UPDATED: UnitedHealth adds to formulary pain for Sanofi, Amgen and Novartis

UnitedHealth dropped the latest formulary bomb Wednesday with a proposal to exclude Sanofi’s insulin Lantus and Amgen’s infection-fighter Neupogen in favor of their biosimilars.

The insurer, among the top three in the U.S., also kicked off Novartis’ leukemia drug Gleevec, now that Sun Pharma has rolled out a generic version, and instituted step therapy on the Swiss drug giant’s Gleevec follow-up Tasigna.

These changes were among a slate of moves outlined by the top U.S. insurer in a presentation posted online, and they follow high-profile exclusions by pharmacy benefits managers Express Scripts and CVS Health. Taken together, the formulary changes suggest payers will quickly adopt biosimilar drugs to save money, and that they're growing ever more aggressive about exclusions and other tactics to limit branded drug spending.

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Some drugs--such as multiple sclerosis treatments from Novartis, Sanofi and Biogen--will get a boost. Seven MS drugs that were previously excluded--as was Biogen’s Plegridy--or otherwise restricted will be freely available. These include Biogen’s Tecfidera, Novartis’ Gilenya and Sanofi’s Aubagio, three of the new generation of oral treatments.

Others, including Lantus, Neupogen and Gleevec, will suffer from copycat launches. Novartis rolled out its Neupogen biosimilar Zarxio earlier this year, while Eli Lilly and Boehringer Ingelheim are expected to launch their Lantus copy, Basaglar, in December. Sun Pharma started marketing a Gleevec generic in May under a patent settlement with Novartis.

The biosimilar moves "are not surprising and point to the possibility that branded biologic exclusions could extend into other categories such as inflammation or oncology," Barclays analysts said in a Thursday investor note. These particular changes won't affect Amgen or Lilly sales much, the analysts said, but anti-inflammatories--such as the behemoth Humira from AbbVie--are much bigger targets.

Bernstein analyst Ronny Gal predicts that payers will help biosimilars hit those targets, based on the new formulary exclusions from UnitedHealth, CVS and Express Scripts. "[W]e would argue it materially increases the likelihood that Enbrel and Humira will see similar exclusions when biosimilars arrive," Gal wrote in a note analyzing UnitedHealth's new formulary.

For diabetes, UnitedHealth's moves, combined with CVS Health's decision to exclude Lantus, portend  difficulties for the rest of the basal insulin field, too. Payers are likely to crown just one basal insulin as "preferred" after Basaglar hits, he predicts, with those changes rolling out over the next 18 months.

And prices will come down, too, Gal figures: "We believe total price reductions in the 30-50% in the next 3-5 years should be expected."

In other changes, certain drugs will see their coverage reduced or eliminated because of trends UnitedHealth considers troubling. The insurer's formulary, handled by its Optum pharmacy benefits manager, accounts for 25 million directly covered lives, Barclays says.

For instance, the insurer overhauled its pain-drug coverage, citing “aggressive drug marketing” that had fueled overprescribing. It knocked off Purdue Pharma’s opioid OxyContin and two other pain drugs as part of that revamp, which was also designed to adhere to new guidelines from the Centers for Disease Control and Prevention.

In fact, the insurer cited stepped-up marketing as one trend that’s driving increased drug spending--and triggering formulary changes as a result, at least indirectly. According to the UNH presentation, pharma advertising spend increased 30% in the past 2 years, hitting $5.2 billion in 2015--“with the highest expenditure being TV commercials, which average 80 per hour, 24 hours per day.”

Meanwhile, the new formulary takes aim at a large number of dermatology drugs--moisturizers that “manufacturers have tried to market as prescription products” despite the fact that far cheaper over-the-counter alternatives are available. It’s plugging the familiar drugstore brands Eucerin, Lubriderm and even Vaseline over the prescription meds, which it says cost an average of $270 per prescription.

The company will also reverse a previous policy of favoring branded contraceptives, putting generics in their place.

As well, UNH is moving a wide variety of drugs to higher formulary tiers, which means patients will have higher copays if they choose to use them. That includes Novo Nordisk’s Levemir, which competes with Lantus in the basal insulin category, and as such will face Basaglar in a few months. Novo’s newer basal insulin, Tresiba, was excluded when it was launched, the presentation says, and will remain so.

Expect more exclusions and limitations ahead, Bernstein's Gal said. "[W]e are seeing commercial payors making more aggressive steps to control formulary costs" as employers grow more willing to accept fewer choices for their employees in return for reducing drug spending, the analyst said in his note. "This process is happening somewhat faster than we had expected," he said, and Bernstein had thought its own expectations were "sharper than most."

Related Articles:
'Audacious' CVS formulary drops key meds from Sanofi, Medivation and Novartis. Yours could be next
Express Scripts bars new launches from Lilly, Merck and shuts out Novo for 2017
CVS Health bars Valeant, Concordia drugs for 'egregious' price hikes, and it's on the lookout for more
Sanofi lawsuit tries to hold Merck Lantus biosimilar at bay
Novartis spends on manufacturing, expecting big biosimilar payoff
AbbVie continues heavy spend on Humira TV ads as biosimilar competition looms

Editor's note: This story was updated with comments from analysts.