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In the latest bid to control prescription drug spending, the nation’s largest pharmacy benefits managers are again excluding dozens of medicines from their lists of products that are covered by health insurance, which are known as formularies. PBMs, you may recall, are crucial, behind-the-scenes middleman who negotiate drug prices on behalf of companies, unions, and government agencies.

On Monday, Express Scripts notified its customers that next year, 85 medicines will be excluded from its national formulary, and, as a result, the PBM hopes to recognize about $1.8 billion in savings, up from $1.3 billion this year. The number of excluded medicines, by the way, is down slightly from the 88 prescription drugs that were excluded from its 2016 formulary.

This morning, CVS Health released its own 2017 formulary that will exclude another 35 medicines, including 10 that were called “hyperinflationary.” As a result, CVS is now excluding a total of 131 medicines and boasts such moves have saved more than $9 billion over the last five years, according to a CVS spokeswoman. The PBM did not provide a specific savings estimate, but Barclays analysts forecast about $2.6 billion should be saved next year.


One medicine that CVS is eliminating from its formulary is Alcortin A External Gel, an antibacterial and antifungal skin cream that is sold by Novum Pharmaceuticals and which jumped in price by more than 2,850 percent over the last three years. We asked Novum for comment and will update you accordingly.

“CVS Health is taking a stand against egregious drug price increases that unnecessarily add costs for clients and their members,” the PBM wrote its clients. “On a quarterly basis, products with egregious cost inflation that have readily available, clinically appropriate, and more cost-effective alternatives may be evaluated and potentially removed from the formulary.” CVS is also eyeing generics for which there is limited competition that may cause price spikes.


The formulary changes come amid an ongoing national debate over prescription-drug prices, an issue that has encompassed many of the newest and most innovative treatments for such hard-to-treat diseases as hepatitis C and cancer, as well as rare diseases and even some generic pills. One way that PBMs have responded is to shift drugs on and off formularies, or place them in categories where patients will have to fork over higher copayments.

Among the noteworthy changes — CVS is shifting toward biosimilars, which are nearly identical variants of brand-name biologic medicines. Although widely available in Europe and elsewhere, US regulators have so far only approved two biosimilars, which are expected to save the US health care system billions of dollars. Before rebates, biosimilars are expected to cost 20 percent to 30 percent less than biologics.

CVS, specifically, is adding the Zarxio biosimilar to its formulary and replacing Neupogen, a treatment used to boost white blood cell counts in chemotherapy patients and others with compromised immune systems. Zarxio, which is made by Sandoz, the generic drug unit of Novartis, won US Food and Drug Administration approval two years ago to market the biosimilar.

The big PBM is also adding an insulin called Basaglar, which was approved in Europe as a biosimilar, but considered to be a “follow-on biologic” by the FDA. The treatment, which is made by Eli Lilly and approved by the FDA last December, is taking the place of Lantus, a long-standing insulin sold by Sanofi, which has been struggling to revive its diabetes franchise amid increasing competition for this product. CVS is also excluding Toujeo, Sanofi’s follow-up to Lantus.

[UPDATE: In an investor note, Sanford Bernstein analyst Ronny Gal wrote that, “drug investors have largely accepted the logic that commercial payers would gradually tighten commercial formularies. The question is the rate of change.  So far, second-quarter revenue numbers (reported by drug makers) were strong, suggesting slower impact.  We see the changes implemented by CVS in 2017 as a data point arguing for faster change.”]

Among the medicines Express Scripts will exclude is Zyclara, a cream sold by Valeant Pharmaceuticals for treating skin cancer and actinic keratosis, which are raised areas of the skin that were heavily exposed to the sun. Valeant has been harshly criticized for its pricing practices, and its new chief executive has indicated its new strategy will rely less on price hikes. The skin cream costs about $1,240 for 7.5 grams.

To what extent PBM clients will reap all of the projected savings, however, is a matter of debate.

Recently, a group of two dozen of the largest names in Corporate America — including Macy’s, Coca-Cola and American Express — formed an alliance to find ways to lower health care costs. One notion they are exploring is to change the way PBMs are paid due to concerns that the rebates the PBMs collect from drug makers on behalf of clients are not always passed along. The PBMs have disputed this argument.

  • I’m a certified diabetes educator and pediatric nurse practitioner. It infuriates me that insulins such as Novolog and Levemir are so expensive. People are being forced to use the insulins that were the only insulins available 20-25years ago because they are cheaper. Cheaper is not better – the older regular and NPH insulins provide less predictable responses than the newer more modern insulins. Life sustaining medications need to be affordable to all. Long term complications from diabetes are related to overall blood glucose control — diabetes is hard enough. People shouldn’t have to choose between paying for insulin or paying their utilities. Lilly, Novo Nordisk or Sanofi Aventis need to cut their prices. Just today I was quoted a cash price of Humalog kwikpen 1 box of 5 pens to be $115 while an equivalent amount of Novolog would be $618.00. This is crazy!

  • I have had to change from Novalog and Levmir to over counter Region Jumping R and N they are $24 a bottle at Wal-Mart .We have insurance it’s better for us to use CVS to fill scripts they want $250 per insulins in co-pays.I can’t do that I work two jobs just to keep up my health which in turn has caused more trouble.I am glad to see the FDA change and say the CGM can replace regular glucose machines.I have one of these that is super helpful with my care.I haven’t been able to use this could not afford the sensor for machine

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