Express Scripts shuts out 64 branded drugs from 2018 formulary
Correction: A previous version of this article incorrectly identified the sales ranking of two products marketed by Valeant Pharmaceuticals that were excluded from Express Scripts' 2018 formulary.
- Express Scripts, a top-three pharmacy benefit manager (PBM) in the U.S., will exclude an additional 64 drugs from its national listing of preferred drugs next year, sending shares in several biotechs affected spinning in Monday trading.
- Notably, the PBM's 2018 formulary leaves off Amgen's neutropenia blockbuster Neupogen (filgrastim) in favor of Novartis' biosimilar medicine Zarxio (filgrastim-sndz) and drops Lilly's osteoporosis drug Forteo (teriparatide).
- Forty-six other brand-name drugs with generic competitors already on the market were also excluded, potentially accelerating uptake of cheaper copies to a number of aging product lines. Two of Valeant Pharmaceuticals' older, less profitable drugs, for example, were shut out from Express Scripts' preferred list.
Express Scripts has been an outspoken critic of drugmakers' pricing practices, frequently pushing back against the pharma industry's attempt to pin the blame for rising costs on the rising power of PBMs.
In March, for example, the PBM sent a letter to Gilead CEO John Milligan calling on the drugmaker to lower the price of each of its hepatitis C drugs to $50,000 per course of treatment. The week before, a Gilead executive had said PBMs were partly responsible for keeping costs high, suggesting higher prices helped to boost the level of rebates and discounts negotiated by benefit managers in return for favorable coverage.
The spat was illustrative of the more broad back-and-forth between pharma and PBMs. Drug industry trade group PhRMA recently rolled out an ad campaign accusing payers and PBMs of failing to pass on the savings received from those rebates and discounts to the patients on behalf of which they negotiate.
PBMs have had an easier argument to make, though: simply noting that drugmakers are the ones actually increasing the prices of their products.
Express Scripts' newly released formulary for next year substantially increases the number of drugs excluded by the PBM to a total of 159. The PBM was quick to highlight, however, that the new exclusions would only affect 0.67% of its members while saving cash overall.
The announcement gave a substantial boost to Radius Health, sending shares in the biotech higher by 4.5% Monday. Radius recently won approval for its osteoporosis drug Tymlos (abaloparatide), a direct rival to Lilly's Forteo. While Express Scripts also lists several generic treatments for the bone condition on its list of preferred alternatives, an exclusion for Forteo should help Tymlos gain market share.
Radius priced Tymlos at a wholesale acquisition cost of $19,500, cheaper than the annualized list price of roughly of $35,500 for Forteo — a fact specifically cited by Express Scripts as a factor in making its decision. That lower price could also help boost earlier use of anabolic agents like Tymlos before older drugs that slow the weakening of bone.
While Express Scripts formulary was good news for Radius, Syngergy Pharmaceuticals felt the sting of rejection.
Synergy had recently secured an OK from the Food and Drug Administration for its constipation drug Trulance (plecanatide). But Express Scripts decided against covering the treatment on its preferred list, going instead with Allergan's rival Linzess (linaclotide) as well as Sucampo and Takeda's Amitiza (lubiprostone).
Shares in Synergy fell more than 10% in value Monday morning, but clawed back some of those losses to close down nearly 4.4%.
Formulary lists such as Express Scripts' have become crucially important as payers take a harder line on drug pricing. Additionally, the market launches of several biosimilar medicines in the U.S. could lead payers to downgrade coverage for pricey blockbuster biologics, although impact to date has been limited.
Update: This post has been updated to reflect the closing prices of shares in Radius Health and Synergy Pharmaceuticals on Monday.
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