Express Scripts

Express Scripts

In his lawsuit, Spitzer alleges that through New York’s Empire Plan, which provides pharmacy benefits to the state’s current and retired state and local government employees, Express Scripts pocketed $100 million in manufacturers’ rebates, induced doctors to switch patients to drugs that provided a rebate to the company and inflated costs of some generic drugs. Express Scripts has denied all charges and declined additional comment for this story.

PBMs, like Express Scripts, enter into contracts with employers and government health plans to manage prescription drug claims for drugs provided to patients enrolled in the health plan. The States asserted that Express Scripts engaged in deceptive business practices by encouraging doctors to switch patients to different brand name prescription drugs and representing that the patients and/or health plans would save money. But, doctors were not adequately informed of the effect this switch would have on costs to patients and health plans.

PBMs enter into contracts with employer and governmental health plans to process prescription drug claims for drugs provided to patients enrolled in those health plans; negotiate with drug companies to obtain discounts; negotiate discounts with participating retail pharmacies to provide dispensing services; and dispense drugs to patients through PBM-owned mail order pharmacies. In the thirty years since the first PBMs appeared, their services have evolved to include complex rebate programs, pharmacy networks, and drug utilization reviews.

Last year was the first full year to reap the benefit of a significant shift to generics among cholesterol-lowering drugs in 2006, when both Pravachol(R) and Zocor(R) went generic. By the end of last year, 48.9% of all prescriptions for a cholesterol-lowering drug at Express Scripts are for a generic. Overall, 63.7% of all prescriptions at Express Scripts were for a generic.

As part of the settlement, Express Scripts is required to significantly change its business practices. Vermont will receive a total of $372,500 from this settlement. A portion of Vermont?s payment, $100,000, can be used to benefit low-income, disabled or elderly consumers of prescription medications, to promote lower drug costs for state residents, to educate consumers concerning the cost differences among medications, or for similar purposes.

Lower copayments at Express Scripts have encouraged many patients to switch to generics, and the company attributes its 25-cent decline in average copayments to this trend. The company found patients saved an average of $15 every time they moved from a brand name drug to a generic. So while copayments for more expensive drugs rose significantly, those increases were overwhelmed by the savings seen by patients who switched to generics.

In calculating drug trend, Express Scripts includes both member copayments and plan sponsor costs to evaluate total cost. This is instead of focusing solely on plan cost, which can be reduced simply by shifting costs to members in the form of higher copayments. The company also accounts for changes in utilization, the relative rates at which brands and generics are used, price inflation, units per prescription and changes in the mix of chemical entities and dosage forms used.

Today?s settlement, in the form of an Assurance of Voluntary Compliance, asserts that Express Scripts engaged in deceptive business practices by encouraging doctors to switch patients to different brand name prescription drugs and representing that the patients and/or health plans would save money. But doctors were not adequately informed of the effect this switch would have on costs to patients and health plans.