(Bloomberg) — CVS Health Corp.’s drug-benefits unit will cover Amgen Inc.’s new cholesterol-cutting injections while excluding a competing treatment from Sanofi (NYSE:SNY) and Regeneron Pharmaceuticals Inc. (Nasdaq:REGN), pushing for savings from medications that list for more than $14,000 a year.
The decision, which applies to workers whose employers use CVS Health (NYSE:CVS) for drug coverage, shows that benefit managers are continuing to be aggressive about setting exclusive deals with drugmakers to get better prices for expensive new therapies.
CVS said that its independent pharmacy and therapeutics committee had reviewed data for Amgen’s Repatha, as well as Praluent from Sanofi and Regeneron Pharmaceuticals, and concluded that the drugs were clinically equivalent.
“That puts us in a situation where we can bargain with the drug manufacturers” and get a significant discount in return for an exclusive deal, said Troyen Brennan, CVS’s chief medical officer, said in a phone interview. “You have to use every tool that you have to try to keep costs down today.”
While the discount CVS obtained from Amgen (Nasdaq:AMGN) was “substantial,” Brennan said he would not reveal the amount or the length of the contract with Amgen. CVS will continue to require that prescriptions for Amgen’s drug be approved in advance, a practice known as prior authorization that can limit use of the medicine.
Amgen shares rose 1.8 percent to $162.74 at 9:59 a.m. in New York. Regeneron was up less than 1 percent to $582, and Sanofi fell less than 1 percent to 82.75 euros.
CVS’s decision is just the latest example of pharmacy benefit managers excluding some expensive drugs from coverage in a category in order to gain better prices for the competing drugs they do decide to cover.
Last December, Gilead Sciences Inc.’s hepatitis C treatment Harvoni was excluded from Express Scripts Holding Co.’s main list of 2015 covered drugs in favor of a competing treatment from AbbVie Inc. That move set off a price war over hepatitis C drugs, with several other insurers and payers, including CVS, deciding to cover only the Gilead medicine.
Winning an exclusive deal with a benefits manager is a mixed blessing for drugmakers, who ensure a market for their drugs but may sacrifice a lot in discounts. AbbVie’s hepatitis C treatment generated $469 million in sales last quarter, while Gilead’s drugs, which require patients to take fewer daily pills, brought in $4.8 billion.
PCSK9 inhibitors are designed to help people with high levels of bad cholesterol who can’t get their condition under control with statins such as Pfizer Inc.’s Lipitor. Payers of insurance benefits have worried they could become one of the costliest drug classes ever, with the potential for $100 billion in annual sales if widely used. For now, their scope is more limited to people who have genetic conditions or particularly stubborn cholesterol levels.