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Perspectives on CVS Bid to Lower Drug Launch Prices

Posted by Leslie Small on Nov 1, 2018

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In an effort to pressure drug manufacturers to temper their launch prices for new drugs, CVS Health Corp. is rolling out a program in which drugs that have a price exceeding a certain cost-effectiveness threshold will be excluded from coverage, AIS Health reported.

CVS will let clients refuse to cover drugs that have a price tag of more than $100,000 per quality-adjusted life year (QALY), provided they are not designated as "breakthrough" therapies by the FDA.

What's unique about CVS's move is where that cost-effectiveness threshold comes from: the QALY ratio is based on publicly available analyses from the Institute for Clinical and Economic Review (ICER), a nonprofit organization that conducts comparative-effectiveness research. Experts say it's the first instance they're aware of in which ICER is playing a formal role in a PBM or payer's coverage decisions.

"In theory, I think it's a great idea," says Art Shinn, Pharm.D., president of Managed Pharmacy Consultants, LLC. "I think their quality of work is good," he says of ICER. "From what I have seen of their studies, I think they're nonpartial."

However, in a letter sent Sept. 12 to CVS Health Corp. CEO Larry Merlo, nearly 100 patient groups urged him to reconsider the company's new policy, saying that coverage decisions based on cost-effectiveness "ignore important differences among patients and instead rely on a single, one-size-fits-all assessment." They also say that ICER's cost-effectiveness analyses discriminate against the chronically ill, the elderly and people with disabilities by "using algorithms that calculate their lives as 'worth less' than people who are younger or non-disabled."

CVS is not alone in taking steps to push back against high launch prices for prescription drugs. Express Scripts Holding Co., one of CVS Caremark's chief rivals, "was actually the first to market last year with a more comprehensive and flexible program through our National Preferred Formulary called Exclude at Launch, which helps protect payers from high-priced drug launches," a spokesperson wrote in an email to AIS Health.

Jayson Slotnik, a partner at Health Policy Strategies, LLC, says CVS's move may be an attempt to compete with Express Scripts, as the two companies are "racing for market share" in order to demonstrate growth to investors.


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Topics: Payer, Specialty, Industry Trends, Data & Analytics, Provider