In an aggressive move to counteract the financial impact of expensive medications, CVS Health has excluded 154 products from its standard formulary in 2017, up from 124 in 2016. In the hotly debated hepatitis C category, CVS gave Gilead's Sovaldi and Harvoni exclusive placement in 2017, excluding AbbVie's Viekira Pak and other alternatives.
Oncology, an area where PBMs have been cautious of pushing exclusions, also saw some exclusions: Novartis’ chronic myeloid leukemia therapy Gleevec and its improved version Tasigna, were both excluded from the formulary for a generic version of Gleevec which was launched in the US earlier this year. Among other important replacements were Amgen’s Neupogen, a bone marrow stimulant, which was removed in favor of Sandoz’s biosimilar Zarxio, and Sanofi’s Lantus, an insulin injection, was replaced by Eli Lilly’s biosimilar agent Basaglar.
CVS Health was among the first first major PBMs to exclude a host of branded drugs from its standard formulary back in 2012 and its exclusion list has been growing steadily since. It started as a defensive move to counter the proliferation of copay-discount programs offered to members by drug companies, and has evolved into a strategy that capitalizes on competition among branded manufacturers to drive down costs.
Other major PBMs such as Express Scripts and OptumRx have also adopted formulary exclusion as a common strategy to reduce drug expenditure. CVS estimates that its use of exclusions and other formulary management tactics will lead to more than $6.4 billion in savings from 2012 through 2016. In line with this strategy, the company reported in February 2016, that its prescription drug trend dropped from 11.8 percent in 2014 to 5 percent in 2015.
While plan sponsors (i.e. large insurers) have supported formulary exclusions as they stand to benefit financially from such restrictive protocols, this strategy has created a confrontational relationship between PBMs and pharma companies.
Drug companies see these aggressive formulary decisions as a detriment to patients, denying them the opportunity to take branded products that may work better than biosimilars. Patient advocates also have expressed concern about “nonmedical switching” from branded drugs to biosimilars. Nonmedical switching occurs when a patient moves from an effective treatment to an alternative as a cost-cutting measure.
Critics of exclusions argue that employer groups with and without exclusion strategies have not demonstrated significant differences in pharmacy costs and trends, and also suggest that the impact of exclusions on overall medical spend has not been validated by scientific research. The PBMs have responded to patients and their advocates stating that lower-cost, therapeutically equivalent alternatives to the excluded drugs are placed on their formulary, suggesting that the exclusions will impact only a small percentage of patients.
In the near-term, CVS Health’s exclusion list is expected to grow, and the company plans to evaluate drugs on a quarterly basis, focusing on cost inflation. This will increase competition within the pharma industry to produce more clinically appropriate and cost-effective therapies. Drug glasses with multiple similar products will likely be an area of focus when it comes to exclusions – such as the GLP-1 diabetes market, multiple sclerosis and ADHD. Likewise, drug classes in which biosimilars are being developed aggressively (such as immunosuppressants), will also see increased attention. Although formulary exclusions are now accepted as a norm in the PBM industry, a thorough analysis of prescription drug trends and the patient related outcomes resulting from formulary exclusion strategies will answer some of the key questions in this area.