Tuesday, January 09, 2024

The Big Three PBMs’ 2024 Formulary Exclusions: Biosimilar Humira Battles, CVS Health’s Weird Strategy, and the Insulin Shakeup

For 2024, the three largest pharmacy benefit managers (PBMs)—Caremark (CVS Health), Express Scripts (Cigna), and OptumRx (United Health Group)—have again each excluded 600 or more drugs from their standard formularies. You can find our updated counting below.

This year, Humira and its 14 biosimilars will provide the most intriguing formulary drama. Unfortunately, the gross-to-net bubble will remain a fixture for this category, despite a price war led by almost half of the biosimilars. CVS Health will lean into the craziness with an unusual Humira strategy.*

There are also unusual formulary developments for insulin products, many of which experienced massive list price cuts for 2024.

Read on for my deep dive into these two therapeutic categories. I also highlight recent research that raises troubling questions about the patient impact of these ever-growing exclusion lists. As always, I welcome your comments below or on LinkedIn.

UNPICK ME

Formulary exclusions have emerged as a powerful tool for PBMs to gain additional negotiating leverage against manufacturers. The prospect of exclusion leads manufacturers to offer deeper rebates to avoid being cut from the formulary. Exclusions are one of the key factors behind the large gap between list and net prices for brand-name drugs. (See Tales of the Unsurprised: Brand-Name Drug Prices Fell for an Unprecedented Sixth Consecutive Year.) They can also affect a patient’s out-of-pocket costs and access to a particular therapy.

Formulary exclusions block access to specific products on a PBM’s recommended national formulary. These are suggestions, not mandates. Thus, a drug’s appearance on an exclusion list does not guarantee that all patients will lose access. Plan sponsors—the PBM’s clients—can choose not to adopt their PBM’s standard formulary. However, they would then face reduced rebates and/or higher plan costs.

Here are the 2024 formulary updates for commercial clients of the three largest PBMs: These links are current as of this article’s publication date. However, the lists can change during the benefit year, so the links and product lists may change.

PBMs target both traditional and specialty products for formulary exclusion. The excluded products typically fall into one or more of the following categories:
  • Brand-name products with generic equivalents or therapeutic alternatives
  • Biosimilars and reference biologics with biosimilar alternatives
  • Non-preferred drugs with very low utilization
  • Heavily promoted drugs in therapeutic classes with multiple generic alternatives
  • Medicines treating chronic conditions
These criteria have led many single-source, brand-name drugs—those without a generic equivalent or biosimilar alternative—to be excluded from one or more of the PBMs’ formularies. From 2014 through 2022 (the most recent year studied), a total of 1,357 unique medications faced exclusion for at least one year from one PBM. Of this total, 654 (48%) were single-source, brand-name drugs. (See Xcenda’s excellent Skyrocketing growth in PBM formulary exclusions continues to raise concerns about patient access.)

WELCOME TO 2024

Here are my takeaways from the 2024 exclusions.

1. Growth in exclusions is peaking.

The widespread practice of formulary exclusion began in 2012. Since then, the number of unique products excluded from the formularies of the three largest PBMs—Caremark (CVS Health), Express Scripts (Cigna), and OptumRx (UnitedHealth Group)—has grown dramatically.

We counted the number of unique products on each company’s 2024 list. (We counted multiple formulations of a drug as a single exclusion.) The chart below tracks the growth at each company.

[Click to Enlarge]

As you can see above, the rate of growth has slowed in the past few years, due partly to the large number of products that have already been dropped. The growth in excluded products shows how competitive many therapy categories have become—and the undisclosed but presumably significant rebates generated by these products. By our tallying:
  • The CVS Caremark list increased its list to an estimated 644 products.
  • Express Scripts significantly expanded its exclusion list, to an estimated 762 products.
  • OptumRx’s exclusion list declined slightly, to an estimated 599 products.
Note that the 2024 figures and growth rates may not correlate perfectly with growth from the 2023 figures, due to mid-year formulary changes. The PBMs sometimes—but not always—exclude many of the same medications.

2. The Gross-to-Net Bubble is alive and well for Humira biosimilars.

The Humira biosimilar market finally emerged in 2023—although the biosimilars’ collective market share barely cracked 1% last year. For 2024, biosimilars will be competitively positioned on the Big Three PBMs’ formularies, although the warped incentives of our drug channel system will create some dynamics.

As a reminder, there are currently 14 biosimilar versions of adalimumab in the U.S. market. Seven of these products have list prices that are only slightly lower than Humira’s list price, while seven tried to tempt payers and pharmacy benefit managers (PBMs) with list price discounts that ranged from -55% to -86% below Humira’s list price. Four of the nine manufacturers offer both high- and low-list price versions. For my review of the market dynamics, see July’s Four Crucial Questions about the Humira Biosimilar Price War.

The table below summarizes the formulary status for these 14 Humira biosimilars along with 2023 wholesale acquisition cost (WAC) list prices, which were the only known prices while the formularies were being negotiated. Note that the WAC list price does not represent the price paid by any entity within the drug channel, because it excludes rebates and such other reductions as distribution fees, product returns, discounts to hospitals, price reductions from the 340B Drug Pricing Program, and other purchase discounts. We classified products omitted from the PBMs’ published lists as formulary exclusions.

[Click to Enlarge]

Key observations:
  • Boehringer Ingelheim and Sandoz are the biosimilar winners. All three PBMs have placed the Sandoz biosimilars on their formularies. Express Scripts and OptumRx also include the interchangeable products from Boehringer Ingelheim. Manufacturers of the nonselected biosimilars will struggle to gain marketplace traction.

    Notably, OptumRx has maintained formulary placement for Amgen’s Amjevita, despite the entertaining controversy about its strategy that I covered last May.
  • PBMs’ 2024 formularies reflect the warped incentives of the gross-to-net bubble. You may be surprised to see that the PBMs’ formularies include both high- and low-list-price biosimilars from the same manufacturers. OptumRx has the most ludicrous formulary, with coverage for dual-priced biosimilars from three manufacturers. On a stand-alone prescription basis, I doubt that the branded high-list biosimilars have net costs below the identical unbranded versions selling for 80%+ less.

    Sadly, these moves signal that far too many of the PBMs’ plan sponsor clients—employers, health insurance plans, labor unions, governments, and other third-party payers—remain addicted to rebates. The plans that adopt the higher-priced biosimilars will get bigger rebates, while patients with coinsurance and deductibles end up paying more out-of-pocket. Boo.

    Today, these rebates are mostly (but not exclusively) passed through by PBMs to the plan sponsors. Employers generally use these rebates to offset non-drug healthcare costs and reduce premiums for all beneficiaries, not just the subset of patients whose Humira prescriptions generated the rebate funds. Health plans want the rebate dollars so they can use lower premiums to compete for business.

    Consequently, both employers and health plans rarely use point-of-sale rebates—and have often preferred high-list/high-rebate over low-list-price products in such categories as hepatitis C and insulin biosimilars.

    BTW, such benefit design shenanigans are a key reason why many plan sponsors are skeptical about any Congressional “PBM reform” efforts that will limit plans’ ability to do whatever they want to do.
  • CVS Caremark has a confusing strategy that will use vertical integration to drive its profits. Unlike its peers, CVS Caremark stands to directly profit from its biosimilar strategy. Its approach is not straightforward and has been somewhat misstated in the media. Here’s the real scoop.

    Page 9 of CVS Caremark’s 2024 Advanced Control Specialty Formulary contains four Humira-related preferred options:
    • Humira
    • Hyrimoz, the high-list-price Humira biosimilar from Sandoz
    • Hyrimoz, the low-list-price Humira biosimilar from Cordavis
    • adalimumab-adaz, the unbranded, low-list-price Humira biosimilar from Sandoz
    While its not clear from the published list, one of the biosimilar products just so happens to be marketed by Cordavis, the new CVS Health subsidiary. In What’s Behind CVS Health’s Novel Vertical Integration Strategy for Humira Biosimilars, I outline six distinct ways that CVS Health profits from its private label strategy.

    In the second quarter of 2024, CVS Caremark will go further. Humira will be removed from its major commercial formularies. The reference product will only be available on CVS Caremark’s Choice and Standard Opt Out commercial formularies, which account for only 4% of its customers and 2% of its covered lives. 

    On these two formularies, CVS Caremark will also offer a co-branded Humira sourced via Cordavis. (source) Unlike the co-branded Hyrimoz, the new co-branded Cordavis Humira will have the same list price as Humira (original flavor).

    While I got this wrong in my initial description, it’s still confusing.

    When Cordavis was launched, CVS Health touted its new subsidiary as one that "will work directly with manufacturers to commercialize and/or co-produce biosimilar products." (emphasis added) The release repeatedly highlighted its objective of "reducing costs."

    Technically, the new co-branded product will *not* be a biosimilar, because it will also be supplied by AbbVie. Perhaps we should call it an “authorized biological,” although no such regulatory classification exists. And the list price is no lower than the reference product.

    The few plan sponsors that use Cvs Caremark's Choice and Standard Opt Out commercial formularies should be asking many questions about CVS Health's strategy for these formularies.
3. Insulin exclusions vary among the PBMs. Biosimilar insulins still face challenges.

For years, insulin has been one of the most highly rebated therapeutic categories. Exclusions have been a key factor driving the huge gross-to-net differences for these products. Even JAMA has been forced to publish an article that took notice of insulins’ true selling prices.

Consider rapid-acting insulins. Consistent with previous years’ lists, Express Scripts and OptumRx are aligned with Eli Lilly’s products, but exclude Novo Nordisk’s products. By contrast, CVS Health’s formulary excludes Lilly’s insulins in favor of Novo Nordisk’s products.

In previous years, no major PBM formulary has preferred the low list-price versions of these branded products. However, Eli Lilly, Novo Nordisk, and Sanofi have all reduced many insulin products’ WAC list prices by 65% to 75%.

Sanofi cut the price of Lantus, its long-acting insulin product, by 78%. This reduction has important implications for the adoption of interchangeable biosimilars of Lantus. For background on Lantus and its biosimilars, see 2021’s Why PBMs and Payers Are Embracing Insulin Biosimilars with Higher Prices—And What That Means for Humira.

The simultaneous list price reductions have limited (but not eliminated) PBMs’ ability to block lower list price products. The cuts also popped the gross-to-net bubble for insulin, which gave PBMs little choice but to cover the lower priced products. Consider the Big Three PBMs divergent approaches to insulin market developments:

  • OptumRx has placed all insulin products at parity the first formulary tier, which has the lowest out-of-pocket costs for patients. (Great move, IMHO.) All products on this tier have same copayment or the same coinsurance rate. However, a patient’s actual out-of-pocket costs will vary for benefit designs with coinsurance, because the list prices vary among the products.

    OptumRx’s formulary includes both Lilly’s Humalog product as well as the unbranded admelog version. OptumRx placed the brand-name Lantus product and the Rezvoglar biosimilar on tier 1, while the Semglee biosimilar has been excluded from the formulary.
  • Express Scripts’ main formulary includes the brand-name Humalog along with the lower list price insulin lispro. Its formulary also includes Semglee, the high-list-price interchangeable biosimilar of Lantus, but excludes the identical unbranded, low-list-price insulin glargine-yfgn product as well as the Rezvoglar biosimilar. Express Scripts didn't reply to my request for a comment on its love of higher list prices.
  • CVS Caremark’s formulary includes brand-name versions of Novolog, and excludes Humalog and Apridra. It includes Lantus and excludes the follow-on biologic Basaglar. However, it doesn’t mention Semglee, unbranded Semglee, or Rezvoglar.

UNDERSTANDING THE PATIENT IMPACT

In previous years, I lamented the lack of research on how exclusions affect physicians’ prescribing decisions, patients’ ability to access therapies, and clinical outcomes. Thankfully, research is starting to emerge that address these issues.

A reminder: An individual patient’s access to a particular therapy and out-of-pocket costs is determined by formulary exclusions established by their plan’s PBM. Patients who change plans (or employers) can unknowingly lose access to their physician’s preferred therapy—unless they file a successful appeal.

Exclusions raise the prospect of non-medical switching—altering a patient’s drug therapy for reasons other than a drug’s efficacy, side effects, or clinical outcome. Exclusion lists also impact patients’ out-of-pocket costs, especially when low list price products are excluded in favor of equivalent products with higher prices.

That’s why I’m happy to highlight some recent research studies about exclusions—but disappointed by what they uncovered. Here are the links so you can evaluate them for yourself: CVS has stated that 1.4% of its members will be affected by its 2024 exclusions, which is five times higher than the 0.28% figures it cited for 2023 exclusions. This is an especially troubling jump given the comparatively small increase in the overall total number of exclusions shown above. Neither of the other PBMs report any comparable figures on beneficiary impact.

I look forward to hearing your thoughts about the 2024 formularies on LinkedIn.

* This article originally misstated the formulary position of Humira and the co-branded Cordavis Humira on CVS Caremark's commercial formularies. As noted above, both products will be removed from CVS Caremark's most common commercial formularies in April 2024. We apologize for the error.

No comments:

Post a Comment