Ready or not, the biosimilar market is taking shape in the U.S. And the biggest shaper, at least early on, is the payer.

Although only one biosimilar has hit the market, CVS Health is making biosimilars and other follow-on biologics a key component of its formulary strategy. The 2017 formulary the pharmacy benefit manager (PBM) released Tuesday replaces Amgen Inc.'s Neupogen (filgrastim) with Sandoz Inc.'s Zarxio, the first biosimilar approved in the U.S. It also replaces Sanofi SA's blockbuster Lantus (insulin glargine) with Eli Lilly and Co.'s Basaglar, which was approved in the EU as a biosimilar and in the U.S. as a me-too drug.

"We anticipate significant savings for many clients and members, as the removal of higher cost products will enable near-term value, with additional future opportunities for savings resulting from market competition as more new products are launched," CVS said of its move to exclude the innovator drugs in favor of biosimilars and other follow-ons.

In what could portend a further blow to innovators, CVS also knocked Sanofi's Toujeo off the list. Touted as the next-generation Lantus, Toujeo provides insulin glargine in a once-daily, long-acting formulation and is administered via a new Solastar pen. With biosimilar pressure looming for Lantus, the Paris-based Sanofi hoped to switch patients to Toujeo by launching it at about the same price as Lantus and offering an extensive patient-support program.

CVS' exclusion actualizes the biggest fear that many patients have had about biosimilars – that payers would force them to switch from a biologic that's working for them to a biosimilar that is not an exact replica. While a forced switch is not a concern for new patients, it is worrisome for those with chronic diseases who have tried drug after drug until they found one that worked for them.

CVS has about 80 million plan members and is one of three PBMs that together cover 70 percent of the U.S. market. Express Scripts, another of the PBM power trio, also released its 2017 formulary this week. The Express Scripts formulary, which provides prescription drug coverage guidelines for 25 million Americans, excludes 85 drugs, but it doesn't specifically target innovator biologics with biosimilar competition.

Both Neupogen and Sanofi's Lantus franchise remain on the Express Scripts formulary, along with their challengers. However, the PBM indicated it may reassess the basal insulin category later this year in light of anticipated product launches.

Given the cost-savings purpose of Express Scripts' national preferred formulary (NPF), biosimilars offering steep discounts could lead to exclusions in the future. "We exclude medications only when clinically equivalent alternatives are already covered on our formulary, and only when those exclusions will result in significant cost savings for our clients and patients," Express Scripts explained.

As a result of its 2017 formulary, Express Scripts expects $1.8 billion in annual savings for its participating plan sponsors – the biggest savings since the NPF was introduced in 2014.

In addition to favoring biosimilars, CVS is making a few more changes to its formulary, which it launched in 2012 as a way to push back against escalating drug prices. Beginning in January, CVS will use an indication-based formulary in therapeutic spaces such as hepatitis C and psoriasis, "which is among the biggest cost growth drivers for many plans," the PBM said. The indication-based approach is a response to the growing number of indications for pricy biologics. By using this approach, CVS hopes to expand its negotiating strength to improve formulary positioning and rebates.

Taking a stand against what it calls egregious drug price increases, CVS excluded 10 "hyperinflationary" drugs from its 2017 formulary and said it plans to evaluate price hikes on a quarterly basis. If necessary, drugs with excessive price hikes during the year will be removed from the formulary based on the availability of clinically appropriate and more cost-effective alternatives.

CVS' price vigilance won't be restricted to innovators. The PBM also is taking steps to address "limited source generics" that can result in increased prices for a generic with little or no competition and significant cost in the market, CVS said.

GUIDANCE ADDRESSES COMPOUNDING

Hoping to avert serious health risks from drugs being compounded or held under insanitary conditions, the FDA released a draft guidance to help compounders understand what's expected of them and guide states in regulating the facilities.

The policies detailed in the guidance apply to pharmacies, federal facilities, physicians' offices and outsourcing facilities that compound or repackage human or animal drugs, or that mix, dilute or repackage biologics – even if they are not registered with the FDA as outsourcing facilities.

Drugs compounded, repackaged or held under insanitary conditions are considered adulterated under the Federal Food, Drug and Cosmetics Act. The draft guidance defines insanitary conditions as those "that could cause a drug to become contaminated with filth or rendered injurious to health." Thus, a drug doesn't actually have to be contaminated for it to be deemed adulterated.

The guidance lists conditions that would be considered insanitary, noting that FDA investigators have observed each of the violations at outsourcing facilities they've inspected. The list includes the presence of vermin, bacteria, mold, glass shavings, rust and hair in the production area, as well as possible contamination from nearby construction and cross-contamination with beta-lactam, hazardous or highly potent drugs. The FDA has opened a 60-day comment period on the guidance.