2021 ESI/Caremark Formulary Assessment
CVS Caremark (CVS) first introduced their formulary exclusion list in 2012, followed by Express Scripts (ESI) in 2014. These lists represent all pharmacy drugs that these pharmaceutical benefit managers (PBMs) do not cover, with the objective to reduce redundancy among products in the same class and/or steer patients towards preferred products. Exclusion lists are also leveraged to extract higher rebates from manufacturers. As a result, both CVS and ESI have exhibited increased formulary control; since 2019, the number of excluded products at CVS grew 96% (from 179 to 333 drugs) and 51% at ESI (from 242 to 366 drugs). Additionally, they have exerted more control among typically hands-off classes, including oncology in 2017 and HIV in 2019, both of which are protected classes in Medicare Part D.
In 2021, CVS removed 57 drugs from their Standard formulary, adding 7 back across multiple therapeutic areas: anticonvulsants, diabetes, growth hormone, ophthalmic, and osteoarthritis classes. According to CVS, only about 0.4% of members will be affected (however, secondary sources suggest this estimate could be up to 1.4%).(1,2) The change is expected to save $4.4 billion or $130 per member. (1)
Express Scripts’ Preferred National formulary removed 70 drugs with no add backs. For 53 of those excluded drugs, ESI will instead cover lower-cost generics and/or the biosimilar. The change is expected to affect only 1.3% of members (however, secondary sources estimate this could be up to 6.3%). (3,4) While PBMs emphasize minimal patient disruption, it is important to discuss the downstream effects these changes have on patients and access.
HaydenCG will take a deeper look at trends in the following areas:
Biosimilar Adoption
Type-2 Diabetes (T2D)
Indication-Based Formulary Management
US Biosimilar Market
There are currently 15 pharmacy benefit biosimilars commercialized in the US market, across 6 reference brands. These products are marketed as brand alternatives, so it is likely that PBMs do not consider them interchangeable. Moreover, biosimilar prices tend to be higher than standard generics due to higher COGS and a lengthier development process for manufacturers. These factors complicate biosimilar coverage; indeed, ESI and CVS have exhibited differing levels of biosimilar adoption (Figure 2).
ESI appears to prioritize cost reduction efforts by covering all reference products with at least one biosimilar. Furthermore, for most reference brands in which there are multiple approved biosimilars, ESI prefers more than one option. In comparison, CVS has only added 3 biosimilars to its national formulary, each for a different reference product. The stark difference in CVS and ESI biosimilar adoption leaves drug developers in a bind when deciding whether to continue with biosimilar development. It will be key to monitor biosimilar uptake as PBMs and payers either lean into biosimilar adoption or opt for reference brands to squeeze rebates. While branded manufacturers may offer rebates on reference brands, biosimilars always feature lower list prices and often lower net prices, which provide savings to patients – if they could only access them more easily than PBMs are allowing.
Type 2 Diabetes
While there was limited formulary change by ESI, CVS made no changes in the 3 major Type 2 Diabetes categories: DPP-4, SGLT-4, and GLP-1 (Figure 3). Heading into 2021, ESI strengthened control over the DPP-4 Inhibitor class by moving to prefer Merck’s portfolio (Januvia and Janumet), while excluding Boehringer Ingelheim’s Tradjenta and Jentadueto. This mirrors CVS’s current formulary as they made no change to their DPP-4 coverage. Furthermore, CVS and ESI’s coverage of SGLT-2 is the same, with both covering AstraZeneca’s Farxiga and Xigduo XR and Boehringer Ingelheim’s Jardiance, Synjardy, Synjardy XR. There is slight divergence between the PBM’s coverage of GLP-1s. ESI and CVS cover Trulicity and Ozempic; however, only CVS leans into Novo Nordisk’s larger portfolio, covering Victoza and Rybelsus. The diabetes class continues to underscore the power of portfolio management and volume-based rebate walls that could preclude smaller players from achieving broad access.
Indication-based Formularies
Both CVS and Express Scripts claim to utilize indication-based formularies for autoimmune disorders, which allow for tailored drug coverage based on specific diagnoses. For example, Cosentyx and Taltz are both IL-17 inhibitors and both are approved to treat the same conditions: AS, PsO, PsA, and nr-axSpA. As seen in Figure 4, CVS prefers Cosentyx for both AS and PsA, but Taltz for the other PsO. However, ESI excluded Cosentyx across all inflammatory conditions heading into 2021 and prefers Taltz. While CVS encourages bidding across indications as seen in the AS flip from Cosentyx to Taltz in 2021, ESI’s product swap from 2020 across all indications suggests deviation from a true indication-based formulary. While differing adoptions of indication-based formularies, both PBMs exhibited indication-based formulary changes from the previous year which poses risk and inconsistency in coverage for patients year over year. (5)
Conclusion:
Expanded blocklists from both ESI and CVS signal intensified payer control driven by increased competition through rebating; ultimately affecting patient access. Additionally, the contrast of biosimilar adoption by PBMs, may lead to further divergent strategies with the expected launch of more biosimilars. Most notably, the expected 2023 launch of 6+ biosimilars of Humira which could shake up the market. Indication-based formularies in high-cost classes can be an effective cost containment tool. However, without stable coverage, there can be severe implications to patient access and outcomes. Too often, PBMs leverage control and profit off rebates, at the expense of patient treatment. These decisions can have both patient access and outcome implications. As evidenced by the indication-based formulary examples above, forcing (potentially stable and well managed) patients to switch biologic brands annually due to opaque pricing negotiations truly inserts the profit motivations of PBMs into the clinical setting.
Without any real reform in place for rebate pass-throughs or price transparency, the annual dance between manufacturers and PBMs around exclusion lists enters its second decade. Some brands may be winners, and some may lose – and that can flip year to year. But patients are impacted constantly impacted to the negative with fewer choices, forced switching, and no clear financial savings to show for it. As exclusion lists become more powerful, patients should be privy to the details that determine their treatment options and be directly afforded the discounts PBMs negotiate.
Special thanks to Hannah Rosenblatt for her work on this blog post.
Hayden Consulting Group
HaydenCG is the life sciences industry's premier Market Access and Commercialization strategic consultancy. Our focus is to deliver game-changing strategic guidance and analytical vision to transform the commercial trajectory of therapies, portfolios, and entire companies. Our services are designed to create competitive advantages, establish strong analytical foundations, build growth plans, and address Life Science industry's most pressing Access, Reimbursement, Policy, and Commercialization challenges. Follow us on LinkedIn.
Sources:
Fredell, Joshua. “2021 CVS Caremark Formulary Updates: Delivering Value and Quality Care”, 1 Oct. 2020, https://payorsolutions.cvshealth.com/insights/2021-cvs-caremark-formulary-updates
“Insights into the 2021 CVS Formulary Changes.” Pharmaceutical Strategies Group, 14,Oct. 2020, https://www.psgconsults.com/wp-content/uploads/2020/10/2021-Formulary-Exclusions-CVS-10-14-2020.pdf
Novatski, Jeannette. “2021 National Preferred Formulary: Clinically Sound, Cost Effective”, ESI, 12 Aug. 2020, https://www.express-scripts.com/corporate/articles/2021-national-preferred-formulary
“Insights into the 2021 ESI Formulary Changes.” Pharmaceutical Strategies Group, 21 Aug. 2020, https://www.psgconsults.com/wp-content/uploads/2020/10/2021-Formulary-Exclusions-ESI-8-21-2020.pdf
Weintraub, Arlene. “Express Scripts axes Novartis’ psoriasis drug in favor of Lilly’s as discounting takes over: analyst”, Fierce Pharma, 20 Aug. 2020, https://www.fiercepharma.com/pharma/express-scripts-axes-novartis-psoriasis-drug-favor-lilly-s-as-discounting-takes-over-analyst