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CVS Health to replace higher-cost drugs on covered medication list for 2017

Pedestrians walk by a CVS store in San Francisco.
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CVS Health, the giant pharmacy benefits manager, moved Tuesday to counteract the financial impact of high-cost medications by excluding a number of drugs used to treat patients with cancer, diabetes and hepatitis C.

"We expect to remove 35 products from our standard formulary" — a list of covered products — "including 10 hyperinflationary drugs," said CVS Health, which provides prescription benefit management services to several thousands health plans.

In some cases, higher-cost drugs are being replaced with lower-cost options, the company said.

CVS Health also said that it will, on a quarterly basis, evaluate medications "with egregious cost inflation" that have available, clinically appropriate and more cost-effective alternatives, and possibly remove the more expensive drugs from its standard formulary.

One such "hyperinflationary" drug that is already getting the hook is Alcortin A External Gel, a treatment for skin irritation made by Novum Pharma, "which saw a price inflation of 2,856.8 percent in the last three years," CVS Health said.

"We are also taking steps to address 'limited source generics,' which are products with limited generic manufacturers resulting in significant cost in the market," CVS Health said. "These products will be evaluated, and if appropriate, be excluded during the year."

CVS Health's moves, which affect its more than 20 million enrollees, came a day after the nation's largest benefits manager, Express Scripts, released the names of drugs that will be excluded next year from its own formulary.

In a research note issued Tuesday, Barclays said that CVS Health's exclusion list, for the second consecutive year, "appears markedly more aggressive than" Express Scripts.

"CVS's removal list grew to 155 [medications or treatments] in 2017, as compared to 124 in 2016 and 95 in 2015," Barclays said. In contrast, Express Scripts noted that its national preferred formulary will excluded 85 products next year, three fewer than this year.

CVS Health said, "We are acting vigilantly to help our clients contain their costs while supporting their members with affordable prescription drug benefits."

"A key to containing cost is effective formulary management. This is essential at a time when escalating drug prices as well as the introduction of new, costly therapies are creating significant challenges to the affordability of health care," the company said.

Atop CVS Health's list of moves is including biosimilars, or drugs that are biological copies of existing treatments, as a key component of its formulary, "replacing higher cost drugs within the categories."

The company said this will include putting the biosimilar Zarxio, made by Novartis' Sandoz unit, on the formulary, replacing Neupogen, which is made by Amgen. The drugs are used "to decrease the risk of infection in patients receiving treatment for certain forms of cancer," CVS Health said.

Zarxio last year became the first biosimilar product approved in the United States by the Food and Drug Administration.

CVS Health also said it is placing Eli Lilly's drug Basaglar, which was approved last year as a "follow-on" drug by the FDA, on the formulary to replace the insulin Lantus, made by Sanofi, for treatment of diabetes.

For hepatitis C medications, CVS Health is excluding Daklinza, Olysio, Technivie and Zepatier from its formulary, the company said. Those exclusions leave Gilead's Sovaldi and Harvoni as options for CVS Health customers with hepatitis C.

Express Scripts also has excluded Zepatier from its formulary.