employers and government agencies. That has created new pressures within the industry to control costs.

To that end, Express Scripts has agreed to a buyout from health insurer Cigna Corp, while PBM rival CVS Health Corp plans to buy insurer Aetna Inc .

In interviews with Reuters, smaller PBM Abarca Health and insurer Highmark Health said they were adopting similar tactics to Express Scripts in negotiating coverage for the migraine drugs. CVS declined comment.

Teva said it was evaluating the pricing environment for its migraine drug. Officials at Lilly did not respond to a request for comment.

The stakes are high for Amgen, which has struggled to grow revenue in recent years.

The biotech company's last potential blockbuster, high-priced cholesterol treatment Repatha, has been stymied by PBMs who questioned its value compared to generic statins that cost $100 per year.

Repatha and rival Praluent, sold by Sanofi and Regeneron Pharmaceuticals, launched in 2015 at list prices near $14,000 a year and were expected to be billion-dollar products. But Express Scripts and other payers have rejected most prescriptions written for the new medicines while awaiting proof that they lower the risk of death.

As a result, Repatha sales totaled $319 million last year, while Praluent had sales of $195 million.

"If Amgen and Sanofi had it to do over again, I think they would have priced at half the list price and made a whole lot more money," said Jason Borschow, chief executive officer at Miami-based Abarca.

Aimovig is far more effective at preventing migraines than current treatments, mainly low cost generic drugs. Recent studies have shown that Aimovig reduces episodic migraines by at least half in around 50 percent of patients.

The Food and Drug Administration is expected to decide on Aimovig by May 17. The agency's decision on Teva's treatment fremanezumab had been expected in June, but that may be delayed due to manufacturing issues. A ruling on Lilly's galcanezumab is expected later in the year.

Amgen will report quarterly results on Tuesday afternoon.

(Editing by Michele Gershberg and Edward Tobin)

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