In August of 2014, our Chief Product Officer, Bob Kyle wrote a great blog post about how August is becoming the scariest month of the year for pharma companies because it is the time of the month that payers announce the drug exclusion lists for the upcoming year. On August 3, 2015 Express Scripts announced their 2016 Preferred Drug list Exclusions, and indeed the world got a little more frightening for a few choice pharma companies.

These exclusions are a strong barometer regarding which manufacturers could not demonstrate sufficient value for their products over those of competitors, and are thus relegated to a non-covered status.

Although it was not public that Vivus’ Qsymia was being left off of Express Scripts formulary until this week, the layoffs that they announced last week – halving their sales force, was certainly more than just serendipitous timing. When a company such as Express Scripts, that reimburses approximately 1.4 billion prescriptions a year, blocks a product from market access it is pretty much a death toll.

It is well-known that drug pricing is one of the hottest issues today, and will likely continue to be a topic for the foreseeable future. And with Express Scripts announcement that their formulary decisions will save their insurance-plan customers $1.3 billion in acquisition costs, the drug pricing conversation will only be elevated. However, we at AdverseEvents continue to express caution and concern about the short-term implications of Express Scripts’ exclusions in relation to patient safety, and the long-term downstream medical effects of that drug side effects.

The question is a relatively simple one – does the downstream medical cost of the side effects of the drugs Express Scripts excluded, outweigh the downstream medical costs of the Express Scripts preferred drugs?

After a back of the envelope analysis, the answer appears to be yes. Using RxCost, AdverseEvents’ proprietary algorithm that calculates downstream medical costs associated with AE/drug combinations, we were able to quickly ascertain that on average, the excluded drugs had a higher RxCost per prescription than the preferred drugs, resulting in an average $7.70 savings per prescription.

A table with the classes the most contributed to the savings below.

Average Downstream Medical Cost Savings

In 2014, Express Scripts stated that excluded drugs represented 1% of all drugs on market. If we make the assumption that it also represents 1% of the 1.4 billion prescriptions that the PBM pays for in a year, we can estimate that by making the exclusions that it did, it saved its clients (and the healthcare system as a whole) an additional $107.8 million in 2016, just from downstream medical costs associate with drug adverse events.

Although the total savings is a rough estimate and can’t be precise without access to more information (namely actual Express Scripts' prescription rates for each medication), $107.8 million is a big number that can’t be disregarded and clearly demonstrates that downstream costs from drug side effects should play a role in all formulary decision making.

To learn more about RxCost download our methodology white paper or get in touch with us today to better understand the downstream medical costs associated with your formulary.

 

Subscribe to Drug Safety Monitor



Jim Davis

Jim Davis

Executive Vice President

Jim Davis Linkedintwitter

 

Jim Davis

Written by Jim Davis

As Executive Vice President, Jim is responsible for the commercialization strategy for Advera Health Analytics.