The machinations with prices, rebates, and discounts reflect the intense competition among me-too diabetes agents and manufacturers’ frantic attempts to develop market share for new drugs. The insulins are an example. Sticker-price expenditures on insulins increased by $4.8 billion from 2014 to 2015, but IMS Health says manufacturers gave back more than that in rebates and discounts to position themselves in the market.
Diabetes spending growth (in billions of dollars)
Source: IMS Institute for Healthcare Informatics, “Medicines Use and Spending in the U.S.,” April 2016
Express Scripts and CVS Caremark have taken advantage of the therapeutic similarity of insulins as well as their own purchasing power to obtain deep list price discounts by offering exclusivity on their standard formularies. The two giant PBMs have maximized their leverage with the two leading manufacturers, Eli Lilly and Novo Nordisk, by playing them off one another. The stakes are high: Annual sales of insulin approach $20 billion, although that’s the market based on sticker price. CVS Caremark has removed Eli Lilly’s Humalog and Humulin from its formulary in favor of Novo Nordisk’s NovoLog and Novolin. Express Scripts has done the opposite, excluding NovoLog and Novolin in favor of Humalog and Humulin. The manufacturers collectively had to give back billions to get those exclusive arrangements, according to IMS.
The PBMs have also wielded their exclusion power in other classes of diabetes drugs. CVS Caremark has been more aggressive than Express Scripts with exclusions in the red hot SGLT-2 class. It nixed first-in-class Invokana in favor of Farxiga and Jardiance. In the DPP-4 class, CVS gave Januvia and Tradjenta the nod over Onglyza and Nesina.
The two PBMs also take opposite stands with the GLP-1s. Express Scripts excludes Victoza and prefers Byetta and Bydureon, while CVS Caremark does the opposite.
Competition has also led to increased use of couponing. Sanofi-Aventis’ Lantus Solostar, a long-acting insulin, is the top selling diabetes medication. Its 2014 invoice sales of $4.5 billion outdistanced Novo Nordisk’s competing long-acting insulin, Levemir, which had 2014 sales of $1.3 billion. (For these individual insulin products, IMS reported only 2014 sales figures). Yet Sanofi-Aventis still offers a saving card that guarantees a maximum copayment of $25, which matches the coupon deal that Novo Nordisk offers for Levemir.
Coupons also exist in the SGLT-2 and popular DPP-4 classes, and they go a step further than the insulin products by offering deals that cover all of the patient’s out-of-pocket costs. They are advertised as “free,” although that means no out-of-pocket cost to the patient. The health or drug benefit plans are still on the hook for their share.