The move is part of the company’s new venture focused on securing, and in some cases co-producing, biosimilar drugs, which are the equivalent of generic versions of complex gene or protein-based therapies known as biologics.
“We’ve invested in committing to certain volumes for the U.S. marketplace so that we have a durable supply of product. We want to ensure that once we bring this into the U.S. marketplace, we don’t have any supply issues, we have a high-quality biosimilar product available, and it’ll be launched at a much lower … price than the originator molecule that exists,” said Prem Shah, CVS Health EVP and chief of pharmacy.
CVS is already one of the leading players when it comes to sourcing generic drugs through Red Oak, its joint venture with Cardinal Health
The company said Wednesday it’s launching a new subsidiary called Cordavis, which will specialize in securing supply of the new biosimilar drugs and will partner with Novartis Pharmaceuticals
Sandoz, currently a unit of Novartis, is expected to be spun off as an independent publicly traded firm later this year.
CVS did not disclose the terms of the agreement for the new biosimilar, trademarked Hyromiz.
The company pledges that the list price of Cordavis Hyromiz will be more than 80% lower than the current list price of Humira, which is made by drugmaker Abbvie
The first FDA-approved biosimilar for Humira, Amgen’s
Amgen executives have said demand for the company’s biologic appears to be growing, but that securing coverage from health insurers has posed a challenge.
“We’re obviously very early innings still in this biosimilar market with Amjevita. And we’re seeing clearly what is new payer behavior in light of such a large product having biosimilar competition,” said Murdo Gordon, Amgen EVP of commercial operations, on the company’s second-quarter earnings call. “The clarity of how pharmacy benefit works with biosimilar uptake, or lack thereof, is becoming clear to us and to other biosimilar manufacturers and other onlookers.”
Abbvie reported more than $4 billion in Humira sales in its most recent quarter, which was slightly better than expected. The company says it continues to be offered on health insurer plans at parity with the new biosimilars.
The launch of Cordavis has long been in the works, before the news last week from Blue Shield of California that it was dropping CVS as its pharmacy benefits manager and switching to Mark Cuban’s Cost Plus Drug Company, Amazon Pharmacy and others in an effort to save on drug costs.
The news sent CVS shares plunging, but analysts like John Ransom of Raymond James say the selloff was overblown.
At this point, the potential threat from upstarts is not as big as some might fear, especially when it comes to the current biosimilar market for drugs like Humira, Ransom said.
“They either get a big rebate from Abbvie, or they get a big discount from one of the competing biosimilar manufacturers. And that’s really where they have the advantage,” said Ransom.
Cuban’s Cost Plus doesn’t have the scale to buy generic or enough shelf space from the manufacturers, he said.
Correction: CVS Health subsidiary Cordavis will partner with Sandoz on biosimilar drugs. An earlier version mischaracterized the relationship.
