In its crusade to contain increases in drug spend, CVS plans to exclude even more drugs from its standard formulary in 2017, including branded oncology drugs. It will also replace two longstanding biologic treatments with similar “generic” versions—the only two such versions the FDA has approved thus far.
The nation’s second-largest pharmacy benefit manager (PBM) has targeted 35 additional drugs to exclude from its 2017 formulary, bringing the total to 131. Some of the 124 drugs excluded from the 2016 CVS formulary will be back on the 2017 formulary.
Among the oncology drugs CVS will not cover next year are Medivation’s Xtandi (enzalutamide), which is a treatment for advanced prostate cancer, and two leukemia drugs by Novartis—Tasigna (nilotinib) and Gleevec (imatinib).
CVS is also excluding Amgen’s Neupogen (filgrastim), a biologic treatment used to decrease the risk of infection in patients undergoing chemotherapy, replacing it with Sandoz’s biosimilar, Zarxio, which the FDA approved in March 2015. In addition, Sanofi’s diabetes treatment Lantus (insulin glargine injection) is being replaced with Eli Lilly’s Basaglar. The FDA granted Basaglar final approval last December and considers it a “follow-on biologic” rather than a biosimilar.
Other drugs being dropped include 10 products CVS considers “hyperinflationary,” such as Novum Pharma’s Alcortin A (iodoquinal/hydrocortisone acetate/aloe polysaccharides), a gel for skin infections that CVS says increased in price by 2856.8 percent in the last three years.
Analysts at Barclays estimate that CVS will save approximately $2.6 billion in 2017 as a result of the exclusions.
Express Scripts, the country’s top PBM, will exclude 85 drugs from its standard formulary in 2017, which it hopes will increase savings from an estimated $1.3 billion in 2016 to $1.8 billion. Express Scripts excluded 88 drugs in 2016.
Our Take: Given the public debate over pharmaceutical pricing we’ve written so much about, it’s no surprise that CVS Health is becoming increasingly aggressive with its exclusion lists.
“By dropping products to gain negotiating leverage, PBMs reap significant marketing advantages with their plan sponsor clients,” says Drug Channels’ Adam Fein. “The PBMs can claim to be standing up to pharma on behalf of payers, regardless of the actual dollar or patient impact.”
CVS also issued a strong warning in the lead-in to its formulary exclusion list: “CVS Health is taking a stand against egregious drug price increases that unnecessarily add costs for clients and their members. On a quarterly basis, products with egregious cost inflation that have readily-available, clinically-appropriate and more cost-effective alternatives may be evaluated and potentially removed from the formulary.”
Curiously, Express Scripts, usually the more vocal PBM, held constant the number of drugs it is excluding from its formulary. Fein speculates that the threat of exclusions may help the PBM to negotiate better deals than actually excluding them.
The story here is less about exclusion lists than it is about the embrace of biosimilars. If you thought that PBMs would shy away from them, think again. That is, at least for CVS. No word yet from Optum or Express Scripts.