Drug companies’ links with pharmacies draw scrutiny

Drug companies’ links with pharmacies draw scrutiny

"Captive" pharmacies push patients to more expensive drugs.

When prescriptions are written, most patients believe they are getting the most effective drug for a fair price. But a recent investigation found that some pharmacies are delivering more expensive drugs made by a single pharmaceutical company with which it has ties, even when identical yet cheaper generics are available.

The revelations came earlier this week when the country’s largest manager of drug insurance benefits, Express Scripts Holding Company, raised questions about the arrangement between the drug maker Valeant Pharmaceuticals and its partner pharmacy Philidor RX Services. In response, Valeant ended its deal with Philidor, leading the company to suspend its operations, according to Reuters.

Express Scripts and other insurance management firms seek to keep drug prescription costs down by negotiating with suppliers and suggesting patients get generics when they are available. But drug makers looking to maintain profits attempt to steer patients to their products through often undisclosed deals with allied pharmacies.

Using such “captive” pharmacies can allow drug companies to evade restrictions of insurance plans, and push patients towards their brand name drugs, even after their patents have expired and cheaper versions are available.

Drug companies say the partnerships help them verify insurance claims and help patients get the best drugs for their needs.

Valeant has been hit hard in the stock market since the issue has become public. In just over a month the company has lost half of its share value, with investors concerned about news of the company’s price hikes and accusations that it inflated revenue through its Philidor partnership. The company denies the allegations.

Sales of drugs through the pharmacy accounted for about seven percent of Valeant’s third-quarter revenue.

Valeant is hardly the only drug company with such arrangements. Express Scripts and the major drug chain CVS said they were investigating such deals that other drug companies have with allied or captive pharmacies.

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