CNBC
Express Scripts Chief Medical Officer Steven Miller speaks to CNBC in November 2018 about the company’s role in bringing down drug prices.
Not long ago, Steven Miller (not that Stephen Miller) was a bona fide media darling, celebrated in The Washington Post as waging a lonely “battle to stop the wave of high-priced drugs,” and by Fierce Biotech as a crusader “ushering in a new era in drug pricing.” Miller was the chief medical officer at Express Scripts, the leading pharmacy benefit manager and, according to Miller’s profile in a 2015 list of the “most influential people in biopharma,” an institution emerging as the “arbiter of cost-effectiveness in the U.S.”
When the biotech firm Gilead Sciences announced it would be pricing its breakthrough hepatitis treatment Sovaldi at $1,000 per pill, Miller told Bloomberg: “What they have done with this particular drug will break the country.” And when Martin Shkreli famously bought the distribution rights to the 77-year-old anti-infective Daraprim and hiked its price to $750 a pill, Miller contracted a compounding pharmacy to produce a clone it would sell to insurers, on whose behalf Express negotiated the price of just 99 cents a pill.
But as I detail in this month’s issue, Miller’s war on drug price hikes was comically unsuccessful—pharma launch prices have soared 20-fold since the Daraprim debacle. It’s unlikely that Express Scripts, CVS Caremark, or OptumRx—the three rivals that control more than 80 percent of the PBM business—actually want drug prices to fall: As middlemen, they make more money when prices are higher. More insidiously, court documents allege that Express Scripts and various “supply chain” subsidiaries have actually played a pivotal role in the proliferation of high-priced drugs, many of them far less effective than Sovaldi.
In a deposition unsealed last month in an antitrust case against Express Scripts, Miller—who left Express’s parent Cigna last year—defended the company, describing its mission “to make drugs more affordable for Americans” and adding that there were “essentially no other entities in the U.S. marketplace that work to drive down the costs of drugs.” But far from the brass-knuckled negotiator depicted in his fawning media coverage, Miller characterized his own role at the company, which had never employed a “chief medical officer” before him, as “nebulous” from the beginning.
“What I did is I actually went to all the areas of Express Scripts to see how I could add value to them,” he explained. “So HR, how can I add value to our own employee health benefits? For sales and account management, how can I support you in the sales effort? … For government affairs, how can I support them?” As for squeezing price concessions out of Big Pharma, which countless profiles depicted as his primary occupation, Miller repeatedly insisted under oath that he had little direct interaction with pharmaceutical companies, and even if he had, there was little he could do about the tiny sliver of “specialty” drugs he estimated as comprising just 2 to 4 percent of volume but almost half of overall pharmaceutical spending.
For the most part, he explained, such drugs had no obvious direct competitors, and his role consisted mostly of “using the bully pulpit to” try to make it “publicly clear that the price was egregious,” while the company did its best to make sure expensive drugs were “only utilized in the most appropriate circumstances.”
Court documents allege that Express Scripts and various “supply chain” subsidiaries have played a pivotal role in the proliferation of high-priced drugs.
The specific egregiously priced drug under discussion in the deposition was HP Acthar, a 70-year-old, $40,000-a-vial steroid with what Miller described as “limited utilization.” It had been FDA-approved for treating epileptic seizures in infants and acute exacerbations of multiple sclerosis—though it had since been eclipsed by superior drugs for MS—but because it had been approved before the FDA had adopted efficacy standards, there were 17 other “grandfathered” ailments for which the drug’s owner, Questcor Pharmaceuticals, was permitted to market. And it was precisely those indications that generated the majority of Questcor’s revenues at the drug’s peak of more than $1 billion in annual sales.
“I was very clear about not appreciating the price” of Acthar, said Miller, who claimed the drug was “not of much value” for most indications. But its status as the gold-standard treatment for a rare affliction with no alternative treatments meant that Express was a “price acceptor” of the drug, Miller maintained, “because we have no leverage.”
In reality, Express had veritably micromanaged Acthar’s drug pricing strategy since 2007, when a trio of Express subsidiaries inked a contract with Questcor to exclusively distribute the drug to patients and manage all communications with doctors and patients. The effort, as outlined in documents produced in court, would support what Express employees referred to obliquely as an “orphan pricing strategy.” Express and Questcor put a number to its strategy: $23,000 a vial, a price that would almost double in the coming years.
“The increase was a manufacturing decision,” Miller said at the time, placing the blame on Questcor. But in a contract referenced in the deposition, Express Scripts required Questcor to submit plans for increasing the drug’s price in writing, and gave Express the sole right to approve or disapprove any price increases.
Asked if he knew about the sole discretion his employer exercised to bring down the price of the drug, Miller said, “I have no idea what’s in the contract.” Asked if he had ever personally asked any colleagues what could be done to bring down Acthar’s price, he said, “I’m not in the supply chain, so I don’t deal with those negotiations. I assume they do their job to the best of their ability.”
ACTHAR WAS NOT A ONE-OFF: Express Scripts was the exclusive pharmacy supplier of at least 30 high-priced specialty pharmaceuticals. An email produced for the deposition quoted an Express executive boasting about having snagged specialty distribution contracts with Genzyme (the world’s first six-figure drug), Alexion (the most expensive drug in the year 2015), and Celgene (the cancer drug whose price was famously raised more than 20 times to $763 per pill after its launch). The document said the standard distribution fee for a specialty pharmaceutical product was 4.5 percent of sales.
Questioned on another email chain in which Express employees discussed pitching Shkreli on a distribution contract for Daraprim, and setting the price even higher than the $750 a pill he charged, Miller stammered that he was “unaware of the—those—the discussions. I tend—I do not know the—I don’t participate in the discussions of the contracts for the—for the access side of the business.” Asked if he had ever sought “to investigate whether or not Express Scripts was involved with drug companies in allowing them to adopt orphan drug pricing models to raise the price of older medications for limited patient populations,” Miller simply replied: “No.”
In perhaps the most plaintive moment, plaintiff’s attorney Don Haviland read aloud from an email the company had received from Mark Baum, the owner of the compounding pharmacy Express had contracted to develop the cheap alternative to Daraprim that Miller had hailed in The New York Times. With encouragement from unwitting Express employees, Baum had been working on other low-cost projects for Express, including an Acthar alternative, only to ultimately find himself feeling “ghosted” by his contacts at the company. “While we’ve been working with your team on several offerings … to date, adoption has been insignificant,” Baum wrote dejectedly. “We created these formulations with the best of intentions, to ensure patient access to important and sometimes life-saving therapies. Our objective in this regard has been perfectly aligned with that of [Express].”
But it hadn’t. At the same time Baum was soul-searching over his failure to consummate his promising “partnership” with the industry’s sole “arbiter of cost-effectiveness,” the PBM’s real partner was Questcor. Deep down in the fine print of the PBM’s rebate contract with the city of Rockford, Illinois, one of the plaintiffs in the antitrust case, there was a provision called the “HP Acthar Gel Model Policy Guidance.” The provision specified that Acthar was “a covered therapy” for not just its two FDA-endorsed indications but rheumatoid arthritis, systemic lupus, “opthalmic conditions,” and a whole host of other ailments for which Acthar had been unable to demonstrate efficacy in nearly 70 years of use.
Where Miller had touted the company’s vigilant “utilization management” systems of checks, balances, and authorizations as the antidote to unnecessary Acthar prescriptions, the fine print suggested that Express was forcing at least some of its clients to pay for as many unnecessary $40,000 Acthar prescriptions as doctors could write.
“Did anybody come to you and ask your opinion about whether or not the PBM should be requiring plans to cover a host of non-FDA-approved indications for Acthar as a condition for getting a rebate?” Haviland asked Miller.
“This is totally outside my area,” the former chief medical officer replied.
It’s jarring to see the man who spent years offering himself up at think-tank conferences and in the media as a warrior battling high drug prices repeatedly claim that there’s just nothing he can do about it. But what Miller said in that deposition had the benefit of being under oath.
Express Scripts didn’t respond to a request for comment. The case remains ongoing.
