In August 2023, CVS Health announced that it would begin offering several adalimumab biosimilars at a low wholesale acquisition cost (WAC) through the CVS Caremark commercial template formularies. This would also include a low-WAC adalimumab product from its subsidiary Cordavis. The program was instituted in April 2024, while also excluding branded Humira® from coverage. The strategy resulted in an immediate spike in adalimumab biosimilar uptake. In a discussion with one of this strategy’s architects, we asked Dr. Fredell about its genesis, implications, and questions from clients around its cost savings.
BR&R: Offering biosimilar access through Cordavis represented a new paradigm for enhancing adalimumab biosimilar uptake. Can you tell us about the origins of the concept?
Joshua Fredell, PharmD: Sure. At its core, we were trying to address the need: How can we best ensure the biosimilar market develops in a way that it operates and provides the benefit that we all generally experience with the traditional generic market? Like generics, biosimilars are clinically equivalent, high-quality products that can be lower cost. We’ve seen huge success in the adalimumab category, resulting in patient adoption and subsequently cost savings with 97% of scripts for adalimumab filled with a preferred biosimilar.
I think this new model helped do that, based on the market’s response.
Implications for Stelara® Biosimilars
BR&R: The first ustekinumab biosimilar will be launching in January, and one of the other big 3 PBMs has already announced it will produce a private label brand through their associated distributor. Do you know if the CVS Health family has plans for that same sort of model for the Stelara biosimilars?
Fredell: I can’t really speak to that. But at CVS Caremark, the PBM, we are very focused on the Stelara market—regardless of whether Cordavis has a product—in terms of what and when is right for the betterment of our clients and members with lower-cost products.
Caremark will need to see who will be releasing a lower-cost product in that market. [As of early September], a couple of the competitors in that space have not spoken to the pricing of their ustekinumab products. So some additional things need to evolve, before Caremark decides what direction it will take.
Rebates, Portfolio Contracting, and Low Net Costs
BR&R: The implementation of this concept comes at a time when PBM rebate contracting are heavily scrutinized from legislators, governmental agencies, and healthcare entities. It seems like the co-branded or private-label distribution model implemented by CVS Health (and now the other big 3 PBMs) provides the PBMs with the opportunity to earn revenue through a manufacturing-type model. Do you view that as a significant factor in CVS Health’s launch of Cordavis?
Fredell: While I can’t speak to that, I can tell you CVS Caremark’s goal is to deliver lower net cost for our clients. If we don’t do that, we are not meeting our client needs. The model works when the client is seeing lower net costs and benefits their members.
BR&R: Let’s consider a self-insured company who is laser focused on obtaining lower net costs. What kind of questions, if any, do these clients ask you regarding the Cordavis model? Are they trying to grasp how this benefits them?
Fredell: The questions I hear most often from our clients involve the final cost of a drug. Even with the conversation around rebates, the majority of clients still recognize that this is one mechanism to help lower their final net cost.
One of their first questions is, “Will this strategy help me lower my net cost overall in the autoimmune category?” The clients ask this in context of their unique member populations, because you know we have clients with both small and large populations.
If we think of a large self-funded client, they might have 100 or more members using these autoimmune products. So they also want to know, “Is this helping lower my net cost across this population as best as possible?”
They also ask, “If we do this, how do we implement it without disrupting our members?” You know, human resource leaders don’t want upset employees in their offices. And we certainly don’t want members calling into customer care because something went wrong in the process of making a change to a biosimilar.
How can we administer a change as smoothly and as efficiently as possible when it will lead to lower costs for the client? If we can help them understand how it does save money, then the client (and patient) is willing to go through the change. But they also want us to show them how we can make that change smoothly for the member and not cause disruption.
BR&R: In terms of rebate contracting, we hear a great deal about portfolio contracts or bundled contracts, especially within the autoimmune category. Consider AbbVie’s portfolio contracts that bundle Humira, Skyrizi®, and Rinvoq® in the autoimmune space; these contracts have been around for several years. One might think that this new model could significantly affect the PBM’s ability to gain optimal rebates from portfolio contracts. How does the inclusion of co-branded or private-labeled adalimumab affect the portfolio rebate contracting? Are you seeing any direct effect on the incidence of portfolio contracting resulting from the model you’ve introduced?
Fredell: I’ll answer to the degree I can. No, I haven’t seen this. There’s real competition in the adalimumab market and there is substantial demand by the member population for it. AbbVie recognizes there’s new weighty competition from biosimilars in this market that they hadn’t experienced before 2023.
The Biosimilar Manufacturer-Partner
BR&R: Let’s move the discussion to the perspective of the biosimilar manufacturer. This new paradigm seems to offer benefits or maybe even some disadvantages. The model covers Hyrimoz and Sandoz’s unbranded version, but what have you heard from other adalimumab biosimilar makers?
Fredell: Although I haven’t personally spoken to each biosimilar manufacturer, I can relate just broad comments or actions. These have mostly been good in the sense, even if the whole PBM industry didn’t move as fast as Caremark did to encourage biosimilar uptake as some would have wanted, there is decisions to prefer biosimilars, and that is good.
It’s been positive in the sense that biosimilars have been getting added to drug formularies at that parity to the reference drug. We did that in February 2023 with Amjevita®. We did that with the Sandoz products and a couple others in September 2023. That’s the first thing most biosimilar manufacturers wondered, “Will we have access in that market?”
Then the second question “But can we be preferred over the reference brand, just like we’ve seen in other spaces?” And the answer to that has been yes, too.
If there is a challenge for them, you could say these manufacturers are at a disadvantage because they’re competing with themselves, not just the reference brand. Which single or multiple biosimilars can best meet the needs for the market around cost, clinical aspects, etc. If there was an assumption that it would work like it has for generics, where they’re just kind of all in the market together, it hasn’t occurred in that way yet.
I would say they need to look at how they’re pricing themselves. Some of those biosimilars came to the market priced like a brand. I suspect we’ll see that change.
Financial Questions for Co-branding and Private-Label Arrangements
BR&R: Several adalimumab manufacturers offered a high-WAC and low-WAC price option at launch or soon afterwards, in the hopes of gaining better access. They failed to get any access if the biosimilars and reference product were covered at parity.
CVS Health introduced the Cordavis model, and as part of this, the PBM excludes Humira from coverage. The biosimilar makers begin to see a light in the tunnel, and the highly discounted low-WAC offerings can finally gain some traction, first with Sandoz’s Hyrimoz (at a 5% WAC discount) and unbranded Hyrimoz (at an 81% discount). If you’re agreeing to a private-label or co-branded agreement with the low WAC product, there must be a revenue-sharing agreement in place, correct?
Fredell: That’s a safe assumption.
BR&R: There just doesn’t seem to be a lot of revenue to share when you’re already at 19% of the original WAC price. There’s a smaller window for profitability. And this is not by any means Cordavis’ problem. This is a biosimilar industry problem for products covered under the pharmacy benefit.
Do you think this is simply the price of access, where you can finally sell some more adalimumab but at a narrow profit? If so, how does this contribute to biosimilar sustainability?
Fredell: It’s a good question. I guess I haven’t spent a lot of time thinking about the future of adalimumab versus the potential future of other biosimilars.
Given these dynamics in the adalimumab market, we have seen some of the manufacturers pulling either out of the market or making moves to find other channels for their products. They’ve already invested in creating the product and product supply.
Knowing that will have an influence on how future manufacturers will price their products. They are going to see where there’s been the greatest adoption, at least in the Caremark space, which has been with the low-WAC product. If that’s a more consistent model that we’ve created for the future, I think that’s a good thing.
BR&R: With at least 14 products, including branded and unbranded versions of biosimilars and of the reference drug, and at different list prices, adalimumab has undergone hypercompetition, if you will. That won’t be the case (at least immediately) with the Stelara biosimilars. There will be fewer competitors, but there will be unbranded and branded versions of this product, too. And I imagine the reference manufacturer (Johnson & Johnson) will launch an unbranded version of ustekinumab. One manufacturer already announced an 80% discount right out of the gate. So this will all play out again.
Fredell: I think so, too.
BR&R: I am concerned about biosimilar sustainability long term with these pharmacy benefit–covered products. With the Cordavis model, the biosimilar makers gain quick access, greater utilization, but it does so with a reduced margin.
Fredell: I do see your point.I’d have to defer to Sandoz and the others, in terms of whether it is beneficial for them.
It does streamline the path to market access and the actual marketing of the product. Cordavis is taking that on.
I’ll say this: We’ve been committed to market sustainability. If there are indicators that the current market may not be sustainable, then you’ll see changes on our part and hopefully on the part of others as well to take actions to make it sustainable.
The Adalimumab Biosimilar Uptake Trend Continues at CVS Caremark
BR&R: Since the implementationof Caremark’s formulary strategy on April 1, adalimumab biosimilar uptake has increased significantly. Can you give us an update on the utilization numbers?
Fredell: We’re running at 97% use of biosimilars for the adalimumab category. We’re trying to get the last percentage points of adalimumab utilization moved over to the biosimilar, and that’s true regardless of pharmacy channel (i.e., CVS specialty pharmacy or any other pharmacy for our open-pharmacy network clients). We’ve seen quick, substantial, and sustainable success.
BR&R: Can you break down the utilization figures between the Hyrimoz-related products and the AbbVie co-branded products? What’s the trend look like among those? And the high-WAC versus low-WAC offerings?
Fredell: I will say that 90% plus of that biosimilar utilization is with the lower list-price products. Between like a higher list price Hyrimoz, which is by Sandoz or the lower list price Hyrimoz by Cordavis or the lower list price adalimumab-adaz by Sandoz, those with the lower list prices represent far and away the greatest utilization.
BR&R: Do you have a feel for which of the lowest-priced products are really trending upwards?
Fredell: Both of them are trending upwards, since we made the change on 4/1.
BR&R: As the PBM earns money with each sale of the Cordavis products, has there been any questions from your clients about this? It could be construed as a conflict of interest to some, raising the possibility of a financial incentive to dispense those specific products?
Fredell: We approach Cordavis like we do any other manufacturer. Our clients are asking us, as the PBM CVS Caremark, to continue to work and fight for those lower prices for us, whether through Cordavis’ products or elsewhere.
That’s the challenge not only for the PBM they’ve hired, but for the entire enterprise to deliver that reliably and consistently for our clients.