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In the latest tussle over rising drug prices, Express Scripts, the nation’s largest pharmacy benefits manager, is excluding an expensive Valeant Pharmaceuticals diabetes drug from its list of medicines that are reimbursed.

In explaining its decision, the benefits manager cited a need to “protect our clients and patients from wasteful, unnecessary” drug spending, according to a note posted on its website. Some industry experts, however, said the move appears to be public posturing to appease the company’s many clients.

Express Scripts pointed out that Valeant increased the price of its Glumetza drug by more than 800 percent last year, but a “more affordable” generic version becomes available this week. The benefits manager also noted Valeant has a history of jacking up prices. Howard Schiller, the Valent interim chief executive, in fact, will testify before Congress this week about the company’s pricing.


As a benefits manager, Express Scripts negotiates contracts for drug coverage on behalf of corporations, government agencies, and unions, among others. This means the company helps determine health plan pricing and access through formularies, or lists of preferred medicines.

But until Valeant was criticized last fall for its dealings with Philidor Rx Services, a specialty pharmacy, which involved allegations of manipulating insurance reimbursements, one expert said most benefits managers were not scrutinizing the drug maker and its pricing. For instance, after that episode, Express Scripts moved to cut ties over similar concerns involving a different specialty pharmacy and another drug maker, Horizon Pharma.


“There’s more significance for public relations than formulary coverage,” said Adam Fein of Pembroke Consulting, which tracks pharmaceutical distribution. “Express Scripts needs to demonstrate to their clients that they’re getting tough with manufacturers, because a lot of health plans are questioning Valeant’s actions. But this is just one drug (that is being excluded). So the news has almost very limited impact on actual drug spending, but it’s a great way for Express Scripts to send a signal.”

Indeed, in the face of rising drug prices, Express Scripts is trying to adopt a tougher public stance and over the past two years has grown increasingly assertive in restricting medicines that are listed on its national formulary. Last year, the company made headlines by playing off drug makers against one another to obtain lower costs for hepatitis C treatments.

Express Scripts, however, cited another reason for its move — a deal that Valeant recently struck with Walgreens Boots Alliance, the big pharmacy chain, to sell many of its medicines at a discount. The benefits manager fears this might encourage the chain to bypass a lower-cost generic and, instead, “dispense Glumetza at a higher cost to consumers,” according to the note.

Fein explained that benefits managers cannot easily substitute lower-cost generics for some Valeant drugs, because the product formulations are not always the same. This can make it difficult for benefits managers to place restrictions on the use of some higher-priced Valeant drugs, he said. And there are early indications that the deal with Walgreens is increasing prescriptions for Valeant medicines.

“So the timing (of the move by Express Scripts) is tied to the deal, as well,” said Fein.

An Express Scripts spokesman noted that most formulary changes are covered during an annual update provided each summer, but that changes are made “as needed during the year.”

It is worth noting that, recently, Express Scripts also tried to put on a tougher face for its clients by warning about prices for new injectable, cholesterol-lowering meds even before they became available. And last year, Express Scripts ended coverage for about 1,000 ingredients used to make compounded medicines, mostly ointments, creams, and powders that are found in topical treatments.