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The rising cost of prescription drugs has come under the spotlight in recent months, with drug price sticker shock and pharmaceutical companies' pricing practices the subject of numerous congressional panels, a presidential campaign talking point and a thorn in the side of employers working to rein in benefit costs. Dr. Steve Miller, chief medical officer for the nation's largest pharmacy benefit manager, Express Scripts Holding Co., is at the forefront of the conversation. Business Insurance Staff Reporter Shelby Livingston spoke recently with Dr. Miller about the PBM's focus for 2016 and beyond. Edited excerpts follow.
Q: What are the major drivers of prescription drug spending right now?
A: On the traditional oral solid drugs, it's diabetes. Diabetes is going up at a tremendous rate, and it's now become the single biggest spending category for plan sponsors. And on the specialty side, it's actually the anti-inflammatory drugs — those drugs used to treat rheumatoid arthritis, Crohn's disease and systemic lupus.
Q: Express Scripts has worked to lower the cost of hepatitis C drugs and cholesterol drugs. You're also starting to practice indication-based pricing with costly cancer drugs. What are you going to do about the cost of diabetes and anti-inflammatory drugs?
A: The first biosimilar insulin will come to the market this year for (diabetes drug) Lantus, and we've been preparing for this for some time. We have Lantus as our preferred insulin, so it'll be a lot easier for ... our plans to switch people to the biosimilar for Lantus when it comes to the marketplace. Insulin is one of these really expensive drugs ... so we think that this year we'll be able to come up with a pretty exciting program to help our plans when it comes to their spending for diabetes. Also, the indication-based pricing has been working well for us as an experiment for cancer (treatment). And so we're also looking at the possibility of expanding indication-based pricing into the anti-inflammatories, probably for 2017.
Q: Express Scripts' latest drug report said spending in 2015 grew 5.2%, about half of the 2014 growth in spending. Is this the start of a new downward trend in drug spending?
A: We believe that it will moderate for a period of time, but it is not time to relax. Plan sponsors have got to continue to be aggressive in the programs they put in place. Otherwise, they will see double-digit growth come back.
Q: Can Express Scripts continue to be effective as a stand-alone PBM amid industry consolidation?
A: We have tremendous scale, which allows us to get the best deals for our plan sponsors from both the pharmaceutical manufacturers and also the pharmacies. If any pharmacy chain ever becomes too large, we're able to move our patients and ... get the lowest cost.
Q: The contract dispute between Anthem Inc. and Express Scripts over drug pricing has raised questions about transparency in the PBM industry. Do you think there's a problem with it?
A: We want our patients to fully understand what their benefit is and what their costs are going to be. We want our clients to have transparency. What we don't want is our competitors to know what the prices are. If we had to let the pharmaceutical companies know the price we were being offered from another pharmaceutical company for hepatitis C, would we have been successful to create a price war there? The answer is probably not. Gilead (Sciences Inc.) would not have gone any lower (on its price for hepatitis C treatments) than they had to if they knew what the AbbVie (Inc.) price was.
Q: Does the Anthem lawsuit against Express Scripts have any merit?
A: The current Anthem leadership was not the same leadership that was there when we cut this deal years ago, and so obviously they are trying to renegotiate.
Barry Dillard serves on the Risk & Insurance Management Society Inc.'s board and is the director of claims management for the Walt Disney World Resort in Lake Buena Vista, Florida. There, Mr. Dillard, who is a member of RIMS' Central Florida chapter, leads a team of cast members who manage all aspects of the company's claims management program, including compliance operations, workers compensation and general disability claims. Mr. Dillard also teaches business management courses as an associate professor at the University of Phoenix. He received a bachelor of science in marketing from Hampton University and a master of business administration from Webster University. Mr. Dillard recently spoke with Business Insurance Senior Editor Mark A. Hofmann about his professional life and his service with RIMS. Edited excerpts follow.