PBM formulary exclusion lists continue to grow

August 5, 2014

Battlefield over drug pricing and availability continues to widen between plan managers and pharma

It’s almost becoming an annual summer rite of passage: the release of formulary exclusion lists by the major pharmacy benefit managers (PBMs). Both CVS Caremark and Express Scripts have added to their lists—CVS Caremark’s is now 95, up from 72 the year before, and Express Scripts’ is 66, up from 48 in 2013 (the new lists are for the coming year, 2015). Roughly half of prescriptions filled by Americans are contracted for by the two of them.

Formulary exclusion means that, for health plans managed by these PBMs, the drugs are not available, with some exceptions, for the prescribed conditions indicated, unless the patient covers the full cost: a key market-access issue for manufacturers. Some major brandnames are now on these lists: AstraZeneca's Symbicort, Amgen's Aranesp and Epogen. Lunesta (which went generic this year) is excluded from CVS Caremark but not Express Scripts. And, although the lists are presented with a general sense that clinical efficacy is the driver, some interesting contradictions crop up: Express Scripts drops Novo Nordisk's Victoza while recommending AstraZeneca's Byetta, while CVS Caremark does the exact opposite.

According to Adam Fein, president of Pembroke Consulting (Philadelphia) and a Pharmaceutical Commerce Editorial Board member, plan sponsors (payers) get better rebates and/or lower plan costs when the follow the formularies; Express Scripts will provide $1 billion in savings across its millions of members with the exclusions in place.

Many analysts look on the exclusion lists as PBMs’ way of exerting market forces—including playing off one manufacturer’s similar product to another’s—on drug pricing. Amgen told Reuters that its erythropoietin-stimulating factors, Epogen and Arenesp, are mostly sold to hospitals and clinics and dialysis centers; the pricing through the PBMs is incidental.

Besides wheeling and dealing on discounts to the PBMs, manufacturers’ other important tactic is to build a body of clinical knowledge for specific conditions, as opposed to general categories like diabetes or high blood pressure. The PBMs note that drugs are often offered for multiple conditions and different evaluations result.

Gilead Science’s new hepatitis C therapy, Sovaldi, has generated enormous friction in healthcare circles for its cost--$84,000 for a 12-week regimen. CVS Caremark says that “Evaluation and identification of drugs requiring prior authorization for medical necessity will be made upon approval of the new hepatitis C agents;” while Express Scripts says inclusion “to be determined after FDA approval” (which has already occurred in the case of Sovaldi).