When Payers Become Producers: Inside the Private-Labeling Trend
Vertical integration between payers, PBMs, specialty pharmacies, and providers has grown in the last decade, with more negotiating power concentrated among a handful of major players. Now insurers are adding production arms into the mix, following CVS Health’s bid to cash in on the race for Humira biosimilar market share.
Adding a manufacturing arm brings undeniable advantages for PBMs, from better cost control to smoother supply chain dynamics. Payer-production entities can align an entire product distribution chain in their favor, excluding competitors and preferring their designated agents. But how will these integrated powerhouses impact the industry?
To learn what payers think of this trend, the MMIT Index team conducted primary research with 20 large national payers, independent plans, Blues affiliates and PBMs (excluding participants).
The big 3 begin biosimilar production and procurement
In August 2023, CVS Health launched Cordavis, a subsidiary that co-produces biosimilars with manufacturers, beginning with Sandoz’s Humira biosimilar (Hyrimoz). The company’s PBM, CVS Caremark, removed Humira from commercial formularies in April 2024, replacing it with a private-label Cordavis Hyrimoz, Sandoz’s Hyrimoz, and Sandoz’s unbranded adalimumab-adaz. As a result, Sandoz now controls 13% of the anti-inflammatory market, while the eight other Humira biosimilar manufacturers share less than 5%.
The Cigna Group’s Evernorth Health Services followed suit in April 2024, announcing the production of a $0 copay Humira biosimilar via its subsidiary Quallent Pharmaceuticals, a private-label distributor. Alvotech and Teva Pharmaceuticals will manufacture a Humira biosimilar (Simlandi) for Quallent distribution, as will Boehringer Ingelheim (Cyltezo). Express Scripts by Evernorth, Cigna’s PBM, will doubtless take the same approach as CVS Caremark, excluding Humira and preferring Simlandi and Cyltezo.
A third payer/PBM is evidently joining the game, as UnitedHealth Group’s PBM OptumRx is preparing to launch NUVAILA, a biosimilar procurer and private-label manufacturer.
Read the full article in Drug Channels. Learn how MMIT’s Custom Market Research can help you with early market access planning for your brand or biosimilar.
