Express Scripts ($ESRX) has struck again. The pharmacy benefits manager (PBM) is barring another 25 drugs, including some aging heavyweights like Amgen's ($AMGN) anemia drugs Aranesp and Epogen, and newer meds such as the controversial painkiller Zohydro, made by Zogenix.
It's the PBM's latest move against branded drugs it considers too pricey for the clinical benefits they provide--or pricier than competitors it sees as equivalent. Last year's list of excluded drugs amounted to 40-plus, and also included medical products such as Roche's ($RHHBY) blood-glucose testing strips. The 2015 list will grow to 66 drugs, Express Scripts tells Reuters.
Rival pharmacy manager CVS Caremark ($CVS) has said it's planning a 2015 formulary that would exclude about 200 drugs. The PBM first issued an exclusionary formulary in 2012.
The exclusions may amount to a small percentage of the drugs these PBMs cover, as Express Scripts told the news service. But with 25 million members governed by the Express Scripts national formulary, the impact on individual excluded products can be significant.
Horizon Pharma ($HZNP) disclosed last week that two of its drugs, Duexis and Vimovo, would be taken off the Express Scripts formulary as of Aug. 1--and estimated that the drugs' prescription numbers could plummet by 20% to 30%. Novo Nordisk ($NVO), facing the exclusion of its big-selling diabetes drug Victoza and an insulin product NovoLog, warned that 2014 financials were likely to suffer. And consider GlaxoSmithKline's ($GSK) respiratory blockbuster Advair, excluded from the 2014 formulary: Its head-to-head competitor from AstraZeneca ($AZN), Symbicort, made the list, and it quickly grabbed market share from the GSK inhaler.
The newly expanded list of barred drugs offers some hints about the types of products PBMs might target. Horizon's two pills are combination products that comprise active ingredients available--at lower prices--as individual meds elsewhere. Efficacy may have played a role in blocking Incivek, the hepatitis C drug from Vertex Pharmaceuticals ($VRTX); a new generation of treatments is rolling out, and though they're expensive, their cure rates tend to be higher than those for older meds.
And then there are copay discounts, which played into the 2014 exclusion list. Payers have been fighting that marketing technique for awhile, because it's a run-around on tiered copays, a mainstay of PBM cost control. Plus, drugmakers often use copay discounts to build up branded meds just before and after a patent expiration, to fend off cheaper generics, or to help patients pay for expensive drugs.
For Amgen, the exclusion of Aranesp and Epogen won't affect the company's sales much, analysts pointed out. Epogen isn't sold at the retail level at all, and Aranesp's retail sales are "significantly less" than those in hospitals and clinics that administer the IV drugs. So, as RBC Capital Markets analyst Michael Yee told Reuters, the company's anemia drug sales through Express Scripts amounts to less than 1% of their U.S. revenue.
What of Sovaldi, the $84,000 hep C drug that's caused so much consternation among payers, Express Scripts included? The PBM tells Reuters that it hasn't decided on the status of Gilead Sciences' ($GILD) wonder drug, which has racked up $6 billion in sales so far, thanks to impressive cure rates and tolerability. That decision will wait until other new hep c treatments--including Gilead's Sovaldi combo drug and an AbbVie ($ABBV) cocktail due for approval later this year--hit the market. That's when competition might push prices down--or so the theory goes.
- see the Reuters news
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