Express Scripts 4Q16 Earnings Call Notes

Timothy C. Wentworth

We exist to keep drug costs down

“Let me first say that in my nearly 20 years in the PBM business, I have never been prouder of the results we create, but I’ve never seen more misinformation and absence of facts in the dialog about our role. So let me start with the facts. Drug companies set drug prices and over the last eight years those list prices have increased by more than 200%. If not for us, our clients and patients would be left to pay those costs. Drug makers set prices and we exist to bring those prices down to ensure patients can access the drugs they need and the payers can afford them. We use every tool in our arsenal to do it and are constantly innovating new ways to bring costs in line and create greater patient access.”

We are advocating for key policy changes

“In addition to being ready and able to help our clients adapt, we are also advocating for key policy changes at the state and federal level, including accelerating the introduction of biosimilars, allowing the FDA to prioritize applications based on market need, prohibiting pay for delay, prohibiting coupons from drug manufacturers and eliminating the tax deduction for DTC advertising among others.”

Trying not to get into finger pointing

the way that we continue to evolve the conversation is to be engaged, as I said, that we’ve been in. It’s also to – try to not appear to be finger pointing, but rather to defining solutions which is why we are working in concert with legislators but also to, again, try to work with manufacturers to go beyond just rebates to value-based care ”

Integration of out of pocket maximums had unintended consequences

“there is something that hasn’t been discussed a lot which was an unintended consequence of the ACA and that was that in 2015 for a great number of patients, out of pocket maximums were integrated between pharmacy and medical creating one single large out of pocket max. And for patients, as you can imagine, high deductible plans have been in existence for quite some time, back in the early 2000s. The big change was they typically had out of pocket maxes for pharmacy or other things that didn’t cause pharmacy patients who were not using the medical benefit extensively to have to encounter thousands of dollars of out of pocket maximums. But by integrating these things, we’ve seen more patients and we are beginning to study this and help our plans look at ways to put some guardrails for those patients on those unintended consequences. ”

We’re in a very competitive business, I don’t think we over-earn

“We are in one of the most competitive businesses I know. And so our clients have great choices besides just us. We’re in a competitive business. They have terrific choices. They have consultants a lot of the times that sort of add to the mix of evaluating us and ensuring that we make and keep meaningful promises to them. And so the market does work here. And I think the satisfaction with PBMs is high. If you look at the patients in Med D, satisfaction with PBMs is high and it saved a fortune. So I think there’s a lot of stuff that you could point to. I point to our operating margin versus a – or our net income versus a pharma company’s net income kind of stands on its own. No one writes about that. But again, I don’t think our business over-earns as it relates to that.”