CVS Removes Humira From Formulary — But the Fine Print Is Key

CVS Health Corp.’s PBM, CVS Caremark, said recently that it will remove AbbVie’s immunosuppressive drug Humira (adalimumab) from its major national commercial template formularies. The move comes on the heels of a year in which 14 near-identical copies of the world’s best-selling drug entered the U.S. market after years of delays, leading major PBMs to generally put selections of several biosimilars on the same coverage tiers as their reference product.

Yet while Wall Street analysts heralded CVS’s decision as an indication that it’s become a trailblazer in the biosimilar space, one prominent PBM critic remains skeptical of the company’s motivations — especially since CVS is working with Humira’s manufacturer on a new cobranded version of the drug.

When it comes to Humira and its biosimilars, “CVS Caremark has a confusing strategy that will use vertical integration to drive its profits,” Drug Channels Institute CEO Adam Fein, Ph.D., wrote in a Jan. 9 blog post summarizing the three largest PBMs’ 2024 formulary exclusions.

Currently, Fein explains, CVS Caremark’s 2024 Advanced Control Specialty Formulary has four adalimumab-related options: Humira; Hyrimoz, the high-list-price biosimilar from Sandoz; a low-list-price biosimilar, also named Hyrimoz, from CVS’s new division Cordavis; and adalimumab-adaz, the unbranded, low-list-price Humira biosimilar from Sandoz. And starting in the second quarter, the PBM said on Jan. 3, Humira will be nixed from that list. “Our customers want to have choices,” David Joyner, executive vice president, CVS Health and president of CVS Caremark, said in a statement. “By preferring biosimilars that have a significantly lower list price than their reference product, CVS Caremark is putting our customers in the driver’s seat to best meet the health care needs of their members and lower drug costs.”

However, there are exceptions to the new policy. Humira will continue to be covered by CVS Caremark’s Choice and Standard Opt Out commercial formularies. (Fein noted that those formularies represent just 4% and 2% of the PBM’s covered lives, respectively.)

Also, for just those two formularies, CVS’s Cordavis division will work with AbbVie to provide a “committed volume of co-branded Humira.” By doing so, CVS said, it will provide “additional options for payors” as well as “another treatment option for adalimumab patients” — who are often highly reluctant to switch when a drug is working for them. Humira treats a variety of inflammatory conditions, including rheumatoid arthritis, Crohn’s disease, ulcerative colitis, psoriatic arthritis and ankylosing spondylitis.

Wall Street Gives Seal of Approval

To Evercore ISI analyst Elizabeth Anderson, the Humira move “shows the continuing innovation we are seeing out of CVS regarding drug and pharmacy cost and reimbursement changes.” She added that it “represents one of the most serious steps we have seen thus far in terms of helping to drive additional biosimilar adoption.”

Bank of America’s Allen Lutz was similarly enthusiastic.

“We view today’s news positively as biosimilars represent a clear way for CVS to leverage its size and scale to both drive down drug prices and capture incremental economics versus traditional specialty drug spend,” he advised investors. “CVS estimates the biosimilar market will increase tenfold through 2029, and while we don’t have a view on those projections, biosimilars certainly represent a strong growth opportunity for the company.”

Anderson noted that removing Humira from its main formulary will also have tangible — albeit modest — financial benefits for CVS. Evercore ISI’s “rough math” suggests the change could contribute $60 million to $80 million worth of incremental adjusted operating income in 2024, she said. That’s assuming approximately 30 million patients are affected by the formulary change, with about 75% of them actually transitioning to a biosimilar instead of Humira.

Mesfin Tegenu, CEO and chairman of RxParadigm, also sees positive implications for CVS — as well as the greater prescription drug landscape.

“CVS not only derives revenue from dispensing biosimilars but also benefits from rebate dollars as a PBM for its clients. The decision to transition from Humira to Hyrimoz, a biosimilar manufactured by Sandoz, likely offers a financial equilibrium at the very least,” he tells AIS Health, a division of MMIT. “Moreover, this move positions Cordavis as a formidable player in the biosimilar arena. As long as biosimilars remain cost-effective alternatives with minimal patient co-pay, this shift primarily reshuffles the financial dynamics among PBMs, manufacturers, and payers.”

Furthermore, “this strategic move augments CVS’s public relations and strategically positions it to capitalize on the escalating biosimilar market,” which is projected to surge from $10 billion to $100 billion within half a decade,” Tegenu adds. “As physicians increasingly embrace biosimilars, favoring Hyrimoz enables Cordavis to extend its product reach beyond CVS-managed entities, thereby amplifying its distribution margins.”

Co-Branded Humira Raises Eyebrows

To Fein, the potential profitability of CVS’s formulary switch-up runs counter to the lofty promises associated with its new biosimilar division.

CVS unveiled Cordavis in late August, saying that the new venture would “help ensure sufficient supply of biosimilars in the U.S. and support this market now and in the future, while ultimately improving health outcomes and reducing costs for consumers.” And indeed, its first product — Cordavis Hyrimoz — will launch in the first quarter of this year “at a list price that is more than 80% lower than the current list price of Humira,” Lutz noted.

However, “unlike the co-branded Hyrimoz, the new co-branded Cordavis Humira will have the same list price as Humira (original flavor),” Fein pointed out in his blog post. He also observed that the new product technically isn’t a biosimilar since it will be supplied by AbbVie, the manufacturer of best-selling Humira.

“Perhaps we should call it an ‘authorized biological,’ although no such regulatory classification exists. And the list price is no lower than the reference product,” Fein wrote. Ultimately, “the few plan sponsors that use CVS Caremark’s Choice and Standard Opt Out commercial formularies should be asking many questions about CVS Health’s strategy for these formularies,” he wrote.

Tegenu, meanwhile, suggests that some plan sponsors’ preference for receiving rebates for high list price drugs may be playing a role.

“The co-branding agreement between AbbVie and Cordavis appears to be AbbVie’s concerted effort to sustain relevance in the saturated Humira biosimilar landscape,” he says. “While CVS might be leveraging this co-branding deal to satiate the appetites of clients keen on rebates, a predetermined volume stipulated in the agreement could potentially dilute CVS’s commitment to optimizing biosimilar options for its clientele.”

Contact Tegenu at mesfin.tegenu@rxparadigm.com.

This article was reprinted from AIS Health’s biweekly publication Radar on Drug Benefits.

© 2024 MMIT
Leslie Small

Leslie Small

Leslie has been working in journalism since 2009 and reporting on the health care industry since 2014. She has covered the many ups and downs of the Affordable Care Act exchanges, the failed health insurer mega-mergers, and hundreds of other storylines spanning subjects such as Medicaid managed care, Medicare Advantage, employer-sponsored insurance, and prescription drug coverage. As the managing editor of Health Plan Weekly and Radar on Drug Benefits, she writes and edits for both publications while overseeing a small team of reporters who also focus on the managed care sector. Before joining AIS Health, she was a senior editor for the e-newsletter Fierce Health Payer, and she started her career as a copy editor at multiple local newspapers. She graduated with a dual degree in journalism and political science from Penn State University.

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