'Audacious' CVS formulary drops key meds from Sanofi, Medivation and Novartis. Yours could be next

CVS Health raised some hackles Tuesday when it rolled out a 2017 formulary that left off the world’s top-selling basal insulin, blocked two cancer treatments, and excluded two pricey orphan drugs. Should drugmakers be afraid?

If they’re relying on big price hikes, yes. If facing the threat of biosimilars, counting on developing new drugs to follow older versions or vulnerable to payer decision-making on cancer treatments, then maybe.

The fact that Sanofi’s megablockbuster insulin Lantus didn’t make CVS Health’s coverage list is a big deal by any measure--as Bernstein analyst Ronny Gal put it, the diabetes therapy is the largest commercial product ever excluded from a formulary.

The fact that Sanofi’s Lantus follow-up Toujeo also didn’t make the list is a big deal for the French drugmaker. The longer-acting insulin had been picking up steam and helping to offset Lantus declines, Leerink Partners’ Seamus Fernandez said in a Tuesday note.

But perhaps the most worrisome thing about Sanofi’s basal insulin lock-out is also the most understandable: Lantus and Toujeo are being replaced with Eli Lilly and Boehringer Ingelheim’s biosimilar copy of Lantus, Basaglar. That insulin glargine formula is expected to launch in December, and at a discount to the brand.

Here’s the scary part, as Gal notes: Is this the thin end of the wedge? Basaglar’s sweep-aside of its branded reference product “increases the prospect of biosimilars on commercial formularies,” and if it’s an insulin biosim in 2017, “what about a TNF in 2020?” Gal asked, referring to the anti-inflammatory blockbusters such as AbbVie’s Humira and Amgen’s Enbrel, both of which face biosimilar versions up for approval at the FDA.

In a certain respect, CVS’ willingness to exclude particular cancer drugs could be even more threatening. The pharmacy benefits manager nixed Medivation and Astellas' prostate cancer pill Xtandi--a drug that’s significantly different from its closest rival, Johnson & Johnson’s Zytiga, in that it can be used on its own, rather than alongside steroids as the J&J drug is, as Gal pointed out.

“This is a material ‘bid’ by CVS to get more involved in cancer management,” the Bernstein analyst suggests. And if it works--if oncologists cooperate--“the implications would be viewed more broadly,” he added. For instance, why not make picks among the new generation of immuno-oncology treatments?

Novartis’ Tasigna also got the boot from CVS’ formulary, and it’s intended as a new-and-improved version of the Swiss drugmaker’s top-selling blood cancer med Gleevec. Actelion’s Opsumit, which treats pulmonary arterial hypertension, is now excluded, too, in favor of the same company’s predecessor med, Tracleer. In both cases, the companies are counting on the follow-up drugs to take up the slack as the older products decline, and both newer meds boast data that make a case for their superiority over the old. CVS’ decision to block the newer therapies could hobble those efforts, particularly if other payers decide to follow suit.

CVS also plans to zero in on "hyperinflationary" drugs by reviewing price hikes and tweaking its formulary accordingly. All told, the PBM pulled another 35 drugs from its formulary, bringing its excluded list to 131.

Express Scripts unveiled its 2017 formulary exclusions Monday, and that list illustrated how PBMs continue to step into crowded drug classes to win discounts in exchange for formulary placement. Merck’s new hep C treatment Zepatier, for instance, didn’t win a spot on Express Scripts’ coverage list; the PBM kept its exclusive deal with AbbVie instead.

Though Express Scripts did the same in diabetes, barring a range of Novo Nordisk drugs once again, it didn’t exclude Sanofi’s Lantus or Toujeo. Nor did it kick off particular cancer drugs. In that respect, Express Scripts’ exclusions list could be seen as less aggressive than CVS Health’s. (Conversely, Express Scripts might have been more successful at winning up-front discounts, as some analysts pointed out.)

Then again, Express Scripts did say it might change its basal insulin lineup, as Fernandez pointed out in his Tuesday note. The PBM said may reassess the category later this year “to reflect anticipated product launches”--which must be none other than Basaglar. That means Sanofi could be under more discounting pressure to keep Lantus and Toujeo covered by at least one of the two biggest PBMs in the United States, presuming Lilly could turn out enough Basaglar to be the sole insulin glargine supplier for those top two PBM formularies. And that means Sanofi--and by extension, other drugmakers with biotech meds nearing the end of their exclusivity--could get an even more painful lesson in the power of the biosimilar.

Special Report: Top 10 patent losses of 2015 - Lantus, Sanofi

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