In the latest fallout over the role that specialty pharmacies play in boosting prescription drug sales, Express Scripts has ended a contract with a company that is used by Horizon Pharma to distribute some of its medicines.
Express Scripts cancelled its contract with Linden Care after determining the mail-order pharmacy was apparently dispensing drugs that are mostly made by Horizon, according to a spokesman. Express Scripts, which is the nation’s largest pharmacy benefits manager, is scrutinizing what it calls captive pharmacies. Those captive pharmacies appear to sell products for mostly one drug maker.
In response, Linden filed a lawsuit  accusing Express Scripts of making “a trumped-up charge that Linden Care is mailing drugs out of state purportedly in violation of [its] contract.” The pharmacy also maintains Express Scripts failed to provide adequate notice that the contract was ended. Express Scripts sent its termination notice  yesterday, Nov. 10.
For its part, Horizon released a statement  saying, “the notion that Linden Care is a so-called ‘captive pharmacy’ of Horizon Pharma is entirely false. Less than 5 percent of our net sales are from prescriptions filled by Linden Care and processed by Express Scripts…And no pharmacy that participates in our primary care patient support programs account for more than 13 percent of our net sales.”
The moves come amid heightened scrutiny of specialty pharmacies, which are regularly used to ship medicines that require special storage or additional patient education. But some drug makers, such as Valeant Pharmaceuticals and Horizon, also use them to dispense more ordinary medicines and to seek larger reimbursement payments from pharmacy benefit managers.
The practice has come under a microscope in recent weeks after Valeant disclosed it had an option to buy Philidor Rx Services, a specialty pharmacy. Those ties  prompted speculation the drug maker used Philidor to inappropriately boost reimbursements. Philidor accounted for about 7 percent of Valeant revenue. The drug maker has since cut ties to the pharmacy, which is closing down.
That relationship prompted Express Scripts and other PBMs, including CVS Health and OptumRx, to stop doing business with Philidor and, more significantly, review their contracts with numerous specialty pharmacies. In the termination letter sent to Linden, Express Scripts maintained that Linden violated its contract because it is primarily functioning as a mail-order pharmacy.
Specialty pharmacies play an important, but little understood, role. Drug makers favor these operations because insurers and pharmacists are less likely to attempt to switch a brand-name prescription to a lower-cost generic. This helps explain why drug makers such as Valeant and Horizon find these pharmacies appealing.
Separately, Express Scripts also filed a lawsuit yesterday against Horizon, seeking $140 million because the drug maker allegedly failed to pay rebates. Horizon maintained the lawsuit stems from a separate dispute that erupted more than a year ago.
Like Valeant, Horizon has also been criticized for its pricing. For instance, Horizon boosted the price of Vimovo pain tablets after buying the rights from AstraZeneca in late 2013. In January 2014, its first day selling Vimovo, Horizon raised the list price for 60 tablets to $959.04, a 597% jump, and earlier this year raised the price again to $1,678.32, according to Truven Health Analytics, which publishes pricing data.