More formulary exclusions are on their way as smaller PBMs get in on the action

PBM giants Express Scripts ($ESRX) and CVS Health ($CVS) have so far found formulary exclusions an effective way to manage drug costs. And unfortunately for pharma companies, that tactic is catching on.

The internal PBMs of four large insurers--UnitedHealth's ($UNH) Optum, Aetna ($AET), Cigna ($CI) and Prime Therapeutics--are set to either roll out or significantly beef up their use of formulary exclusions beginning next year, according to a research note from Bernstein analyst Ronny Gal. Those moves will take the share of the market using the strategy in a retail setting from 30%--aka, just Express Scripts and CVS--to more than 50%.

But drugmakers don't need to panic--yet.

"Most insurers are a bit cautious in 2016, 'test driving' the new capability," he wrote. "We thus do not expect a sharp impact on drug markets beyond what has been disclosed already by drugmakers."

The areas in which he does see cause for concern? The GLP-1 diabetes market, multiple sclerosis and ADHD.

"Drug categories with multiple similar products will likely have additional pressure while classes with one-two products will likely be affected less so," he noted. "Innovation will continue to pay."

And discounting likely will too. GlaxoSmithKline ($GSK), for one, has shown that it's possible to get back on a PBM's good side after getting the boot, making its way off of Express Scripts' exclusion list last year by cutting the company some serious deals on Advair. In turn, though, those discounts have taken their toll on sales, with the blockbuster's top-line tally spiraling downward.

Other companies, like Horizon Pharma ($HZNP), have worked to minimize exclusions' impact on sales by partnering with specialty pharmacies that cover scripts and seek reimbursement themselves. But those relationships came under fire this fall, with one research firm alleging that Canada's Valeant Pharmaceuticals ($VRX) used its own to inflate sales.

Next year, other companies will have to figure out their own ways of coping. Express Scripts alone will leave 80 meds out in the cold in 2016, saving $1.3 billion for insurance-plan customers that use its National Preferred Formulary, it said in August. Among them: Two AstraZeneca ($AZN) diabetes treatments, Onglyza and Kombiglyze; Johnson & Johnson's ($JNJ) hep C-fighter Olysio; and Vivus' ($VVUS) struggling weight-loss drug Qsymia.

Special Report: The 25 most influential people in biopharma in 2015 - Steve Miller - Express Scripts