Express Scripts makes a bold cost-cutting move against Daraprim but will others follow suit?

Express Scripts performed a remarkable service for the healthcare sector last week. It's probably too soon to tell how it will impact healthcare delivery and costs, but it remains telling nonetheless.

The company offered to hospitals and other providers a low-cost compounded alternative to Daraprim, a 62-year-old drug that experienced a 50-fold price increase earlier this year.

"We believe we now have an extremely cost-effective way to provide access to a Daraprim alternative," said Steve Miller, M.D., Express Scripts' chief medical officer in a statement. "We will share our solution with other payers to make sure all appropriate patients around the country have access to the treatment they need at the lowest possible price."

The cost is the equivalent of $1 a pill. That compares to the $750-a-pill Daraprim currently costs. Indeed, the Express Scripts price is even much lower than Daraprim's original $13.50 a pill pricetag before its huge price increase. The use of this compounded medication could theoretically reduce a hospital's cost of treating a patient with Daraprim from as much as $40,000 to less than $60.

In other words, a drug behemoth on track to report $100 billion in revenue this year--more than double its total from 2010--apparently declared that enough was enough regarding the cost of drugs (or for one drug, at least). It was a major rebuke to the current owner of Daraprim's rights, Turing Pharmaceuticals.

Express Scripts probably would not have taken this measure save for Turing's CEO, 32-year-old Martin Shkreli,  who put a human face to the drug sector's recent pricing practices. But what Turing did to the price for Daraprim is not without precedent. Valeant Pharmaceuticals International also recently jacked up the prices for two cardiac drugs widely used by hospitals, Isuprel and Nitropress. Questcor Pharmaceuticals raised the price of a drug primarily used to treat gout from $50 to $28,000 per vial--that's a 560-fold increase.

But when the media covered these jackups, Valeant and Questcor trotted out a corporate spokesperson for a couple of phone interviews, or did nothing at all. Shkreli not only went on television to remorselessly spin his rationale, but he engaged in furious battles on social media.

That left pharma giants such as Express Scripts with a couple of choices: Hunker down and hope the whole pricing issue went away or try to paint themselves as more benevolent than their new cover boy. Given that Express Scrips only issued about 350 regimens of Daraprim last year, severely undercutting Turing's price made the most sense from both a fiscal and publicity standpoint.

Whether this is a one-off or not remains to be seen. But the healthcare sector could use a lot more actions like those Express Scripts took last week. But I'm not likely to hold my breath waiting for the next one to happen. - Ron (@FierceHealth)

 

 

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