CVS Drops Lilly’s Zepbound as Preferred Drug in Novo Win

CVS Health Corp.’s drug-benefits unit negotiated a deal to make Novo Nordisk A/S’s Wegovy more widely available to its members, a blow to rival Eli Lilly & Co.’s Zepbound that was moved off the company’s list of preferred drugs.

Starting July 1, Zepbound will no longer be preferred on CVS Caremark’s standard formulary, while Wegovy and other anti-obesity medicines will be, according to the company. The change means that Lilly’s drug may cost more to insurers or employers that opt to pay for weight-loss drugs and who use CVS Caremark to manage their prescription drug plans.

Under the new deal, “Zepbound will be excluded” in health plans using CVS’s standard drug list, CVS spokesperson David Whitrap said in an email. People in those plans on Zepbound will be able switch to Wegovy, with exceptions made for medical need on a case-by-case basis, he said.

CVS shares rose as much as 10 percent before markets opened in New York on Thursday. Novo shares were up as much as 6.5 percent in Copenhagen while Lilly fell as much as 6.7 percent in premarket trading.

Novo and Lilly have been locked in a fierce competition to dominate the obesity market, which is expected to reach $130 billion by the end of the decade. CVS Caremark’s decision to place Wegovy over Zepbound could give Novo an edge as the companies fight to convince insurance companies to pay for their treatments, which cost more than $1,000 a month before rebates.

The behind-the-scenes negotiating the resulted in the change shows that competition is heating up, especially as more supply hits the market and drug plans can pit one roughly equal treatment against another. Novo is also allowing CVS to sell the drug for $499 to cash-paying customers, less than half its list price, to patients at its more than 9,000 pharmacies nationwide.

There’s likely to be more haggling for similar favourable treatment in the future.

“Now that both of these GLP-1s are available in adequate supply, Caremark was able to do what PBMs do best: compete clinically similar products against one another, and choose the option that delivers the lowest net cost for our clients who choose our standard formulary,” CVS chief executive officer David Joyner said in a statement to Bloomberg News.

Health plans have complained that the popularity of drugs like Wegovy and Zepbound has led to higher costs from covering them. The agreement between CVS and Novo provides bigger discounts on Wegovy, ultimately saving the plans money, the company said.

A CVS spokesperson declined to say how much the company was saving on Wegovy.

“The cost of this therapeutic category is one of the biggest pain points for Caremark clients, and I’m proud we could be first to market with a solution that drives greater affordability.”

It is Novo’s responsibility to work with players in the US health care system to connect patients with authentic Wegovy in “a convenient and affordable way,” said Dave Moore, Novo’s executive vice president of US operations, in a statement.

CVS Caremark is one of the largest pharmacy benefit managers, an industry that negotiates drug prices between insurers, pharmacies, and manufacturers. They have faced mounting criticism in Washington from lawmakers and the pharmaceutical industry for allegedly driving up prescription drug prices, a charge the industry denies.

President Donald Trump, who’s said he’s going to “knock out” such intermediaries, has spoken to Lilly chief executive officer Dave Ricks about the issue.

“Every time I talk to him about drug prices, he sweet talks me,” Trump said, referring to Ricks, during a White House event they both attended on Wednesday. “He tells me about the middlemen. By the time I leave the meetings, I say, gee, he’s giving us a great bargain.”

Trump, however, has also complained about the high prices of weight-loss drugs.

CVS is the first retail pharmacy chain to sell Wegovy at a $499 cash price under a program the drugmaker announced earlier this week. Novo is also teaming up with telehealth companies including Hims & Hers Health Inc. Hims & Hers Health Inc. to sell Wegovy at the discounted rate.

Additionally, Lilly has made efforts to lower the price of Zepbound for patients whose health plans don’t cover weight-loss drugs. The company is working with telehealth partners to provide broader access to the lower-cost option.

By Ike Swetlitz, Madison Muller, and Robert Langreth

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Novo Nordisk to Sell Wegovy Through Telehealth Firms

The drug manufacturer will partner with companies like Hims & Hers and Ro amid a larger crackdown on compounded forms of its GLP-1 drugs.