CVS Enters the Biosimilars Market | How Does This Affect Patients and Developers?

How will CVS’ decision to begin developing biosimilars impact the life sciences industry?

As a product similar to FDA approved biologic, biosimilars are an important part of the pharmaceutical market. This marketplace saw a major upheaval recently when CVS announced that it is launching a new business unit, Cordavis, to develop private-label biosimilars. As its first foray into this space, CVS is partnering with Sandoz to produce Cordavis Hyrimoz, a co-branded version of the biosimilar for Abbvie's Humira. 

This announcement highlights three trends:

• Cut-throat competition in the PBM space. When BCBS of California dropped CVS Caremark as its pharmacy benefit manager (PBM) to partner instead with Amazon Pharmacy and Mark Cuban’s Cost Plus Drug Company. CVS shares plunged 8% on the news. Vertical integration – expanding into the development and commercialization of biosimilars – is a way to further control the continuum of care – and compete.

• Continued cries to lower drug prices. Cordavis expects to price Hyrimoz at least 80% lower than the current list price of Humira, “creating more competition that drives down prices”. We can expect CVS to cast itself as a champion of lowering drug prices.

• Concern over sustainable drug supply. This partnership affords Sandoz quick and relatively easy access to investment dollars, formulary control and necessary infrastructure to overcome the barriers to biosimilar uptake including cost and consistent supply (uptake of the other 8 available Humira biosimilars has been slow). 

What does this mean for the industry?

For patients, more biosimilar choices are generally positive for patients and may lower out-of-pocket costs for specialty medicines.

For branded developers, vertical integration in healthcare changes the power dynamics. As entities expand their capabilities, biopharmaceutical manufacturers have less leverage. Yet, this is also an opportunity for biopharmaceutical manufacturers to double down and tout what they do best – develop incredible innovation to advance human health based on cutting-edge science. Afterall, today’s innovations are tomorrow’s biosimilars – this is a good argument against price controls like those in the Inflation Reduction Act.

For biosimilars development, this partnership is an example of likely what’s to come. For example, the other big PBMs, ESI and OptumRx, may seek out other similar partnerships to nurture and tap into the biosimilar market. This is where things do indeed get interesting (strange bedfellows to emerge) because biosimilar developers are also branded developers in some cases too (Novartis/Sandoz, Amgen, Pfizer).

CVS’ decision to launch Cordavis has had wide reaching effects on everyone involved in the biosimilars marketplace, from developers to patients. It will only continue to impact in the industry in the weeks and months ahead and interested parties should keep a close eye on the impact of Cordavis. 

The Syneos Health Reputation & Risk Management team provides insights and recommendations for clients with stakeholder engagement and value communications strategies.  We always welcome your outreach to talk through how these developments uniquely intersect with your business. Just reach out to us at [email protected].

Contributors

Leigh Ann Bruhn, Senior Strategist, Reputation & Risk Management, Syneos Health