Big 3 Implement Conflicting Formulary Exclusions on Biosimilars

The Big Three PBMs — Cigna Corp.’s Express Scripts, UnitedHealth Group’s OptumRx, and CVS Health Corp.’s Caremark — once again added new drugs to their formulary exclusion lists for the 2022 plan year, but the rate of new exclusions slowed. Industry insiders tell AIS Health, a division of MMIT, that the slowing amount of exclusions indicates the PBMs find high value in opaque, complex contracting agreements with providers, even though certain preferences in areas like insulins, specialty drugs and biosimilars defy the logic of list prices.

According to an analysis of plan documents by Adam Fein, Ph.D., CEO of the Drug Channels Institute, Caremark now excludes 433 products from its formularies, Express Scripts excludes 485 and OptumRx excludes 492. Each amount sets a record number of exclusions for each company.

“The formulary releases seem to be later and later each year,” adds Brian Anderson, a principal and senior pharmacy consultant at Milliman Inc., via email. “This is typically a result of rebate contracting efforts and negotiations around programs. It would be better to see the formularies locked in earlier in the year to create opportunities for communications and steerage to lower cost products. PBMs could leverage the formulary release as a marketing opportunity through a campaign effort to lower healthcare costs.”

“I think restrictions are inevitable based on the PBMs’ business model,” Ge Bai, Ph.D., tells AIS Health. Bai is a professor at Johns Hopkins University’s schools of business and public health. “They can’t have everyone, otherwise they lose their leverage against drug manufacturers. The ability to exclude some competitors of the drug from the formulary gives PBMs power at the negotiating table. This is what they do — their job is to exclude drugs from the formulary.”

“But the problem for drugs [is] the Big Three basically control 80% of the market,” Bai continues. “If the drug a patient really wants is excluded from the formulary, it’s really hard for the patient to get a good deal elsewhere. He or she is captured. So that is the conundrum now.”

Changes to tight formulary restrictions can be dangerous for some patients on maintenance medications. A December 2021 open letter to CVS by Ryan Gough, executive director of the Partnership to Advance Cardiovascular Health, a patient advocacy group funded by cardiologists’ professional organizations and the Alliance for Patient Access, a pharma-backed advocacy group, protested formulary controls imposed by CVS on direct oral anticoagulants (DAOCs).

“The removal of all but one DOAC option from formulary means that stable patients who are at high risk of stroke and other cardiovascular events will be forced to switch their anticoagulation therapy in the 2022 plan year. It also appears that there is no option for current, stable patients to be grandfathered into the new plan year on their previously covered DOAC therapy,” Gough wrote.

“Sudden and disruptive formulary changes that upset care for stable patients pose a growing challenge,” Gough added. “Non-medical switching, such as the change that CVS is instituting, occurs when a managed care plan changes its formulary or cost-sharing requirements in a way that forces stable patients off their prescribed medication. Non-medical switching is problematic for both patients and providers because it actively discourages adherence to therapy and increases the paperwork burden for clinicians and their staff….For patients on anticoagulant therapy in particular, nonadherence can be debilitating, even deadly.”

Meanwhile, Fein and Marc Guieb, Pharm.D., a consultant at Milliman Inc., both identified seemingly odd decisions by the Big Three in their formulary design for insulin products.

Exclusions Can Be ‘Frustrating’ for Docs

“The Big Three’s 2022 formulary design and exclusions continue to reflect the complexity of the country’s drug pricing and how these levers continue to be frustrating for practicing clinicians,” Marc Guieb, Pharm.D., tells AIS Health via email. “One great example of this is the formulary variability between [Sanofi S.A.’s] Lantus, [Sanofi’s] Toujeo, [Eli Lilly & Co.’s] Basaglar, [Viatris Inc.’s] Semglee, and insulin glargine. Semglee made headlines in 2021 as the first FDA-approved interchangeable biosimilar, an approval that allows it to be substituted for Lantus without a prescriber’s approval. This approval was seen as exciting since increased competition should, in theory, lead to much lower prices for this insulin product.”

“However, current formulary decisions make it clear that this is not the case,” Guieb continued. “Each PBM seems to be adopting a different strategy regarding these products, making it clear that there is no ‘lowest net cost’ frontrunner among the bunch and suggesting that, at least for now, generics and brands are similarly priced after accounting for rebates. This is especially disappointing when taken in context with the 2021 Senate report highlighting the practice of anticompetitive ‘shadow pricing’; the report warns of the existence of synchronized pricing between manufacturers.”

Similarly, Guieb added, “the pattern seen with these insulin products might also be applicable to the long-anticipated release of Humira competition in 2023. While the release of interchangeable Humira biosimilars is a good thing for consumers, immediate and substantial price decreases should not be expected. It might take years for plan sponsors and patients to see the effects of the Humira patent expiration. Expect the same formulary confusion to apply to these products, as well, with each PBM covering different products at different tiers and with different exclusions.”

“PBMs continue to juggle provider-administered biosimilars on their pharmacy benefit formularies. Consequently, plans do not consistently favor biosimilars and continue to restrict providers’ clinical choices,” Fein wrote in a Jan. 19 blog post.

In addition, Fein added, “the 2022 formularies highlight unexplainable differences in how each of the big three PBMs handle these products. CVS Caremark prefers Basaglar, a non-interchangeable follow-on biologic, and blocks Lantus. Neither Semglee nor its unbranded version is listed on the Caremark formulary. Express Scripts prefers the high-list price Semglee and excludes the low-priced, unbranded interchangeable biosimilar….OptumRx prefers the Lantus reference product and excludes Semglee. However, its formulary list doesn’t mention the unbranded biosimilar. So much for adopting lower-cost products!”

What’s Behind These Decisions?

Bai says the conflicting nature of these exclusions shows that a given PBM might be able to negotiate a better price from one manufacturer than their competition. She says one PBM might negotiate exclusivity for a certain product with a PBM or negotiate favorable pricing across a manufacturer’s inventory in exchange for swallowing high costs for a certain drug.

“In that contract, there might be some provision like exclusivity that means that you’re dealing with me as a PBM — you don’t do the same deal with other PBMs,” Bai explains. “So I think that might be a reason why they can go into quite a deep discount or some kind of deal.”

Elan Rubinstein, Pharm.D., principal of EB Rubinstein Associates, tells AIS Health via email that he reviewed Optum’s exclusions for 2022 and found several reasons why a drug might be excluded. Those could include the availability of a generic, though Rubinstein “do[es] not know why [UnitedHealth] makes one or the other decision in particular cases”; the availability of a biosimilar, though similar caveats apply; the drug falls under the medical benefit; a branded drug is preferred: “for example, for migraine, Emgality and Aimovig are included on [Optum’s] tier 2,” but Ajovy isnt; a preference in how a drug is formulated and whether drugs are combined in the same capsule or tablet; and preferred product packaging.

Anderson adds that those types of dynamics are notably present in specialty drugs.

“We are seeing the beginning of an evolution in specialty management under the formularies of all PBMs. This includes how clinical programs are administered, leveraging copay maximizers, continuous modifications to the lists, biosimilar approaches, and re-bucketing of limited distribution drugs. In addition, we are seeing preventative treatments fall into the specialty category, which can put payers in a difficult position in deciding how to cover them,” he says.

Patients Need Greater Transparency

As high numbers of formulary exclusions become entrenched, Anderson and Fein both argue that more transparency is required.

“PBMs should provide more transparency into how formulary changes affect patients taking drugs for cancer and for other specialty therapies. There is also an urgent need for more research on how exclusions affect physicians’ prescribing decisions, patients’ ability to access therapies, and clinical outcomes,” Fein wrote.

“I expect that we will see new innovations in formulary management in the coming years and/or a rekindling of old approaches of keeping formularies simpler to understand. This may include the management of the number of tiers and exclusions that occur within the programs. Also, we will see more pay-for-performance and value-based approaches as PBMs find ways to differentiate their offerings and leverage manufacturer contracting,” Anderson says.

Contact Anderson at brian.anderson@milliman.com, Bai at gbai@jhu.edu, Guieb at marc.guieb@milliman.com and Rubinstein at elan.b.rubinstein@gmail.com.

PBMs’ Formulary Exclusions Continue to Grow

By Jinghong Chen

Cigna Corp.-owned Express Scripts will exclude 32 additional medications from its 2022 National Preferred Formulary, while the other two major PBMs — CVS Health Corp.’s Caremark and UnitedHealth Group’s OptumRx — will both cut 20 additional drugs from their formularies in 2022. Since 2014, the three PBMs have dramatically increased the number of excluded drugs, but the growth rate of exclusions has slowed in recent years. Graphics below list medications that will be excluded by major PBMs due to 2022 formulary changes and their current market access among commercial formularies under the pharmacy benefit. For many of these drugs, fewer than half of covered lives are under the preferred tier/preferred with prior authorization or step therapy and covered tier/covered with PA/ST.

pbms-formulary-exclusions-continue-to-grow

SOURCES: “2022 National Preferred Formulary Exclusion List Changes,” Express Scripts. “2022 CVS/Caremark Prescription Drug Formulary Changes,” CVS Health. “Pharmacy Passages, Formulary Update,” OptumRx. Managed Markets Insight & Technology, LLC database as of February 2022.

 

Peter Johnson

Peter Johnson

Peter has been a reporter for nearly a decade. Before joining AIS Health, Peter covered a wide variety of topics in his hometown of Seattle, where he continues to live. Peter’s work has appeared in publications including The Atlantic and The Stranger. Peter attended Colby College.

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