By Peter Loftus
CVS Health Corp.'s decision to stop covering Pfizer Inc.'s
anti-impotence pill Viagra for many of its drug-benefit plan
members is the latest example of the tough tactics some health-care
managers are using to control rising drug costs.
CVS and rival Express Scripts Holding Co., which together
dominate the U.S. market for administering drug-benefit plans for
employers and insurers, are excluding more drugs from coverage if
there are viable alternatives in attempts to squeeze greater price
discounts from manufacturers. The pharmacy-benefit managers, or
PBMs, are steering patients to other drugs they say have equivalent
safety and efficacy, but at lower costs.
A CVS spokeswoman declined to comment on the reasons for
Viagra's exclusion. She said the strategy of excluding drugs has
resulted in "significant savings" for employers and other sponsors
of benefit plans. The spokeswoman said "equally effective products
with lower overall costs remain available within the formulary" as
alternatives to excluded drugs.
Geoffrey Porges, a Sanford C. Bernstein analyst, calls the
coverage exclusions a "potent weapon" for PBMs and estimates the
number of drugs excluded by at least one of the two major PBMs will
rise to 165 in 2016 from 130 this year.
"We're often able to extract over-sized discounts from the
pharma manufacturers" by holding out the option of coverage
exclusion, Express Scripts Chief Medical Officer Steve Miller said
in an interview.
In the past, PBMs wouldn't typically exclude drugs from
coverage. Instead they'd try to direct patients to cheaper options
by requiring them to pay more out-of-pocket for less favored drugs.
CVS first began excluding drugs from its preferred list in 2012,
and Express Scripts later followed suit.
The exclusions aren't ironclad. Some clients of the major PBMs
customize their own preferred-drug lists, and may choose to
continue paying for Viagra and other excluded drugs to satisfy
demand from their members.
The exclusions come as health payers continue to grapple with
rising drug prices. According to Express Scripts, U.S. spending on
prescription drugs rose more than 12% in 2014, the biggest annual
increase in more than a decade, fueled part in by the introduction
of effective but expensive new medicines for hepatitis C.
CVS Caremark, the PBM division of the Woonsocket, R.I., pharmacy
company, said it would instead steer men who want to take an
erectile-dysfunction drug to Eli Lilly & Co.'s Cialis, famed
for its TV commercials featuring couples sitting in side-by-side
bathtubs.
The CVS spokeswoman said the company tries to ensure a smooth
transition when patients have to switch drugs, providing early
notification to members and doctors a few months ahead of coverage
changes.
A Pfizer spokesman declined to comment on the reasons for CVS's
decision. He said Viagra continues to be available to millions of
patients including to certain CVS plan members. Viagra's price
varies by pharmacy and dosing strength; it sells for at least $40 a
pill at many U.S. pharmacies, according to GoodRx Inc., which
tracks prescription prices. U.S. Viagra sales rose 15% to $605
million for the first six months of 2015.
Drug makers usually give discounts, in the form of rebates, to
PBMs to ensure favorable coverage on preferred-drug lists.
A Lilly spokesman declined to provide specifics of its
arrangements with CVS. "We're pleased that patients have access to
Cialis," he said. Cialis costs more than $40 a pill at higher
doses, according to GoodRx. U.S. Cialis sales rose 18% to $556.5
million for the six months ended June 30.
CVS said this week it is removing a total of 26 drugs from its
standard formulary for 2016. Aside from Viagra, the drugs include
Johnson & Johnson's Type 2 diabetes treatment Invokana, and
Biogen Inc.'s Avonex treatment for multiple sclerosis. In those
cases, CVS said people with diabetes will be steered toward similar
drugs from AstraZeneca PLC and Lilly, and multiple sclerosis
patients may take drugs from Teva Pharmaceutical Industries Ltd.
and Novartis AG.
A J&J spokeswoman said the company was disappointed in the
CVS decision because it will affect patients for whom Invokana is
currently working. She noted the drug will be covered for CVS
members whose plans use different formularies than the standard
one. A Biogen spokeswoman said Avonex has "broad insurance
coverage" and the company is confident patients will continue to
have access to its medicines.
St. Louis-based Express Scripts plans to exclude an additional
eight drugs from coverage in 2016, said Dr. Miller. Not all of the
decisions are entirely cost related. Among the new exclusions is
AstraZeneca's Onglyza diabetes drug, which Dr. Miller attributed to
clinical-trial results showing its use is associated with an
increased risk of hospitalization for heart failure in
patients.
An AstraZeneca spokeswoman said Onglyza remains available for
Express Scripts clients who select their own formularies, and other
AstraZeneca diabetes drugs such as Bydureon remain on the preferred
list for the national formulary.
Express Scripts says it expects the exclusions to force fewer
than 0.5% of plan members to switch drugs.
In most cases for both PBMs, plan members who want to continue
taking the excluded drugs must pay the full retail price out of
pocket. There are exceptions, however, if a patient and doctor can
demonstrate that an excluded drug is medically necessary.
The coverage exclusions have hurt sales of some of drugs in the
past. U.S. prescription volume for Bayer AG's Betaseron
multiple-sclerosis treatment began to decline more sharply after it
was excluded from Express Scripts' preferred-drug list at the
beginning of 2014, according to Bernstein's Mr. Porges. The drug's
U.S. sales fell 29% to $468 million in 2014.
Jonathan D. Rockoff and Joseph Walker contributed to this
article.
Write to Peter Loftus at peter.loftus@wsj.com
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