Express Scripts vs. CVS Health: Five Lessons From the 2020 Formulary Exclusions and Some Thoughts on Patient Impact (rerun)

This week, I’m rerunning some popular posts while I prepare for this Friday’s video webinar: Industry Update and COVID-19 Impact: PBMs & Payers.

Today's rerun highlights one of the most effective tactics that PBMs have developed to extract deeper discounts from brand-name drug makers. COVID-19 seems likely shift the U.S. payer mix away from commercial health plans. Expect even tighter formulary management and more restrictions as PBMs work even harder to cut costs for their plan sponsor clients.

Click here to see the original post and comments from January 2020.

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For 2020, the two largest pharmacy benefit managers (PBMs)—Express Scripts and the Caremark business of CVS Health—have again increased the number of drugs they have excluded from their standard formularies. The 2020 formulary exclusion lists are available below for your downloading pleasure.

Below, I highlight my key takeaways from the 2020 lists:

• The number of exclusions

• Management of specialty drugs

• Indication-based formularies

• The slow adoption of biosimilars

• The PBMs’ patient-unfriendly exclusions in the hepatitis C category

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 therefore a key factor behind falling brand-name net drug prices.

Read on for a look at this year’s exclusions along with some closing thoughts on what exclusions mean for patients.

ARE YOU ON THE LIST?

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, but they then face reduced rebates and/or higher plan costs.

Here are the 2020 preferred formulary lists for commercial clients of the two largest PBMS:

• Express Scripts: 2020 National Preferred Formulary Exclusion (12/15/19)

• CVS Caremark: 2020 Standard Control Formulary

Last August, Express Scripts published the following article explaining its strategy: 2020 National Preferred Formulary: Improving Care and Value. Note that its exclusion list has expanded since the publication date.

FIVE OBSERVATIONS ON THE 2020 LISTS

1) The biggest PBMs have expanded exclusions.

The chart below shows our count of the number of drugs that have been excluded from the national preferred formularies of the two largest PBMs: CVS Health and Express Scripts.

[Click to Enlarge]

Here are the key developments for 2020:

• CVS Health has excluded 282 drugs on its 2020 Standard Control Formulary. This figure is a big increase from the 173 products excluded from its 2019 formulary. CVS stated that 239 (85%) of the excluded products are traditional drugs, while 43 (15%) are specialty drugs.

• Express Scripts expanded its list to include 296 products for 2020. For 2019, Express Scripts excluded 242 products.

Express also stated that drug coverage will change for 0.37% of its beneficiaries. That’s up from the 0.2% of its beneficiaries who were affected by its initial 2019 exclusions. Both figures are lower than the 0.78% of Express Scripts beneficiaries who were affected by the PBM’s 2018 exclusions.

2) PBMs are refining their formulary management of crucial specialty categories.

Express Scripts added new categorization for many specialty therapies. For example, the multiple sclerosis category for 2020 distinguishes between two types of agents:

• Beta interferons (Preferred: Avonex, Betaseron, Plegridy, Rebif, and Rebif Rebidose; Excluded: Extavia)

• Oral (Preferred: Gilenya, Mayzent, and Tecfidera; Excluded: Aubagio)

Meanwhile, CVS combined the multiple sclerosis drug class into a single list. Its standard formulary prefers five products that are also on the Express Scripts list: Betaseron, Gilenya, Mayzent, Rebif, and Tecfidera. However, CVS prefers Aubagio (which Express Scripts excluded) and excludes Avonex (which Express Scripts preferred).

The oncology therapy class on the Express Script 2020 list includes three sub-categories:

• Breast cancer agents (Preferred: Ibrance, Verzenio; Excluded: Kisqali, Piqray)

• Multiple myeloma agents (Preferred: Darzalex, Kyprolis, Ninlaro, Pomalyst, Revlimid, Thalomid, Velcade; Excluded: Xpovio)

• Mylefibrosis agents (Preferred: Jakafi; Excluded: Inrebic)

Caremark addresses oncology products on its Advanced Control Specialty Formulary (January 2020). Its formulary excludes Verzenio and prefers Kisqali—the opposite position of Express Scripts.

3) Indication-based formularies for inflammatory conditions are now routine.

Express Scripts uses an indication-specific formulary for the inflammatory conditions drug class.

• Its Inflammatory Conditions Care Value Program was launched in 2016. It is based on seven inflammatory conditions: ankylosing spondylitis, Crohn’s disease, juvenile idiopathic arthritis, psoriasis, psoriatic arthritis, rheumatoid arthritis, and ulcerative colitis.

• Preferred products include Actemra, Cosentyx, Enbrel, Humira, Otelza, Remicade, Rinvoq, Simponi (for ulcerative colitis only), Skyrizi, Stelara, Tremfya, and Xeljanz. Eli Lilly’s Taltz is the only excluded product.

• Express Scripts notes that product placement is “subject to change throughout the year based upon changes in market dynamics, new indications for existing products, biosimilar and new product launches.”

CVS Caremark takes a similar approach to the category. The table below shows its preferred and excluded options by condition, as shown in its Advanced Control Specialty Formulary :

[Click to Enlarge]

4) PBMs are slowly adopting provider-administered biosimilars on their pharmacy benefit formularies.

Pharmacy benefit biosimilar drugs are not here yet, so PBMs have focused on provider-administered drugs.

For colony stimulating factors, CVS excluded the innovator brand Neupogen, one of its biosimilars (Zarxio), and the biosimilar-like Granix. It preferred only the biosimilar Nivestym. CVS also preferred the brand Neulasta along with one the brand’s biosmilars (Udenyca), but excluded a second biosimilar (Fulphila). By contrast, Express Scripts excluded Neupogen and Granix in favor of the biosimilars Zarxio and Nivestym. Express Scripts did not include any information about Neulasta and its biosimilars.

Other product categories with biosimilars have a similarly mixed status for biosimilars. For erythropoiesis-stimulating agents, Express Scripts prefers the innovator brand Procrit and one of its biosimilars (Retacrit) but excludes the other biosimilar (Mircera). By contrast, CVS excludes both brand version (Procrit and Epogen) in favor of Retacrit.

The exclusions have limited impact, because these products are typically reimbursed under the medical (not pharmacy) benefit. PBMs play a very limited role, though I expect their influence to grow, as I discuss in the “Buy-and-bill channel management” section of Insurers + PBMs + Specialty Pharmacies + Providers: Will Vertical Consolidation Disrupt Drug Channels in 2020?.

5) Express Scripts and CVS Caremark both made patient-unfriendly exclusions in the Hepatitis C category.

The hepatitis C formulary situation highlights the warped incentives of today’s drug channel.

For 2019, Express Scripts made a major change to the hepatitis C category. It excluded AbbVie’s Mavyret product and added Merck’s Zepatier product back to its preferred formulary. The other preferred alternatives in this category were Epclusa, Harvoni, and Vosevi. Its 2019 formulary also excluded the low list-price, authorized generic versions of Harvoni and Epclusa. I analyzed these problematic hepatitis C formulary choices in 2019 Express Scripts Formulary Exclusions: Hepatitis C Changes Show Why the Drug Channel Must Change, Too.

For 2020, Express Scripts maintained the same odd formulary design as it offered in 2019.

Meanwhile, CVS Caremark is also excluding the low list prices drugs Mavyret and Zepatier in favor of Harvoni and Epclusa. Its published formulary makes no mention of the lower list price versions of these products.

As I explained in my article analyzing Express Scripts’ 2019 formulary, this approach will raise out-of-pocket costs for many patients. Patients with commercial insurance often have prescription drug deductibles and coinsurance, so their out-of-pocket costs are linked to undiscounted, pre-rebate list prices.

Of course, plan sponsors gain from a formulary focus on net, post-rebate price. Express Scripts and CVS will also benefit, because they (1) retain some portion of the rebates, and (2) earn specialty pharmacy revenues tied to list prices.

Read my earlier article for the incredibly lame defense that Express Scripts offered for its formulary choices.

FIGHT THE BOUNCER

I’ll have more to say about formulary choices and patients’ costs in an upcoming post. In the meantime, consider that the growing presence of exclusions—and differences between PBMs’ lists—raise troubling issues about patient care.

As you can see from these lists, individual patients’ access to a particular therapy is determined by their plan’s PBM. Patients who change plans (or employers) can unknowingly lose access to their physician’s preferred therapy—unless they file an appeal and successfully summit paperwork mountain.

Did I miss anything important? Please add your own observations on the 2020 lists in the comments below.