A Conversation With Steve Miller, MD: Come in and Talk With Us, Pharma

The man who has shaken up the pharmacy industry isn’t done yet.

Interview by Peter Wehrwein

You have been called a gatekeeper, judge and jury, cost-fighting ninja, and “among the most feared” by pharma. Which label is the most accurate?

I am a clinician who is passionately concerned about the cost of health care, and that’s been reflected in my career, both before Express Scripts and now. So I don’t see any of those as being quite accurate. But I find them more acceptable than some of the things I’ve been called.

What would you call yourself?

A concerned clinician.

You’ve been at Express Scripts since 2005, but now you’re in the media a lot, sort of in an adversarial role. Did this come naturally to you?

The first year I came to Express Scripts, we did something that was almost equally newsworthy and audacious as what we are doing now. We were the first ones to take Lipitor off the formulary. At the time, it was the biggest drug from the biggest pharmaceutical manufacturer. But when we looked at the data, it was clear that Lipitor was a great drug, but there was no clinical data that said it was any better than any of the other statins. And simvastatin was about to go generic, so we looked at that as a great opportunity to actually demonstrate that PBMs could move market share and truly drive tremendous savings for patients and plan sponsors.

That one move alone—moving Lipitor off our formulary—was a huge effort because we had 10% of our patients on that product. But it saved a billion dollars for our patients in 2006.

So the Lipitor decision set the stage for what followed, the formulary exclusions?

Remember, after the Lipitor decision, we got into a disagreement with Walgreens.(Because of a contract disagreement, Walgreens was not in the Express Scripts network for eight months in 2012.) At that time, Walgreens was selling 20% of our retail prescriptions. The tools that we had developed to communicate with doctors, patients, and pharmacies after the Lipitor decision allowed us to move our market share out of Walgreens into other pharmacies. Having superior communication tools allowed us to almost seamlessly move those patients without blowback.

Then, you fast-forward to our 2013 formulary exclusions. We were able to exclude, at that time, those 48 drugs, and again, do it with essentially no blowback and huge savings for our plan sponsors and our patients.

No blowback?

I won’t say zero but, you know, our clients will tell you that there has been very little noise in the HR department and very few doctors even calling for medical exceptions. Because remember, it’s not just what you have on the formularies. It’s also all the medical rules you design around it to make sure that those exceptional patients that need a certain drug can still get it.

What went into the 2013 decision to exclude those 48 drugs?

You had a lot of coupon programs going on. Remember, coupon programs are different from patient assistance programs. Patient assistance programs help patients get the drugs they need, and we are very supportive of them. But coupons exist only when there are competing drugs in a marketplace and you’re trying to preserve your market share. The trouble with coupons is that they undermine the three-tiered benefit that plans put in place. The company doesn’t really want the 5% or 10% that the patient is contributing. They want the 90% that the plan sponsor is contributing.

Did all 48 of those drugs have coupon programs?

Over 90% had coupons at the time.

So the exclusions were just to push back against coupon programs?

Part of it was also to extract lower prices, because the manufacturers were now convinced—because of what we did with Walgreens and the statins—that we could actually deliver market share when we were motivated to.

So we went to the companies, and we told them, “We’re going to be pitting you all against each other. Who is going to give us the best price? If you give us the best price, we will move the market share to you. We will move it effectively. We’ll exclude the other products.”

But I told you I am a clinician at heart. We’ve always first made sure that any changes make clinical sense. We have an 18-member pharmacy and therapeutics committee that has no Express Scripts employees on it and is self-governing—if one member goes off the committee, they pick the replacement. They are completely independent.

So you’re at 74 excluded drugs now. Do you think you’re approaching an outer limit of what can be excluded?

One of our competitors has up to 200 drugs on the list. There’s this balance between disruption and savings, and there’s no reason to go after trivial drugs that aren’t going to drive savings, just to have a long list.

Let’s turn to the hepatitis C drugs. There are other costly specialty drugs out there. Was there something special about the hepatitis C drugs?

There are many expensive drugs that we pay for, and we do that without complaining at all because we think it’s appropriate. The difference with hep C was that this was the first time we had an extraordinarily high-priced drug for an extraordinarily large population. When you price a drug at almost $100,000 for a treatment regimen, and you have 3.2 million people that could benefit from it—there’s never been a drug that potentially could generate over $300 billion in sales. I know they weren’t all going to be treated in one year, but even if you treated them over a decade, that’s an enormous increase in drug spend for the country.

You’ve said that the pricing came as a shock, and that Gilead hadn’t discussed the cost before it was announced. Should they have?

We’ve actually now come out with principles about how we believe we can achieve a sustainable model for pharmaceutical development in this country. One of our recommendations to the industry is to use good judgment when you bring products to the marketplace. We’ve said, “Listen, come in and talk to us prior to launch because we can give you insight as to how the payers will look at this.” You have advisory boards for doctors, you have advisory boards for patients, but most companies don’t really have payer advisory boards. And we’re willing to play that role.

You have companies taking you up on this offer?

Since we’ve made that offer last summer, the number of meetings I’ve been having with the pharmaceutical manufacturers is extraordinary. Many of them are reaching out to us, and in the last few months, we’ve even had pharmaceutical companies’ boards of directors reaching out to us to speak at their board meetings.

You see this as an outcome of the tough stand on Sovaldi?

I believe, absent what we’ve done with Sovaldi, these discussions probably would not be occurring, especially at the pace they’re occurring today.

Let’s talk about Viekira Pak. If I had hepatitis C, why should I welcome your decision to put Viekira Pak on your national formulary? It seems like it’s a lot less convenient than Harvoni: 24 weeks versus 12, several pills versus one.

The vast majority of the patients actually can take Viekira Pak for 12 weeks. So you’re talking about three months, and you’re talking about taking a drug twice a day versus once a day. The cost difference even today is still over $10,000 for a treatment course. These are motivated patients who want to be cured. The vast majority are telling us, “Yes, we have followed the debate, and let’s just get on with the treatment.”

We knew some people would say patients will be less adherent. But we put in place adherence guarantees. We will refund the payer the money if the patient is not adherent. The reason we’re able to do this is that we have predictive models that indicate which patients are going to be less adherent. We’ve developed phone apps for those patients. We’re able to surround them with specialist pharmacists, social workers, and nurses. We’re even willing to make calls out to the patient every day to help them stay adherent.

Could you put a number on the amount of money you’re saving so far?

We believe that for our plans alone, for Express Scripts, we’ll save about a billion dollars this year. And because of the impact it’s had on the entire market, it will save about four billion.

How much of a discount did you get from AbbVie?

We’ve never disclosed our discount. Viekira Pak is for our patients on our national preferred formulary. But we also have contracts with Gilead for our 60 million members who aren’t on our national preferred formulary. And as you know, Gilead has announced that their average discount is 46%. So you can imagine the cost savings that we’re having for all of our patients across our entire book, regardless of whether they’re taking the AbbVie product or the Gilead product.

Are you saying the AbbVie discount is close to what you’re getting from Sovaldi on those other accounts, so it’s roughly 46%?

Gilead has proudly said that they’re not having to discount as deeply as AbbVie, right? The discounts for both products are obviously substantial.

Are you in discussions with manufacturers of the PCSK9 inhibitors? Is this going to be Sovaldi, part 2? Or do you see PCSK9s playing out differently?

It’s already playing out differently. These manufacturers—Amgen, Sanofi, Regeneron—they have been watching the hepatitis C battles. We’re already in very substantial discussions with them.

Isn’t it the same math as hepatitis C drugs­—a lot of people with the condition to be treated, an expensive medication?

There are 71 million people with high cholesterol in the U.S. And cardiovascular disease and stroke are the top killers. So, it’s a really important category, which potentially is going to add a lot of spend. But if you’re able to get the price to an appropriate level, and you’re able to target it to just those patients who will truly get the greatest value from it, then we think we’ll bring true value to society.

Oncology is much more complicated to manage than many other therapeutic areas… In cancer, how do we judge effectiveness?

In an interview you did recently you said that you’re gearing up to take on the oncology drugs. That is a tough area to take on.

Oncology is much more complicated to manage than many other therapeutic areas. Hep C—it’s somewhat bimodal. You’re either cured or not cured. In cancer, how do we judge effectiveness? Some cancer agents are really effective and prolong survival. Others just make you feel better, but you still die in the same amount of time. Some cancer agents may shrink your tumor but have no survival benefit. Are all of those good responses? And then there are all the emotions around cancer. So you’re exactly right. This is a much tougher area to take on.

You also mentioned “accumulating the keys to the puzzle” in that interview.

One of the keys is medical drug management, which means that we were advising plan sponsors what should be covered under the medical benefit, and what drugs should be covered under the pharmacy benefit. There are certain drugs, however, that need to stay under the medical benefit. So, several years ago, we created another product called medical benefit management, where we’re doing the prior authorizations for a drug, even though they’re going to be paid for by the medical benefit.

Then, a couple years ago, we added site-of-care management, where we’re able to move drugs out of the hospitals into infusion centers, and out of infusion centers all the way into people’s homes.

One of the things we’re most proud about is our therapeutic resource centers. We have specialist pharmacists in cancer who deal with our cancer patients. And we have subdivided it where we have pediatric cancer specialists, breast cancer specialists, solid tumor cancer specialists, and leukemia/lymphoma specialists. Our cancer specialist pharmacists often have more experience than even a great oncologist. Because, for instance, if you’re at Memorial Sloan Kettering and you see 50 brain cancers this year, my pharmacist is supporting Memorial Sloan Kettering, MD Anderson, Siteman Cancer Center here in St. Louis, City of Hope in California, so they have even more experience.

We really believe that in the coming years, we’re going to start influencing both the pricing and the quality of care in oncology.

You played hardball with Sovaldi and Gilead. Do you see yourself playing hardball with oncology drugs?

Well, there’s definitely opportunity there. There are more and more products that are overlapping in their indications, and as you know, one of the great things we do is we take a very data-driven approach. We put clinical concerns first. And when given the opportunity to pit drugs against each other, we do that. And, historically, oncology hasn’t had nearly the opportunity to do that. You now have a lot of treatments for kidney cancer, for prostate cancer, for different leukemias. And we believe there’s going to be great opportunity to impact pricing but also provide great care.

The savings for America from biosimilars over the next decade could be $250 billion.

A little bit on biosimilars. How hopeful are you about them?

I’ve been advocating for biosimilars very aggressively over the last eight years, and we just testified in front of both houses of Congress. Because the importance of biosimilars is this: For the last five years, the drug spend in the U.S. has been fairly flat because for every patient that needs to go on one of these new expensive drugs, we’ve been able to move 10 patients to generic drugs. Now that generic fill rates are over 80%, there’s no longer that opportunity to move patients to generics. So every new drug is falling directly to the bottom line, which means drug spend in the U.S. is going to go up to $500 billion over the next several years if we don’t do anything. The savings for America from biosimilars over the next decade could be $250 billion. That buys a lot of hepatitis treatment, a lot of cancer treatment, a lot of cholesterol treatment. So biosimilars can do great things for this country because they can make the same headroom that generics made in the past.

You’ve talked up mail order pharmacy.

There are a couple of things you can’t use mail order for. You can’t use it for your acute prescriptions. If you have an infection today, you want to get your antibiotic today. Or if you break your leg, you need your painkiller today. But 60% of prescriptions are for chronic medications, and all of those should be coming through the mail.

Just look at the increased adherence that you get with mail and the avoidance of errors. When you go to the retailer, the chance of you having the wrong medicine in the bottle is about 1.7%. We fill prescriptions with Six Sigma perfection. We make one error per million prescriptions. So the number of prescriptions we fill prevents two million errors from reaching a patient every year. So for us, we believe that mail order is not just a great solution now, but an even better solution for the future. And it holds down costs. We’re really bullish on mail order.

PBMs have been criticized for not being more transparent. Why aren’t you more transparent, especially with respect to spread pricing?

That criticism actually comes from competitors in the supply chain. It doesn’t come from our clients. Our clients actually know their pricing; they can audit their contracts; they audit our contract. So we actually provide transparency to our clients.

Aren’t you the classic middleman that people always complain about?

Well, with hepatitis, we brought about four billion dollars worth of value. It gets pretty easy to demonstrate the value we bring.

It seems like PBMs, and maybe Express Scripts in particular, have picked up the mantle of managing health care costs. Why is this happening now?

I think because of the continued escalation of cost, you need a PBM now more than ever. And what a best-in-class PBM like Express Scripts does really ensures great health outcomes and more affordable costs.

But why now?

I think the cost of health care is so extraordinary. You’re talking about almost $3 trillion in health care spending. On the medical side, there are very few examples of effective control. I think people are paying so much attention because we’re being successful and effective.

Did something change that made you more effective?

When I joined the company, we represented 12 million members. We’re at 85 million today. That gives us extraordinary sway in the marketplace. If you think about any other aspect of health care, no one else has that many lives that they can represent.

You’re persuasive that Express Scripts improves access and maybe improves people’s health. But this success of yours, maybe it comes at the expense of pharmaceutical industry innovation.

I’m a basic scientist by training. I started in primary drug discovery. I care passionately about the pharmaceutical industry. I hold many patents with pharmaceutical manufacturers from my prior work.

If we hindered innovation, that would be a very bad outcome. What we do actually spurs innovation. We will reward companies that bring us innovative products, and we will reimburse them appropriately. But if you come out with a me-too product, you’re obviously going to be pitted against someone else, and you’re not going to benefit from that. We believe that our effectiveness is the reason you’re seeing so many new products come to market. That’s why there are 5,400 drugs in clinical trials today and more drugs being approved by the FDA.

So, unlike what people are saying, we actually foster innovation. And, as you know, the pharmaceutical manufacturers are making record profits these days. They’re doing just fine.