Medicare formularies add to the squeeze on key Novo Nordisk, Sanofi insulins

Just over a year ago, Sanofi and Novo Nordisk were touting their new basal insulins as fuel for their diabetes growth engines. But with biosims looming and competition heating up, commercial formularies have clamped down--and now, Medicare Part D plans are adding to the pressure.

New Medicare formularies were published late last week, and while they maintained coverage for Sanofi’s behemoth Lantus and its new follow-up Toujeo, Novo’s basal insulins lost ground. Coverage “deteriorated modestly” on the older Levemir, Bernstein analyst Ronny Gal said in a Monday investor note, to 81% from 87%. Perhaps more important for Novo’s hopes, Tresiba clung to 62% reimbursement rather than ratcheting upward.

But Sanofi’s coverage levels might be less lucrative than the percentages suggest, Gal suggested. “The difference between Toujeo and Tresiba likely reflects Sanofi’s willingness to discount while Novo continued to ask for premium price,” Gal noted.

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The formulary decisions illustrate the importance of diabetes drugmakers’ negotiations for coverage these days, and the rebates and discounts necessary to score favorable reimbursement. Insulin list prices have risen steadily in recent years--to the point where some products carry stickers more than double those 5 years ago--but drugmakers say rebates and discounts are so large now that they’re reaping little to no additional revenue from those increases.

Meanwhile, biosimilar versions of Sanofi’s behemoth Lantus are on their way, ready to steal formulary spots and market share. Eli Lilly and Boehringer Ingelheim have their biosim, Basaglar, ready to launch in December under a patent deal with Sanofi, while Merck & Co.’s version is at the FDA for approval. Sanofi has sued Merck to block its product.

Medicare Part D formularies didn’t include Basaglar, at least for now. They may wait to reassess until after Basaglar launches.

Whatever happens on basal insulin coverage for 2017, there’s likely to be a scramble in Part D for 2018, Gal predicts, after Basaglar takes hold. “[We] expect a 'bake-off' for the 2018 contracts where some agents will be excluded,” he said.

The average U.S. net price for Lantus is set to fall 10% this year after tanking by 17% last year, according to recent Bernstein estimates. And that’s after a list-price jump to $248.51 per vial from $114.15 in 2011.

Lilly’s long-successful insulin Humalog is another example. As the Wall Street Journal reported recently, its list price currently sits at $254.80 per vial, more than double its list price in 2011. But with rebates and discounts factored in, Lilly nets less in Humalog sales now than it did in 2009, Enrique Conterno, who heads up the company’s diabetes business, told the newspaper.

CVS Health, on the commercial side, has already said it would favor Basaglar over Lantus--not surprising, given that the biosim is set to sell at a discount to that brand--but it also barred Sanofi’s Toujeo, too. PBM giant Express Scripts didn’t bar the two Sanofi meds for 2017, but suggested it may revisit that decision after the new drug launches.

Toujeo had been picking up steam and helping to offset Lantus declines, Leerink Partners’ Seamus Fernandez said in a recent note.

Those diabetes franchises will obviously need some alternative energy. Novo appears to have it in the GLP-1 market, where its blockbuster daily med Victoza continues to grow in spite of competition from Eli Lilly & Co.’s weekly, Trulicity.

In the Part D world, Victoza may actually have gained an edge on its new rival; it maintained coverage on 86% of plans, Gal noted, where Trulicity held onto 51% coverage. That’s a turnabout compared with some commercial plans where Trulicity prevailed. Victoza also recently scored new data showing it can cut cardiovascular risks, and Novo has a weekly GLP-1 in the works, semaglutide, whose heart attack, death and stroke risk data may prove even better.

Meanwhile, however, Novo's shares were recently hammered after the company released a disappointing forecast. Longtime CEO Lars Rebien Sørensen is retiring early, to be replaced by Lars Fruergaard Jorgensen, currently the company’s EVP and head of corporate development. The company also recently replaced its North American chief with Jacob Riis, who had been overseeing international operations.

Related Articles:
Insulin costs are way up, but drugmakers say PBMs are collecting the loot
Departing Novo chief wins 'best CEO' nod again, and Biogen's grabs laurels, too
Sanofi, Verily eye diabetes jump-start with $500M venture beyond the pill
'Audacious' CVS formulary drops key meds from Sanofi, Medivation and Novartis
Sanofi lawsuit tries to hold Merck Lantus biosimilar at bayZ
Express Scripts bars new launches from Lilly, Merck and shuts out Novo for 2017

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