EDITORIAL: Express Scripts went from zero to $67 billion in 32 years, a symptom of American health care costs

St. Louis Post-Dispatch (MO)

March 10--Over the years, as successive St. Louis-headquartered companies have disappeared, there were at least colorful, long histories to recount. Not so with Express Scripts, which on Thursday announced a $67 billion merger that will make it part of Connecticut-based Cigna, the nation's fifth-largest health insurance company. Express Scripts is a mere 32 years old.

That it grew so quickly into the nation's 22nd-largest industrial corporation -- the largest ever to call St. Louis home -- is a testimony to savvy management, but also to the explosive growth of American health care costs, particularly the cost of prescription drugs.

Health care is now 17.9 percent of the American economy; prescription drugs are 17 percent of health care costs and growing faster than any other part. Express Scripts itself has pointed out that since 2008, prices for commonly used household goods have increased 14 percent while prescription drug prices have risen by 208 percent.

In 1986, Barrett Toan, a former director of the Missouri Department of Social Services, and his partners realized that there might be money to be made in managing prescription drug programs for corporate health care plans. Express Scripts became one of the earliest pharmacy-benefits managers. Today it manages prescriptions for 100 million Americans.

Pharmacy-benefits management companies put a lot of corner drugstores out of business. Mom and pop couldn't compete with companies that bought drugs by the truckload. Express Scripts deserves credit for slowing the rate of drug-price increases by insisting on greater use of generic drugs.

Express Scripts also took credit for negotiating rebates from manufacturers of expensive name-brand drugs and passing the savings on to customers. In late 2016, Wall Street critics suggested Express Scripts was keeping the rebates for itself. The company insisted that it passed on 90 percent of the rebates to customers.

No one knows for sure because, like most other parts of the health care industry, the pharmacy-benefits management business is opaque. That no one knows why drugs, procedures, doctors and equipment cost what they do is a big reason Americans pay the highest drug and health care prices in the world.

Politicians, including President Donald Trump, have vowed to do something about it. Instead Republicans went to great lengths to undermine the Affordable Care Act, which at least was trying to slow down rising costs.

So the market will try to do it. Insurance companies have taken over the business, eliminating other middle men in the crowded space between doctors and their patients.

On the horizon, perhaps, is Amazon, the 900-pound retailing gorilla, which may begin selling prescription drugs like it sells everything else.

Rising health care and drug costs are so intractable that, eventually, public outrage will cause the federal government to step in. Express Scripts' 32-year history will be seen as a blip on the way to a real solution.

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