Doom for combo meds? Express Scripts, CVS dump Horizon Pharma two-in-one drugs

CVS Caremark's Woonsocket, RI, headquarters--Courtesy of CVS Caremark

When do rising drug prices not equal rising sales? When payers step in to control costs--and that's exactly what they've been doing. The latest: Express Scripts ($ESRX) and CVS Caremark ($CVS) are kicking two Horizon Pharma ($HZNP) drugs off their formularies as of Aug. 1--and plan to exclude them completely next year.

As Horizon noted in an SEC filing, the move to exclude Duexis and Vimovo, which treat arthritis pain, could cut the drugs' prescriptions by 20%-30%. And the exclusions may not end there, Horizon cautioned. If other healthcare plans follow suit, "there could possibly be additional Duexis and Vimovo prescriptions affected," it said.

Why the lost love for Horizon's pain-therapy duo? As Investor's Business Daily notes, it could have something to do with the fact that both are combo drugs whose ingredients are available as solo meds. Duexis comprises the pain reliever ibuprofen, the active ingredient in Advil and Motrin, and the heartburn remedy famotidine, a.k.a. Pepcid. Vimovo is another pain drug/stomach med combo, naproxen (Aleve) and esomeprazole (Nexium). All four are available as generics, with Nexium off patent as of May this year.

In the past, Horizon has found success through aggressive marketing and price increases--but those increases are what PBMs are increasingly looking to combat. The drug price debate has been loudest with Sovaldi, Gilead's ($GILD) next-gen hep C drug that runs $84,000 for a 12-week course of treatment. To keep the drug from decimating its bottom line, Express Scripts has put tight limits on reimbursement and lobbied doctors to hold off on treating some patients till competitors hit the scene and drive prices down.

But a wider reaching move came last October, when the PBM cut out 44 treatments--including some of pharma's stalwarts (GlaxoSmithKline's ($GSK) $8-billion-a-year respiratory giant Advair) and hottest up-and-comers (Pfizer's ($PFE) newly approved rheumatoid arthritis treatment Xeljanz; Johnson & Johnson's ($JNJ) recently launched psoriasis therapy Stelara; and so on).

Drew Crawford

Drew Crawford, editor of PBM365, traces the trend back three years, when CVS Caremark made a similar move late in the season. And the reaction from the PBM's insurer clients--or lack thereof--has encouraged others to do the same.

"There was not near the amount of noise that was expected … from people being switched from one product to another," Crawford said, "and therefore it became more comfortable for PBMs to make these exclusions."

When it comes to dealing with drugmakers, PBMs have also used the stick more often than the carrot--"lower prices, or else"--as consolidation has swept through the PBM industry. Mergers--like that of CVS and Caremark, and Express Scripts and Medco--have upped PBM purchasing power, and therefore their negotiating power, too, Crawford said.

What's a company in Horizon's position to do? The drugmaker plans to rev up its commercial model to push prescriptions through other channels--such as its "Prescriptions Made Easy" specialty pharmacy program. The company also plans to continue working with other PBMs. It will even take a look at price increases.

So, the Illinois-based drugmaker is hopeful, according to the SEC filing. "We believe our strategy can allow us to mitigate the effect of this event on the Duexis and Vimovo business and can enable further growth in the revenue of Duexis and Vimovo from current levels," it said.

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