Molina Healthcare is one of several insurers that has outspokenly argued new FDA-approved specialty drugs such as Harvoni, Sovaldi and Johnson & Johnson's Olysio are “exorbitantly priced but not factored into the calculation” of their capitated rates, according to the company's most recent financial filing. Molina said specialty drugs in particular have been the biggest factor behind the industry's inflated healthcare costs.
“We're running medical ratios in the 89% range, so it's something that is always on our mind right now,” Molina said. “If there's a little bit more competition in the pharmaceutical world, it will be a good thing for health plans and health plan subscribers. I think this is a harbinger of things to come.”
Given St. Louis-based Express Scripts' market share, 20% to 40% of the private payers in the U.S., its decision could impact 15% to 25% of Gilead Sciences' Harvoni market share, potentially cutting revenue for the drug by up to $2 billion, RBC Capital analyst Michael Yee said in an analyst note.
Harvoni, approved by the FDA on Oct. 10, costs $94,500 for a 12-week regimen. Viekira Pak costs $83,320 for a treatment for 12 weeks. AbbVie offered Express Scripts between a 10% and 20% discount, estimated ISI Evercore analyst Mark Schoenebaum.
Brian Henry, a spokesman for Express Scripts, would not comment on if it would reverse its coverage decision for Gilead products if the company agreed to a discount, but did say “we feel the cost (of Harvoni) is too high for our payers.”
Prime Therapeutics, a PBM collectively owned by 13 Blue Cross and Blue Shield Plans that oversees the benefits of 25 million people, also plans to offer an exclusive contract for one company that offers a drug to treat genotype 1 hepatitis C. However, David Lassen, it's CCO declined to say to which company. It plans to make a decision by mid-January after its pharmaceutical therapy board makes a recommendation.
He did say efficacy would be weighed first and foremost over price, followed by price and the willingness of the manufacturer to offer a discount. In clinical trials, Viekira Pak, 91% cure rate compared to Harvoni, which had a 94% cure rate.
Catamaran Corp., another major player in the PBM space with 32 million customers, is taking a targeted approach to its coverage of Viekira Pak. It will add the drug only to selected formularies at the request of the employers and plans that rely on it to manage their drug benefits, Tony Perkins, vice president, investor relations for Catamaran, told Modern Healthcare.
CVS declined to comment on its plans, and a representative from United Health's OptumRX did not respond to multiple requests for comment.
“It remains to be seen how this may impact other managed-care payers as well or if Gilead may find other ways to provide access to these Express Scripts patients like a written doctor letter, intolerance (to Viekira Pak),” Yee said.
“Gilead has been negotiating in good faith with Express Scripts and other payers to ensure patients and health care providers have access to our medications and can make informed treatment decisions,” said a Gilead spokesperson in response to a request for comment. “We continue to engage with Express Scripts and hope to have meaningful discussions that focus on the best interests of patients with hepatitis C.”
Express Scripts' decision is significant because 75% of all hep C infections are genotype 1. There are six strains of the virus. It will, however, allow continued use for Gilead products for customers who have already begun treatment regimens.
Sovaldi, which is ideal for genotypes 2 and 3 of hep C, will continue to be covered for those patients, according to Express Scripts.
Shares of Gilead Sciences was down 11.8% to $95.64 a common share in mid-day trading Monday on the news.
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