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You are here: Home / Articles / U.S. Drug Benefit Managers Clamp Down on Specialty Pharmacies

U.S. Drug Benefit Managers Clamp Down on Specialty Pharmacies

November 17, 2015 • By Caroline Humer & Deena Beasley

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NEW YORK/LOS ANGELES (Reuters)—In recent days, the largest U.S. managers of private prescription drug benefits have cut off at least eight pharmacies that work closely with drugmakers, intensifying scrutiny of a system that helps inflate drug prices, officials at the benefit managers told Reuters.

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The terminations come from payers who together manage drug benefits for more than 100 million Americans, and they follow disclosures by Valeant Pharmaceuticals International Inc. in late October that one pharmacy accounted for about 7% of its sales.

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“What we had not been aware of, until really the last year, was these type of pharmacies that have a really high proportion of sales from a drugmaker and it was not out in the open,” Everett Neville, senior vice president of supply chain at Express Scripts Holding Co., said in an interview.

The actions are being felt by drugmakers that have come to rely on hefty price hikes to boost profits. Valeant’s closely linked pharmacy, Philidor Rx Services, pressed insurers to pay for expensive Valeant treatments even though much cheaper generic alternatives were available.

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Shares of Valeant have lost more than half their value since its pharmacy ties were made public.

Neville said Express Scripts, the nation’s largest pharmacy benefits manager, has changed the algorithms it uses in its audits to find pharmacies focused heavily on one drug manufacturer and has cut ties with half a dozen such pharmacies in the past week.

Express Scripts and OptumRx, part of UnitedHealth Group, have also found pharmacies engaged in extensive mail-order operations without proper accreditation. CVS Health, the No. 2 pharmacy benefits manager, said in an email that it had reviewed pharmacies with ties to drug manufacturers and was removing those that fell short of its contract. It did not give further details.

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All three of the big benefits managers have quit doing business with Philidor. Neville at Express Scripts was careful to note that the pharmacies being eliminated are not true “specialty” pharmacies that help manage drugs for rare diseases.

“The Valeant-Philidor relationship woke payers up to potential problems in their pharmacy networks,” says Adam Fein, president of Pembroke Consulting, which follows the drug distribution industry. “We are now seeing much greater scrutiny of the independent pharmacies that may not be complying with payer requirements.”

Growth from Price Hikes
For large pharmaceutical companies, U.S. pricing gains have accounted for roughly 46% of worldwide revenue growth over the past three years, according to Sector & Sovereign analyst Richard Evans.

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Filed Under: Drug Updates, Pharma Co. News Tagged With: costs, Drugs, generic drugs, pharmacy, Prescription drugs

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